Augustine H.H. Tan
Singapore
“There are instances when reserves should be used, but the govern- ment has to make a case to the President and if good arguments are used, the President is expected to concur. I therefore end by asking you, as you have done in your speeches, to support this Bill with a very loud "Aye" when it comes to the vote. [Applause].”
“We must have confidence that in the end, as Singaporeans, we know what is overall best for ourselves. We are a community of free citizens committed to making Singapore a great city to live in and for foreigners to come visit and admire.”
“There is such a thing as initiative. Who initiated the project? What was the objective of the project? And there is such a thing as economies of scale, the benefits of which are passed on to the taxi drivers. Let us not forget those elements. An hon. Member: They do not pay tax on their income.”
“They can still enjoy the seafood regardless of the indigestion. They can do the shopping and do other things in Johor Baru. I believe that what is important for us is that we do not preclude ourselves the option of setting our own national policies.”
“Mr Speaker, Sir, the Minister stated that it is undesirable to employ foreigners to run child care centres because they affect the values of our children. Is it not also true that by having foreign maids in our homes that they too directly impact upon the values of our children?”
“It was a point which I brought out much earlier when a similar matter was debated here in Parliament. Because the government could borrow on the basis of the reserves even though the President has one key to the reserves because there is such a thing as credit-worthiness of the country.”
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“The majority of these new investments were in electronics, as well as for the manufacture of precision equipment, precision tools and dies and metal engineering parts and components.' Furthermore, Sir, if one looks at the figures on investment commitments in manufacturing, we find that in 1987, out of a total of $1.7 billion, only $295 million represented local investments, a mere 17%. If one looks back to the year 1981, one finds that out of a total of $1.8 billion worth of new investment commitments, $642 million represented local participation or 34%. And throughout the years, from 1981 to 1984, the local participation rate was no less than 27%. Why has this rate dropped suddenly and significantly? Has EDB given up efforts to encourage local entrepreneurship? At the same time, Sir, we notice that the small business sector contributes some 30% of our GDP and 44% of our total employment. The EDB has set up a Small and Medium Enterprise Division in January 1988, just before the Budget debate. And we are told that it is formulating a master plan for SMEs due to be presented later this year. Sir, I would urge the Minister to make a study on private sector savings, the role of corporations, both MNCs and local, plus personal savings. The reason I would urge such a study is to look at the flow of funds available to the private sector, particularly the local private sector. I am concerned at how we utilize our savings of 41% even though we have one of the highest saving rates in the world. Are we in fact utilizing our savings to our best advantage? Are our entrepreneurs able to get hold of enough funds? I do know the Minister has provided a lot of funds to the EDB for loans to local enterprises, and that is all to the good.”
“Sir, I beg to move, That the sum to be allocated for Head V be reduced by $10 in respect of Code VE 3000 of the Main Estimates. Sir, I propose to deal with the operations of the Economic Development Board. According to its latest report, the international operations of the Board have increased significantly from 18 offices in 14 locations to 33 offices in 20 international locations. At the same time, the costs of operations are going up, according to the latest proposed Budget for 1988/89 from $1.64 cents to $1.87 cents for every hundred million dollars of investments committed. Are these cost increases justified? Are we keeping some of the uneconomic, not cost-effective offices still going? At the same time, if one reads the Economic Survey, one finds that the value added per worker has been dropping since 1984 from $112,900 to $77,854 today. This is value added per worker for new investments committed. And this figure, value added per worker, is now below the 1982 level. And in real terms it is even lower. Yet the fixed assets per worker have risen from $66,860 in 1982 to $83,540 today. In the Economic Survey Report, it is stated or claimed that the quality of new investments has gone up. I am at a loss to explain how this is so. In fact, in the Report on page 22, we have this claim: 'New investment projects committed during the year continued to be of good quality. More significantly, there was increasing interest among companies, both new and existing ones, to move beyond mere production into design and engineering as well as research and development activities in their Singapore operations.”
“Sir, perhaps the Member for Chua Chu Kang is allergic to roses. I am not. I am quite satisfied with the explanation on the revision of the factory rentals but not on the land rentals and my reason is as follows. If it was the fault of the JTC in not making rental adjustments for the land for such a long time, then it should not be hasty in increasing those rentals to the market rate even if it is now half the market rate. We are faced with the same problem some years ago when the HDB revised its rental rates for shophouses very sharply upwards. Based on the argument that since 1960 many of those shophouse rentals have never been revised upwards, well, it was the fault of the HDB. So what if these shopkeepers enjoyed low rentals for all those years? The point is that when HDB suddenly upped those rentals, it was a very painful thing for the shopkeepers to endure. Costs went up very substantially. So also this could happen with the JTC land rental rates.”
“Our DMF(T) index is about one of the lowest in the world and compares very well with that of the developed countries. For example, Japan's DMF(T) index is 5.9, UK 3.1 and USA 2.6. Singapore, as I said, have a DMF(T) of 2.5 The School Dental Health programme has been extended to about 50% of secondary school students who make use of nearby primary school dental clinics. Sir, my Ministry does not intend to build any dental clinics in secondary schools and junior colleges. Secondary school and junior college students will be encouraged to use existing school dental clinics and the dental centres at the Institute of Dental Health and the Pegu Road which provide free dental service for school children. My Ministry will conduct dental screening for all secondary three children annually from this year onwards. Advice on their dental condition and treatment needs as well as reinforcement of their knowledge of dental health will be given. BLOOD BANK (Blood contamination and causes) 9. Dr Ho Tat Kin asked the Acting Minister for Health what percentage of blood collected by the Blood Bank in 1986 and 1987 could not be used because of contamination; what were the main causes of the contamination; whether the percentage has been on the increase; and what does his Ministry do with the contaminated blood.”
“Would the Minister make available information on the starting wages and salaries for the different categories of skills on a regular basis, as this would be an additional useful indicator for students to choose the type of careers? BG Lee Hsien Loong: Yes, we will do that. In fact, there are already some statistics. I released some last year at a talk in NTI and the students copied down assiduously every single figure as if I was giving them a lecture. We will do it regularly. I hope it will be additional input into their choice. But I also hope that undergraduates do not only choose subjects on the basis of their starting salary. You have to plan a career and it must be a satisfying one. If you are shortsighted and money-minded, you will end up very sad. SCHOOL DENTAL SERVICE (Extension to secondary schools and junior colleges) 8. Dr Ho Tat Kin asked the Acting Minister for Health how successful is the School Dental Service; and whether this service will be extended to secondary schools and junior colleges. The Acting Minister for Health (Mr Yeo Cheow Tong): Sir, the School Dental Service provides a comprehensive dental health programme for about 95% of the primary school population through dental clinics located in the primary schools. When the School Dental Service first started in 1948, dental caries was rampant. Many teeth could not be saved and had to be extracted. With the introduction of water fluoridation and a succesful school dental health programme, the dental health of our children has improved considerably. The average number of Decayed, Missing and Filled teeth, or the DMF(T), index of our 12-year old children has decreased from six in 1958 to 2.5 in 1984.”
“Sir, the question of setting competitive rents would be easier when some of these JTC factories are sold, so that the private owners can then establish their own rates. BG Lee Hsien Loong: I think it can be considered. It cannot be done in a hurry. But perhaps it may be possible for us to hive-off some industrial estates into industrial parks which can be run on a private basis. We will look into it.”
“There seems to a hidden formula. Would the Senior Parliamentary Secretary release that formula to the press?”
“What the Parliamentary Secretary said sounded ominous. There seems to be a prospective further increase in the rentals of JTC factories.”
“Since there is still considerable vacancy, why were the rentals increased?”
“Does this represent a big improvement over the recession years?”
“Sir, may I just ask the Senior Parliamentary Secretary whether he has any figures on the vacancies of JTC factories at this moment?”
“Yes, Sir. I withdraw my amendment in spite of some unsatisfactory replies. Amendment, by leave, withdrawn.”
“Sir, I urge the Minister not to take too long. We do not have to embark on an expensive advertising campaign immediately. One simple question to the Minister:has he or his officials written a letter to Newsweek to protest against this poll? BG Lee Hsien Loong: Now that it has been pointed out to me, I will consider it. I would also urge the Backbenchers to write.”
“This is made in Singapore and this one is broken, that is made in America." I think we take our time about it. As I said earlier, it is the responsibility of the Minister to hear many ideas and we will pick a few of them for implementation.”
“Sir, for all the limitations of this survey, I think what is important and pertinent is the comparison between the responses vis-a-vis Singapore products and Hong Kong products. Whereas only 60% of the people responded to the Singapore products, 84% responded in the case of Hong Kong. The question is why. Is it because Hong Kong has got more consumer products or is it because Hong Kong has done a better PR job in the United States? If it is a matter of PR job in making Singapore known, then I think we ought to be doing something about it. Furthermore, should we take this thing lying down? Why do we not go on a counter-offensive? In America, Sir, I understand it is quite all right to advertise against your competitors. MacDonalds can say, "We are better than Burger King" and so on and so forth. So we can put two products together - Singapore product and US product - and say we are better than the American product and show all the defects in the American product. Why do we not do so? BG Lee Hsien Loong: We will take our time to consider, first, whether this poll is conclusive. Secondly, if it is accurate, how serious the problem is. Thirdly, if it is a serious problem, whether we need to look into it further to decide what needs to be done. If there is a problem, we attack it. But we have to be very careful not to go charging off, tilting at windmills. Do we have a problem in America - selling, exporting, providing them with goods and services which meet their needs and which keep our reputation up? I think no. We are doing quite well. Should we embark on an advertising campaign? Do you know how much it costs to run a television advertising campaign in America? Millions and millions of dollars to say that, "Look.”
“Sir, as I was looking at the average occupancy rate for hotels, it has gone up to 68.7%. It is no mean achievement, given the fact that the number of hotel rooms expanded so tremendously to 23,400. But on page 79 of the Economic Committee Report, it is stated there that "the performance of the tourism industry would have been better had there been no constraint on the supply of seats on some air routes to and from Singapore." May I know from the Senior Parliamentary Secretary what steps have been taken to increase the number of airline seats coming into Singapore?”
“One last word on that debate, Mr Chairman, with your indulgence. There is a fundamental difference between the Minister and myself. He thinks in terms of niches. I think in terms of bigger things. Two years ago, I told him, I warned him not to use that word "niche". When you think small, you will devise small plans. When you think big, you will have big plans. BG Lee Hsien Loong: Sir, the difference between the Member and me is that he dreams dreams, and I have to carry them out.”
“They have done well because we have refused to protect them, because we have exposed them to competition, frightened them from time to time with threats of financial ruin when they are less successful. And, therefore, they have weathered the storms, grown more resilient and expanded their base. If we are going to do well in the retail sector, which cannot completely be ruled out, I think the same approach will have to work.”
“I think there are certain things worthwhile preserving. If we can help our local guys, we give them a helping hand to grow bigger, even if a little bigger. We do not have to play in the big leagues; we can play in the little leagues. BG Lee Hsien Loong: Sir, there is no such thing as a little league Sumo wrestler. It is a very strange feeling to argue as a non-economist against an economics professor and try and persuade him of the virtues of free trade. But I suppose I should try what the Chinese call Ban Men Nong Fu. At the door of the master, I will just make two simple tricks. First of all, banks. When I said that there is a reason for protecting them, it is not to protect the banks per se. It is because we want to maintain control over our monetary system - interest rates, money supply - a key institution, a key mechanism for keeping the economy on an even keel. If we lose control of that, then inflation is out of hand, finances are out of hand, the whole economy grinds to a halt. There is a reason for it. Secondly, it makes no difference whether you are Sumo wrestling in Japan or in Singapore. It is a service which is being provided, and we have found a niche in Singapore for making a living. Otherwise, we would not have had economic growth. If it is a niche which must involve no local retail traders on a big scale, so be it. We have other businesses. I think that is entirely satisfactory. If everybody knows these rules of the game, then calculations can be made, and we will build up in places where we can do well, and we have done well. We have big companies, not on an international scale, but companies which have done well - Times, some manufacturing companies, National Iron, our shipyards. They have not done well because we have protected them.”
“Despite our banking sector being not completely open, despite our best efforts to build up our local banks as much as we can so that they will have a fighting chance competing overseas, can we produce one Citicorp or Dai-Ichi Bank, given 100 years? We are too small! We have four banks. In Singapore terms, they are giants; in international terms, they are still peanuts. We have to recognize the realities. If in the banking sector, where there is good reason for wanting to keep a good portion of the sector under Singapore control, we have such difficulty building up a big Singapore bank, how much harder it will be in the retail sector where the arguments are weaker, the market is that much more open, because you can just go overseas and shop? To a Singaporean, there is no insult in saying I buy from whom - Sogo? Or from Yaohan? - I am sorry I never go to these places, so I cannot produce their names - Why not? I make a living, nobody pays me to cool my heels. I earn a living, whether working in a factory, producing micro-chips or computers, or whether working as a doctor or as a stenographer, and I will shop in Yaohan. Why must I own Yaohan and run it poorly? If that wereoffered me, I would turn it down straightaway. Dr Augustine Tan: Sir, by his own admission, the Minister never goes shopping. So how does he know the problems of the retailers? And on my example of the Sumo wrestlers, I was not suggesting our going to Japan to wrestle with them. I was telling him not to bring them to Singapore to overwhelm our little guys, including himself. I hope he was not serious in regard to the local banks. I think we can be justifiably proud of these banks. I hope that he will not open the doors any wider to foreign competition.”
“It is not a sport in which anyone of my build, much less the Member for Whampoa's build, is likely to survive. And therefore when I want to watch Sumo, I either turn on the television, or bring in real Sumo wrestlers from Japan. If we want to compete with them, they can indulge in Sumo wrestling but I will either race them, or swim or play tennis, anything, but never get into the ring with the Sumo wrestlers. I am happy and, I think, so are they. Yes, some foreign retailers are Sumo-class, heavyweights. Therefore, do we want to be in the same business as them? If (to change the metaphor) there are people in the world 7 ft tall who play basketball, and there are, then do we, 5� ft tall, want to set up our own basketball team to compete with them? Surely not! Let them play, we will watch, and we will make our living in other ways. Similarly with the retail trade. If a Japanese retail chain store can come here and do what they ought to be doing in Japan but are not, which is to run extremely efficiently, offer very competitive prices and provide a very good service for Singaporeans, why should we not buy from them? And if they want to offer prices below market, below cost, thank you very much, so much the better. I am a consumer, I don't mind. And if you have deep pockets, well, I will come more often and tap your pockets more frequently. We will find a living in other areas. As the Member for Leng Kee said, why do you want to spend precious labour in retail trade when we need them in manufacturing and in other services, when we are short of labour and should put workers in jobs where we have a comparative advantage? The Member for Whampoa also mentioned banks as a good example. I think the banks illustrate our dilemma.”
“Sir, with your permission, I would like to take issue with the Minister on the question of competition in relation to entrepreneurship and the retail sector. Sir, I do agree that some kinds of competition can be helpful in spurring innovation and spurring people to better efforts, but certain other kinds of competition can overwhelm. If the Minister were to wrestle with a man about his size, we can have even bets on the outcome. But would he like to wrestle with a Japanese Sumo wrestler? Sir, we are talking about the retail sector in Singapore. When you allow these Japanese retailing giants to come in, it is like allowing a Sumo wrestler to come in to fight the Minister. We have no doubt as to who will win. The point is this, Sir, that although our economy is a small one, there are surely some sectors, however limited, that can preserved, helped in some regard so that local entrepreneurs would have a chance of emerging to be giants. We have the excellent example of the banking sector where there has been deliberate government policy to help promote the four major local banks. And I think we can be justifiably proud that these four banks have done so well. Why can we not do the same for the retail sector? Why must we bring in the Sumo wrestlers to overwhelm the Singaporeans? Why can we not promote our own retailers - give them all the technical assistance and financial assistance possible, so that eventually they can spread their wings and set up branches in other countries as well? BG Lee Hsien Loong: When the Member for Whampoa speaks, the persuasiveness of his argument is not always related to the logic of his case. I do not indulge in Sumo wrestling for a very good reason.”
“He has not even thought of the subject because he does not have the people? Sir, recently the Policy Studies Institute was set up at the NUS, costing $4 million, to conduct political and social research. Why not establish an Economic Research Institute similar to the Korean Development Institute to undertake independent, medium and long-term studies of Singapore, of ASEAN, of the NICs and the major Pacific Basin countries? Such research will help us to identify emerging economic trends and problems and therefore to adopt the right strategies. We have spent hundreds of millions of dollars on new public offices and tens of millions of dollars in extravagant furnishing. Why can we not spend a few paltry million dollars on much needed economic research? Singapore is well placed to be a world class centre for economic research. We are a free trading nation, we are a commercial and transportation centre, we are a financial centre of global significance, we are a regional centre for ASEAN and we are on the rim of the burgeoning Pacific region. All these mean that if we put in the resources, we can have an internationally recognized economic research facility.”
“He should not hasten to add to the cost of doing business in Singapore at this time when we have barely recovered from the recession. Next, may I deal with the subject of the Economic Committee and Sub-Committees. Members will recall that these were set up in 1985 and they made a commendable contribution by way of helpful diagnosis and prescriptions to overcome our economic recession. These Committees gave the private sector a sense of participation in decision-making. I believe the Government enhanced its image of openness, of accessibility and of receptivity to new ideas. And I believe, Sir, that the rapport which was built up was one intangible factor that contributed to the recovery. The problem now is that these Committees appear to be dormant, unutilized. I am told that businessmen are afraid to bring their problems to the Minister himself or to political leaders for fear of incurring the displeasure of bureaucrats. I would urge the Minister to look into such complaints and I would ask him, why not keep the Economic Committee and Sub-Committees as permanent avenues of dialogues for the business community? At the same time, my GPC is available as another channel to the private sector, and we already have a number of organizations approaching us for help. Finally, Sir, may I deal with the subject of economic research. I notice from this year's Budget that there were only five staff listed under MTI who deal with economic research. I am told that MTI is losing the director in charge of research very shortly. Are these five people sufficient to undertake all the economic research necessary at MTI? Is it the reason why the Minister was so hesitant to tell me his possible reactions to a world depression or world recession?”
“Mr Chairman, Sir, I hope the Minister's gushing optimism on regional cooperation is justified. Let us also hope that the Minister's reaction to a possible world recession is better than my ability to project scenarios, however dismal, or else we will all be dead ducks. May I now move on to the other three subjects that I have raised under this Head. Firstly, co-ordination of trade policies. In his reply to a recent question, the Minister was reassuring that this co-ordination of various economic policies is being done at MTI and there is a Ministerial Economic Committee of the highest level dealing with it. There is also an index of competitiveness which his Ministry has devised. But, Sir, I would like to focus concern on the anxiety that the business community has expressed concerning the various con- cessions that were granted in order to fight the recent recession. Members would recall that a total of $3.2 billion were given by way of concessions, of which $1.5 billion represented the cuts in the CPF and in the Skills Development Fund, and $420 million were by way of cuts in the corporate taxes, the rest represented increased public sector spending. Sir, we would have to watch the situation very carefully to make sure that what is injected into the economy is not suddenly withdrawn to the detriment of the economy, especially this year when we are expecting an economic slowdown. Furthermore, since the Finance Minister's announced intention is to limit the public sector's share of the GDP over the next five years, which I heartedly endorse, would not this mean that the withdrawal of the concessions would be quite unnecessary from the revenue standpoint?”
“Can we benefit from joint projects with our close neighbours? Are they serious about these suggestions? On investment abroad: among the new tax incentives, is one that would encourage more Singaporeans to invest abroad and among the criteria listed is one which requires such prospective investors to gain greater access to markets abroad. We can learn from the Japanese experience that whenever they make investments abroad they always make sure that their companies abroad buy from Japan. If our companies can do this, then this will be very helpful to our economy. In the recent Fortune magazine report of 28th March, a Singapore Government-owned company, Singapore Technology Incorporation, invested $5 million in Siera Semi-Conductors in California and this led to a subsequent joint venture in Singapore to the tune of $40 million. We certainly need to encourage more such investments.”
“In exchange for preferences, which brought them limited and risky gains, they have given up a voice in reciprocal trade negotiations and left themselves open to attack by protectionists in the industrial countries, who accuse them of unfair trade. The most mature developing countries, at least, should ask themselves whether this bargain still makes sense.' Sir, what do all these add up to? I believe there are two implications for us in terms of our economic strategy. Firstly, there is the prospect of potential instability in the world economy, a possibility of prolonged economic recession, if not, an actual depression. How shall we cope in that eventuality? What contingency plans have we made? In the Great Depression of the 1930s, large numbers of Singaporeans emigrated back to India and to China. We can no longer do the same. We have built up most of our infrastructure. We cannot build substantially more. About the only thing left to us is our savings which hopefully would meet our minimum needs for the duration of the recession or depression. But more than that, in the new international setting we need a new growth strategy. We need to identify new markets. Japan is a promising new market. But from recent reports, it would appear that the other newly industrializing countries have done far better than Singapore in Japan's markets. Are we doing something about it? Are we taking participation in the GATT negotiations seriously? As a free trading nation, we have much to contribute to the multilateral trade negotations. What further potential is there in regional cooperation, particularly with our closest neighbours, Indonesia and Malaysia? There were some reports from Johore that they would welcome more investments from Singapore, more tourism from Singapore.”
“Protectionism cannot solve the basic problem of trade imbalances because the root of these imbalances is the imbalances between savings and investments. Unless and until the United States sets its own house in order by substantially reducing its budget deficits, there can be no real solution to trade imbalances. We have also seen the withdrawal of the GSP for Singapore by the United States, again another sign of increasing protectionism. Sir, my GPC has publicly deplored this unilateral and unwarranted move by the United States. When a superpower takes on a minipower, it only belittles itself. More than that, it loses far more politically than it gains economically. It may be of interest to note some comments made by the World Bank in its latest World Development Report regarding the GSP. Firstly, it notes that as a result of the limitations adopted by most industrial countries, the developing countries have gained little from the GSP. Studies of the GSP in the EEC show that imports from non-beneficiaries were growing at a faster rate than those from countries covered by the GSP. Moreover, there is no long-term guarantee for the GSP benefits. They are unilaterally given and they are unilaterally withdrawn. Product regulation has been taking place all the time. Exporters and investors in developing countries, like Singapore, have faced uncertainty for their export markets. On page 167 of the Report we have a very interesting comment by the World Bank and I quote: 'It has been suggested that by accepting special and differential treatest the developing countries have struck a Faustian bargain.”
“Sir, I beg to move, That the total sum to be allocated for Head V of the Main Estimates be reduced by $100. I have raised a number of topics there but I propose to deal with the first one - economic stability and economic growth - first. During the Budget Statement presented in this House, the Minister for Finance indicated that we are facing a time of great uncertainty internationally. Certainly the October market crash has now led to expectations of a slowdown of the US economy unless Japan and West Germany and other OECD countries can supply the alternative locomotion needed for world economic growth. The world economy therefore is expected to grow more slowly. At the same time, international trade will also grow more slowly. The basic problem of a huge payment imbalances between the major powers, the US, on the one hand, Japan, West Germany and other countries on the other, will mean continuing currency and trade instability. The pressures for greater protectionism are therefore increasing. We have seen in the last few months the US Presidential candidates trying to outdo each other to direct attention to the balance of payments surpluses not only of Japan but also of the newly industrializing countries, including Singapore. In the Senate and Congress of the United States, there are a number of Bills which seek to increase protectionism. One of them is the Omnibus Trade Bill which will require the US President to produce a list of unfair trading partners each year and to retaliate within 19 months. Protectionism is not only increasing but it is now taking place on a bilateral basis and blatantly violates the laws of comparative advantage and multilateral trade.”
“Sir, I thank the Minister for his reply and I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.”
“Sir, I beg to move, That the sum to be allocated for Head N be reduced by $10 in respect of Code NG 1000 of the Main Estimates. Sir, this subhead deals with the Civil Service Telephone Network. In 1986, $3 million was spent, in 1987, $2.7 million and this year, it is proposed to spend $1.6 million. The manpower involved is 30. I am moving this amendment to ask the Minister why is it necessary to maintain this telephone network for the civil service when we have Telecoms.”
“Sir, I thank the Minister for his reply and I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.”
“Sir, I beg to move, That the sum to be allocated for Head N be reduced by $10 in respect of Code NE 1000 of the Main Estimates. My purpose in raising this amendment is to draw attention to the management services programme. In 1986 $1.9 million was spent and in 1987 it rose to $3.9 million. For this current Budget, $6.9 million has been provided and there is a complement of 43 people in this department. Sir, earlier on the Minister mentioned the use of private management consultants in some of the studies that he alluded to. I merely want to raise some questions on how extensive this is and on the proposal to make greater use of such private management consultants. Obviously there is a benefit because one can then have the benefit of private sector experience in terms of efficiency, office management and the like. Furthermore, if civil servants are used to look after other civil servants, the chances are that they may not be very forthcoming in terms of the recommendatons for productivity improvements.”
“Sir, I would like to support the proposal by the Member for Changkat and to remind the Minister that human beings are more important than buildings. I beg leave to withdraw my amendment. Amendment, by leave, withdrawn.”
“Sir, I was informed that this process of escalating luxurious furnishings began with the Ministry of the Environment. The Ministry somehow found itself with surplus funds unutilized in some areas. And because of the more liberal rules that allow a Ministry to vire funds from one Head to another, the Ministry of the Environment found it possible to sidestep certain regulations and provided themselves with rather luxurious furnishings. Certainly, Sir, one may note that rubbish collecting is done in very glamorous surroundings. May I also get an undertaking from the Minister that for any future furnishing of buildings priority be given to our local furniture manufacturers.”
“Our planners in the Treasury Building have splendid views amidst even more splendid furnishings, with deep-pile carpeting and the best imported furniture. Sir, we do not yet have MPs and Minister with rotund girths like the Roman senators of old. But we do have circular buildings. Let us hope our leaders and planners do not develop "circular" reasoning as a result. When leaders of a nation start building monuments, that nation has begun its decline. Let us hope that despite the unnecessary opulence of our public buildings we can still maintain that rugged pioneering spirit that our first generation leaders so amply display.”
“Sir, my fourth subject is the standards of comfort and luxury in public buildings. In the Budget Statement, the Minister made a proposal that with effect from FY 89 ministries should be given greater discretion in terms of their expenditure and that up to 10% of the Development vote, subject to $10 million each year, could be committed by Permanent Secretaries. This is certainly a big improvement from those days when even to buy a typewriter required Ministry of Finance's permission. But a new problem would probably arise, namely, that capital expenditures may be committed which will require future operational and manpower costs and therefore the norms for various types of expenditures need to be carefully set. Sir, I recall the rugged days when Ministers and civil servants were cooped up in Fullerton Building, a poky place indeed. Yet from those shabby offices sprang great visions and ideas that gave us the development over the last 25 years. Mr Hon Sui Sen, the late Finance Minister, was a very frugal Finance Minister indeed. The furnishing standards and space allocation for civil servants were spartan. I recall that when the new Kent Ridge Campus for NUS was being planned, there was talk of dispensing with air-conditioning for staff offices as it was deemed that the Kent Ridge Campus was very breezy and we were told to expect to use the old furniture, some of which dated back to Raffles College. Today, Sir, as one looks at buildings like PSA, PUB, Telecoms, Ministry of the Environment, the Monetary Authority of Singapore and the Treasury Building, the norms for comfort and luxury in public buildings have become exceedingly generous.”
“Sir, I thank the Minister for his reply. May I get on to the third part of my amendment and that has to do with the divestment programme and farming out activities. My purpose in bringing up this subject is to get a progress report on the divestment of Government-linked com- panies and the question whether this has been hindered by the stock market crash of last year. As to the second part of this subject matter, may I refer to the Auditor-General's Report, 1986-87, paragraphs 136 to 138. In that Report, it was mentioned that the Government ministries managed to farm out $370 million to the private sector. This is something to be welcomed because it means that greater efficiency will result and the private sector's participation in the economy will increase. The Auditor-General, however, also recommended other areas, to which the Finance Ministry apparently agreed, as priority areas for farming out. They are maintenance and repair of vehicles, laboratory and testing services, materials management and office services. May I find out from the Minister what further progress has been made in these areas?”
“Mr Chairman, Sir, I thank the hon. Minister for his reply which is reassuring. We certainly regained part of our lustre as a financial centre last year when our stock market was able to keep open for trading in spite of the October crash. May I now move on to the second topic, and that is, Manpower Utilisation in the Public Sector. In his Budget Statement, the Minister informed us that the manpower complement of Ministries and those statutory boards funded through the budget will be reduced by 2% and that this is part of the targetted 10% decrease in public sector manpower over a 5-year period announced in 1986. There are a number of questions I would like to address to the Minister in this regard. Firstly, what kind of manpower saving does this represent? One could, for example, be saving mostly in terms of daily-rated workers or one could save workers across-the-board, including executive and professional officers. In the case of daily-rated workers, it is very simple to save on such workers by simply contracting work out. But in terms of national manpower requirements, we are not really saving. There may be marginal gain in terms of efficiency if the contracting cost is less than having to maintain these workers at the Ministry level. The second question is, we have been automating and mechanizing much of the Civil Service. Are there fruits that are evident from this process by way of manpower saving? Thirdly, to what extent are we developing performance indicators or productivity indicators in Government Ministries and statutory boards?”
“So my question to the Finance Minister is: how do we protect our financial institutions in the event - and let's hope it does not happen - but in the event of an international financial collapse?”
“There are therefore possible threats of instability to Singapore. In October last year we already experienced a stock market crash. As it turned out, the Pan-El crisis in 1985 was a blessing in disguise because it led us to institute a number of very good reforms of the stock market, as a result of which we were able to withstand the stock market crisis of last year. The possibility of another stock market crash cannot be dismissed. Another possibility lies in the collapse of financial institutions on a global basis. And it is this possibility that has caused me to raise certain questions with the Finance Minister about our own financial institutions. Members would note from the Economic Survey Report that the Asian Dollar Market last year rose to US$245 billion. Of this amount, inter-bank funds held outside Singapore by the system totalled US$140 billion, and inter-bank funds owned by foreign banks in Singapore amounted to US$160 billion. As for our domestic banking system, in 1987 the total assets were S$87 billion. Of these total assets, the assets held by our banks abroad amounted to $25 billion or 28% of the total, whereas the liabilities which were due to foreign banks held in our banking system amounted to $28 billion or 32% of the total liabilities. At the same time, Sir, the capitalization plus reserves of our domestic banks amounted to only $6.4 billion or only 7.4% of total bank liabilities. I do not have the figures for capital and reserves for the Asian Dollar Market. Perhaps the Minister might refer to that. But, Sir, these figures illustrate for us the degree, the extent of our financial integration with the global monetary system. Yes, we have benefited a great deal from this integration but at the same time it does pose dangers to us.”
“Sir, I beg to move, That the total sum to be allocated for Head N of the Main Estimates be reduced by $100. I move this amendment to discuss a number of issues. May I take up the first one on the soundness of Singapore's Financial Institutions. Sir, during the debate on the Budget Statement, I commented on the correctness of our fiscal, monetary, wage and savings policies of our country. I also alluded to the uncertainties in the global economy within which we have to operate. Perhaps we may want to take a quick look at our external position. Members would note that our balance of payments last year was in surplus to the extent of $2.3 billion which included the current account surplus of $1.1 billion. Our external reserves rose to $30.4 billion which represented 5.3 months of total imports or 7.8 months of retained imports. We have a low inflation rate as measured by the cost of living index 0.5%. Our external debt was remarkably low compared to all other nations. We owed a mere $303 million, and the Singapore Dollar was strong and stable. This strong external position of ours would stand us in good stead in facing the global uncertainties. We are vulnerable in two regards. Firstly, because of our dependence on trade and foreign investments; and secondly, because of our financial integration with the global monetary system. I have mentioned the fragility of the global situation in respect of the heavy indebtedness of countries, particularly the developing countries. And there are the huge trade imbalances among the major powers, particularly the US vis-a-vis Japan and West Germany, and the need to rely upon monetary policy to make economic adjustments which makes for exchange rate instability. At the same time, the pressures of protectionism are mounting.”
“Sir, I could not believe my ears when I heard the Senior Parliamentary Secretary say that there are no young people willing to become hawkers. There is a rule, is there not, which says that nobody under the age of 40, unless that person is handicapped, can become a hawker?”
“Mr Speaker, Sir, will the HDB consider helping out with relocation expenses in the event of these hardship cases having to be relocated to smaller flats?”
“7 billion and also reduce tax, both corporate as well as personal tax, by 1% each. So before we feel too happy, I think we should look at the situation of Hong Kong and ourselves. Why did we lose out? The Member for Whampoa has said that there were distortions introduced into our economy. Well, he put it mildly. I would say that it was a mistake of the Government by introducing factors which increased our costs.”
“Our foreign exchange reserves will be strong. The Singapore dollar will be strong and the Monetary Authority of Singapore will continue to be in a happy position of making sure that our dollar does not get overly strong so as to penalize our exports. But all can be unravelled easily, just vote in a government promising HDB flats at give-away prices, free medical services, lower taxes, regardless of revenue needs. Overnight, like France when Mitterrand first became President, our foreign reserves will be drained and the Singapore dollar will need to be devalued. Inflation will be high and so will unemployment, as both foreigners and Singaporeans pull their money out of Singapore. A depressing scenario, yes indeed. An avoidable scenario, yes indeed. It is up to the people of Singapore to choose. Thank you, Mr Speaker. Mr Chiam See Tong (Potong Pasir): Mr Speaker, Sir, I rise not in support of this Budget. May I be allowed just to comment on what the Member for Whampoa who is also the GRC Chairman on Finance, Trade and Industry has said. He says that we should be thankful of the recovery for excellent results. Mr Speaker, Sir, Singapore has sometimes been compared to the other three NICs, namely, South Korea, Taiwan and Hong Kong. But according to our Ambassador to Washington he preferred that we be compared to Hong Kong. He has called South Korea and Taiwan the two tigers but Singapore and Hong Kong the two pussycats. Our competitor is therefore Hong Kong. It would appear that we have lost out as a competitor to Hong Kong. We are just recovering from our depressed economy. But in the case of Hong Kong they had two boom years of double digit increases in growth. And also I was reading in the papers their Financial Secretary was able to make hand-outs of HK$2.”
“A small mistake just prior to 19th October caused the crash of 19th October. Just one-quarter percent increase in the rate of interest that was proposed was enough to cause the crash. So we are now living in a world that is on a tightrope. Exchange rates are volatile, protectionism is rising. What do all these things portend for us? Firstly, we must have the agility to adjust our structure of production in order to produce goods and services that will find markets abroad. At the same time, we must be diligent in searching for new markets. I was reading about Japan opening up her market and how the other NICs in the Far East have already made great efforts to penetrate the Japanese market. But Singapore seems to be lagging behind. At the same time, Sir, we need to be able to withstand a breakdown of the world financial system. I will have more to say about this when we get to the Ministry of Finance. What should our formula be for steady economic growth? Firstly, as the Finance Minister rightly pointed out, to aim for a balanced budget. I fully support it. He wants to limit and control the share of the public sector in Gross Domestic Product. I fully support him. We have a high savings, high investment economy. Let us keep it that way. We have a moderate as well as a flexible wage policy. This is something necessary for us if we are to make the necessary adjustments. We have emphasized increasing productivity, more so in the future. And may I add a sixth, selective immigration, to get the skills and the type of workers that we want. Sir, hon. Members will note that when the basic policies are right, when there is fiscal prudence and when there is high savings and investment, moderate wages and productivity increases, there will be confidence in our economy.”
“But America was not yet ready to take up economic leadership in the world. There were three mistakes made which exacerbated the Great Depression. Firstly, tight monetary policy; second, competitive devaluation; and, third, protectionism. So far, we have managed to avoid a tight monetary policy. But please note that competitive devaluation is taking place. The US wants the dollar to go down in relation to the Yen, the Mark and other currencies. The Japanese, the Germans and others are wary of their currencies growing too strong. And there is pressure on the NICs like Singapore, Taiwan, Hong Kong, South Korea to revalue our currencies. At the same time, protectionism is on the increase. Whereas since the Second World War, tariffs in industrial countries have declined very substantially, at the same time, non-tariff barriers have risen very significantly, especially in North America and the European Common Market. They now affect more than 20% of all imports in such countries. Non-tariff barriers are much more difficult to identify and therefore much more difficult to evade and to overcome. We are now in a multi-polar world economy with no clear economic leader. Country after country have found their fiscal policy inflexible. Raising taxes is unpopular. It is easy to increase government expenditure but difficult, if not impossible, to decrease them. Because new political constituencies are created for every expenditure that is increased. Then there is the rising burden of interest payments. So countries which have pursued high spending policies and huge budget deficit policies have gotten into trouble all over the world. So now, what is left for the industrial countries is monetary policy and it is having to coordinate monetary policies that is of vital importance.”
“Although the United States is in the sixth year of economic expansion, Members may wish to note that this economic expansion was a very unhealthy one. It was based upon huge government deficits in America. In 1987, the budget deficit was US$148 billion. In 1988, it is projected to be US$165 billion. With such huge budget deficits, it is no wonder that America has suffered huge trade deficits, US$175 billion last year and projected to be US$152 billion this year. And the US dollar has been devalued more than 50% since 1985. The stock market crash of 19th October therefore was no surprise, given this kind of unhealthy development. At the same time, Members may note that the United States in the last two years has shifted from being a leading international creditor to being a leading international borrower and its debts are piling up at a tremendous rate. The problem that America has is something which we ought to study carefully in order to avoid making the same mistake ourselves. The crux of the problem for America lies in the very low savings rate of 16% compared to 32% for Japan, 24% for West Germany, 41% for Singapore. This has meant that in 1985, for example, the United States had to borrow from abroad up to 3% of their GNP and this figure is rising, whereas Japan and West Germany were able to lend abroad something like 4% of their GNP. The current international situation reminds me of the inter-war period between the first and second world wars. We have a huge developing country debt of US$753 billion in 1986, representing 35% of their GNP, 144% of their exports, 22% debt service ratio and debt service, as a percentage of GNP, 5.5%, a huge figure indeed. By 1914, Britain had lost her position as an international creditor country to America.”
“For 1985-1986, the public sector surpluses plus the CPF contributions accounted for 73-75% of our total savings in those years. In other words, Sir, the amount of savings in private hands was something like 25% or so. Is this a healthy situation for us? Are we not starving the private sector of sufficient funds in order to encourage private entrepreneurship and investment? As regards the foreign worker's levy, I am sure other Members also have complaints to raise. My question is very simple. If our economy is expected to grow at a similar rate as last year, then I would look upon such an increase more kindly. But as the Minister pointed out, there is an expected economic slowdown. Why then increase the levy at this stage and pose additional difficulties for our firms? Although he mentioned that only 3% of the total labour force is involved, but eventually as the older workers get replaced, practically all foreign workers will come under the foreign worker's levy. So in terms of potential, the addition to business costs is not something to be dismissed. In this connection, Sir, may I quote from a recent book by Lim Chong Yah and associates called "Policy Options for the Singapore Economy", page 228: 'The operating costs of businesses, which include certain statutory board fees, utility charges and licences in Singapore, are higher than those in Hong Kong. Indirectly then, statutory boards' savings appeared to be built up at the expense of decreasing the competitiveness of Singapore.' I invite the Minister to rebut that statement. If I may now turn to the world economic outlook. As the Minister pointed out, it is a time of uncertainty.”