Goh Keng Swee
Singapore
“Sir, since that was not a supplementary question, may I be allowed to comment briefly on that. When we form a Committee of the House to inquire into an activity of the Government, the assumption must be that there has been something improper. In this instance, where is the impropriety?”
“The career of Brig-Gen Lee is well-known to the public. It has been published in the newspapers. Why then does he come out with all this drivel, other than to impute improper motives? Mr Jeyaretnam: Sir, I object to the term "drivel" as spelt out by the First Deputy Prime Minister. He should know better as a Member of this House.”
“Sir, this is getting most tiresome. So I will just say this - that Brig-Gen Lee Hsien Loong has proved himself in so many ways, both inside the Army and outside the Army, to be a person of outstanding quality. When the Member for Anson says the public are worried, he is again talking nonsense.”
“Sir, I rise to clarify. Actually, the limits are not set by me. I do not have a heavy hand. I regard the MAS as the implementing agency of Government, and in this respect I have to listen to the Minister for Finance and the Minister for Trade and Industry.”
“How you set them, how restrictive or how liberal, would determine two things: (1) the degree of imported inflation from abroad via goods and services from abroad, and (2), the degree of capital inflow from abroad which will affect our money supply in Singapore.”
“Sir, if the land could be more profitably used, say, for commercial or residential purposes and if the Minister for National Development requires such land, then, of course, the land will be acquired and the generous terms will apply.”
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“Mr Speaker, Sir, the answer is "No". There is no advantage to Singapore in a proliferation of steel mills. It will not increase employment or output. It will mean the sharing of a fixed domestic market by more producers, and will probably result in excess capacity. Most of our steel products are produced by National Iron and Steel Mills Ltd., in which Government has a significant equity holding. Prices of products as well as prices of scrap are controlled by Government, to ensure that customers and scrap dealers have a fair deal. More than 30 per cent of the output is exported and most of the profits of the Company are not distributed to shareholders but are ploughed back to the industry for further expansion, so as to create more jobs for Singapore citizens.”
“It is expected to last for 25 to 30 years and calculations show that in the long run it is more economical to purchase the equipment outright as the capital cost will be recovered in less than seven years' time.”
“In order to ensure high standards of purity of water when it flows into the Seletar Dam, certain measures have to be taken in the catchment area to the reservoir. The Member for Sembawang will know that unlike the central catchment area feeding the two reservoirs - MacRitchie and Peirce - the Seletar Reservoir catchment area is populated mainly by farmers. It is not feasible or necessary to resettle these farmers. But certain safeguards have to be carried out, namely, the construction of latrines, cess-pits, pigsties, and so on. This involves a total cost of $1.8 million, part of which is paid by the Government and part by the farmers. The scheme is being implemented in stages. A sum of $454,000 has been spent this year and the balance will be spent next year. The project is expected to be completed by the middle of next year when the Seletar Reservoir will provide us with a very useful increase in water storage capacity. Subhead 401 concerns "P.A.B.X. Equipment for Fullerton Building". I am unable to get details of the price break-down from the Singapore Telephone Board. The equipment is manufactured in Sweden and its purchase price was quoted by the Telephone Board as $126,547. Before its installation in November last year, the Telephone Board conducted a survey of telephone requirements of all the departments in Fullerton Building with the exception of the Postal Department, the Telecommunications Department and the Economic Development Board. The engineers recommended that an expandable P.A.B.X, unit for 50 exchange lines and 500 extensions equipped initially with 40 exchange lines and 300 extensions be installed. The equipment is at present rented from the Telephone Board at a cost of $23,542 per annum.”
“Sir, the Jurong Town Corporation asked for a loan of $56 million to finance various development projects next year. The Ministry of Finance was able to agree to only $30 million and this sum will be spent as follows: development of land, that is to say, land reclamation, earthworks, construction of roads, sewers, electrical sub-stations and so on $10.4 million is at Jurong and $2.8 million in the other estates outside Jurong. The second item is on factory buildings. A sum of $3.5 million is to be spent on factory buildings in Jurong for sale or lease to private enterprise, and $6.5 million will be spent on constructing factory buildings in other industrial estates. The third item is on improvement to facilities in the Jurong wharves. This will entail an expenditure of $2 million. The fourth item is housing at Jurong which is expected to cost $2½ million. The fifth item is a small one in which $200,000 will be spent on the industrial water scheme at Jurong. A sum of $1.6 million has been allotted for development of social amenities of which $1.1 million is earmarked for the development of Jurong Park. There are other small items such as organisation facilities - Town Hall -$200,000. I am not quite clear what this really means. I think the Jurong Town Corporation has an ambitious plan to construct a very noble town hall, and maybe this $200,000 will go into the preliminary studies and designs. Then there is an item of $100,000 against common amenities and $200,000 for research and investigations.”
“Sir, actually the Member for Anson has a point there. But then we were faced with rather exceptional circumstances which required an exceptional solution. The, present incumbent is a legal authority of international eminence. He was formerly our Ambassador in Cairo. Of course, before that, he was the State Advocate-General. On completion of his diplomatic duties, he is available. Either he takes on the job as Professor of Islamic Law in the University of Cambridge or he works in Singapore. So in order to prevent a brain drain, we have to create this post and give him a salary which is somewhat larger than a Minister's salary. Of course, there is a lot of work for him to do. There is the Income Tax Department; the Customs Ordinance is being revised; and, of course, the Government is now a major shareholder in dozens of companies. In strict accordance with the socialist principles of the People's Action Party, we are in industry. Our companies often need legal advice and there he is. So all in all, it is a very good move to create this post and appoint this gentleman.”
“The Member for Delta has dealt with the cost of living. I think I probably answered her points when I replied to the Member for Sembawang. I do not know whether I have got her right, but I had the impression that she was complaining about merchants making money as a result of devaluation. I do not know why she should complain about other people's good fortune. After all, some make profits, others suffer losses, and in the end it all evens up. She said that after I had said that there would not be a painless budget, rumours apparently were quite rife in Singapore and people rushed to buy refrigerators, T.V. sets and what have you. So what ! She cannot blame me. I cannot tell them that there would not be any increase in tax in refrigerators, T.V. sets or shoes or what have you. So if they listen to rumours and act foolishly, that is their business. I do not think - Madam Chan Choy Siong rose -”
“They are, for example, the earnings of tourists, what the seamen spend when they are on shore in Singapore, the British base expenditure, which unfortunately is getting less and less each year, and our earnings on shipping, insurance, and on the general entrepot trade. All this makes up the balance. Of course, nobody really knows what our balance of payments position is in any given year. I have come across dozens of estimates of balance of payments made by the International Monetary Fund, the World Bank; estimates made by our own statisticians, by the University of Singapore Economics Department and so on and so forth. But, quite frankly, I do not believe any of them. At one time those who estimated Singapore's balance of payments were very modest. You will find that one of the biggest items will be what they call "E, and O." - Errors and Omissions, and they will be running to $500 million. But now statisticians have presumed to be more accurate and this "E, and O." business seems to be getting smaller and smaller. I wonder whether that is, in fact, the case. The proof of the pudding, as they say, is in the eating. Whether we balance our trade or not, the question is whether in the end our external balances go up or go down. In the case of Britain, they say all the time that their assets go down and they have to borrow from people. So sterling is in trouble. But in our case, our assets are going up year by year and, in fact, at a very rapid rate. What are we going to do with such sums of money with the international monetary system in such an insecure situation? It gives me many sleepless nights to think of what to do with the $2,000 million that we have All is well with our imports and exports. Do not worry about that.”
“This has been tried in England, and with such great success that the British Ministry of Agriculture have banned this method of raising pigs because they say it will knock out the ordinary farmers who raise pigs on the ground and not in concrete structures. This is a very efficient method of raising pigs. I hope I can convince my colleague that we should do likewise. But so far I have not been successful. The Member for Sembawang is greatly concerned about the gap between imports and exports. He says that we imported more than we exported, and that there was a deficit in our balance of trade. Of course, there is a deficit in the balance of trade. There has been a deficit ever since Sir Stamford Raffles landed here. Mind you, each year, for some reason or another, within a day or two after we have published the twelve months' trade figures, Radio Peking will say, "There you are, Singapore is in trouble again. Exports are $2,000 million and imports are $3,000 million. There is a deficit of $1,000 million. They are going bankrupt." And this has been going on for years. I would ask the Member for Sembawang not to worry at all. We are in no danger of going bankrupt. What you want is not so much a balance of trade; that is, the goods you buy, the goods that are transported from the holds of the ship to the harbours and thence into the shops and godowns, and what we export by sea or by air. That is only part of what the economists call the balance of payments. Although there is a deficit in the balance of trade - that is, we import more than we export, and the deficit is very substantial; this year it will probably be short by $1,000 million - we make it up by what we call "invisible exports".”
“The first, of course, is to ensure that we run an efficient port. We get most of our consumer goods from abroad, including the bulk of our foodstuffs, textiles, and so on. So long as we have an efficient port, a competitive importing system and an absence of monopolies, we can ensure that we buy the cheapest and the best goods from any part of the world. 4.00 p.m. Similarly for locally produced goods. I will deal with this subject in some detail later. The Member for Delta has raised this point also. The second point raised by the Member for Sembawang was : what would happen to the old notes and coins after 16th January, 1969? They will no longer be legal tender. Anybody who has these coins had better put them either into the bank or the Currency Board, because after 16th January, 1969 the bus conductor has a right to say, "I do not want this money." We have already announced to the public to send in their old coins and old notes quickly, because after 16th January, 1969, they will no longer be legal tender. The public will be put to a lot of inconvenience to get par value for these coins and notes. They will not, of course, be utterly worthless, because the value of these old notes and coins is guaranteed by law. But it would be very inconvenient. With regard to unemployment, the Member for Sembawang has suggested opening up arable land, fish ponds and so on and so forth. The trouble with opening up arable land is that we have only 224 square miles of land at low tide. Where are your vast areas - the new western frontiers? I do not see them. In fact, I am trying to persuade my colleague, the Minister for National Development, to induce our pig farmers to raise pigs in flatted concrete structures.”
“The price of rice shot up to 50 cents or more a katty for the best quality. But since then it has gone down. And because rice is such an important item in the budget of a working-class family, this decline in the price of rice has brought down the retail price index. Therefore, when you say that the prices of shoes and socks have gone up, they might have gone up a little bit. But because the proportion of money spent on shoes, socks, match-boxes, or what have you, is so small compared to that spent on rice, the general fall in the price of rice has brought about a fall in our retail price index. So much for the background. Therefore, it is not necessary, in order to measure price movements scientifically, to form a Price Committee. Unless the committee works according to these principles of measuring prices, we will be constantly arguing about whether prices are going up or going down, because they may be collecting prices at different shops and at different markets and indeed in respect of different brands or different qualities of products. So I do not think that a Price Committee will be more useful in giving us information as to movements in the cost of living than the official retail price index. The Member for Sembawang believes that a Price Committee can prevent increases in prices. This is what King Canute thought. Governments have tried to control prices and the net result is the emergence of black markets, bribery and corruption. Where a com mittee has no statutory powers, I do not see how it can exert any influence over prices. Mind you, it can probably browbeat the grocer around the corner, but that is not going to help the people. So in order to ensure that the cost of living does not go up, we can take a number of precautions.”
“" Different inspectors, will go to different shops to get different types of shoes properly specified, so that we do not have changes in prices which are due to, changes in quality. And similarly with the whole range of vegetables, fish, and so on. Of course, there are many technical difficulties of definition in getting standard qualities and so on. But within what is possible to standardise and what is possible to define, this is the way the cost of living index is formulated and kept up to date. It may be asked, "How is it that in Singapore in the first nine months of this year, the retail price index has gone down by two points, whereas we know for a fact that in most other countries, the cost of living has been going up?" If advanced countries like Britain or the richest country in the world, the United States, are taken, it will be found that this year the retail price increases have been of the order of between 4� and 6 per cent. That is the measure of inflation that is going on in these countries. But in poorer coun tries, the situation is worse. In a large under-developed country like Brazil when they have an increase in prices of 80 per cent a year, they say that they have done well because the prices had increased by 200 per cent the previous year. Take our neighbour, Indonesia, which has been racked by inflation ever since Dr Sukarno thought that economics was a matter for book-keepers. In our case, when the official price index showed a decline of two points from 113 to 111 points this year, there is a rational explanation for it. You will remember that last year there was a very big increase in the price of rice because of a drought in Thailand and a general shortage of rice from our other traditional source - Burma.”
“They kept detailed records of what the housewife spent every time she came back from the market. They asked other members of the family, "How much did you spend on transport, education, cigarettes, entertainment, clothing, and so on?" Taking the total pattern of expenditure of these few hundred working-class families, you then arrive at the relative importance of different types of consumer goods and services that enter into a working-class family budget. Then you can say that food will come to, say, 45 per cent or 51 per cent - and the food items are these: rice, noodles, this, that and the other. For each item, you can say that it comes to a certain percentage of the total expenditure. The pattern of expenditure of these working-class family budgets gives you what is called the weights, that is, how much importance you attach to the different commodities - say if they spend ten. per cent of their expenditure on rice, then rice will occupy one-tenth of the total expenditure, and if the price of rice goes up, then it has a weight of ten as compared with the total weight of 100. This is the way we measure the cost of living movements. Once we get the weights which are based on actual budget surveys of working class families, we periodically send out inspectors to take down the prices. There is a team of price inspectors attached to the Statistics. Department, each of whom is provided with detailed instructions. They do not just find out whether the price of shoes this week is more expensive than that of last week. They are told, "Go to this shop, check this kind of shoes and record its price regularly.”
“Mr Speaker, Sir, I will start off with prices and price committees. When my Parliamentary Secretary yesterday announced that the retail price index had gone down from January to September this year from 113 to 111 points, his statement was greeted with a great deal of scepticism, if not with downright derision. Obviously people believe that the cost of living is increasing. But before we argue about whether prices are going up or down, I would like to explain how the cost of living is measured statistically, what the retail price index means, and the basis on which the index is computed. When you say that prices are going up, it is always very easy for anybody to point to particular examples. The prices of bicycle-tubes, or shoes, or socks may be going up in one week and you say that on the basis of this evidence, prices are going up. On the other hand, you can point to the prices of other goods which may be going down - rice, or chillies, or blachan, or what have you. So in our type of economy which is based on a free market, prices are always changing - some are going up and some are going down. So how do you say, "In general, prices are going up or prices are going down, or prices have remained stable when some are going up and some are going down and others are remaining stable."? Obviously, there must be some kind of averaging process applied to prices of goods bought and sold in the market. This is exactly what the retail price index attempts to do. The retail price index is based on a study of what people in Singapore actually bought in the year nineteen fifty something - I have forgotten the actual year. Some people went out and studied what some 500 working class families in Singapore bought in one month.”
“These include Blakang Mati, Fort Canning, Bukit Timah Maintenance Park, 30 buildings and a hangar in Seletar, some buildings and a hangar in Tengah, Pulau Tekong, Kiat Hong domestic accommodation, the Naval Dockyard and No. 5 Sub-depot of the Base Ordnance Depot at Telok Blangah. The Ministry of Defence has taken over all these properties except the last which is being used as an industrial training centre. Plans, of course, are being drawn up in consultation with the Land Office, the State and City Planning Department, the Ministry of the Interior and Defence and various other depart ments and Ministries concerned. It will be some time before a final decision is reached on these matters. As regards the air base in Seletar, the present intention is to develop it into a civilian aircraft maintenance centre. This project has been under intensive study by the Economic Development Board which has engaged a team of American consultants to see in what form or what shape this aircraft maintenance business can be carried on in Seletar. The study is in an advanced stage of completion. In addition to the study by American consultants, Hawker de Havilland has proposed that they be allowed to make use of some facilities in Seletar air base to run an aircraft maintenance and overhaul business on commercial lines. The merits of this proposal are being assessed. It will be some time, not too long I am sure, before a final decision is reached on these matters.”
“Sir, the Member for Mountbatten wants to know whether the training schemes provided for redundant base workers have been deemed satisfactory. Of course, this is a very difficult question to answer, because whether or not the training is satisfactory will depend on whether or not they get jobs after they have been retrenched. This test has so far not been applied on a very large scale. The reason is that most of those base employees who have gone through the training schemes are still employed at the bases. In the first batch of trainees, out of 561 workers, 427 successfully completed the course. Similarly, in the second batch, out of 524 workers, 417 passed the course. But 90 per cent of the trainees are still in the employ of the British services. Therefore, whether the training would be good enough to get them a new job in industry has yet to be seen. But of those who have been retrenched and who have responded to the circular issued by the Bases Economic Conversion Department, 81 out of the 1,105 retrenched have undergone this course and 49 of them have been re-employed by the Sembawang Shipyard, formerly H.M. Naval Dockyard. So on that question, no conclusive answer has been reached. I have also answered the Member's question about the number of persons taken into new employment. As regards the three air bases, Changi, Seletar and Tengah, it is a bit early to think about what to do with Changi and Seletar. These are not likely to be released until very late in the rundown programme, probably at the end of December 1971. So far, only a limited number of properties have been taken over.”
“Am I to understand that the question is whether, in addition to bursaries, Malay students can get study loans? I am not conversant with the details of the regulations governing study loans and bursaries. No doubt, if there are special circumstances which justify a grant of both study loan and bursary in any individual case, such an application will be considered.”
“Mr Speaker, Sir, the Member for Sembawang seeks an assur ance that in spite of the increase in defence expenditure, there will be no reduction in the provision for rural development in 1969. I trust that the hon. Member is not taking the position that the welfare of the rural people-whether in Sembawang or elsewhere-has precedence over the security and safety of the entire population of the Republic. I am sure he is not. But his question reminds me of a cartoon I saw in Punch during World War II. Britain was then in a desperate position, standing alone against Nazi in Germany, and her cities were being bombed day and night. The cartoon depicts a bespectacled middle-aged woman addressing a gathering of village folk in some small English village. She said, "Of course, the Government's policy will advance the national war effort, but will it help this village?". Now to answer the question. It is fortunate that defence expenditure can be met in 1969 without reducing essential expenditure in other fields. This, however, assumes that economic growth in 1969 will be good, resulting in good tax yields. If that proves not to be the case, then either defence expenditure will have to be reduced or other expenditure, including that of rural development, will have to be reduced. I, therefore, cannot give the assurance that the Member seeks.”
“So whatever the correct balance may be in the next two years, it is quite clear in my mind that we have to proceed with the defence build-up. In the meantime, we are looking around for astute, resourceful and perceptive ambassadors. Question put, and agreed to. Resolved, That Parliament approves the financial policy of the Government for the financial year 1st January, 1969, to 31st March, 1970. Resolved, "That Parliament do now adjourn."-[Dr Goh Keng Swee]. Adjourned accordingly at Ten minutes to Eight o'clock p.m Appendix to Mr Speaker's Announcement(Col. 112)(Cols 0201-0204)”
“We have got to pay Ambassadors according to the salary scale of the civil service structure. If you pay the Permanent Secretary Grade C, which is about $2,300 all-in a month, you cannot pay the Ambassador $50,000 a month. This is what a successful businessman is making. Be that as it may, the supply of top-class diplomats is a greater limitation than money. Of course, it takes time to develop the Foreign Ministry. It is not merely a matter of getting staff and training them: there is the further problem of developing a tradition, inculcating professional skills and so on and so forth. The Member says that we struck a wrong balance between the Ministry of Foreign Affairs and the Ministry of the Interior and Defence. I do not know. Of course, we agree that we have to get on well with other countries. But whereas you can take your time to develop your Foreign Service, you have three years only to develop "the muscles". That is why we are spending so much time and putting so much effort into our defence build-up. Of course, what encourages us or should encourage us and should assure other people is the fact that it is quite fantastic to regard Singapore's defence build-up as in any way offensive or threatening to other people, because, by our nature, we, as a trading centre, a small island with a small population, above all, value peace, security and stability. Wars and aggression are for countries with 100 or 200 million people. Small countries just want to be left alone to exercise their abilities and their talents for their own advantage. Unfortunately, in this part of the world and in the age in which we live, we are more likely to achieve these objectives and to get on well with other countries if we are respected rather than if we are despised.”
“Of course, no one will argue against the importance of having a good diplomatic service, having effective missions abroad which will influence friends and keep enemies at arm's length. We will agree to all that. The Member for Crawford gave the good example of our Ambassador in Jakarta who put up such a brave and resolute show in the face of very acute difficulties. We have a good man there and we have good men in other missions. But the trouble is that the supply of good, resourceful and perceptive Ambassadors is very limited. You may have good men who can become good Ambassadors, but they prefer to remain in Singapore and make money. After all, we do not pay our Ambassadors all that much money.”
“That part of his proposal is in hand. Apart from getting income from various sources, and mind you, this sort of thing can be over-done, I think there is scope for ingenuity by officials. With the same money, if they can think of solving the problems in novel ways, if they can apply their minds in bold and imaginative ways, we can see not merely the maintenance of existing standards but great improvements in the standards of services provided. Let us hope that the non-defence Ministries will regard this as a great challenge and rise to the occasion. The Member for Crawford raised a number of points. First, with regard to the P.U.B, he said that the P.U.B, has a surplus of $26 million. He thought that if we had reimposed the fuel tax, which could easily get us $12 million, it would not be necessary for us to have a 10 per cent tax on P.U.B, bills. First of all, the trade surplus of the P.U.B, is somewhat different from, say, the trade surplus of a private corporation. Supposing XYZ Company makes $20 million. That belongs to the company --the directors and the shareholders. But when the P.U.B, enjoys a trade surplus, all it means is that it will need less money from the Finance Ministry by way of loans. Therefore, in a sense, the trade surplus of the P.U.B, helps the Government in that we need to give them less money for their development expenditure. Therefore, to impose a fuel tax would mean that in the end, although we get $12 million from them, we will have to give them back $12 million for their development expenditure. That does not help us very much. Now, more money for the Ministry of Foreign Affairs!”
“He has correctly noted that in many developing countries which have failed to provide a secure framework of internal security and defence against external threat, no development of any kind is possible. The Member for Havelock has drawn our attention to the strong position of our external reserves, the level now being some $2,000 million. He has compared it with the reserves of Japan and Thailand. Although in the aggregate both these countries have more external reserves than ours, in terms of per capita reserves, ours is between 10 and 15 times those of Thailand and Japan. I think his figures are correct, except that the Japanese have been increasing their reserves very fast in the last few months. He has asked how we compare with European countries. He may be interested to know that I have in my Ministry two German advisers who have been sent here by the International Monetary Fund. They have done calculations and compared the external per capita re serves of Singapore with those of their ~wn country - Germany. As you know, the Deutschesmark is the strongest currency in the world. But our per capita reserves are two and a half times those of the Germans. So I think, all in all. we are in a good position. Let us always keep our position that strong. The Member for Havelock is entirely right in saying that the Ministries which are now suffering a standstill in their budget allocations should not despair. He has given us some proposals on how to raise income. It is not at all a bad idea. In fact, so far as the Ministry of National Development is concerned, they are carrying on with a very energetic plan to sell houses to the tenants. In the next few months the Housing and Development Board itself will launch a very extensive scheme to sell houses to the tenants.”
“He also makes what appears to me a very crucial point, when he says that apart from buying weapons and training people, we need to instil into the population a strong emotional attachment to the country. I wholeheartedly agree with him that this point must never be overlooked by the Ministry of Defence, by the Government, and by the general population. If we ignore this important psychological factor, we do so at our own risk. Mr Speaker, Sir, the population of Singapore is really of recent migrant origin. Our society does not strike deep roots into the past. Therefore, the natural basis of patriotism which exists in older societies does not exist here. In fact, I remember reading the editorial of a local Chinese language newspaper just before the Budget and it was speculating on defence expenditure. The leader writer made this point. Although in terms of the legal constitution we may be an independent country, in fact we retain a great deal of the colonial heri tage - namely, a good proportion of the population live in Singapore not as residents of a home but as paying guests in a hotel. If there is prosperity, people 'enjoy it. But if there is adversity, they pack up and go to another hotel. This unfortunately is true of a good number of Singaporeans, it is as well that we recognise this fact. At the same time, we must also admit that among the younger people who have grown up here and are educated here, this strong emotional attachment is developing. We should see that it develops speedily and strikes deep roots in our society. The Member for Nee Soon is entirely right in saying that without security there can be no stable basis for investment. In fact, security from disturbances both from within and from without is an essential pre-requisite to economic growth.”
“In defence, all I say is that the amount they have to pay is really small, the number of tax payers is large, and the total sum collected is not negligible. The Member for Delta has asked me to think of ways and means to attract foreign rich women into Singapore. I confess I am very startled by this pro posal. It has never occurred to me just how to go about this job. If there are volunteers among the strong, virile and attractive Backbenchers to help us in this task, I am sure we might achieve something. The Member for Delta said that our women buy jewellery and perhaps they might be induced to sell the jewellery and invest in industry. I am not a prig in these matters, Mr Speaker, Sir, I see no harm in women buying and keeping jewellery. After all, it is a very good hedge against inflation. In any event, where Finance Ministers in poor countries have asked their women to disgorge themselves of their jewellery, they have all been singularly unsuccessful. So let us console ourselves with the thought that our Singapore women buy jewellery and use it. Let us hope that they look more attractive and raise the morale of the population. I think the Member for Nee Soon has made what I consider to be a sober and constructive analysis of the problem that faces us. I would like to underline some of the points that he has made. The first is this. After 1971, with the departure of British military protection, we will be living in a nevi world. I do not think he is exaggerating the position when he says that it will be a new world and that in this new world it is as well that we have an adequate defence capability.”
“Mr Speaker. Sir, my task this evening is made somewhat easier by the novel arrangement of introducing my Parliamentary Secretary at half-time. He has dealt with so many of the points raised by Members of the House that only a few are to be dealt with by me. However, since my Parliamentary Secretary made his speech, some speakers have raised a number of points and I think they deserve careful attention and consideration. Many Members have said that the tax on P.U.B, bills is not such a good idea, particularly the levying of a five per cent tax on bills between $10 and $20 per month, The Member for Delta, the Member for Anson and, I think, the Member for Crawford have criticised this proposed measure in very clear terms. In fact, the Member for Delta thought that in some poor families children may be reduced to such straits that they will have to study by kerosene light. May I remind her of the "Three Character Classic", which no doubt she had read in her early childhood, in which there was a very distinguished scholar who studied by the light of glow-worms. We are still far from this desperate position. To all these people I just want to make this reply. Let us get down to figures. They say that a family earning $300 per month and having many children will have difficulty in paying this tax. In fact, on the average, they will pay only something like 75 cents more per month. I do not think a family earning an average of $300 a month -- according to the Member for Delta - would find it an incredible hardship to pay 75 cents more per month. Of course, there are so many of them that, collectively, we get about half a million dollars a year. That is a very tidy sum. I do not think one can despise half a million dollars a year.”
“Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." Question put, and agreed to. Resolutions accordingly agreed to. ADJOURNMENT MOTION Resolved, "That Parliament do now adjourn to Thursday, 12th December, 1968. -- [Mr Yong Nyuk Lin]. Adjourned accordingly at Ten minutes past Three o'clock p.m. to Thursday, 12th December, 1968.”
“Sir, this is not the appropriate moment to consider this innovation, for we have many more important things to do. I am aware, of course, that in some Commonwealth countries this subject is agitating the minds of some people. In the Australian House of Representatives on Friday, 22nd November of this year, a proposal to reduce the voting age to 18 was rejected. I think the best policy for us is to see what the others do. METRIC SYSTEM (Introduction in Singapore) 2. Mr Yeoh Ghim Seng asked the Minister for Finance if the Govern ment will consider introducing the Metric System at this stage of the Republic's development so as to conform with the practice obtaining in most developed countries.”
“The same pattern of expenditure is expected to continue over the next three years, that is to say, by placing a ceiling available for the development of the social services and on health and education. We allow most of the additional revenues resulting from economic growth to be channelled towards Defence expenditure. This is the price that we are paying. The cost is not so much the additional burdens which taxpayers have to meet by the new measures. The cost is in the limitation of expenditure on non-defence items. We get a bigger armed force by spending that much less money on schools and on universities and on better health and social services. It goes without saying that nobody regards this with any great pleasure. But there would be few who would be bold enough to say that what we are doing is unnecessary and wrong. When the British military withdrawal is completed in 1971, a new era will dawn on us. This event is likely to he no less significant than our departure in 1965 from the Federation of Malaysia. Since 1965, we have proved that as a separate economic entity Singapore has a far greater survival potential than many people, here and elsewhere, had believed possible. After 1971, we have to go through another test, perhaps a more exacting and rigorous test, and that is our survival potential as a separate political entity in a difficult and turbulent part of the world. If in the intervening years we have put to good account our resources in money, manpower, skills and organisation, I believe we shall pass the test of political survival as adequately as we are now passing the test of economic survival. Sir, I beg to move.”
“I also propose to levy a transfer fee of two per cent on the value of vehicles ~ transfer of ownership subject to a minimum fee of $5 for a motor-cycle and $20 for a motor car. The yield is expected to be $2 million for the financial year. There will also be a revision of stamp duties At present, the annual yield from stamp duties amounts to $9 million. As hon. Members know, stamp duties are payable on a large variety of documents and instruments - on receipts, cheques, transfer of title deeds, and so on. The last revision was done in 1952. Previous to that, the last major revision was way back in 1931. In fact, nearly half the rates applicable today were levied in 1931, and the present revision does not introduce any drastic changes in rates and charges, but is more in keeping with present-day conditions. The revisions in stamp duty rates are expected to yield an additional $3.8 million in the coming financial year. Sir, I began my address with Defence expenditure and I will conclude on the same theme. The new taxes which I have just announced will help to pay for rather less than 10 per cent of our Defence expenditure incurred next year calculated on a, cash basis. We are fortunate in being able to offset part of the expenditure with British aid while, in respect of another substantial amount, we can take advantage of credit terms offered by suppliers. But in the main, the additional expenditure has been financed by siphoning off the major part of additional revenue away from non-defence expenditure towards Defence. This is achieved by maintaining non-defence expenditure on a virtually standstill basis.”
“This latter figure is a notional quantity and is likely to become increasingly fictitious as an increasing proportion of vehicles registered come from our local assembly plants. It is, therefore, necessary to revise the system and adopt a more realistic basis. With effect from today, the additional registration fee which will remain unchanged will be based on "open market value". Under the "open market value" system, the assessment is based not only on the C.I.F, value but also on other incidental costs, such as handling charges, advertisement costs and agency commission. Generally, the "open market value" will be between 10 and 15 per cent higher than the C.I.F. There have been instances of under declaration of C.I.F, values by importers in collusion with suppliers, which has resulted in an evasion of revenue collected by the Registry of Vehicles. The new basis of assessment is in line with the practice in Malaysia and in the Customs Department. The result of this change to a more realistic valuation is to increase slightly the additional tax payable. The increases are likely to range from $20 in the case of a cheap car to $180 in the case of the more expensive models. Hitherto, locally-assembled commercial vehicles and omnibuses have not been subject to tax. This was because until recently there have been no local assemblies, it is proposed, with effect from today, to impose an ad valorem tax of five per cent on commercial vehicles and omnibuses. This levy is similar to the existing levy that has been payable on commercial vehicles and omnibuses imported from Commonwealth countries. The yield from these two measures for the financial year is estimated at $1.6 million.”
“A rate of three cents a pound will maintain the comparative advantages of the different sources of cooking fuel at their present level, and this tax is expected to yield $800,000 for the financial year. As from 1st January, 1969, subscribers to the Singapore Telephone Board will pay a tax of 15 per cent on their bills. This amounts to an additional payment of $27 a year by each domestic subscriber and $37.50 per line per year for each business line. Collection will be undertaken by the Singapore Telephone Board. The yield of tax is estimated at $3.8 million for the financial year. Import duties are to be introduced on made-up garments for the first time. It is quite amazing to me that while we are exporting substantial quantities of garments to the United States, Britain and Western Europe, we continue to import vast quantities of made- up garments. The value of annual imports comes to more than $50 million. The receipts from these duties are estimated at $12 million for the financial year. There is, of course, no reason why local consumers cannot buy our locally-manufactured garments when Americans, Swiss, Englishmen and Europeans are satisfied with their quality. If, however, people still prefer imported clothes as against locally-made clothes, it is not unfair to require them to make a special contribution to the Defence effort. I propose to revise the present system of assessing the value of motor vehicles on which the additional registration fee is levied. The present basis of assessment for imported vehicles is a C.I.F, value and for locally-assembled vehicles the equivalent of C.I.F, value.”
“The levy on public utility services supplied to consumers will take effect by legislation which will be introduced in Parliament shortly. The levy will be collected by the Public Utilities Board on behalf of the Government. The advantage of this arrangement is that 110 new machinery of tax collection need be established, and the additional cost of tax collection is virtually nil. The rates have been so calculated that families in the lowest income group will not be affected. Large numbers of these families live in Housing Board flats and elsewhere and their monthly bill does not exceed $10. No rate of tax will be imposed on those whose monthly bills do not exceed $10. No less than 58,000 consumers, or 25 per cent of the total, fall in this category. For those whose bills fall between $10 and $20 a month, a lower rate of five per cent is levied. The number of consumers falling in this category amounts to approximately 73,000, that is, 32 per cent of the total. The full 10 per cent rate will apply to households whose monthly bills exceed $20 a month. This means that only the wealthier 43 per cent of consumers pay the full rate. This tax will apply to all consumers of public utilities with two exceptions. The first are the poorer families I referred to. The next are industries which depend on power supply to a significant extent. They already qualify for special industrial power rates. In order not to reduce their competitive position, I intend to exempt them from this levy. The yield of this tax is expected to amount to $11 million for the coming financial year. It is necessary to protect P.U.B, gas and electric supply as a means of fuel supply for cooking and therefore a compensating tax on liquid petroleum gas is necessary.”
“New Taxes I now come to the subject which everybody is waiting for - and in most instances wrongly guessed namely, the new taxes. There has been a good deal of speculation about this and it had been necessary for me to issue a clarification to dispel unwarranted gloom and to reassure people that the new taxes would not have any damaging effect on investment incentives. This, of course, is a sine qua non of our economic strategy. We try to get increased yields mostly by fast growth of the economy. Even for the coming year, as I have explained, the greater cost of Defence expenditure will be paid for more out of increased revenue yields due to economic growth than by new taxes. I have in mind seven new tax proposals: three of them involve increases or changes in existing rates of taxes, four of them are completely new taxes. By spreading the load over seven tax measures, we reduce the risk of adverse effect either on the economy or on the revenue itself which might come about by concentrating on one or two items. These new taxes will not have the effect of impairing incentives to economic development or of discouraging and disrupting the flow of foreign investment. They have also been so selected that the least burden will fall on the poorer sections of the community. The four new taxes are as follows: (i) A 10 per cent levy on monthly charges of the Public Utilities Board. (ii) A small duty on liquid petroleum gas. (iii) A 15 per cent levy on telephone bills. (iv) A 15 per cent import duty on made-up garments, excluding furs. As regards old taxes, there will be a change in the basis of valuation of motor vehicles, a general revision of stamp duties, and an increase in the transfer fee of motor vehicles. Let me discuss each of these new tax measures in turn.”
“It is not necessary for me to discuss non-defence expenditure at any length a~ the Treasury Papers give all the numerical details. The broad policy of keeping non-defence expenditure, especially that on education and social services, on a standstill basis has enabled most of the substantial increases in Defence cash expenditure to be met out of the normal growth of revenue. The revenue for the calendar year 1969 is estimated at $759.2 million as compared with the 1968 Estimates of $646.7 million, in other words, there is an estimated revenue increase of no less than $112.5 million. This increase results partly from increased revenue yields due to economic growth and partly because the 1968 revenue estimates appear to have been substantially underestimated. The curbing of non-defence expenditure together with the increases in revenue yields has enabled us very nearly to secure a balance on revenue and expenditure on the current cash account. Taking the financial year of 15 months, that is to say, 1st January, 1969, to 31st March. 1970, expenditure is estimated at $1,024.9 million. Total revenue almost comes up to this amount, the shortfall being a mere $9.2 million. However, this does not take into account the need to transfer money from current account to the development fund, a practice which has continued without fail since my first Budget of 1959. In recent years, the annual transfer is $30 million, and over the 15-month period this would mean $37.5 million. Taking the shortfall of $9.2 million and $37.5 million, there is a total sum of $46.7 million to be met. I propose to meet this by raising additional taxes to yield $35 million for the 15-month period. The balance of $11.7 million can be met by transfers from our reserves.”
“3 million relates to purchases of weapons and equipment for which recourse to credit is available. Finally there is a sum of $63.9 million which could be paid out of United Kingdom Defence Aid funds. These are the three components adding up lo $337.5 million. The financial provision required in the calendar year 1969 to meet such expenditure comes to $205.1 million. This is made up of inescapable cash expenditure of $117.3 million and a further sum representing advance payment on credit purchases that have to be made in the calendar year. This sum includes payments on credits incurred in previous years. The total amount of such payments on credit purchases comes to $87.8 million. Of the total of $205.1 million, a cash liability, that is, the total cash liability, for 1969, $157.2 million is incurred in respect of items in the Ordinary Estimates and $47.9 million is expenditure on development projects appearing in the Development Estimates. In addition to these cash outlays, there is of course the item I referred to earlier of $63.9 million, being purchases of British equipment and weapons paid out of the United Kingdom aid fund. This expenditure is not entered under the head of "Ministry of Interior and Defence", but under the "Ministry of Finance". As a contra item the same sum has been entered as a revenue item. The reason for putting this under the heading of the "Ministry of Finance" is that payments for these items will have to be made in the first instance out of the Consolidated Fund and subsequently recouped from the U.K. Aid account. To keep the accounting of such transactions under direct supervision, the unusual device of entering the Defence expenditure under the Finance Ministry has been resorted to. [Mr Speaker in the Chair] 4.30 p.m.”
“(c) As far as possible, non-defence expenditure is to be retained at existing levels, increases being allowed only for normal annual salary increments and for new proposals which have exceptional merit. (d) In spite of savings produced by stringent economy and by recourse to credit payments and to British aid, it has been proved necessary to introduce new taxes and to increase the rates of some existing taxes. Certain Ministries and departments which provide economic services, for instance, the Telecommunications Department and the Civil Aviation Department, are not to be starved of funds and are to be given normal additional expenditure required to meet the demands of normal growth. Similarly revenue- producing departments are allowed reasonable increases in staff. Apart from this, any increase in expenditure will only be sanctioned if the Ministry concerned can offer offset reductions in other items of expenditure. If the total Defence budget to be incurred in the calendar year 1969 were to be paid on the normal Government basis, that is, on a cash basis, a sum of $337.5 million would need to be provided. This refers to the expenditure of the Armed Forces alone and does not include Police and other expenditure of the Ministry of Defence. This is a substantial increase on the $47.6 million provided for the Armed Forces in the 1968 Estimates. I should, however, mention that the expenditure actually incurred on the Armed Forces in 1968 is considerably larger than this. Of the sum of $337.5 million, a part must be paid in cash. For instance, the pay of soldiers and payments of contractors' bills can hardly be settled on credit terms. The amount of such expenditure comes to $117.3 million. A further sum of $156.”
“At present Members would have noticed the rather sketchy manner in which the economic performance of the Republic has been reported in annual budget statements. Statistical records of foreign trade and calculations .of balance of payments and national income aggregates are made in periods of calendar years. Putting the start of the financial year forward by three months should enable us to obtain a proper account of these useful statistical aggregates. However, the effect of this change in the Estimates of this year is to complicate the presentation of this and the next budget. The figures in the Estimates before Parliament relate to a period of 15 months, whereas the figures with which comparisons are made, that is for the calendar year 1968, cover a period of 12 months. This complication will eventually be eliminated in the financial year commencing April 1971 and thereafter. For purposes of comparison in my address, I will not take the amounts as entered in the Estimates, that is to say the 15- month totals, but the annual rate so that a meaningful comparison can be made with 1968. The substantial increase in Defence expenditure has affected the entire financial policy of the Government. In order to finance expenditure of this magnitude, the Government has to adopt the following policy: (a) As far as possible, advantage is to be taken of deferred credit payments from suppliers of equipment and weapons. (b) Full advantage is to be taken of the British defence aid proposal which offers a total amount of �50 million sterling in soft loans and grants for the purchase of goods and services from Britain, both for defence and for non-defence ex- penditure.”
“It was a pleasant surprise for me to discover that after allowing for an adequate rate of depreciation of assets, the overall return on capital invested by the Government in Jurong's social and industrial infra-structure comes to three per cent. I had expected a lower figure and was even prepared for a loss. This outcome reflects credit on the land and lease policy of the E.D.B. In future years, we can expect the revenue accruing to the Jurong Town Corporation to increase both with the increasing number of industries as well as increases in lease payments. Eventually, we can hope to get a return of seven or eight per cent. Estimates, 1969 Mr Speaker, Sir, I now turn to the Estimates before Parliament. Last year I promised that I would circulate a Treasury Paper each on the Ordinary and Development Estimates setting out in detail, under each Head and Subhead, changes in such expenditures and the reasons therefor. These two Treasury Papers are now before the House and provide all the details required. This arrangement will allow me to comment on the Estimates in broad terms and thus to avoid a tedious enumeration of figures. Those who want particular details can refer to the Treasury memoranda. The first major change in the presentation of the Estimates is the change in the basis of the financial year. Since living recollection, the financial year in the Singapore Government accounts has been the calendar year. It is now proposed to take the financial year as the period 1st April of one year to 31st March of the following year. There is an advantage in so doing. It will be possible under the new arrangement to give a proper account of the functioning of the economy during the preceding calendar year.”
“There is, in fact, a shortage of housing in Jurong and some 1.384 flats are under construction, some of which will be ready for occupation in the middle of next year. As a result of industrial investment reaching a rate which exceeded planning expectations, there is currently a severe shortage of available factory space. To meet this excess demand, nine blocks of flatted factories are under construction with a total floor area of more than a million square feet. One of the major enterprises undertaken in Jurong is the construction of a new port there. More than $25 million was spent, with 3,000 feet of wharves and various facilities for the mechanical handling of bulk cargo. The increase of cargo handled in Jurong since the completion of the port has been satisfactory. In 1967 the volume of cargo handled was 342,000 tons. In the 11 months of this year the volume of cargo handled was increased to 478,000 tons; in addition some 121,000 heads of livestock were also handled. This latter is a direct result of the construction of the abattoir in Jurong. Some problems still remain to be resolved in Jurong in addition to the preparation of more factory sites and dwelling houses. It is necessary to improve social amenities there. The Corporation is taking action on this. One pleasing outcome of the establishment of the Corporation has been the comprehensive review undertaken of their accounting system. The new system of accounts enables a separate assessment to be made of each separate operation of the Corporation to assess its profitability as determined on commercial principles.”
“With an authorised capital of 50 million shares of one dollar each, of which 20 million shares are being issued, only 50 cents per share is being called up immediately. INTRACO will be jointly owned by the Government of Singapore with six million shares, the Development Bank with 3.8 million shares and the private sector with 10.2 million shares. The private sector allocation has been substantially over-subscribed. [Mr Deputy Speaker in the Chair] 4.15 p.m. Of the three institutions, INTRACO, in my opinion, is the most complex, difficult and challenging undertaking. While the Development Bank and the Jurong Town Corporation were built on the foundation of solid achievement ol the Economic Development Board, INTRACO has to blaze its own trail not in Singapore but in the outside world. It has to meet fierce international com petition from all quarters in promoting the export of Singapore's goods. This is not a task that can be accomplished over-night and the directors of INTRACO have wisely decided upon a phased programme. The Company is still in its infant stages and its future progress will no doubt be watched with interest. The third institution, the Jurong Town Corporation, takes over from the E.D.B, the ownership and management of the industrial estate in Jurong and six other places in Kallang, Tiong Bahru, Kampong Ampat, Tanglin Halt, Kallang Park and Tanjong Rhu. The number of factories in production on the Corporation's land totals 293 at the last count in October this year. They gave employment to more than 21,000 persons and involved a capital investment of $588 million. In addition, the Corporation runs a number of other enterprises. It owns 4,450 flats and 150 shophouses in Jurong. The flats are virtually full up.”
“An invitation to subscribe to this capital by providing subscription to local banks and financial institutions as well as by public invita tion was well received. In the allocation of shares to the public, special consideration was given to small investors and all applications of $2,000 or less were accepted in full. As regards the Bank's future operations the Government will extend to the bank credit lines of $30 million in the first instance and another $50 million on exhaustion of the first line of credit. Interest will be at a rate of 4 per cent per annum. These funds will be used by the Bank to extend loans to industries at a rate of interest not exceeding 7 per cent. The Bank will also raise additional funds from local, foreign and international institutions. These operations of the Bank will be governed purely by commercial considerations. A high level technical team from the Investment Bank of the German Federal Government, Kreditanstalt fuer Weideraufbau (KFW), arrived in Singapore last month to advise the Bank on internal organisation and in the formulation of its operating policy. The KFW team stayed in Singapore for three weeks and has submitted a preliminary report. The German Investment Bank has also been asked to assist our Bank in the initial years by seconding a number of senior staff. The Chairman of the Bank is Mr Hon Sui Sen who has rendered such distinguished service as Chairman of the Economic Development Board. I have little doubt that under his leadership and guidance, the Bank will grow into a powerful institution for promoting economic development in Singapore. I now turn to the second institution, the International Trading Company, or INTRACO, to use its registered name. The Company was incorporated on the 5th November, 1968.”
“The Development Bank has taken over from the Economic Development Board its entire loan portfolio. This includes loans to small industries advanced by the Light Industries Services as well as special loans for ship-breaking operations. The amount of loans transferred to the Development Bank comes to $48.9 million. In addition, some $30 million worth of loan committed by the Eco nomic Development Board has been taken over by the Bank. The transfer of loans from the E.D.B, to the Bank is a comparatively simple operation. The position in regard to equities, that is, shares in industrial ventures owned by the Economic Development Board, is more complex because of problems of valuation. Where the share is listed in the Stock Exchange, a clear-cut basis for valuation exists, though the trouble here is that stock prices fluctuate from time to time. Where shares are not listed, it is not easy to find a mutually acceptable price. In the event, it was decided that the entire equity holding of the E.D.B, should be taken over by the Government. The Government will similarly undertake to pay up the balance of equities which had not been fully paid up. The value at cost of these equities comes to $25.2 million with a further $3.4 million equity capital remaining to be paid up. In addition to these, there are a number of equity commitments made by the E.D.B., paid-up capital of which has not been called. Such equities will be taken over by the Bank and the value of these equities comes to $8.5 million. In addition, the Bank has taken over guarantees made by the E.D.B, on behalf of manufacturers making purchases of plant and equipment. The value of outstanding guarantees as on 26th November this year is $14.1 million. The Bank has a total paid-up capital of $100 million.”
“In addition to what has been mentioned, there are other projects involving international consortiums for the development of petrochemicals, steel, paper and pulp, fertilisers, watch-making, construction of fishery vessels and other specialised ships and marine structures, prefabricated houses, internal combustion engines, farm implements and machine tools. Most of these projects should get off the ground in the next two years. To sum up, there are enough industrial investment projects in the pipeline to keep the economy going at a brisk rate the next two years. All this will make it easier for redundant workers to find new employment than would otherwise be the case. In my previous Budget Statement I commented on the need to establish new institutions to strengthen the industrialisation effort. In my series of broadcast talks last April, I elaborated upon the theme. The proposal was to set up three new institutions. Two grew out of the Economic Development Board; the third is an entirely new project, an international trading company. All these three institutions have been launched and it seems appropriate on this occa sion to report on progress achieved. The Development Bank of Singapore, which was formed to take over the financing functions of the Economic Development Board, has been successfully launched. It was formally incorporated on July 16th, 1968, and commenced operations on the 1st September. The staff of the Bank was drawn initially from the E.D.B. In addition to financing purely manufacturing undertakings, the Bank's financial scope extends to include tourist and estate projects, the latter relating mainly to projects established under the urban renewal programme.”
“These ingredients for success have been confirmed by the well-known American independent business consultants, Business International, who in their "Report to Managers of World Wide Operations" in February this year rated Singapore as an excellent place to do business. The American companies are particularly interested in two fields of activities in Singapore. First, there is a group of companies like Caterpillar, Allis Chalmers, and International Minerals Corporation which are keen on using Singapore as a distribution centre and an assembling base for South-East Asia. Other American companies like Santa Fe-Pomeroy, Dillingham Corporation, McDermott and Procon are also interested in using Singapore as a supply and fabrication base for oil and mineral resources development projects in this region. Singapore can provide all the necessary engineering and supporting services efficiently. This would not only benefit the large international companies but also the neighbouring countries, as the provision of an efficient supporting base could accelerate their development programmes. Secondly, there is a group of companies interested in manufacturing a wide range of electronic components, electrical appliances and other instru ments. These companies include National Semiconductors Corporation, Texas Instruments and Continental Devices. All three are American com panies. These are very substantial investments and they will employ large labour forces.”
“Future Prospects Last year, our economy was considerably boosted by panic capital from Hong Kong and a good proportion of this year's crop of new industries represents the fruition of this capital inflow in 1967. But in the next two years, the main impetus to our growth of industry will come not from Hong Kong capital, but from American capital. As Hong Kong recovers from its political troubles of last year, the number of panic enquiries has tailed off. However, Hong Kong interest in Singapore remains at a gratifying level. Projects in the pipeline represent genuine investment in search of profit opportunities. Investment of this kind is likely to be more productive and more enduring. Although our investment promotion programme in the United States and Europe is still in its initial stages of development, the results achieved so far are encouraging. Large international companies, mostly American, are increasingly becoming aware of the advantages that Singapore offers to investors. Amongst the factors that they find attractive are our political stability, the national determination to work and overcome problems as manifested in the general acceptance of the new Employment Act, our price and wage stability, a sound currency, a strategic location, an honest administration, an abundance of hardworking and adaptable workers, high labour productivity and excellent transport facilities. No less important are the investment and export incentives provided in the Economic Expansion Act. Also capital is available in abundance and on good terms.”
“Tourism, too, is having its day though the rate of increase in arrivals is only a shade of the previous year's spectacular increase of 70.5 per cent. Never theless, total arrivals of passengers by air and sea to Singapore numbered 181,570 up to the end of September this year, an increase of 25.3 per cent from the corresponding period last year. This is likely to be the normal rate of growth in future years rather than the spectacular figure achieved in 1967. There are now 58 tourist hotels with 2,570 rooms. The occupancy rate is 83 per cent. Eighteen new first- class hotels are being built. These, when completed, will add some 6,000 rooms to the current stock. Six of the hotels are expected to be completed by the end of 1969, increasing the number of hotel rooms by 1,610. With all these facilities, accommodation will not be the bottleneck constricting the inflow of visitors to Singapore in coming years. Symptomatic of the well-being of the economy is the rise in the level of bank deposits. At a time when the international economy is beset with monetary crises, when sterling, the U.S, dollar and the French franc are being attacked by speculators, bank deposits in Singapore continue to increase, from $1,650 million at the end of September last year to $2,105 million at the end of September this year, an increase of 27.3 per cent. The large increases in bank deposits month after month since June 1967 could not possibly be due to the expanding economy alone. Inflow of funds from abroad is possibly an important contributory factor. If this is so, it is a cogent reflection of the confidence that people have in the currency of Singapore, and, in the final analysis, it is a vote of confidence in the stability and strength of the Singapore economy.”
“These have a total fixed investment of $436 million and a combined output of $472 million. Investment and output increased by no less than 19.0 per cent and 64.0 per cent respectively from the previous year. Pioneer industries now employ 18,780 workers, an increase of 5,380 over last year. Another indicator of increased commercial and manufacturing activities is the volume of electricity consumed by industrial and commercial enterprises. This has gone up from 521 million kilowatt hours for the first nine months of 1967 to 659 million kilowatt hours up to September this year, an increase of 26.5 per cent. To meet this increased demand for electricity, a new power station is being constructed in Jurong with an eventual capacity of 480 megawatts, or slightly larger than the present total installed capacity of 464 megawatts. The first phase will be completed in June next year when a 120 megawatt generator will be commissioned. A second 120 megawatt generator will go on stream in April 1971. By 1974, the total installed capacity in Singapore will be 944 megawatts, more than four times the 202 megawatts we had in 1961. Building and construction, too, are making good progress. Commencement of new buildings, however, has slowed down somewhat. In the first half of this year, 6,140 units were commenced as against 8,320 units for the same period last year. The decline was mostly in the public sector. In terms of floor area, however, there was only a 3.0 per cent decline, from 6.7 million square feet to 6.5 million square feet. But in terms of value, which is really what counts, there has been an actual increase of 8.8 per cent. The value of the buildings commenced in the first six months of 1967 was $72 million as against $78.3 million for the same period this year.”
“Total investment this year is estimated to be $606 million, as compared with $518 million last year. The share of investment in gross domestic expenditure has increased to 15.7 per cent from 14.5 per cent in 1967. The good performance of the economy is reflected in no small measure in the upward surge of trade. Total trade for the first nine months of this year was valued at $6,720 million, up 14.5 per cent from the corresponding period last year. Exports totalled $2,880 million and imports $3,840 million. Cargo handled at the harbours reflected this increase in trade activities. From January to September this year, a total of 26.5 million freight tons were discharged and loaded at the ports as compared with 22.6 million freight tons for the same period last year. This represents an increase of 17.4 per cent. Reflecting this, increase, more ships called at our ports. Up to September this year, 11,600 vessels. with a total tonnage of 47 million tons had called at Singapore, an increase of 15.0 per cent and 11.5 per cent respectively over 1967. The expansion in trade is partly the result of continued growth in the manufacturing sector. As the manufacturing sector grows, it requires more raw materials, plant and machinery to be imported. Similarly, as industries go into production, they too export more and more of their products. The quarterly index of industrial production for the first quarter of this year stood at 121.3; for the second quarter at 129.4; for the third quarter, at 131.4. The average for the whole of 1967 was 111.1; the base year for the index is 1966. As at the end of June this year, there were 174 pioneer firms in production, an increase of 47 firms over last year.”
“It is obviously not possible to ensure that each and every redundant worker finds a job congenial to him. Nor is it possible to deal with redundant workers individually. The problem is too large for an approach of this kind. The best guarantee that adjustment to new conditions will be relatively prompt and painless is to ensure a sufficiently fast growth of the economy. With rapid economic growth, there will be a rising demand for all categories of workers, and within this rising demand there will be more opportunities for redundant workers to find new jobs. This leads me to discuss the general economic conditions now facing us and the immediate prospects ahead. State of the economy This year the economy has had another good year. Trade continues to expand. Port activities remain at a high level. Manufacturing output and sales are up because the productive capacity of the industrial sector has been enlarged. Construction, too, shows good progress and, all in all, there has been satisfactory all-round growth. Preliminary estimates of the gross domestic expenditure for 1968 indicate that despite the British military rundown the economy has grown by 7.7 per cent since last year. Gross domestic expenditure is estimated at $3,850 million. With population growth now at less than two per cent a year, per capita gross, domestic expenditure has increased by nearly six per cent to a level of $1,940. Economic growth is associated with the rate of investment in fixed assets undertaken by the economy. It is particularly gratifying, therefore, to note that this year, gross domestic capital formation or, to use a more familiar term, total investment has increased by 17 per cent over 1967.”
“Locally enlisted 4550 4350 4100 3200 2300 Nil personnel Domestic servants 8000 7200 5800 4900 4000 Nil ----- ----- ----- ----- ----- --- Total 42150 39550 32100 27300 19500 Nil ===== ===== ===== ===== ===== === In April last year, there were some 42,000 persons employed, and by the end of this year we estimate that 10,000 would have lost their jobs. Of this 10,000, 3.000 have been re-engaged by the Sembawang Shipyard on the transfer of assets of the Naval Dockyard to this enterprise. Therefore, the total number retrenched so far is only 7,000. Next year we shall see a further retrenchment, but not in substantial numbers some 5,000. The following year will see a larger decline in employment another 8,000 or so. But the real crunch will come in 1971 when 19,500 persons of all categories would have been declared redundant on the closure of all Service establishments. The annual redundancies, as recorded here, differ from the figures I gave earlier this year when, in the absence of accurate data, I had assumed a constant rate of rundown. The British time- table is now made up, and the rundown begins at a slow pace until the very last year. Accordingly the counter-recession programme outlined earlier needs to be revised. So the year 1971 from all accounts will be a difficult one, and it is well that we lay up a store of fat to meet that lean year. We have taken a number of measures which are intended to help redundant base workers. They include the Central Provident Fund scheme into which all gratuities are deposited and from which regular amounts can be drawn, so that the redundant worker can have a longer period during which to find work and adjust to the new situation. We have also introduced a training scheme to fit them for new occupations in industry.”