Goh Chee Wee
Singapore
“Sir, I would like to thank HDB and the Government for the upgrading programmes. We saw 4,900 units of flats in my constituency, Boon Lay, benefiting or about to benefit from the Interim and Main Upgrading Programmes. For older constituencies like Boon Lay, most if not all of the flats are eligible for main upgrading.”
“There will be no need to panic and rush to secure COEs at all costs and this will address the kiasu syndrome expressed by Mr Chew Heng Ching earlier on. 1.15 pm In short, the authority must lay out clear rules and regulations and devise a fair and workable system.”
“The actual cost savings to the taxi operators would, therefore, come only from the existing fleet of taxis which were subject to the old tax regime. Nevertheless, there are sizable savings which could be passed on to the taxi drivers.”
“We already have Mercedes and London cabs on our roads to cater for those who are prepared to pay more to travel in style and comfort. One day we might have Kancil and Daihatsu taxis to cater to the budget-conscious commuters, provided the vehicles meet LTA's conditions.”
“Until such time when the taxi industry is completely deregulated, I propose that the Government fix the price of COEs for taxis in the same way that the taxi fares are regulated. We do not expect the taxi fares to fluctuate monthly, neither should the COE price for taxis.”
“Sir, there is currently no plan to extend the MRT line to the cargo and engineering complexes. Any extension will have to be justified in terms of cost and ridership. We should also consider the fact that the cargo and engineering complexes in Changi are housed in a sprawling area and I believe they cover 70 hectares.”
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“Sir, I would like to thank HDB and the Government for the upgrading programmes. We saw 4,900 units of flats in my constituency, Boon Lay, benefiting or about to benefit from the Interim and Main Upgrading Programmes. For older constituencies like Boon Lay, most if not all of the flats are eligible for main upgrading. But being a nation-wide programme, upgrading could only proceed at a certain pace. So, many residents are therefore afraid that it will take quite some years before their turn for upgrading of flats will come. Some of the older ones wonder whether if they will live long enough to see the upgrading. Sir, I share the sentiments expressed by the earlier speaker, Dr Wan Soon Bee. And I would like to ask the Minister, in view of the economic recovery and the stronger financial position, and, in fact, larger surpluses accumulated by the Government, whether HDB could accelerate these upgrading programmes so that more of those who live in the older estates could benefit from the programme early.”
“There will be no need to panic and rush to secure COEs at all costs and this will address the kiasu syndrome expressed by Mr Chew Heng Ching earlier on. 1.15 pm In short, the authority must lay out clear rules and regulations and devise a fair and workable system. Only then can we assess more objectively the feasibility or otherwise of an open bidding system.”
“To determine the allowable vehicle growth rate, the Government will have to be more precise in its projection of the expansion of the road network, the travelling pattern of the population and anticipated level of road congestions and other factors. I say that we need a more accurate projection as we should not go off the mark like the way we project our population growth. We were told that we have a population of three million but all of a sudden, we were told that we are reaching four million soon. I wonder which Ministry is responsible for this unplanned and unanticipated fortune or misfortune. Similarly, for the open bidding system, the authority can make the system work by thinking through all possible pitfalls and devise a bidding mechanism which would minimise abuse and minimise anxiety among the bidders. Many people think that the open bidding system is inflationary. It pushes up prices. The Review Committee has suggested that the Government try out an electronic on-line open bidding system in the Open Category before extending it to the entire VQS. I suggest that in trying out the open bidding system, the Government could introduce a number of measures to check the inflationary tendencies. For instance, the authority can limit the number of times a person can up his bids during the bidding process. This will prevent him from raising his bid to outdo others, and this point was raised by Mr Ong Kian Min. Another way is to increase the frequency of inviting bids. For instance, instead of calling for bids once a month, we can spread out the quota allocation and call for bids on a weekly basis. So, those who miss out this week can bid again next week.”
“Sir, the Vehicle Quota System Review Committee has completed its deliberations and has submitted its Report to the Minister. I am a member of the Committee and would urge the Minister to endorse the recommendations of the Committee. Sir, after the release of the Review Committee's Report and in fact even before the release of the Report, there has been numerous public debate over the merits and the shortcomings of the current system. There was no lack of ideas of how the current system can be further refined and improved upon. Members will recall that when the idea of the Vehicle Quota System was first mooted, there were outcries from some quarters that the scheme was ill conceived and it was designed to enrich the Government's coffer. Today, after the system has been in place for a number of years, it has proven to be effective in controlling our vehicle population. Bidding for COE has become a way of life for Singaporeans. Sir, today, when the idea of a revision to the VQS is mooted, we heard comments like, since the present system has served us well, why change it. And true enough, many are apprehensive of the impact of any proposed changes. Sir, I would say that what the VQS Review Committee has proposed is a refinement of the current system. It has not proposed a fundamental change in the vehicle demand management strategy. It has reaffirmed the principle of allocation of COEs, which is to allocate a scarce resource through a bidding process. While there were specific suggestions to fine-tune the quota formula and to merge some categories of vehicles under the quota system, what catches the attention of the public is the recommendation to review the allowable vehicle growth rate and to try out an open bidding system.”
“We already have Mercedes and London cabs on our roads to cater for those who are prepared to pay more to travel in style and comfort. One day we might have Kancil and Daihatsu taxis to cater to the budget-conscious commuters, provided the vehicles meet LTA's conditions. The end result of the deregulation exercise is that we would have a more efficient, competitive and responsive taxi service which would better serve the interest and needs of the commuting public. Sir, I support the deregulation exercise.”
“In 1985, when the taxi fares were raised substantially, the demand dropped drastically, as a result of which the taxi drivers suffered badly. Consequently, the fares had to be lowered to a more realistic level. In setting taxi fares, therefore, the operators cannot ignore the market conditions. Most of our taxi drivers could still remember the unpleasant experience which I have just mentioned. They themselves, not just the commuters, are apprehensive of the consequences of fare increases. They would rather not raise fares for fear of losing their customers if their operating cost could be contained and remain unchanged. The taxi company too would rather not raise the rental rate for fear of losing their drivers if the costs of doing business - the COE, ALS, financing cost and others - do not go up. But in real life, things do not remain constant. There are many variables. There are many economic factors at play and, finally, it is the market forces which would determine the supply and demand and price of service. With deregulation, the taxi fares would reflect more accurately the state of supply and demand. For instance, there is a strong demand for taxis during peak hours. But during off peak hours, empty cruising of taxis is a common sight. We can try to address this problem through differential pricing - differential pricing according to the hour of the day and even by day of the week. In some of the cities in the United States, even the bus fares are discounted on Sundays in order to attract ridership. There is no reason why the same principle of differential pricing cannot be applied here either for buses or taxis. Deregulation would also enable the taxi operators to introduce more differentiated and innovative service to suit the special needs of the customers.”
“Sir, once again, I wish to declare my interest as a director of the Comfort group. Sir, the Minister has announced that the LTA will be recommending to the Public Transport Council to deregulate taxi fares when the new vehicular tax structure and the electronic road pricing system are implemented on 1st September 1998. This will allow taxi operators to set their own fares so that they will better meet the requirements of the various market segments and deploy their resources to best meet the demand. Sir, with the deregulation, the onus of setting taxi fares rests with the taxi operators and not the regulator, as is the case now. In setting the fares, the operator would have to take into consideration the market conditions, the supply and demand for taxis, the cost of providing the service and what the commuters are prepared to pay. Competition among the taxi operators would also place a lead on fare increases, as those who charge higher fares risk losing their customers. The fear among the commuters is: with the deregulation, would the taxi operators raise fares arbitrarily? Would operators form a cartel to fix fares, and this is a point which has been raised by Mr Iswaran and Dr Toh See Kiat? Sir, my view is that our taxi commuters are sensitive to fare increases. While one cannot rule out the possibility and justification for fare revision in the future, it is a fallacy to believe that the taxi operators can just raise the fares arbitrarily without due regard to the commuters' ability to pay. The demand for taxis is price elastic. The commuters can easily switch to other forms of public transport, like buses and MRT, if they consider the taxi fares to be unreasonably high. And we already had a previous experience in the mid-80s.”
“The actual cost savings to the taxi operators would, therefore, come only from the existing fleet of taxis which were subject to the old tax regime. Nevertheless, there are sizable savings which could be passed on to the taxi drivers. And I have no doubt that the taxi companies would discuss with the taxi driver representatives on ways to pass the benefits of cost savings to the drivers in a fair and equitable manner. Sir, in speaking on this amendment, I do not intend to pose specific questions to the Minister. I just wish to offer some comments on this subject and commend the Minister for consulting and seeking the views of the various interest groups, including the taxi operators and drivers, while formulating the new tax structure.”
“Sir, the Minister has announced a package of vehicle tax changes. The rationalisation exercise has been a comprehensive one. I welcome the changes as they are fair and rational. Except for the motorcyclists and a minority few who are adversely affected by the changes, most motorists could benefit from the new tax structure as the emphasis is shifted from ownership restraint to usage restraint. The package of rebates has also been carefully formulated so as to lighten the burden of the motorists subsequent to the introduction of ERP. Sir, before I go on, I must declare my interest as a director of Comfort Group Limited. Sir, in formulating the tax changes, the Ministry had held consultations with various groups, including the taxi operators and taxi drivers. During the dialogue session, the taxi operators and drivers have put forward several suggestions, which would accord taxis with some concessions, in recognition of their public transport role. There are two specific requests which I would like to highlight: first, is to reduce the taxi diesel tax, the point already raised by Mr Seng Han Thong. The other is to phase in ERP charges for taxis gradually. Sir, I am glad the Ministry has taken these requests into consideration and has agreed to reduce taxi diesel tax as well as to phase in the ERP charges over a period of three years. The reduction of this taxi diesel tax came as a relief to the taxi drivers and operators who have long lobbied for it. However, the Ministry has also decided, at the same time, to raise the ARF imposed on taxis to bring it on par with private vehicles. This will raise the upfront cost of purchasing a taxi substantially. For new and replacement taxis, therefore, the savings in diesel tax will be largely offset by the increased vehicle taxes.”
“I thank the Minister for his answer and beg leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“Sir, I beg to move, That the sum to be allocated for Head I of the Development Estimates be reduced by $10 in respect of Code IA 5100. Sir, I would like to raise the question of impact of ERP on taxis. Again, I would like to declare my interest as a Director of Comfort group. Sir, when the ERP is implemented, it is only logical that the taxi commuters be required to pay in full the ERP charges on top of the taxi fares. A number of issues need to be resolved. For instance, how would a taxi driver charge the commuter for the ERP charges that he has incurred while on the way to pick up the passenger in response to a telephone booking? I would request that the LTA seek the views of the taxi operators and attempt to address all the anticipated problems before the implementation of the ERP. I would also request that the ERP for taxis be introduced in phases so as to lighten the burden of the drivers and the commuters as they adjust to the new system. To begin with, concessionary ERP charges could be imposed on taxis instead of the full rate applicable to normal vehicles. I hope the Minister would consider these suggestions.”
“Until such time when the taxi industry is completely deregulated, I propose that the Government fix the price of COEs for taxis in the same way that the taxi fares are regulated. We do not expect the taxi fares to fluctuate monthly, neither should the COE price for taxis. But like the taxi fares, the cost of COE for a taxi can be adjusted from time to time. It can be reviewed, say, annually with any proposal for a fare revision. I hope the Minister will consider the suggestion.”
“Perhaps, we should allow the taxi drivers to levy a small charge on the commuters so that part of the ALS and RPS charges could be passed on to the commuters. "By a small charge", I mean 50 cents or so. This, I believe, is more equitable. The proposed ERP system would modify or replace some of the existing schemes like the ALS and RPS. But it would be still some time before the ERP is fully implemented. I would therefore request the Minister to consider my proposal in the meantime. With your permission, Sir, I propose to speak on the next subject. This is on the Certificate of Entitlement (COE). Since the introduction of the COE scheme, taxi companies have to bid for COEs when they wish to add new taxis to their fleet and pay the Prevailing Quota Premium (PQP) when they replace their seven-year old taxis. The PQP prices have risen more than 15 times, from $3,000 seven years ago to almost $50,000 today. Today, the pro-rated PQP, which taxi companies have to pay to replace the taxi, is more than the capital cost of the vehicle itself. The increased cost would have to be borne by the taxi companies, but eventually by the taxi drivers and commuters. No doubt the Government has granted special tax concessions to taxis. That is why taxi fares in Singapore are still very affordable compared to those in other major cities. But while the taxi fares are regulated, an important cost element in acquiring and operating the taxi, which is the COE, is determined by market forces. The COE and PQP prices have escalated over the years. The Government has to decide to what extent the taxi industry is to be regulated or deregulated. The present regime where fares are regulated but a key component of cost is subject to the vagaries of supply and demand for COE is untenable.”
“Sir, before I speak, I would like to declare my interest as a director of the Comfort Group. Sir, the Area Licensing Scheme (ALS) was introduced to control traffic flow into the city. Motorists who wish to enter the restricted zone during certain hours have to pay a charge. The measure is intended to reduce congestion and make motorists who wish to enjoy free flowing traffic to pay for it. It is for the same purpose that the Road Pricing Scheme (RPS) along the expressways was introduced. But the scheme does have an adverse impact on the taxi operators and the taxi drivers. By right, all taxi commuters who wish to enter the CBD or use the controlled expressways should be asked to pay the ALS and RPS charges. The taxi drivers should not be made to bear the burden. But, in practice, taxi drivers find that in order to secure business and attract commuters, they have no choice but to purchase the ALS licence themselves and, for convenience and to save some cost, most of them would buy the monthly licence instead of the daily one out of their own pocket. Today, many taxi commuters do not pay the ALS charges when they enter the CBD. They would look for a taxi which already displays the ALS licence. Similarly, they do not pay the RPS charges too. It is the taxi drivers who are paying for it. This, I believe, is not what the Government has intended. I would therefore suggest that we fine-tune the present system. I am all for the control measures introduced by LTA. They are necessary and I support them, but we need fine-tuning from time to time. 5.45 pm Currently, taxi drivers are not allowed to charge commuters over the ALS licence which the driver has already purchased on his own.”
“Sir, I think I have already explained why there is no current plan to extend the MRT line to the cargo complex.”
“Sir, there is currently no plan to extend the MRT line to the cargo and engineering complexes. Any extension will have to be justified in terms of cost and ridership. We should also consider the fact that the cargo and engineering complexes in Changi are housed in a sprawling area and I believe they cover 70 hectares. It is therefore not feasible to build a station to serve all the employees in the complex. Mr Teo Chong Tee: Sir, as you are aware, it took me nine years to convince the Ministers and the relevant transport authority to bring the MRT line to Changi Airport and I hope that it will not be another nine years for the Land Transport Authority or the MRTC to consider extending the line further to the cargo complexes and engineering complexes. May I also request the Minister to keep this in mind for future planning and I hope that he will not take nine years.”
“As I said, I do not have the details about this fee structure. I will ask SingTel to look into this. 4-ROOM BUDGET FLATS IN NORTH EAST ZONE (Building) 9. Mr Low Thia Khiang asked the Minister for National Development whether 4-room budget flats will be built in the North East Zone estates like Sengkang and Punggol and whether applicants of such flats can choose the unit.”
“Sir, I do not believe that there will be a waiver of the fees. There is a fee incurred in having this Caller ID facility. As I said, I do not believe that a waiver is being planned.”
“Sir, I do not have the details about this fee. But as I explained earlier on, there are options available to the subscribers who want to have Caller ID facility. As I said, special arrangements can be made for the subscribers.”
“Mr Speaker, Sir, the proposed amendments to the EEI Act will improve our tax incentives to better attract investments into Singapore. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Goh Chee Wee]. Bill considered in Committee; reported without amendment, read a Third time and passed. TOWN COUNCILS (AMENDMENT) BILL Order for Second Reading read.”
“IA at 100% will typically be for projects that would also qualify for Pioneer Incentive, but may find the Pioneer Incentive less attractive because of the project's long gestation period. The second tax change to the IA allows us to more effectively encourage companies to reduce the consumption of water. Presently, IA is awarded to help defray the high capital expenditure on water recycling plants or other means of water conservation. However, for companies already enjoying concessionary tax rates or tax exemption, IA is not sufficient as an inducement to install such equipment. The tax change will allow IA for equipment used to reduce water consumption to be set off against the company's other income streams taxed at the normal rate. This enables the company to derive maximum benefit from the IA for water conservation or recycling. Clauses 5 and 6b relate to these amendments. Technical amendments I will now move on to the technical amendments to the Investment Allowance Incentive. The first technical amendment clarifies that the IA may not be awarded to a project that derives income which already enjoys a concessionary tax rate. The amendment makes explicit the tax practice of not double-incentivising a company for the same investment project. However, an exception to this principle is made for reducing water consumption as I have explained earlier. The second technical amendment widens the scope of water conservation projects allowed. The IA is presently given for projects that reduce the consumption of potable water. The word "potable" is to be deleted so that the IA can be used to encourage the conservation of both potable and industrial water.”
“Like the Post-Pioneer Incentive, the DEI confers a concessionary tax rate of no less than 10%, but for a maximum incentive period of up to 20 years. The DEI fulfils a need. Currently, the Pioneer Incentive is awarded only to the most desirable projects and the Post-Pioneer Incentive can only be given to Pioneer companies. With DEI, Pioneer and Post-Pioneer companies can be induced to further expand or upgrade their activities in Singapore at the end of their incentive period. The DEI can also be awarded for investments that have not enjoyed Pioneer status, but nevertheless bring strong economic benefits to Singapore. Singapore faces strong competition from both developed and developing countries for highly-desirable, high value-added manufacturing and services investment projects. The DEI will help ensure that Singapore remains an attractive location for these projects. Clause 2 of the Bill introduces the DEI. Tax changes to Investment Allowance Incentive The next two tax changes are to the Investment Allowance Incentive, or IA in short. Under this incentive, up to 50% of approved fixed capital expenditure may be deducted against the company's taxable income. The first of the two tax changes raises the IA cap from 50% to 100% of fixed capital expenditure. The enhancement to the IA will make it more attractive to companies making sizeable capital investments in projects with long gestation periods. Where the company has insufficient profits in the year to fully set off the IA, the unutilised IA can be carried forward and set off against future profits. In contrast, the tax relief period for the Pioneer Incentive commences upon production, even if the company makes losses during the initial years.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill will amend the Economic Expansion Incentives (Relief from Income Tax) Act, which I will refer to as the EEI Act in short. The Bill introduces the new Development and Expansion Incentive and two tax changes to the Investment Allowance incentive. Two of these three tax changes were announced in the 1996 Budget Statement. The Bill will also make two technical amendments to the Investment Allowance incentive. These amendments shall take effect from the Year of Assessment 1997, and will therefore apply to income earned in 1996 I will now describe each of the proposed amendments in turn. Development and Expansion Incentive (DEI) The new Development and Expansion Incentive, or DEI in short, was announced in the 1996 Budget Statement. It replaces the Post-Pioneer Incentive which will no longer be awarded. The DEI complements the Pioneer Incentive in encouraging companies engaged in high value-added manufacturing or services activities to invest, expand and upgrade in Singapore. To explain how the DEI works, let me firstly briefly touch on the Pioneer and Post-Pioneer Incentives. The Pioneer Incentive is awarded to investment projects that bring substantial economic benefits to Singapore. These are typically high value-added, technology and capital intensive manufacturing investments. Income of approved Pioneer projects is exempt from tax for up to 10 years. At the end of their Pioneer status, companies that upgrade or expand their activities further may apply for the Post-Pioneer Incentive. Income derived from the Post-Pioneer projects is taxed at a concessionary rate of no lower than 10% for up to 10 years.”
“Mr Speaker, I would like to thank the NMP, Dr Lee Tsao Yuan, who spoke in support of the Bill. Dr Lee welcomes in particular the widening of the scope of the SDF to benefit those who are currently not working and those who intend to enter or re-enter the workforce and she has cited the example of the Back to Work scheme which is being supported by SDF. I can assure the Member that MTI and PSB, together with other agencies, will continue to introduce innovative programmes to encourage more Singaporeans to re-join the workforce and to encourage more companies to support the relevant training programmes. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Goh Chee Wee]. Bill considered in Committee; reported without amendment; read a Third time and passed. ADJOURNMENT Resolved, "That Parliament do now adjourn to 10th October, 1996." - [Dr Lee Boon Yang]. Adjourned accordingly at Two o'clock pm to Thursday, 10th October, 1996. WRITTEN ANSWERS TO QUESTIONS UNICORN INTERNATIONAL PRIVATE LIMITED 1. Mr Low Thia Khiang asked the Minister for Defence what action has been taken in response to the seven irregularities highlighted by the Auditor-General concerning Unicorn International Private Limited and what measures are implemented to improve the operating control of the company.”
“Clause 14 ensures that levies due from persons or companies are given priority in the event of individual bankruptcies or winding up of companies. And finally, clause 15 allows PSB to make specific regulations necessary for it to carry out SDF activities. These concern the administration, collection, and remission of SDF levies. PSB is required to obtain the approval of the Minister before making these regulations. Conclusion Mr Speaker, Sir, the proposed amendments to the SDL Act will enable the SDF to reach out to a larger group of Singaporeans and encourage them to acquire new skills through training. It will also give Government greater ability to support worker upgrading programmes and help keep Singapore competitive in the world market. Sir, I beg to move. Question proposed.”
“While PSB is given flexibility to administer the SDF, let me assure the House that there are sufficient built-in Ministerial controls to protect against misuse of the Fund. For example, clause 4 stipulates that the moneys of the Fund may be expended for purposes other than those listed in the Act, only with the approval of the Minister. Clause 7 states that approval from the Minister is needed before PSB can undertake investment outside the terms stipulated by the Trustees Act. The accounts of the SDF will continue to be separately maintained from the rest of PSB's accounts and submitted as part of the annual report to Parliament each year. Other amendments Let me now take the House through some of the other amendments of the SDL Bill. These amendments are necessary for PSB to administer the SDF flexibly and effectively as an independent fund. They also provide PSB with greater powers to deal with abuses of SDF funds. This is important as PSB has now been made the custodian of the Fund. Clause 3 expands the sources of income of the SDF to include not only skills development levy, but also donations, honorariums, as well as contributions by the Government. Clause 9 makes certain officers of a body corporate, a partnership, a society or associations liable for any offence under the Act. Clause 10 gives investigative powers to PSB for breaches of the Act, to allow it to request for information, conduct checks and retain documents for investigation purposes. Clause 11 increases the composition fine to a maximum of $1,000 for persons who infringe the Act. Clause 13 ensures that PSB conforms to standard financial provisions in administering a public fund. The set of financial provisions applicable to the PSB are described in the First Schedule.”
“Clause 4 of the Amendment Bill extends SDF beneficiaries to include first, persons "in the workforce", for example, the self-employed and contract workers; second, persons "preparing to join the workforce", for example, school-leavers; and third, persons rejoining the workforce, for example, housewives and retirees. About 270,000 persons, or 16% of the workforce, who are self-employed or unemployed stand to benefit from additional training opportunities arising from this wider definition. The revised definition will also facilitate a large pool of the economically inactive persons to enter or re-enter the workforce. The second major amendment relates to the transfer of the SDF from Government to PSB. The SDF is currently a Government fund. It becomes part of the reserves when the current Government's term of office ends. With an annual grant commitment of about $70 million, the SDF will encounter serious cash-flow problems if it is not able to tap on its reserves after a transition of Government, but has to rely solely on fresh levy collections. Workers' training will be severely disrupted as a result. To avoid this, it is necessary to establish the SDF as a PSB fund, to ensure that funds continue to be available to support workers' training during transitions of Government. Clause 5 of the Bill transfers the SDF to PSB and establishes it as an independent PSB fund. PSB will be given some flexibility and autonomy to manage and administer the SDF. For instance, clause 6 gives PSB powers to appoint its own agents, decide on remuneration of such agents, and delegate its powers and functions to others accordingly without the Minister's approval. This is similar to section 3 of the Tourist Promotion (Cess Collection) Act.”
“6% of payroll, a marked improvement from 1% in FY86. Main objectives The Government needs to amend the SDL Act for two main reasons. First, we want to ensure that all workers, whether they are salaried employees, self-employed or seeking employment, have greater access to training opportunities. Secondly, we want to ensure that SDF support for workers' training can continue uninterrupted during transitions of Government. With the proposed amendment to the SDL Act, the SDF will be transferred from the Government to PSB as a statutory board. PSB will be responsible for the management and administration of the Fund, with built-in Ministerial controls to prevent misuse of the Fund. PSB will expand existing programmes to support the training of a larger group of workers. The current SDF schemes will be immediately made available to all contract workers and the self-employed. PSB will also extend SDF support to new programmes designed for housewives and retirees who are preparing to re-enter the workforce. One such example is the pilot training programme launched recently by the Ministry of Labour and PSB, in collaboration with the Singapore National Employers' Federation and the National Trades Union Congress, to train housewives, retirees and dislocated workers and encourage them to return to the workforce. Major amendments I will now describe in more detail the major amendments proposed in the Bill. There are two major amendments. First, to widen the definition of SDF beneficiaries, and second, to transfer the Fund from the Government to PSB. Under the existing SDL Act, the beneficiaries of SDF grants are restricted to "persons in employment" and retrenched persons. The present definition therefore caters only to workers in active employment and retrenched workers.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill will amend the Skills Development Levy Act, which I will refer to as the SDL Act for short. The Bill will widen the definition of the beneficiaries of the Skills Development Fund, or SDF, transfer the existing SDF from the Government to the Singapore Productivity and Standards Board, or PSB, and make some minor amendments to enable PSB to administer the SDF more effectively. Background Let me first give Members of this House some background information on the SDF. The SDF was established in 1979 under the Ministry of Finance to support and encourage the upgrading of skills of workers in Singapore. Companies were required to contribute towards the Skills Development Fund through the payment of a certain percentage of their payroll for workers whose income falls below a stipulated cap. In October 1981, the Minister for Finance delegated the administration of the SDF to the EDB. As the focus of the SDF was on training of workers to improve productivity, the SDF was subsequently transferred to the National Productivity Board. With the merger of the National Productivity Board and the Singapore Institute of Standards and Industrial Research to form the new PSB in April 1996, the SDF now comes under the administration of PSB. The accumulated reserves of the SDF currently stand at $359 million. The SDF has played an indispensable role of facilitating and encouraging Singapore workers to upgrade and acquire new skills. Since its inception, $731 million has been disbursed to support 2.8 million training places. In 1995 alone, 489,911 training places were committed under the SDF. Our investment in training has now risen to a national average of 3.”
“As I have explained earlier, the so-called disadvantage of incorporating these safety devices which make the car costlier is mitigated by the COE system, which does not depend on the price of the car. As I have also explained earlier to the question raised, the Government encourages the installation of these safety devices, but with the advancement in technology, there will be new features introduced into a car. And it does not mean that every time a new safety device is invented and fitted into a car, the Government must give rebates for the installation of these devices. I think we should not lose sight of our overall objective, ie, all these tax measures essentially are to restrain the rapid growth of the car population. I do not think we should lose sight of this objective. SINGAPORE POWER (Average total assets) 6. Dr Wang Kai Yuen asked the Minister for Trade and Industry, in the definition of Return on Total Assets, (a) what portion of Singapore Power's Average Total Assets is land; (b) which are the major land parcels and where they are located; and (c) how these land prices are appraised.”
“As I have explained in my main answer, we have those features which we consider are essential safety devices, like the seat belt, for instance. The Government has legislated the installation of seat belts. But for other safety features which we consider desirable but are not essential, we will not legislate, but we will encourage their usage. And it does not mean that the Government must give a tax rebate or incentive to encourage the installation of these safety devices.”
“I think it is the choice of the individual. These are additional features. The car distributors and car dealers will have to sell their cars and they have to explain to their buyers that it is a good car, a good product, and it is worth paying a bit more for a car which is safer. This is marketing.”
“The ABS and airbags are additional features of a car introduced by the car manufacturers. The car distributors have been bringing in cars fitted with these features. Some of the best selling models are actually cars fitted with these safety devices.”
“Many car dealers refuse to bring them in because they will jack up the sale price of the car. Therefore, they are not encouraged to provide cars with these safety features.”
“Sir, with rapid advancement in technology and rising expectations, cars have become increasingly sophisticated. Nowadays, a car comes with numerous fixtures, accessories and gadgets to make the journey safer, more comfortable and less harmful to the environment. For example, catalytic convertors and fuel injection mechanisms make the car less pollutive; a tougher shell and windscreen make the car safer; even bumpers, rear view mirrors and side mirrors help to prevent or lessen the impact of accidents, and so on. Most of these items have become standard features of the modern car. The development of ABS and airbags is part and parcel of the development of the automobile technology. If we give rebates on ABS and airbags, we should also do likewise for the fixtures, gadgets and accessories I mentioned earlier. While this is theoretically possible, in practice, the distinction between an essential safety device and a desirable but not essential gadget is grey. It is therefore more practical to base the import duty on the total value of the car. The progressive nature of the import duty and the ARF, which are proportional to the OMV of the car, might cause some distortion in demand for safety features like ABS and airbags. But this is mitigated by the COE system, which does not depend on the price of the car. While we should encourage the use of safety devices like ABS and airbags, we must not lose sight of our broader objective of managing congestion on our roads. Traffic which is free-flowing , roads which are well planned and good driving habits and effective enforcement all contribute towards road safety. Mr Low Thia Khiang: Does the Minister of State agree that safety features like ABS and airbags are not actual parts of a car?”
“Sir, Mr Chin Harn Tong is concerned about junk mail or sensitive materials coming through the fax machine. Unsolicited messages via the fax machines are like junk mail sent through the letter-boxes. Until a mail is received, there is no way for the recipient to determine whether it is junk or not. Furthermore, what is considered "junk" by one person can be taken as useful information by another. We cannot stop people from sending information through the fax machines. But if someone sends through materials, the content of which is objectionable and infringes our laws, the recipient can always report it to the Police who can then investigate. Apart from this, there is a way for fax users to avoid receiving unsolicited messages via the fax machines. They can subscribe to call screening facility provided by Singapore Telecom. The facility allows a recipient to pre-programme his fax machine to receive messages from select numbers, making him unavailable to numbers not in his list. And for fax users who prefer not to pre-empt or limit whom they wish to receive faxes from, Singapore Telecom has also introduced a call-in line identification facility which will allow the recipient to identify the source of the fax message.”
“Examples of the steps the Government has taken are: (1) The retirement age was raised to 60 years in July 1993, with a target of 67 years over the long term. (2) The Singapore Productivity and Standards Board (SPSB) is working out a programme to attract housewives and retirees back into the workforce. The programme will include helping these groups to prepare for re-entry into the workforce, encouraging employers to employ these workers and matching workers with employers. (3) The Employment Act was amended in November 1995 to spell out more clearly the definition and guidelines on terms and conditions of part-time employment, so as to encourage companies and potential workers to explore part-time work as an option. Apart from the Government measures, there is a need to look into the industry and company - specific measures, including job design. Employers must be innovative in designing jobs and job processes which enable workers to work part-time, or even to operate from home, as suggested by the Member. So the SPSB will be working with the Ministry of Labour, employers and unions to explore measures to further enlarge our labour pool.”
“On the other hand, the NPB projects that grant commitments would average $75 million annually, from FY95 onwards. The deficit between SDF collection and commitment is not sustainable. And at this rate, the SDF would run out of funds by the year 2001. So we must find ways to make up for the shortfall. One way to increase the SDF collection is to raise the salary ceiling eligible for SDF contribution. The other way is to increase the present contribution rate of 1%. This was the proposal raised by Mr Sinnakaruppan and Mrs Yu-Foo. The employers, of course, would like to see that the Government shares the burden too and co-pay with employers. We will examine all these options. In the meantime, however, I would like to assure Members that SDF will continue to support all worthwhile training programmes submitted by the employers. Pending the decision on additional funding, SDF will draw down from its current balance to finance all training plans. Mr Low Thia Khiang made a number of suggestions on maximising our manpower resources. I agree with him that we should maximise the use of our limited manpower, especially when we are so short of labour and dependent so much on foreign workers. I believe we should try to tap the large pool of economically inactive persons like housewives and retirees. Sir, Singapore's labour force participation rate has been increasing. In 1995, our labour force participation rate was 64%, comparable or higher than the other NIEs and developed countries. However, in view of our small labour force and technological improvements, we should and can do more. The Government has taken steps to encourage these groups to enter or re-enter the workforce. We are referring to those housewives and retirees and economically inactive persons.”
“There are three strategies which have to be employed to push this: (1) assist companies to institutionalise OJT; (2) to provide OJT blueprint for companies to emulate; and (3) to facilitate the sourcing of OJT instructors. By the end of FY95, about 44,500 workers from 2,400 companies would have been trained under the various OJT programmes introduced by NPB since 1993. And this is not counting the many companies which also provide on-the-job training independently from the NPB programmes. To accelerate the adoption of OJT programmes, OJT models were established for companies in 15 different industries, and these would enable companies in the same industry to emulate and adapt their on-the-job-training programmes. To reach out to the SMEs, a pilot OJT-instructor programme was launched in July 1994 whereby 200 instructors were trained to deliver OJT to staff in companies with less than 50 employees. For the nine courses offered so far, 860 instructors have been trained. As a result of these various efforts, companies now invest about 1.3% of payroll on OJT. The NPB will press on to encourage more companies to carry out the restructured OJT as a cost effective means of training. Since there is still time, may I turn to the earlier questions raised by Members? I think I have responded to all the questions except for one or two points raised by Members. There was a suggestion by Mr Sinnakaruppan and Mrs Yu-Foo about raising the salary ceiling for the SDF levy to $1,500. I think Mrs Yu-Foo also expressed concern about the financial position of the SDF. Sir, the salary ceiling for SDF contribution was revised from $750 to $1,000 in April 1995. At the current levy rate of 1%, the collection for FY95 is expected to be about $18 million.”
“The reason for the low educational level of our workforce is historical and, over these years, we have implemented various programmes to try to raise the educational level of our workforce and upgrade their skills. And we have made progress. If you look at the figures on the total factor productivity in the 70s, our TFP growth was negative. But this had improved. From the 80s to 90s, the total factor productivity growth had gone up to 1.1% and from 1990 to 1995, the TFP growth had gone up to 2%. So actually we have made progress but, of course, more can be done. Mr Chiam has made some specific suggestions like introducing compulsory education, and so on. These are issues and suggestions which the Member can bring up when we debate on the Ministry of Education's budget. Mr Chin commented on worker training and on-the-job training programme. I agree with Mr Chin that on-the-job training programme should be encouraged. In fact, OJT is more flexible for the company and the workers and more responsive to the specific needs of the company. And training under OJT can be tailored to meet the needs of the company and can be conducted by immediate superiors or skilled staff at the workplace. Furthermore, most OJT programmes do not require the trainee to leave the workplace, thereby enabling more training to be conducted during working hours. The Government actively promotes OJT and to accelerate the adoption of a structured OJT by companies an OJT 2000 plan was launched in October 1993 to make on-the-job training a pillar in our national training infrastructure. The target of the plan is to skill 100,000 workers through structured OJT by the year 2000.”
“As Singapore advances into the innovation phase of the economic development, we can no longer depend on increases in labour and capital investment as our main source of economic growth. Instead, we have to focus more on making the best use of our labour and capital resources as captured by the concept of the Total Factor Productivity (TFP). That is why we are forming the Singapore Productivity and Standards Board whose mission is to spearhead our drive to increase Singapore's TFP growth. With this new focus on TFP, we are reviewing the thrust of the productivity movement. To pursue TFP improvements, the Singapore Productivity and Standards Board has identified that total commitment to the two key elements of innovation and quality is required. So innovation and quality will thus be the theme of the productivity movement for the next five years. Quality encompasses excellence and meeting world class standards, be it in products, services or work. Innovation connotes a commitment to change, to push up the frontiers and to seek breakthroughs, ie, break through ideas rather than mere incremental gains. The combined efforts should lead to higher output per unit input, in other words, higher TFP. Sir, the productivity movement is a dynamic process. SPSB will continually review its relevance and refine its focus in the light of experience and changing external environment. Mr Chiam commented about our productivity movement and also mentioned about the need for quality improvement of our labour force. Sir, I have explained the importance of improving productivity to enhance our competitiveness. A very important component of improving productivity is really the training of our human resource, ie, the development of manpower.”
“Sir, Dr Wong Kwei Cheong asked about the progress of our productivity movement and whether we have drawn up strategies to make sure that our campaign or movement is relevant in today's context. Sir, since its launch in 1981, the productivity movement has advanced steadily in phases, focusing attention on different aspects of productivity drive. These phases, though overlapping in practice, can be broadly classified as (1) the awareness phase, that is, from 1981 to 1985 where productivity awareness was created by rallying the entire nation to work together to achieve higher productivity; (2) the action phase, that is, from 1986 to 1988 where various productivity practices were promoted to encourage companies to translate awareness into action; and (3) the ownership phase, that is, from 1989 to 1990s where individual excellence through pride and skills upgrading was actively promoted. The goal is to develop a self-sustaining productivity movement where productivity habits become part of a Singaporean work ethics. Having laid a strong foundation for productivity movement at both the company and individual levels, the productivity movement began to focus on quality from 1990. The key message was that quality work leads directly to productivity and, ultimately, a higher quality of life. Sir, we have made significant achievements since the launch of the productivity movement. Overall, our productivity growth rate averaged 4.5% a year from 1981 to 1995. Today, 3.5% of the workforce in the private sector participate in quality control circles, close to the 4% participation rate in Japan. Companies have also invested about 3.4% of their payroll on training, a significant increase from 2% in 1992. We are now entering the next phase of the productivity movement.”
“Our foreign worker policy is based on political, economic and social considerations. There should not be any linkage between training of local employees and admission of foreign workers. 2.30 pm”
“Mrs Yu-Foo and Mr Sinnakaruppan as well as Mr Imram proposed the setting up of training accounts for workers akin to Edusave. Sir, while this may appear to be an attractive idea, we have to examine whether such a scheme is preferred over the various training support schemes which we already have in place, such as the Skills Development Fund. I have just announced the relaxation of rules governing the use of SDF. Schemes can in fact be worked out to support individuals who wish to enrol in approved skill courses supported by SDF. There is also the question of funding if the suggestion of Members for training account is to be taken up. Who should contribute to the account? The employer, the employee, the Government or co-payment? Sir, I would not dismiss this idea as non-feasible. There are merits in the proposal and I would ask the Singapore Productivity and Standards Board to consider this in consultation with the employers and the unions. Mr Stephen Lee has suggested that the companies be given the incentive of employing more foreign workers if they release their workers for training, especially during working hours. Sir, I find this proposal unacceptable. Training is part and parcel of a company's operation. A forward-looking company must have plans to systematically train their employees in order to enhance their competitiveness. The Government supports the training effort of companies through schemes like SDF funding. The NPB has even devised a training leave scheme with enhanced subsidies by SDF to support training conducted during working hours and we will be receptive to any other suggestions to further support the employers' training efforts. But the admission of foreign workers is a different matter altogether.”
“Dr Ow also asked what accounted for the higher TFP growth in the past decade. Sir, the TFP measures the efficiency with which labour and capital inputs are used jointly to produce output. It is determined by qualitative improvements in inputs used as well as the systems and processes in place. Contrary to what Dr Ow suggested, a growth in TFP cannot be attributed to increases in a capital-labour ratio. Our growth in the capital-labour ratio slowed down from 9.2% per annum during the 1974-1986 period, to 3% during 1986 to 1995. We therefore have a situation of increasing TFP growth and declining capital-labour ratio growth. The increases in capital-labour ratio can raise the labour productivity growth but not the TFP growth. In fact, increases in capital-labour ratio that are not accompanied by other qualitative improvements, such as technology exploitation, skills upgrading, systems and process improvement, must lead to diminishing returns to capital investment. So TFP determines labour productivity, not vice versa. The increase in Singapore's TFP growth is partly due to the vast improvement in the educational and skills level of our workforce. Besides the school system, certificates conferred by various training institutions have allowed workers to upgrade to post-secondary educational level and above. Apart from improvements in the quality of the workforce, the increasing technological sophistication of our industries, complemented by improvements in management and production systems, product and process innovations had also contributed to the rise in TFP growth. So we are now actually reaping the dividends of years of emphasis on education and skills training.”
“The exercise will identify the skills needed in our economy and specific groups of workers that require training in such skills. Based on these findings, SDF will tailor existing programmes accordingly or introduce new ones in FY97. Sir, let me now turn to the specific questions raised by Members. Dr Ow enquired on the current educational profile of our workforce as compared to that of 1984. May I refer Members to Table 1 (Cols. 1293 - 1294) of the handouts on skills training. I am pleased to say that significant progress has been made. Over the 10-year period, the proportion of workforce with tertiary education tripled from 5% in 1984 to 15.6% in 1994. At the same time, the proportion of those with below secondary education was halved, from 53% to 26.4%. Table 1 - EDUCATION PROFILE OF WORKFORCE (Cols. 1293 - 1294) Dr Ow asked for an update on disbursements made by SDF. The information is given in Tables 2, 3 and 4 (Cols. 1295 - 1300) of the same set of handouts. While the companies with a larger workforce continue to account for a big portion of training grants committed, the proportion of grants committed to smaller firms with less than 100 employees has gone up from 14.3% in FY90 to 20.3% in FY94. By type of training, technical service and productivity and QCC-related training are the biggest two groups accounting for about 46% of all grant commitments. Tables 2, 3 and 4 - TRAINING GRANTS AND PLACES COMMITTED BY TYPE OF TRAINING, TRAINING GRANTS AND PLACES COMMITTED BY SIZE OF FIRMS, TRAINING GRANTS AND PLACES COMMITTED BY AGE GROUPS (Cols. 1295 - 1300) By age groups, younger workers in their 20-29 age group accounted for almost half the supported training places. Older workers accounted for 11% of the places in FY94, up from 7% in 1990-1992 period.”
“Therefore, selectively, we are prepared to depart from the policy of employer-based training and support the individual's initiative to train. Many Members of this House have repeatedly called for the relaxation of the SDF rules to allow individuals, including those not in employment, to benefit from SDF funding. I am pleased to inform the House that my Ministry has agreed to amend the Skills Development Levy Act to allow these categories of people, the self-employed and contract workers, the retrenched workers and those seeking to enter or re-enter the workforce, to be eligible for SDF support. This represents a shift from the current policy of awarding SDF grants only for employer-based training to one of awarding SDF grants to those requiring training regardless of their employment status. We realise that this departure from employer-based training may open the scheme to abuse or result in wastage. So we have to put in place the necessary conditions and safeguards to ensure that the departure generates the expected benefits without any wastage or abuse. Other initiatives which we are considering to improve worker training include: (1) A national skills certification system to appraise and accord national recognition to the disparate training schemes now existing, to provide recognition for skills learnt on-the-job as well as give recognition to new skills being identified. This will encourage workers, especially the unskilled ones, to raise their skills base and help employers to reward skills attainment. (2) The Singapore Productivity and Standards Board will complete a national manpower plan to project the economy's skills requirements in the next five years.”
“It has worked with training providers to develop and boost the number of training programmes to cater to older workers. Enhanced incentives are provided to employers who send their older workers for training. The NTUC and the community self-help organisations have also been roped in to reach out to older workers. BEST and WISE classes offer older workers who missed the opportunity to acquire basic literacy and numeracy skills when they were young to do so now and if they are not comfortable with the traditional classroom mode of learning, the NPB has FAST FORWARD programmes in English and Mathematics to allow these older workers to learn at their own pace. Through the various efforts, the number of training places supported by SDF for older workers more than doubled, from 28,500 in 1992 to about 67,400 in 1995. This represented 18% of all training places last year, up from 8% in FY92. In FY88 only one in 25 older workers were trained with SDF funding. By FY95 this ratio has increased to one in ten older workers. Although statistics on the training of older workers and workers in the SMEs indicate that we have made good progress in this area, there is still scope for more to be done. Sir, in the past, we maintained the policy that SDF supported training should be sponsored by employers. This is to ensure that employers are supportive and that the training would be relevant to the workplace. However, we acknowledge that there are some employers who do not yet appreciate the value of staff training, depriving their employees of the opportunity to train. Also, those who are presently not part of the workforce, for example, housewives, would not be able to benefit from the SDF.”
“4% of their payroll on worker training compared to only 1% in 1985. This is close to our target of 4% and it compares well with other countries such as Japan, US and Hong Kong. Although these figures show good progress, there are a few areas where additional efforts are required. Two particular areas are training our workers in SMEs and training of older workers. While larger companies spend about 5% of payroll on training, SMEs spend only 1.4%. Additionally, as the economy matures and restructures, skills training for the large pool of older workers with low skills level is becoming more critical. As I have mentioned earlier, 32,000 companies have benefitted from SDF grant and nine out of ten of these beneficiaries are in fact SME companies with fewer than 50 workers. SDF schemes are open to all companies. However, recognising the limitation faced by SMEs, we have special schemes designed with SMEs in mind. The Minister has earlier highlighted some of the schemes, such as the net fee payment mechanism to ease the cash flow problems for SMEs. To help the SMEs in choosing relevant training programmes, the SDF has compiled a list of recommended programmes for their reference. A special scheme also exists to allow SMEs to send their managers for training programmes which are not available to the larger companies. To make the scheme user friendly to SMEs, SDF application procedures have been further simplified. The implementation of these special initiatives has resulted in a substantial increase in training places committed to SMEs, rising from 19,152 in 1992 to 27,200 in 1995. The other major area of concern is training of older workers. The SDF actively promotes this and has embarked on several initiatives.”
“Sir, let me respond to all the questions raised by Members concerning skills training. I think I certainly need more than ten minutes to answer all the questions. Sir, I believe everyone is in agreement on the importance of workers training. A well trained worker is an important resource in any economy and modern economy rewards skills and knowledge and, on the other hand, no skills risk unemployment. So we need to train and retrain our workforce to meet the changing economic demands. Continuing education for the workforce must be an essential feature of our manpower development plan. For historical reasons, we have a workforce whose educational profile lags behind their counterparts in the developed countries. So we set up the Skills Development Fund (SDF) in 1979 to encourage employers to use the labour force more efficiently and to upgrade their workers' skills. The SDF has over the years built up an array of programmes to expand and improve the training infrastructure, create training opportunities for workers and to provide incentives for employers to train their workers. The SDF has made significant progress. Altogether, some 32,000 companies have benefitted from SDF support. This includes almost all companies with more than 10 employees, that means all those companies with more than 10 employees have benefitted from the SDF support, and a quarter of all companies with fewer than 10 employees. A total of $916 million in SDF grants have been committed to companies to train their workers. Between 1980 and 1994, the number of training places supported by SDF increased more than 45 times, from 11,000 per year to 500,000 a year. This is about one training place for every three workers every year. Our companies now invest an average of 3.”