Ahmad Mohd Magad
Singapore
“The participants were proudly spoilt and present their national attires, the mainland Chinese would tell stories about the differences in their culture and practices from ours and the Indians would cook their best sumptuous dishes for us.”
“Sir, anecdotal data suggest that there is an increasing number of families who have sold their flats twice but are unable to afford another flat from the open market due to cash flow or other financial problems. There are also others, for one reason or another, who are no longer eligible to purchase another subsidised flat.”
“I would also like to know whether HDB could process applications for sales of balance flats faster as feedback received suggests that applicants are frustrated by the long waiting time and the uncertainty of whether or not they are going to get their flats allocated. Income ceiling for HDB flats”
“Furthermore, for single mothers who are working, many of them are possibly unaware of the childcare schemes that they can make use of. I hope that MCYS, with the cooperation of Malay/Muslim organisations, can spread the message about the choices available to fulfil this need.”
“Many small and medium enterprises (SMEs) in the manufacturing industries face challenges in sending their workers for training and skills upgrading.”
“Sir, 2009 also saw quite a significant shrinkage in maritime activities in Singapore. With the economy on the mend, could the Minister provide an update of MOT's efforts to prepare and capitalise on the economic upturn and enhance Singapore's position as a global maritime hub?”
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“Some retirees I have met told me that they only enjoyed the first few years of not working after retirement, and after that they became restless and felt that they were wasting away and, hence, needed to engage themselves in part-time jobs or community work. This reminds me of a quote by a poet, Richard Armour who said, and I quote, "Retired is being tired twice, I've thought: first tired of working, and then, tired of not". I feel that the Government should provide more education and statistics to the public so that they understand the issues surrounding retirement, and the needs and challenges longevity brings. While all these measures are deliberated, Sir, I would like to take a step back and look at what needs to be done to prepare the younger generation of Singaporeans for such challenges, which may be even tougher when the time comes for them to retire. I worry that they are already starting to become a part of a "plastic money" generation where the culture of spending is ingrained in them even before they start working. The $500 credit cards offered to students by banks is one example of this. This is in stark contrast to the savings campaign in the 1980s where POSB's squirrel mascot was often seen encouraging children to save for a rainy day. I would say, bring back the squirrel to educate students and youths on the importance of starting to save for old age at a very early stage of their lives. We have to stress to Singaporeans that CPF savings alone may not be enough to see them through their old age.”
“The topic on annuities or longevity insurance has generated quite a bit of debate on the ground. A key point of contention with the majority is the fact that, if made compulsory, they would rather have their principal contributions protected and the balance returned to their beneficiaries should they not live beyond 85 years old. It is still a question of the premium to be paid and special riders could be considered for those keen in protecting their capital. Another possibility is to consider extending the CPF monthly withdrawal period to beyond 20 years, recognising that the monthly payouts will be smaller. There are also suggestions of having the longevity insurance as an opt-in scheme. However, I feel this puts us in a catch-22 situation. If not many people take up annuities, the pool will be smaller and the returns correspondingly lower. Sir, some residents have told me that the prospect of having to work till they are 65 or 67 is a sombering reality. The figures given by the Department of Statistics support this need for people to work longer, but there is a grey cloud hanging over the workers' heads as they feel that they are in a society where one has to work to the grave. We have to educate Singaporeans on the harsh reality they may face that if they retire at 62 and do not have enough savings, they will face great difficulties. Apart from financial considerations, keeping the elderly in the workforce beyond the age of 62 can bring other benefits. When a healthy elderly person works or is constantly engaged in activity, he is kept physically and mentally active and this can prevent elderly ageing ills.”
“While I support the initiatives announced under the second pillar - on increasing CPF returns - I feel that the needs of some sectors of the community, such as the under-employed, are not sufficiently addressed. One sizeable group would be housewives or women who are involved in informal or ad-hoc jobs. They might have very little or no CPF to take care of their needs in old age. If their husbands are holding low income jobs, there would not be enough in his CPF to cover for his wife's retirement needs. I would like to urge the Government to look at this issue seriously and explore ways and means to assist housewives. One measure that could be considered is to extend an "M" (or Mother) bonus in the CPF accounts of mothers who are working part-time. This will also encourage more women to join the workforce and pave the way for contributions to be made to their CPF savings but still leaving them with sufficient time to tend to their children and household chores. Another group of concern is low-income Singaporeans who do not have sufficient savings in their CPF accounts to meet the Minimum Sum requirements. Sir, while the 1% increase in the OA and SMRA CPF interest rates will quite substantially, as the Minister explained, contribute to the increase in Singaporeans' retirement savings, this may still be inadequate for low-income families to build on their retirement savings. I would like to propose that the Government consider lowering the HDB's concessionary loan interest rate, specifically for three-room flat buyers, as such applicants are likely to be low-income families. The savings that they earn from the lower interest rate should then be transferred to their Special Account, which will in turn help them accumulate for retirement use.”
“Currently, only 53.7% of Singaporeans aged 55 to 64 are working. As announced, the Government will make it mandatory for all employers to offer re-employment to their workers after they reach 62 in 2012. Sir, to accomplish this smoothly, mindset changes - both on the part of the employers and employees - must be addressed from now. Employers must feel that they benefit or at least do not lose out by retaining the older workers. They must understand that older workers may generally bring with them strong work ethics but they, ie, the employees, for example, may prefer face-to-face communication as compared to jobs which require electronic modes of communication. Perhaps, training courses could be held for employers on job redesigning for older workers so that they can come up with a job matching exercise that takes into consideration the needs of the company and also the ability and interest of the older worker in the new post. Workers too must be pragmatic in being prepared to take up a lower salary or take on a different role. The guidelines by the Tripartite Committee on Employability of Older Workers should be such that they are fair to both parties and that they feel motivated to extend the relationship they have built over the years. It should also consider a way out for employers whose business may be genuinely affected from a downturn by allowing them to turn to a third party for placement in another company. In other words, the onus of responsibility should lie on the employer to seek a suitable job match for an employee who is still willing to continue employment past the age of 62.”
“Mr Speaker, Sir, the last few months have seen the nation abuzz with discussions on the CPF and retirement issues. As we grapple with challenges, like widening income gap, greater life expectancy and an ageing society, steps need to be taken to ensure that Singaporeans have enough savings for their retirement needs. The Malays have a saying, "sebelum hujan sediakan payung", which literally translates to "getting an umbrella ready before it rains". Sir, the measures just announced by the Minister in his Statement form part of that umbrella that Singaporeans need to see them through retirement. On sunny days, one may grumble that carrying an umbrella is a hassle. But in a tropical climate like Singapore's, rain can come at any time of the day, all year round. The sooner we start planning and preparing for it, the better. It is critical that we each have a big and sturdy "umbrella" because, if not, Singaporeans may be caught at a time when they are at their most vulnerable, ie, in old age. Some of these changes may not be popular but I wholeheartedly agree that they are necessary. I would therefore like to congratulate the Minister and his team for a sterling job in coming out with the three pillars to support Singaporeans' retirement needs. The Government is also clearly generous in dishing out the D- and V-Bonuses which together amount to a whopping $2.3 billion. This is no mean feat as there are not many countries out there that could do or deliver this. The changes to the CPF system is a recurring $1.1 billion each year. To this, I would like to ask the Minister whether this is really sustainable in the longer term or will there be cut-backs in difficult years. Sir, I have some concerns to raise. The first pillar involves increasing the retirement age for workers.”
“This will cater to Singaporeans who do not mind getting less after spreading their savings over a longer period of time, but wish to have the balance returned to their accounts or families upon death. Another factor to consider is to extend an opt-out scheme for people with serious illnesses from having to take up an annuity as they may need the higher regular monthly pay-outs for their immediate needs and may not live beyond 85. Finally, Sir, I believe there is still a lack of understanding amongst Singaporeans on how critical it is for them to have adequate savings for retirement. Some may not understand the rationale for delaying the drawdown period and many more may not be able to appreciate the need of annuities. There is a critical and urgent need to step up public education efforts and outreach has to be done in different languages to ensure that no one gets left out. 5.11 pm”
“This review can, in fact, be done without having to have legislative changes for the retirement age to be pushed further beyond 62 years old. Apart from this, the CPF Board should also consider reducing the tax on 50% of the withdrawn amount of savings upon retirement, especially if the withdrawn sums are used for critical needs, such as medical expenditure. At the same time, the contribution cap of 15% could also be increased to encourage more Singaporeans to save and accumulate higher retirement savings. Beyond making SRS attractive to CPF members, employers could also be given an option to contribute to their workers' SRS accounts, like what is being done in the United States for the US individual retirement arrangement, or the IRA. To encourage employers to do so, corporate tax benefits could be offered based on the amount they contribute. The CPF Board should have joint efforts with financial institutions to educate the public on the SRS to generate greater public awareness of this Scheme. On the issue of annuities, increasing life expectancy makes it necessary for Singaporeans to look beyond their CPF pay-outs which can only last 20 years. While there is a general understanding on the need of having lifelong funds due to an increase in life expectancy, there is this worry at the back of some people's minds that if they die young, the money invested in the tail-end annuity will not be returned to the family. Sir, rather than making buying annuities compulsory, the CPF Board could consider offering another option to those who prefer to extend their CPF pay-out period from 20 to, perhaps, 30 years.”
“The 1% increase in CPF rates announced by the Prime Minister brings much cheer to Singaporeans but, at the same time, many are worried that pegging the interest rates to bonds may mean volatility as it follows the economic cycles, even though the risks are lower compared to the stock market. Sir, we should find ways to help Singaporeans make more informed choices when they invest their CPF savings. Statistics tell us that about 45% of members who sold their investments or CPFIS made losses. 32% made equal to or less than the 2.5% returns for the Ordinary Account and only 23% made gains. Perhaps, the CPF Board could team up with appropriate partners to have public education campaigns to educate Singaporeans on investing an investment judiciously or, at least, to make better calculated risks. Moving on, some Singaporeans have suggested that the CPF Board buy shares of Temasek Holdings which will fetch higher returns for CPF members. I believe this suggestion is worth looking into, considering that Temasek Holdings is after all not only a Government investment arm, but has also proven to bring about attractive returns on its diversified investments. One other way of boosting Singaporeans' savings is to enhance the Supplementary Retirement Scheme (SRS). This is an area that I have proposed several times to be looked into but, so far, the Government has been non-committal in reviewing the current Scheme. In addition to proposals I had made in past speeches, I would like to also propose the following changes to make the SRS more attractive to CPF members. Sir, currently, members can make contributions to the SRS only up to age . But with policy changes to make more Singaporeans remain employable beyond 62, this age cap should be reviewed.”
“This will ensure that CPF members have sufficient amounts in their Medisave accounts for hospitalisation and healthcare needs. Let me now turn to broader issues related to the CPF. Sir, the Prime Minister recently announced some initiatives to help Singaporeans save more and stretch their retirement savings longer. These changes are welcome as they will help boost Singaporeans' CPF savings. We have to move quickly and introduce changes that will help our society face the challenges of an ageing population before it is too late. I feel that there is a general understanding on the need for these changes but, at the same time, there is a feeling of an overcast sky as many are worried that they will have to work longer and, yet, at the end of the day, not have a high quality of life towards the end of their lives. Gone are the romantic illusions of the golden years of retirement. The situation is even bleaker for lower-income families who may be living hand-to-mouth and may be so caught up in making ends meet day-to-day that thinking about the future and planning for retirement is something that is totally beyond them. There is therefore an urgent need to think of more ways of helping Singaporeans boost their CPF savings. A Straits Times' survey recently reported that seven out of 10 Singaporeans feel that they will not have enough retirement savings. With half of those who are still working, having $45,000 or less in their CPF accounts, I still feel that the changes are not enough to ensure that Singaporeans will have sufficient savings for their retirement needs. Bigger changes must be thought through and made and new ways have to be explored to help Singaporeans build stronger retirement nests.”
“Mr Deputy Speaker, Sir, any amendment to the CPF Act which seeks to help Singaporeans increase their retirement savings is timely and should be supported. At a time when we are facing challenges from an ageing society, increased life expectancy and rising cost of living, ensuring that Singaporeans have adequate savings for retirement is a critical challenge that we must overcome. The amendment in this Bill that will, amongst others, allow more Singaporeans to top up the CPF accounts of their family members, is therefore particularly welcome. This area will be the focus of my speech. I will leave the proposed amendments relating to matrimonial assets to Mdm Halimah and other female counterparts to respond. While I support the amendments, I have some concerns to raise. Sir, statistics have shown that many Singaporeans are facing problems accumulating the Minimum Sum in their CPF accounts. While the expansion of the CPF topping-up scheme will open the doors for more family members to make contributions to the CPF accounts of their loved ones, I am especially concerned about low-income elderly workers who are destitute or are being taken care of by people who are or may not be their immediate family members. While I agree that the family unit is the primary social support structure for Singaporeans, I feel that the definition of "family" should be broadened to include caretakers of the elderly member as this may, at times, not be someone from the member's immediate family. As healthcare costs continue to rise, I would also like to suggest that the top-up scheme be extended to the Medisave accounts of parents, grandparents and siblings of the contributor.”
“Subsequently, this money grows with tax being deferred until it is withdrawn many years later. The scheme I would like to suggest could take the following or some modified form: (1) Limits for defined contribution plans could be capped at, say, 20% of salary, less employer contribution to CPF, instead of being capped at the level of benefits payout; (2) Employers should have the discretion to determine eligibility to the retirement benefit plan; (3) Employers should have flexibility in determining contribution level or benefit level; (4) Pooling of the retirement funds under one master trust could also be considered so as to attract low unit costs from fund managers; (5) Portability of the retirement savings should preferably be permitted; (6) The benefit withdrawn at retirement should be tax-exempt, provided they are used to purchase an annuity; and (7) Double tax deduction to employees and employers for contributions made towards retirement savings should be considered to encourage contribution to the fund. Sir, I believe these recommendations can provide relative tax efficiency, impose the discipline that the Supplementary Retirement Scheme (SRS) lacks, and could be used to assist the Government's aim of devolving retirement responsibilities to the private sector. They also provide tax efficient benefits to foreign nationals who are always on the lookout for safe and tax-incentivised environments to park their funds.”
“As companies look to ways to drive more loyalty from Singaporean workers and to attract more foreign talent for critical assignments, a private company-run plan can be a strong draw, while also functioning as a retention component for employees. At the same time, it has the potential to significantly enhance long-term retirement savings for the middle class. One time-tested model that we could consider to base on is the US 401K plan which has contribution limits that do not make them a major part of the high-income segment's retirement savings. However, middle-class participants in the US who start early and regularly contribute to these plans are pleasantly surprised to discover that, over the years, their savings grow to hundreds of thousands of dollars. It is my understanding that the 401K plan in the US is the largest single asset in many people's retirement portfolios. I would like to repeat my proposal made last year that consideration be made to amend section 5 of the Income Tax Act, so as to allow companies to create tax deferred savings plans into which both the company and its employees can make contributions. This would not affect CPF in any way. People and companies would continue to contribute to CPF accounts, just as they do today. However, the level of contributions to the private pension scheme could be linked to CPF contribution limits in some way, and that the maximum contribution level could be capped at an amount that would not make the programme a windfall for the wealthy. The 401K plans, for example, are set up such that the company matches some of the employees' contributions into their savings. For these matches, employees typically earn anywhere from 30%-60% on their investments right away.”
“Mr Chairman, Sir, the Government's announcement of incentives to attract philanthropic and not-for-profit organisations (NPOs) to Singapore is laudable. The move will not only create the opportunity for Singapore to be positioned as a philanthropic hub in the region, but would also enhance greater philanthropic awareness among Singaporeans in our endeavour to be a more caring and giving society. The announcement, however, did not clarify as to whether such organisations would incur GST on their operating costs when they locate their operations here. The addition of a 7% GST to the operations of an NPO, when it comes into effect in July this year, would certainly make it less attractive in their overall relocation considerations. I would like to ask the Minister for Finance to clarify whether the cost of operations of NPOs will be GST-exempt. Retirement Planning Sir, with the concerns expressed by several Members of this House during the Budget Statement debate that the middle class has been squeezed over the last few years and considering that many of them are also middle-aged, I believe there should also be a corresponding sense of urgency to assist the middle income segment to increase their savings for retirement. This will help to alleviate the middle income squeeze issue from becoming a perpetual problem for the Government. The Government has also clearly stated in 2003 that the CPF would be more of a "safety net" for the middle and upper-wage earners, and that these people would have to take on more of their own planning for retirement.”
“Sir, I would like to join Minister Teo in echoing the very good job done by our civil service and take this opportunity to also thank all officers in the civil service for the sterling job performance to put Singapore where it is today. I would also like to thank the three Ministers for their extensive and detailed clarifications that they have given throughout this session. With that, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $193,252,110 for Head U ordered to stand part of the Main Estimates. The sum of $25,870,800 for Head U ordered to stand part of the Development Estimates. Column No : 2303 Head M - Ministry of Finance”
“This is a good move as it destigmatises match-making from being something that is initiated and led by the Government. This will also spur private companies to become more innovative in getting singles together. SDU's new role in accrediting these programmes and providing funds will turn match-making into an exciting industry. However, Sir, I am worried that SDU's withdrawal from playing cupid may mean an end to affordable match-making services. It used to cost only $50 a year for premium membership in SDU which included targeted match-making, but private companies now are charging hundreds of dollars for services and some even thousands of dollars for 12 dates. While price is dictated by market forces, I would like to urge SDU to keep check to ensure agencies do not over-charge customers. There should also be a wide range of services at different prices to cater to the population at large so that it can be accessible for singles who do not want to spend thousands of dollars to meet Mr or Miss Right. Sir, reverting back to the Baby Bonus scheme which was implemented in 2001, I would advocate that a comprehensive survey is quite overdue to measure the effectiveness of these efforts so that we can plug the gaps. I believe one area is sorely lacking, and that is an approach in raising awareness of these issues amongst our youths. I feel that more focus should be given to educating them, especially those at tertiary levels, on marriage, procreation and related responsibilities. The intention is not to preach or get them to marry at a young age but to raise their awareness on the need to balance career ambitions, economic goals and marriage or having a family, and the impact it can have on the country should more and more people put off marriage or having children.”
“I would like to suggest that the Government allows the flexibility for men to take longer paternity leave and also share the responsibilities of having children. Such a move has led to an increase in birth rates for Iceland, where fathers can have up to three months' paternity leave on 80% of their salaries. I am not suggesting that we fully embrace the Iceland model as this will dramatically increase business cost, but the idea is to consider and allow greater flexibility at the workplace for men to shoulder greater responsibility in tending to growing family needs. This will, hopefully, help women who worry that having more children means sacrificing their career development when they have to take maternity or longer leave to look after the new additions to the family. I would also like to urge the Government to involve more sectors in the drive to promote having children. In the past, the predominant religion of a country was a big factor in determining high birth rates. So far, barring a few family related organisations, the drive to spread the message on having babies has largely been done by the Government. As societies world wide become more religious, the Government should adopt a more integrated approach and consider working with the religious sector to encourage more Singaporeans to have babies, as it is in the interest of everyone to sustain the existence of a future generation of Singaporeans. Sir, the number of marriages in 2005 saw a slight increase but much more can and should be done. With the announcement that the Social Development Unit's role as cupid coming to an end, this leaves the task of match-making largely in the hands of the private sector.”
“Sir, I beg to move, That the total sum to be allocated for Head U of the Estimates be reduced by $100. Singapore continues to face huge challenges in population issues. The Government has adopted three strategies to address the population problems, which are by encouraging marriage and parenthood, engaging and bonding Singaporeans overseas and attracting suitable foreigners to work and settle here. While all three are equally important, I wish to focus on the efforts made to encourage Singaporeans to marry and reproduce, as I feel this would be the most advantageous and sustainable approach for Singapore in the longer term if we do it right and creatively. Sir, population creation remains one of the biggest challenges for our nation. Even with the introduction of the Baby Bonus in 2001 and several enhancements thereafter, the scheme has not produced any significant difference in raising national birth rates. Our total fertility rate remained a dismal 1.25 babies per resident female in 2005, way below the replacement rate of 2.1. This is also a decrease from the 1.4 babies per resident female in year 2001, when the Baby Bonus was introduced. Even the birth rate for Malays - a community which traditionally had higher birth rates - is falling below the replacement level when it declined to 2.07. This shows that the Baby Bonus policy, thus far, has not been that successful in encouraging procreation. In this light, I would like to suggest that the Government takes a more radical and holistic approach on this matter. While the Baby Bonus offers many financial incentives to couples, it is apparent that money, though important, is not necessarily the only deciding factor. With more women in the workforce, many feel that the burden falls on them when they have children.”
“[For vernacular speech, please refer to Appendix A *.] Mr Speaker, I am confident that the Malay community welcomes the various incentives that have been announced recently in the Budget Statement which is inclusive and at the same time gives special attention to the low income earners. It is intended to prepare Singapore and its people in facing various challenges which will be brought on by globalisation. Therefore, it is imperative that the Malay community seizes all available opportunities, especially schemes and incentives offered by the Government. Among those which have been announced recently is the Workfare Income Supplement scheme or WIS which will benefit many low income earners from the Malay community. Such a scheme is far better than welfare schemes because WIS encourages our people to continue working and not be dependent on Government’s assistance. This endeavouring attitude for wanting to be self-reliant is very important for the Malay community. If one is retrenched, he or she should not lose hope, instead he or she must strive to find another job. If there are jobs which require one to work on shifts or offer a lower pay, whether in the cleaning or service sector, the Malay community must seize these opportunities while undergoing training, job enhancement or waiting for better job opportunities. This is better than being unemployed for months. I also hope that the community in general will not have a crutch mentality or frequently be reliant on Government’s assistance. Every low income earner has to see WIS as an assistance. With this, I support the Budget Statement. *Cols 1753-1754. 2.36 pm”
“Sir, MOM announced that the scope of the Act would be gradually extended to all workplaces in phases over the next few years. In order for industry to have sufficient time to prepare to meet the requirements under the Act, could the Ministry provide more details of the plans as to which new workplaces will be covered by the Act and timeframe for the extension of the Act? I would like to also ask the Minister for Manpower for an update on the progress made so far in improving workplace safety and health performance. What percentage of workplaces has already attended the requisite training courses on risk assessment, and how many have now instituted risk assessments at their workplaces? Has the Ministry held accountable and taken action against individuals who failed in their responsibilities under the new legislation? Finally, has there been any significant improvement in safety outcomes since the new legislation has been in place? Sir, I would like to continue the rest of my speech in Malay.”
“While even such painful memories fade with the passing of time, I hope that the lessons that we have learnt from such accidents will behove us to continually enhance the workplace safety and health framework to minimise and prevent loss of lives. To this end, I am glad that MOM has made a commitment to revamp the occupational safety and health framework by way of passing legislation in January last year that heralds three fundamental reforms to improve safety outcomes. This includes expectations by employers to reduce risk at source, take ownership of OSH standards and introduce measures that would bring about a cultural change for life and livelihoods at the workplace, and holding persons accountable for their actions, including imposition of higher penalties for poor safety management. Sir, the Workplace Safety and Health Act came into operation on 1st March 2006 and replaced the Factories Act as the key piece of legislation regulating occupational safety and health at the workplace. With the projected economic expansion, our workforce will most certainly experience strong growth in the next few years. We cannot afford to see our economic growth marred by unfortunate accidents in workplaces, especially accidents that result in fatalities. It is therefore imperative for not just the Government but all stakeholders, including employers and workers, to continue to support Singapore's efforts to make our workplaces safer and healthier. While the new Act currently covers only the riskiest workplaces, such as factories, construction worksites and shipyards, efforts must be put in place by employers in the less risky workplaces to ensure that good measures are in place for the safety of their workers.”
“Our Forum pages have carried letters from Singaporeans on overcrowded trains and buses at peak hours, congested roads and long queues for facilities. HDB flats may get smaller and this may become yet another factor for Singaporean couples not to have more children. If so, this can impact on our national policies aimed at population creation. Some economists have said that a large population mass is not necessarily a key ingredient for a nation's success. Finland, with a population of over five million people, is one of Europe's most prosperous countries and the birth place of globally successful companies like Nokia. With our current total fertility rate of 1.25 children per resident female in Singapore, it is safe to assume that a large part of this increased projection will include foreigners. It will be beneficial if the Government will clarify to Singaporeans its rationale behind this upward revision of population rates. Is there really a need for 6.5 million people or more? At the end of the day, the question to ask is: is this trade-off worth it? Having a large population may spur economic growth but at what price? The last thing we want is for our population and immigration policies to work well but at the expense of our own people. While we want to create buzz and spur economic growth, we must make sure that such efforts will not drive our people out in search of less crowded living areas or a more tolerable pace of life. Sir, I was watching the programme "Building the Biggest: Underground Singapore" on the Discovery Channel last Sunday when memories of the Nicoll Highway collapse in 2004 came vividly to my mind. This accident, coupled with the accidents at the Fusionpolis Complex and Keppel Shipyard, collectively claimed a total of 13 lives.”
“3 births per 1,000 residents in 2004 was the highest in Europe and it also has reached a high, in terms of immigration, with almost 87,000 migrants in the one year ending April 2006. With this boom, the Irish are starting to feel the heat. Schools are getting more crowded, infrastructure is strained, there is a mad rush for facilities, including childcare services. One school was said to have run out of space and had to resort to even using the basketball court as a classroom. In Dublin, housing prices are doubling and people are starting to feel the strain. Recently, the Government announced its revised estimates for Singapore's population, from 5.5 million set some six years ago to 6.5 million people. This represents almost a 45% increase from our current population of about 4.5 million. The Government has given its assurance that quality of life will not suffer with this population increase. It has said that with proper planning, Singapore can comfortably accommodate 6.5 million in the future. Some economists have even ventured to say that it is with a population of 8 million that Singapore will have the critical mass it needs. Sir, if you were to speak to the ordinary Singaporean, you will find that immediate concerns upon hearing this upward revision of population statistics would be overcrowding. With planning and proper use, we can maximise the use of our land and space in Singapore. But with such limited land, surely something has got to give. One only needs to visualise the cramped apartments in Hong Kong, the crowded streets in Chennai and the high property prices in central London in order to get a sense of what it is like living in an overcrowded city. While these people can choose to move to lesser populated areas, we, in Singapore, have no such option.”
“The employment market has become much more dynamic and many companies are facing increased staff turnover and are struggling to retain their talent pool. Sir, as we try to get the best from the world to come here, we must not forget that some of our own best talents are also venturing out. While some will eventually come back, others may not. We must find ways to retain some of our best talents while we attract more from outside. We must ensure that sufficient opportunities are created for them or face the risk of losing them to foreign competitors. Top talent command global salaries and we must be prepared to match this or lose them. In this light, Sir, I am also concerned about talent retention in the public sector. Singapore has done well to-date because of a world-class Government and a talented critical mass of public sector employees who have creatively executed the policies of the Government. With so many opportunities currently available here in the region and globally, the pull factor is very strong. I am confident that the Government is aware of this situation but would like to, nevertheless, ask what is being done to retain our key talent pool in the public civil service. Sir, I move on to population and migration. Last month, Sir, I read an article in the International Herald Tribune about Ireland's population woes. Contrary to the kind of population issues that many developed countries in Europe and the world are facing, the kind of population problems that Ireland faces are not related to that of a population decline or an ageing society, but one of a population boom and an excess of youth. Its birth rate of 15.”
“The elderly do not only have to perform service or cleaning jobs as there are many who have served in middle-management posts and have a wealth of skills, knowledge and experience dealing in the past. Perhaps, jobs in consultancy or other areas could be explored for the elderly. Sir, policy changes alone might not be enough to encourage more elderly Singaporeans to work. The tripartite movement between the Government, employers and unions needs to continue to work closely together to boost this silver industry. Since the start of the year, the Manpower Ministry had raised the sub-quota of "S" Pass workers from 5% to 10%. These are mid-level skilled foreign workers who have diploma, university or technical qualifications and can work in the professional, specialist or technician level jobs earning a minimum basic salary of $1,800 a month. I believe that these are the kinds of jobs we must continue to train and retrain more of our people for. We need to continue matching Singaporeans for jobs at these levels wherever there is an industry need, first, before getting foreigners to fill up the jobs. It is at the lower and higher-ends that we can afford to hire more foreigners if there are Singaporeans not able or not willing to do the jobs. With Singapore rapidly transiting into a knowledge and technology-driven economy, the top-end is particularly witnessing an increased shortage in talent. As an employer in the high-tech sector, I can certainly vouch for this. Not only am I getting lower and lower responses to job advertisements for key and professional positions, the expected compensation from those who responded has also increased significantly.”
“My GPC Resource Panel member from Giordano, for example, said that some young Singaporeans do not see why they should serve others when they are served by maids at home. Others cannot fold clothes well as they are not used to doing household chores. What is heartening, however, is that employers generally seem to have good experiences with older workers. MOM's survey found that they have a lower incidence of switching jobs and tend to work longer hours. The same retailer from Giordano said its older workers are able to relate to customers well. There, they are given a choice to work up to a certain time as some have to pick up their children after 7 pm. Those who choose to do so, however, have to forgo some commission as peak hours are after 7 pm. But there is a balance. This is a healthy practice and more companies should offer more flexibility to encourage older workers to work. At the same time, older workers must manage their expectations. A recent survey by MOM indicated that willingness to accept salary adjustment was a significant factor in the employment of workers aged 60 and above. With jobs that have reduced scope of responsibilities, it is only to be expected that the wages given will be lower than their previous ones they held. MOM's statistics also indicated that employment rates for older workers have increased. This is indeed good news but, again, most were doing low-level jobs as cleaners, machine operators and sales workers. We must remember that the elderly is a diverse group and not all will be best tapped when they are doing service type jobs. With the impending ageing process of the baby boomers, we will need to widen the scope of jobs.”
“We need to find ways to help them stretch the dollar and, through the outreach effort, citizens should be reminded to be more prudent in spending the cash. I turn now to employment issues, Sir. The outlook for jobs in Singapore last year was bright with an unprecedented 173,000 jobs created as compared to 113,000 in 2005. While this is reason to cheer, we should not only look at the quantity, but also the quality of the jobs that are created. Although major sectors registered employment growth, many of these jobs are lower-paying ones in the retail, services and manufacturing sectors. Many in the lower-income strata are continuing to have difficulty to make ends meet. Therefore, MOM and WDA must continue to push on training and retraining to equip the low-income with relevant skills and gradually improve their income levels. The key here is to encourage them to keep on going and prepare them adequately for jobs that are in demand in the new economy. However, there seems to be a gap between what locals say and what employers say. On the one hand, feedback from employers indicate that many are willing to hire Singaporeans over foreign workers, but are put off by the attitudes of locals who are not willing to work longer hours or do shift work, as compared to foreign workers. Residents, on the other hand, say that they have looked for jobs but employers prefer foreign workers. Sir, something needs to be done to understand this gap and plug it. I wonder if the relatively comfortable conditions in Singapore and our increasing emphasis on work-life balance may have made our younger Singaporeans less willing to work in more physically demanding areas, such as the service industry.”
“HDB should be more nimble and have flexible policies which move with the times so that the people's needs are met. Sir, the GST offset measures have been greeted positively by Singaporeans. There is something for everyone, and the offset packages will cover between 2 and 17 times the amount they would spend on the extra GST each year, with the lower-income and older citizens benefiting the most. While this is good news, I am concerned that the older, less-educated Singaporeans are confused with the entitlement, especially if this is considered in the context of putting it together with WIAS. It was also mentioned that Singaporeans will have to sign up once to qualify for the GST credits over four years. Sir, this will require an outreach and public education effort to make sure that no one misses out in the GST credits. I would like to urge grassroots and community organisations to be involved in this outreach effort, especially for the lower-income and elderly citizens. In May 2005, it was reported that over 70,000 people had not indicated if they would like to qualify for CPF top-ups from the Government. These were the same people who did not qualify for the third lot of Economic Restructuring Shares (ERS) given out that year despite efforts by grassroots leaders to visit the homes of those who did not top up their CPF accounts to qualify for the ERS. We do not want needy Singaporeans to slip through the cracks and miss these offsets. There is also a need to remind the needy to try and stretch their dollar and not spend cash in a flash. It must be clearly explained that this is not merely a cash handout, but part of a wider assistance programme including offsetting the additional 2% GST.”
“Sir, I would like to suggest that the Government adopt a more open-minded and flexible approach to the WIS scheme, as it may have to revise the salary bracket for people under WIS in the event of a prolonged downturn. The amount of assistance given may also need to be tweaked so that more people can be assisted when times are tough. Sir, much has been said in the media before and after the Budget Statement about Professionals, Managers, Executives and Technicians (PMETs) who were affected in the last economic downturn. This Budget will give some relief towards this sandwich class through various incentives and offset measures, such as the reduction in road tax, maid levy, service and conservancy charges, as well as rebates in property tax. The GST credits will also help this group of people offset the increase, as many PMETs live in five-room or Executive flats. But many say that not enough is being done for the PMETs. Although the rate of structural unemployment among PMETs was almost halved from 1.3% in June 2004 to 0.7% in June 2006, some still continue to face challenges as they struggle to secure jobs that pay them enough. As a result, many cannot afford their HDB mortgages, as their flats were bought at a high price and can only be sold now by incurring huge losses. Consequently, many are faced with no choice but to downgrade and they are faced with a dilemma as they are unable to secure bank loans due to payment defaults as well as their lower-income status. As many of those in a quandary are first-time flat buyers, I believe that the HDB should consider removing the current policy requirement which states that a second HDB loan is only extendable if a resident upgrades to a bigger flat.”
“However, Sir, there remains a concern that a crutch mentality can still develop even though WIS is not a welfare scheme. We must tell our workers that this scheme is to help them temporarily, and the ultimate objective is not just to give them handouts so they can remain in the under $1,500-a-month salary bracket but to assist them until they graduate from this scheme, earn a higher income and become more self-sufficient. This will, hopefully, give workers hope that their own situation will improve with time, effort and the initial boost from the Government. It is imperative that we do not breed a mindset of dependence, as we do not know what the future holds for Singapore. I am worried that, should a national or global crisis occur, such as a flu pandemic, another SARS outbreak or a severe economic downturn, the proxy that is currently used for WIS may not work. In such an event, jobs may disappear rapidly, causing more Singaporeans to be out of work and in need of real help but yet are unable to qualify for WIS, as they will not be able to contribute to their CPF Medisave accounts. Another scenario could be that, during a prolonged period of downturn, companies may take severe cost-cutting measures, causing salaries to decrease. This will result in a significant increase in the number of older workers in the salary range below $1,500. This will correspondingly increase the cost of supporting WIS at a time when revenue collected from GST dips, as consumer confidence is affected. At a time like this, the Government will have to be more prudent with its reserves but at the same time it cannot abandon its people who may be in need of help more than ever before.”
“I would like to reiterate my proposal of last year to have section 5 of the Income Tax Act be reviewed and amended so as to permit companies to establish retirement schemes that will allow employers and/or employees to contribute directly to a retirement savings plan. The US' section 401(K) scheme in the US is a time-tested and mature scheme and could be used as a basis or model for reference. Contributions to such a scheme, in addition to CPF, should be tax-exempt and that the accumulated benefits are portable. I will elaborate more on this during the Committee of Supply debate. Let me now move on to the Workfare Income Supplement (WIS) scheme. Sir, the Government is spot on in its approach in giving more help to lower-wage workers. The widening income gap is a global phenomenon, and Singapore is not spared from it too. While the lower-wage workers have benefited from Singapore's overall economic growth and measures have been taken to help them become more skilled, the gap continues to widen as the salary increases for the top-end workers are growing faster. With these challenges, it is unwise for the Government to let this section of the population to continue struggling, as they may get left further behind and an underclass society may develop. The Workfare Income Supplement scheme is an innovative way of helping these workers, because it enables them to have a larger take-home pay, have more in their CPF accounts but yet remain employable, as their employers will contribute less to their CPF. But while we want to help these workers, it is essential that we do not blunt their desire to continue working. We must continue to preserve the basic principles of our social security system and encourage our people to become self-reliant.”
“Globalisation presents many challenges and, if we do not prepare our people, many of them will suffer in the future. In fact, it is precisely because we are enjoying good times now that we should start taking measures to mitigate the effects of future challenges and problems. Sir, several Members who have spoken before me have already touched on the favourable impact this Budget has on corporate Singapore, and how the financial policies affect Singaporeans. There is, however, one area where this Budget is silent on, and this is on retirement funding. Sir, this happens to be an area that I am particularly passionate about, considering the Government's position of steering clear of state welfare programmes for retirement. With our population ageing rapidly, we must explore various approaches to ensure that Singaporeans have sufficient funds to carry them through this uncharted phase of their lives. As I have said in my speech last year, the majority of Singaporeans have only their CPF to look up to for their retirement and for whatever little most of them might have when they reach that point in their lives. Even with the one-and-a-half percent restoration, much of it will go towards servicing housing loans. Nothing has been done to the Supplementary Retirement Scheme (SRS), which is stifled by its own complex mechanisms and restrictions. When this matter was raised last year by Miss Penny Low and myself, then-Second Minister for Finance, Mr Raymond Lim, indicated that it would be looked into. A year has since lapsed and we have not heard anything about it. There has been strong advocation to have existing legislation governing tax-approved schemes be widened and made more flexible so as to enhance the appeal to both employers and employees.”
“Mr Speaker, Sir, at a dialogue session with residents and grassroots leaders I conducted before the unveiling of the Budget, an elderly man stood up and said that he was worried with the rising cost of living after the Government's announcement on the impending GST hike. He was not convinced with the need for the 2% increase at all, especially that things are going well both in Singapore and in the world. I hope the explanation and offset measures in the Budget Statement have helped cast his worries aside, as they seek to help Singaporeans like him cope with the future challenges of globalisation. Sir, Budget 2007 has been hailed for many reasons. It is a forward-looking Budget, as it seeks to prepare Singaporeans for the challenges of the future. It is inclusive in that there is something for everyone, yet it is focused, as it targets the lower-income sector and gives them the most help. This is a landmark Budget Statement, as it is the first time the Government is giving out permanent assistance to a section of Singaporeans, ie, the lower-income workers. The aim is to provide assistance while spurring them to keep on working and contributing to the economy. For these reasons and more, Sir, I would like to congratulate the Second Minister for Finance, Mr Tharman Shanmugaratnam, for presenting what a local newspaper has simply but aptly called it a "Wow" Budget. Mr Speaker, Sir, this Budget was presented in a year with a positive outlook, both locally and globally. Our economy has done well, and an unprecedented number of new jobs have been created, and the unemployment rate has gone down substantially. But while this is so, we cannot be lulled into a false sense of complacency and assume that the current situation will remain.”
“Mr Speaker, Sir, the Supplementary Retirement Scheme (SRS) has been indeed one of the vehicles used to enhance Singaporeans' retirement security. May I ask the Minister to please explain why the maximum contribution cap on the SRS declines each year instead of going the other way round?”
“On that note, Sir, I wholeheartedly support the NRF Bill. 5.28 pm”
“The production of graduates and post-doctorate students transferable to industry is widely understood to be an important sector for technology transfer, but most Government-sponsored alliance programmes assume this to happen naturally, rather than setting specific targets or KPIs. Where agencies, such as A*STAR, are given hefty incremental budgets to propel R&D activities, there has to be a higher degree of governance and accountability of fund expenses. I know the National Research Foundation Board will be charged with this responsibility but, since billions of dollars are involved here, I would like to suggest that the Board be required to submit a quarterly report to ensure transparency and proper appropriation and application of the fund. Additionally, there should be a clear and transparent framework to ensure that funds and resources are invested in the targeted domains so that optimum benefits could be extracted from the investments. The framework should include both top-down and bottom-up approach. The former ensures that there is proper overview and supervision that resources are appropriately directed, while the latter draws expertise from seasoned researchers to identify emerging domains that we should be investing in. Third, Sir, Prof. Ong Soh Khim expressed her concern about discrimination and more favourable treatment being granted to foreign researchers and scientists, in comparison to home-grown research talent. If these were true, it goes against the spirit of wanting to generate more local talent and does not augur well for Singapore's future. It calls for a review of the approval procedures for research grants to ensure that a fair and more level playing field exists as Prof. Ong has asked for.”
“As I already said in my speech during the debate on the Budget Statement, MNCs know very well what to do to take advantage of the funds. But how do we make the various schemes more easily accessible to our SMEs so that more could become the MNCs of the future? We must never forget that they form an integral part of our enterprise eco-system and provide significant employment to our workforce. Second, Sir, I applaud the wide ranging purposes and objects of the establishment of the research fund, as outlined in clauses 5(1) and 5(2) of the Bill. With respect to the purposes of the fund, I have the following comments and concerns, some of which were also raised by several hon. Members of this House during the Budget Statement debate. I would like to echo the concern raised by Prof. Ivan Png on the need for sharper performance measures. As he correctly stated, most of the measures currently in place are input based, such as fixed asset investment derived from R&D spending and total value-added. To evaluate the effectiveness of policies, we really should know the incremental value-add of the policies. Hence, I would like to propose that we consider outcome measures, such as: (i) the incremental value-added or value created by companies arising from the R&D funding inputs, (ii) the incremental investments and business spending derived from the extension of R&D incentives and grants by Government agencies, such as A*STAR and the Economic Development Board. Considering that one of the key goals of NRF is to generate more talent to support a knowledge-based economy, what is the connection between R&D spending to enhance science and technology and talent generation?”
“Sir, viewed from a private sector perspective, such activities are crucial to prepare products and bring them early to market. With product cycles today getting shorter than ever, first mover advantage is a key competitive advantage. Therefore, I believe, as the hon. Member Dr John Chen does, that it is crucial that we devote special effort, including funding and resources, to the commercialisation of R&D result. Commercialisation sows the seeds which leads to wealth creation and growth and, subsequently, sinks in the pillars for enterprises to become mature and large innovative companies. Just R&D alone without such infrastructure support cannot achieve this. There are obviously risks in supporting such activities, but not doing them leads to shelving and decay of the R&D product which, ultimately, would become worthless when they are overtaken by new competing technologies. I would like the Minister's assurance that adequate funds would be set aside for commercial exploitation of research results. Sir, I know for a fact that the Government has attempted to boost entrepreneurship with a variety of incentive schemes. A*STAR, for instance, has the commercialisation of technology (or COT) scheme but it only funds development activities of the research institutes under A*STAR itself. Unfortunately, it does not extend assistance to SMEs, or technopreneurs, who may be interested in tapping into and commercialising the research results of these institutes. I see it as beneficial if this policy could be reviewed and changed so as to enable companies, particularly local SMEs, to ride on existing R&D efforts, instead of having to reinvent the wheel themselves. However, I would like to see that our SMEs are able to reap a fair share of the huge funds set aside for R&D.”
“Mr Deputy Speaker, Sir, I am very delighted that the Prime Minister, in his Budget round-up response, has asserted that R&D would be a key pillar to strengthen Singapore's foundation for sustainable growth and enhancement of our competitiveness. The recently announced $13.55 billion five-year Science and Technology Plan with three targets of (1) increasing national R&D spending to 3% of GDP by 2010; (2) increasing the private sector share of R&D to two-thirds; and (3) increasing research manpower to catch up with countries like Sweden and Japan, is very laudable and I am sure is the envy of many countries in the region. Sir, as we move forward in an increasingly globalised knowledge-based and technology-driven economy, I believe a country's ability to generate talent and continuously create value will be the primary determinant of who gets ahead in the intense economic race. Therefore, beefing up our R&D capability is a critical piece of securing our economic future. In going through the provisions of the Bill, I have a few clarification requests which I would like the Second Minister for Finance to address. First is with respect to Part I, clause 3(2) of the Bill. This clause contains the listing and definition of activities which are not considered as systematic, investigative and experimental in nature. I presume that the activities under this clause are deemed to be non-R&D activities and therefore are ineligible to receive funding. While I agree that many of the items may be classified as such, I have reservations over activities, like market research and development and pre-production initiatives, such as demonstration of commercial viability being categorised as non-R&D.”
“Sir, on behalf of the many Members who have raised cuts and questions, I would like to thank the two Ministers and the Minister of State for their extensive clarifications and responses they have provided. On that note, Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $457,397,860 for Head V ordered to stand part of the Main Estimates. The sum of $4,379,748,000 for Head V ordered to stand part of the Development Estimates. Head J - Ministry of Defence”
“Sir, I would like to thank Minister Lim particularly for his extensive elaboration of the many improvements to several existing schemes meant to assist our SMEs. I am sure the SME committee will be pleased with the new announcements. Sir, in an age of hyper competition and radical innovation, to achieve long-term sustainable results to position entrepreneurship as one of the key pillars for the future economy, we could and should do more to preach entrepreneurship as a serious viable alternative to employment. Beyond easier access to funds and beyond stepped-up education about entrepreneurship, radical entrepreneurship initiatives require strong persistence and encouragement. For example, in the creative industry, cost of talent and developing commercialisable products are high, and developing such may cut across the ups and downs of business cycle. We certainly would not want to see our entrepreneurs giving up all their efforts when they are just ripe on the edge of success but do not go on. This is where I would like to ask the Government to do more by providing them the necessary support, which includes mentoring for business continuity, helping connect them with appropriate sources of funds and providing them with grants for protection of their intellectual properties. Provisions of such support will ensure that the entrepreneurs could be focused on their product development and, subsequently, successfully bring their products to the market in the shortest possible time.”
“As such, I believe creating a platform for the two groups to meet and interact regularly will be beneficial to strengthen this relationship. I would like to propose that a private sector-led initiative like the Action Committee for Entrepreneurship (ACE) be initiated for the MNC-SME segment. As noted by Mr Inderjit Singh during the Budget Statement debate, the progress made by ACE has been encouraging across the private sector there. Although a Minister chairs the Committee, his role is primarily to facilitate rather than to dictate what should be done. Hence, I propose that we should embrace a similar model like ACE for the facilitation of MNCs and SMEs to connect and to come together. Along the same lines, Spring Singapore or IE Singapore could function as a secretariat to coordinate such activities. Sir, I am not speaking on the second topic on SMEs as the issue I wish to raise has been clarified under the Ministry of Law cut last week. Small and Medium Enterprises”
“Sir, I beg to move, That the total sum to be allocated for Head V of the Estimates be reduced by $100. Both MNCs and SMEs have played a significant role through the various phases of Singapore's economic transition. Both occupy an important position in Singapore's enterprise ecosystem in terms of generating economic growth and providing employment to Singaporeans. Among others, SMEs have played a pivotal role in providing support in many aspects to the MNCs and are continuing to do so to this date. However, with increasing competition from both developed and developing countries, many MNCs, especially manufacturing industries, are pressured by rising costs and are forced to locate to countries with lower cost. As a result, the dynamics in MNC-SME relationship is changing rapidly, more so with the forces of globalisation integrating the economies of the world to unprecedented level. However, Sir, with Singapore upgrading and transforming itself into a knowledge and innovation-driven economy, to enhance its competitive and comparative advantages, combined with Singapore's excellent infrastructure, stable political environment, a steady supply of well-educated workforce and a strong intellectual property protection regime, many MNCs are finding Singapore attractive to conduct their high-end activities here. I believe our SMEs could leverage on these evolving changes provided that they are wary of the changing needs of the MNCs. Similarly, SMEs could also continue to be relevant to the MNCs even as the latter relocate their business activities to other countries. Sir, we need to ensure that the special and trusted relationship between MNCs operating here over the last several decades and our SMEs is not only preserved but also strengthened.”
“Mr Chairman, Sir, in line with Singapore's positioning as the leading information technology hub, I would like to propose that electronic record-keeping of documents be considered and permitted as an alternative to hardcopy storage documents. Such a measure would contribute not only to enhance business efficiency but also further reduce business cost. Mr Chairman, good electronic record-keeping requires planning and budgeting for data migration and conversion as well as complying with laws and regulations on how to retain business records. Keeping records over a long period can be costly if they are not properly maintained and managed, especially if the records become a subject of litigation. However, with the current state of electronic storage technology, I feel that it would be more cost effective and efficient if companies are provided this option by law to store their records electronically. The key to it is to ensure that the proper legal framework is put in place, including annual audit requirements to ascertain that companies adopting this option are in proper compliance.”
“Mr Chairman, Sir, I would like to thank the Second Minister for Finance, Minister for Education, who is also the Deputy Chairman of MAS, as well as Mrs Lim Hwee Hua, Minister of State for Finance, for their extensive clarifications to the many issues raised. In this circumstance, I would like to beg leave to withdraw the amendment. Amendment, by leave, withdrawn. That the sum of $451,490,950 for Head M ordered to stand part of the Main Estimates. That the sum of $109,450,900 for Head M ordered to stand part of the Development Estimates. Column No : 614 Head Z - Financial Transfers Special Transfers”
“To develop innovative products, we need a critical mass of players in the market which is currently grossly lacking. To encourage product development, the MAS could consider the declaration of an open arm and open minded policy to stimulate discussions on Islamic product applications. Doing so would provide assurance to potential investors that Islamic products they are developing or plan to develop, are permissible in Singapore. [Mr Deputy Speaker (Mr Chew Heng Ching) in the Chair] 4.35 pm Wealth Management Industry”
“Sir, Singapore has developed an excellent reputation as a transparent financial centre with a favourable regulatory environment for the placement and investment of offshore funds. Our tax system permits offshore funds to compound tax free for non-residents, with hardly any barrier entry for the repatriation of funds. As such, Singapore is well-positioned as a benefiting party to the movement of offshore funds out of Europe and the United States. The various ministerial visits to the Middle East to boost bilateral and economic ties coupled with a series of FTA conclusions with several Middle Eastern and Gulf State countries, have created significant awareness of Singapore as an alternative leading financial centre for these countries to conduct business with. SM Goh, as Chairman of the MAS, has also pledged to boost Singapore's status as a centre for Islamic financial services. All these, combined with our triple A political stability rating and positioning as the region's wealth management centre, should make our country attractive to Middle East funds. But to be the nexus for the convergence of both conventional and Islamic finance and banking in Asia, we need to do more. I would like to make two suggestions. First, to develop a healthy Islamic finance industry here, we need to strengthen the legal framework to attract the more lucrative Islamic funds. As the Islamic market is still infant and not well understood, we should be prepared to invest in its education. This could be done by promoting training and education in Islamic finance and banking and incentivising training courses and programmes with grants and subsidies. Funding for research into new products should also be seriously considered. Second, Sir, is focused need on product development.”
“And, finally, Sir, would companies be given a choice of method to value the transferred shares when valuing these shares for employees if treasury shares were bought at different prices and times? Taxation and Duties”
“An option that is increasingly being used today is to link employee remuneration to the company's performance by granting stock options or direct share awards, ie, share-based compensation. Companies that grant share-based compensation in the form of its own shares have two ways of meeting their obligations. They can either issue new shares or alternatively buy back their own shares at the time when they are obligated to settle the share-based compensation. 3.45 pm I am pleased that the Minister has proposed to grant a tax deduction to companies that have incurred actual outlay for share-based compensation, granted through treasury shares, in order to encourage companies to use such to settle share-based compensation obligations. Sir, first, to encourage a higher degree of usage of performance-linked compensation system, including by MNCs, I would like to propose that the tax deductibility be extended to the MNCs' local subsidiaries here in cases where their parent companies have to purchase their own shares from the open market for the specified purpose of meeting the share-based obligations of their Singapore employees. In this regard, I would like to declare my interest that I am working for an MNC. Second, Sir, when the treasury shares are transferred to employees pursuant to the share-based compensation scheme, the company could possibly record an "accounting gain" from the appreciation in value of the treasury shares. If so, would the gain be considered as capital in nature? Third, if excess treasury shares pursuant to employee share-based compensation scheme are sold subsequently for cash or transferred to third parties, would such gains be treated as capital in nature?”
“Sir, I believe these recommendations can provide relative tax efficiency at least at the tax contribution end, impose the discipline that the SRS lacks and could be used to assist the Government's undoubted aim of devolving retirement responsibilities to the private sector. They also provide tax-efficient benefits to foreign nationals who are always on the look-out for safe and tax-incentivised environments to park their funds. Approved Holding Companies Sir, a major reason why Singapore's endeavour to establish itself as the regional capital for holding companies has been lukewarm may be attributable to the uncertainty over the treatment of gains from the disposal of subsidiaries and other investments. To encourage more MNCs to locate their holding functions in Singapore, it was proposed in the recent Budget announcement that gains by approved holding companies on the disposal of shares in subsidiaries will be exempt from tax, provided that at least 50% of the shares are owned and the shares have been held for a period of not less than 18 months. Sir, while the announced changes are encouraging, there is a lack of clarity of the definition of an approved holding company and whether it means simply approved for this very purpose. To make this scheme more attractive, I would like to propose that the term "approved holding company" be properly defined to remove any ambiguity and the requirement for the shares to be held for the specified period be removed. Employee Stock Options Sir, to make the wage system more flexible, companies should be given wider choices of flexi-components to be incorporated in the overall compensation of employees.”
“Sir, I beg to move, That the total sum to be allocated for Head M of the Estimates be reduced by $100. Sir, several hon. Members, including myself, have spoken about Singaporeans' inadequacy of savings for retirement and have argued on the urgent need to tackle this problem. With dwindling CPF contributions and the SRS losing favour because of its excessive restrictions on the scheme, the retirement nest-egg for Singaporeans is shrinking. Hence, further to what I have said during the Budget Statement debate, I would like to propose the following changes be made to section 5 of the Income Tax Act, so as to expand the options available to employers and employees to save for their old age. The proposals have no bearing on the current CPF and SRS, which should also be enhanced to encourage higher savings. (1) I welcome news to establish retirement schemes that will enable employers and/or employees to contribute directly to a retirement savings plan; (2) Limits for defined contribution plans should be capped at 20% of salary less employer contribution to CPF, instead of being capped at the level of benefit pay-out; (3) Employers should have the discretion to determine eligibility to the retirement benefit plan; (4) Employers should have flexibility in determining contribution level or benefit level; (5) Pooling of the retirement funds under one master trust to attract low unit cost from fund managers should also be permitted; (6) Portability of the retirement savings should also be permitted; (7) The benefits withdrawn at retirement should be tax-exempt, provided that they are used to purchase an annuity; and (8) Double taxation deduction to employees and employers for contributions made towards retirement savings should be considered to encourage contribution to the fund.”