Inderjit Singh
Singapore
“You do not want our monetary policy easing to offset some of these as it will result in an inefficient allocation of resources. I think our SMEs will also be similarly affected by higher import costs.”
“Thus, SPRING can become something like a Municipal Service Office (MSO) for SMEs. SPRING has already set up an outreach mechanism through the SME Centres. This structure should stay to be the outreach arm.”
“I want to thank the Minister of State for agreeing to the suggestion of the first- and one-stop agency. We have higher expectations, so, I hope we can make it work. But my question on REITs was not answered.”
“She worried about the eroded sense of belonging that she and her friends felt and their view that Page: 24 the Government was more interested in luring foreigners than bringing Singaporeans home. She said that friends and relatives asked if she planned to stay in Australia after her graduation. In 2013, she was unsure of her answer.”
“I recently read that, in Malaysia, the EPF holders are paid 6% for their savings for a number of years, and this is much higher than the return we are paying to our CPF holders.”
“I believe Minister of State Mr Teo Ser Luck mentioned just now the company formation rate of about 14,000. I would like to ask are we monitoring the rate of companies folding up. I have heard recently that the rate has also increased, especially in some sectors that are very dependent on rental.”
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“The payment can be made in instalments to ease the burden on the worker, and repayment could be made through higher employee's CPF contribution until the amount borrowed is fully paid up. Sir, I would like to emphasise that I am not advocating a permanent withdrawal from the Fund, but a loan from one's own account to be paid back with interest. In this way, the impact on old-age savings will be almost none and, at the same time, we will reduce the burden on the Government and the various welfare organisations since the worker now finds help himself first, eliminating the need for welfarism.”
“Sir, in the past year and possibly this year, we expect to see record numbers of people being retrenched from work. While many people are able to support themselves through their savings or through family support until they find alternative employment, however, there are still a substantial number of Singaporeans who may not be able to do so for a number of reasons. I would like to propose to the Minister that such families in trouble be allowed to use their CPF savings during this time of difficulty. My proposal is to allow retrenched workers to borrow from their CPF Special Account to pay for essential expenses like school fees, S&C charges, house rentals and for purchase of basic food items. While I agree that we should not change the fundamental purpose of the CPF, which is a saving for us after retirement, I do feel that we need to put in place a system that allows us to ease the burden of the workers who are in financial difficulties, especially during this time. What I am suggesting is not a permanent draw down from the CPF account, but to treat the transaction as a loan. The mechanism could work as follows: First of all, the Ministry can set criteria which allow workers, who were retrenched and who have been out of a job for a minimum period of time, to borrow from their account. Second, the money borrowed can be used only for certain pre-approved type of expenses. Third, to set a limit for a maximum quantum to be borrowed and for a maximum of, say, six months so that the worker seriously looks for alternative employment. Fourth, once the worker finds a new job, he has to repay the money back to his CPF account, which should include the amount borrowed plus interest on the borrowed amount.”
“If we treat such activities as both sporting as well as a business opportunity, we may be able to organise such activities on a different scale in order to attract tourists to Singapore. Sixth, until we can develop world class theme parks, can tax incentives be given for current operators like Tang Village, the Chinese and Japanese Gardens and others to upgrade and to improve their facilities so that they become more attractive? And finally, can we allow the use of satellite technology as an alternative to cable television? In this way, we will be able to provide competition for Singapore Cable Vision as many Members in this House have asked for and, at the same time, reduce the cost to individuals, hotels and organisations. Sir, I hope the Minister will seriously look into these suggestions.”
“What we really need is to spend money, some development expenditure on developing world class theme parks like Universal Studios or Disneyland Park. I guess Hong Kong has beaten us to the Disney project, but we should not give up. Alternatively, we could provide attractive incentives for such companies to locate in Singapore, to also tap on the regional market as well as to keep the business travellers in Singapore - and I think the number of business travellers is quite high - for at least another day after their business has been done. I suggest we focus on technology based theme parks that offer attractions like virtual reality where a visitor can spend the whole day in such a theme park. Second, both India and China are two very big markets for our tourist industry. They still want to shop in Singapore and visit our places of attraction. In India alone there is a middle class population of about 200 million people capable of spending money. I am sure China has an equal, if not, a bigger number of middle class population. Can I request that the Ministry work with the Ministry of Home Affairs to ease travel restrictions for people of these countries by lifting or simplifying visa requirements for entry? Third, double tax deductions for training expenses. Because retail and tourism industries are mainly service orientated and depend on capability of human resources, can the Government allow double tax deduction for training expenses for approved training? Fourth, we should provide more funding to Singapore Tourism Board so that they can more aggressively market Singapore as a popular tourist destination. Fifth, staging world class sporting activities. This is an area where we have not attempted to think big.”
“Sir, this is a topic that I have not raised in this House before but after two years of feedback and pleas from the representatives of this sector through our GPC, I would like to channel their feedback to the Minister and I feel that they do deserve some attention. Tourism is an important component of our economy and we should continue to promote it. The retail sector cannot depend on local consumption alone. Tourism can play a big part in helping this sector. In 1997, tourist shopping was around $2.4 billion, down by 18% from 1996 level. The key challenges are threefold: a) how do we bring in new tourists to Singapore; b) how to make arrived tourists stay a little longer or to keep a business visitor here for one more day for leisure; and c) how can we bring in repeat tourists. Cost alone is not a major factor as long as we can become a value-added destination for tourists. So, we should not give up bringing in tourists just because the cost of living in Singapore is high. We should look at Hawaii, Paris and other popular tourist destinations that still have a vibrant tourism sector despite being expensive cities. The issues and my suggestions are as follows: We have stale and outdated theme parks like the Haw Par Villa, Tang Dynasty Village, the Malay Village and the various gardens. These, I think, are all too stale and will not be able to bring in repeat customers. I guess the only theme park that is able to do this is the Singapore Zoo. I would say that going to Sentosa once after a very long time is also sufficient. I do not see any compelling reason to go back to Sentosa after one visit. In fact, I visited Sentosa after about 7 years, and I found there was nothing really attractive to look at there.”
“I am talking about the two associations. But once this can happen, when more industry players can join these organisations and be more committed to help themselves, perhaps the Government can provide funding for these associations to play their extended roles in helping to disburse the various schemes. Furthermore, the more successful association members could be mentors for the smaller players. Once the industrialists can prove that they can be a significant force and behave as such, I am sure they will be given more attention. (4) The LEFS scheme is great, but the interest rates are still pegged at 6.25%, which did not change despite the market interest rates coming down. Can I ask the Government if they can half this rate? Can Government agencies also be more involved in approving loans rather than depending just on banks? Despite the boost to the LEFS scheme in June last year, many companies are still facing difficulties in getting their loans approved because of the conservative nature of the banks. We may want to set up a joint body consisting of PSB and bank officers to act as loan approving bodies. Also, can the Government increase the share of risk to encourage banks to do more in lending the money? (5) Can we extend the SDF funds for executive and managerial training so that SMEs can take advantage of this down cycle to upgrade their staff, and not just focus on the lower end employees?”
“Credit squeeze is a big problem because banks continue to adopt a very conservative stance. The 65 or so incentive schemes that exist are a big help, but the ability to complete an application form for some of the SMEs is still a concern. At this juncture, I would like to add that so far the Productivity and Standards Board (PSB) has done an excellent job in trying to meet the demands, but without additional resources, their ability to reach out to more companies is limited. I have the following suggestions for the Ministry. (1) Again, for SMEs to set up a focused agency to support them. The current `First Stop Centre' (not One-Stop Centre), has not been able to help effectively due to its lack of resources and established roles. In the one-stop centre, the companies that apply for help are then directed to many agencies, and in the process of going from one agency to another, they get lost and they give up trying. (2) Perhaps we can farm out some of the activities like the processing roles for some of the incentive schemes to the various industry associations like the Singapore Confederation of Industries and the ASME (Association of Small and Medium Enterprises). (3) Of course, the various industry associations too need to play their part in helping themselves by attracting more and bigger members to join them. Industry players need to also become more committed to work through these associations, because these are useful organisations through which they can achieve many of their objectives. Currently, the Association of Small and Medium Enterprises has only 380 members while SCI has about 1,000-plus members, whereas I believe that there are about 100,000 or so SMEs in Singapore. So I think they are not currently exactly representing all the SMEs in Singapore.”
“Sir, the strategy of bringing in foreign direct investment with a focus on big multinational companies has worked very well for Singapore in the past 30 years. But looking ahead, I believe the strategy is not going to work because the value that Singapore provided for such investors in the past can now easily be duplicated or improved upon by other countries in Asia. As I mentioned before, in the USA, one new company is started every 3.5 seconds and again in the World Competitiveness Yearbook, ranking on Creation of Firms, USA ranked number one while Singapore ranked 25th; Taiwan was fourth. If we set the objectives like bringing in $7-$8 billion of investments in a year, I can understand that it is very easy for the agencies who have to work on such targets to attract a few big projects, which bring in big dollar amounts and huge chunks of jobs each time. It is tougher and troublesome to attract the same dollar levels by working on, say, 10 to 20 times more of SMEs. Therefore, agencies, like EDB, prefer to focus on these big companies. We should in the next 10 to 15 years focus on making the SMEs the cornerstone for the growth of our economy, with particular focus on KBE type of industries. Many SMEs feel that the existing mindset among the various Government agencies is that SMEs are always asking for help. The mindset needs to change so that these agencies and the Government feel that they need SMEs' help for the economy to grow. The attitude among some agencies is also to prefer MNCs to local companies even if they bring in the same amount of investment. In fact, I have experienced this personally. I am trying to start up my company with an investment that is bigger than some of the MNCs but we face some problems and issues.”
“We need not just academically smart people, but also street-smart people, as I have said many times. I suggest we seriously consider the selection and promotion system in the Government service to include people with good experience on the ground in the industry. One possibility is to co-opt people from industry for two to three-year term into key positions where decisions are made in supporting entrepreneurs and technopreneurs. (7) Modify the many Government schemes that we have today which require you to spend your money upfront before you are allowed to claim the money or to be reimbursed later on. Such technological type of companies typically require a lot of cash outlay in the beginning and cash flow problem can be a big headache for entrepreneurs. So if some of these schemes can allow upfront funding, it will help us quite tremendously. (8) Finally, we need to be very serious about promoting 'cottage industries'. The Prime Minister talked about the possibility of using HDB homes for some of these light industry types, those that use the computer, knowledge based, software development type of companies. I think we need to amend our company laws that can promote such cottage industries. If we start with cottage industries today, I think this will lead to entrepreneurs and technopreneurs emerging five to 10 years down the road.”
“(4) In the area of venture capitalists, I talked about the conservative nature of our VCs down here. I think we need to develop a more vibrant environment for such venture capitalists, like those that exist in the Silicon Valley in the USA and in Taiwan. I would like to suggest the following: (a) The Government should divide their current big funds in the Government-linked VCs (like Temasek Holdings) to many smaller funds and invite private sector businessmen and entrepreneurs to manage these funds. Fund sizes could range between $30 million and $40 million. We could start a pilot project with one or two of such funds and inviting some local businessmen to take on the challenge of managing such funds. (b) Initially, until we can develop a vibrant environment for VCs, I suggest that Government helps by providing a service to locate VCs from around the world and link them up with local entrepreneurs until a natural network of VCs can be developed down here. Basically, I am suggesting that the Government play a match-making role to link the technopreneur to the fund. (5) Set up permanent industry groupings or committees of the various industry groups identified by the EDB in the Industry 21 Plan. Let each of these groups be under the leadership of the private sector. And each permanent grouping should have full-time staff consisting of administrative people providing administrative support as well as technical people from the industry who can come and work on a rotational basis to work on key ideas and joint projects, the results of which can be shared by the particular industry group members. (6) I feel that we need to have a good mix of people at the policy-making level in the Government and Government agencies.”
“However, I decided to stay put in Singapore with the hope of helping to change the environment here and also try to initiate similar projects in Singapore. Also, I felt that it was my duty to stay here. However, I know of a number of cases of capable people who have left Singapore because of the restrictive environment. One is in Silicon Valley now and the other who has started up an Internet-based company in Singapore is very discouraged by the lack of support and is considering leaving for the USA. 4.15 pm I feel that we should do a lot more to create an environment that promotes technoprenuership and entrepreneurship which our current Budget did not address, as I have said earlier. If we start to do more now, can we then achieve our objective of being the knowledge-based economy of the future and avoid losing our talented people to other countries that have more vibrant KBE industries? Based on my experience and observations, I would like to suggest the following: (1) We need to set up a new EDB-style organisation that has a full-time job of supporting entrepreneurs. EDB's main focus is on MNCs and lately, I believe, PLEs have been added to their list. But no one takes a focused look at start-ups. (2) The bankruptcy laws need to be amended. I think the Minister has already addressed this and I will not touch on it. (3) The Government sets up a high-risk fund which they are prepared to lose. Entrepreneurs can borrow from this fund or make use of this fund for their start-ups and pay back if they are successful. Even if one in 10 of such projects makes it, the net loss to such a fund can be quite minimal, because the returns from the other one out of 10 that is successful can be quite substantial.”
“Sir, as I indicated during the Budget debate, I would like to go into some detail as to how we can promote technopreneurship in Singapore. The 1998 World Competitiveness Yearbook ranked Singapore second after USA in terms of overall competitiveness while Taiwan ranked 16. However, if we go into the details in the area of entrepreneurship, Taiwan and Singapore switched places with Taiwan ranking number 3 while Singapore ranked number 17 and in the category of creation of companies, Taiwan ranked fourth while Singapore ranked 25th. The USA ranked 1st in this category. My point is that we are losing the battle to be the Silicon Valley of the east and if we are serious about grooming more technopreneurs and entrepreneurs, we have to do a lot more. Sir, I have the experience of starting up two companies in the last one year, one is a high-tech company and the other is a trading business. I have to admit that while the drive to be a technopreneur comes mostly from within you, a more conducive environment could have facilitated things and make the life of an entrepreneur less stressful. While I did not wait for things to change to get started, I am hopeful that the path for future technopreneurs would be better. In my case, after actively looking for funds in Singapore and being unsuccessful, I had to raise about 70% of the funds from my company from overseas and about 60% of them come from Taiwan. I also faced obstacles that originated from our multi-national focused economic strategies and policies that are not friendly towards local start-ups. Given the restrictive environment here, I almost agreed to take on two opportunities, one in the USA in 1994 and another in Taiwan in 1995 to be involved in starting up high-tech companies.”
“Thirdly, provide new incentives to encourage mergers and acquisitions of viable companies in the region, since there are good opportunities like the acquisition of a Thai bank by DBS recently. Fourthly, allow double tax deduction for costs related to globalisation. Some of these are the relocation cost of employees, cost of training of staff and the higher insurance cost of having operations overseas. Fifthly, to encourage individuals to globalise to allow personal income tax rebates for higher cost of maintenance of children, including education and the loss of spouse's income. I would like to once again say that we have a very valuable opportunity to extend the second wing of our economy and we should motivate more companies to do so.”
“Sir, this is not a time to slow down, but rather we should speed up the regionalisation process. In fact, to be more accurate, we should encourage going further away and encourage globalisation to diversify our risks. Good opportunities exist in the region and around the world and Singapore companies stand a good chance of benefiting by investing before the upturn comes. There are two possible ways in which Singapore companies can globalise. The first way is by complete replication, ie, by moving out the whole operations from Singapore resulting, of course, in the hollowing of our economy since all the value-added activities will then occur outside the country and the host country where these companies go to will benefit from our investments while Singapore loses out because of loss of investment and loss of jobs. The second way is by breaking up the value chain of an operation and keeping some value added activities in Singapore so that this still remains a centre where funds, trade and technology flow. One other issue is that currently offshore operations of Singapore companies cannot tap on the various incentive schemes offered to companies located here. We are talking about the 65 or so schemes that are available. I would like to suggest a few things. First of all, can we devise new initiatives and incentives to encourage globalisation by breaking up the value chains of operations so that Singapore still remains the centre for some of its activities as opposed to encouraging complete move out of operations? Secondly, can we allow companies that still keep part of their operations value in Singapore to be fully eligible for all the 65 incentives instead of trying to devise new schemes to help such companies?”
“Sir, I have a question on the status of the upgrading of private estate policy that was announced two years ago. I would like the Minister to clarify.”
“I would like to ask the Minister to clarify what is the mechanism that we have put in place so that in the long term we can ensure that our property prices remain competitive.”
“Furthermore, I feel that only a small cross section of our population has been hurt, particularly those who bought their private properties from 1994 to 1996, while we have a bigger potential population who may be able to purchase properties if the prices are lower. So I have a few suggestions. First of all, I would like to renew my call to the Government to decide on a long term land sales policy for private property development for, say, 10 years at a time, and do not change the policy irregardless of what the state of the private property market is. In this way, we can ensure certainty and we avoid jerking the market around as we have done in the past few years. So I hope we will continue with the land sales at the end of this year when the time for announcement is due. Secondly, the Government basically sets the stage for private property market by setting benchmark prices for land sale tenders. Could the Ministry look into how the mechanisms can be changed to allow true market forces to rule? Another way that the private property market gets propped up is by the prices the Ministry sets for new HDB flats. The current prices for new flats are too high with a very small gap against resale HDB flats and also against private property market. Sir, while the quantum paid for new flats is still lower, considering the renovation and furnishing costs of resale HDB flats and private properties that are already in place when a person buys a property, I feel that it is about time that the Government reviewed HDB prices for new flats, which should be reduced. Fourthly, there has been a lot of talk about long term prices of industrial land and to set the mechanism that is not internally based but based on external competitiveness.”
“Sir, we have been hearing many calls from many Members of this House and also from the public to ask the Minister to help the ailing property market. While I have nothing against doing things to strengthen the fundamentals to ensure a solid base for the property market, I cannot agree to any attempt to artificially prop up the property market or to open the market to speculation as we had experienced in the past, particularly from 1994 to 1996. I feel that the root cause of the cost competitiveness of Singapore and the high cost of living here is the artificially high prices of property, particularly the private property, both industrial and residential. Companies pay high prices for land rentals and in buying buildings which add to their cost. Similarly, retail and commercial users who have to pay high rental prices also see a much higher cost. Ultimately, the high cost is passed on to the consumers or, in the case of exports, the products cannot compete with products produced elsewhere, resulting in either lower margins or losses. This then leads to companies closing down or scaling down to relocate to cheaper areas. Similarly, the people, Singaporeans in general, who have to pay high prices for their private properties or residential properties, will demand high wages so that they can pay for their mortgages. Sir, this is a vicious circle which originates from the high cost of owning properties in Singapore. While the property prices have come down in Singapore in the last couple of years, the prices here are still high compared to many countries around the world. In fact, our neighbouring countries have seen a similar drop in prices by bigger percentages than what we have seen.”
“This, in turn, will help our local companies or distributors who now lose out to foreign suppliers who are the preferred sources for such contract manufacturers because of the GST payment. If they purchase locally, they have to add the 3% GST on their purchases. Such a concept exists in both Malaysia and Indonesia where they are called free trade zone or licensed manufacturing warehouses. I suggest we adopt the same approach for certain industries, especially the contract manufacturing industry. Finally, to give tax incentives to small venture capitalists that can help fuel our entrepreneurship drive. Current incentives are only for big funds and I suggest that we give tax breaks for smaller funds that are willing to locate in Singapore.”
“Similarly, we can encourage many more new ventures which typically are loss making at an early stage by allowing the following: (1) Double tax deduction for the cost of regionalisation or globalisation to encourage more companies to take advantage of the good opportunities available in the region. (2) Double tax deduction for cost of hiring from overseas to encourage foreign talent to be brought into Singapore who could then be used for their global operations in the future. (3) To exempt the value-added component from GST for contract manufacturers. Such businesses enjoy very small margins of around 2%-4%, I believe, and the 3% GST can make a big difference in pricing competitiveness if we compare them to similar companies in the region, like in Malaysia and Thailand. Sir, when you have to pay for GST upfront and you price your goods, you have to add the 3% in your pricing mechanism. (4) Can we extend the bonded warehouse concept to manufacturers, making them `bonded manufacturing sites'? This will help export orientated manufacturers. In this way, these companies will be exempted from GST and the benefits are two-fold. First of all, it helps to improve their cash flow because currently the time taken to claim GST results in funds not usable as working capital or for new investments. The amount can be quite substantial for large manufacturers. For example, an operation that does about $30 million of purchases in a month, will have about $1 million taken off the system, and this is a substantial amount that could be invested for other things. Secondly, it will encourage such manufacturers to buy locally without paying GST if they are bonded manufacturing sites.”
“Sir, I have a number of suggestions for the Ministry of Finance that will help in developing the areas of our economy that we have an excellent potential for growth. These suggestions include ideas to facilitate innovation and the entrepreneurial spirit, globalisation and the future growth of industries where we have core competencies. They are: (1) To promote entrepreneurship and to develop employee loyalty, can the capital gain from stock options be made tax exempt? (2) Similarly, many start-up companies emulating the examples in Taiwan are offering free shares, in fact, that are valued at par to employees, Can these too be tax exempt? (3) Some Members have talked about this. Currently income brought back from overseas operations is fully taxable, resulting in companies leaving their funds outside Singapore. Can we make it attractive for companies to bring these funds back for use locally? I suggest a tax equivalent to at least 50% or less of the current corporate tax to encourage companies to bring their funds back into Singapore which could then be used for further investments. Some revenue to the Government is better than zero revenue, in the case where income is left outside Singapore. (4) Group tax consolidation - where we allow the offsetting of losses made within the group of a company. This will help ease cash flow and will encourage regionalisation by breaking value chains of operations rather than by completely moving the whole operations out of Singapore. In the second case, we will actually have a loss to our economy where jobs will be lost and all the value activities happen outside the country.”
“Many Members have spoken about the need to change our tax laws in this House for the last two days. We have to consider these changes to be competitive with tax practices of countries around the world, with whom we are now competing. In the past 30 years, the focus of our economy was largely to bring in foreign direct investments of mainly large multinational corporations and on an industrialisation programme that brought Singapore from an under-developed to an almost developed economy status. Today, as we look into the future, we know that we have to change the direction and the approach needed to bring our economy to the next stage of growth to sustain another 30 years of economic prosperity. Sir, I talked about the three areas in the Budget debate, and I believe that we should focus on these three, namely, promoting growth through globalisation and searching for new markets through either greenfield investments or through mergers and acquisitions in the region or around the world; secondly, to promote entrepreneurship or technopreneurship and a knowledge based economy; and thirdly, by encouraging a vibrant small and medium enterprises sector to emerge. To achieve these, our tax laws have to be revamped to be more future orientated. Today, our system tries to be very comprehensive so as to plug any loopholes, as Mr Heng Chiang Meng mentioned yesterday. In doing so, our laws become very restrictive just because we want to capture a handful of occurrences of companies trying to benefit from these loopholes. These restrictive rules then discourage and become obstacles for companies who genuinely need to grow and who can compete around the world. We should put in place rules that allow flexibility and facilitate the growth of these three areas that I have mentioned.”
“Alternatively, the Government could arrange for some local and international banks to undertake a minimum of, say, 3% to 5% of their loan portfolio to such traders and, if loss is incurred, the banks can be allowed to write off such bad debts with a double tax deduction. 6.00 pm Secondly, currently, countries like Hong Kong provide tax exemption for third country trades done outside the country by local companies. Can Singapore provide a similar incentive so that we can encourage traders to remain in Singapore while they manage such third country trades from here? Sir, it has come to my attention that in the last two years, many traders who operated out of Singapore have decided to relocate to countries like Dubai and Hong Kong for a number of reasons: firstly, the cost of doing business in Singapore where our cost is between two and four times higher than these countries; secondly, the inability to raise funds in Singapore; and thirdly, the restrictive tax practices in Singapore. I hope we can reverse this move by doing more for traders. Sir, can I move on to my next cut?”
“Sir, I would like to declare my interest in the trading business. Sir, traders big and small, have contributed significantly to our economy. Smaller traders have been successful in non-traditional markets and have developed interesting niche areas where OEM or big suppliers have not been able to get into. One of the issues is that such companies in Singapore usually trade or operate in risky but profitable second or third world countries. The banks treat such small businesses like small "sampans" in rough and choppy waters who are likely to be rocked or sunk. The banks prefer to support big companies that are like big boats or ships. They rather prefer to support an ocean liner or super tanker sized big business. Little do these banks realise that many of these sampans have very strong jet engines that allow them to steer out of troubled waters. They are flexible and can move fast. On the other hand, even the Titanic could not get out of trouble fast enough. During the recent financial crisis, banks have become very conservative. A lot of us have talked about this many times and many local companies, especially the smaller traders, have been badly hit by cash flow problems. Many have viable businesses and business opportunities but lack the credit facilities and cannot take advantage of the opportunities available to them. I would like to suggest that the Minister look into the following two areas: Firstly, a Government-funded trade financing scheme where the Government can provide an LEFS-equivalent scheme using traded goods as security, if necessary.”
“In USA, for such high-tech companies, the fast track initial public offering channel was created some years ago by setting up the Nasdaq Board. This Board does not have stringent requirements of a track record of revenue, profit or size. As long as there is a good portfolio of technology and ideas with possible future growth potential, companies are allowed to raise funds through the Nasdaq. In Singapore, listing of companies to raise funds takes a very long time and hence the cycle time of new companies to be started up is much longer, since the funds are tied up for long periods of time. Sir, I have the following suggestions for the Ministry: (a) Make it easier to list technological start-up companies where intellectual property and a potential business plan become the deciding criteria. Of course, the public must be made aware of the high risk nature of such companies and leave it to them to decide if they want to invest. In fact, I suggest, for a start, we use our second Board, Sesdaq, by allowing two categories of companies to raise funds on this Board - one group following existing rules and the other that allows the fast track criteria that I have talked about. (b) Make it easier for private venture capitalists to raise funds from the public. We should allow open fund-raising of such high risk funds, once again by making it known to potential investors the high risk nature of such funds. Sir, there are many rich individuals in Singapore who may not have the ideas but who may be willing to participate in such funds. So I hope that the Ministry would look into these suggestions.”
“Sir, last year, I made a similar call for the Minister to review the listing rules for high technology companies and I believe when the Second Minister for Trade and Industry, BG George Yeo, responded on this issue, he did indicate that this is one of the areas that will be looked into in order to encourage technopreneurship to flourish in Singapore. Sir, technological companies require substantial funds and capital investments as well as on-going spending on research and development to keep up with the fast changing technology. Funds invested in such projects can be tied up for long periods of time. Technopreneurs typically have many ideas and, as I mentioned during the debate on the Budget Statement, getting funds is a big challenge in the current Singapore environment. If an entrepreneur is successful in attracting venture capitalists, typically because of the large investments needed, the entrepreneur's share of the company could be grossly diluted if he does not have a significant amount of his own cash to invest, which is typically the case. In Taiwan, there is a vibrant environment of many new companies, especially in the Hsin Chu Science-based Industrial Park. Technopreneurs are able to source funds easily either through venture capitalists or by quickly turning around their investments in companies. There is such a thing as a grey market where shares can be traded the day the company is formed. The buy and sell prices for such company shares are in fact published in local newspapers for the public to trade in these shares. The end result is that they have a quick turnaround and availability of funds for new start-ups. Entrepreneurs can therefore multiply their funds for use in new projects.”
“And while we should still try to bring in such companies, especially in the area of high technology, we need to make a significant shift in our policies to pay more attention to building a vibrant small and medium enterprise sector with high emphasis on technology intensive companies. One of the reasons I feel why the Taiwan's economy has not been badly hit by the economic crisis this time round is because of its heavy dependence on SMEs who are engaged in technology intensive activities. On the other hand, South Korea was one of the first to be hit by the crisis and they built their success based on big conglomerates. Sir, the EDB's Industry 21 programme and its recent announcements to co-invest in local companies to help them grow is indeed a good move. I do see a shift of focus towards SMEs and I hope all of us will develop a positive attitude towards them as being key players needed to bring our economy to the next stage of growth. However, I feel a lot more can be done to reach out to even a small fraction of the 100,000 or so SMEs present in Singapore today. I hope we, in Singapore, can try to emulate what happens in the USA where one new company is started every 3.5 seconds! Sir, I would like to conclude by once again emphasising that while we have done an excellent job in addressing the cost component of the equation in the last few budget sessions, it is about time we started preparing for the future by working on the other parts of the equation that focus on the long-term strategies of growth. I will be giving detailed suggestions on how we can achieve this during the Committee of Supply discussions. Sir, I support the motion.”
“However, I do feel that until we can have a vibrant environment developed, the Government can play the role of a match maker, especially in the area of making funds available and in revising some of the incentive schemes that require upfront spending before a company can collect the incentives. We also need a new EDB-type one-stop organisation to support technopreneurs who now have to go to multiple agencies for help. Once we have a natural environment, the Government should take a step back and play a purely supporting role and let the private sector flourish on its own. Sir, in my opinion, the people responsible for administering the many schemes and in setting policies all come from the same mould, because of the hiring and the promotion practices of the Government. I suggest it is time the Government considered a system where we have a good mix of street-smart as well as academic-smart people at the helm. Sir, ultimately, the "dare to dream" attitude must come from within and it cannot be Government driven. The third area that I think we should be focusing on for the long-term growth of our economy is a thriving small and medium enterprise sector. In the past 30 years, we have focused on attracting foreign multi-national companies to locate in Singapore. Our lower cost, our hardworking and educated workforce and stable Government were the attractions for the foreign multi-national companies. However, as we have recently learnt, our cost is no longer competitive, our neighbours also have a good workforce. They may still lack in good governance, but they will soon catch up. Singapore may no longer be a preferred choice for many foreign investments.”
“It is also a well-known fact that in Taiwan, venture capitalists will commit to investments if they see even a 30% chance of success for a project, while the feeling is that in Singapore, venture capitalists will need to see at least a 90% chance of success before participating. Furthermore, the saying goes that in Taiwan, there are 100 venture capital funds chasing after one project, while in Singapore there are 100 projects chasing after one venture capital fund. Sir, there is an urgent need to encourage more Taiwan or Silicon Valley type venture capital funds to be set up in Singapore. Perhaps some Government funds could be used as seed money for technology savvy venture capitalists willing to set up base in Singapore. For example, Temasek Holdings could allow some private sector entrepreneurs to manage a certain proportion of its funds. Fourthly, the role of the Government. Sir, in my opinion, Government direct involvement should be as minimal as possible; otherwise, they risk crowding out private sector entrepreneurs, as our GLCs have done in the past The most important role the Government can play is to create an environment that allows entrepreneurship to flourish. One useful role for the Government is to fine-tune rules and regulations that are obstacles and stifle a creative environment. Rules like our bankruptcy laws, initial public offering rules for technological start-ups, restrictions in fund raising for small venture capitalists and taxation of stock options are examples of rules that need to be revised.”
“The way we define and punish failures has a big impact on creating an environment that encourages entrepreneurship. We, as a society, have a low threshold to failure. The way we measure success is narrowly defined along the lines of academic excellence and material gains. We need to give second chances to people who have tried but failed. Sir, failure should be treated as just an event in a long process, and not to be treated as an end. Our people must be able to handle failure. In a reply to a question on how many times he failed in his efforts to invent the light bulb, Thomas Edison said, "I was successful in knowing 1,800 ways of how not to make a light bulb." Sir, we need to encourage such positive thinking about failure in Singapore. Thirdly, the availability of funds. This is one area where Singapore has a long way to go if we are serious about becoming the Silicon Valley of the east. In my opinion and from my experience, while we have a number of Government-linked venture capitalists, the decision makers are very conservative and bureaucratic and behave more like administrators. What we really need is a big pool of entrepreneur-led or managed venture capital funds, where decision makers too think in the same wave length as the entrepreneurs they hope to support. Sir, in Taiwan, small funds were introduced in the early 1980s and the government participated, not directly, but through equity in technology-oriented private venture capital companies. Today, I believe there are more than 100 such venture capital funds managing a total of about US$2 billion, which means each company manages an average of US$20 million, making them very nimble and able to move fast and to make decisions fast.”
“3% to almost 40% in a short span of 10 years. Sir, we too have to now shift our focus and I suggest the following four areas to be looked into. Firstly, our education system, from one that is vocation based to one that is knowledge based. In Singapore, we are still relying on old methods of teaching which were designed to train people to fit into the various jobs for the industries planned for our economic growth. While I can see some changes, I think we have to accelerate these changes if we are very serious about growing this part of our economy. In the 9th November 1998 Newsweek report on 'Silicon Valley' aspirant cities, it was reported that analysts felt Singapore's education system depends on "out-dated teaching methods and learning by rote with little chances of independent thinking". This together with the reward system that focuses on academic excellence and on a scholar system are becoming an obstacle in our drive towards nurturing more people who are willing to take the path of entrepreneurship that entails taking risk in more cases. We need to develop a reward system that recognises creativity and encourages doing things differently. The streaming in schools, the labels we place on our children and the fear of failing to make it to the best schools and the fear of failing to make it to the best streams, all add to this problem of discouraging creativity. I would like to quote our Senior Minister Mr Lee Kuan Yew. In an interview published in the Straits Times on 3rd February this year, he said "many of the entrepreneurs are innately bright people. It takes more than paper qualifications to be a good entrepreneur". That is, we need a good combination of both street smart as well as academic smart people to be successful. Second, tolerance to failure.”
“In this respect, I believe the Budget could have been more proactive to accelerate growth and to take advantage of the opportunities available in the region as well as around the world. Because Singapore has been relatively unhurt by the crisis, we are in an excellent position to be the first to take off and find the best opportunities and markets as compared to our neighbours. So some tax changes to accelerate globalisation and in encouraging mergers and acquisitions could have been helpful. I strongly believe we need to restructure the current tax system, as some of the Members in this House have spoken about, to be more future oriented so that businesses will be prepared to invest early for future returns. Second, on technopreneurship and encouraging the entrepreneurial spirit. In my opinion, technopreneurship and entrepreneurial spirit are the most important areas we need to address for the future growth of the Singapore economy, and this is where I find the current Budget has a serious shortcoming. Sir, our success in building a flawless infrastructure through a strong civil service and our education system that inculcates benefits of stable professions and the glamour of working in multi-nationals is now causing our failure to encourage more entrepreneurs to emerge. We have to seriously address these mindsets among our young which, as I have said, are the results of our style of governance for the past 30 years. In Japan, after a decade of government led growth, the country is now looking at entrepreneurs to lead the economy to its next stage of growth. Taiwan's success is also attributable to its quest to encourage technopreneurship. From 1988 to 1998, the contributions made by science and technology-based companies in Taiwan to the economy has grown from 26.”
“On the other hand, we were at least one year late in implementing the May 1996 property market measures to address the growing asset price bubble. Therefore, the third area we need to address is the speed at which we are willing to make changes because sometimes, even a slight delay could result in a disaster as we can learn from Indonesia's delay in implementing the IMF measures which caused the rupiah to be drastically devalued. Sir, I would like now to focus on the long-term strategies that I feel the Government should focus on if we want to ensure another 30 years of economic prosperity. I feel that it is about time we looked at three key areas: a) how to ensure growth and new markets, including globalisation - not just regionalisation; b) putting in place new capabilities, technologies and mechanisms to plug into the knowledge-based economy and encourage technopreneurship; c) to change the direction and to re-orientate Singapore's economy to include a vibrant SME sector to encourage more technology intensive companies and to avoid over reliance on an asset-based economy, as we have done in the past. Sir, these are the areas that the Budget for 1999-2000 has failed to address. However, I still have hope that the much bigger development expenditure set aside this year will focus on these areas. I urge the Government not to over spend in fixed assets, unless these directly support the above three new areas. I will now touch on these three areas that we should be focusing on. First, on globalisation and exploring new growth markets. In addition to being cost competitive, it is about time we explored new markets, farther afield and go to new areas not explored before.”
“Since the information gathered and the measurement indices are used for economic planning and policy making, any inaccuracy or time lag could lead to policies that may not be optimal. So the first thing that needs to be seriously addressed is the type of indices and how these should be collected so that we can do a better job in predicting our economy. New mechanisms and indices need to be introduced if we want to do a better job. Lesson No. 2: The Inefficiencies of Small Incremental Measures We can also learn a lot about this from the mistakes that Japan has made in the last few years in trying to recover after its bubble economy burst. In Japan, the government of the day for the last few years had attempted to recover from their recession by taking small step-by-step measures and the impact on their economy has been insignificant, despite draining tremendous resources. We in Singapore also attempted to take a similar route by trying to make small piecemeal changes by announcing a conservative 1998 Budget and tried to follow up with a small $2 billion off-budget expenditure. However, we failed to create an impact and finally we decided to take a bold step by introducing the $10.5 billion off-budget measures at the end of last year. The second issue that needs to be seriously addressed is therefore our willingness to take bold steps in trying to influence changes to our economy. Lesson No. 3: Timing of Changes Sir, in this area, I would like to say that the Government has a mixed track record. We have shown that we are willing to come out with off-budget measures when needed and not wait for the regular budget cycle to make changes. Similarly, we have been prepared to make other non-fiscal changes if the need arises.”
“While the Government has done an excellent job in many areas, there are always opportunities to be even better and I would like to suggest that there are three lessons that we can learn from the way we have managed our planning process for the past three years. Lesson No. 1: The Accuracy of Economic Indices Used by the Government I would like to highlight that as far back as in early 1997, even before the regional economic crisis hit us, the private sector saw signs of our economy starting to slow down in a few sectors, including the manufacturing and service sectors. Then again in early 1998, the business community projected a rapid decline in our economy, while in his Budget speech in 1998, the Minister for Finance talked about recovery and growth, including the recovery of the electronics and manufacturing sectors in 1998. However, many industry players, including some MPs in this House, expected a decline in these same sectors and predicted that Singapore will go into a recession in 1998, while the Government maintained a 2.5% to 4.5% growth rate. Results showed that instead of a growth in the electronics and manufacturing sectors, we saw a decline since the second quarter of 1998 and going into negative territory in the third and fourth quarters. Sir, the consistent pattern I have observed is that there is a gap between what the business community sees and what the Government agencies are able to measure. I also see that the planning agencies may not have a good feel of the real pulse of the ground and I also see a significant time lag for the information gathered by the various Government agencies to be used to measure the state of the economy.”
“Mr Speaker, Sir, I support the motion proposed by the Minister for Finance. Sir, while there were no surprises in this year's Budget, the Minister could have done more than just focus on the financial sector if we are really serious about the next phase of growth of our economy that has to be driven by more than just being a financial hub. So far, through a series of budget and off-budget measures, the Government has addressed mainly short-term cost-cutting measures in some of the sectors of our economy and I feel that it is about time that we started focusing on long-term strategic issues. The Budget has failed to introduce new initiatives that are badly needed for the next phase of growth for the manufacturing sector, the knowledge-based economy and in encouraging the emergence of a more vibrant small and medium enterprise sector. So I feel the Government needs to start doing something now because we have the unique opportunity to widen our competitive edge against our neighbours and we will be far ahead when the region recovers from the crisis if we start now. Sir, since many Members have commented on the details of the budget, I plan to touch on a few long-term issues in my speech today. Firstly, I would like to touch on the lessons the Government can learn from the experience of the last few years, and second, I would like to share my views on the areas we should focus on for the long-term growth of our economy. I have observed a few areas of weaknesses in the way the Government has executed the role for the planning of our economy in the last few years.”
“Sir, as we have seen from press reports in the past few weeks, developers have increased prices of private property by as much as 17%. What this means is that the balance between demand and supply is a very delicate one. Does the Minister not feel that a one-year wait to review the prices may be too late and we may see prices escalating again at uncontrollable levels?”
“What he told me is that generally he thinks that the fees do not need adjustment, except for one or two specific areas where there are problems. But he will look into the matter.”
“From the package of measures that DPM has announced, it is not so obvious whether all the Government charges, levies and taxes that we have been talking about, including rentals, telecommunications and utilities, have they all come down to the 1994 levels, as we are targeting the wages to come down. Secondly, on property tax, the 55% tax rebate is of course welcomed. But is anything going to be done to speed up the re-assessment of property values because the net effect of that 55% and the failure to assess the recent property values, which have gone down by 40% to 50%, negate the impact of that 55% rebate. Thirdly, I would like to ask whether for tenants of JTC and HDB industrial land, for those who are paying rentals slightly below the posted values, would they also see some reduction in rentals? BG Lee Hsien Loong: The question on whether the rates are back at the 1994 levels, the answer is that it varies. In the case of industrial land, which is probably the most important of them, they will be back there. In the case of telecommunications charges, it is not only at 1994 levels but considerably below that because in the last few years, in fact, telecommunications charges have been coming down. The reassessment of property tax is in progress and I know people have been receiving property tax reassessment notices and for once, the figures have become smaller rather than larger. I am not sure whether this is good news, generally, but those who have received them have welcomed them. For JTC and HDB tenants who are paying below the posted prices, as I said, they will have certain rebates given to them which will hold until December 1999. Mr Harun Ghani asked about higher learning institutions. I will have to ask the Minister for Education to look into this.”
“The Government should indeed only play a supporting role and create space for the private sector and entrepreneurs to move in. So far, the Government has been crowding some parts of the business environment. Similarly, Government-linked companies (GLCs) should not compete with local private companies in the domestic market. Instead, because of their size and access to substantial funds, GLCs should bring their competition to outside Singapore and in addition, bring along with them some SMEs by getting them to do parts of a big overseas project. This initiative has not been fully explored by our local GLCs. Sir, in conclusion, I am happy that the Government is willing to react fast to tackle the problem of our declining economy. I hope that the measures implemented will be bold and I hope everyone will seriously implement them fast. I applaud the workers for their understanding for the wage cuts. The employers and the Government need to play their part and take their fair share of actions so that together we will emerge as a strong economy and as a country. Sir, I support the motion. 4.56 pm”
“Local start-ups and people who are involved in these start-ups feel discouraged by the lack of support given to them and their projects. We also need to develop a culture of tolerance to failures and to give people second chances. Sir, success should not be measured by straight 'As' alone. How we classify and label people at such an early stage through practices like early streaming in schools affects our children's self esteem and many will end up giving up and not willing to try again, as they go along in life. Society and Government's attitude towards those without academic excellence needs to change and we must have a broader definition of "success" that goes beyond material, economic and academic measures. Sir, another area that needs to be looked at is the help for entrepreneurs who need to raise funds necessary for their projects. I call on the Government to further liberalise rules on how funds can be raised for start-up companies and unlisted companies. Singaporean venture capitalists are highly conservative just as our banks are and we need more foreign ones to set up funds here in Singapore, so that they can create an environment similar to the one in Silicon Valley in USA and the Hsinchu based Science Park in Taiwan. The goal of developing more world class companies is excellent. We need many more companies like Creative Technology who are global players. Sir, being small is not an excuse for the lack of such world class companies. We can learn from the small European countries like Finland and Switzerland who have many world class global companies like Ericcson and Nokia. I fully support the suggestion that the Government acts as a business facilitator.”
“Sir, on the issue of strategic land pricing, I am glad that the CSC has recommended a new way to price industrial land and properties and to benchmark increases to the increases in countries that are competing with us, as opposed to increases according to the market rates in Singapore. I call on the Government to learn from its past mistake in this area by putting in place measures that will prevent land prices from escalating so drastically in a short span of time, as we experienced in the last few years. Sir, land prices do make a big impact when it comes to selecting an investment site for a manufacturing facility, although we have heard leaders saying that it forms a very small component of total operating cost. But when it comes to deciding a location to site a factory, it plays a major role. In fact, in the last few years, I have experienced two occasions when we were trying to select a new manufacturing facility. On one occasion, the land cost played a major role in causing my company to select Thailand as the site rather than in Singapore. On entrepreneurism, I fully support the strategy because I believe that if we have to compete as a global player, we need to have more knowledge-based industries and we cannot continue to rely on an asset based economy as we have done in the past. We need to create an environment in Singapore that promotes business risk taking and to encourage more technopreneurs to emerge. In my opinion, the Government agencies that we have today are very entrenched in just supporting the MNCs, while the infrastructure to support local technopreneurs is not well developed. We need mindset changes among those involved in these agencies.”
“Sir, with a better trade financing scheme, we can avoid the drain of expertise out of Singapore or even prevent the collapse of some still viable traders who are located here. Sir, so far, I have focused on the immediate cost competitiveness issues and the short-term action plan proposed by the Minister for Trade and Industry through the CSC Report. I would now like to touch on the long-term strategies. In my opinion, the strategies spelt out by the Committee are excellent and will without doubt get the whole nation mobilised to work towards achieving the plans that we have set up. Sir, for the longer term, I see the economic recovery coming in a few stages. First, we will have to focus on our immediate cost competitiveness issues which I believe we are very well focused on. The second stage will be to build upon investor confidence in Singapore and also in investor confidence in the region. This is because a lot of investors, especially those from the West, look at the stability of the region as a whole and they do not just look at Singapore as a country. So if we can bring stability and confidence in the region faster, funds will flow in even faster. The issue of confidence building is an urgent issue and I hope that the Singapore leaders can take a lead to get ASEAN organised to speed up the recovery process. The third stage of recovery will have to be in finding new markets and boosting demand. We cannot rely on our traditional markets. We have learnt this lesson very well. So both the Government and the private sector can play an important role by exploring new markets and regions. I believe this has already been set in motion.”
“Since they are already here, I urge the Government to reduce the levies by 50% for both skilled and unskilled workers. For skilled workers, the cut should be permanent. For the unskilled workers, we can issue a time table of increases back to the original levels over a period of three years. In this way, we will help many companies survive this downturn while we compel them to make long-term plans to train their workers. Sir, many of our small and medium enterprises (SMEs) are affected by cash flow problems. While the Government has enhanced the Local Enterprise Financing Scheme (LEFS) to be broader based and pumped in more money to it, unfortunately, the banks are still the deciding bodies. Given the ultra-conservative stance of our banks in this environment in Singapore, many companies are still finding it very difficult to take advantage of the scheme. I would like to suggest that PSB or some other Government body take a direct approach in financing some of our viable companies, because they are finding it very difficult convincing the banks. Sir, traders also contribute substantially to our economy. However, due to credit squeeze from our ultra-conservative banks in Singapore, they are not able to take advantage of the still attractive trades that exist in South Asia, China, Africa and Europe. I have heard of a number of big traders who are planning to move and relocate out of Singapore to countries like Hong Kong and Thailand to carry out their trading activities because of lack of credit facilities in Singapore. I would like to suggest some form of Government supported trade financing scheme, quite similar to the LEFS.”
“I am not suggesting a complete suspension of GST, as many business leaders have suggested to us, because I believe that we still have the right system in place and we should keep the machinery of the system going. If we completely suspend the GST, putting in the mechanism in place again in the future will be troublesome. Sir, I believe that the $3 billion or so that the Government plans to reduce in terms of costs will come from our current account. I would like to suggest that we take this opportunity now to dip into our reserves. Since we were willing to do so for our neighbours like Thailand, Indonesia and Malaysia, the Government should seriously consider giving some of the surpluses and the reserves back to Singaporeans who badly need it now. It is the time to help stimulate domestic consumption. Sir, as we are looking forward to substantial reduction in rentals by JTC and HDB for industrial and commercial properties, these reductions should not be in the form of rebates. They should be permanent reductions if we really want to build long-term investor confidence in Singapore. Rebates will go away after some time and do not give a feeling of long-term thinking on the Government's part. Given how much our land and property cost has gone up compared to our neighbours in the last few years, we need drastic reductions in rental, again to the tune of 30-40% reduction. Sir, foreign workers form an important part of our economy. We know we cannot do without them. While I understand and support the need to bring in mainly skilled workers, however we already have a large pool of unskilled workers in Singapore. It will take some time to either replace them or train them to become skilled workers.”
“While I understand that the real Government charges form a very small component of the total business cost, but really, there are many "hidden costs" in our system of governance in Singapore. Some of these are the COEs, the ERP, petrol tax, GST, worker levies, and many more. So although our official income tax is among the lowest in the world, the net effect of all the indirect taxes and charges is significant to the bottomline of businesses. Our approach of autonomous agencies in the Government departments and statutory boards while, in principle, looks good, has resulted in `micro-managing' of our economy where all of them either want to make surpluses or profits individually. Collectively, the impact on businesses can be very high. So if we look at the charges from all these agencies, the net contribution to the business cost is more than what we officially classify as business charges. I feel that we may have to make sacrifices in certain agencies where they must be allowed to have deficits or losses, as long as the collective result to the Government's budget is positive, if that is what we aim for every year. Sir, I suggest that the Government spend between $5 billion and $7 billion to boost the economy, not just the $3 billion. Of course, we have seen numbers that if we go for $5-$7 billion that would mean a 50-60% reduction in Government charges which may not be realistic. So, what we are asking for down here is that part of it should come in real reduction in charges and levies, and the rest of it could come in the form of pumping in some liquidity to boost local consumption, which also contributes to about 30% of our economy. These can be in terms of more generous tax rebates. I also suggest that we temporarily bring down the GST charges from 3% to 1%.”
“However, I hope they will take our request into serious consideration, since we have not been very far off in the last one and a half years. The Government must be more aggressive and not rely on small steps or piecemeal measures, like the $2 billion off-budget measures that we announced earlier this year. That $2 billion in my opinion did not move the economy even a little bit. We must learn from Japan's struggle for the last two years. Japan also tried to take many piecemeal actions and it resulted in wasted efforts and wasted money with Japan's economy still in trouble today. So I hope this time we do not waste our efforts and money and I hope we will be more aggressive. Sir, in my opinion, the Government's share of the $10 billion reduction proposed is not sufficient. While I can understand that wages make up a large proportion of total business cost, I feel that the reduction in Government charges, levies, utilities and so on needs to be higher than the 15%. Frankly, the 15% reduction in business cost falls short of the business community's expectation of 20-25%. In fact, even the 20-25% is not a cooked-up number. In fact, I did a calculation. For the manufacturing sector, based on the real increases that have gone on in the last three to four years, and based on the currency depreciation in our neighbours we really needed about 25-30% of reduction to be competitive. So 15% falls short of our expectation. However, I feel that the $7 billion wage reduction is sufficient. But the Government's portion needs to be much more and I am suggesting 30-40% reduction in all the areas that I have just mentioned.”
“I would like to recall that early this year when we were debating the Budget for the year 1998/1999, many of us highlighted the perception gap between the way the Government and the private sector perceived the state of the economy. Many of us had projected a rapid decline in our economy while the Minister for Finance had in his speech talked about the recovery and growth, especially in electronics and manufacturing sectors. Based on how the Government viewed the economy, we implemented a number of conservative measures at that time. Then we came in with off-budget measures about four months later because things turned out to be different as planned. However, things again deteriorated and the off-budget measures, being very conservative, did not do much to revive the economy. Sir, let us look at the facts. While our economy is still in a much better position if we compare ourselves to our neighbours, nonetheless, we have slipped into a recession as many of us had predicted early this year. The worrying issue is not just the recession but is also the rate of decline from 6.1% growth in the first quarter to 1.6% growth in the second quarter, and to a negative 0.7% in the third quarter. The rate of decline is quite fast. Sir, my point in bringing this out is that the mechanisms we have in place are not accurately addressing the real problems seen by the business community. Many of us have asked for bolder measures from the Government, as far back as July 1997 during the 1997/1998 Budget debate. Unfortunately, the outcome was otherwise. This time round, it is a little difficult to assess the impact of the measures that we have identified because we do not have the details of the actions from the Government.”
“Mr Deputy Speaker, Sir, I support the motion as proposed by the Minister for Trade and Industry. Before I go into the details, I would like to congratulate the Government, the workers and the business leaders in Singapore for working as a team to tackle a very tough problem that they are facing by delivering this very comprehensive Report. We have seen many examples of how a seemingly good infrastructure breaks down in times of crisis. If we look around us in Asia, in all the countries affected by the economic crisis, there has either been a leadership change in the country affected or the countries are in turmoil with political and social reforms taking place. It takes a very stable Government with strong leadership to be willing to take bold steps that have been suggested by the CSC. It also takes a committed and responsible business community and citizens to work hand in hand with the Government to implement some very tough measures that we are talking about. Sir, I am glad that we in Singapore are sending a very strong and clear signal to the rest of the world that Singapore consists of a strong team of partners from the public, private and people sectors who can work in synergy to solve our problems despite the difficulties that we face. While we have identified the solutions, they would only be effective in resolving our competitiveness problems if we implement them fast and decisively. We have done a lot of planning and talking in the past one year. We have to very quickly set the actions in motion. So I hope we would implement the measures that we have identified immediately.”
“Sir, in a recent report in the newspapers, it was reported that the starting pay for graduates hired in the civil service is the highest in the industry. Will the Government take this opportunity to revise this downwards so that it sets a trend for the rest of the private sector?”