Hansard, Monday, 9 March 2015

[(proc text) Order read for consideration in Committee of Supply [3rd Allotted Day]. (proc text)]

[Mdm Speaker in the Chair]

[(proc text) Resumption of Debate on Question [6 March 2015], (proc text)]

[(proc text) "That the total sum to be allocated for Head V of the Estimates be reduced by $100." – [Mr Liang Eng Hwa]. (proc text)]

[(proc text) Question again proposed. (proc text)]

Mdm Chair, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Chair, the key point of my speech is to support traditional industries in creating value through trade associations and industry associations.

Singapore's business environment is continually changing. The emergence of new opportunities and new concepts has created conflicts with traditional industries; in particular, manpower shortage and rising business costs have been a bugbear for SMEs. In the past few years, the Government has been rolling out support packages to help enterprises mitigate the pressure of economic restructuring. Local enterprises have also tried their utmost to think of ways to increase their productivity. Just as Deputy Prime Minister Tharman had said, compared with other countries, our Singapore Government is comparatively more generous in providing assistance schemes to enterprises. How do we make full use of these generous

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assistance schemes and ensure their effectiveness?

Assistance schemes can only help to give financial support but, apart from capital, restructuring requires a change in mindset and broad directions. While these efforts are very painstaking for an individual company to manage, leveraging on the strength and collective effort of trade associations would be much more productive.

In this regard, the Singapore Food Manufacturers' Association (SFMA) has done very well. The association has led its members to improve the capability of their industry and has brought Singapore food products to the global marketplace through branding. For example, the Singapore Food Expo organised annually by the SFMA is one of the largest and most well-attended fairs in Singapore. It has also taken their members to expand in China under the Tasty Singapore brand. Last year, it even organised the "Great Singapore Food Gifts Award 2014", an innovative and interesting way to attract the participation of even more businessmen and customers. In other words, SFMA has thus been supported by many Government agencies and is one of the beneficiaries of the LEAD programme.

This successful case assures us that trade associations can play a very important role in creating a deeper understanding of their respective industries and in improving the overall industry image and competitiveness. We need to have more trade associations like the SFMA to propel the traditional industries. The Government has already rolled out a package of assistance schemes for trade associations, which, in fact, largely benefit those which are larger and stronger. Going forward, I recommend that the Government renders its support to more industry and trade associations with the drive to upgrade themselves.

In general, the leaders of trade associations are businessmen who have the industry knowledge and the Government could seek their opinion when they are formulating their policies. In the past few years, the SCCCI has organised regular monthly dialogues with trade association leaders to understand the business sentiment. The majority of the trade associations raise three concerns with regard to their operations: one is the lack of working capital. Trade associations are non-profit organisations with limited working capital. Their expenditure is used to service their members and not to earn profits. I take this opportunity to bring up a pressing concern of trade associations. Currently, trade associations can only apply for the tax rebate under the PIC, but are unable to apply for the PIC cash grant. As the majority of the trade associations do not make profits, they do not need to pay tax and the tax rebate is, therefore, meaningless to them. We hope, therefore, that the Government could also allow trade associations to benefit from the PIC cash grant.

Currently, the Government assistance packages for trade associations are always formulated on the principle of "shared responsibility". While receiving Government support, the trade associations must also bear 30% or 50% of the expenses. This is a stumbling block

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for some trade associations in taking up the grants or assistance schemes. These are the trade associations most in need of financial assistance.

The second point is that trade associations are badly in need of bringing in new blood. Many trade associations are actively working at recruiting young members into their ranks. However, successful businessmen may not necessarily be ideal trade association leaders. Young people need time to mature and need to be trained up by taking part in trade association activities.

The third point is the dire lack of permanent office premises and secretariat personnel. Trade association leaders are entrepreneurs, not permanent working staff. The organisation of activities and planning of programmes require the assistance of professional secretariat staff. Currently, some trade associations do not have permanent premises due to the rental issue and face the difficulty of recruiting experienced secretariat staff.

This year's Budget has enhanced CIP, and extended and strengthened PACT. These two schemes were rolled out in 2013 and 2010 respectively. I wish to understand how many businesses have benefited from these schemes thus far. At the same time, I would also like to find out if the 30% ratio to be borne by trade associations could be further reduced. Reducing this ratio could allow more trade associations to take up the programme, but the KPI can still be maintained to ensure the programme's successful outcome.

I wholeheartedly agree with the Deputy Prime Minister's standpoint, as we need to guarantee the vibrancy of local SMEs after the next five to 10 years. Having said this, we should press on to enhance the capability of stronger and more effective trade associations, and let them lead the traditional industries and SMEs in creating new value.

Mr Inderjit Singh, you have two cuts. Please take them together,

Thank you, Mdm Chair. I have three points to raise. First, on the high cost of business

In his round-up speech, the Deputy Prime Minister and Minister for Finance stated that the Government had taken the middle path in restructuring the economy. I am afraid the middle path that the Government thinks is right is not middle enough for most SMEs. Can I ask the Deputy Prime Minister if he has looked at whether we have a dual economy growing where SMEs face one cost structure and larger MNCs and GLCs have another because of better support from the Government? Perhaps, this is why an average middle path from the

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Government's perspective looks good enough because it is an average of unequals.

Just look at some of the indicators. Among the top 1,000 SMEs in Singapore, data compiled shows that the hospitality and F&B sector is the only one that has contracted by as much as 7.7% in each of the last five years. There were also more loss-making SMEs among the top 1,000, rising to 130 from the previous year. Among the top 1,000, 13% of them are already loss-making! I cannot imagine how many more of the 200,000 or so of our SMEs are loss-making, reflecting that costs are spiralling out of control.

Next, on industrial and commercial land. I want to repeat my call and many from the SME sector for the Government to take a serious look at the industrial and commercial rental markets, as rents are killing companies' cost competitiveness in almost every sector of our economy, not just one. We need to implement ideas, such as rent control – which I believe the trade associations and chambers (TACs) had suggested – and restricting industrial land for owner occupation instead of allowing such properties to be used as investment properties. JTC needs to become a bigger player in the local industrial land space if we want to moderate rentals. The Minister should also have rolled back more of the REIT incentives so that we do not have too many focusing on financial engineering without adding real value to our economy. The Government should also never have allowed some companies, which had preferential land allocation or preferential prices for land, to subsequently sell them into industrial REITs. REITs should only be restricted to properties originally purchased from the open market. Otherwise, it helps create a dual economy, and regular SMEs are disadvantaged as they do not get the land allocated to them.

Third, a first and one stop SME agency. The current Government approach of many agencies supporting SMEs at different stages of their growth and for different needs has run its full course. It is time we relook our approach of managing SMEs. Many say that they are confused by the number of assistance schemes and the various agencies that they have to visit for each of these schemes. They are unhappy that they have to be passed from one agency to another for different needs and sometimes fall through the cracks without help. We must realise that they have businesses to run and cannot be figuring this out or going door-to-door to deal with onerous administrative requirements, as they are very small.

Recently, the Singapore Business Federation (SBF) and its SME Committee, too, urged the Government to establish a single agency as opposed to a multi-agency approach. It said that under the multi-agency approach, each agency tended to rely on its own mandate and KPIs, and I agree with this. Moreover, the current multi-agency approach adds to red tape and delays response time for many of these companies.

There must be a reason why so many of us involved in the SME community feel the need for such a single SME agency, so I urge the Government to not write this off. In fact,

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SBF is very closely linked to the Government. SBF also made this call this year. Many other agencies made the call many years before. So, there must be something wrong and we need to do something about it.

During the Deputy Prime Minister and Minister for Finance's closing speech last week, I was shocked to learn that the net new company creation in the last five years was 100,000 companies. This is a huge increase in only five years. Does this mean that SPRING has also an additional 100,000 companies to support? Can I ask the Minister if SPRING's manpower has increased in proportion? If not, we can understand why SMEs feel that not sufficient support is going to them.

While MTI tries to figure out the right time for this single agency to be set up – which I think will happen one day – may I suggest an interim solution of a "First and One Stop SME Agency" approach where companies only need to approach one agency for all their needs and that agency will help SMEs identify the kind of help needed, coordinate with the different economic agencies and then bring the right assistance to the companies.

Obviously, SPRING is well positioned to do this by extending its scope of work beyond the schemes it currently administers. And SPRING will also need a lot of manpower and resources and I hope that the Government and the Deputy Prime Minister will allocate more for them.

For companies, they will just see one agency and we present just one face of the Government. In the background, the Ministry can allow the various economic agencies to continue to work the way they are currently working. Thus, SPRING can become something like a Municipal Service Office (MSO) for SMEs.

SPRING has already set up an outreach mechanism through the SME Centres. This structure should stay to be the outreach arm. I believe if the Government can help SMEs on these three fronts: by addressing the cost of doing business, reducing their land and rental costs, and streamlining the assistance to them through a stronger and more focused SPRING looking like a MSO, the Government would have greatly helped SMEs, which play a critical role in our economy that provide jobs for seven out of 10 Singaporeans here in Singapore.

Mdm Chair, I believe the Ministry is heading in the right direction to recognise R&D as one of the key drivers to help SMEs sustain and compete.

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A recent Parliamentary Question (PQ) by Member Assoc Prof Randolph Tan just last month, revealed that just 500 claims were made on PIC amounting to $619 million, which is less than 1% of the 75,300 claims made in total. This is a small take-up rate by businesses. What are the Ministry's plans to boost R&D adoption by SMEs?

Many businesses that submitted technology-related R&D claims gave feedback that the overall process, especially the many queries from the officers, is often tedious. Often, the officers did not understand the subject matter involved and these businesses either got rejected or gave up mid-way. Perhaps, having the IRAS or the tax officers fronting this scheme may not be the best interface for the industry.

I would like to propose that MTI consider allowing a different agency, perhaps, even SPRING, as Member Mr Inderjit had just suggested earlier, to make the technical assessments because they understand growth requirements of businesses, to front the R&D claims and then pass over to IRAS for processing.

Based on the Australian government Department of Industry's Innovation Australia Annual Report of 2012 to 2013, they processed about 11,000 claims amounting to A$19.69 billion. While Australia's GDP is four times that of Singapore, the number of claims lodged in Australia was about 20 times greater and the total expenditure claimed was also about 35 times greater than Singapore.

In such environments, are there more businesses claiming because there is a simpler, more business-friendly evaluation process? I understand that R&D definitions are fairly similar across mature economies, so the level of rigour should be similar.

Mdm Chair, to support the growth of our home-grown companies and help them build their expertise and brands, the Government has been providing various assistance schemes, such as the broad-based Productivity and Innovation Credit (PIC) and Innovation and Capability Voucher (ICV) schemes.

I am heartened to note that awareness of these schemes is high and they are increasingly popular among SMEs, as the SME Development Survey and a Singapore Chinese Chamber of Commerce and Industry survey had found. More SMEs are also accessing manpower-related schemes, such as the Workfare Training Scheme and the Workfare Income Supplement Scheme.

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May I ask the Minister if there are plans to enhance targeted assistance scheme tailored to individual companies' needs? If so, how can such targeted Government schemes benefit more SMEs?

Mdm Chair, during the initial phase of the restructuring efforts, SMEs have benefited from generic productivity schemes, such as PIC, to purchase equipment and train their staff. At this point of the journey, it should be time to shift to a higher gear where help provided becomes more targeted and solutions are tailored to address companies' specific operational issues. Broad frameworks may no longer be adequate to help SMEs find their "next wind".

Let me illustrate with an example. Little Ferry Agencies provides valves and other supplies to the shipping and marine industry – this usually involves handling heavy and bulky metal parts. It is a relatively small company with 16 staff, operating out of a 3,000-square feet warehouse. Madam, may I show a couple of slides?

Please proceed. [Slides were shown to hon Members.]

The supplies for this company come in odd-sized wooden crates, so storage is a big challenge as is moving them around in order to access the supplies you want. Doing so also normally involves extensive manpower and space. So, in an effort to raise productivity, the owner, Jason Tan, spent many sleepless nights working with engineers in the marine industry to come up with this: a system of metal crates which are strong, durable, stackable and offers easy access. This Mild Steel Racking system not only improves space efficiency as the crates can be stacked neatly from floor to ceiling. It enables a safer and leaner work environment as his staff can now access the supplies effortlessly through a forklift.

But when Jason made a PIC claim for this racking system, it was rejected as it did not "automate or mechanise" his business processes. My appeal to SPRING under the Capability Development Grant was also unsuccessful as the project was deemed not to have involved technological improvements required or meet the value-add requirement. Whilst this racking system did not cost much, Jason and his team felt it was one of the most critical initiatives they had taken to make their business more efficient and manpower-lean.

Madam, I would like to ask the Minister whether we should encourage SMEs to pursue these kinds of initiatives, even if they may not involve breakthrough technology or automation. This sort of "low-tech" or "no-tech" productivity efforts is nevertheless innovative and achieves meaningful productivity boost for small companies like Little Ferry.

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How will the Capability Development Grant be enhanced, as announced, to enable a broader definition and interpretation of innovation to support such ground-up productivity improvements that help to improve workflow in incremental steps.

Mdm Chair, entrepreneurs have highlighted the increasing cost of doing business in Singapore, as have many SMEs. And according to the 2014 SME Development Survey that was conducted by DP Information Group, which covered about 2,800 SMEs, about half, or 48%, of the businesses cited high manpower costs as their top business concern and one-third, about 31%, cited high rental costs as the other main problem.

In a separate survey conducted by the Singapore Chinese Chamber of Commerce and Industry last year, 83% of SMEs surveyed struggled with increasing business costs. This was an increase of 8% over the same period the year before. Almost half also faced thinning profit margins. The main contributing factors were – as one would expect –escalating manpower, land and rental costs.

Another problem that I would like to bring up here is this issue of increasing compliance costs, such as licence fees, which are increasingly becoming a significant business cost and concern in Singapore.

In our tight labour market, the problem of increasing manpower cost will not be solved anytime soon. I would like to ask the Ministry what the Government is doing to ensure that Singapore remains a cost-competitive and business-friendly environment. In addition, what measures will the Government implement to encourage more SMEs to access schemes and grants to help them grow?

Mdm Chairperson, allow me to declare my interest in speaking on this topic as the President of the Consumers Association of Singapore (CASE).

Last year, there were several cases reported in the newspapers where consumers were either cheated or lost their deposits through no fault of theirs. For example, there were consumers who lost their deposits when a sports coach centre ceased business abruptly, leaving the students in the lurch. There were also travellers who lost their deposits when a travel agency went into liquidation. Last December, more than 100 consumers lost about S$3 million when the director of a car company went missing after taking deposits from customers. And many of us will recall the infamous case at Sim Lim Square where an

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unscrupulous trader openly bullied tourists and made consumers pay for phone insurance or unlocking fee when there was no such requirement.

Hence, despite all the efforts to protect consumers, there are still limitations to the Consumer Protection (Fair Trading) Act in protecting consumers from dishonest traders. Not every dispute is a civil dispute. Indeed, sometimes, civil action against such dishonest traders is of limited use because consumers find it costly to take legal action if their claims exceed the Small Claims Tribunal's jurisdiction. Further, the consequences of legal action or an injunction can easily be circumvented by a trader who has been sued. He simply shuts down his old business and sets up another business either in his spouse's name or his family member's name.

I submit that it is timely to consider stiffer measures towards dishonest traders who cheat innocent consumers. I urge MTI to amend the Consumer Protection (Fair Trading) Act to introduce criminal sanctions against dishonest traders or contractors where the evidence is clear that they have been dishonest and fraudulent or that they have deceived consumers. Likewise, contractors who pretend to be HDB or Town Council officers and deceive elderly residents into paying for services which they do not need should also be prosecuted.

The law should also be amended to make it an offence for a company to continue taking deposits when the company is clearly insolvent and has no means or intent to deliver its services. This way, company directors will think twice about taking deposits if the company is on the verge of ceasing operation. Another option is to rule that pre-payments or deposits exceeding a designated sum must be paid to a trust bank account or duly insured. I urge MTI to enhance the protection for consumers.

Mdm Chairperson, may I have your permission to display some slides on the LED screens for my speech?

Yes, please. [Slides were shown to hon Members.]

Several Members have spoken on issues that affect our SMEs. I want to thank them for their comments and suggestions.

Creating a vibrant, productive and competitive SME sector is crucial to our restructuring efforts. Restructuring has not been easy for many individual SMEs. The Government adopts a middle-of-the-path approach to cater to the different tiers of SMEs because they are of different sizes and scale in their nature of business.

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So, the restructuring process will be faster for some but may be slower for others. We have to moderate the pace and adjust the kinds of schemes to help them adjust to the pace of the restructuring. But, on the whole, we are seeing many positive signs that the SME sector is trying to transform and also improve capabilities.

More SMEs are internationalising and investing in technology. The entrepreneurship scene is also robust. Firm formation rose from 54,000 companies in 2010, to 77,000 in 2014. In comparison, firm closure has held steady at between 40,000 to 42,000 in the same period. So, the net formation is positive and is on an upward trend. Mdm Chairperson, may I now speak in Mandarin, please?

(In Mandarin): [Please refer to Vernacular Speech.] Mr Thomas Chua asked about traditional sectors. Many of our industry sectors, particularly the more mature or "traditional" ones, have a substantial base of well-established SMEs. Many of these companies have grown up with Singapore. They are household names and are important links in our business ecosystem. As our economy restructures, traditional companies, too, will need to evolve to compete effectively and face new challenges.

These SMEs are often family-owned, and face particular challenges with regard to succession planning and talent attraction. Nonetheless, SMEs in such "traditional" sectors can continue to grow if they are able to build a strong talent pipeline, innovate, and proactively pursue growth through innovation and opportunities to expand their business overseas.

Mr Yeo Guat Kwang talked about the story of two men being chased by a tiger. The ending of the story is that one guy managed to escape from the tiger by taking off his shoes and climbing up a tree. However, he could not stay up in the tree forever. The one who fastened his shoes ended up being eaten. This tells us that we have to be flexible in order to survive. But if we want to expand the story further, the one who hides in the tree cannot stay there forever; he has to find ways to jump from one tree to another tree; or to think of ways to subdue the tiger that is waiting at the bottom of the tree. This means he needs to innovate and adapt to the changes. We must move forward; we cannot just stay there and wait forever.

Similarly, our businesses and SMEs need to continue to explore and find new ways to improve their operations, to innovate and use information technology to turn traditional industries into advanced industries.

There are many successful examples of companies in "traditional" sectors that have positioned themselves well for growth. Old Chang Kee, for instance, has become one of

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Singapore's successful household brands. It grew from a single hawker stall in 1956, to become a listed company. It has about 80 local outlets today, as well as an overseas market presence in Malaysia, Indonesia and Australia. The company has continuously transformed its businesses to keep up with the changing times. With the support of SPRING, Old Chang Kee launched Curry Times Tingkat brand in 2013. This is a fully self-service concept restaurant where customers order and pay for their food via a kiosk. Customers then collect their food when their number tags are called. This allows them to run a quick service restaurant with only five staff, compared to the usual 15 staff required.

Everyone has a role to play in strengthening our SME sector. The Government is committed to helping companies in all sectors improve their productivity and competitiveness. Our broad-based schemes are available to all SMEs, whether in traditional or new sectors and some can directly help SMEs in traditional sectors to address the challenges they face. I will talk about some of these schemes later in my speech.

At the same time, Trade Associations and Chambers (TACs) would also need to come forward to organise the industry and raise the competitiveness of the SMEs. I sincerely agree with what Mr Thomas Chua had suggested.

Mr Chua had asked about how the Government can support the development of TACs. Given the size and range of the SME sector, Government agencies, TACs and other partners need to work together to effectively reach out to SMEs. For example, through the Local Enterprise and Association Development (LEAD) Programme, the Government provides funding support to TACs for industry development projects and to upgrade their own capabilities.

We recognise that larger TACs in Singapore have stronger secretariat teams and sizeable membership bases and are better able to roll out initiatives to benefit the industry. On the other hand, there are also many smaller TACs which are not able to provide similar services due to resource constraints.

To help smaller TACs, JTC will be setting up a Trade Association Hub, the TA Hub, to cluster different TACs under one roof. This will benefit TACs in three ways.

First, this can facilitate collaboration amongst TACs and companies across different industries in areas, such as skills upgrading and business co-creation. This is similar to Mr Thomas Chua's example on the food manufacturing industry. They will benefit from this.

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Secondly, smaller TACs will be able to leverage on large TACs which can provide expertise in secretariat support and organisation needs.

Thirdly, TACs can also reduce operating costs and optimise resources through sharing facilities and amenities. Ultimately, TAC members will benefit from the broader range of programmes which will be made available to them, and also from the improved convenience when TACs are housed together at the TA Hub.

I am happy to announce that the TA Hub will be located at JTC's iHUB, which most of us would recognise as the old Jurong Town Hall. This is where Singapore's early industrialisation policies took shape, in the face of the challenges we faced during our nation-building years. We hope that this will serve as inspiration to our local industry, and especially our SMEs, to continue to transform and raise productivity.

(In English): Mdm Chair, please let me continue in English. We will continue to grow the SME sector through three key strategies – innovation, collaboration and internationalisation. Senior Minister of State Lee Yi Shyan had talked about internationalisation earlier, so, I will elaborate on innovation and collaboration.

In his Budget Speech, the Deputy Prime Minister and Minister for Finance stressed that we must make innovation common and widespread in our economy. To encourage innovation among our SMEs, we have expanded broad-based schemes like the Innovation and Capability Voucher (ICV) and Productivity and Innovation Credit (PIC). These schemes are designed to help as many companies as possible. Mr Thomas Chua would be happy to note that many SMEs from the traditional sectors have benefited from these Government schemes.

Ms Foo Mee Har, Mr Gan Thiam Poh and Mr Zaqy Mohamad have asked about targeted Government schemes to promote SMEs' transformation. We recognise that each sector and even individual companies have different challenges. Hence, we have introduced targeted schemes to focus our efforts on priority sectors, or raise productivity in specific ways unique to the company or industry. The Capability Development Grant (CDG), which Minister Lim had talked about earlier, is one such programme. It is tailored to the capability development needs of individual SMEs.

Let me highlight how targeted innovation through the CDG has helped our companies raise productivity. Food manufacturing company Foodedge Gourmet, for instance, tapped on the CDG to cover 70% of the qualifying costs to build a brand new ice cream production line. Foodedge is a food supplier to cafes, restaurants and hotels, and ice cream is one of its key products. Since 2014, with the introduction of this technological innovation, the

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company has been able to introduce new products, such as salted caramel almond ice cream, pistachio ice cream and locally-inspired sorbets like Soursop and Lychee. Furthermore, Foodedge was able to increase its ice cream production capacity by five times while requiring less manpower, who were redeployed to other areas. This enabled the company to supply more ice cream locally and explore export opportunities in the region.

As mentioned by Minister Lim, the CDG will be enhanced by simplifying the application process for projects below $30,000. For such projects, companies do not need to submit detailed project reports. We used to require them to submit detailed forecasts in terms of the project's value-add. Instead, there will be just five easy-to-answer guiding questions to describe the projects briefly, as long as they can prove how they can improve their processes or productivity. In addition, the number of fields in the simplified application form will be further reduced, so companies need not provide detailed projections on the impact of the project. I have heard Ms Foo Mee Har's example of Little Ferry Agencies and how it has customised its racking system to make it more efficient and in its processes. I used to be from the logistic industry and I can understand what kind of racking system they had. Technological applications may not be applicable here. Nevertheless, we want to encourage such innovative ways of changing a company's process or racking and shelving systems. Under the enhanced CDG that was announced this year, this type of projects could be supported.

The Government will be extending this enhanced support level for CDG of up to 70% of the costs for three more years until March 2018. We will also put in more resources to scale up the teams managing the CDG to reach out to more SMEs, so that more companies can benefit from this programme. Mr Inderjit Singh had asked for more resources for SPRING. I thank him for his request and I agree with him that because there are about 180,000 SMEs and if we want to help them to improve productivity, there is a need to give SPRING more support.

As we pursue innovation, we need to recognise that there are areas that we need to and can develop further, especially given the rapid rate at which companies in other countries are innovating. For instance, in e-commerce, there is scope for us to catch up with the likes of South Korea, China and Japan. Internet retailing made up only 3% of total retail sales in Singapore, compared to 12% in South Korea. Mr Inderjit Singh had also mentioned about rental costs which I will address later. E-commerce is one way to bypass some of these costs. In my own personal experience, I have just bought a very specialised skipping rope that can spin a lot faster. I thought that we did not have this in Singapore, but I found a place where I could purchase such a skipping rope and it was at a warehouse here. When I bought the skipping rope, I went to the warehouse and I thought because it was a warehouse, the rental would not be so expensive. The skipping rope cost me $24. Another friend of mine bought a similar skipping rope online via a Chinese Internet retail site and it was delivered to

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his house. He paid $8.

While our small market size poses a natural obstacle to scale, there is clearly scope to improve and new ways to do business. The Government has taken some steps to give e-commerce a stronger push. For instance, SPRING has worked with partners to organise workshops to educate retailers on topics like digital marketing and data analytics to help traditional retailers understand opportunities in e-commerce. SPRING has also supported digital consumer campaigns, such as the "Great Online Shopping Festival" in February, to drive sales for participating retailers.

In addition, SPRING, IDA and other agencies are working with industry partners to develop a common platform to facilitate e-commerce activities across various online marketplaces. This platform will include integrated warehouse functions, inventory management solutions and order fulfilment capability. This will benefit SMEs which want to adopt e-commerce but are unable to afford the initial outlay. In addition, by streamlining the logistics chain, participating SMEs can reduce the time taken to process and manage orders by up to 45%.

The reality is that competition will only get stiffer – from newcomers who are starting to differentiate themselves and from existing companies that have already begun to transform. The Government will continue to support our SMEs, but I also urge our SMEs to stay committed to the journey of innovation and raising productivity.

Collaboration is the third key strategy to grow the SME sector. Collaboration helps our SMEs build track records, pool resources, share best practices and create new business opportunities.

Minister Lim had earlier mentioned how SMEs can collaborate with large organisations and benefit from the PACT programme. Let me just update Members that SPRING, under the PACT programme, over a short period of time, has facilitated 85 projects that benefited 570 SMEs. We want to continue to encourage SMEs to collaborate with one another. They can come together for business opportunities and they can also pool their resources to look at new ways to keep costs down.

The other programme is the Collaborative Industry Projects (CIP) Programme. It has been a key initiative to promote the adoption of shared services among SMEs. For this, we would need the TACs to take the lead and to help to bring projects together. Through the CIP, SPRING works with industry players and partners, such as TACs, to drive mass adoption of innovative and productivity-raising solutions tailored to the specific industries. So far, we have 15 projects that have benefited 240 SMEs. I know more will come on as many of the

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TACs are already planning new shared services to be provided to their members.

SPRING is currently working with its partners on a number of projects, two of which will be rolled out very soon. One of them is the e-commerce project which I had mentioned earlier. The second project is a platform for shared HR services. Together with industry partners, SPRING will be setting up a common pool of HR solution providers, which micro enterprises and SMEs can tap on for HR systems and services. Participating SMEs can benefit by outsourcing their administrative HR activities, so that they can focus their limited manpower on their core functions.

Both projects are open for enrolment starting from 1 April 2015 and we are targeting to enrol 50 companies each. I encourage our SMEs to come on board these two CIP projects.

Ms Foo Mee Har also asked what more the Government can do to help companies appeal to the hearts of their workers and motivate them. Fostering a positive workplace culture and increasing employee engagement is a key concern for the National Productivity Council (NPC).

To improve employee engagement, we need to raise the quality of leadership and management within our companies, especially SMEs. Research has also shown that well-run companies are more productive. In this regard, many SMEs have tapped on grants like the ICV and CDG to raise their HR capabilities. We have now widened access to the CDG as well as made it simpler to apply. With this greater access, more, including the micro and small enterprises, can now tap on CDG to do more. PIC may not be readily available for them, but they can approach the SME Centres for help in tapping on grants. The business advisors in the SME Centres can better understand what their needs are. The SMEs do not need to remember any of the schemes. They just need to approach the Centres.

In addition, helping SMEs attract talent is also crucial. Mr Thomas Chua had mentioned that this is important to the renewal of our traditional companies. We have launched the SME Talent Programme (STP) quite some time ago and it was introduced to address SMEs' need for talent, by matching promising students from ITEs, Polytechnics and Universities to some of our growing SMEs.

I am pleased to share with you that this programme has gained traction over the past two years. Seven TAC partners are now on-board. Since the programme launch in June 2013, there have been 530 internship matches and more than 450 job matches to 240 companies. For instance, through the programme, Keystone Cable was matched with four candidates who will be groomed to play key roles in its business operations and to drive the company's overseas expansion. To me, this is a win-win situation where promising students are given a

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headstart in their careers, while SMEs have the option of tapping on a pipeline of talent.

Government schemes are available for all SMEs to tap on. But companies must take the lead and strengthen management. They must recognise their workers' skills, value and train workers. As mentioned by the Senior Minister of State, the SkillsFuture Council (SFC) will promote continuous learning and skills mastery to support workers as they improve their productivity. We look forward to SMEs' support of the SFC's work.

One key plank in our outreach efforts is the SME Workgroup, which I have chaired since 2013. Many of our hon Members are also in this Workgroup. Members of the SME Workgroup, together with representatives from Government agencies, such as MOM and IRAS, have been conducting dialogue sessions with SMEs to understand their challenges and concerns. We also share with the community about Government policies and how these can be helpful to SMEs. As part of our outreach efforts, we established a network of 10 SME Centres in 2013 and added two more in 2014, where Business Advisors are on hand to advise SMEs how they can improve productivity or business capabilities. To date, the SME Workgroup and the SME Centres have collectively reached out to over 60,000 SMEs.

The SME Workgroup has provided useful feedback to the Government on various issues concerning SMEs. As a case in point, the Government released more detailed retail and industrial rental market data earlier in January this year following feedback from the SME Workgroup and SBF as well. Such information can help our retail and manufacturing SMEs make more informed decisions on setting up outlets or factories or renewing leases for their current premises. The industrial rental data, as well as the commercial rental data, are released on the website. Companies can compare and look at it at the street level, cluster level and the floor level as well. So, when they make the comparison, they will make more well-informed decisions. JTC is constantly monitoring industrial rental movements and also releasing land where necessary. In terms of commercial and retail rentals, we hope that this information that is provided to the market is helpful for the tenants, as well as the landlords, for their negotiations. We want to encourage fair practice. As long as there is fair practice, I think this information will be helpful.

I would like to take the opportunity to thank members of the SME Workgroup for their contributions. Through their efforts, we have identified some of the key issues affecting SMEs today and have taken steps to address them. I look forward to working with all of them in 2015.

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Mr Inderjit Singh and Mr Thomas Chua talked about a one-stop SME agency. The SME sector is an important part of our economy. I believe Ms Denise Phua as well has also talked about a one-stop SME agency. It is a very diverse group – ranging from micro enterprises in our HDB neighourbourhood shops to high-tech startups to local companies which are already successfully exporting to overseas markets. Every SME comes in different forms, have different natures of business, need different skills and are in different phases in their business development. So, it is not easy just to have a one-stop agency. But we take the point that we could make it easier for the SMEs, wherever they are, whoever they are, to access to a first-stop. It would be very challenging for one agency to cover all areas.

Let me say that SPRING Singapore is the lead agency looking after the SME sector, providing the majority of Government programmes and grants to support the capability development of SMEs. SPRING reaches out to every segment of the SME sector; from retailers with fewer than 10 workers, to globally competitive SMEs. SPRING also provides a range of assistance, from basic ICV to customised CDG and financing schemes.

SPRING will work with other agencies to make sure that that first-stop is possible. Whether it is increasing resources to do that, I think it is most important that we train the existing officers and staff, both at the SPRING level. Maybe, some of the larger companies would have to go to SPRING officers to look at their more detailed operational and business needs, whereas the micro SMEs can access the SME Centres in the HDB heartlands. The micro-businesses could approach the SME Centres which would coordinate with the rest of the agencies. The SME Centres will play that role.

We will train our officers to be able to coordinate and put forth the schemes available and to be able to give the appropriate advice or coordinate the resources to give that advice under one roof. As Mr Inderjit Singh has pointed out, the current network of SME Centres has provided useful touch-points, and we will enhance that.

There are many good examples where SMEs have benefited from the SME Centres. For instance, with the assistance of SME Centre@SCCCI, one company called Skylace Enterprise was able to improve its HR and financial management capabilities by tapping on SPRING's ICV and WDA's Age Management Grant. So, that is two agencies supported by one SME Centre facilitating the process. This is one example. We know that more needs to be done and we will make sure that it gets done to address some of the gaps in the marketplace today.

To make grants more accessible, we will be rolling out Phase 1 of the Business Grants Portal (BGP). We want to do that, not only on the ground and physically, but on the Internet, online, we are going to do that as well. There is the BGP which we are going to bring in, involving about 10 agencies – namely, SPRING, IE Singapore, WDA, Design Singapore, Maritime Port Authority (MPA), Media Development Authority (MDA), Infocomm

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Development Authority (IDA), Singapore Tourism Board (STB), Building and Construction Authority (BCA) and NParks – with all the 20-plus business grants under one portal.

Our vision is to streamline about 20 existing business grants into three key areas within one portal. SMEs visiting and accessing the portal, need not know what kinds of schemes or grants exist, but they look at it by category and then apply for the relevant one. It is very straightforward. These three areas in the portal are capability development, internationalisation and training. On this portal, companies will be guided through the process and given advice on the grants for which they are eligible. It will reduce the time required to search and apply for these business grants.

Since the inception of the Innovation and Capability Voucher (ICV) scheme in 2012, more than 16,000 vouchers have been awarded. A few service providers who are suspected of abusing the ICV are under investigation. This is one point I wanted to highlight – that there are some who abuse the system and some have inflated project costs for SMEs in various ways to claim the vouchers. Others have colluded with SMEs to make false claims. I want to say that we will be monitoring them very closely. We will ban them and there are some being banned already, and they are on our blacklist of consultants. We will continue to monitor them but we also need the feedback from the ground, to tell us who they are. We will list them, find out and gather enough evidence before we do so. We take a serious view of such abuses.

Mr Inderjit Singh asked about the startup ecosystem. Over the years, we have put in many different startups. International publications like the Economist and Harvard Business Review have started to write about our startup ecosystem entrepreneurship; most notably Block 71 LaunchPad. There is urgency for startups to have a place and quickly launch themselves beyond Singapore shores. As a start, Block 71 has now expanded. Block 71 is in Ayer Rajah and that is a LaunchPad itself. We have added another two blocks. So, there are three blocks for startups altogether. There are 500 startups there – many entrepreneurs.

In order for them to go beyond our shores, as a start, what we have done is there will be a "Block 71 San Francisco" which was opened in January 2015 to support Singapore startups venturing into the USA. This is a collaboration between NUS Enterprise, Singtel Innov8, Infocomm Investments (IIPL) and SPRING. And this is something that will encourage them. We will be planning other locations as well.

LaunchPad in Singapore will not just be limited to one area but it will be in different parts of Singapore. The second one will be near NTU, in CleanTech Park. These are the areas that we will be looking at. We have a vibrant startup ecosystem.

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We have also supported start-ups by making available financing in the early stages. For instance, the Government catalyses "smart money" through the Start-up Enterprise Development Scheme (SEEDS). Many enterprises have benefited from SEEDS and the Business Angel Scheme (BAS). These help our startups benefit from the expertise and go beyond the first phase of development.

SEEDS and BAS have done well, having catalysed close to $340 million cumulatively from about 500 private sector investors and funds into 240 investments.

We are committed to supporting innovation and entrepreneurship. We will enhance SEEDS and BAS by increasing the co-investment cap to $2 million per company and topping up the BAS scheme by $75 million to support more innovative start-ups. We will also pilot a venture debt programme to give high-growth enterprises access to an alternative financing instrument that can serve as a substitute for equity financing.

There is a window of opportunity for our SMEs over the next few years, so that the SMEs can work on some of the public sector projects. Er Dr Lee Bee Wah has mentioned that. We believe that there should be a fair and open competition among all companies, including SMEs. But, then, we want to make sure that there is opportunity available as well. Considering the fair and open competition, we will encourage SMEs to look at our Smart Nation Project.

SPRING, Action Community for Entrepreneurs (ACE), which is really in charge of fostering the entrepreneurship community in Singapore for startups, and also Chambers of Commerce will work with the Smart Nation Project Office to identify opportunities for our startups and SMEs to contribute to making Singapore a Smart Nation.

We want SMEs and startups to have the chance to participate in this project. The best way for us to help SMEs is to allow them to go into this competition to bid for it. We should not hold them back and set a very high barrier to entry. But they have to prove themselves based on their own merits, to be able to bid for them and win those projects. We will make sure that we take note of that and advise the good companies, some of the good startups, to bid for some of the Smart Nation projects.

Mr Liang Eng Hwa, Dr Chia Shi-Lu, Mr Yeo Guat Kwang, Mr Gan Thiam Poh, Mr Inderjit Singh and Mrs Lina Chiam, in their earlier speeches, asked about business costs. The increase in business costs for the manufacturing sector moderated to 0.7% in 2014 from 4.1% in 2013, while the increase in unit services costs for the services sector remained at below 2% in the last two years.

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We have also noted the point about rentals. I have mentioned that and I will not mention that again. Furthermore, utilities costs for both the manufacturing and services sectors declined in 2014 compared to the previous year. This was due to a fall in electricity tariffs in the second half of 2014 on the back of the plunge in global oil prices. Let us continue to monitor that and see what we can do, like, for example, the way we have done it with the rental data.

Dr Chia Shi-Lu asked how the Government will ensure that Singapore continues to have a pro-business environment. We are always pro-business, we are always open and we always take in feedback. Let me give you an example. The Pro-Enterprise Panel (PEP) is chaired by the Head of Civil Service, with the Second Permanent Secretary of MTI as Deputy Chairman. What do they do? They actually look at some of the processes and streamline them, whether it is licence fees or process review. Since its set-up in 2000, the PEP has accepted more than 1,000 suggestions to improve rules and regulations.

Moving forward, in 2015, we will undertake more of such reviews of the costs arising from business regulatory compliance. As part of the review, the PEP will engage companies and gather their feedback, because this is part of their work throughout the year.

Mr Lim Biow Chuan has raised a few issues on consumer protection. Promoting fair trading and consumer protection is a collective effort by the Government, CASE and the industry.

CASE and STB have stepped up cooperation with relevant malls to improve information to the public on retailers who are the subject of a high number of customer complaints. I know everybody was concerned about Sim Lim Square's issues and the saga when it happened. Let me just give an update that CASE had worked with Sim Lim Square's Management Council to produce consumer alerts and advisory posters in English and Chinese. I understand that they are now placed at all the entrances, lift lobbies and even within the lifts of the mall. STB is also working with the Management Council to prepare public announcements on consumer advice in the four major languages.

On a broader front, MTI will work closely with CASE to step up broader consumer education. At the same time, we want to highlight that the Consumer Protection Fair Trading Act (CPFTA) cannot be a "one-leg kick" with everything encompassed, because it will be very messy. What we want to do is that we do not discourage retailers from doing their business, especially those good retailers. We know that errant retailers are the minority. We just need to catch them. This is under review at the moment and we have until mid-June to put it through, make the recommendation and make a public announcement.

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We thank Mr Lim Biow Chuan for his concern. We also need his help and support all the way through, to make sure that we can protect the consumers.

I am confident that we can overcome all the challenges, whether it is for SMEs or consumers, as long as the Government companies and individual Singaporeans work together as one to transform our economy and position ourselves to secure opportunities in this new global economy.

We have a little bit of time for clarification. Mr Liang Eng Hwa.

Thank you, Madam. I have two clarifications with regard to inflation and cost. Firstly, the MAS recently did an off-cycle adjustment to the Singapore dollar rate, slowing the appreciation trajectory. While it will help exporters, it has also led to the upsurge in Singapore interest rates. I would like to ask the Minister whether this sudden sharp increase in the Singapore dollar interest rate will have an adverse impact on our businesses, especially since many of them are still grappling with the rising labour cost and whether this weaker Singapore dollar will impact imported inflation, especially the imported necessities.

My second clarification is with regard to the petrol duty that was announced. Following the Budget announcement of a 20-cent hike in petrol duty, petrol prices were reported to have risen beyond the level of the duty increase. I would like to ask if the Ministry has carried out investigations on the matter and whether action will be taken against petrol companies which have unfairly raised the petrol prices.

First of all, this off-cycle adjustment was prompted because we have been receiving data and the inflation performance has been much more benign than we anticipated. Therefore, MAS felt it necessary to intervene ahead of its typical April schedule. Because of that, and due to the oil price decline, inflation is projected now to come in much lower. We expect the lower appreciation trajectory of the Singapore dollar not to disrupt the inflation numbers we have projected.

On interest rates, the pattern started way ahead of the off-cycle adjustment. If you track the interest rates in Singapore, this is prompted more by anticipation of the US Federal Reserve Board raising interest rates sometime this year. Being a very open economy, interest rates have moved in anticipation of that decision by the US Federal Reserve Board.

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Second question, Minister of State.

Mdm Chairperson, for the petrol prices and duties, currently, the Competition Commission of Singapore is gathering information and engaging petrol companies about the reason and rationale for the price increase. While they are gathering information and the engagement is in progress, we do not have conclusive evidence yet. Nevertheless, we want to assure the public that, if they are found to be fraudulent or they are involved in anti-competitive behaviour, we will take action against them.

Madam, I have two clarifications for the Senior Minister of State. On the International Growth Scheme (IGS), I had asked in my speech about numerical targets for IGS as we have numerical targets set for the other schemes. So, I was wondering if there is any target set on the number of companies that will be on IGS over the next five years.

Second is that it is good to know that the number of Singapore companies with more than $100 million in sales has been increasing. One hundred million dollars itself may not automatically mean that the company is globally competitive because they have to have critical market share and strong branding. A whole-of-Government approach involving multiple agencies and research institutions may be necessary to help the companies in this competitive world. I would like to know what sort of whole-of-government involvement can our promising local companies get outside of MTI, for example, say, in trade diplomacy, so that we can move beyond schemes into grooming specifically very promising global leaders from Singapore.

Mdm Chair, I thank Mr Yee for his supplementary question and clarifications. On the IGS, it is a new scheme, and IE Singapore will soon release the guidelines of the scheme. We do not have any numerical targets as yet because of the way the scheme is structured. However, we really hope that the scheme will stimulate more companies to set up operations that will channel some of the income back to Singapore. However, at the same time, we also want to be sure that they keep Singapore as a core in their HQ functions so that good and high-quality jobs will be created for Singaporeans.

On leading Singapore companies, how do we grow them to $100 million or more? In fact, we take a very holistic approach to grooming them. Trade diplomacy is still within MTI's purview. So, whenever our companies are growing into the different markets, IE Singapore, for instance, with their 30-over offices worldwide, will provide facilitation. Sometimes, they will link them up with local partners; other times, they will advise them on how to

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understand local business regulations, as well as legal requirements.

Our companies are doing well. Of course, we have set an ambitious target of having 1,000 of them by 2020. This is an ongoing journey. Many of our companies are now working as a group to address opportunities that are available to a larger consortium of companies with a range of capabilities. So, I think many of the examples, such as township, urban solutions, larger infrastructure development, typically involve both our larger leading companies as well as smaller companies going in as a consortium.

Working closely with the trade associations, SBF and some of the market organisations, we are quite confident that Singapore's external economy will grow.

On the SME Talent Programme and the matching of talents to the SMEs, would the Ministry consider recruiting all these talents under the Ministry and seconding them to those businesses requesting them? Of course, the cost will be borne by the businesses directly. That will expedite the whole process and also give more assurance to the talents.

There are many talents. Different talents study different courses. They also have different personalities, passions and interests. So, yes, there may be some that are possible where we can, say, second some of the talents under the agencies, not necessarily have to be under the Ministry, like the scheme where we also second some of our civil servants to private-sector companies. But if we want to do it as a big group, I think we need to look at their interests and so on.

Currently, it is best to let the students pursue their interests but we continue to promote what is good about joining SMEs. That is the most important priority today, as people sometimes just want to join the much larger companies, MNCs and so on. But we need to support our SMEs because they employ 70% of our workforce and they comprise over 90% of our registered entities in Singapore. We need to support them. There is an immediate need and gap to fill. It is not like we bring in all the best or all the talents and then, after that, we start to allocate. That adds on another layer to the process and may not help the SMEs directly and immediately, which is what we need to do now.

Madam, I would, first, like to thank MTI for the enhanced CDG and to know that initiatives, like those pursued by Little Ferry, can now be approved. I just have one point to clarify with the Minister of State. He mentioned that CDG and ICV would be the schemes that people could tap if they want to get advice as to how they can improve support schemes that relate to appealing to the hearts of the employees. Could the Minister of State

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elaborate exactly how that would work because these are HR and people-related schemes.

There are a few schemes. Let me make it simpler so that people will not be confused. The schemes are PIC, ICV and CDG. In fact, all of these schemes, we tier them such that the smaller and micro-enterprises can benefit from them. This year, we announced the enhanced CDG, which widened the process and access for smaller enterprises. We are helping our local enterprises a lot more than just helping the bigger companies.

In terms of applying for some of these schemes, in fact, I would say that any company just needs to approach the SME Centre and need not know what kind of schemes are available. They just need to tell them what needs to be done or what they hope to improve.

Let us, say, for example, they want to improve the human resource management of their company and they are growing from a small company to one of a larger size, and they want to know what they should do, what kind of schemes they can tap on. Business advisors can advise them. SMEs can tap on the schemes to support changes in HR, for example, implementing a HR software system or HR process. HR consultants can be engaged to advise the company to, say, look at your growth, your company's projection of how much manpower will be added in one year, two years, and what you should do in terms of, say, HR manual, HR processes, interview appraisals and so on. The companies can then make it more structured.

Those companies that have participated in the SME Talent Programme have to undergo an assessment of their HR system because we want to make sure that the HR process is tightened and that there is a proper prospect and career path for those who want to join the company. A lot of SMEs that join the SME Talent Programme end up having to implement a more structured approach to its HR resource management. Then, we can recommend ITE, Polytechnic and University graduates for internship or job placement.

So, when SMEs approach and apply for whether it is ICV, CDG or PIC, it is not necessary for them to know and understand every scheme because we know it can be confusing. The reason why we introduced so many schemes is because we definitely want to help the SMEs of different sizes. That is exactly why when we launched it, it is just to highlight the need and highlight the fact that there is such a programme to help them out there. So, this is how we can address the issue.

Madam, the Minister of State mentioned that instead of having a one-stop, he is suggesting to provide a better first-stop. So, I hope the Minister of State can elaborate further on how this first-stop can really help. We know that

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many SMEs would like something that is more concrete and for someone to hand-hold them so that they can find a better solution for this.

As for the one-stop service centre, it seems that the Minister of State also suggested that the current SME Centres will be able to do the job. I also want to ask the Minister of State, does the Ministry have plans to extend these SME Centres to collaborate with more like-minded organisations, instead of just the SCCCI and ASME?

I thank Mr Yeo for the suggestion. We can pursue a vision of hand-holding, but I can tell him, it is very tough. Why? Because there are 180,000 SMEs in Singapore. They are of a different nature of business and are of different sizes. Instead of raising expectations and say I have every officer, 180,000 officers, one to hand-hold each SME, or I can have one officer for many SMEs. Sometimes, I do not think we have as much domain knowledge as the businessmen themselves or those who set up the companies themselves.

So, it is best that we make sure that there are different resources available to them, but these resources might rest with different agencies. That first-stop can help to coordinate resources, to discuss with the entrepreneur or the business person on what they need. You bring in all the resources and we coordinate. That is exactly where I see the SME Centres and also the business advisors playing that role to say, yes, you need HR, you need WDA's support; or, yes, you have this certain need and there is a scheme in SPRING Singapore that can help you. If you need to go overseas, I can coordinate with my colleagues in IE and facilitate the process.

One thing we will try to do as a first-stop agency is that we can have this vision when the SMEs come to the SME Centre to relate their cases. And they would only need to tell their story once. We will try to do that. Whether it is through technology or information or whatsoever, we will try to do that. Put it down in one standard template and say, this is the story, and you tell that story once and we coordinate the officers to meet the SME and then see what can be worked out to address the issues.

As far as working with more than chambers of commerce or trade associations for the SME Centres, we are definitely open to all these ideas. As long as the organisation is a non-profit organisation and they would like to engage the SMEs to help the SMEs improve and also, at the same time, for their own mission, whatever is their mission, let us say, to help Singapore as a whole in terms of jobs, workers or SMEs, we are open to suggestions and we would like to work with them as well.

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Mdm Chairman, I would like to ask the Minister of State on the subject of the petrol price hike. Besides investigating on anti-competitive behaviour, is the Ministry also investigating them on profiteering? And, indeed, if there is profiteering, is the Government or the Ministry going to take action against the petrol companies?

I thank Er Dr Lee for the question. We have to gather information and, whether it is profiteering or anti-competitive behaviour, we still need to gather information and look at what act was committed, and whether it has been a fair practice or not. At this point in time, it is still too early to make any conclusion or judgement and I do not want to raise expectations and, say, end of the day, yes, we found something. We have not. We are engaging them right now and we are collecting information. But as I assured Members just now, we will take action if they are involved in any of the practices that is unfair or anti-competitive.

I am glad the Minister of State spoke about MTI being the first-stop. On my question of R&D, I spoke about R&D at quite some length. I just want to know, being the first-stop, whether MTI will be facilitating more R&D adoption claims, because 1% of PIC is certainly a low number. Is there any target to grow the adoption of R&D in the SMEs? That is my first question.

The second question is with regard to productivity. Senior Minister of State Lee mentioned last Friday in terms of secondary indicators, that there are some set by with BCA, for example. Is this also across all the major sectors where we can look at secondary indicators? Because one of the key feedback from industries is that they have no idea how far they are from the end and what is the end state for each sector. What is important for many companies is to know what is the Ministry's or Government's definition of success in productivity for each relevant sector.

Mdm Chair, let me answer the productivity questions. The National Productivity Council (NPC) has been working with the industry and we have developed 16 industry roadmaps. In each of these roadmaps, the industries have given feedback and we are in the process of structuring secondary productivity indicators.

As we have discussed, in the examples of construction industry and the retail industry, there are different measures to measure: the individual workers' productivity – how much that person can accomplish, either on the shop floor or construction site or factory; there are also productivity measures for the company as a whole – when all the individuals and automation and process re-engineering are put together, how much will the cost be reduced

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and how much the yield will be improved and so on.

Individual companies will have to work on specific data sets like these to measure themselves against their targets. However, the value-add per worker as an overall measure is still important because companies can go on producing more and more units, but if the prices of such units as reflected in their sales in international competition are coming down drastically, it will also mean that we are doing more but getting less overall. That, in economic productivity terms, means that we are not doing the right thing. Staying in this business probably cannot add to the wages of our workers. So, what do we do as a business, as a sector? That is where we have to make more fundamental changes to our business model or increase our ability to innovate and create products or services of higher value.

As we pursue incremental improvements in productivity, we also have to keep in mind some of the more abrupt and fundamental changes in the business model or products and services, so as to give us a quantum leap, a step change in the way we provide our value-add.

I want to thank the Member for raising this because, most of the time, we talk about value-add, and that is subject to business cycle fluctuations. While that is true, we also work on secondary matrices to make sure that our companies – on an individual basis and on a sectoral basis – are making improvement.

Is your question answered? Who is answering the other part of the question?

Mdm Chair, basically, we have to be realistic. When we look at the PIC statistics, the easiest thing that companies can apply for and the quickest way to get applications approved is the generic ones, whereas R&D is very specific and very in depth and we cannot expect too high a percentage. But we will continue to work to improve this. As Second Minister Iswaran mentioned the other day, the research institutes work with the companies, especially through the Technology Adoption Programme, and try to transfer the technology from the research institutes down to the companies. So, that process is working quite well.

We only have five minute left for clarification. So, Mr Liang Eng Hwa can make his clarification, followed by Mr Inderjit Singh. And then, I will have to end this session.

Madam, I just want to ask a clarification on internationalisation. Singapore companies have done very well internationalising into China, thanks in part to the strong government ties, as well as agencies like IE Singapore helping to do the ground work.

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It is good, of course, but it also means that we are overly exposed to China's economy.

I would like to ask the Minister: does he envisage similar success in other markets? Can some of these be replicated elsewhere in terms of different geographical markets and whether we are too dependent on China's market and whether we should really make an effort to diversify from there?

A quick answer. Again, we have to be realistic. We can do much better in China and ASEAN than we can in Latin America and Africa. But we are continuing our efforts in Latin America and Africa.

I want to thank the Minister of State for agreeing to the suggestion of the first- and one-stop agency. We have higher expectations, so, I hope we can make it work.

But my question on REITs was not answered. There are companies that have yet to get direct allocation of land and, so, they got preferential treatment and perhaps, preferential prices. Later on, they turn this back into REITs which, I think, is not the right thing to do because they got preferential treatment. Are we having this practice and, if we do, are we going to stop this?

I thank the Member for the question. As far as REITs and the specific case in terms of preferential treatment are concerned, the Member may perhaps want to provide more information on the details, so that we can look at the specific case in question.

I have answered about REITs several times in this House, as well as about REITs' influence on rental. They may not be the dominating party in the cluster but, because REITs usually have a share of a larger part of a more attractive place, usually the prices and the rental prices go up. That is exactly why, working with the Singapore Business Federation and the SME Working Group, we came up with releasing some of the data to make it more transparent so that both sides, tenants and landlords, can go into a fair discussion on the negotiation of rental rates.

We do the best we can. We cannot interfere and intervene in the market. We provide the information as best we can to provide transparency for them to negotiate. So, as far as REITs and the specific cases are concerned, can the Member please give me more details offline?

Mr Liang, would you like to withdraw your amendment?

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Mdm Chair, I want to thank Minister Lim, Second Minister Iswaran, Senior Minister of State Lee and Minister of State Teo for the thorough and informative replies to our cuts and clarifications.

The message from this debate is that: in the context of Singapore, we continue to build a vibrant and resilient economy. We will help our SMEs to catch up, to improve, but we also need to change. We cannot afford to fail in our productivity efforts and our skills upgrading efforts. And of course we need to remain open and stay business-friendly to stay in the game.

It is not an easy task for MTI but we are confident that the Ministry, which is our Team Singapore economy, will continue to bring rain to Singapore like what we have done in the last 50 years. With that, Madam, I beg leave to withdraw my amendment.

Is the Member given leave to withdraw the amendment? I think leave of the majority is given. The amendment is withdrawn.

Amendment, by leave, withdrawn.

The sum of $751,955,800 for Head V ordered to stand part of the Main Estimates.

The sum of $3,875,084,000 for Head V ordered to stand part of the Development Estimates.

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Mdm Chair, I beg to move, "That the total sum to be allocated for Head S of the Estimates be reduced by $100".

Mdm Chair, our economic achievements and rapid industrial development have given us much to be proud of. Despite our lack of resources, our people are industrious and persevering. Singapore has become, without doubt, a city with a global reputation for prosperity and rapid growth.

Yet, we remain vulnerable to rapid worldwide economic changes and disruptive technological advancements. Within our country, demographic changes to our workforce pose a major challenge. All these have been evident since our struggles in the early days when we started modernising and experiencing different phases of development.

Countries all over the world have become more connected and inter-dependent than ever through globalisation and the influential nature of the social media. The changes occurring throughout the world potentially affect us and they are happening at a rapid pace. Terrorism, the risk of pandemic outbreaks and natural disasters, all these lead to a myriad of disruptions, from greater border restrictions to shortage of raw materials. Coupled with the ever-changing regional geopolitical landscape and an uncertain economic outlook, our workforce will continue to face more challenges. We need to be prepared so that we do not get caught unawares.

Furthermore, Mdm Chair, in the last few years, the Government had also emphasised the need for Singapore to restructure our economy and our industries for a sustainable quality development. As a result of the strategic changes, the companies operating in Singapore and many of our local SMEs face real acute manpower challenges. In the construction and building sectors, services and marine industries, we hear regular feedback and complaints of shortages of workers. Equally, we also hear the loud rumblings of workers complaining about stability of employment and the lack of opportunities for good paying jobs and career advancement.

In this respect, I would appreciate it if the Minister could shed light on some of the emerging labour market trends. What will Singaporeans have to do to contribute to and benefit from the next phase of our economic development? How can we tap on overseas markets for our continued growth and mutual benefits?

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Mdm Chair, I believe some of the areas we can look into will include employment statistics, size and composition of our workforce, and viable economic activities that other countries are engaged in. We will also need to look into solving potential problems, such as employment inequalities, as well as how to help the more vulnerable groups like senior citizens, the women folk who have rejoined the workforce after years of not working and low-income workers.

Allow me now to touch on the issue of the development of Singaporeans to take up senior management positions. We should continue to develop our Singaporeans and groom them for leadership positions in all industries. According to the results of an American Management Association (AMA) survey that was published in 2011, executives say the typical knowledge and skills in the areas of reading, writing and arithmetic – or the three Rs that we all know – are no longer sufficient for managers. To ensure success in the workforce of the future, the three Rs need to be fused with four other skills, the four Cs, namely, critical thinking and problem-solving skills, communication skills, collaboration skills, and creativity and innovation skills.

We all know and believe the four Cs have become even more important to workers and their employers now and in the future, mainly due to the increased pace of change in business, the movement towards global competitiveness, how work is accomplished, and the way companies are structured.

An understanding of the needs of future leaders and managers has direct implications for management development for our industries and companies. Companies are looking for workers and talents that would make a difference and are impactful to their organisations. They understood that without workers with the four C skills, companies may not be competitive in the global marketplace. So, I would like to ask: do we have enough Singaporeans with such qualities for leadership positions in our industries now and in the future? Are we providing the resources and enough impetus through the SkillsFuture programmes to allow for more Singaporeans to rise to be one of these industrial leaders? If we want those objectives to be achieved, it means that we must ensure we create a development plan for our workers to obtain all the necessary knowledge and skills to succeed, including the four Cs.

I believe that once our local talents and workers know which knowledge and skills are needed, then the plan to acquire them can be created. Moving on, how do we assist them to acquire that know-how? We should widen the learning platform and opportunities beyond the traditional ways of learning using books and classrooms. SkillsFuture should allow for a flexible and open learning environment through: firstly, one-to-one coaching and mentoring; secondly, professional development and training; and, thirdly, in-house job

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training and rotation.

The bottom line, Madam, is that SkillsFuture should allow for workers to evaluate their knowledge, skills, strengths and weaknesses, create a career development plan, find career coaches and mentors, and focus on continuous learning throughout their entire career.

This could develop Singaporeans to take up senior management positions. In my view, this can be another form of CET, not just through attending training courses but also through what firms can do internally to systematically develop their Singaporean professionals, for example, through challenging postings. Not only will we be developing talents; this will also allow for more Singaporeans to fulfil their aspirations and build local workforce competitiveness.

So, my last question is: can SkillsFuture be a platform to develop leadership and develop more capabilities so that we can groom future leaders in our industries?

[(proc text) Question proposed. (proc text)]

Mr Karthikeyan, you have two cuts, please take them together.

Mdm Chair, I am reflecting the voice of the workers. If you ask anyone whether their pay or wage is high, the answer is a firm no. Therefore, what are the key things that are worrying?

We live in Singapore with only CPF savings and no personal savings. We need at least a disposable income of $900 a month. Statistics in MOM show that many Singaporeans are earning below $1,000 a month in basic wages. I am concerned with wage and bonus growth with the slowdown of Singapore's economic growth, especially for low-wage workers.

Mdm Chair, within the unionised sector, wages and bonuses shrank last year to three months' bonus and 4.1% wage increase versus 3.16 months' bonus and 4.63% wage increase in 2013.

The recent MOM Employment Situation Report 2014 also shows that median income growth has moderated, that is, median gross monthly income increased from $3,250 in 2013 to $3,276 in 2014, an increase of 0.8%, as compared to an average of 4.8% from 2009 to

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2012. This is excluding CPF.

I laud the Deputy Prime Minister for the extension of the Wage Credit Scheme for another two years and all companies should take this opportunity to improve the wage situation of their workers.

In the 2011 Budget Statement, Deputy Prime Minister Tharman stated that real wages would grow by 30% in 10 years' time and, to achieve this, every company should innovate and improve their productivity. This wage growth should go to the low- to middle-income workers. Many of our workers are concerned that wages might stagnate or even deteriorate if nothing is done. With the Government's support in this Budget for labour cost and CPF changes through Enhanced Temporary Employment Credit, organisations can tap on it to improve our wage situation. To ensure that our workers can continue to receive wage increases, productivity must improve and more needs to be done in this area.

As I said in my speech in the Budget Debate, the Progressive Wage Model (PWM) is a known way of improving wages and productivity in the Oil, Petrochemical, Energy and Chemicals (OPEC) cluster of unions and many others. It is a more sustainable approach to achieving long-term wage growth. Will MOM monitor the situation and license the PWM to more industries? If the situation does not improve after a certain time, can MOM form a sectoral tripartite workgroup to spearhead PWM with SkillsFuture and sectoral and manpower planning?

On my second cut, I used to frequent a retail outlet near my office. There, one cashier will tap the total amount of my purchases, another one will put the goods into the bag and four others are standing around and talking. I do not think the workers want to complain as they will be out of a job. Companies do not want to introduce any technologies as workers are cheap and many are foreign workers, too, and the replacement cost of technology is expensive.

Companies can take advantage of programmes like Inclusive Growth Programme (IGP) and many others, but will they? If you look at the manufacturing sector, there is also a risk of job loss and we need to urgently reskill our workers. Workers in the manufacturing sector are at risk of losing their jobs because the sector is gradually hollowing out.

Last year, eight manufacturing companies within the unionised sector shifted out of Singapore to Thailand, Malaysia and China, due to rising costs, weak business and ongoing restructuring. These companies considered the abundance of workers in these countries,

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amongst other factors, such as political stability.

With the ongoing restructuring and retrenchments, we need to reskill our workers so that we can keep pace with restructuring and displaced workers can be gainfully employed. The Productivity & Innovation Credit (PIC) extended till the year of assessment 2018 will support the companies to improve productivity. I urge all companies to take advantage of this.

If companies are not more forthcoming to identify gaps, redesign work and review work processes, then we are not very hopeful that we can have any quantum leap improvement in productivity. Ultimately, wages are linked to productivity. So, this is important to us, the Labour Movement. Will MOM monitor the initiatives implemented by companies before approving the quota of foreign workers in their organisations?

Mdm Chair, in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Chair, the key message of my speech today is to review the foreign worker policy in view of changing circumstances. Last year, Deputy Prime Minister Tharman announced in his Budget Statement a slew of measures to curb the growth of foreign labour. After enforcement, the impact, both positive and otherwise, was evident. Hence, when the Deputy Prime Minister announced that the scheduled increase in foreign worker levy would be deferred, it was a relief to many businesses. However, the foreign worker levy and quota continue to impose a heavy burden on all businesses.

In the beginning, the Government established the foreign worker quota and imposed the foreign worker levy with these objectives in mind: one was to ensure the employment opportunities of Singaporeans, and another, because it did not want companies to take the easy way out and rely too much on cheap foreign labour.

Following the rapid growth of the economy, Singaporean workers in the construction, marine, manufacturing and other industry sectors are practically non-existent at the blue-collar level, and there is no longer any fear of their jobs being taken away by foreign workers. Singapore has become an ageing society. On top of this, the focus of the SkillsFuture initiative is in training up local young people in the high value-added growth industries. We can anticipate that the more dirty, strenuous and hazardous industries would have to count on foreign workers.

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Hence, what is most troubling is the meaning behind the continued imposition of the foreign worker levy. If the purpose is in curbing the number of foreign workers, the stringent quota system would already suffice. If there are certain jobs which rely on the recruitment of foreign workers, paying a high foreign worker levy would only serve to increase business overheads and erode the companies' competitiveness. This is not a paltry sum. Taking the construction sector as an example, the lowest foreign worker levy was $180 in 2011 and the highest was $380. By 2014, the lowest became $300 while the highest was $950. If the quota system could attain the objective of curbing foreign worker numbers, then could we not consider lowering the foreign worker levy?

Times are moving ahead; our population structure is also changing. We now have a more highly-educated population than ever before and the foreign workforce should continue to contribute to the economic development of Singapore. We should be more tolerant in our approach towards foreign workers and appreciate what they have done. Without their contribution, we could never have built up a beautiful garden city. We keep urging enterprises to upgrade and change their business models. However, construction sites still need skilled workers and non-skilled workers. Moreover, trained skilled workers will no longer be willing to work in manual jobs.

Hence, I would like to suggest that MOM re-examine its foreign worker policy, especially with regard to the foreign worker levy charges, and instead use the quota system to control the influx of foreign workers, so as to alleviate the burden on enterprises.

Madam, the SkillsFuture initiative has the potential to transform our human capital development, which will increasingly drive economic development at the national and individual levels. To achieve our objective, it will need to be properly implemented.

I would like to know the roadmap for implementing the various programmes under the SkillsFuture initiative.

I hope that the SkillsFuture Council will educate both local and foreign companies about how they can draw on Singaporean talent from our educational institutes using schemes like Earn and Learn, as well as the various benefits of hiring Singaporeans, such as 90% subsidy for training for employees above age 40.

SkillsFuture Leadership Development is targeted at supporting career progression of PMETs. I understand that EDB currently has a programme on this. I would like to know how

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does the SkillsFuture initiative strengthen the programme or will there be new programmes.

SkillsFuture, together with the MOM's Fair Consideration Framework, should ensure that Singaporeans face equal opportunities for hiring and career progression in all companies. We should also work with employers to identify any gaps in Singaporean employability and promotion-readiness and fix these issues in the education sector.

Some commentators have said corporate leadership success requires qualities other than cognitive intelligence – such as communication skills, social skills, initiative, diversity of thought and confidence. We should ensure that our education and training landscape equip Singaporeans with the ability to compete for career progression on their own merits.

There should be no glass ceilings for Singaporeans. Nor should we accept gaps in the employability or career-readiness of Singaporeans.

Mdm Chair, I declare my interest as an employee of UniSIM, which has a large enrolment of working adults.

SkillsFuture is a long-term initiative and the credits are an avenue for individuals to assume control of and chart their personal long-term endeavour. They also serve as an affirmation to workers of the importance of taking the initiative to undergo continuous upgrading.

Together with the enhanced education and training subsidy for Singaporeans aged 40 and above announced in this Budget, the SkillsFuture Credit will reduce the opportunity costs of deferring further education. As a result, it could encourage more Singaporeans to gain work experience before pursuing higher education. This could gradually shift perceptions about the importance of being relevant to the needs of industry. Rather than discourage further education, this should enable those who embark upon it to make a mature decision based on labour market realities.

Quality outcomes are critical to education. The Deputy Prime Minister acknowledged the importance of quality assurance in his Budget Debate round-up speech.

At the same time, there have been calls from some Members for flexibility in utilising the SkillsFuture Credit.

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My question, therefore, is whether such quality assurance will be achieved, especially in view of the calls for flexibility. Will quality assurance be implemented by stringent monitoring, to ensure that the appropriate standards are met at every stage of the learning process? Will determining appropriate standards of assessment be part of the monitoring regime?

Madam, training and retraining are especially important for older workers to ensure that they remain relevant and useful to the needs of businesses. Towards this end, I support enhanced subsidies for mid-career older Singaporeans aged 40 and above.

In view of the fact that the Government schemes to support staff training and re-training may have been abused, we have to ensure that there are enough checks and balances in the enhanced subsidies schemes to ensure that they are not abused. There is anecdotal evidence of how personal enrichment courses, like swimming lessons, are disguised as staff training by errant companies to unethically benefit from such schemes.

Most mature workers in Singapore are not averse to train and retrain, so that they may upgrade their skills and have multiple skillsets in order to stay relevant in the workforce. But in an environment where most companies are reluctant to pay older workers equitably because of age bias, the incentives to train and re-train are lessened.

With confusing comments like, "Worker training is like trying to hit a moving target", "The technology and skills required today are likely to be different from those needed five to 10 years from now" made about training given by establishment figures, it is understandable if our older workers are confused about the need and necessity to be trained appropriately in skills for the industry.

It was reported that our ongoing economic restructuring has squeezed more workers out of the workforce and that PMETs, especially, have below average re-entry rates. It was also recently reported that it is industry practice to reduce the pay of older workers. Are the efforts of the older workers who keep themselves upskilled appropriately considered by employers when they have to decide on matters like retrenchment and salary adjustments?

Besides training throwing money at the problem of ensuring an appropriately trained workforce, what else can the Government do to ensure that the older workers, especially

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mid-career employees who know the value of continuous upgrading, do not get the short end of the stick by human resource policies of some companies which may be discriminatory? TAFEP is a good platform the Government has been properly addressing some of these problems to all workers, especially older workers, face —

Mrs Chiam, please conclude your speech. Your time is up.

Yes. The role of TAFEP though has got to be enhanced so that it can better enforce fair employment and not be seen just to bark, but also to bite when necessary.

Madam, I would like to applaud the Government for the SkillsFuture Credit initiative in Budget 2015. The Government has shown that it is willing to put its money where the mouth is. In reality, the responsibility of lifelong learning and skills upgrading should lie with the employees and the employers. However, the business environment is challenging, as we understand, at the moment. So, it is difficult for them to spend extra in non-operational costs.

In that regard, by stepping up to take this responsibility, the Government has alleviated this cost from them and yet ensured that the workforce is constantly upgraded to remain relevant to the changing needs of the economy. Employers may still find that certain courses may require more funds than it is provided for by the SkillsFuture Credit.

Will the Ministry allow employers to ask employees to co-fund course fees for work-related training? It is good to have both employers and employees to also take ownership of the process as long as we ensure that there are relevant safeguards for employees and that the employees feel that the benefits they receive from co-paying is justified. I feel that this will help provide greater diversity to the courses the employees can consider so that SkillsFuture Credit will achieve its desired aims.

Madam, for workers who wish to upgrade or deepen their skills, some courses are currently funded by the Government, with individuals paying the balance; while others are fully or partially supported by their employer.

SkillsFuture Credit is a good initiative. It allows workers more access to training opportunities, to take personal ownership and to use it to pay for the unfunded portion of

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their training courses.

There are two areas which I hope the Ministry or the Council can consider when developing the criteria for the use of the credits. Firstly, we should try to include courses beyond those under the WSQ system. Especially if those courses are specific to licence, acquisition, or already receive good industry support and are able to help workers perform better in their jobs. Secondly, employers should not use the credits to pass on some of the course fees to the employees. They should continue to invest in the training for their staff and allow employees to use SkillsFuture Credit for other purposes or other training.

Being a new initiative, there are bound to be areas which may be unclear. It is important that the system is designed in such a way that it benefits the majority of users. For instance, in developing the courses and criteria, how would courses, such as Class 3 driving licence be regarded? Some people hold jobs as sales people, property or insurance agents. They may acquire a driving licence to do their job properly. In other cases, there may be those who require a Class 3 licence to be a delivery man or a taxi driver.

Do we then consider Class 3 driving a useful skill for people to acquire that skill to make a living, or just to drive their car around for commute purposes? The Council may want to consider supporting these measures with things such as screening by agencies, such as the NTUC's Employment and Employability Institute, to make such courses eligible for SkillsFuture Credit?

Madam, on growing our human capital, the Government advocates the need for all Singaporeans to inculcate a desire for lifelong learning, in order for us to build deep skills and advance our capacities to the fullest.

Deputy Prime Minister Tharman advised that Lifelong Learning aims to empower each Singaporean to chart his own journey in life, and gain fulfilment at work. As a result, the development effort SkillsFuture "marks a new phase of investment in our people throughout life."

I, for one, have always been an avid supporter for acquiring new knowledge and learning cutting-edge skills as it sharpens one's faculties and quickens the heart. However, I have two concerns; namely, on the age criterion and the unbalanced variety of courses under WDA's current purview.

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Firstly, if learning is lifelong, then should age be a criterion for entry into any Government support schemes for the uptake of skills and training? If not, perhaps, one could start to accrue the SkillsFuture credit the moment one begins permanent work at an age earlier than 25, regardless of reasons?

Similarly, for the enhanced subsidies in support of mid-career Singaporeans going for further education and training, would it be better to peg the requirement on a minimum number of years of working experience, say, 10 or 15 years, instead of making it possible only at age 40 and above?

This will allow flexibility to enable Singaporeans to better plan and integrate their learning journeys with their work and family commitments. In fact, this approach is in harmony with the current proposal of having Singaporeans leverage on the multiple subsidies given by MOE for its modular courses, which are conducted at levels regardless of age. This same flexibility of modular, continuous learning is designed to specially help individuals balance family and career together with their learning.

So, if age is not a barrier to employment, then should it also not be an impediment to lifelong learning? Each one of us has different capacities to learn which may not necessarily be age sensitive. But the types of learning and training one requires may differ as one ages; hence, there is this need to ensure a wide diversity in the courses offered as well as in the mode of learning.

Madam, this leads to my second concern, on the unbalanced spread of courses and training schedules currently available. Deputy Prime Minister Tharman again mentioned that Singapore must retain her vibrancy as a city by nurturing creative talents and ensuring that we have people with the skills and empathy needed to champion our social causes. Hence, the Government will, and I quote, "help Singaporeans learn at every stage, at every age and develop expertise and flair in every field."

Presently, all Singaporeans in our labour force qualify to apply for a great array of skills-upgrading courses and training under the WDA's suite of approved courses, comprising at least 33 Workforce Skills Qualifications (WSQ) Frameworks within the respective industries. Many of these come with Government funding in various modes of subsidies depending on each sector's specific courses.

A quick review on the listed courses in 55 Areas of Training available on the WDA website shows the majority of courses are for the learning and training of hard skills, very technical in nature, with only approximately 16% catering to design and creativity training and another 22% on the training and development of social skills. Likewise, at the BCA

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Academy for those individuals who are keen to establish a career in the built environment, 75% of its courses are engineering in focus.

I checked out the Creative Industries WSQ website and found its courses like Arts Management, Creative Entrepreneurship and so on very business-oriented.

On the other hand, over at the Lasalle College of the Arts and the Nanyang Academy of Fine Arts, a wide variety of creative courses are offered, either full time, part time or even as enrichment classes. From Interior Design to Fashion Design, Graphic Communication to Multimedia, from Music Course to Speech and Drama. The array is impressive.

Similarly, full-time courses, such as Culinary Arts, Beauty and Wellness, Community Care and Social Services offered in the ITE campuses should be modularised and rolled out to meet the needs of our working adults seeking to upgrade their existing skills or to learn new ones.

In fact, WDA should proliferate its eco-system by widening its scope of accreditation to work with industry trade associations, private institutions and voluntary groups, to embrace the varied courses currently offered and those to be made available in the future.

I believe monetary assistance from the Government is a great incentive for workers to upgrade their skills and expertise in the areas other than skills required for work, especially those who work part time, those who have given up their roles to care for their young families, for elderly relatives as well as those who are senior in years.

Hence, in addition to the many subsidy schemes, I hope the Ministry would allow SkillsFuture Credit to pay not only work skills related courses which are subsidised by WDA, but also for soft skill courses offered by both MOE funded and the privately-run institutions.

Lastly, in order to navigate the whole myriad of courses available, I like to suggest that the agency looking after the SkillsFuture Credit provides a one-stop portal, where all courses can be systematically categorised for easy reference and applications for these courses can also be done online.

Madam, the numbers and proportion of PMEs within the Singapore's workforce continues to grow. Today, it constitutes about one in three that are within the workforce, and by the year 2030, perhaps one in two. This is because of the changing structure of the economy. The growth

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in the size of the PME pool comes from three sources. Firstly, school-leavers joining the workforce and they come with better qualifications, working adults who are upgrading themselves into PME level jobs as well as foreign PMEs working in Singapore.

As the pool of PMEs grows, the competition within it will intensify. If we were to consider who are likely to be the relatively more vulnerable amongst the PMEs, we can surmise that those working in declining industries as well as those in middle-management levels who have attained their positions after many years of work. These two groups would stand out. Economic restructuring that de-layers middle levels will put additional pressure.

As a result, we have seen an increasing number of middle-level, middle-aged PMEs displaced from their positions over the years. It is not easy for a mature worker, including a PME who is a mature worker, to find work should he become unemployed. A tight labour market helps but it is no guarantee for a fast re-entry into work. PMEs, with their relatively higher pay compared to rank-and-file workers and likely larger financial commitments, face additional emotional and practical adjustment challenges. There is a risk of structural unemployment and under-employment for this group.

I wish to ask for an assessment of this situation and whether there are sufficient mechanisms in place for job matching, for place and train arrangements and professional alternative career conversion arrangements to help this group of PMEs to minimise unemployment and under-employment.

Madam, PMEs form a sizeable proportion of our workforce. Those who are out of employment and mid-career PMEs do struggle to re-enter the workforce. In a recent TODAY newspaper article in January this year, it was cited that while the labour market remains tight, industry insiders are seeing more PMEs seeking help for employment issues. Can MOM provide visibility of the hiring and wage trends for Singaporeans in PME roles?

As our economy is restructuring and with the shifts in the labour market, what is being done to support PMEs, especially mid-career PMEs' employability and career changes?

In my Budget debate speech, I asked if there could be a programme similar to the Earn and Learn programme to target mid-career PMEs. Those who face mid-career changes due to either job losses because jobs have gone away with the changes in the industry or a company's decision to downsize or relocate. These PMEs do face difficulty finding employment. Despite having experience that may be relevant to other industries, these PMEs do face difficulty in getting suitable employment given their age as well as the re-

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training that may be required.

I have seen many residents who are mid-career PMEs who have come to seek assistance at our Meet-the People Session. They share the challenges they have putting in many job applications but not getting even a response or an opportunity for interview. There seems to be preferences by employers to hire younger workers. This can be quite disheartening and eventually for those who do find employment they are usually under-employed. Some of them do take up freelancing. This trend will affect the confidence and job prospects of mid-career PMEs, and it will affect their financial positions and quality of life.

With an ageing population and the restructuring in the industry and job market, this pool of PMEs may get larger. Industry will benefit from applying their skills more effectively. Having a focused programme to support this group, it will meet the manpower needs of the industry as well as benefit the individuals, too.

Madam, thank you for allowing me to speak on this topic. One of the key thrusts of this Budget is to develop people through SkillsFuture. At the macro-perspective, it is the right direction to re-skill and up-skill our work force and make them future-ready. But at the micro-level, the implementation of this plan needs careful calibration to ensure that all segments of the workers can reap the real benefits, especially the older workers. Here, I wish to speak up for the older PMEs.

Technology is constantly changing the nature of our jobs and skills. For instance, engineers and accountants use complex software today which require more training, compared to the past. Many of our young graduates would have learnt these tools in University. But the same cannot be said about the older workers, who have left school a long ago and this could result in some mature PMEs feeling anxious about their jobs security if they cannot keep up with new technology and new skills.

Whether it is about having to stay relevant, or about switching to a new job for career progression, mature PMEs may need to make substantial investments to skill and reskill themselves. On the other hand, this group of PMEs often have substantial personal commitments. Some of those who have been retrenched are afraid of investing time and money on a full-time course as their top most priority is to find a job after retrenchment.

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Madam, our mature PMEs are facing a dilemma. On the one hand, the needs for skills training are great; on the other, the costs, including opportunity costs, are very high, too. I understand that the Professional Conversion Programme (PCP) launched in 2007 was an initiative to provide incentives to businesses to hire these PMEs, and enhancements have been made along the way, with the most recent ones being late last year.

But more can still be done for the mature workers, especially the PMEs, as they face greater challenges. Beyond helping the mature PMEs in gaining employment, helping them to acquire skills and access training to stay in their existing jobs or switch to a new job successfully is equally important. Will SkillsFuture cover the training that PMEs need and can they use the Credit together with course subsidies, as PME courses may cost more.

It is heartening to see that just early this year, there has been a number of measures and initiatives towards helping PMEs, for instance the amendment of the Singapore's Industrial Relations Act to include PMEs under the scope of union representation; and the launching of the U Associate Grant by NTUC to PMEs to support them in training and employability enhancement.

However, can there be more targeted help for the mature PMEs? Is there anything similar to the SkillsFuture Earn and Learn programme that can be made available to mature PMEs? Perhaps a more structured programme, where our mature PMEs are able to undergo on-the-job training?

adam, with the Pioneer Generation Package to CHAS, to Medisave top-ups, the Government clearly demonstrates its concern for the welfare of low-income senior citizens and retirees. Yet I notice that many of the benefits are concentrated on healthcare. Certainly, poor health and medical bills are paramount concerns in the old age. However, this does not necessarily apply to all senior citizens.

There are many senior citizens who are low-income workers. They may not necessarily fare badly in health, but they are surviving on meagre income and, sometimes, they do encounter financial difficulties because they cannot pay the bills. Many are still caring for their spouses and sometimes even their grandchildren. Often, these senior low-income citizens have basic living environment and their children are not better-off, too. These are Singaporeans who have contributed since the early days of our development and I think they do not deserve to live out their silver years likes this.

My question is how can we strengthen the support for our low-income elderly now and during their retirement? The needs of our senior citizens are very varied, and as our society

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ages, it becomes more crucial for us to develop viable solutions before the problems build up. We must be more inclusive and broad-based in our measures, so that more low-income elderly working citizens can benefit from the Government's support. In conclusion, may I request that the means testing can be made more broad-based and more inclusive so that they can cover more elderly working low-income citizens?

Madam, home ownership and the CPF are two key pillars of every Singaporean's retirement support structure. Unlike home ownership, for which HDB's eligibility criteria requires joint ownership by members of the family nucleus, the CPF account is owned solely by the member, and balances are pegged to employment and the level of wages earned by that person throughout his or her lifetime. Many women "work" at home as the primary caregiver of their families with no paid wages, so they depend entirely on their husbands' CPF. They are, therefore, vulnerable should their husbands pass on before they do and his CPF LIFE payout ceases.

With the latest set of CPF enhancements, members are offered more flexibility to withdraw from their CPF – 20% of their savings at 65 and those with properties need only set aside Basic Retirement Sum. How can we ensure that a member's withdrawal decisions are in the best interests of the family?

I call on the Government to make joint consent from both spouses a requirement for withdrawal, if the account balance is less than the Full Retirement Sum. This is consistent with the allowance for members to maintain only the Basic Retirement Sum if they have a property with CPF charge, which is usually jointly owned by both spouses.

To help stay-at-home mothers boost their retirement adequacy, I would like to ask the Minister to provide "auto sweep" functions for CPF members to transfer their savings to their spouses' account, unless members opt out. This will allow couples to take full advantage of the extra interest rate on lower balances and therefore enjoy a higher effective interest rate overall.

For example, if a husband has saved $120,000 at age 55 years, transfers the balance to his non-working wife account after setting aside the Basic Retirement Sum, the $39,500 transferred would have earned over $9,000 more or 16% more savings in the wife's account given the higher effective interest rate for low balances, than if he had kept the full amount in his own account at 65.

In addition, introduce a CPF LIFE joint ownership scheme for couples, so that when one spouse dies, the annuity is bequeathed to the surviving spouse, who then continues to

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receive a lifelong income stream from that policy.

Finally, I would like to ask the Minister whether he would allow members greater flexibility to use their CPF savings in the Retirement Account to service their housing loans after they reach 55, as Singaporeans are now working till they are older and may not have planned for the monies to be transferred from Ordinary Account to Retirement Account at 55.

Mdm Chair, CPF remains the key pillar for our social security systems in retirement. However, changing demography contributed to a widening gap between retirement and life expectancy. The early intent of the CPF system is to help Singaporeans own their homes and now 90% do. However the unintended outcome is one of constrained retirement adequacy with low cash balances.

Retirement adequacy ranks highly in the minds of Singaporeans. Some Singaporeans may have difficulties meeting their mortgage payment when they reach 55 as their CPF monies will be consolidated into the Retirement Account. About half cannot meet this CPF Minimum Sum still due to home ownership, paying for their medical fees, their children's education as well as investment.

We have to tackle CPF adequacy problem further upstream and work remains the most effective way of building one's CPF savings. Although, I am heartened with the full restoration of CPF contribution of our matured workers aged 55 to 60, I do like to nudge the Government to do more for our older workers aged above 55. Even after factoring the CPF increases, older workers above 55 to 60 still see an 11% gap whilst those in the above 60 to 65 age band see a wider variance of 20.5% when compared to their younger colleagues.

Those aged above 65 should not be ignored, as job participation rate for this group has been encouraging and set to expand in lieu of our fast ageing population. In this regard, can the Ministry also look at enhancing CPF contribution for these older workers, who will receive 24.5% less in CPF, compared with their younger "mature" colleagues?

Mdm Chair, in the email sent by the Minister of Manpower to Members very recently, the Minister sent a soft copy of the "Do It Right" toolkit, part of the Ministry's WorkRight initiative. In the 16-slide document, slide 10 was notable as it covered the employer's duty in contributing CPF to employees, including employees who are on part-time, ad hoc, contract or casual employment, not forgetting those on probation. The

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document also confirmed that it was illegal for employers to contract out their obligation to pay CPF for their employees regardless of employment status. I appreciate the effort of the Ministry in pursuing an adjudicative approach towards employers at the first instance.

As WorkRight is into its second year, I would like to enquire if the Ministry has a timeline or framework to change its approach to compel employers to make the necessary CPF payments for all employees including freelancers, part-timers and contract workers. Until then, I would like to request the Ministry to consider adjudicating and stepping up awareness among temporary, ad hoc and part-time employees as well and to allow them to file reports against employers who refuse to make CPF contributions especially since the risk of CPF inadequacy in their later years would be very acute.

Madam, CPF members who have reached 55 years of age will see a portion of their Ordinary Account (OA) and Special Account (SA) savings transferred to their Retirement Account (RA) to meet the Minimum Sum. After setting aside the Minimum Sum cash component, funds from the RA can only be used to pay for these individual's housing mortgages.

An article in Yahoo Finance dated 11 February 2014 discussed the top three complaints Singaporeans have about their CPF accounts. One of the complaints is it is nearly impossible to access your RA. I have come across such cases during my MPS where residents above 55 years are unable to pay their housing loans through their RA because they have insufficient funds left over and above the Minimum Sum. And they struggle to find additional funds to pay off their housing loans instalments in cold hard cash. Some of them do not even think that they stand a chance to get CPF Board to allow them to use their monies in the RA and hence do not even want to try to appeal.

I have also come across residents who wish to appeal to use their CPF RA for the purpose of funding their children's tertiary education. This will become more and more common as Singaporeans get married and have children later. Many of them will still have school-going children when they reach age 55.

Madam I acknowledge that it is important to set aside sufficient funds for retirement. At the same time, we must recognise that there are immediate financial concerns that warrant exceptions to present rules. Managing housing mortgages and cost of education are financial concerns that are important to many Singaporeans.

I urge the Minister to consider allowing CPF members to use their RA to continue to pay for their outstanding mortgage loans and the tertiary education of their children even if they

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do not meet the Minimum Sum, so as not to create sudden additional financial burden on them. After all, to many of these Singaporeans, how can they possibly think about a comfortable retirement when they are still struggling with home loans and ensuring their children have a good education? We can look at this easing of the restrictions specifically for repayment of existing loans by taking a minimum number of years back.

Thank you Madam. Madam, many elderly Singaporeans will be asked to tap into their children's Medisave when their own limit for outpatient treatments is reached. Some of these retirees will have to dig deep into their pockets if their children are unable to help them. A single parent told me her life savings is been depleting over the years because of regular out-of-pocket medical expenses to treat her chronic illnesses. She said her Medisave $400 limit were maxed out within two visits to the clinic. And an elderly gentleman I met said his only wish is to have fewer restrictions on the use of his Medisave in his twilight years. At $400 a year for outpatient treatments, he calculated his Medisave will outlive him while his quality of life will deteriorate as he has to dip into his life savings to pay for his medical needs. He is 80 years old.

The House was told in 2013 that a patient incurred an annual bill of $200 on average for treatment of chronic diseases at the polyclinic, well within the Medisave $400 limit. However, the introduction of the Flexi-Medisave scheme to add another $200 a year for outpatient treatment for senior citizens aged 65 and above, seems to infer that the current limit of $400 is inadequate for the elderly.

Madam, older CPF members should be accorded flexibility in the use of their Medisave for outpatient treatments. Asking them to tap into their children's Medisave to continue their treatments is like asking them to borrow from the future generation to pay for the current generation. This option should be used only as a last resort when the Medisave account of the older member is depleted. Otherwise, the cycle will play itself out again when the younger generation ages with insufficient savings left in their Medisave accounts as a result.

I call for the limit on the use of Medisave for outpatient treatments to be lifted completely for senior citizens aged 75 and above.

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Madam, I am heartened by the recommendations to introduce more flexibility in the CPF scheme, as recommended by the CPF panel, so that it can be used for diverse retirement needs.

Following the Budget debates, I noted the continued reactions in some segments of the community seeking the Government to allow higher or full withdrawal of CPF savings upfront. Of more concern is that many of these calls also come from PMETs of different segments, who should have understood the logic of forced savings for retirement and also retirement adequacy.

My concern, Madam, is that many Singaporeans do not fully understand the working mechanics of the CPF – how it benefits them, retirement-related schemes such as the CPF LIFE and MediShield Life, and why it is also a system of collective responsibility that protects them as individuals and protects our future generations too.

My concern is how the ordinary citizens can maximise the retirement savings for the long haul if they do not understand the CPF framework. Simply, if one does not understand the system, the Government puts itself in a risky position relying on goodwill and trust for support. It should be increasingly difficult for an educated population that needs to be convinced and rationalised. So, you see a gulf for a system that is widely recognised by governments all over the world as well as many academics. Our system is admired but at the same time you see that there is a gulf in expectations between Singaporeans and what others see.

The Government must put in more resources to engage citizens in depth, not just mass communications, especially amongst the older, less educated workers, but we should also try to engage those who are new in the workforce and also those in schools who will be joining the workforce in the future. What resources will MOM make available to win over the hearts and minds, to gain citizens' buy-in for this already complex but well-intended retirement plan?

Madam, the CPF Advisory Panel has recommended that the Minimum Sum be adjusted after 2015 based on three key considerations: adequacy, simplicity and flexibility.

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Thus, the Minimum Sum will be renamed as Basic Retirement Sum, Full Retirement Sum and Enhanced Retirement Sum.

The repackaging of Minimum Sum reflects the reality on the ground, especially the principal of adequacy. In fact, when one gets older and older, one's lifestyle becomes simpler than before. It is really back to basic.

The name "Minimum Sum" is also misleading as it implies that it is the minimum required.

The panel also recommends that Government provides appropriate and timely information and financial counselling, to help members make informed choices.

My question is: what are the communication plans CPF Board has to provide appropriate and timely information and financial counselling? How will CPF help its members, especially the not-so-well-informed and not-so-well-connected lower income retirees to make informed choices? Does the CPF Board have the capability and capacity to do it?

Again, the communication plan should not be a "one size fits all" as members come from different background and with different priorities and preferences.

(In Mandarin): [Please refer to Vernacular Speech.] Among the many recommendations suggested by the CPF Advisory Panel, changing the concept of the "Minimum Sum" to "Basic Retirement Sum", "Full Retirement Sum" and "Enhanced Retirement Sum" is the most noticeable.

Last month, an online survey conducted by Lianhe Zaobao showed that more than 30% of the readers were pleased to see the change.

Among the retirees, some are rich and some are poor; some are active and some are quiet. Some have "seen through life" and some still have not. The way they live their retirement life is different. Also different are their expectations for retirement.

The Panel recommends that the Government "provides appropriate and timely information and financial counselling to help members make informed choices" .

My question is: how is the CPF Board going to help this elderly group, especially those who have little knowledge of financial management, make informed choices?

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With rising cost and greater competition, the Government has consistently encouraged local businesses to look at different areas for new growth opportunities like innovation.

Although industries which are unable to attract Singaporean workers and are thus more dependent on foreign manpower are suffering, such businesses tend to be manpower-intensive industries like the construction or processing industries, which find it difficult to adopt best practices and have been successful at raising productivity in other industries. Therefore, could the Minister explain what support MOM can offer to these SMEs?

Mr Yeo Guat Kwang, you have two cuts, please take them together.

Madam, our world number one workforce is our critical competitive advantage. As our country continues to progress, we must ensure that we maintain a strong Singaporean Core in our total workforce, at the heart of our economy.

I would like to call upon the Government to extend the CoreTrade scheme beyond construction to other industries such as manufacturing, retail, F&B, to facilitate the development of Singaporean core and benefit Singaporean workers.

The current CoreTrade scheme or Construction Registration of Tradesmen scheme, administered by the BCA, aims to build up a core group of competent and experienced local workers who will anchor and lead the construction industry in order to achieve higher productivity. Employees registered as CoreTrade workers are recognised by industrial players as experienced employees and are rewarded by a clear career progression path within the construction industry, allowing them to progress from a basic skilled worker to a registered tradesman and specialising in specific trades, and eventually become foremen and supervisors. The CoreTrade scheme has benefited the construction industry by increasing the retention rate of construction personnel and ensuring that the industry is supported by a core Singaporean group of highly experienced and productive personnel. This is a good scheme, and I hope that the Government agencies will continue to press on and do not allow the employers to u-turn.

Recently, when I met a limousine taxi driver when I was on my way to the airport, he told me that actually he was a beneficiary of this scheme when he became a tower crane operator. Unfortunately, the policy changed and he eventually lost his job because the agency has allowed the job of a tower crane operator to be extended to foreign workers,

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and he ended up becoming a limousine taxi driver.

I urge the Government, both as licensing agency and service buyer, to give full support to CoreTrade scheme in the construction sector. I would also request Government to consider building a CoreTrade in all other major industries and job sectors such as Building and Facilities Management, where experienced Singaporean employees can be granted CoreTrade status, with industrial players' recognition, so that they can continue to progress in their career. Such a model would enable CoreTrade employees to progress up the skill and career ladder within the industry in a structured manner, thereby enhancing their retention rates and the standards of the industry as a whole.

The CoreTrade model will also complement the within-company Progressive Wage Model (PWM) by ensuring that there will be similar qualified Core Trade employees recognised by the industry.

(In Mandarin): [Please refer to Vernacular Speech.] I would urge our employers not to just focus on the cost, but also to take on the responsibility of building a Singaporean Core. The Government should expand the CoreTrade scheme from construction sector to others sectors, such as building and Facilities Management, financial management , F&B and landscaping, so as to build a Singaporean Core in these industries and promote the steady and healthy development of these companies and industries.

(In English): I will now continue with my next cut.

Madam, we all recognise the need to complement our workforce with migrant workers. However, with the number of unfortunate migrant worker related incidents in 2014, I think we need to change the way our employers recruit migrant workers and promote capability-based recruitment. I urge our tripartite partners to review and build a system of migrant workers recruitment for quality and not for quantity. We must just go for what is good for us and not just the number. MOM should consider setting up a firmer skill recognition on requirement upfront in order that we do not inevitably jeopardise our workforce productivity efforts as a whole, but also as a means to ensure Singapore remains a preferred employment destination in our region where all our workers are able to make a real contribution towards the building of our future and where all our workers, both local and foreign, are treated fairly.

MOM should consider the setting up of a qualitative skill measurement network and system into a firm dependency ratio of foreign workers quota, so that employers are restricted to a limited number of sub-quota of low skilled workers within their overall quota

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of migrant workers. Large numbers of the low skilled and no skilled foreign worker will stifle our overall productivity effort. I would like to repeat my call for the Government to consider WSQ-equivalent skill standards to be required for all migrant workers in Singapore. We should set this requirement upon entry, or as a renewal requirement for employers who wish to keep their workers beyond the first work permit term of two years.

We want the employers to retain a more experienced and a better trained migrant worker. MOM should, one, provide more levy incentives for employers employing high skilled work permit holders; two, give longer maximum period of employment to the better skilled migrant workers; three, extend the change of employer scheme to allow suitable migrant workers to transfer to new employers rather than to send them back home at the end of every contract. It is better for the employers to keep the better migrant workers. And four, consider a special training support for our working foreign spouses of Singaporeans. I think if they are working, they should also be given better support.

(In Mandarin): [Please refer to Vernacular Speech.] Our labour force has now reached the ratio of 2:1, meaning two Singaporeans to one foreign worker. We cannot further reduce this ratio. I would like to urge all employers to change their mindset. When they hire foreign workers, they should focus on quality, not quantity. They should also further focus on improving the quality of our local workforce. They should also focus on only employing suitable and highly skilled foreign workers, and make sure that they are qualified and try to retain these high quality foreign workers. This will help further promote the harmony of the workforce.

(In English): Madam, setting quality indicators upfront in the quota injects more urgency into trying to change the way employers strategise their migrant recruitment and correspondingly their own productivity efforts. We will be able to very speedily change the profile of migrant workers being allowed into Singapore and ensure that productivity is boosted not only among the Singaporeans as a whole, in our workforce, and together with one-third of the migrant workers as One Inclusive Workforce, build a better Singapore.

Madam, I applaud the initiative to introduce professional career counselling and career guidance in our local institutions. To complement efforts to create a skilled Singapore workforce, I believe that we should also embark on building a Singapore Core.

I would like to urge MOM to look into the possibility of refining our available infrastructure and to put in place structures to create a Singapore Core in the industries –

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particularly for positions in the middle and higher management positions.

What are our current measures in place to support companies that develop manpower capital in Singapore? I believe that we should expand on support schemes for companies to develop manpower capital in Singapore. We should look into pressuring companies to have an outcome abiding to the idea of the Singapore Core. In the long run, we should thus be looking at reduced reliance on foreign talent and greater job satisfaction amongst Singaporeans.

The National Jobs Bank should also undergo refinement to incentivise companies to employ Singaporeans should there be more than a certain number of applications from Singaporeans for the advertised jobs. As it stands now, the National Jobs Bank is frequently criticised for not compelling companies to hire Singaporeans and that is an area which we should revisit in order to better serve our local workforce.

Mr Patrick Tay, you have two cuts, take them together.

Three cuts, Madam.

Mr Tay, I suggest you stop after two cuts, the first two cuts.

Yes, Mdm Chair. I am glad that MOM will be setting up an Employment Tribunal that more PMEs will benefit and be protected. In the set-up of the Employment Tribunal, I urge MOM to take cognisance of the following points.

Firstly, for the Composition of Tribunal, the single or multiple adjudicator on the tribunal should be a person of high standing, especially in the area of industrial relations, employment relations and has dealings and is familiar operating with unions and unionised companies.

Secondly, the Employment Tribunal should be easily accessible and economical.

Thirdly, it should be efficient and effective, that is, the time taken for a claim to be heard or mediation to be arranged should be relatively short. There should also not be a salary ceiling of a PME before he or she can file a claim. Likewise, the claim limits should not be low or else it will not be useful. By the same token, the scope of issues or disputes covered should

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minimally include statutory claims and contractual breaches.

Fourth, there should be ease of enforceability of award and judgment. One challenge is the enforcement of the judgment and award which requires a civil process. This may cost monies and may be cumbersome. I suggest MOM partner with NTUC's U-PME Centre to assist PMEs and PME union members in the enforcement of their claims in a cost-effective way.

Fifth, tripartism must be upheld. The formation of the Employment Tribunal should not erode the tripartite relationship and dilute the role of unions. Tripartite mediation should work seamlessly with the Employment Tribunal. Involvement and representation by union officials and industrial relations officers of union members for Employment Tribunal cases should be provided.

Lastly, there should be compulsory mediation in that before a tribunal is convened, I submit that mandatory mediation, including tripartite mediation, be required.

Madam, my second cut. With the proposed set up of the Employment Tribunal in Singapore to handle PME and other labour dispute claims in an economical and expeditious way, it is appropriate to also review and expand the scope of the tripartite mediation framework, which was started on 1 February 2011, to help PME union members earning less than $4,500 to resolve three specific areas of workplace disputes.

In order to preserve the sanctity of tripartism and ensure tripartism in Singapore stay relevant and serve PMEs in Singapore, I have three suggestions for MOM. The first is to expand the scope of the Tripartite Mediation Framework to cover any statutory and any contractual and workplace issues and not limit it to just the current three heads of claim. The second is that there should not be any salary ceiling for union members to embark on tripartite mediation. My third suggestion is that the tripartite mediation process must work seamlessly with the employment tribunal in that there must be a clear incentive for those who choose to embark on the tripartite mediation route before the case escalates to the employment tribunal or any other adjudicatory panel.

Minister Tan Chuan-Jin.

Mdm Chair, I would like to thank Members for the 53 cuts submitted for our Ministry.

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Before I begin, let me take a step back to talk about our longer term goals for Singapore. While we address the specific cuts, it is important to remember what exactly we are trying to build here in this place we call home. We want to build on what we have achieved over the many years, and work towards creating an environment where there are better jobs, higher incomes and a more secure retirement for all Singaporeans towards their latter years.

I have met many people in the course of my work, and they are at different stages of their lives, each having their own aspirations, their own expectations, different opportunities and challenges facing all of them. Everyone has their own story to tell. Our shared vision must be expansive enough to reflect these differing aspirations and our society must be inclusive enough so that everyone has a stake in our future.

In this inclusive society we call Singapore, all Singaporeans must have access to quality jobs. Whether you are looking at something fast pace, or something slower pace, something meaningful, or something financially rewarding, the range of opportunities must be created.

Therefore, we must nurture a vibrant economy to anchor quality jobs in Singapore. We will equip our people with the necessary skills for these jobs and to help them continuously upgrade themselves to remain relevant throughout their lives. We should have safe and progressive workplaces. And when some falter, as invariably some will do, we must be there to support our fellow Singaporeans, help them get back on their feet, so that they can, in turn, look after their loved ones.

This will be a society where everyone can maximise his or her potential and realise his or her aspirations. Where Singaporeans can take pride in being really good at what they do and are recognised for their skills, regardless of their academic qualifications, regardless of the schools they come from, regardless of the uniform they wear, or the sector that they work in. Underpinning this, there must be an open and level playing field for everyone to have a fair chance to progress, based on their skills, based on their effort and own merit.

At the end of a fulfilling career, we want each and every Singaporean to have peace of mind in retirement. A secure retirement that is made possible primarily by our own savings but we also want a system that does not impose a burden on future generations. For this to happen, we need a system of savings that is anchored on personal responsibility, but with employers and the Government pitching in and playing a critical role to augment it. A system that is flexible enough to cater to differing Singaporeans' needs but, at the same time, remembering very clearly that we cannot compromise its core objective of helping Singaporeans set aside sufficient funds for their retirement years.

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Visions are important, but in this society that is based on a democracy of deeds, we must be able to translate these ideas into realities for all Singaporeans. Words are cheap, but actions speak a lot louder. But as we all know, there are no straightforward answers because there are so many perspectives to consider and difficult trade-offs to be made, but the effort must be put in to see how inclusive we can be. We need to balance the needs of the individual with that of society. We need to meet the needs of today but, at the same time, to make sure that we look after the needs of our children's generation and the generations beyond that.

We are making steady progress towards our goals. We are not doing too badly. In 2014, our economy grew 2.9%, creating 129,000 new jobs. These are the opportunities for our people. Citizen unemployment rate remains low at 2.9%, and as I have always mentioned, low unemployment does not mean zero unemployment. It is one of the lowest in the world.

In 2014, real median income – meaning that you have compensated for inflation –grew by 1.4%. If we looked at a longer five-year time horizon and we take out year-on-year volatilities, between 2009 and 2014, real incomes have grown by 2.1% per annum at the median and 1.5% per annum at the 20th percentile.

We have managed to achieve positive real income growth and avoid the wage stagnation that many developed economies are facing. I am always reminded of this every year I meet with my G20 counterparts. I do not relish the challenges that they are grappling with: high youth unemployment, high unemployment, slow economic growth, wage stagnation and in some countries, the wages have been stagnating for many years. In some instances, wages have declined. It is important to look at what is happening in the rest of the world because the same pressures that are brought to bear in those societies are happening to us as well. But we are managing quite well.

We are in a relatively strong position. But as we continue to build on what we have achieved, we must also ensure that Singaporeans who encounter difficulties are not left behind. These are hardworking Singaporeans who lose their jobs when companies restructure. Restructuring is inevitable as the world changes. Their skills may have become outmoded and they have difficulties finding new jobs when they are in their 40s and 50s, when they still have to support their families, or have mortgages to pay.

Mr Ong, for example, was retrenched after working for seven years with his company. Even though he was given a retrenchment package, he was anxious to get back to work as he needed to support his family, especially his two school-going children. I could only imagine how difficult those times were. Mr Ong, with guidance from his career coach from the WDA Career Centre, managed to secure a position in Beyonics International Pte Ltd as a Programme Manager. The new job is now nearer his home and with the shorter commute,

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he can spend more quality family time with his children. Mr Dharmarajan, 55, was retrenched in 2014 because his company relocated to another country. His career coach from WDA referred him to the Jobs Bank where he subsequently found a new job with a pay rise.

Today, I will talk about our plans to help more Singaporeans like Mr Ong and Mr Dharmarajan secure quality jobs and opportunities through better skills and to prepare our people for the future. I will also talk about enhancements to the CPF system to better meet diverse retirement needs. Senior Minister of State Amy Khor will speak about the Fair Consideration Framework and the Jobs Bank, helping older workers remain in employment and mechanisms for dispute resolution. Senior Parliamentary Secretary Hawazi Daipi will cover further measures to uplift incomes in low-wage sectors and improve workers' safety.

As Mr Zainudin Nordin has pointed out, to be successful in the next phase of our economic development, we need to prepare and adapt to the structural shifts that are taking place in our economy and labour market, and to adapt to the world that is changing exceedingly fast. Over the next decade, our labour market will tighten further, and rapid advancements in technology will change the way we work, the way we communicate and the way we do business.

Let me first elaborate on the tightening labour market. We commenced tightening the labour market in 2010. In the past few years, our deliberate policies have moderated foreign workforce growth steadily and progressively, from about 80,000 in 2011 to about a third of that, 26,000 in 2014. This is not because we have become manpower-lean. In response to Mr Thomas Chua, we are still some distance away from the world's most advanced economies. In the Construction sector, our value-added per worker is only a third of that in Finland or Denmark and half of that in the United States or Japan. In the Services sector, we are around 70% to 80% of that in the US or Japan.

While foreign workforce growth has slowed, some companies have transformed but many companies resorted to hiring more local workers instead of restructuring or economising on manpower. The local employment growth was 95,000 in 2014. This is more than twice of the 38,000 in 2011.

Having more jobs for our locals is a good thing. So, the high labour force participation rate is great and it is good to see more women and older workers coming back into the workforce. They contribute to augmenting household incomes and the data on that front has been very positive and strong. Unfortunately, this increase in local hiring sometimes allows companies to avoid the restructuring and the changes that they need to make. This

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increase in local hiring will not last.

In fact, we expect our local employment growth to slow dramatically in the next few years, dropping from this base of 95,000 last year, to around 20,000 per annum in the last part of this decade. This is largely due to our Baby Boomers gradually exiting the workforce and our smaller cohorts entering the workforce.

I am highlighting this situation not to signal a change in our direction. There will be no change. We will continue to keep foreign workforce growth sustainable and allow it to grow at the current tight pace. The main message is this – taken together with the slowdown in our local workforce growth in these coming years, companies must note that we will experience a very significant tightening of the labour market going forward. If businesses do not become manpower-lean, if they do not become more productive, they will have great difficulties in finding enough manpower – be it local or foreign – to run their operations.

The next significant change that I would like to talk about is technology. It is not new. Technology has always been changing businesses and jobs, but it will do so at an ever increasing rate. Many of you would remember IBM Watson, the super-computer that beat the world's best "Jeopardy!" player four years ago. Well, since then, Watson has upgraded and has begun to assist human beings in actual work settings. At DBS Bank, for example, Watson is now helping relationship managers read and process thousands of reports, crunch client data and give unbiased, tailored investment advice to their clients. To give you a sense of the scale, DBS Bank itself produces about 700 to 800 such reports every quarter. In the past, it was impossible for any single relationship manager to read all these reports. But Watson can and, given its huge computing power, it will continue to do so at increasing rates.

To remain competitive in this rapidly evolving environment, our businesses must capitalise on technological advancements to innovate, so as to establish new areas of competitive advantage, keep ahead of the curve and grow within our national manpower constraints. DBS started using Watson for precisely this reason. Ms Frances Boon, Senior Advisor at DBS, told us that their adoption of Watson was a pre-emptive move. Rather than waiting for technology to impact DBS, they wanted to explore it first, so that DBS is ready to move to the new business models when change occurs.

As our businesses restructure and move up the value chain, you will realise that jobs will have to evolve. Singaporeans need to move towards higher value skills, so that they can stay relevant and capitalise on opportunities in the new-age economy.

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Developing Singaporeans has always been our priority but this is the right time to make a further concerted push due to the shifts I outlined. Moving forward, it has to be about quality. Quality growth, quality companies and quality skills in every individual.

With SkillsFuture, we have embarked on a major new phase of investment in our people, to develop every Singaporean to the fullest, not just in school but throughout life. SkillsFuture can only succeed if everyone plays their part.

First, employers. Today, many employers say that they cannot find Singaporeans with the right experience. But we all know, no one is born with experience. It takes time and deliberate effort to develop this experience in our employees. In this tight labour market, employers have to shift away from this "plug and play" mindset to one which proactively develops every one of their workers, providing career pathways and valuing their contributions as they advance. Employers play a critical role in this. If you do not develop those pathways, if you do not develop a fair remuneration scheme, SkillsFuture cannot take off if you do not play your part.

One way to do this is through offering meaningful internships, participating in the SkillsFuture Earn and Learn programme, or being part of the SkillsFuture Leadership Development Initiative. In turn, companies will have access to a more skilled workforce that will enhance their competitiveness and productivity. We will reach out to businesses to share with them how they can benefit from the various SkillsFuture initiatives. I call on all companies to come forward proactively and be part of this process.

Next, let us talk about individuals. This is about you and I, every Singaporean. We must take ownership of our own learning and careers. We cannot think about lifelong learning as something that is more suitable for the rank and file, or blue collar jobs. It is for everyone of us. Given how fast the labour market and skills needs are changing due to technology and restructuring, learning can no longer stop when we step out of school. We, as parents, teachers and individuals need to constantly re-invest in learning, throughout our lives. The example of Watson earlier will show that technology is not just impacting rank and file workers. It impacts the work of professionals as well.

Finally, education and training providers. They must value-add to their students' personal and professional development by offering relevant and high quality programmes. I will elaborate on this later.

SkillsFuture is exceedingly important. It is truly a national movement involving all stakeholders. The Government is a key enabler and we will provide the necessary infrastructure and resources. Deputy Prime Minister Tharman had shared how SkillsFuture

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will support learning through a wide array of initiatives. I will elaborate further.

First, on training landscape. We must ensure that the course offerings are of high quality, a wide variety – as Ms Rita Soh emphasised – and delivered through multiple modes of learning. We have taken a significant step towards this with the opening of two new CET campuses last year. Mr Zainudin Nordin had acknowledged this. These CET campuses are focal points. They complement our Universities, Polytechnics and ITE in providing a continuum of diverse learning opportunities for Singaporeans throughout life. Today, there are over 25 partners delivering training and other CET-related services at both these campuses.

I fully agree with Mr Ang Hin Kee, Ms Foo Mee Har and Assoc Prof Randolph Tan that we must ensure that this education and training is high quality, industry-relevant and ultimately, it must deliver good outcomes for Singaporeans.

To ensure that courses are industry relevant, our Institutes of Higher Learning (IHLs) co-develop course curricula with the industry. Again, industry must play a part and participate in this. The various Singapore Workforce Skills Qualification (WSQ) frameworks were also developed in close consultation with the tripartite partners. This system has served us well and our local graduates are highly employable. But we know that sometimes there are courses that are less than ideal and we will weed them out and continue to improve. We can make things better, especially now that we are enhancing the education and training landscape. Moving forward, MOE and WDA will enhance existing accreditation frameworks, taking into account the important points raised by many of the Members here about ensuring the rigour and relevance of training.

Mr Low Thia Khiang may wish to note that we will be implementing the various SkillsFuture initiatives in phases to ensure that the training landscape is able to develop in tandem with the new measures. We need to avoid a case where training institutions face this sudden surge in demand and resort to offering sub-standard programmes or expanding class sizes and compromising on quality. This will lead to a wastage of both individuals' time and public monies. Therefore, we have staged the implementation according to readiness and capacity. Let me elaborate.

We will start with a significant number of initiatives that are ready to go. These are the SkillsFuture Mid-Career Enhanced Subsidy, SkillsFuture Earn and Learn Programme, SkillsFuture Study Awards, SkillsFuture Leadership Development Initiative and the SkillsFuture Mentors.

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In 2016, we will implement the SkillsFuture Credit and the SkillsFuture Fellowships. Various Members of Parliament have asked questions related to the implementation of this SkillsFuture Credit.

Under the SkillsFuture Credit, more than two million Singaporeans aged 25 and above will receive an opening balance of $500 in credits next year. Even as we do this, I fully agree with Assoc Prof Randolph Tan that we need to pay attention to the quality of outcomes, to ensure that courses are useful for both individuals and also for the companies. This will have to be balanced with flexibility in utilising the credits, which many people have called for. So, again, there is a balance. We want more diversity, we want easy accessibility, but at the same time, we also want accountability and a lack of wastage. Going to extreme ends, on either front, will cause problems. So, we need to find where that middle ground is.

In order to galvanise a culture of lifelong learning, we have, and we believe, that we should take a broad approach of supporting work-skills with the Credit. Our intent is to help Singaporeans deepen their existing skills, and also to provide options for people to broaden their horizons in areas outside their current fields. The courses we will support will clearly be diverse, comprising areas like Aerospace, IT and early childhood education, and also including areas, such as languages and culinary skills, which some may have a strong interest for and wish to explore career opportunities in.

Mr Ang Hin Kee asked about the specific criteria for courses to qualify for the SkillsFuture Credit. To ensure quality, courses will need support from WDA, MOE or other public agencies to qualify for the credits. We will look into the helpful suggestions from many of you to see how we can help Singaporeans from all walks of life to benefit, including stay-at-home parents, the self-employed and also persons with disabilities. The full range of courses will need to be inclusive and will be released closer to the implementation of the Credit.

Mr Ang Hin Kee and Mr Zaqy Mohamad were concerned that employers who are cutting costs may now ask their workers to co-fund the cost of training with their SkillsFuture Credit. Let me be very clear that the credits are meant to support training initiated by individuals, not to fund training which employers send them for. In any case, we will continue to support employers who send their workers for training by providing substantial course fee subsidies. We will also extend the existing Enhanced Training Support for SMEs Scheme by a further three years, to give SMEs additional support to send their local workers for training. Training funded by the credits, which are meant for individuals, will not allow employers to qualify for absentee payroll from WDA. So, this is a built-in mechanism that will address some of the concerns raised.

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Another key initiative is the Sectoral Manpower Plan (SMP). I shall not elaborate on this in detail as I had done so in Parliament previously, but I would like to highlight that one of its key objectives is to develop a deep pool of local talent in our key sectors, by building attractive skills-based career progression pathways, improving HR practices and enhancing workplace conditions. Over time, we hope that these efforts will help us build up a Singaporean Core in key industries with the right skills and experiences, as suggested by Mr Zainal Sapari and Mr Yeo Guat Kwang. We will work closely with Trade Associations, training institutions, employers, and unions to develop and implement comprehensive Sectoral Manpower Plans (SMP) in all key sectors by 2020, covering both growth sectors and traditional sectors. As for the core trades approach raised by Mr Yeo, we are open to exploring this with other agencies and other sectors.

Let me move on to talk about supporting Singaporean PMETs. Mr Sam Tan, Ms Jessica Tan, and Mr Heng Chee How have asked how we are helping this group of Singaporeans. As Mr Heng Chee How highlighted, the proportion of Singaporeans employed in PMET jobs has increased from 43% in 2004 to roughly half of our citizen workforce in 2014, and this is projected to reach two-thirds by 2030. Our future economy in Singapore will be driven by a strong Singaporean Core, with highly-skilled PMETs at the centre.

PMETs generally enjoy positive employment outcomes. Real median incomes of Singaporean PMETs have risen 2% per annum in the past five years. The unemployment rate for Singaporean PMETs has stayed low at 2.9% in 2014 and the long-term unemployment rate has also remained low at 0.7%. Although displaced PMETs are not a large group, the pressures of a rapidly changing economy have caused some, especially mature PMETs, to feel anxious about their job security.

And, as I have mentioned earlier, while the percentages are low, there are Singaporeans who are affected. We need to look out for them and see how best to help them. We aim to maintain these good outcomes for our PMETs by putting in place policies in a way that is best tailored to their needs and circumstances.

First and foremost, we are empowering PMETs to chart their own learning and career development. The first thing that the Government can do is to provide a good suite of practical, usable online resources. If you are a Singaporean PMET looking for a job, you can start with looking at the Jobs Bank. Starting 2017, you will also have an Individual Learning Portfolio (ILP), which will provide a whole suite of tools and labour market information to help you to plan your career throughout your life. In the longer term, the Jobs Bank will also

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be integrated into this ILP.

Next, we are helping PMETs to equip themselves to achieve their career goals. PMETs are, in fact, a key focus under SkillsFuture, in three ways.

First, we are helping PMETs progress further in their careers. The SkillsFuture Study Awards and SkillsFuture Fellowships will help individuals achieve skills deepening and mastery in their respective fields. We also want to develop Singaporeans for positions of leadership in our industries. This requires both depth and breadth, and both local and global experience.

I am pleased to inform Mr Zainudin that the SkillsFuture Leadership Development Initiative will support companies to develop or enhance in-house programmes to groom their Singaporean employees to take on these leadership roles. This will help Singaporeans gain exposure and experience in key global or regional markets and critical business functions. The initiative will be implemented progressively across sectors from this year, and will build on existing efforts to develop a pipeline of Singaporean leaders, such as MAS' Finance Associate Management Scheme and International Postings Programme, or EDB's on-going engagements with companies to enhance their talent and leadership development programmes. I urge all Singaporeans to make full use of these opportunities to broaden their experiences and to deepen their international outlook.

Second, we will finance an enhanced funding support for mature PMETs. Education and training subsidies for all Singaporeans aged 40 and above will be enhanced to a minimum of 90% of training costs for courses funded by MOE and WDA. A minimum of 90%. This is a substantial increase from the current minimum subsidy of 75% for MOE courses and 50%-70% subsidy for WDA-supported courses. Courses already subsidised at above 90% will retain their existing rates. This will benefit PMETs substantially. Also because PMET courses tend to cost more and, so, the absolute quantum of subsidy will be correspondingly higher.

Let us say you are a mature PMET and you want to go for a WSQ Diploma and Specialist Diploma in Precision Engineering (Master Craftsman Skills) from Nanyang Polytechnic, which costs $27,200. The net course fee that you need to pay, with the previous 70% subsidy, was around $8,100. With the enhanced subsidy of 90%, you just need to pay around $2,700. On top of that, you can use the $500 SkillsFuture Credit that you will be receiving, therefore, paying only $2,200. After graduating from the Master Craftsman programme, you can become a certified Master Craftsman after a certification interview, like Mr Kenneth Koh. Kenneth started off as a machinist in JEP Precision in 1992, after completing his Nitec. He participated in this programme and when he graduated in 2013, he was promoted to Senior Manager and enjoyed a pay increment of about 20%. He is now leading the entire manufacturing engineering department in his company, delegating projects and providing

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training to his colleagues.

Many PMETs have busy work schedules or heavy family commitments and are unable to commit to a fixed, long period of training. This is the third aspect where SkillsFuture will help – to inject more flexibility into the training landscape to cater to their varying needs. As Minister Heng mentioned, MOE will expand the range of flexible, bite-sized modular courses offered by our IHLs. Under SkillsFuture, WDA will also aim for at least 75% of courses offered by its training partners to incorporate online or workplace learning components.

There are also PMETs who are switching jobs mid-career for various reasons – some to pursue their passions, to join a growth industry, or because their companies are restructuring. The third prong of support for PMETs is, thus, to provide them with good avenues to take on new jobs, through place-and-train programmes.

We will enhance the Max Talent Programme. In April 2012, we introduced the pilot Max Talent place-and-train programme to help PMETs access good opportunities in SMEs and, at the same time, enhance opportunities for SMEs themselves. In the past two-plus years, there have been 1,000 successful placements, with a good six-month retention rate of over 80%. Given the positive feedback, we will enhance this programme with a stronger career development component and will work towards matching 3,000 PMETs with SME jobs over a three-year period. The enhanced programme will be called P-Max and is open to all PMETs at various stages of their career, including those who are currently unemployed. P-Max for PMETs.

If you are thinking of switching to a completely different sector, one option is to take up, as mentioned earlier, a Professional Conversion Programme (PCP). Just last November, we had substantially increased the monthly salary support given to employers who hire PMETs on a PCP in the place-and-train mode, from the previous 70% of basic monthly salary, up to 90%. This enhanced support is targeted at PMETs who are aged 40 years and above, or those unemployed for six months or more.

Employers have found the PCPs very helpful. Dr Vincent Ng, Executive Director of AMKFSC Community Services, said that his company had a very positive experience with hiring Professional Conversion Programme trainees, as they are very dedicated to making a positive impact in society and also bring with them a wealth of life experiences. He found the salary support from the Government particularly helpful in alleviating manpower costs, especially for the social service sector, as many organisations face very tight resource constraints.

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Lastly, we will step up our placement and job matching efforts for those PMETs seeking dedicated help. WDA will complement its existing career services for PMETs through collaboration with private search and placement firms. This will help to widen the network of jobs that PMETs can access.

To complement what we are doing for locals through SkillsFuture and the various PMET measures, we will also continue to take progressive steps to raise the productivity of our foreign workforce. Today, employers pay lower levies for higher skilled R1 workers compared to less skilled R2 workers. It encourages companies to hire skilled workers who are more productive, but who, at the same time, are likely to command higher wages.

Mr Christopher de Souza would be pleased to know that, this year, we have worked with the Process sector to implement several productivity-enhancing initiatives. First, we will enhance the Process R1 criteria to be more reflective of market-relevant skills. The current skills test pathway will be paired with a salary requirement, to ensure that only workers whom employers value are given R1 status. We will also introduce a new salary plus experience pathway. Those better-paid workers who have worked in Singapore for some time can be R1, and employers who hire and retain them will benefit from lower R1 levies. This is in line with Mr Yeo's suggestion to provide levy incentives for better skilled workers. In fact, the enhanced criteria will be a more reliable way of identifying workers who are genuinely skilled and productive. These changes will kick in in 2017, to give companies time to retain and to train their workers up to this level and, therefore, to enjoy lower R1 levies.

The skills tests for R1 recognition will also be harmonised under the Process WSQ to provide skills upgrading and multi-skilling progression pathways. This will be further supported by a policy change, to allow employers to hire experienced Work Permit Holders at the end of their Work Permit term or any time, with the previous employer's consent, without having to send them back to their home country first. These changes are in line with Mr Yeo Guat Kwang's concept of a progressive skills recognition framework, as well as his suggestion to allow employers to hire experienced Work Pass Holders without them having to be sent home first at the end of their contract. It will support the retention of a more experienced and a skilled workforce.

Let me turn to another important issue affecting Singaporeans, and that is with regard to assurance in retirement and the role of our CPF. We have been making concerted efforts to provide greater assurance to Singaporeans in old age on three fronts: (a) healthcare needs; (b) housing needs; and (c) cost of living needs.

On the healthcare front, the various healthcare subsidies and, most importantly, MediShield Life, will offer better protection for all. The Pioneer Generation Package will also help the current elderly better meet their healthcare needs and also help to alleviate the

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cost burden on their families as well. Our home ownership rates across income levels are among the highest in the world. In recent years, we have further increased housing grants to help middle- and lower-income households own their homes. In addition, the GSTV cash payouts and Service & Conservancy Charges (S&CC) rebates serve to help lower-income households with costs of living. Eligible older Singaporeans will also receive an extra Seniors' Bonus to help with daily expenses.

We have been systematically taking steps to help boost Singaporeans' retirement savings and income. We top up the CPF accounts of low-wage workers via Workfare and introduced Extra Interest for smaller CPF balances. As announced by Deputy Prime Minister Tharman in his Budget Statement, we will raise the CPF salary ceiling, increase CPF contribution rates for older workers and provide an additional tier of Extra Interest for older CPF members. We will also introduce the Silver Support scheme, which will be a permanent scheme, to provide a regular income supplement for the less well-off elderly. These changes will take effect in 2016.

Mr David Ong has supported the move to increase CPF contribution rates for older workers and some have also asked if rates can be increased further for those over the age of 55. In this round of adjustments, we will be restoring the CPF contribution rates for workers aged 50-55 to the same level as younger workers and making smaller increases to the rates for those aged 55-65. It is important to understand that CPF contribution rates for older workers were lowered in the past primarily to reduce their hiring costs and, ultimately, to improve the employability of older Singaporeans. That is really the key focus. We are more ready to remove this disparity in rates for the 50-55 age band because the employment rate for this group has improved considerably and is almost on par with younger workers. However, it would not be prudent at this stage to raise the contribution rates for those above the age of 55 too quickly as the employment rate in this group is still considerably lower than that for those who are younger.

Ms Lee Li Lian spoke about the need to provide greater flexibility within the CPF system. The truth is, the CPF system has evolved over the years to cater to the differing needs of Singaporeans and this meant introducing various forms of flexibilities that members enjoy today. In fact, some would criticise that there is too much flexibility, as it is. For example, we have the flexibility to draw on our CPF funds for training, or for the education of our children, or to invest in a variety of financial instruments under the CPF Investment Scheme. The CPF's core purpose, however, must continue to be about providing for the retirement needs of Singaporeans.

That is why I was so glad to hear Mr Gerald Giam affirming the Workers' Party's position on the need for enforced savings, without which, he and many others "would have saved much less for retirement", and that "the Workers' Party is not asking for CPF members to be

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allowed to withdraw all their CPF money in a lump sum". I think this is a reflection of a realisation of how important it is for us to balance the need for flexibility and the need to continue to provide for their retirement adequacy for the long term.

Last month, the CPF Advisory Panel announced Part One of its recommendations. These were made following a period of consultation and engagement with Singaporeans from all walks of life. The Panel's recommendations are part of that journey to introduce more flexibility to cater to the needs of members today, while bearing in mind that retirement adequacy remains our primary objective and especially as longevity is upon us. More Singaporeans are going to live longer. So, how do you ensure that retirement adequacy continues for many years to come?

It is not easy to find the right balance between adequacy, flexibility and simplicity. I think the Panel has done a good job in trying to steer this path. The Government has accepted the Panel's recommendations. Let me walk you through how the Panel's recommendations will affect the key decisions that Singaporeans will need to make as they approach their retirement.

Let us take, for example, Mr Tan who is 54 this year and he will be turning 55 in 2016. Mr Tan works as a sales manager in a department store. He earns about $3,500 a month. He is married with two children. What are the important decisions that he needs to make at age 55 to provide for a secure retirement? Well, first, he needs to think about what is the monthly income he needs for a secure retirement. How should he go about thinking about this? Does he own a property? Does he have a non-working spouse he will need to support? Does he also have private savings outside of the CPF and how much can he expect to receive in family support?

In the case of Mr Tan, like most Singaporeans, he owns an HDB flat and, in most instances, at the age of about 55, it is fully paid up, so he need not worry about rental expenses in his old age. He also has some savings in his bank account that he has set aside over the years for emergencies. And he has two children who love him and his wife, and he is quite confident they will share the responsibility of looking after him for his old age. But for the purposes of this example, let us ignore the two children and assume that they are not looking after them.

Let us say that Mr Tan has about $90,000 in his Retirement Account when he turns 55. This is the median amount that someone aged 55 will accumulate. Having considered the matter, Mr Tan thinks he can get by for himself and decides that perhaps the basic payout

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after retirement of about $700 will suffice. This means that he will need to set aside $80,500 in his Retirement Account and can withdraw the rest.

Mr Tan's one important concern is the well-being of his wife who is of the same age. She does not have much CPF because she stopped working quite some time ago. She became a full-time home-maker after their children were born. It is important to help family members build up their CPF savings so that they too can have their own CPF LIFE plan and payouts in retirement.

Ms Foo Mee Har has asked how we can help stay-at-home mothers to meet their retirement needs. I fully share her concerns. One way we will address this issue is by making it easier for CPF members to transfer their CPF savings to their spouse's CPF and the Government will provide good interest rates on that for them. Currently, CPF members can only transfer their CPF savings above the Full Retirement Sum to their spouse's CPF. From next year, we will allow savings above the Basic Retirement Sum to be transferred to the spouse's account. I hope more Singaporeans will take the opportunity to make such a transfer. Ms Foo suggested making the transfer automatic, or to require spouses' joint consent before withdrawals of Retirement Account savings can be made. These are personal decisions. We believe that at this stage, it is best left to the couples to decide. It would, I think, be intrusive for the Government to intervene.

In Mr Tan's case, he decides to transfer his CPF savings above the Basic Retirement Sum, a sum of about $10,000, to his wife. It is a win-win situation for him and his wife because if he had left the money in his own CPF account, he would be the only one earning the higher interest rates on the first $60,000 of up to 6%. By making the transfer, both Mr and Mrs Tan can enjoy the benefits of these higher rates. If Mr Tan had kept that $10,000 in his own account, he would be drawing 4%. But with the transfer, this same $10,000 will be earning up to 6% interest for Mrs Tan, that is a very significant extra 2% interest on top of the already attractive 4% interest rate provided for her.

Mr Tan has also some private savings. Frankly, he is not very pleased every time he opens his bank book, as the interest is earning less than 1%. He thought of investing in the stock market but is unsure of what might be a good investment and in his older years, he really does not want to risk his savings. He decides to use $25,000 of his personal savings to top up his wife's CPF account to further boost her CPF savings. This will earn up to 6% in Mrs Tan's CPF account, which is much higher than the interest in the bank of less than 1%. Mrs Tan also turns 55 next year and she will have $35,000, comprising $10,000 which Mr Tan had transferred earlier from his CPF account and the $25,000 from his private savings, so, totalling $35,000. By the time Mrs Tan is 65, in these 10 years, how much has the $35,000 grown based on interest? Well, it will have grown to about $60,000 by the time she reaches age 65. She will now have her own CPF LIFE plan and will receive monthly payouts of about

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$340 for life.

While Mr Tan has decided that he needs only the payout from the Basic Retirement Sum for himself, there are others who may desire a higher monthly payout in retirement. They can choose to top up their Retirement Account up to three times the Basic Retirement Sum, also known as the Enhanced Retirement Sum, after they turn 55. Some have said that only the wealthy top few percent will be able to benefit from the Enhanced Retirement Sum. Not so. Thirty-five percent of active members at the age of 55 in 2013 had CPF savings above the Full Retirement Sum. Come 2020, the proportion is estimated to rise to about half of all active members. So, they can also top up, up to beyond the Full Retirement Sum and enjoy the higher interest rates.

Furthermore, 90% of elderly households are home owners, and if they decide to downsize during their retirement, something smaller which is easier to manage or to participate in the various monetisation schemes, the new flexibility of an Enhanced Retirement Sum will provide them with a useful option for placing their cash proceeds in their CPF account.

Let us fast forward 10 years and walk Mr Tan through the decisions that he has to make at age 65, as he enters the retirement phase of his life. The savings that Mr Tan set aside in his Retirement Account at age 55 will have now grown with interest and working contributions. He now needs to decide on three things.

First, he needs to decide whether to withdraw up to 20% of his Retirement Account savings in a lump sum. This is one of the new flexibilities recommended by the CPF Panel. How should he choose? Some people may need that lump sum immediately for various reasons. Others will not want to make a withdrawal because it means lower CPF LIFE payouts or because they have already set aside some other funds for emergencies.

In the case of Mr Tan, he does not think he needs the money straight away but he likes the fact that there is flexibility of having a lump sum that he can withdraw as a safety buffer in case of unforeseen family circumstances and emergencies that may arise in the next few years. What can he do? Well, we will allow, indeed encourage, him to leave that 20% in his CPF. He can withdraw it later when he needs it.

The second decision that Mr Tan has to make is whether to start his CPF LIFE payouts straight away at age 65 or whether he can afford to wait to a bit later, perhaps up to age 70. He is a healthy man and is keen to carry on working. Forty percent of Singapore residents aged 65 to 69 continue to work. And I believe with the extension of the Retirement and Re-employment Act, and with more Singaporeans being in good health, many would opt to

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continue working as part of active ageing. Mr Tan does not need his payouts to start as he continues to earn an income from work. He also knows that by deferring his payout start age, he can get a permanently higher monthly CPF LIFE payout. Every year that he defers his payout start age, his monthly payouts go up by 6% to 7% permanently. So, if he carries on working and starts drawing on his CPF savings only at age 70, he can get a payout that is as much as 30% more. He decides that this is a prudent thing to do, so long as he is still able to work. But he knows if he were to stop working for whatever reason, he can start his CPF LIFE payouts at any time between the ages of 65 and 70.

Finally, the third issue that Mr Tan will have to decide on is which CPF LIFE plan he wants. As we know, there are two CPF LIFE plans to choose from – one that gives you a higher payout and slightly lower bequest, and another that gives you a lower payout but a slightly higher bequest. Today, members are asked to choose their CPF LIFE plan at age 55, even though their payouts will start some 10 years later. From January 2016, members will only need to choose their CPF LIFE plans from age 65 or at the point when they wish to start payouts from CPF LIFE. In the case of Mr Tan, he decides to start his payouts later, at age 70 and he will only need to make his choice of CPF LIFE plan then. His savings will only be committed to CPF LIFE when he makes his plan choice.

These are all important decisions that Mr Tan has to make at age 55 and 65, and the choices he makes will have consequences on the type of retirement that he will enjoy. Mr Zaqy Mohamed and Mr Seng Han Thong asked about how we are communicating the CPF changes to members to help them make better decisions. I share the concern that with more options, with more decisions to make, it does become more complex. That is inevitable. You want something simple to understand, then you will have very few choices, very few options. We cannot run away from that. But we believe this flexibility that is being woven in is important.

Let me assure the House that my Ministry and the CPF Board are committed to guiding members through these critical junctures as they transit from their working life into retirement. We will scale up and intensify our efforts to first raise awareness and understanding of the CPF system and the new changes.

We are also working on making available guided one-to-one retirement planning service to CPF members to help them better understand the various CPF options and decide on the option best suited for their individual needs and circumstances. We have completed a three-month trial project and will pilot a retirement planning service in the second half of this year. We plan to ramp up the service gradually from 2016. Our priority will be members who are approaching 55 and may need the service most, such as those with outstanding housing loans and may be affected by the transfer of their Ordinary Account savings to the Retirement Account at 55. We hope such services will help members navigate the CPF

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system better and make better use of their CPF savings.

Ms Foo Mee Har and Ms Lee Li Lian also asked whether more flexibility can be provided for the use of Retirement Account savings for housing. This is an issue that has been raised several times in Parliament by various Members in this House. Although the number of people affected by this is quite limited, the fact is it is challenging for those affected. Last July, I explained that we already exercise some flexibility in the use of CPF for housing after 55. But the transfer of CPF members' Special Account (SA) and Ordinary Account (OA) savings to the Retirement Account (RA) at the age of 55 is necessary to help them earn a higher rate of return overall so that they will have more savings and higher payouts in retirement. Remember the example we cited earlier of that 10 years from 55 to 65 and the impact it had on both Mrs Tan and Mr Tan's accounts. That is exactly what it means.

But let me take this opportunity to explain to members what flexibilities continue to exist for the use of CPF for housing after the age of 55. First, the Ordinary Account continues to exist even after the RA is created. Any new contributions to the OA after the age of 55 can continue to be used for housing because many people continue to work after 55. In addition, any money in the RA in excess of the Basic Retirement Sum can also be used for housing.

Second, we have, on appeal, allowed CPF members to use savings in their RA that originated from their OA to meet their housing needs even if their RA savings are below their Basic Retirement Sum, meaning that for the amount of money that originated from the OA, on appeal, we can look at how they can use some of it to meet the housing needs.

Third, CPF members turning 55 can also opt to use their OA savings to fully or partially redeem their outstanding housing loans if they have concerns with their ability to continue servicing their housing obligations after the transfer of savings to their RA at age 55. Members can request to leave in the OA the monies that they may require for their housing obligations, and not transfer these monies to the RA at age 55. But it is important that they need to understand that these savings in the OA will not enjoy the RA rates of up to 6%. The CPF Board will be including this information in its letters to members turning 55 this year, so that they can consider if they want to exercise these options.

While these flexibilities will help CPF members meet their housing needs, it is important to emphasise this – members must bear in mind that further expenditure and use of these monies will deplete their CPF cash savings for retirement. I do urge CPF members to be prudent with their housing purchases, especially when buying or upgrading a property at an older age. MND and HDB have already taken steps in the previous years to manage housing

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loans, this means to help individuals not over-extend their housing consumption.

It is important to pay attention to this, because older members may have to take on loans with shorter tenures and higher monthly instalments, and they should also factor in any decline in CPF contributions as they age, which may mean that they may need to service their monthly housing instalments with cash on top of CPF. These are decisions that individuals need to bear in mind.

While the CPF Panel's recommendations will offer Singaporeans more flexibility and options to better plan for their retirement, some are worried that their fellow Singaporeans might not be able to save up enough in their CPF accounts to meet the Basic Retirement Sum. The numbers at a larger level can be quite mind-boggling for young Singaporeans just entering the workforce.

Let me try to reassure younger Singaporeans by using the example of Ben. He is a 25-year-old Polytechnic graduate who has just started work, with a starting salary of $2,200. The median starting salary for Polytechnic graduates today is about S$2,400, but let us be more conservative, let us take the rates which were applicable a few years Р$2,200. He has a job and he is earning an income, and Ben is thinking of proposing to his fianc̩ and is looking around the market to purchase a home. I hope he decides to purchase a home within his means and, frankly, there is no better deal than a HDB BTO flat if he qualifies for one.