Hansard, 2009-01-22

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 (2009) To (2009) Mr Seng Han Thong 20 Jan 20 Apr Ms Grace Fu Hai Yien 24 Jan 25 Jan Mr K Shanmugam 24 Jan 27 Jan Assoc. Prof. Dr Yaacob Ibrahim 29 Jan 01 Feb Ms Ellen Lee 14 Feb 18 Feb

ABDULLAH TARMUGI Speaker Parliament of Singapore

1. Mdm Ho Geok Choo asked the Minister for Trade and Industry in view of this year's global financial fallout (a) whether a shift towards self-employment, sub-contracting and consulting is likely to accelerate and, if so, what type of support programmes will be rendered to these groups; and (b) whether small businesses and start-ups can become sizeable enough to be a pillar of our economy and, if so, what kind of support programmes are available to the SMEs and the start-ups in this economic downturn.

Sir, our unemployment rate was 2.2% in the 3rd quarter of 2008, up from 1.7% during the same period in 2007. The unemployment rate is likely to deteriorate further as the global economy worsens.

Historically, we are unable to establish a clear relationship between the level of self-employment and economic conditions. The proportion of self-employment in our economy increased in the 1997 Asian Financial Crisis but came down during the dotcom bubble burst in 2001. Self-employed individuals, especially entrepreneurs, who leave the employment sector to incorporate new businesses, however, can become an important source of growth for the economy. The number of start-ups in Singapore has grown steadily over the years. Start-up companies, defined as companies employing at least one employee and less than five years old, have increased from 27,000 in 2002 to more than 36,000 today. They now employ more than 300,000 workers and generate more than $166 billion in turnover.

The process of starting up business in Singapore is simple, fast and costs little. Incorporating a new company used to cost more than $1,000 and take five days. Now with our one-stop BizFile e-services, incorporating a company costs only $300 and takes a mere 15 minutes. Starting a business is even cheaper at a cost of $65. One can also seamlessly access comprehensive information on business licences, regulations and Government support from the integrated online portal – EnterpriseOne.

Our start-up companies enjoy a conducive tax environment. They do not need to pay tax on the first $100,000 of annual income for the first three years of their operation. On the next $200,000 of annual income, they only need to pay half

the amount of tax. In addition, technology start-ups also enjoy special tax incentives for R&D investments.

Adopting a public-private-partnership approach to promote entrepreneurship, we have vastly improved the business environment over the years to render it conducive for entrepreneurship and new firms formation. Our support for start-ups is elaborate and wide-ranging and we have designed measures especially to assist start-ups at different stages of their growth. For instance, start-ups less than three years old with less than $500,000 paid-up capital can apply for start-up capital of up to $1 million under SPRING's Start-up Enterprise Development Scheme, or SEEDS in short. Start-ups can also apply for capital of up to $1.5 million under the Business Angels Scheme. While some start-ups are open to receiving equity from Business Angels or venture capitals, others might prefer to finance their operations from loans. For this latter group of companies, they can access loans of up to $100,000 from SPRING's Micro-Loan Programme to supplement their working capital.

In exploring the best financing solutions and growth models, some start-up SMEs might prefer to consult experts face-to-face. To facilitate this process, SPRING, in partnership with the private sector, has established a network of Enterprise Development Centres, or EDCs, to provide free consultation services. The five EDCs are conveniently located at the Chinese, Indian and Malay Chambers of Commerce, Association of Small to Medium Enterprises and Singapore Manufacturers' Federation to serve their members and start-ups at large.

Mdm Ho also asked whether our small businesses and start-ups can be a sizeable part of our economy. Our SMEs and start-ups are already a significant part of our economy. They make up of nearly half of our overall GDP, contributing to

62% of our total employment. In fact, the growth of our SMEs has outpaced that of the overall economy in certain years.

Our SMEs, be they start-ups, small businesses or existing firms, can tap on a wide range of support measures to strengthen their capability in finance, operation, product development and manpower training. To ensure continued access to capital and credit, SPRING has recently enhanced the Local Enterprise Financing Scheme and also the Micro-Loan Programme by increasing Government's risk-taking from 50% to 80%, widening eligibility to all local enterprises, increasing loan quantums and reducing interest rates by 1.25%. We also introduced a new Bridging Loan Programme which offers up to $500,000 to address SMEs' working capital needs.

To help our SMEs develop their capabilities, there are also a wide range of grants that support areas such as branding, equipment upgrading, IT development and manpower training needs. SMEs can also tap on the recently introduced SPUR programme to retrain and upskill their workers. Through IE Singapore, we also help our SMEs go abroad through internationalisation initiatives such as trade missions and export assistance. SMEs can refer to the EnterpriseOne website to learn more about the 22 programmes SPRING has for them and the 13 programmes IE Singapore has for them for overseas expansion.

Sir, we are not standing still. We are continually exploring further measures to help our SMEs seize new opportunities so that they can weather this economic storm, remain competitive for the long term and emerge stronger, and more resilient.

Thank you, Minister of State, for the very comprehensive explanation. Just on two

points. The first point really has got to do with the part about being able to go face-to-face with the consultants that are in place now for start-ups as well as even self-employed individuals to consult with. I am just wondering whether the Minister of State would be able to enlighten the House as to how well this outreach has been accepted by the industry, in terms of the numbers of start-ups as well as individuals who have taken up this service that is available. The second point really is that beyond consultancy which is normally at the initial stage, is there any plan for an advisory service of sorts where actually the consultants will walk through with the new start-ups as well as the newly self-employed people in the process?

Let me answer the second question first. I think Mdm Ho is referring to the professionals and some of the PMETs who might leave the employment sector and go into the business. Many of them have good experiences and good skills. But it really depends on the kind of sector they are going in, they would certainly have to be associated with their professional bodies in order to be more effective in providing the services. For instance, the Institute of Management Consultants, working with SPRING, over the years, has come up with accreditation programme to certify consultants of certain minimum skills. So if the professionals wanting to go into this sector to be consultants, then they too have to learn new skills, in terms of consulting methodology as well as to run a business at the same time. So SPRING's approach has been to work with different professional bodies to raise the standard of their professionalism and, therefore, making them better receptacles and to serve their members at large.

On the first point on face-to-face consultation, over the years, with the formation of EDCs as well as our agencies own centres to provide face-to-face

consultations to companies that are interested, I think the response has been good. The basic knowledge and information needed to start a business and to discuss the growth operation models of a company or a business can be discussed in the initial period. But we should also understand that helping companies to grow over a sustained period of time is both experience and time-intensive. Therefore, beyond these five centres, we also encourage the network of mentorship to be formed. So, in the overall scheme of things, when we want to promote healthy start-ups and new firms formation in Singapore, we have to strengthen the network of mentorship and we encourage experienced mentors with background of investments and business operations to participate in this network.

2. Mdm Halimah Yacob asked the Minister for Trade and Industry (a) how many households are currently in arrears of their water and electricity bills for more than three months; (b) how many households are on the Pay-as-You-Use (PAYU) scheme; and (c) whether he will provide an update on the pilot project that was started to help households keep tabs on their energy consumption.

Mr Speaker, Sir, as at November 2008, there were 3,099 household accounts with outstanding arrears of more than three months in their utilities bills. This comprised 0.28% of all household accounts.

As at November 2008, there were 13,262 households on the PAYU scheme,

of which nearly half were from the one and two-room HDB flats.

The Energy Market Authority (EMA) has embarked on the pilot project known as the Electricity Vending System (or EVS) since July 2007. By integrating smart metering technologies and the existing e-Payment infrastructure, the EVS not only allows consumers to monitor their electricity usage, but also to choose and purchase electricity from competing electricity retailers.

Field tests of the prototype EVS are now being done with selected residents in Marine Parade whose units have been installed with smart meters. The technical viability of the system will be tested through this pilot project. From February 2009, EMA will be further conducting a "live" trial of the system, involving residents volunteers in Marine Parade and West Coast to enable EMA to gather feedback from these households. The trial is targeted for completion by the third-quarter of 2009. And feedback from the trial run will enable EMA to evaluate the feasibility of wide-scale implementation of the system.

Sir, as the economic situation is worsening and utilities is a very basic necessity, I think it is important that SP Services exercises greater flexibility and be less forceful in pushing for arrears of utilities because there will be families whose breadwinner would have lost their job although there would be reduction in household income. I would like to ask the Senior Minister of State whether he can comment on that and whether there is anything MTI can do, although I know that you must look at it from a commercial angle but utilities is, if I were to repeat, a very basic necessity.

Mr Speaker, Sir, I think the Member raises an important point which I think all of us are very familiar with. As we are quite well aware, SP

Services does not terminate utilities or enforce its rights precipitously. There is normally a process. Usually it is only in the more egregious cases either because of an individual account which has not negotiated a proper payment plan or having negotiated such a plan and not honoured it, that is when they then move on to exercise their right. Having said that, I think we are mindful of this. Just to give Members some indication. In November last year, notwithstanding the higher tariff rates and

the general economic conditions, in fact, the number of accounts in arrears was actually lower than in previous months. In part, it is also due to the fact that we have the Utilities-Save (U-Save) rebates and these have been helping our residents cope significantly with their utilities bills. So I think that will continue to be a feature in the current year. As Members know, there are still some U-Save rebates to be paid out this year, and that will be quite helpful to our residents.

Also, if we look at PAYU, which is another indication of whether people are in distress in meeting their utilities accounts, the number of accounts on PAYU scheme has been more or less stable for the last 12 to 14 months or so. It has been relatively stable. So, on the ground, people seem to be managing. Yes, there are some cases of distress, and when they approach their MPs, we can assist them. In the meantime, SP Services is also exercising some level of restraint but with due regard to their commercial objective.

Sir, could the Senior Minister of State consider tapping on the volunteers to be trained and provide guidance to our tenants and lessees in these one and two-room flats, because about 13,200 of them are actually in the PAYU scheme, and 50% are from the one and two-room flats? So from my experience, lessees of one or two-room flats always –

Come to your question, Mdm Phua.

They always pick up old refrigerators, which use up a lot of energy.

Mr Speaker, Sir, if I understand the Member's question correctly, it is whether we can have SP Services and agencies work with volunteers to counsel those who are on PAYU on their electricity consumption. The answer is definitely yes.

In fact, NEA has also been putting up quite a lot of information on how people can be more resource conscious in the way they expend, whether it is water or electricity and so on. And EMA is also a part of that effort in terms of electricity. So, if there is a desire to work with the agencies on information that can be then disseminated in a more direct manner, this is something that EMA will be very happy to work with Members on.

Sir, the Senior Minister of State mentioned that residents who have problems could approach MPs for help. But I would like to inform him that apparently this is not working these days. With PAYU, residents can use the card to top-up, but for gas and water, they cannot top-up themselves. Whatever little payments that residents want to make are not being accepted by SP Services.

I just had a case last night where disconnection had already taken place. Despite making a payment of $250 this morning, SP Services still did not want to reconnect. This is causing difficulty, because even after going to an MP, SP Services is not budging. So, where else can the resident go, if an MP cannot help?

Mr Speaker, Sir, in terms of assistance that can be rendered to residents, as we are aware, MPs are one-

channel in terms of submitting representations on their behalf. There are also schemes available through CDCs and so on, in terms of financial help. Also, in terms of the U-Save schemes, what a person gets in a U-Save rebate can be used flexibly. In other words, he does not have to necessarily use it all for electricity. He can use it for water or gas and then work out a scheme with SP Services on the residual amount for electricity.

The Member has raised some specific instances. If she would like to surface them directly, we can have a look at it and see if there is something more that can be done. But I want to stress that SP Services, at the end of the day, is a private entity. They are exercising restraint and I think they are quite aware of the circumstances, but we also have to be aware of their commercial imperative.

3. Mdm Ho Geok Choo asked the Acting Minister for Manpower given the declining labor productivity that has been in the negative for the last three quarters, especially in the manufacturing sector, what is the Government doing to address the declining labour productivity.

Sir, for the first three quarters of 2008, labour productivity declined as the slowdown in economic growth was outpaced by job creation. Employment typically lags output, as given their sunk costs in recruiting good workers, companies begin to cut back on hiring only when it is clear that the decline in output reflects a sustained slowdown rather than a short-term blip.

Labour productivity in the third quarter of 2008 contracted by -9.6% compared

to the same period a year ago. Over the second half of 2008, the sharp decline in output and economic growth has made employers cautious about hiring. Many have frozen headcount already but most are still retaining their excess workers. While we cannot buffer Singapore fully from the global economic crisis, there are measures which we can take so that companies can strengthen their competitiveness and emerge stronger when the economic situation improves.

To help companies raise their productivity, we have a three-pronged strategy:

investing in training of our workers;

helping companies take advantage of the higher skills of their workers through job redesign; and

encouraging companies to improve their productivity through investments in technology, processes as well as innovation.

On training, the tripartite partners have launched the Skills Programme for Upgrading and Resilience (SPUR) on 1st December 2008. SPUR leverages on the comprehensive CET infrastructure to equip workers with relevant skills that can be applied in a job immediately, so that they can advance in their careers, and remain competitive. SPUR provides enhanced course fee support and absentee payroll for employers and covers over 800 courses. However, the availability of training infrastructure and funding support can only be fully leveraged if there is a mindset change on the part of workers – to be more open minded about new jobs and constantly upgrade their skills or equip themselves with new skills to remain relevant in the workforce, given the uncertain economic outlook. I therefore urge all employers to work with WDA and send their workers for training, so that both workers and

employers will be able to ride out the difficult times together and sharpen their competitiveness.

The Government will continue to support companies to upgrade their capabilities to undertake higher value-added activities and invest in technology and innovation for greater productivity. For example, since April 2008, the Government has injected another $20 million into SPRING's Local Enterprise and Association Development (LEAD) programme to support new industry associations, while enabling existing associations to embark on new initiatives such as feasibility studies of new markets and strategic planning for the industry. Such investments will ensure that our companies continue to retain their competitive edge during this period of economic uncertainty.

I thank the Senior Parliamentary Secretary for the comprehensive answer. I have just four points to make.

Four points or four questions? Are you making a point or question?

I have four questions to ask. Sorry. First, aside from the retraining programme, such as SPUR, does MOM have any other schemes to address the likely growth of surplus labour arising from retrenchments layoff?

Second, assuming that it takes some time, even with a SPUR qualification or any other new qualification, before jobless workers find employment, does the Government have any schemes to offer interim employment for these workers, such as interim housing which HDB has come up with.

Third, the question really has got to do with the point the Senior Parliamentary

Secretary made about mindset change. Yes, we really need to change the mindset of workers with regard to retraining and accepting new jobs. But is there a scheme to subsidise and put these people through a mindset change programme which, for some time in early 2000, was actually very much promoted by some of the professional associations but they never had any form of subsidy or support from the Government.

Lastly, with regard to the likely surplus labour that we may be seeing, does the Ministry have a profile as to who they are in terms of their gender, age and nationality?

Sir, let me answer the first two questions first.

MOM, together with our tripartite partners, NTUC and SNEF, released the tripartite guidelines for managing excess manpower on 19th November 2008 to encourage companies to adopt flexible work arrangements to help contain cost as well as to avoid retrenchments. We would like companies to delay retrenchments, if possible, and the strategy is really to help companies manage the cost and also to enhance their competitiveness through training of their workers, among others.

The response has been very encouraging with over 90 companies already implementing the recommendations in the guidelines. Other companies have also indicated that they will consider various alternatives to retrenchments.

Our focus is on enhancing employability of our workers and to inform workers of the areas and the sectors with good growth prospects. For the retrenched and unemployed, MOM and WDA, as well as the unions, have been working closely with companies to help them find suitable jobs. We have

enhanced the job matching capabilities of career-linked centres or career centres by building a comprehensive job bank with jobs sourced from industries, as well as economic agencies such as EDB.

Locals who are retrenched or unemployed may also be eligible for a training allowance when they enrol for training under SPUR. We will continue to monitor the labour market situation to see how best to help workers who may be adversely affected by the economic downturn.

As an additional point, our career centres have worked quite hard to help retrenched workers find alternative jobs. In October 2008, eg, close to 1,100 workers were placed in jobs. And in November, more than 1,100 workers found jobs through our career centres.

On mindset change, yes, our CDCs, as well as e2i, run by NTUC, provide soft skills for workers to help prepare themselves for the employment that may be available to them, apart from training them in specific skills, so that will be useful to help workers prepare mentally for the different jobs that they may undertake after completing the job.

On profile of retrenched workers, this is ongoing. We are bracing for more difficult times. We will collect the necessary information and see how we can address the issues later on.

4. Er Lee Bee Wah asked the Acting Minister for Manpower (a) what number of foreign workers were not paid their wages during the past six months; (b) what steps are being taken to check on employers to prevent the situation of unpaid labour from getting out of hand; (c) at what stage will the Ministry step in

to protect the workers from being abandoned by their employers.

5. Er Lee Bee Wah asked the Acting Minister for Manpower if the Ministry will impose stricter conditions on employers who intend to bring foreign workers to Singapore.

Sir, with your permission, can I take Question Nos. 4 and 5 together?

Yes.

Sir, as the economy slows down, the number of foreign workers who have approached the Ministry for assistance on salary arrears has increased. The number of foreign work permit-holders who are involved in salary disputes increased from about 0.2% of the total work permit population in 2007, to about 0.4% in 2008.

My Ministry has stepped up enforcement and mediation efforts to ensure that employers fulfil their obligations to their workers. In addition to the regular audits that MOM conducts on companies to check for infringements of the Employment Act – such as failure to pay salary, overtime, or provide leave benefits – we are also stepping up inspections at foreign workers' dormitories to check, among other things, if they face salary arrears problems.

If they do, MOM will step in to help them recover their outstanding salaries. Through MOM's intervention, most of these complaints have been resolved quickly and amicably. Over the past six months, 85% of the cases involving foreign workers were dealt with within three weeks. Complex cases could take longer and could involve adjudication by the Labour Court. The foreign workers involved are allowed to stay in Singapore under a Special Pass for a short period to

enforce their claims. Even if they return home, MOM will continue to help them with their claims.

We have also put in place a number of early intervention measures to detect non-payment of salaries. We monitor employers who default on levy payments, and work with housing operators to gather information about employers who default on their rental payments. Such employers are likely to be facing cash-flow problems and may have salary disputes.

While we can understand that some employers may be facing business difficulties under the current economic environment, this does not absolve them from their basic responsibilities towards their foreign workers. These include paying salaries and providing workers with proper accommodation, food and medical care. MOM will not hesitate to take action under the Employment Act (EA) or the Employment of Foreign Manpower Act (EFMA) against errant employers who fail to pay salaries on time. The penalty for non-payment of salaries under the Employment Act has been increased to $5,000 per charge for first-time offenders since January this year.

MOM may also prosecute employers, as well as debar them from hiring foreign workers. Employees who are not paid their salaries are advised to approach the Ministry for assistance.

Further upstream, MOM has also implemented measures in the work pass approval process to minimise the possibility of workers being brought in without jobs. For example, construction and marine companies need to show documentary proof that they have ongoing projects before work permits are issued. For subcontractors, an endorsement of work is also required from their principal contractor. MOM has stepped

up scrutiny in processing work permit applications by companies specially in the marine sector. However, we have to do this in a calibrated way so that we do not create rigidity and inconvenience for the vast majority of lawful and responsible employers.

We must also recognise that in a volatile business environment, some employers may find that the projects they had earlier planned for are delayed or even cancelled. In such situations, companies may not have work for some of their foreign workers. If so, the work permit conditions require the employer to terminate the contracts and facilitate the repatriation of their workers to their home country after ensuring that all outstanding employment issues have been resolved. MOM will continue to monitor the situation closely, and we will step up enforcement and tighten checks, if necessary.

Sir, I have four supplementary questions.

First, during the past two years, how many employers have been charged by MOM? Second, will there be a stricter requirement imposed on those employers who were found to be irresponsible on future hiring of workers? Third, are there any signs of syndicates, who are bringing in foreign workers to Singapore without any jobs available? Fourth, in view of the challenging economic situation, is the Ministry going to reduce the number of foreign workers, so that there are sufficient jobs for Singaporeans?

Sir, let me give the Member some numbers. In 2008, we had a total of 26 employers who were prosecuted for Employment Act violations, 14 of whom involved salary disputes.

With regard to stricter control on employers who have violated our

Employment Act and other legislations, I have explained in my answer that some of them, when found guilty, will be debarred from employing foreign workers in the future. So there are quite stringent controls on their ability to have access to foreign workers.

With regard to syndicates or employers who bring in foreign workers without work, we are currently investigating a number of employers who have brought in foreign workers without proper work for them. Some of them had contracts with their principals, but some of these contracts did not materialise. Some of them had brought in too many foreign workers, and these are the cases that the Ministry is currently investigating. Because the investigations are still under way, I would rather not discuss the details of these cases.

Ms Lee's fourth question is whether we are going to tighten the supply of foreign workers. As I explained at the last sitting, foreign workers will continue to be needed especially in some of the sectors, including the construction and marine sectors. These foreign workers are here sometimes to do jobs which Singaporeans do not want to do or are unable to do. I think it is important for us to ensure that these foreign workers will continue to help us in our economy.

I also mentioned in my previous answer that for companies which are facing difficulties and which have insufficient work, these companies should release their foreign workers so that they can return home. To keep these foreign workers here without adequate work will not be beneficial for them. So, in short, I think we will calibrate our framework for foreign workers to ensure that we respond to changes in the economy's outlook, but it is important for us to

ensure that we have sufficient flexibility in the labour market.

This recession will come, we do not know how long it will last. But what is important for us during this recession is to ensure that our long-term economic fundamentals are not compromised. And one key strength that we have is our flexible labour market, that we are able to expand when the economy grows, and we are able to then respond to the economy when the economy slows down. So I think it is important for us to ensure that our labour market remains flexible. What we want to focus on now is really to help Singaporeans to improve their employability, and SPUR is one key strategy for us to help Singaporeans improve their employability, through training as well as through upgrading. We also use SPUR to help companies cope with the downturn by helping their workers upgrade and, at the same time, to share the cost through absentee payroll. I think, through SPUR, we want to ensure our Singaporeans are more productive, more employable, and they will be attractive to the companies. And when the companies employ them, their skills will also benefit our local companies. This way, we will ensure the businesses in Singapore will remain competitive and will be able to survive, and we will be able to save more jobs.

6. Er Lee Bee Wah asked the Deputy Prime Minister and Minister for Home Affairs (a) what steps are being taken to pre-empt foreign workers who have not been paid wages from turning to crime; and (b) what the Ministry is doing to provide security to residents living near foreign workers' dormitories housing abandoned or unpaid foreign workers who may be tempted to turn to crime.

Sir, while we can appreciate the sense of insecurity felt by some residents as a result of the presence of foreign workers living nearby, let me say that this sense of insecurity is based more on perception rather than reality. The fact is that foreigners generally commit fewer crimes than locals. In 2007, the overall arrest rate, ie, number of persons arrested for every 100,000 in the population was 407. The arrest rate for foreigners at 279 was much lower than the figure of 456 for Singapore residents. Indeed, the arrest rate for work permit holders, which is the focus of Ms Lee's question, was even lower, at 217 per 100,000 work permit holders.

Moreover, Sir, we should not conclude that foreign workers with contractual disputes with employers will naturally turn to crime. Indeed, these workers would be familiar with our strict laws and social norms. When they first arrive here, they would have received a guide book produced by MOM in nine languages, providing information on key laws and norms, and also reminding them to be law abiding during their stay here.

In addition, the Singapore Police Force has ongoing programmes to engage the foreign workers' community, leveraging on the Community Safety and Security Programme (CSSP). Foreign workers themselves are co-opted to address crime and security concerns. Currently, there are 18 such CSSP projects which have received positive feedback. Basically, involving foreign workers in CSSP projects, increases the eyes and ears in our neighbourhoods, as they are more aware of suspicious activities that should be reported to the police.

Besides these community engagement measures, police also conducts frequent

visits to foreign workers' dormitories to project police presence. At the same time, police also work with dormitory operators so that they would have a good idea of what is happening in the dormitories, and are aware of any potential law and order issues. Indeed, many of these operators also engage their own security officers to maintain good behaviour by the foreign workers.

Sir, during my recent visit to the Teachers' Estate, which is very close to Tagore Industrial Park, we received a number of feedback from the residents. Very often, they see foreign workers loitering around Teachers' Estate, and the foreign workers also approach residents for jobs. Therefore, there is this sense of insecurity. I would like to ask the Senior Minister of State whether the police step up more patrols in residential areas, which are near to a foreign workers' dormitory? And does our Police Force have sufficient manpower to carry out these patrols?

Sir, in regard to the incident that Ms Lee has indicated, in terms of foreign workers, I think it is more a question of social disamenity that is being caused – they loiter around. They are visible but they do not commit crime. Some of them, in fact, may engage in anti-social behaviour. The key point to note is that it is not a law and order problem; it is not a crime problem. That is why I mentioned just now that whilst police can be involved, the key really is that the community is involved, and indeed, like some dormitory operators do, they engage auxiliary police or security officers. This is something which I think we have to face in Singapore. And employers can play a part too, to advise and to see that the foreign workers do not to loiter around in areas that may cause anxiety to others.

7. Dr Lam Pin Min asked the Deputy Prime Minister and Minister for Home Affairs (a) what is the incidence of fires at night entertainment outlets over the past three years; (b) what are their causes; (c) what is the frequency of fire safety checks by SCDF at these premises and the violation rate; and (d) what measures have been implemented to prevent catastrophic fire incidents in these places.

Sir, between 2006 and 2008, eight fires occurred in public entertainment outlets, such as pubs, bars, and music lounges, with only one fire occurring last year. These were all small fires caused by faulty electrical equipment or food left unattended on heated stoves. There were no injuries or fatalities.

Dr Lam asked about the frequency of fire safety checks, the violation rate and measures to prevent catastrophic fires in entertainment outlets.

Sir, to prevent catastrophic fires, the Singapore Civil Defence Force (SCDF) has established and enforces fire safety standards applicable to all buildings, including public entertainment outlets. In addition, under the Fire Safety Act, a Fire Safety Certificate (FSC) is required for all new buildings and existing premises where additions and alteration works are conducted. Hence, before an operator of a public entertainment outlet can start his business, he has to first obtain a FSC. To apply for a FSC, the operator must engage a Qualified Person, who is either a registered architect or professional engineer, to submit the relevant fire safety plans for SCDF's approval. These

plans must conform to fire safety requirements stipulated in the Fire Code. Examples of these requirements include the provision of sufficient emergency lighting, clearly indicated exits, fire extinguishers within easy access and installation of sprinkler protection for basement units and large premises.

The Fire Code also stipulates the permitted occupancy load to prevent overcrowding and stampedes in the event that a fire breaks out. Entertainment outlets are also prohibited from using open flames, fireworks or pyrotechnics in their performances. Finally, completed fire safety works must be checked by a Registered Inspector before the issuance of a FSC.

In addition to the FSC, large public entertainment outlets are also required to apply for a Fire Certificate (FC) which has to be renewed annually to ensure continued compliance with fire safety standards.

Sir, the SCDF conducts both scheduled as well as surprise inspections on public entertainment outlets to check for fire safety violations. These are stepped up during festive periods when larger crowds are expected. On average, SCDF conducts about 700 such inspections each year. Last year, SCDF issued 95 Fire Hazard Abatement Notices to entertainment outlets mainly for fire safety infringements, such as having non-illuminated exit signs, obstruction of fire exit doors and failure to service fire extinguishers within the prescribed time period. Owners are required to rectify the faults by a certain date, following which a re-inspection would be done. Fines would be imposed if the faults are not rectified. Last year, two outlets were fined for failure to comply with fire safety requirements. For very serious fire hazards that pose immediate and grave danger to the public, the SCDF Commissioner can order the closure of the premises.

In short, Sir, stringent fire safety standards and regular enforcement are in place and, of course, this must be complemented by community responsibility and preparedness. In the event of a fire, staff and patrons, being "first on the scene" play a critical role in saving lives before the arrival of fire fighters and paramedics. On this score, since 2005, SCDF has been training entertainment outlet staff in evacuation and first aid under the Community Emergency Preparedness Programme (CEPP). To date, more than 900 persons have been trained. Advisories in the form of posters and pamphlets were also shared.

Mr Speaker, the senseless loss of 59 innocent lives in Bangkok's nightclub fire is a stark reminder that fire safety is paramount and should never be trivialised. The incident is not the first and will not be the last. I would like to ask the Senior Minister of State if the penalty will be increased to reflect the potential catastrophic outcome associated with the infringement of fire safety regulations, and also to send a strong signal to night entertainment club owners.

Sir, the penalties currently are stiff enough because a person who breaches the requirements of the Fire Code can, in fact, be imprisoned up to six months and fined up to $10,000. Of course, a composition fine can also be imposed. But that is only the deterrence part. What I have really painted is a comprehensive and holistic approach in Singapore, starting from the time when the premises are structured and also, on the part of the operators, the sense of responsibility exercised by them. So they are very aware that there is a need to comply with the requirements. Also, in terms of the enforcement being carried out, there is a process of issuing fire notices. And so far, as the figures have indicated, most, in fact, have complied. Let us work this system. Of

course, I take Dr Lam's point that we cannot take things for granted just because the record has been good. We must ensure that the big fire that happened in Bangkok should not and must not happen here.

8. Mr Ong Ah Heng asked the Minister for Education in view of the single intake in January 2009 for students of Junior Colleges (JCs) and Millennia Institute (a) whether the JCs and Millennia Institute are ready for the students; (b) what differences will the single intake have on the students' curriculum; and (c) whether the five polytechnics will also be similarly ready to admit students earlier.

Mr Speaker, we wish to assure our hon. Member, Mr Ong, that the Ministry of Education has been working closely with the Junior Colleges (JCs) and Millennia Institute (MI) to ensure that they are ready for the single intake in February 2009.

The move to a single intake will not affect the curriculum. The duration of the new academic calendar is comparable to the existing one, and will provide teachers with sufficient time to cover the same curriculum.

Unlike the JCs and Millennia Institute, the academic year of the polytechnics currently commences in April. We have no immediate plans to change this as the current arrangement allows the polytechnics to conduct several smaller admissions exercises after the main Joint Admissions Exercise (JAE) so that they can cater to other groups of applicants, including ITE upgraders.

The following Question stood in the name of Ms Denise Phua Lay Peng –

9. To ask the Minister for Education whether staff and students from special schools are being considered and included in the formulation of the Ministry's annual work plans and initiatives such as the Ministry's IT Masterplans.

Question No. 9, Sir.

Mr Speaker, in developing plans and rolling out new educational initiatives, MOE does take into consideration the needs of staff and students from special education (SPED) schools. However, in any one year, new initiatives or programmes announced may pertain to specific sectors, eg, primary schools, or particular segments of students, eg, students offering the Normal Course in secondary schools.

In the area of IT, SPED schools that offer the mainstream curriculum are currently provided with additional funding to purchase resources such as computers, software, assistive devices and specialised equipment to support their students' learning. The other SPED schools also receive computers which are upgraded on a regular basis. For the Third IT Masterplan which was announced in August this year, appropriate provisions will likewise be made for SPED schools, taking into account how teachers and students would benefit from the enhanced use of ICT in special education settings.

Another key area is training and professional development for SPED teachers. To this end, NIE will be launching a new Specialist Diploma in Special Education and Specialist Post-

Graduate Diploma in Special Education for SPED teachers teaching the mainstream curriculum starting from 2009.

Teachers and school leaders from SPED schools who offer mainstream curriculum are also included in MOE's curriculum workshops on syllabus revisions, and provided with the curricular materials where relevant. For example, we have included five SPED schools in the pilot programme for the new primary school English curriculum to be rolled out in 2010, and trained their teachers alongside mainstream school teachers. MOE has also worked with Chaoyang School, to pilot a modified version of the same pedagogical framework and principles, targeting the learning needs of its students.

In line with the 'Many Helping Hands' approach, MOE will continue working with the VWOs and National Council for Social Service (NCSS) to further enhance the quality of special education in Singapore.

I have two supplementary questions for the Senior Minister of State. Will MOE consider including in its annual workplan a specific segment on students with special needs who are in mainstream schools? MOE runs schools like Northlight and Assumption Pathway, and there are 21 special schools run by charities. The reason is because this will ensure that these students are not forgotten in the MOE's key thrust and good work. The second question is: can MOE, as administrator of education in the charity sector, work with MCYS and its agency (NCSS) to develop one single integrated quality assurance, performance, evaluation and reporting system so that special schools, like mainstream schools, report to only one system and not to several systems from several agencies?

I thank the Member for the questions. On the purpose

of the annual workplan seminar, I would just like to explain that, like all of us who attend annual workplan seminars, we know that the objective of such seminars is really for us to focus on the key changes of policy directions of the Ministry. It is not intended to be covering every segment and every level of the school system. It would not be practical to do so. And therefore, the annual workplan will continue to be an event where we would only focus on key areas. But I would like to assure the Member that SPED schools are always part of the consideration of MOE at all times.

As to MOE working with MCYS and NCSS, I would like to assure the Member that I personally do meet up with NCSS and we are working towards coming up with a consistent policy and performance framework for the SPED schools.

10. Assoc. Prof. Kalyani K Mehta asked the Deputy Prime Minister and Minister for Home Affairs (a) whether the current punitive measures for speeding and other violations by drivers of heavy vehicles are an effective deterrent; and (b) whether the Ministry has other more comprehensive plans to make our roads safer from heavy vehicle collisions as they are often fatal.

Mr Speaker, in the past three years, an average of 12 fatal accidents involving heavy vehicles took place on Singapore's roads each year. Because of their size, heavy vehicles involved in traffic accidents are likely to cause extensive

damage and more serious injuries to other road users.

Traffic Police (TP) maintains a tough enforcement stance against errant drivers of heavy vehicles. Besides making regular patrols, Portable Speed Laser cameras (PSLC) are frequently mounted along expressways and roads used by heavy vehicles to deter and detect speeding activities. In fact, TP has stepped up enforcement efforts against heavy vehicle drivers significantly, with more dedicated operations conducted to detect reckless drivers. Thus, the number of summonses issued to heavy vehicle drivers for various moving offences more than doubled in the first nine months of 2008, to 2,215 summonses from 898 summonses issued in the same period in 2007.

Besides enforcement efforts, TP constantly reviews our laws to ensure that they remain relevant in the current environment, and are adequate to deter irresponsible and dangerous road use. In this regard, a review is currently on-going to look into raising the composition amounts for heavy vehicle drivers who flout traffic rules.

While punitive measures may deter reckless driving behaviour, the Police cannot be everywhere all the time. A comprehensive public education and engagement programme is equally important. To this end, TP has been constantly engaging the heavy vehicle transport industry, including both fleet owners and their drivers. For instance, TP, together with Singapore Oxygen Air Liquid Pte Ltd (SOXAL) and the heavy vehicle associations launched the 'Heavy Vehicle Driver Safety Programme' in 2008 to promote awareness among heavy vehicle drivers. Items such as banners, tissue boxes, decals and stickers were all utilised to spread road safety messages.

In conclusion, TP will continue to take enforcement action and run education

programmes to inculcate a safety mindset amongst heavy vehicle drivers. However, road safety is not the sole responsibility of TP. Everyone has a part to play. Heavy vehicle drivers need to recognise the enormous responsibility associated with driving their vehicles, and exercise extra caution while on the roads. Heavy vehicle owners also have to ensure that their vehicles are roadworthy and that drivers are properly trained and equipped to drive in a safe and responsible manner.

I have three supplementary questions, Sir. One, may I find out from the Senior Parliamentary Secretary whether he is aware of the digital tachograph technology which records speeding and timing of drivers of vehicles? In the European Union, the tachograph has been made mandatory since 1985 and since 2006, the digital version is compulsory for all new commercial vehicles. Has his Ministry considered using digital tachograph technology to monitor speed of drivers of heavy vehicles, such as trucks, lorries and buses? If no, what are the reasons for not implementing? Two, how closely does the Ministry work with the companies that hire these heavy vehicles and their drivers? The company operators can also assist the Ministry to regulate the speeding of the drivers because in this digital tachograph, they can store a 12-month period of record and this can also help the Police when there are traffic accidents. Three, if the Minister feels that the current measures are effective, can he explain the rise of pedestrian accidents involving people below 17 years, by 41% in the time period January to June in 2008, as compared to 2007? This was reported in the Straits Times yesterday. As recent as last Monday, a nine-year-old boy was hit by a tipper truck and he died when he was using a zebra crossing.

I thank the hon. Member for raising some interesting devices that the Traffic Police could consider in enforcing their regulations. However, we are not yet, at this point in time, looking at these devices.

I would answer the third question immediately, which is the enforcement of these regulations. The speed limiter device that we have put in our vehicles restrict the drivers to 60 kilometres an hour. As Members all know, they require regular maintenance and sometimes they can also be tampered by errant drivers. Therefore, we do want to deal with this minority group of drivers who tend to flout the laws. For the first nine months of 2008, the number of summonses issued to people who flouted the law by tampering with these devices had continued to increase to around 50%. Therefore, we would like to take this opportunity to highlight the hefty penalties for tampering of the speed limiters, failing to properly maintain the speed limiters or driving with faulty speed limiters. However, the number of fatal accidents that we note, due to heavy vehicle drivers, are not caused by speed-related offences. They are largely caused by errant drivers in the way they drive and they are usually errant in this respect.

11. Dr Lam Pin Min asked the Minister for Health (a) whether he will provide an update on the figures for medical tourism for 2008 and whether we are on track for the 2012 target of one million foreign medical tourists; and (b) if there will be a change in strategic plans to woo foreign patients in view of the deteriorating economic outlook around the world.

Sir, the figures on medical tourists are estimated by the Singapore Tourism

Board (STB) based on exit surveys of international travellers at our airport. The numbers for 2008 are not available yet. The 2007 estimate was 348,000, a 15% drop from 2006's estimate of 410,000. The 2007 figure is even lower than the 2005 figure. So the drop came as a surprise both to STB and to myself, because all hospitals have registered higher patient admissions and patient-days in 2007, as compared to the previous year. STB is re-examining the survey methodology. On the other hand, the same survey estimated that the spending by these foreign patients increased by 30% to $1.7 billion during the same period.

In any case, given the severe global economic downturn, it will be a challenge to meet the earlier target of one million foreign patients by 2012. Our hospitals will have to work harder to attract these patients and we may take a longer time to realize this numerical target.

But the aim of making Singapore a regional medical hub and the strategy of achieving it through offering a high standard of care which is affordable, remain unchanged. As I have explained before, becoming a regional medical hub is a natural outcome of our efforts to enable all Singaporeans to have access to a high standard of healthcare services which are also affordable. This is our primary mission and our success in this mission is bound to attract foreign patients who can afford to come to our shores. As we do not subsidise foreigners, the volume of foreign patients will naturally be impacted by the state of the regional economy. This is seen not only in medical tourism but in the entire tourism sector in general.

Meanwhile, we must press on with our efforts to enhance our capabilities in accordance with the needs and demands of Singaporean patients. Such efforts will also help us compete better against the

other regional medical centres, based on skills and clinical outcomes, and not merely on costs. Hence, the earlier plan to expand hospital capacity and specialist manpower will remain on track, although some of the private investors may adjust their timing in accordance with their shareholders' priorities.

I would like to ask the Minister, whether he has a breakdown of the medical tourists statistics, into those seen at the private sectors as well as those at the restructured medical institutions and whether the Ministry has a process in place to monitor if the medical care to local Singaporeans has been compromised, especially in the restructured hospitals, as a result of the channeling of resources to service the medical tourists.

Sir, as I explained, the foreign patients numbers were estimated through surveys by STB. We do have some breakdown by country of origin. But I doubt, we have further breakdown into which hospitals they go to or whether it is private or public. But I do have good data of foreign patients who are served in public hospitals. They are not big – they make up, I think, 1% ( I am relying on memory here) of our total patient load. There is no reason for us to reject patients, just because they are foreigners in public hospitals. But our mission remains focused on Singaporean patients, particularly, the bottom 50% of the population. I can give Members the assurance that, that remains our priority. It will always be our priority. And I do not think patient care will be affected by our doctors or hospitals chasing foreign patients. We do not. They come to us and we have to serve them.

Dr Lim, last question.

Sir, I would like to ask the Minister, does the Ministry track Singaporeans who go

overseas for medical treatment, which means the reverse. Do you have any numbers of that?

The answer is "no". We do not because it is pretty hard to track outgoing traffic and for what purpose. I suppose if we want to do it, we can. That means, at the border, we have to get our Singaporeans to start filling in forms. But then again, they may not fully disclose. But we do see some of these patients, when they turn up in our hospitals, sometimes, because of complications.

asked the Minister for National Development whether he will (i) make the Home Protection Scheme (HPS) compulsory for Housing Board home owners who are not paying their mortgage through their Central Provident Fund; (ii) provide an update on the number of HDB home owners not covered by HPS who have had to surrender their homes when their sole bread-winners passed away over the past five years; and (iii) provide the reason for not making HPS compulsory for all buyers of HDB flats.

The Home Protection Scheme (HPS) protects households against the loss of their flats, should the breadwinner pass away or become incapacitated before the home loan is fully paid.

All flat owners using CPF to service their home loans are required to take up HPS or a similar insurance product. In the first half of 2008, 90% of households

who purchased a flat with a HDB loan, fall in this category. For those not using CPF to service their home loans, HDB actively encourages them to take up the HPS on an optional basis. Such households generally have to set aside cash to pay for their HPS premiums. Given that their financial circumstances may vary, HPS is not made compulsory for them.

Over the past five years, no household has had to surrender their flat to HDB because the sole breadwinner passed away without HPS coverage. Most households in mortgage arrears tend to be in financial difficulty due to reasons such as business failure or job loss. HDB provides ample time and assistance for such households to seek a long-term solution to their financial difficulties. For example, HDB may consider providing an additional HDB loan to help the household downgrade to a smaller, more affordable flat.

Sir, I would like to ask Parliamentary Secretary whether he would consider allowing the HPS to be paid by instalment, rather than on a lump-sum basis because if the household is unable to afford the flats and paid on cash basis because of the salary, then they would be unable to pay a lump sum. So, it will help the household. I have one case – sorry, Mr Speaker, I will be speaking a bit long here.

You cannot be too long.

A family of five children – the husband suddenly passed away in China and the whole household could not have a shelter over their heads.

Mdm Phua, you can bring it up as an MPS case. You are not speaking it here.

Mr Speaker, Sir, we empathise with cases

such as the one highlighted by Mdm Cynthia Phua. I think the issue that Mdm Phua raised on whether the HPS should be paid or can be paid by instalments or should be made to pay in lump sum. Prior to March 2001, the requirement was that HPS was to be paid in lump sum. But I think there was the recognition that there were difficulties, so my understanding was that post-March 2001, CPF has allowed HPS to be paid by annual premiums through annual payments. And annual premiums are more affordable if they paid annually. Of course, the issue really, is to make sure that the mortgages are able to be continuing paying that annual premiums. The premiums can be paid through CPF or by cash. And the premiums are a lot more affordable for them if they are able to pay annually. And the system allows for that, at this time.

asked the Minister for Transport whether he will clarify on the exceeded budget of the Marina Coastal Expressway which is currently under construction.

Sir, The Marina Coastal Expressway (MCE) is a new strategic east-west transport link between Kallang-Paya Lebar Expressway (KPE) and East Coast Parkway (ECP) at Fort Road and Ayer Rajah Expressway (AYE), with connections to Marina South and Straits View areas. The MCE is required to support the projected increase in traffic volume generated by the high-density developments in the Marina Bay (MB) area. The Government is committed to complete the project by 2013.

In 2007, the Government gave the approval to construct MCE at a budget of $2.5 billion. The budget was based on

preliminary engineering design and construction prices estimated in 2006. There has since been a substantial increase in the project cost, primarily for three reasons.

First, construction costs in general have gone up. The construction industry has seen steep increases in the prices of materials and resources due to shortages locally and internationally. To mitigate this, LTA has put in place measures such as full price fluctuation clauses for concrete and steel reinforcement. This reduces the risk that contractors face and consequently, helps lower their tender bids. It will also allow LTA to take advantage of any subsequent fall in construction prices without compromising project timelines.

Second, LTA's further investigation of soil conditions have revealed that certain stretches of the MCE have weaker soil conditions than originally thought. This will require the contractor to put in more robust and deeper temporary structures during construction and carry out additional works to improve the soil. These measures are necessary to ensure safety during construction.

Third, there have been additional safety requirements put in by the relevant authorities. The Building and Construction Authority (BCA) has required tighter specifications for temporary works such as earth retaining systems during excavation. The Singapore Civil Defence Force (SCDF) has also required LTA to comply with the latest international fire safety standards.

Notwithstanding the cost increases, the Government will ensure that essential infrastructure projects such as the MCE are completed in time to support Singapore's long-term growth.

Thank you, Minister, for the clarifications. I would like

to ask the Minister whether there are any contractors, at the moment, undertaking these projects, who are being assisted by the Government? To what extent, is this assistance rendered?

To my knowledge, we are not assisting any contractors in their tender bids. They have submitted their tenders and we evaluated them and we have awarded it accordingly to their tender offers.

Mr Ong, last question.

Thank you, Mr Speaker, I would like to ask the Minister – before deciding to build this MCE underground and underwater, whether his Ministry has considered any lower-cost options.

Yes, we did consider other possibilities: One, of course, is at grade, it should be cheaper because it is on the surface. But, in terms of the benefits foregone, it will be much higher because you forego the developments on the surface. So, I would like to assure the House, that when it comes to infrastructure projects such as the MCE, the Government takes a stringent financial approach. The transport agencies would evaluate the cost and match that against the benefits from that particular infrastructure project. And only when the benefits outweigh the costs, in this case, including the cost increases, would the transport agencies proceed. But that is not the end of the matter. After that, it goes up to the finance ministry, which is another layer, they will look into it, they will conduct their own detailed studies to ensure that the benefits outweigh the costs, before giving the go-ahead to the transport agencies to proceed with the project. So, I would like to assure Members that the Government exercises prudence and discipline when managing scarce physical resources.

asked the Minister for the Environment and Water Resources (a) what is the incidence of drowning in the Singapore River over the past 3 years; (b) what are the causes of such drownings; and (c) what measures have been put in place to minimise accidental drownings.

In the past three years, there were five cases of drowning in the Singapore River. The cause of the recent case on 25th December is still under investigation by the Police. In the other recent case on 19th December, a man drowned when he tried to save someone who had fallen into the water.

These cases of drowning in the Singapore River did not arise from accidents during water activities. Nonetheless, for water activities and events carried out in Marina Reservoir including Singapore River, PUB requires operators and event organisers to put in place adequate safety measures. For example, water taxis that ply the Singapore River are equipped with life jackets. Operators also oversee general safety procedures for canoeing, kayaking and dragon-boating in Marina Reservoir and conduct water safety briefings to boaters before commencement of these activities. Organisers of events in the Marina Reservoir are also required to deploy safety boats and implement proper crowd control. Life buoys are placed at the various water taxi jetties in case someone falls into the water.

In addition, Sir, there are safety railings and chains along most stretches of the Singapore River to prevent people from going to the edge of the river wall or

accidentally falling into the river. For certain stretches around Boat Quay and Clarke Quay areas without railings or chains, there are steps leading into the river instead of river walls. There is, therefore, low risk of pedestrians falling directly into the water at these steps.

Although safety measures have been put in place, they are effective only if adhered to. The public also needs to exercise personal responsibility and be careful when they are near the river bank, as for any other water bodies.

Minister, I would like to highlight that I remember quite a number of these drownings actually happened at night and I was just wondering if the poor lightings along the banks of the river could have contributed to these fatal drownings, as any accidental falls into the river may be missed due to the poor visibility and, as such, whether the Ministry would consider improving the lighting conditions along the Singapore River.

Sir, the lighting along the Singapore River is done in conjunction with the URA. But the point is noted that we can continue to review whether or not the lighting is adequate, especially in areas where there are crowds. But at the end of the day, it is also important for people who use the facilities along the river to take the necessary precautions.

15. Miss Penny Low asked the Minister for Finance what measures and tax incentives can be introduced to encourage contributions to the not-for-profit sectors, in view of the current economic conditions and the anticipated fall in such contributions.

I declare my interest in the not-for-profit sector.

Mr Speaker, Sir, the Government recognises the difficulties that the non-profit sector may face in raising funds during this downturn, and has been looking into possible ways to help the sector. Should we enhance tax incentives for contributions to the sector, they will be contained in the Budget.

Thank you, Senior Minister of State, for the very crisp answer. I am hoping that the scheme that will be announced during the Budget would be very generous. And I wonder if it would also repeat some of the schemes that were introduced during the last downturn including allowing not-for-profit sectors to occupy office spaces in return for expansion of the retail space on the part of the developers, and other kinds of tax incentives.

Mr Speaker, Sir, I would just like to repeat my answer. Should we enhance the tax incentives, they will be contained in the Budget.

16. Mdm Halimah Yacob asked the Acting Minister for Manpower what measures are in place to ensure that employers comply with the basic terms and conditions of employment stipulated under the Employment Act for contract and part-time workers and that these workers are paid CPF.

Sir, like their regular and full-time counterparts, contract and part-time employees are covered under

the CPF Act, Employment Act and other employment laws. MOM adopts a two-pronged strategy of enforcement and education, to ensure that employers comply with employment laws and that workers are aware of their rights and could seek advice and assistance when necessary. As most of the compliance cases involve low-wage workers, this is where MOM has placed greater emphasis.

MOM and CPF Board have stepped up enforcement efforts against errant employers who fail to comply with the basic employment standards or fail to contribute CPF for their employees. In 2008, CPF Board detected a total of 603 employers who defaulted on CPF payments affecting 5,222 employees and prosecuted 218 errant employers. MOM has also prosecuted 24 employers for Employment Act violations in 2008.

MOM and CPF Board have identified certain industries as being more prone to non-compliance of employment laws, and have proactively mounted audit inspections on these industries. Such inspections have been effective in helping workers receive employment benefits and CPF due to them under the relevant Acts. For example, between January 2007 and August 2008, CPF Board's audit efforts led to 46,200 informal workers being converted to formal employment which enabled them to receive CPF contributions. In the security industry, for example, MOM has worked closely with the industry leaders and the Police, to improve the employment conditions in the sector. As a result, the number of salary disputes in the sector has dropped steadily over the past three years from over 300 salary disputes in 2005 to about 140 salary disputes last year. The employment terms in the sector have also improved and the majority of security officers are now provided with employment benefits stipulated in the

Employment Act such as rest days, annual leave, medical benefit and public holidays. Some agencies have also gone beyond the legal requirements to implement good employment practices such as providing written contracts instead of verbal contracts, and issue pay slips to its security officers.

To raise awareness amongst workers of their employment rights and to promote the adoption of good employment practices by employers, the Tripartite Committee on CPF and Work Related Benefits for Low Wage Workers, which I chair, released a Tripartite Advisory on Responsible Outsourcing Practices in March last year. The Advisory encourages end-user companies to take a more proactive role in ensuring that their service suppliers provide basic employment terms and conditions to their contract workers and comply with employment laws. The public sector has since taken the lead to adopt the Advisory. The tripartite partners have also worked together to reach out to employers, service buyers, managing agents and service providers to adopt the Advisory and implement best sourcing practices.

MOM and CPF Board will continue to engage employers regularly through briefings, dialogue sessions and publications on their obligations to comply with the employment laws, and employees on their rights, regarding CPF contributions, and statutory employment rights and benefits. This includes newsletters published in major newspapers to inform the public of rules under the Employment Act governing the payment of salaries, leave and overtime.

Sir, I have three follow-up questions. First supplementary question to Senior Parliamentary Secretary is to ask, how many complaints has MOM received with regard to non-compliance of Employment Act terms and conditions for

those employed as part-timers and contract workers.

Secondly, I would like to ask MOM's Senior Parliamentary Secretary what additional measures would we put in place to provide better protection to part-time and contract workers because we can expect the numbers to escalate in the current downturn. We have already seen the numbers escalate.

Thirdly, I would like to ask Senior Parliamentary Secretary what effective mechanism is put in place to ensure that employers comply with the Tripartite Advisory on Responsible Outsourcing.

Sir, on complaints received, very quickly, in 2006, employment-related claims by permanent and contract workers, the total was 6,600; in 2007 – 6,100; and last year up to November, about 4,900. Of these, the proportion of claims from part-time or temporary or casual workers formed no more than 3%.

Second question on protection, Sir, the Employment Act and other laws pertaining to employment provide sufficient and strong protection to our workers. What MOM and CPF Board are doing now is to make sure that we educate members of the public of their rights, and the employers, enlighten them of their responsibilities and ensuring that they comply. We also have increased enforcement by both MOM as well as the CPF Board. As a result, the number of errant employers that have been taken to task has been quite effectively dealt with. And I hope this can deter employers from abusing their foreign workers by not paying their salaries including CPF, as well as infringing employment laws.

Mdm Halimah's third question is about effective mechanism. I think there is already effective mechanism in place -

the laws, enforcement measures taken by MOM as well as education approach measures done together with tripartite partners, particularly by MOM and the CPF Board. We are reaching out to more companies educating them about their responsibilities including complying to the guidelines issued by the Committee.

Sir, we have been told by Senior Parliamentary Secretary that there are thousands, like in 2006, for instance, there were 6,000 over complaints received related to employment but only 3% were from part-time and contract workers. The number seems to be pretty small compared to the anecdotal evidence that we received on the ground about non-compliance with employment related laws as well as CPF payments. Is the Ministry concerned, therefore –

Can you ask your question please, Mdm Halimah? We do not have much time left.

The question, Sir, could the Ministry please comment on this apparent disconnect between what is happening on the ground and the statistics that the Ministry receives. That relates to the next question on whether there is a need to review the Ministry's existing enforcement mechanism on the matter.

You have four minutes left.

Sir, we have to go by the number of complaints received. We cannot base on hearsay. Based on the number of complaints that we received, we have been able to deal with the cases quite effectively.

Number two, as I said earlier, the Ministry together with the CPF Board has stepped up enforcement and worked with

the specific industries to ensure that the workers are better protected under the laws, and employers conform to the requirements of the laws. CPF Board, for example, have worked with specific industries, cleaning industry, security industry, for example, in educating, explaining to the employers about their responsibilities. And as a result, more companies have come onboard to offer better terms and conditions and to comply with the requirements of the laws. I think these are evidence of how measures taken by CPF Board and MOM, in particular, have been quite effective. There would be some abuses by employers but when we come to know about it, we will take action, investigate and take the necessary action against such employers.

Sir, I would like to reiterate that despite the perception, the proportion of complaints received from part-time, casual and temporary, or term contract employees, is relatively low. The figure I gave Mdm Halimah earlier was for part-time workers only; they are less than 3%, but together with casual and temporary workers, in 2006, they formed about 4%. In 2007, they formed about 8%. And up to November last year, the number of complaints dealt with was about 5.3%. I think they are relatively small but, of course, we want to protect all workers; part-time, full-time, contract workers, casual workers and help casual workers go into full-time or formal employment, so that they can enjoy CPF.

17. Mr Ong Ah Heng asked the Acting Minister for Manpower (a) whether the Ministry's objective of developing a culture of workplace safety has been achieved so far; (b) how will the Ministry

ensure that the large number of transient workers in Singapore are properly and duly trained in safety measures; and (c) what extra measures have been taken to address the high number of fatalities in the marine and construction industries.

One and a half minutes, Mr Hawazi.

Sir, since the launch of the new Workplace Safety and Health (WSH) framework in 2005, we have made good progress in promoting the culture of safety in the workplace. Today, there is greater awareness and ownership by the industry on workplace safety. These efforts have contributed to a significant reduction in workplace fatality rate from 4.9 deaths per 100,000 workers in 2004 to 2.9 in 2007.

MOM and the newly formed WSH Council will continue in its efforts to further strengthen workplace safety culture. We want to nurture a culture where individuals recognise their responsibility in protecting not only their own health and safety, but that of others working with them. We also want safety and health to become a way of life such that every worker naturally and routinely thinks about safety as they go about their work. We have set a new target to lower our workplace fatality rate to below 1.8 fatalities per 100,000 workers by 2018 and bring our safety record on par with the best in the world. To achieve this, we have revised our national WSH strategy, known as WSH 2018.

Mr Ong has also expressed concerns over the training of foreign workers in workplace safety. All new workers working in any high-risk sector such as the construction, marine, metal working, oil and petrochemical industry must attend their respective mandatory Safety –

3.00 pm

Order. End of Question time.

[Pursuant to Standing Order No. 22(3), Written Answer to Question No. 17 on the Order Paper is reproduced in the Appendix*.]

*Cols. 1313-1316

"to amend the Films Act (Chapter 107 of the 1998 Revised Edition)",

presented by the Senior Minister of State for Information, Communications and the Arts (RAdm [NS] Lui Tuck Yew); read the First time; to be read a Second time after the conclusion of proceedings on the Estimates of Expenditure for FY 2009/2010, and to be printed.

Resolved,

That, notwithstanding the Standing Orders, Question Time may continue for up to 30 minutes from the commencement of a sitting on the days allotted to the debate on the Budget Statement and the Committee of Supply on the Expenditure Estimates for FY 2009/2010. – [Mr Mah Bow Tan].

Resolved,

That, notwithstanding the Standing Orders, the debate on the Budget Statement shall resume on Tuesday, 3rd February 2009. – [Mr Mah Bow Tan].

Mr Speaker, Sir, I beg to move,

That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$3,717,500", "$312,000", "$4,040,000", "$1,414,000" and "$89,000" in the second column and substituting for them the figures "$3,137,700", "$69,000", "$3,823,400", "$2,015,300" and "$598,400" respectively.

Sir, for Class I expenditure, I propose a provision of $3,210,300 which is a reduction of $822,800 from the approved FY 2008 expenditure. This is mainly due to a decrease in the Privy Purse and a reclassification of the expenses for ceremonies and celebrations hosted by President from Class I expenditure to Class III expenditure.

For Class II expenditure, I propose a provision of $3,823,400 which is a reduction of $216,600 from the approved FY 2008 expenditure due to lower bonuses paid out to staff as a result of the economic slowdown.

For Class III expenditure, I propose a provision of $2,015,300 or an increase of $601,300 over the approved FY 2008 expenditure. This is mainly due to the reclassification of the expenses for ceremonies and celebrations hosted by President to Class III expenditure, as mentioned earlier, and an increase in maintenance and IT contract costs.

For Class IV expenditure, I propose a provision of $598,400 or an increase of $509,400 over the FY 2008 expenditure. The higher provisions are mostly due to

replacement of two State cars and a new document repository. It is therefore necessary to vary the provisions in the Schedule to the Civil List and Pension Act (Chapter 44), as indicated in the motion before the House.

Sir, I beg to move.

Question put, and agreed to.

Resolved,

That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$3,717,500", "$312,000", "$4,040,000", "$1,414,000" and "$89,000" in the second column and substituting for them the figures "$3,137,700", "$69,000", "$3,823,400", "$2,015,300" and "$598,400" respectively.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.30 pm.

Sitting accordingly suspended

at 3.05 pm until 3.30 pm.

Sitting resumed at 3.30 pm

Mr Speaker, Sir, I beg to move,

"That Parliament approves the financial policy of the Government for the financial year 1st April 2009 to 31st March 2010."

This Budget comes at a time of grave economic crisis. Growth in the global

economy as well as in Singapore last year fell well below what was expected. We are now in the midst of a simultaneous recession in all major regions of the world. Prospects for 2009 remain highly uncertain.

Economic activity has taken a sharp turn downwards in the last six months in the advanced economies. GDP is estimated to have fallen by about 5% in the US in the fourth quarter of 2008. The Euro area fared as badly, while the contraction in Japan is estimated to have been even larger. Global manufacturing production fell by almost 20% in the same quarter, in the fourth quarter, while global trade and cargo volumes have also slumped.

Asia has not been decoupled from the decline in the advanced economies. Across the region, industrial production and exports have fallen dramatically in recent months. In China, industrial production towards the end of 2008 is estimated to have been below half the levels seen at the start of the year. Taiwan’s exports contracted by 42% in December and Singapore’s by 21%(1). Korea’s latest export data shows a decline of over 30%.

[1] Singapore’s data refers to non-oil domestic exports.

The result is that jobs are at risk everywhere. Job losses in the US in December 2008 were the worst in 60 years and unemployment has risen to 7.2%. In the Euro area, it has risen to 7.8% and in Japan to 3.9%, and is expected to rise further. Even in China, despite positive economic growth overall, job losses have risen sharply in the coastal provinces.

Governments around the world are taking unprecedented steps to stimulate their economies and re-capitalise their banks. Central banks have cut interest rates aggressively. However, with little room left for interest rates to fall, most

governments have turned to expansionary fiscal packages as their main policy response.

The new US Administration’s fiscal package is currently expected to be US$825 billion spread over two years, which will increase its government deficit by about 2.8% of GDP each year. Including the US government’s existing deficit programmes, this will lead to a total deficit of about 10% of GDP in 2009. In the UK, the government has proposed a package of £20b or 1.4% of GDP. Germany has just announced a fiscal stimulus package of about 1% of GDP a year over the next two years. China has announced a 4 trillion yuan package of expenditures to be rolled out over the next two years. Taiwan intends to spend 4% of GDP spread over four years.

These measures are widely regarded as mitigating the severity of the recession. But it is too early to say if they will help in bringing forward a recovery in the global economy.

Length of recession is uncertain

No one knows how prolonged or deep this recession is going to be. The current downturn is unlike past recessions, and recovery, when it happens, may be weaker than in most past cycles. There are a few reasons for this.

First, all major regions in the world are experiencing economic decline at the same time, which makes this the first truly global recession in the post-war period. No economy is able to rely on exports to pull it out of recession.

Second, domestic spending in the US and other advanced economies, is unlikely to recover for some time to come. Consumers in the US are over-stretched, having over-borrowed during the years of the housing bubble. The housing bubble has burst, but home prices are still falling

and have yet to reach bottom. US consumers, who account for one-fifth of global consumption, will have to gradually reduce their debts and are therefore unlikely to go back to old ways of spending for some years to come. Consumers elsewhere, including those in China and Europe, are also facing declining values of their homes and asset prices. They are not expected to spend more and pick up the slack left by the Americans.

The third reason why there is great uncertainty over how long this recession will last is the continued fragility of the global financial system. Banks, especially in the US and Europe, have made heavy losses - the results are coming out each week. Once the full extent of impaired assets becomes apparent, it is estimated that the loan losses will reach two trillion dollars in the US alone. These banks are therefore focused on building up their capital rather than making new loans. Furthermore, the de-leveraging that is taking place in financial markets as a whole still has some way to go. Although we are past the

psychological panic that followed the collapse of Lehman Brothers in September 2008, there

remains a high degree of risk aversion in the credit markets(2). As a result, even good quality corporate borrowers are having difficulty obtaining credit.

[2] One of the key indicators of risk in the markets is the Libor-OIS spread. It is now about 100 basis points (bp), down from its peak of about 360 bp at the end of October, but is still well above normal levels of about 10 bp.

We therefore cannot say when this recession will end. The key factor is the US economy. Although China’s major government spending initiatives will boost domestic infrastructural demand, it is unlikely to provide a stimulus for the rest of the world. If we are fortunate and the US Government’s fiscal stimulus spurs new demand, we may come out of the recession in late 2009. However, many careful observers believe it is equally likely that the recession will last into 2010, and that the recovery when it comes, will be weak.

Singapore’s economic growth in 2008 was far below what we had expected at the start of the year. We had known and had highlighted the downside risks of a US recession and a worsening global credit crunch. But like other governments and the vast majority of private forecasters, we did not anticipate the speed and scale of the deterioration in the global economy in the last six months.

On the latest estimates, the Singapore economy grew by 1.2% in 2008. GDP in the fourth quarter declined by 3.7% compared to a year earlier, or by 17.0% on a quarter-on-quarter annualised basis.

Inflation averaged 6.5% last year – or by 5.4% if we exclude the increase in the Annual Values of homes which had no impact on household expenditures. Inflation was higher than what we expected at the start of the year because of the spike in food and fuel prices globally. It has however been declining since the middle of last year and is expected to be close to zero in 2009.

The key risks for us this year therefore have to do with the scale of the recession and loss of jobs, rather than inflation. All recent indicators point to a continuing downward momentum in the economy. We have been affected by the decline in the advanced economies which has reduced demand for our manufacturing exports. Our services industries are also being impacted by the sharp contraction in global and regional finance, and in intra-Asian trade and tourism.

The Government has updated its economic forecasts for 2009. We are projecting GDP to contract by between 2% and 5% this year.

We start from a position of low unemployment, the lowest in Asia last year. The resident unemployment rate was 3.3% in September. However, given the severe economic recession, we have to expect many more jobs to be at risk this year.

The Government will implement a major fiscal package in response to this crisis. We are likely to experience the deepest recession in the Singapore economy since our independence, arising from the worst global economic decline in 60 years.

Budget 2009 will deliver a Resilience Package totalling $20.5 billion this year, to help Singapore see through this period of exceptional difficulty. The Package aims to save jobs to the maximum extent possible in the recession, and to help viable companies stay afloat. It also prepares Singapore to emerge with strength when the global economy recovers, and enhances our capabilities and competitiveness for the long term.

The Resilience Package will not get us out of the recession, as long as the global economy continues to contract. But it will help avert an even sharper downturn, and more lasting damage to the economy.

The Government will keep a close watch on the global situation and its impact on Singapore. We remain ready to undertake further measures if necessary over the course of the year and the next few years.

Key objective is jobs

Our key objective in this package is to help Singaporeans keep their jobs. The best way to give our people confidence during this crisis is to help them stay

employed and retain their ability to support their families.

This is why the Resilience Package will focus especially on helping businesses to retain workers, by helping them to meet their costs and strengthen their cash-flow, and by enhancing their competitiveness. It is mainly a supply-side approach, aimed at keeping jobs. It will provide more support and more confidence for the domestic sector of the economy than efforts to stimulate consumption demand directly.

Keeping our focus on the future

We will help businesses and Singaporeans with their immediate needs, so that they can stay afloat in the recession and look towards the future. But even as we deal with the immediate problems, this cannot be a Budget that is only about the short term. We should take the opportunity of this downturn to build up our capabilities and infrastructure, and position Singapore for its next phase of growth.

The Resilience Package will therefore keep up and accelerate our investments for the future. It will mean stepping up efforts to equip Singaporeans with a world-class education in their youth, broadening training opportunities during their working years, and providing the best care services for those in their silver years. We will provide further incentives for investments across our industries and help build up innovative capabilities among businesses small and large. And we will rejuvenate our neighbourhoods and develop suburban nodes, and move ahead with initiatives to ensure sustainable development, so that Singaporeans will enjoy an extremely liveable city in all its facets, even as the economy continues to grow in the years to come.

The Resilience Package of $20.5 billion for 2009 will have five components:

– First, jobs for Singaporeans. We will spend $5.1 billion to help preserve jobs.

– Second, stimulating bank lending. We expect to extend $5.8 billion in government capital for a Special Risk-Sharing Initiative (SRI). Of this $5.8 billion of government capital, a small fraction is likely to be eventually expended on provisions for loan losses.

– Third, enhancing business cash-flow and competitiveness. We will implement tax measures and grants for businesses that will cost $2.6 billion.

– Fourth, supporting families. We will spend $2.6 billion to support Singaporean households this year. This is on top of the benefits they will derive from the measures to preserve jobs.

– Fifth, building a home for the future. We will spend $4.4 billion on developing first class infrastructure for the island and on expanded provisions for education and healthcare.

These amounts totalling $20.5 billion are what the Package will spend this year. We will front-load some of the measures, beginning in March 2009. Certain measures will also stretch beyond 2009 and will therefore have an impact on future budgets, on top of the $20.5 billion package this year.

Together these initiatives will mean a significantly expansionary Budget in the financial year 2009. The Basic Balance is expected to be in deficit by 6% of GDP in FY2009 (before accounting for NIR or transfers to our endowment and trust funds). The basic balance is expected to

be in deficit by 6% of GDP for FY2009. This is the largest deficit the Government has budgeted for to-date.

This is therefore a major package for tackling an unprecedented recession and preparing for recovery. We will help our businesses and people with their immediate problems in this economic crisis. More than this, we will reduce taxes, and invest in every new skill and capability that will help us come out of this crisis more competitive. We will emerge stronger and ready to seize new opportunities, just as we did when we responded to the Asian Financial Crisis a decade ago.

The first and most important thrust in the Resilience Package is jobs for Singaporeans. We will introduce a Jobs Credit scheme to help employers to keep their workers. We will also strengthen our subsidies for training and provide additional support for lower-income workers who face a reduction in pay during the downturn. Finally, the Government will also expand recruitment across ministries and statutory boards, for all levels of employees, and including mid-career professionals.

To sustain jobs for Singaporeans, we will introduce a Jobs Credit which will encourage our businesses to preserve jobs as much as is possible in the downturn.

Everybody has a part to play

Everybody has to make adjustments in this downturn. Workers are already facing cutbacks in bonuses, reduced overtime and in some instances, involuntary no-pay leave. The National Wages Council has

recommended that companies may implement a wage freeze or wage cut to remain competitive and save jobs. Workers will therefore be making significant adjustments in this crisis to allow businesses to survive and to keep their jobs.

But wages are only part of the total cost of doing business. We expect businesses to find every way to cut unnecessary costs in their operations, improve efficiency so as to reduce overheads without having to retrench workers. As NTUC Secretary-General Lim Swee Say has urged, businesses should cut costs to save jobs, not cut jobs to save costs.

The Government will however, provide a significant incentive for companies to retain their workers, and where their business warrants, to employ new ones. The Jobs Credit will provide every employer with a cash grant to reduce their costs of employing Singaporean workers during the crisis.

Jobs Credit will have broadest impact

The Jobs Credit that an employer receives will comprise 12% of the first $2,500 of the wages of each employee who is on the CPF payroll. It will be given in four quarterly payments, with each payment being based on the workers who are with the employer at the time. This will therefore provide incentive for employers to retain their local workers. For example, for a worker whose wage is $2,500, an employer will get $900 a quarter, or $300 a month.

Employers will receive the first payment at the end of March this year. The next three payments will be in June, September and December 2009. (Details of the Jobs Credit are in Annex A*.)

The Jobs Credit of 12% of wages, will be equivalent to a 9 percentage point CPF

cut(3). The Government did consider cutting the employer CPF contribution rate but decided against it. The fundamental problem in this recession is not one of wage competitiveness but of a slump in global demand. There is therefore no need for an across-the-board wage cut at this time. Furthermore, by designing the Jobs Credit to cover the first $2,500 of each employee’s wages, which is pegged at the median wage in Singapore, we are in fact giving companies special incentive to retain low and middle-income workers - more than a CPF contribution rate cut would achieve.

*Cols. 1317-1318.

[3] The Jobs Credit is based on wages up to the first $2,500, whereas CPF contributions are based on the first $4,500. This explains why the 12% Jobs Credit is equivalent to a 9% CPF contribution rate cut for employers.

The Jobs Credit is also better than the alternative of giving companies a corporate tax rebate during the crisis. It helps all companies, including our SMEs who pay much lower income tax under our tax schedule, because of the partial tax exemption threshold that we have. This broad-based approach is important because our SMEs account for six of 10 Singaporean jobs. The Jobs Credit will add to the resilience of companies that are still viable but have been caught by the severity of the crisis and would otherwise be forced by cash-flow difficulties to shed workers.

The Jobs Credit will cost the Government $4.5 billion. This is not intended to be, and must not be, a permanent scheme to subsidise employment. It is a temporary scheme to help companies through an exceptional downturn.

However, if the downturn continues, it may be necessary to extend the Jobs Credit, in some form, over the following year as well. We will review this later depending on the state of the economy.

The second component of our Jobs programme is to help Singaporeans

upgrade their skills so that they can stay employed or seek re-employment. This is the reason why the Government launched the Skills Programme for Upgrading and Resilience (SPUR) last November which provided higher course fee support for companies and individuals and absentee payrolls for companies that send their workers for training.

Workforce Development Agency (WDA) has recently expanded by five times, the number of courses covered under SPUR including courses in human resource, healthcare, precision engineering, and ICT. We have also extended SPUR support to in-house training that meets quality training standards, for companies that commit to the Tripartite Guidelines for Managing Excess Manpower. With the recent expansion, there will now be more than 800 courses, covering 24 industries, and a total of 230,000 training places under SPUR.

Help for PMETs

We have to step up training across all levels of the workforce, including our PMETs (professionals, managers, executives and technicians). To cater to the needs of PMETs, WDA aims to double the number of Professional Conversion Programmes over the coming year, from 23 currently.

We will make two more enhancements to SPUR to help PMETs re-train and prepare for their next jobs. SPUR currently provides course fee subsidies of 80% for PMET-level courses. We will be increasing the subsidy rate for PMET courses that are eligible for SPUR to 90%, the same subsidy level as rank-and-file level courses. This includes all Specialist and Advanced Diplomas offered by our polytechnics.

Further, WDA will bring under SPUR, selected tertiary courses at UniSIM and our three publicly funded universities.

Complementing SPUR, the Economic Development Board (EDB) will introduce a $100 million programme where EDB co-shares manpower, training and related costs with companies, especially focused on engineering and technical jobs. It will also fund on-the-job training opportunities for fresh graduates.

These re-training and upgrading measures are expected to cost $750 million over the next two years. It is money well invested in the human capital of our workers.

WIS Special Payment to help with lower wages

The WIS Special Payment will provide low-income workers with an additional 50% of the WIS payments that they will receive over the course of this year. As an illustration, a 50-year old employee who has been working throughout 2008 and 2009, earning $1,000 a month, will receive $600 in WIS Special Payment, fully in cash. This will be on top of the $1,200 in WIS that he will receive for this year’s work. So the WIS plus the WIS Special Payment will be a total of $1,800 for this worker who earns $1,000 a month.

As this is a special measure for the downturn, we will also relax the work eligibility criteria of the WIS Special Payment to allow those with less regular

employment to also qualify. The WIS Special Payment will cost the Government $150 million.

The Government will also be expanding recruitment.

In all, we expect a total of 18,000 public sector jobs to be made available over the next two years(4). (This includes government-supported jobs outside of the Government in areas such as childcare, tertiary education, and restructured hospitals.)

The Government is not expanding hiring simply to pad up our ranks. We are doing this so as to build up capabilities and strengthen quality. The downturn is the right time to do so, and enhance our ability to deliver quality education, healthcare and other essential services. We also need more people to handle an increased workload and scope of services such as in security and for the various social schemes that we have started and are expanding. In all these areas we will remain lean and efficient, and avoid over-manning. So we are really building up capabilities for the long term, using the opportunity of the downturn to accelerate hiring but we will keep lean, keep efficient and avoid over-manning.

[4] This includes close to 7,500 in teaching positions and teaching support staff for our schools and tertiary institutions, 4,500 healthcare professionals and administrative staff for our hospitals and 1,400 for our Home Team and over 2,000 for MINDEF, which has been announced earlier by the respective Ministries. In addition, the rest of the public service have plans to recruit an additional 2,600 jobs over the next 2 years. These jobs comprise policy, operational and administrative positions in various government agencies, as well as positions in more specialised areas such as Project Management, IT, Accounting and Urban Planning.

The third component of our Jobs programme will be a temporary top-up to the Workfare Income Supplement (WIS) received by low-income workers. Some of them may have to accept lower wages or work less overtime because of the downturn, which means they will have less take home pay. We will give them a temporary WIS Special Payment, to supplement their pay and encourage them to stay at work.

The second component of the Resilience Package is stimulating bank lending. Globally, the most serious immediate problem is the credit crunch. What we are seeing is a level of risk aversion that has gone well beyond what happens in normal downturns.

This is a systemic problem and requires a systemic solution. This is why governments all over the world are trying to find solutions to free up credit.

The approach taken in some of the developed economies where banks have

suffered large write-downs on their assets has been to partially nationalise financial institutions by injecting government capital. However, these measures have so far not succeeded in unfreezing the credit markets.

The Government has not had to bail out our Singapore banks. They are already well-capitalised and have no lack of liquidity available to them. Singapore banks are also not burdened with toxic assets. Their non-performing loans are low at about 1%.

The credit situation in Singapore held fairly steady until October but loans have begun to decline since then. A decline in credit occurs in every recession both because the demand for credit goes down, and because the banks become more cautious over the prospects of loan recovery. However this time we have to expect a more severe contraction if nothing is done. Firstly, several of the foreign banks, especially those with weak balance sheets globally, have been focusing on recapitalisation in their head offices. Secondly, even the stronger players, including our local banks, have taken a step back to reassess their lending strategies because of the uncertainty over the depth and duration of this recession.

We therefore have to do more to avoid a situation where good and viable companies are unable to get the funding they need to stay afloat and grow.

The Government has therefore decided to take on a significant share of the risks of bank lending. However, we will not take over the lending business ourselves. The credit decisions are best made by the banks themselves because they are the ones who have the direct relationships with their customers and a close understanding of their businesses. The banks also have the expertise in credit

assessment across a wide range of businesses that the Government does not possess.

In November 2008, the Government announced enhancements to our SME loan schemes. In particular, we enhanced the Local Enterprise Finance Scheme (LEFS) and Micro Loan Programme (MLP) to increase the government share of risk to 80%. We also introduced a Bridging Loan Programme for working capital loans, with the Government taking 50% of the risk.

It is too early to assess how effective these enhancements will be. However, since the introduction of these enhancements, there has been significant increase in applications by firms and approvals by the banks.

We will now move to extend Government support to a broader segment of the credit market besides the SMEs. We want to help other viable companies, especially the mid-sized ones, who do not have significant internal sources of funding and need access to credit to sustain their operations. Further, the Government will for the first time, share in the risks of trade financing.

We will do this under a new, Special Risk-Sharing Initiative (SRI). It will have two components.

The New Bridging Loan Programme

First, we will introduce a new Bridging Loan Programme (BLP), that will be substantially enhanced from the scheme introduced in November. The new BLP will cater to loans of up to $5 million (up from $500,000 currently), which will meet the working capital needs of most mid-sized firms, and also some of the larger ones. We will also increase the Government’s share of risk on these loans from 50% to 80%. Further, the new BLP will enable banks to set their own interest rates. This

will allow higher-risk borrowers to still gain access to credit, even if it is at a higher interest rate. However, with the Government taking the bulk of the risk at 80%, I am sure that the banks will be fair and price their loans reasonably.

The new BLP will apply to all new loans from 1st February 2009, and will include refinancing of existing loans when they fall due. The scheme will be in operation for one year in the first instance and cater to loans of up to four years maturity. We welcome all licensed banks in Singapore to participate in the programme.

Trade Financing

Second, the Government will take on a significant part of the risk in trade financing. This is an important dimension for companies that already have orders. They need loans to fulfill their orders as well as insurance against the risk of their buyers defaulting on payments.

The current trade financing schemes are working well but face constraints because of the limited private insurance capacity and reduced risk appetite in the industry. Mid-sized and large exporters have had difficulty obtaining loans on the scale they need.

To address the situation, the Government will step in to share the risk of trade financing, including 75% for trade loans. Further details of enhanced and new loan schemes are set out in Annex B* and will be elaborated upon by MTI shortly.

Besides the SRI, I will extend the tax deduction on loss provisions made pursuant to Monetary Authority of Singapore (MAS) Notice 612 for banks, as well as other equivalent MAS notices for finance companies and merchant banks, for three Years of Assessment. This will

encourage banks to continue making adequate loan impairment provisions and bolster their financial strength to underpin continued lending in the downturn.

Government providing unprecedented support; banks should play their part

The programmes under the SRI will be in operation for a year but with possible extension for another year if the situation warrants. We estimate that this and the other enhancements the Government is making could lead to $11 billion of loans this year. (This includes $5.8 billion of government capital but a total of $11 billion of loans could be stimulated by these enhancements.)

This is a major move by the Government. We had previously only taken on the risk of lending for secured loans to SMEs. We are now taking on substantially more risk including on loans to larger corporate players and on unsecured loans. We have to expect that there will be a cost on the government budget because not every loan will be recovered. But it is right for the Government to intervene in this fashion to help viable companies through this crisis so that they can keep jobs and prepare for the upturn.

The banks have in fact fed back to us that these Government measures to share a very large portion of the risk will make a difference. The Government indeed expects that the banks will take advantage of these schemes, and play their responsible part to ensure that viable companies continue to get the funding they need to see them through the crisis.

We will complement our initiatives to preserve jobs and to catalyse bank lending

with other measures to support business cash-flow and strengthen Singapore’s competitiveness. This is the third component of the Resilience Package. The tax measures and grants that we will provide, together with the Jobs Credit and the substantial subsidies for training, will give companies significant support in this crisis.

What we can do is to help sound companies weather this storm and sharpen their competitiveness. What we will not be able to do however, is to save companies that are inefficient or whose products have lost relevance or appeal in the marketplace.

The speed of the decline in trade and economic activity in the last few months has understandably taken most companies by surprise. However businesses will soon have to reassess their strategies, in order to survive this crisis and to emerge in a better position. Even after the global economy recovers, the markets will not return to where they were before the crisis.

The major measures we are undertaking in this Budget therefore are not aimed at preserving the status quo. How well companies are able to benefit from the Government’s support will depend on how they themselves review their business models, restructure, and put effort into improving their products and exploring new market opportunities. As with all previous crises, there will be opportunities for the entrepreneurial and the innovative.

Many of our businesses are in fact beginning to look at new opportunities, even in the midst of recession. The emergence of the Asian middle-classes remains the big story for at least the next 10 to 15 years. China, India and regional economies like Vietnam are slowing down in the crisis but are widely expected to

come back up. India, even today, has a booming domestic consumption market.

Our companies have the skills and the Singapore brand to help them in these rapidly growing markets. Take healthcare for example, where our Singapore players have developed a strong reputation for top quality and reliable services, across a full spectrum of healthcare. The Asian healthcare market, valued at about US$240 billion last year, is expected to grow by up to 10% this year despite the global slowdown.

AsiaMedic Limited, a locally-listed company which provides diagnostic imaging and specialist medical services, announced plans just this week to manage a diagnostic imaging centre in Abu Dhabi. Our larger players too are growing. Thomson Medical Centre (TMC) took a stake in a hospital in Vietnam last year. Likewise, Raffles Medical Group is still growing and sees a unique window of opportunity in this crisis to expand into other Asian markets.

There are examples in other sectors. Singapore’s education is expanding abroad – from pre-school to tertiary providers, and offering a range of products such as software aimed at bilingual language learning. Singapore’s fashion brands too have taken off, and are still growing in the recession. Local brand Raoul, which started out in 2002, has over 30 stores around the region and in the Middle East and is now making its presence felt in London. Others like alldressedup are seeing their creations in stores and magazine covers around the world.

We must also use this opportunity to enhance Singapore’s attractiveness to global firms. The multinationals are reassessing where they should put their investments around the world. We will give them more reasons to be in Singapore and to grow their operations here.

I will lighten the tax burden of businesses in the coming year.

Property market measures

I will provide a 40% property tax rebate for industrial and commercial properties for 2009. This will cost the Government about $800 million.

The Government strongly urges landlords to pass on the benefits of this rebate to their tenants. Landlords should also consider further adjustments of rentals and more flexible leasing arrangements and payment terms, in light of the severe downturn in demand faced by their tenants. JTC, HDB and SLA will play their part by providing a 15% rental rebate to their tenants and land lessees, which exceeds the savings due to the property tax rebate. The rental rebate will also be extended to stallholders who are paying market rents in markets and food centres managed by NEA.

IRAS will also be bringing forward its property tax assessments for 2009, in view of the change in market conditions. The assessed Annual Values of properties went up last year, in line with actual market rentals. Most property owners have therefore seen increased tax bills. IRAS’s move to accelerate assessments for this year will help property owners in addition to the savings they will be getting from the property tax rebate.

I will also defer property tax for land which is approved for development. This will help developers which intend to hold back their developments that they had originally planned. The deferral will be for up to two years from today (until 21st January 2011), or the TOP date of the development, whichever is earlier. (Details are in Annex C-1*.) This measure will

cost the Government $290 million per year for 2009 and 2010.

To give further flexibility to developers to phase out their projects, the Government will allow a one-year extension of the project completion period for private residential projects. The Government will also extend the period for developers with qualifying certificates to dispose of all residential units in their developments, from two to four years, and allow developers to rent out unsold residential units during this period. In addition, we will allow the reassignment of Government sale sites and private land owned by foreign developers.

Loss carry-back

More of our businesses will make losses in the recession. To help them with their cash-flow, I will enhance the current loss carry-back relief system for this year and the next (YA2009 and YA2010). This enhanced system allows them to get a cash refund on taxes that they had paid in previous years.

I will raise the cap on losses that can be claimed against past taxable income to $200,000 from $100,000 currently. I will also allow businesses to claim losses against their preceding three years of taxable income, instead of just the immediate preceding year under the current scheme. In addition, IRAS will allow provisional claims for the tax refund to be based on estimated losses (instead of waiting for the finalisation of their chargeable income and tax assessments). This will allow businesses to obtain their refunds much earlier – by six to 18 months in most cases.

Foreign-Sourced Income Exemption

Over the years, many of our companies have internationalised their operations and earned a growing proportion of their income overseas. To

help these companies, I will temporarily expand the scope of the Foreign-Sourced Income Exemption scheme which was introduced in 2003 to cover all foreign-sourced income, including interest earnings. I will also temporarily lift the conditions that are currently required for foreign-sourced income to be exempted from tax when remitted to Singapore. With these temporary changes, the companies will be able to make the best use of all their sources of funds to meet business financing needs in Singapore at this time of credit tightness. All foreign incomes which have been earned before today will be exempted from tax when they are remitted, with immediate effect for one year.

Transport-related taxes

To provide further help to businesses on their cash-flow, I will grant rebates and concessions on transport-related taxes and fees.

First, a 30% road tax rebate for goods vehicles, buses and taxis for one year. The rebate will take effect on 1st July 2009 and will yield savings of about $40 million for businesses. In addition, I will waive the special (diesel) tax for un-hired taxis for one year which will yield savings of about $6 million. MOT will work with the taxi operators and the taxi operator associations to have the savings passed on to taxi drivers.

Second, I will extend the special tax exemption for Compressed Natural Gas (CNG) vehicles for two years till 31st December 2011. However, from January 2012, a CNG unit duty will be introduced at $0.20 per kg. With this further two-year extension of tax exemption, CNG vehicle owners would have time to adjust to the changes. The CNG duty rate of $0.20 per kg will be significantly below the equivalent duty that we currently levy on petrol(5). We will study the appropriate

long-term CNG duty rate, which should be benchmarked against the prevailing petrol duty rate, taking into account the relative impact that these two fuels have on the environment. (The measures are summarised in the Annex C-1.)

*Cols. 1319-1336; 1337-1358.

[5] The CNG rate equivalent to $0.41 per litre of petrol would have been $0.53 per kg.

Third, a 20% concession in port dues will be granted to all harbour craft engaged in commercial activities. This will help to lower the business cost of port service providers. This is in addition to the increased rebates on aircraft landing fees which were announced in December. (Details are in Annex C-2*.)

Further extension of the government fee freeze

As a further short-term measure to help businesses, the Government will freeze government fees and charges with immediate effect, to the end of 2009. Like the fee freeze in 2008, it will be applied to all government-provided services (including all licence fees).

The Resilience Package will provide further incentive for both local and foreign businesses to strengthen their operations here and make investments for the future.

More companies are expected to shift to Asia where markets are expected to grow most rapidly. We will do more to anchor them in Singapore, investing in high-value production operations as well as coordinating their base of Asian activities from here. By lowering taxes and providing added incentives for them to invest in human capital and infrastructure, we will ensure that Singapore remains a compelling destination.

Singapore still preferred location for MNCs

2009 is going to be a challenging year for attracting foreign investments. Globally, investments are down – not just foreign direct investments but investments within economies are down. However, EDB is confident of bringing in more than $10 billion of new Fixed Asset Investments (FAI).

Many of the large global companies are in fact continuing to grow their investments in Singapore in the downturn. Rolls-Royce is an example. They are a leading supplier of power systems and are actively engaged in our aerospace, energy and marine industries here. Rolls-Royce, which already has 1,300 employees in Singapore, intends to continue recruiting in 2009. It is also broadening the depth and range of both its operations and R&D work in Singapore.

Likewise for Procter and Gamble (P&G). They have a regional HQ and R&D operations in Singapore, and also their first Asian perfume plant here. They are big in the beauty care business, globally. P&G expects continued growth in their business in Asia and is not letting up on recruitment in Singapore this year. Although nothing is recession proof, P&G calls its products “recession resistant” – people still want to look good in bad times.

CIT cut from 18% to 17% for YA2010

We will take a further step to sharpen our competitiveness. I have decided this year to reduce the corporate income tax from 18% to 17% effective from YA2010. This will cost us $400 million to $500 million a year over the medium term.

It is a signal of the Government’s continued and future commitment to

being the best hub for enterprises, small and large, from all over the world. In particular, together with the changes we have made to the Partial Tax Exemption scheme over the last two years, our effective corporate tax rates are now lower than in any competing destination for small and medium-sized enterprises, and amongst the lowest for large enterprises.

Encouraging investment in equipment and business renovation

I will complement this cut in corporate taxes with an accelerated capital allowance regime to encourage investments.

Currently, businesses can write down the costs incurred for acquisition of plant and machinery on a 3-year straight-line basis. That is the current scheme. I will grant an accelerated capital allowance for equipment acquired this year as well as in 2010. Such investments can be written down within two years with 75% of the write-down taking place in the first year.

Many of our service sector establishments also intend to use the period of the downturn to refit their business premises, in preparation for the recovery. Our restaurants, our retail outfits, many of them hope to spruce up – sometimes major renovations – in preparation for the next phase of growth. I will accelerate the writing down of renovation and refurbishment expenses to help these businesses. They will be allowed to write down these expenses fully within one year, from the current three years. This concession likewise applies to expenses incurred this year and the next. (Claimable in YA2010 and YA2011)

Simplify our tax framework for corporate amalgamations

Downturns are typically a time of opportunity for companies to merge,

acquire or restructure. We will simplify our tax framework to make it easier for companies to restructure and rationalise. This will significantly lower the tax burden when a company acquires another and takes over all its assets and liabilities.

Fund management

Globally, the fund management business has contracted over the last year. It is a reflection of both the reduction in value of assets, as well as the fact that there have been little fresh inflows and some withdrawals. It is a global phenomenon. But it is a matter of time before it recovers - especially in Asia where wealth will be on an upward trajectory over the next 15 to 20 years. I will significantly enhance our tax incentives for fund management to reinforce our position as a leading Asian hub in the business. The current incentives inadvertently discourage resident corporates from having their funds managed from Singapore, as there are limits placed on their holdings in the incentivised funds. We will now remove all these limits on qualifying funds so that they can accept investments freely from resident corporates, in addition to resident individuals. This will allow our resident corporates to enjoy the full benefits of tax exemption on qualifying income derived by the funds.

I will also simplify the rules for recovering input GST for the fund management industry. Further, I will make enhancements to the Financial Sector Incentive – Headquarters Services scheme and the Commodity Derivatives Traders scheme. (Details of the tax changes to promote the financial sector are in the Annex C-1.)

Maintenance, Repair and Overhaul (MRO)

Singapore is one of the largest and most comprehensive Maintenance, Repair and Overhaul (MRO) hubs in the Asia-Pacific. We account for a quarter of the

total MRO market in Asia. To further enhance our competitiveness, I will expand the scope of GST zero-rating for the industry, and help facilitate the import of qualifying aircraft components and systems. (Details of the tax changes are in Annex C-1.)

Auction, exhibition and wine-trading

To encourage the growth of the auction and exhibition industry, for example in art and collectibles, as well as wine trading activities, I will suspend duty and GST on goods temporarily removed from Zero-GST or licensed warehouses for auctions or exhibitions. (These and other related measures are summarised in Annex C-1.)

Besides helping businesses on their cash-flow and helping them to improve competitiveness by reducing taxes, we are going to make a further push forward on innovation, building up innovative capabilities. Innovation has to be pervasive in our economy, and through good times and bad.

We have established a good foundation. Just recently, INSEAD ranked Singapore as Asia’s most innovative economy and fifth in the world in its new Global Innovation Index. We rate well on our legal and regulatory framework relating to intellectual property and ICT, and ease of starting businesses. But we have a lot of catching up to do in other respects, especially in securing competitiveness through unique and innovative products amongst our enterprises.

We see it growing. There are more start-ups and smaller players who are making their mark by bringing innovative ideas to the market. Take local start-up Gothere.sg, for example. It was started by four Singaporeans in their 20s in April last year, who felt that there was a need to do

more to help people make sense of the whole range of transport options in any part of the island and at a glance – the quickest and cheapest way to get from A to B. They wanted to provide far more detail than what Google maps have. So they developed their own maps for Singaporeans – they drove through every single road on our island to do this – complete with information on bus routes, train routes and ERP charges at different times of the day. Gothere.sg is getting more than 15,000 hits daily and is currently collaborating with the LTA to develop a user-friendly travel advisory for public transport journeys.

In the last Budget, we put in place substantially enhanced tax incentives for innovation and R&D, which makes Singapore one of the most competitive locations in Asia for corporate R&D and especially for small enterprises. So a small company, around the 80th percentile of tax-paying companies, and which would be paying an effective tax rate of around 9%, would find its taxes reduced to zero if it spends an additional $150,000 on R&D.

We are complementing these tax incentives with a range of grants in this Budget to develop new capabilities and spur innovation amongst our enterprises. In total, we will commit $900 million in the next few years towards this effort.

Capability development

We will spend $130 million to enhance our grants and training schemes to encourage enterprises across various sectors to refresh and develop new capabilities. The Government will take a greater share of costs under SPRING’s existing capability development schemes and IE Singapore's internationalisation schemes. We will also widen the scope of

activities that qualify for grants. Further details will be announced at MTI’s COS.

We will add $45 million to the Maritime Cluster Fund (MCF) to support new projects that build business and manpower capabilities in the industry.

We will expand our support for the media and digital entertainment industry where opportunities are growing rapidly. We will set up the $230 million Singapore Media Fusion (SMF) fund to provide grants to help local enterprises export content, applications and services to the world, as well as to build up a world-class media talent base. This will complement our plans to develop Mediapolis at One-North, which will help position Singapore as a leading media hub in Asia.

Singapore is an emerging hub for firms in the interactive digital media arena. Two weeks ago for example, gaming peripherals company Razer launched the Razer Mamba, using advanced proprietary technologies developed out of Singapore. It is not your everyday mouse. It costs US$130 but is the fastest gaming mouse in the world. Many such examples are coming up. So we are emerging in this new space of interactive and digital media, both local companies and foreign players.

To encourage the media and digital entertainment businesses to exploit intellectual property (IP) from Singapore, I will allow them to write down the cost of acquiring qualifying IP rights in two years instead of five years currently.

Test-bedding ideas

We will also do more to encourage test-bedding of new ideas. We will put $200 million in a Test-Bedding Fund to make Singapore a “living lab” for companies and entrepreneurs to nurture new ideas, test innovative solutions and develop future global businesses from here. The first wave of test-bedding will

be based on areas where we have key strengths such as urban planning and traffic management, water management and lifestyle products and services. EDB and other agencies will invite and support private sector players to test, develop and implement new solutions in Singapore before exporting them elsewhere.

Last year, we set up a Core Innovation Fund (CIF) to help private companies collaborate directly with Government agencies to develop innovative solutions for public services. We will set aside $180 million in the CIF over the next two years. In addition, the Government will take a more proactive approach in seeking collaboration with the private sector, through the use of Calls for Collaboration (CFC). This will bring clusters of companies together to develop solutions for Government agencies, businesses and the public.

Finally, in addition to these sums that we will spend in promoting enterprise innovation, we will continue to expand R&D funding for our universities and research institutes this year. I will also top up the National Research Fund by $400 million this year to support Singapore’s continuing push forward in R&D.

We are providing significant support in this Budget to help companies with their cash-flow in the current difficult economic situation and to encourage them to preserve jobs as far as possible. We are providing strong incentives for those who want to take the opportunity now to make investments or undertake refurbishments in preparation for the upturn. We are also taking a further step to reduce corporate taxes to complement all our efforts to encourage enterprise and draw companies to Singapore in the coming years. At the same time, we are making a further push on innovation and R&D for enterprises small and large.

Together, our efforts will sharpen our business and workforce capabilities across the board and help us emerge stronger in the recovery.

Mr Speaker, with your permission I will continue later on with the measures we will implement to support Singaporean families in this downturn, and to strengthen our investments in both the social and economic infrastructure we need for our future.

*Cols. 1359-1360.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.50 pm.

Sitting accordingly suspended

at 4.37 pm until 4.50 pm.

Sitting resumed at 4.50 pm

The Resilience Package will provide substantial support for Singaporeans during this downturn.

The key benefit that Singaporeans will derive from the Package will come from the measures to preserve jobs. That is the best way we can help households – to keep the breadwinners employed, so that they can provide for their families. We will complement these measures with direct assistance to all Singaporeans as well as targeted help for the most vulnerable groups.

However, this cannot be a job for Government alone. Families must take care of their members, and the community must take care of families in need. Everyone must pitch in, because

that is far more fundamental to keeping our social fabric strong. Especially now, during difficult times, efforts by everybody – donors, community leaders and volunteers from all walks of life – to help the needy and vulnerable, is what will tie us together and strengthen our society. The Government will encourage them on by providing additional support for their efforts to help the needy.

Additional GST Credits

The key problem that households faced last year was the rising cost of living, especially due to fuel and food prices. Inflation is now on a downward trend, although the absolute prices of many items remain high. However, many households this year may face reduced incomes, because of lower bonuses or wages and some pick-up in unemployment that is inevitable in the recession.

I will therefore double the GST Credits that households will receive in 2009. Each household will get an additional payout of GST Credits, on top of the one that they will receive in July. To help households with their immediate needs, the additional GST Credits will be paid out on 1st March 2009. This additional payout will cost the Government $580 million.

As before, more GST Credits will be given to the low-income and the elderly. For example, a Singaporean retiree (aged 60 or above) living in a four-room HDB flat, will get an additional $400, or a total of $800 in GST Credits and Senior Citizens’ Bonuses in 2009.

S&CC and rental rebates

I will also provide an additional one month of Service and Conservancy

Charges (S&CC) rebates for those in one to three-room HDB flats, who will therefore receive a total of 3 to 4.5 months for this year. Those in larger flats will receive a total of one to two months of rebates.

Further, I will provide an additional one month of rental rebate for eligible households in public rental flats. In total, they will get three to four months of rental rebates this year.

Tax assistance to households

To help households which pay income tax, I will give a personal income tax rebate of 20% for tax residents for Year of Assessment 2009. This will provide immediate reduction in their tax payable for last year’s income. The rebate will be capped at $2,000. This will cost the Government $457 million.

We also want to help taxpayers who may have lost their jobs. Individual tax residents who have lost their jobs in 2008 or who lose their jobs in 2009 will be able to pay their personal income taxes this year in installments of up to 24 months, up from 12 months. This will help ease their cash burden.

I will also provide a 40% property tax rebate for owner-occupied residential properties for 2009. These property tax rebates will cost the Government $75 million.

Currently, those who own higher value homes or secondary residences have to pay income tax on the Net Annual Value of their residential property. I have decided to remove this tax on Net Annual Value with effect from Year of Assessment 2010. (Details in Annex D*.)

All households will benefit

The benefits that households will receive as a result of these measures will

be on top of what was previously committed for 2009 such as U-Save rebates. Taking all the measures together, Singaporean households will receive substantial benefits from the Government this year.

Low-income households and those with elderly family members will get the most benefits. A retired couple in their 60s who live in a three-room HDB flat, together with their working daughter with relatively low-income, can expect to receive about $4,500 in benefits in 2009.

However, the Resilience Package will provide significant benefits for the middle class too. For example, take a family of four living in a five-room HDB flat with working parents earning $4,500 and $3,000 a month and two teenage children. They fall within the upper-middle income group in Singapore. They will receive $2,200 in total in 2009. This will include about $800 in GST Credits and $270 in personal income tax rebates, $800 in PSEA(6) Top-Ups and $330 in U-Save, S&CC and property tax rebates.

Most households will in fact be receiving benefits this year that exceed what they would have gained if the Government had instead cut the GST by 2%. Keeping the GST unchanged has afforded substantial benefits for households, but more importantly, the distribution of benefits favours low and middle-income households. This is the right strategy for the times.

Increase in Additional CPF Housing Grant

On top of these measures that all households will receive, the Resilience Package will provide enhanced benefits to specific groups.

We will ensure that public housing remains affordable to first-time home buyers. The Government has decided to increase and broaden the Additional CPF

Housing Grant (AHG) for first-time home-buyers. We will increase the maximum AHG quantum from $30,000 to $40,000. At the same time, we will raise the household income ceiling from $4,000 to $5,000. Another 2,700 first-time home-buyers will benefit from the enhanced AHG every year, bringing the number of beneficiaries of the AHG scheme to 8,000 yearly. The enhancements will more than double the estimated cost of the AHG scheme to approximately $150 million per year.

Targeted measures for vulnerable

We will enhance funding for the most vulnerable groups. The Government will increase the Public Assistance (PA) rate for single-person households by $30 from $330 to $360, taking into account the increase in cost of living over the last year and the possible difficulties that those in the extended family and the community may have in supporting PA recipients at this time.

For Government pensioners, the Government has also decided to increase the Singapore Allowance by $20 per month to $240.

At the same time, we will top up the Public Transport Fund, to bring it to $10 million and ensure that it is sufficient to fund public transport vouchers for all low-income households who need help.

Further, we will provide more resources towards ensuring that healthcare remains affordable for low-income Singaporeans. The ElderCare Fund and Medifund have been well-utilised in helping needy patients. I will add $100 million each to the ElderCare Fund and Medifund this year.

Financial assistance for students

We will also do more to ensure students from families in need continue to

have every encouragement. MOE will enhance the financial assistance schemes for students in our schools, and introduce a Short-Term Study Assistance Scheme (SSAS) for students in our ITEs, polytechnics and autonomous universities. This will help students whose families face financial difficulties during the economic downturn. These enhancements will cost an additional $20 million a year. Details will be announced at MOE’s COS.

We will introduce several measures to support enhanced community initiatives at this time. First, to encourage greater charitable giving this year, I will increase the tax deduction for donations made in 2009 to Institutions of Public Character (IPCs) and other approved institutions from 200% to 250%. This amounts to a significant Government contribution each time an individual or corporation makes a contribution. (Details are in Annex D*.)

Second, we will provide an additional $15 million to support government-funded voluntary welfare organisations (VWOs), bringing the total to about $220 million for the year. We will be extending the Jobs Credit that I announced earlier to VWOs as well, as they too employ workers. Further, as a longer-term measure, we will put more resources in training social workers, so as to strengthen the capacity of the VWO sector and achieve a better reach to families at risk.

Third, funding to Self-Help Groups (SHG) will be increased to a total of $9 million a year for the next two years. We will likewise increase funding to the CCC-Comcare Fund to $7 million a year, for the next two years. The SHGs and grassroots organisations are best placed to provide assistance on a flexible basis to families

who require urgent and temporary assistance.

Fourth, I will provide greater tax incentive for social enterprises – Companies Limited by Guarantee (CLG), set up by individuals to serve a core social objective. Social entrepreneurs are now making a mark, and we should encourage them to grow and add a new dimension to our social sector. One example is Barista Express Café which provides supportive employment to help former psychiatric patients re-integrate into society. I will extend the tax exemptions for start-ups to Companies Limited by Guarantee from YA2010. (Details are in Annex D.)

In total, we will be providing direct support to households and community groups amounting to $2.6 billion in 2009. This is on top of the help that Singaporean households will get from our jobs initiatives – the Jobs Credit, the WIS Special Payment and SPUR. These measures should help our families see through the crisis this year. They also seek to bolster the community support networks that remain at the core of Singapore’s collective approach to helping the less fortunate in our society.

The Resilience Package provides a further boost to investments in making Singapore an extremely liveable global city and the best home for Singaporeans.

We are pushing ahead in four areas:

– First, we will expand and accelerate public sector infrastructure spending.

– Second, we will develop suburban nodes and rejuvenate our neighbourhoods.

– Third, we will push ahead on sustainable development.

– Fourth, we will spend more on our education and health infrastructure.

We will increase public sector construction spending significantly in 2009. We will proceed with contracts worth $18 billion to $20 billion this year, significantly higher than the $15 billion contracted in 2008 and $6 billion in 2007.

The significant ramp-up in spending this year reflects plans that the Government had already formulated such as for MRT and road networks, which we are proceeding with despite the crisis.

We are also bringing forward $1.3 billion of government projects to 2009, that would otherwise have taken place later. We had previously deferred some of these projects to avoid exacerbating the over-heating construction sector and to avoid adding pressure to construction costs for the economy. Others are projects which had been due over the next two-three years that we have decided to bring forward. The projects will comprise smaller infrastructural contracts worth up to $50 million each, which can be taken up by our small and medium-sized contractors. This segment of the industry is already seeing significant softening in demand.

The projects we brought forward are wide-ranging – from HDB lift upgrading to building of park connectors and upgrading of military facilities. The Government will continue to monitor construction capacity closely in order to adjust the pace of public sector construction projects.

We will continue to develop both a distinctive business hub in the centre of the city and new suburban hubs that will de-centralise economic activity and create jobs closer to home.

In addition to Marina Bay, we will invest in new regional commercial nodes such as Jurong Lake District, the new Kallang Riverside and Paya Lebar Central. We will also rejuvenate our public housing neighbourhoods including enlivening the public spaces within our estates and pushing ahead with the ABC Waters programme. We are linking together all parts of the island through a comprehensive road and rail network. And we will spend more to maintain and upgrade the plumbing of the city – the basic amenities such as our drainage and sewerage network.

The Government has over the last year been developing our sustainable development blueprint for Singapore. MEWR and MND will be discussing our thinking and plans in greater detail at the COS.

Sustainable development is not new to Singapore. We have always had to work within the constraints of being a city state with no natural resources and a high population density. Over the years we have developed expertise in areas such as urban planning, water and waste management and green technologies. Organisations like the World Bank and the Asian Development Bank are now working with us to share our expertise with other countries.

However we will have to invest more in sustainable development in the coming years to provide Singaporeans with a high quality living environment while our economy continues to grow. To achieve both these objectives, a high quality living environment and economic growth, we need to optimise the use of key resources such as land, energy and water.

There is also an economic imperative for sustainable development. We need to

ensure that our use of scarce resources such as water and energy is efficient so that we can reduce costs and our susceptibility to global energy shocks. Investing in energy-efficient technology will reap cost savings for companies and households in the long run.

However, the upfront investments sometimes deter the private sector from making investments that are cost-saving over the long term. The Government will therefore provide incentives where necessary to encourage companies and individuals to invest in economically viable technologies. The Government itself will spearhead investments in improved energy efficiency for our own buildings.

In total, we plan to spend $1 billion over the next five years on sustainable development initiatives. The funds will support programmes such as energy efficiency for industry and households, green transport, clean energy and the greening of our living spaces.

In so doing, we hope to catalyse the growth of a vibrant cluster of firms with expertise and capabilities in these areas, complementing our R&D efforts. Already we have a base of global alternative energy companies, including the big boys like Neste Oil, who are locating their operations in Singapore. New players are also sprouting up. Like JOil, which has developed elite and high yielding Jatropha seedlings using locally developed plant genetics technology. Set up last year, it has now secured a multi-million dollar partnership with Tata Chemicals to market the seedlings in India and East Africa as an economical and sustainable starting source for the production of bio-diesel.

The best home for Singaporeans must be the best place to start families, to help

them nurture their young and to look after their old.

We will be spending $1.6 billion this year, and about the same amount in each of the next three years to support marriage and parenthood – with initiatives such as government-paid maternity leave, and infant-care and childcare subsidies. We are also going to be investing significantly more in education and health.

Enhancing school education

We are upgrading both the hardware and software of the education system. We are providing better facilities for an all-round education in every school and accelerating some projects like the roll-out of indoor sports halls. More importantly, MOE is enhancing both the size and quality of the teaching force and bringing in many others into our schools to collaborate with teachers in providing better attention for every child. Looking at recurrent spending alone, ie, leaving aside capital expenditure, we intend to spend an average of $9,200 per student in our schools each year over the next five years – or an increase of about 60% compared to the previous five years.

Expanding healthcare capacity

We are committed to a substantial expansion of the healthcare sector. Over the next five years, we will invest $4 billion in healthcare infrastructure, which will include the redevelopment of older hospitals, medical centres and a new hospital in the west, as well as seeing through existing projects like the Khoo Teck Puat Hospital in the north.

MOH is also developing an electronic health records system accessible to authorised medical practitioners at our hospitals and polyclinics, and eventually extending to the community care sector. It will allow for more effective treatment of patients who may receive a spectrum

of healthcare services from different providers. We will be spending about $200 million to get this project launched over the next two years and will be among the first in the world to implement such a system nation-wide.

We are doing more to help those who fall ill in old age. We are building new community hospitals and boosting capabilities in treating chronic diseases such as stroke, heart and kidney failure, and other age-related conditions such as dementia. We are also enhancing the capabilities for long-term care, including rehabilitation, home care and palliative services after patients have been discharged from hospitals. This will help support family members and caregivers. We will spend $500 million over the next five years on these measures to improve long-term care for elderly Singaporeans.

Mr Speaker, Sir, if I can now move on to our fiscal strategy and how we are going to finance this Budget.

This is not a normal Budget. It is a not even a normal countercyclical Budget.

The economic decline that we are seeing globally is the most severe and widespread that has been seen in the last 60 years. It has yet to bottom out. There remains considerable uncertainty as to when the major economies will recover, and no assurance that 2010 will be better than 2009.

Singapore, highly exposed to the world, is going through the most serious downturn that we have experienced since independence. The Resilience Package, totalling $20.5 billion, is the largest the Government has undertaken in response to an economic downturn. It includes extraordinary measures to prevent a more severe loss of jobs and lasting damage to our economy. Depending on how deep

and long the recession turns out to be, we are prepared to do more.

The Resilience Package aims first and foremost to save jobs, to the maximum extent possible in the recession. It will also provide direct support for Singaporeans, on top of the measures to help keep their jobs. It will strengthen our workers’ skills and capabilities and the competitiveness of our businesses, so that we are ready to seize opportunities in the recovery. Further, the Package allows us to press ahead with investments in a first-class infrastructure for a global city that will be known for its liveability, and the best possible upbringing for the young and care for the old.

Singapore’s advantage in this global crisis is that we have the resources to respond to the immediate needs of our businesses and households, while not compromising our focus on long-term initiatives. We can address our short-term needs without crowding out the long-term investments needed for our future.

We have the resources to do this because we have for many years rigorously adhered to a prudent fiscal policy, spending within our means, maintaining a stable base of revenues, and building up a nest egg of reserves for contingencies.

We have restructured our revenues over the last two years by raising the GST and amending the framework for spending out of Net Investment Returns (NIR).

The GST has allowed us to put in place major social supports. It has enabled the Government to introduce Workfare, which provides a top-up to the wages of lower income workers on a continual basis. It also allows us to move ahead with significantly higher healthcare

expenditures, including increased support for the low income and better care for the aged. In the current downturn, the GST has also given us the revenue to provide additional benefits to Singapore households, and especially for our low and middle income families.

The new NIR framework has also strengthened our resources. The Constitutional amendments, which we made last October, allow us to tap on more of the returns from the investment of our reserves. We now have an enhanced and steady stream of income which enables us to keep building for the future even in difficult years. We are pressing ahead with improvements in education, enhancing our competitiveness through innovation and R&D, and reinvigorating our infrastructure.

No need to borrow

The GST and NIR have therefore given us a stable revenue base that allows us to respond to this crisis both with significant immediate relief to households and businesses as well as to reduce taxes for the long term and make investments in Singapore’s future.

However, the Resilience Package also contains temporary extraordinary measures which are not part of a normal countercyclical Budget – the Jobs Credit for all businesses and the Special Risk-Sharing Initiative on bank lending. These extraordinary measures will add to our deficit this year and should be separately funded. There are two ways of doing so – either by borrowing or by relying on our accumulated savings.

Other governments are having to finance the major packages they are undertaking in this crisis by borrowing. They will have to raise revenues later in order to repay the borrowings. The

markets are already making estimates of the amount of future tax increases or spending cuts that they will need to make in order to repay borrowings. In some instances, the new borrowings have also put at risk the governments’ sovereign credit ratings – especially as the new debts come on top of substantial previous borrowings used to fund past deficits. Spain, Greece, Portugal and Russia have just seen recent downgrades in their credit ratings, while Taiwan has been "placed on negative outlook". In the UK, the bond markets have recently pushed up the government’s borrowing costs because of concerns over its increased borrowings to fund its response to the crisis.

Unlike most countries, we do not borrow to fund the government budget. Our borrowings in the Singapore Government Securities market serve only to develop our capital markets and to provide a safe investment vehicle for the CPF Board. We will likewise not have to borrow to fund our response to the crisis. We will not have to burden either current or future generations with the need to repay our spending in the Resilience Package.

Judicious use of past reserves to fund extraordinary measures

The Government has sufficient savings built up during this term of government to fund the measures we are taking and the resultant budget deficit. Nevertheless, we have decided instead to fund the two extraordinary measures within the Resilience Package from our past reserves.

We have built up substantial reserves for Singapore, well in excess of our liabilities. They are a valuable asset for us in responding to this unprecedented crisis.

In view of the extraordinary circumstances, which require a commensurate

response, the Government has sought the President’s approval to draw on past reserves to fund these two measures now, rather than wait till we exhaust the savings of the current government. Tapping on past reserves now gives us the resources that we need to deal decisively with the current economic crisis and also ensures that we have all the resources we need to respond to the considerable uncertainties that lie ahead. It will allow us full flexibility to respond as the situation requires, and to pre-empt the severe consequences that this crisis could have for our economy and our society.

The total cost to the Budget of the two extraordinary measures that we will fund from past reserves – namely, the Jobs Credit, and the Special Risk-Sharing Initiative for bank lending(7) – will amount to $4.9 billion (comprising $1.1 billion in FY2008 and $3.8 billion in FY2009).

*Cols. 1361-1366.

Post-Secondary Education Accounts.

The new Bridging Loan Programme, new Loan Insurance Scheme and new Trade Credit Insurance Programme.

The Government has made the case to the President and the Council of Presidential Advisers (CPA) for this cost of $4.9 billion to be funded from the past reserves, on grounds that the circumstances we face are exceptional, and the extraordinary measures that the Government is undertaking are temporary and will not be built into longer-term government programmes. The President has given his in-principle approval for this draw of $4.9 billion from past reserves. The President’s assent to the Supply Bill will be obtained after Parliament has passed the Bill.

This is the first time we have sought the President’s approval for an actual draw on past reserves since the Constitutional framework for protection of reserves was instituted in 1991. We had earlier sought the President’s approval in October 2008, when the Government moved to guarantee all bank deposits in Singapore, for that guarantee to be backed by past reserves. However, that remains a potential draw, and the

probability of an actual government payout, and hence an actual draw on past reserves, remains low.

Need for prudent fiscal rules

It is only by practising fiscal prudence in normal times that we are able, in rare circumstances like today’s crisis, to draw on our past reserves. By consistently accumulating savings over the years, we are able to respond in a major crisis with the confidence that we are not storing up problems further down the road.

We must ensure therefore that we keep to the practice in normal times of running a balanced budget over the course of a government’s term of office. We should also continue to avoid waste in government spending, and make sure we derive value in every use of taxpayers’ dollars. When we have large surpluses, as we did in FY2007, we make sure we save some for rainy days.

Further, the Government must only draw on past reserves in exceptional circumstances, and be able to satisfy the President of why it is critical to do so. The present situation clearly justifies a draw on past reserves. The current global financial and economic crisis is the type of severe contingency that our reserves have been accumulated for. The two major measures that will be funded from past reserves are of a temporary nature, and will not be built into ongoing government programmes.

We must therefore stay committed to our practice of prudence and living within our means. It is how we will safeguard and enhance our reserves as a key strategic asset of Singapore.

The Resilience Package will result in a large deficit in our Budget position for both FY2008 and FY2009.

As some of the measures of the Resilience Package will be implemented in March 2009, the overall position for FY2008 will now show an increased deficit of $2.2 billion or 0.8% of GDP.

For FY2009, we expect the Basic Balance to be in deficit of 6.0% of GDP. The Basic Balance excludes transfers to endowment and trust funds as well as the contributions from Net Investment Returns. This is much larger than the deficit in the Basic Balance for the previous year(8) – difference of more than 5% of GDP – which means that we are imparting a large fiscal boost to the economy this year.

The Basic Balance for FY2008 was in deficit by $1.1 billion or 0.4% of GDP, before taking into account measures taken in Budget 2009 (which are to be implemented in March 2009).

In total, we are making transfers to endowment and trust funds, including pre-committed transfers, of $1.4 billion in FY2009(9). Contributions from Net Investment Returns will be significantly higher in FY2009, at $7.7 billion, following the changes to the Constitution to effect the revised framework on spending from investment returns. (This compares with a Net Investment Income Contribution of $3.7 billion in FY2008, which was itself significantly higher than the average over the previous five years.)

Our revised Overall Budget Balance for FY2009 will therefore be a deficit of $8.7 billion which is 3.5% of GDP. (Details are in Annex E*.)

Lifelong Learning Endowment Fund ($100 million), Medical Endowment Fund ($100 million), ElderCare Fund ($100 million), National Research Fund ($400 million), CPF Deferment and Voluntary Deferment Bonus ($450 million), LIFElong Income (LIFE) Bonus ($260 million).

*Cols. 1367-1368.

Singapore is tied to the fortunes of global markets. We are hit when the global economy goes down, and we move back up when it recovers.

But being a global city works well for Singapore. Even including 2008, when our economy fell, we grew by about 7% per annum in the last five years. This is faster than the other Asian Newly

Industrialising Economies (NIEs) (Hong Kong, South Korea, Taiwan), and well above growth in other countries with similar income levels. And it is also a strategy that has kept unemployment at amongst the lowest rates in the world.