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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“In conclusion, I support the motion and feel that, other than improving labour cost and productivity, we can create a much more vibrant business environment that consists of a high proportion of value-added activities while we try to move away from the low value-added activities like the property sector.”
“In his reply, the Minister for Trade and Industry said that his Ministry is in the process of reviewing some of these things. I feel that the process needs to be speeded up so that we could take advantage of the many opportunities that are available in Singapore and in the region. We should not wait for the next Budget cycle to announce some of these changes. Similarly, we need to do more to encourage our companies to accelerate their regional drive and not to slow down, despite the economic crisis. Banks need to be more proactive in lending to their strong clients. Unfortunately, in this environment where tremendous opportunities to invest are available for our companies, and there are viable companies in the region, cash flow seems to be a problem. Since our local banks are very conservative, I feel we can do with many more venture capitalists locally. However, the incentives to some of the small venture capitalists are not as attractive as those provided to the big fund managers. Most of these incentives favour the fund managers, for example, very generous tax cuts. I urge the Government and the Monetary Authority of Singapore to review some of these rules and incentives to make it more conducive for such boutique funds to flourish and to do away with the bias favouring the bigger funds. I feel that by creating such an environment today we will position ourselves to benefit the high technology investments that are going to come our way in a few years to come. We could learn a lot from Hong Kong and Taiwan in doing such things.”
“In my opinion, the Government could take this opportunity to put in place long term measures, like very clear policies on strategic land pricing, where a large cross section of companies will be allowed to pay much lower rentals for companies that we would really like to bring into Singapore, which can provide widespread employment. One other way is to give a 10-year tax rebate in lieu of high rentals paid to JTC or HDB so that we can de-couple the market price of property from the cost of doing business in Singapore. In this way, companies will take a longer term view of investing in Singapore. Sir, we also need to do more to bring in investments by offering innovative incentives. I must admit that the Economic Development Board is doing a good job here. But there are many more private sector initiatives that could develop into concrete investments in Singapore and hence creating jobs. We all know that our neighbours are today able to offer exactly the same investment incentives as we can. In fact, their approach in luring investors is to copy exactly what Singapore can offer and then to offer a little more. With their cheaper land and labour cost, we are definitely in a disadvantaged position and have in fact lost a number of big companies that could have invested here in Singapore to them. We therefore need to be more transparent and be more innovative in the type of incentives we can offer to these companies. During the Budget debate this year, I talked about the need for us to promote entrepreneurship among Singaporeans. I also asked for a review of the bankruptcy laws, easier listing of high-tech companies on the Stock Exchange, promoting venture capitalists and a number of other incentives that can help us better create an environment of innovation.”
“[Mr Deputy Speaker in the Chair] 4.30 pm I therefore feel that our solution is to defocus from the property sector and to refocus on more technology and innovation based economy. In Singapore we do not have enough large local companies capable of growing in this area other than the likes of Creative Technology. I urge the Government to stimulate the private sector in this direction by creating a conducive environment for more technology and innovation based economy which, in my opinion, will be better able to weather a downturn if it comes again the next round. I also call on the private sector to do likewise to be more entrepreneurial in developing their business in this direction. This downturn provides us the best opportunity to restructure our economy. Sir, while we cannot become the USA, we could try to become the Silicon Valley of the East. One of the effects of the property economy has been asset price inflation, particularly the high land rentals, building cost and property cost. Being involved in the electronics sector and in the high technology area in the last 15 years, I have seen many examples of new investments deciding not to locate in Singapore or existing companies who decided to move their investment overseas because of the high cost being one of the major issues. The economic downturn has made this problem even worse with our neighbouring countries being able to offer much cheaper land cost. While the off-Budget measures did try to address the issue by offering rental and property tax rebates, I feel that the Government did not do enough to instill long term investor confidence. Permanent cuts would have been much better, because investors and businesses would see the rebates go away in one to two years should the economy recover.”
“One obvious problem in our economy is the over reliance on the property sector. I refer the House to the Business Times report dated 20th July, titled "The Perils of the Property Economy". I fully agree with the analysis made that the Singapore's economy, just like those of our neighbours', is heavily dependent on the property sector. We must realise that the property sector also impacts many other sectors of our economy, especially the financial sector. It was reported that the banks in Singapore have an exposure to the property sector of about $49 billion or a whopping 34% of our GDP as of May this year. And it is believed that this is an under estimation, since the numbers do not take into account the loans that are given to professionals, individuals and so on. It is likely that the exposure of our banks could be close to 50% of our GDP. By any account, this has to be a very unhealthy position for any country to be in. Sir, this is one area where all Singaporeans, including the Government, can learn a very valuable lesson. We need to reduce our dependence on the property sector drastically. In the Western economies, property is nowhere near the top in terms of contribution to economic growth. If we look at our top companies and wealthy people in Singapore, most of them made their fortunes through the property sector, while those in the Western countries came mainly from value added activities like technology and innovation. In Singapore, many companies tried to make a quick buck through the property sector. Even bus companies, food companies and others tried to do so. Even the Government, through most of its Government-linked companies, too is to be blamed for adding to the perils of our economy by getting involved in the property sector in a big way.”
“Mr Speaker, Sir, thank you for allowing me to join in the debate. Sir, I support the motion. We have so far been fortunate in that Singapore has been hit by the regional economic crisis relatively late as compared to our immediate neighbours. Malaysia, Indonesia and Thailand are going to be in a recession and possibly in deep recession, and Singapore cannot avoid but go into a recession later this year, in my own opinion. The downslide should continue for another year or so. We can either get defensive and become conservative in such an environment or, alternatively, we can be aggressive and consider this downturn as an era of opportunities to invest while preparing for a better future. Sir, I fully support the call from all the Members who have spoken before me for the public, private and the people sectors to work hand in hand to solve our problems as a team. I will, however, focus my speech on what I feel we can do to strengthen our economy, both in the short and the long-term. While some of the suggestions I am going to make would be appropriate as Budget proposals, I feel that we cannot wait for the normal Budget cycle and they should be addressed very early. I therefore hope that we can take some more off-Budget measures to further strengthen our economy. Sir, there are some areas where I feel our fundamentals are weak, basically the fundamentals of the Singapore economy and if we can focus in correcting the problems, we will be able to do much better than before. However, if we do not tackle these inherent weaknesses in our economic structure, we will not be able to take the full advantage of the next upturn. Worse still, we may face even worse problems in the future should another downturn hit us.”
“Sir, I do not understand. The question was, if they decide to do that, which is not legal, are we going to stop them? Are we going to arrest them for doing so?”
“Sir, two issues. One is regarding non-Malaysians entering Singapore by train. Basically, what it means is that they will be entering Singapore illegally since they have not left Malaysia. So the travel advisory is for Singapore citizens. How do we advise foreigners who are entering Singapore illegally? The second issue is that he mentioned that the CIQ facilities in Tanjong Pagar would be illegal from tomorrow. So will we have any enforcement action to stop them from performing their duties? Are we going to arrest them for doing their duties illegally in Singapore?”
“Sir, I am sure if the blocking of the usage of ports in Singapore goes ahead, Singapore businessmen who are doing business in Malaysia will find it very uncompetitive to remain in Malaysia. If that is the case, can I ask the Minister if he is prepared to assist these businessmen relocate out of Malaysia into other more suitable areas?”
“My point is that we want to keep investors here for a long time, not just on a year-to-year basis. So in making the assessment of whether to keep the investment here in Singapore or to move out to our neighbouring countries, they may want to look at a more permanent solution rather than a year-to-year solution that has been proposed.”
“Sir, in the interest of keeping investors in Singapore in the long term, would it not be better for us to consider a permanent reduction in the JTC or HDB rental, rather than a one-year rebate, as has been proposed?”
“We will also continue to invest in infrastructure projects like the reclamation of Jurong Island. EDB is intensifying its efforts to promote investments from the major regions to ensure that investments in the pipeline are committed on schedule. EDB officers have been stepping up their promotional efforts both in Singapore and overseas, closely monitoring the needs of companies and continuing to spot opportunities to attract investments into Singapore. More investment promotion trips involving EDB's senior management are being conducted this year. In the meantime, EDB will continue to co-invest with companies to help share risks and provide equity funding for strategic projects. Recently, the EDB also introduced an Industry 21 (I21) initiative. One of the thrusts of I21 is to promote world-class capabilities by encouraging MNCs to base world-class facilities here.”
“Can I ask the Minister whether he feels that the land cost in Singapore is excessively high compared to our competitors, for example, in Taiwan where it is about four times cheaper, and in Kulim, Malaysia, which is about 20-30 times cheaper than in Singapore, and will this continue to be a serious problem for us to attract new investments in the future? BG George Yong-Boon Yeo: Land cost is a factor, as I said earlier. Our objective in the coming months and years should be to lower our overall cost position. But as to the specific measures that we should take, I think we should wait for this afternoon's statement by the Finance Minister. FOREIGN INVESTMENTS (Promotion) 9. Mr Leong Horn Kee asked the Minister for Trade and Industry, in view of the expected decrease in foreign investments into Singapore in the near future, what are the measures the Government plans to take to promote and attract more foreign investments into Singapore. BG George Yong-Boon Yeo: Mr Speaker, Sir, the Government is committed to keep Singapore an attractive location for foreign investments. However, the slowdown in regional economic growth has caused some companies, which rely on regional markets, to re-evaluate their investment plans. The Government has been proactive in encouraging foreign companies to locate their operations here. For the short term, the Government has sought ways to keep costs down. JTC had announced in March that it would freeze its posted rentals until June 1999. In cases where the market has dropped, JTC will lower its rentals accordingly to be in-line with market conditions. The Government will continue to keep industrial land prices and rentals competitive and respond to the changing economic conditions so as to create a conducive business environment for investors.”
“Sir, I would like to ask the Minister whether we have lost any investor who has cited land cost as a reason. BG George Yong-Boon Yeo: Mr Speaker, Sir, as I said earlier, land cost is only one of many considerations. Whether land cost as a specific reason has caused an investment to be rescinded, I am not aware of.”
“My question is: will the Minister consider setting up an agency that could provide placement services for such workers?”
“Sir, my question to the Minister is along the same line as what Mr Rai has asked. In some cases, some of these workers have got sufficient experience. They have worked in the industry for some time but, unfortunately, due to reasons that their companies have to terminate them for whatever reasons, they are forced to go back. But they could be valuable to other companies in Singapore.”
“The Government, therefore, should stick to its original objectives and fundamental strategy to curb speculation in the property market, whether times are good or bad. Any measures the Government puts in place should be long term focused, to give the general direction and it should avoid constantly interfering to avoid jerking the property market around with many piecemeal and seemingly uncoordinated measures, sometimes affecting the demand and sometimes affecting the supply, as I have said in my Budget speech. So I feel that the Minister should not have changed the land sales policy. In fact, if the market knows the volume of land available year after year, the market would have taken these into account. Therefore, in the long term, this should not be a major factor affecting property prices. So I feel that the land sales should have continued in the last two quarters. One other issue I have, with the recent announcement of tax exemption for land under development, is that this will induce developers to develop vacant land that does not enjoy similar exemption, thus adding to the supply of private housing already available, and this would negate the intended impact of the new tax measure, as the developers accelerate the development of the vacant land. Once again, I would like to call on the Minister to minimise interference in the property market and be involved in only setting the long term directions and not to give in to the lobbying and the pressure from the developer groups.”
“The economy in Japan is still having problems recovering. We, therefore, must hope that the bubble does not burst in Singapore. However, this does not mean that property prices should not be allowed to slide downwards at a steady rate. Letting a little air out of the balloon may be a healthy thing to do, to reduce the growing tension and strains on the property market and hence our economy. As the property market, like many sectors of our economy, is a cyclical one, we have seen the peak in 1996 and now prices are coming down, heading towards a trough. This cyclical effect is not necessarily bad, as we have a chance to make due corrections to an inflated market. However, if we intervene too early during the downside, we may risk artificially propping the market up at unsustainable levels in the long term. The effect will be seen many years from now if we allow a new higher base to be set now. In the next upturn, the prices will start to increase from this higher base when they should have, in fact, started from a more realistic lower level should market forces have been allowed to determine the prices. There have been recent calls by certain developer groups to lift the measures put in by the Government in May 1996 and also calls to further stimulate the property sector. I would like to request the Minister for National Development not to lift the measures that have been very effective. It was recently reported in the Straits Times that all the major developers still expect to make a comfortable margin in their profits in 1997, despite making provisions for losses due to unsold units, and this comes after two years of record profits for them. We have already seen some of the corporate results in the last few days to confirm this.”
“Sir, the property market in land scarce countries like Singapore has a direct impact on the country's economy. As property prices increase steeply, it creates asset price inflation, as we have seen in Singapore from 1992 to 1996. Asset price inflation translates to higher rental or property purchase costs, so business costs go up. This increase in cost has to be passed on to the customers, so ultimately, the consumers see an increase in expenditure. To afford the increased expenditure, individuals need to have more cash and hence need higher wages. For individuals, they have to pay a higher price to own or rent a property. To be able to afford these higher prices, they need higher wages, so the total wage costs go up. This creates a direct impact on the cost of doing business in Singapore. Sir, this is a vicious circle and the root cause of the problem is asset price inflation. In the last few days of debate, we have been told many times that wage cost is the real issue affecting the rising cost of doing business here. I agree with this, but this is, as I have analysed earlier, just the symptom of the real problem, which is asset price inflation. Sir, this is one way the property prices affect our economy. On the other hand, many businesses and individuals have invested heavily in properties. Should the property price bubble burst, there will be a sudden devaluation of their assets. Banks may ask for repayments to bridge the loss of value or, worse still, force sell the properties to recover whatever residual value they can have, in the case of very heavy borrowings. Book value of company assets would also be much reduced. As an example, we can look at what happened in Japan, about seven years ago, when the bubble burst.”
“Sir, in this cut, I was originally going to ask the Minister for Manpower to help reduce the cost of hiring skilled foreign workers, basically the foreign worker levy to $100. I am glad to note that I was pre-empted and the Minister has announced that this is going to happen very soon. I am sure this will go a long way in helping the manufacturing and service sectors reduce the labour-related cost. I hope that this will apply to foreign workers of all nationalities and not restricted to certain nationalities only. However, I would like to still ask the Minister to consider some temporary measures for all existing foreign workers, including unskilled workers. This request is to help companies get through the tough times expected in the next two years or so. I would like to suggest that the Minister consider temporarily reducing the levy for all foreign workers to $100 for the next 1-2 years. And with the understanding that it would be raised to the original levels once things stabilise in our economy. I am sure this will help our businesses survive the tough time in the next few years.”
“I am glad to hear that there is some review that is going to take place on the SESDAQ rules. I hope that with this review, this will encourage more successes and more high-tech companies to be set up here and to be listed. I would like to ask Minister, while we are reviewing the SESDAQ rules, can we also look at the possibility of allowing shares to be traded in a kind of grey market. This exists in some countries where the moment the company is registered, you actually allow shares to be traded in a grey market. In fact, the values of the shares are listed in the newspapers. It is perfectly above board for shares to be traded. So there is a kind of a grey market even before you go to the SESDAQ level. BG George Yong-Boon Yeo: I am not quite sure what Mr Singh means. It does not sound quite legitimate. If Mr Singh has a specific proposal, I would forward it to the Committee which is now reviewing the rules of SESDAQ.”
“Sir, the Minister was confused about my letter of credit question. So I would like to clarify. I am talking about the category of companies who are fortunately still able to secure sales, but because of the tightening of credit financing, they are not able to purchase the goods that they could sell. I was therefore hoping for some form of backing through any means, banks or Government, to back the purchases that they can make for the sales that they have already secured. So it is quite different from those companies who have lost sales or are in trouble because of the crisis. Secondly, I hope my question on the entrepreneurship will be answered later on too.”
“For the few Singaporean venture capitalists we do have, my experience has shown them to be highly conservative. We need more competition for them by inviting and providing incentives for venture capitalists to set up funds in Singapore. Sir, such funds can be in the range of $100 million to $200 million and not necessarily the billions of dollars of funds that we have been trying to invite in the past. Thirdly, I see a need to set up a consortium of local private sector companies who can collaborate in R&D for home-grown technological ideas. In this consortium, people constantly rotate in from the local companies on a secondment basis so that there is a constant flow of new ideas both ways from the companies to the consortium. While it should be mainly a private sector initiative, the Government can help by providing the infrastructure and some funding. The funding can be shared between the participating private sector companies and the Government and the individual companies can share the technology developed through cross licensing agreements with the consortium. Sir, individually, many of our local companies do not have sufficient resources to achieve what the synergy among them in a consortium can achieve. So I truly hope that we can consider setting up such a consortium. Finally, I suggest that we allow easier listing of start-up companies by modifying the SESDAQ rules, to waive the three years' operations and profitability requirements, much like the NASDAQ in the USA where companies with good ideas get listed even before there is any inflow of cash from the businesses that they have set up. Sir, while we try to teach creativity in schools, I believe teaching alone is not enough. We need an environmental change to nurture the entrepreneurs of tomorrow.”
“Sir, today, Singapore is still very dependent on large multi-national companies, and over the years, we have developed a large pool of very qualified managers who have been helping these companies remain competitive and productive. While there is nothing wrong with this, I feel we strongly lack a good pool of entrepreneurs who could propel our economy even further. I am highly impressed by the many technology start-ups in the Silicon Valley in the USA and the Hsinchu based Science and Industrial Park in Taiwan. We have to ask ourselves why we are not seeing the same success in Singapore. Sir, it is my contention that we do not have an environment that is conducive enough to promote or encourage the entrepreneurial spirit. Unlike the countries I mentioned where both are the lands of many `second chances', in Singapore, we have the exact opposite where there are very few second chances. The Singapore environment and its laws do not tolerate failures and therefore do not encourage creativity and innovative risk-taking. I would like to make a number of proposals, which I think will greatly help change the Singapore environment and encourage more risk-taking, especially in technology start-ups. First, we have to amend our bankruptcy laws - the current laws are very unforgiving and create a long-term stigma for those who have ventured and failed in the risks that they took. This for sure discourages innovation and the entrepreneurial spirit. I hope changes can be quickly made to our bankruptcy laws to give such people more chances. Second, to provide incentives and facilitate a conducive environment for venture capitalists and technology investors to be easily set up to support entrepreneurs on high risk, high return projects.”
“The Minister for Finance in his summary speech on 10th March gave some figures of the companies successfully applying for some of these grants. I would like to know what percentage of the total SME population this represents. In my own opinion, this number may be very small of the total population of companies that we have. Secondly, can the Minister consider changes in the SDF claims policy? I suggest we allow the maximum claimable from the current 30% to 70% to be raised to 90% for the SMEs. To really benefit the SMEs, I would also like to suggest that management level workers and foreign workers also be eligible for SDF claims. Thirdly, a very specific suggestion is the tax deductibility of vehicles, which is currently at $35,000. Can this be raised to the full market value of the vehicles? Today, the COE costs about $35,000. So the full cost of the vehicle comes up to $80,000 to about $100,000. So I believe we should review this policy.”
“Sir, small and medium enterprises will always be important and always employ a very large proportion of our workforce. I believe an economy focusing on a large network of SMEs will always result in a more flexible and adaptable economy that can respond to changes fast. In fact, in the Silicon Valley in the USA, many such companies are playing a more and more important role. The same is true in Taiwan - I touched about this in my Budget debate speech - which is one of the strongest economies in the region and which was relatively unhurt by the regional crisis. So far, for the last two years, in the budgets announced by the Government, the signals that are given to our local SMEs have not been very encouraging. I would like to request that the Minister look into a few areas: In reply to a similar question last year, the Minister stated that there are numerous schemes available (I believe about 60 schemes or so which are very confusing) to assist the SMEs, both financially in training and in infrastructure. Sad to say, not many SMEs have benefited from these schemes for one main reason - it is just too complex and difficult for them to process their applications. I am sure very competent and highly qualified civil servants may have drafted these schemes, but what they may not have realised is that the SMEs do not have similar high calibre people to understand this. This mismatch is what our real problem may be. Could the Minister help simplify the schemes to make them more user-friendly, so that more SMEs can successfully utilise them? Otherwise, it will only benefit the larger companies who have the appropriate resources to apply.”
“Thirdly, the retailers feel that the relevant authorities such as the Singapore Tourism Board (STB) could help to put out more effort to promote tourism to Singapore. This is even more important now to bring in more Australians, Europeans and Americans to supplement the drop of tourists from the Asian region. It would be useful to promote more mega events such as the Great Singapore Sale, Aerospace Show, and other major exhibitions and events. I hope the Government could look into these suggestions to help the local retail industry.”
“So I am suggesting that there should be little interference once the tenants have rented the premises from JTC. I strongly feel that manufacturing and technology will always be important for Singapore's future growth. I, therefore, hope that the Minister will seriously consider these proposals. Mr Leong Horn Kee: Sir, the retail industry has been facing slower business in the last three years. I understand from the Singapore Retailers Association that the retail industry will continue to face a difficult period in the next few years. Moreover, with the strengthening of the Singapore dollar against the ASEAN currencies, the cost of goods in Singapore would be dearer by some 20% to 50%, compared to those made in the ASEAN countries. This will further impact the retail trade as it would be difficult to attract visitors from the region to come to shop in Singapore. To help the retail industry, I have the following suggestions: Both the Singapore Retailers Association and the Singapore Hoteliers Association wish to request whether the Government could consider shortening the ALS hours on Saturdays, so that the retailers, shops and restaurants in the shopping centres and hotels in the CBD zone can do more business during the weekends. They suggested the hours of operation could be shortened, say, from the present 2.00 pm to even 12 noon. With the introduction of the ERP, this request can be factored into the operation of the ERP. The second idea is to curb the release of more retail space, since there has been a reduction of business in both the main Orchard road tourist belt as well as in the regional suburban centres. The request is that the Government should consider curtailing the supply of additional retail space in future land tenders.”
“Land and rental costs have always been a key component that contributed to the high cost of doing business in Singapore, other than labour cost. Can JTC and HDB rentals be lowered by 15% rather than freezing them at current levels? In fact, rentals in the commercial sector have been coming down. So, why not JTC and HDB rentals? Although we can understand that the rentals currently for JTC and HDB are lower than market rates, our businesses are used to these rates. So as they face problems, we need to accordingly come down by the same percentage quantum as the commercial rates have come down. Secondly, to stop all increases in Government charges, like utilities and PSA charges. In fact, PSA has increased charges three times in the last three years, citing corporatisation as an excuse. Thirdly, to give a utilities rebate of between 10% and 15% to all businesses for the next two years. Fourthly, to extend credit schemes like the LEFS to trading companies which are having problems getting bank loans. Fifthly, how can the Government ensure that 15% reduction in the property tax get passed on to the tenants? Many Members have mentioned this. I hope that the Minister can devise a mechanism where the landlords will ensure that tenants get part of the savings. Long term measures - could the Minister consider preferential land pricing for new start-up manufacturing companies, which invest a minimum amount of capital? I am looking at land rent waivers for a period of 10 years and subsidised pricing of the property that they purchase. Secondly, to allow JTC tenants to more easily sublet their premises and let them have the flexibility in managing the premises that they are already renting from HDB or JTC.”
“Sir, I will touch on the competitiveness of the manufacturing sector. As I mentioned in my earlier speech, I feel that the proposed budget for 1998/99 did not adequately address the critical issues faced by the manufacturing sector. There are both long term issues as well as transient issues caused by the crisis and also by the long term competitiveness of Singapore as costs go up and down here. Being one of the biggest contributors to the economy, at around 25% of the Singapore GDP, this sector deserves more attention than it got in the Budget announced. For the long term, I am glad that the Minister for Trade and Industry, a few days ago, reaffirmed the Government's commitment to make manufacturing and services the twin engines of growth for our economy. I would also like to highlight that even in developed countries, manufacturing continues to be an important component that will fuel economic growth in these countries. I quoted the success of the Taiwan economy, which attributed its growth to the electronics and semiconductor industries by 15 times in a span of seven years. I strongly believe that we still have a long way to go and we can follow some of the growth policies of the Taiwan government. For the short term, the regional crisis has created strains on many companies, mainly related to the loss of value of assets invested in the region, cash flow problems and also the inability to collect debts and the loss of sales because of inability of customers located in the region to purchase. I therefore would like to ask the Minister to consider the following proposals, so that we can ensure confidence in our manufacturing sector. Short term measures - some Members have mentioned these. I would like to say it again.”
“Fourthly, to work with the Ministry of National Development to allow the period of absence from Singapore to be counted when computing the minimum occupation period of the HDB flat into consideration when the individual wants to sell or upgrade. Currently, the period of absence is not counted. So this becomes a big problem when the employees return and they intend to upgrade. One other issue that I would like to mention, and this was also mentioned by Mr Leong just now, is: can the Minister enlighten the House as to how Singapore will be impacted should the Indonesian economy collapse? The impression among many Singaporeans is that we are highly dependent and that if the Indonesian economy collapses, so will the Singapore economy. I hope the Minister can give us assurances that this will not happen.”
“Sir, regionalisation is still very important because the second wing of our economy is the one important way for Singapore to continue to grow and create wealth for the country. As I mentioned in my Budget debate speech, I hope the Government will not get too easily distracted by the problems faced by the region. We still should have a long term view in mind. In fact, this is an excellent opportunity for our companies to look for bargains in the region both in greenfield investments as well as to buy into troubled companies which can benefit from the management expertise of Singapore companies. While I am disappointed at the lack of new initiatives to encourage regionalisation, I would like to suggest a number of new short term and long term measures to accelerate the momentum of our regionalisation drive. First of all, can the Government share some of the costs related to regionalisation for some of these companies? These include the cost of relocating the employees to the overseas operation; the cost of training and retraining employees as they go for assignment overseas and as they return back; and the cost of higher insurance of offshore operations. Secondly, to provide further incentives and funding for capital and asset investments made by the companies in the region. In my opinion, although we have some schemes, the current allowances are too small to be effective. Thirdly, to provide tax rebates for individuals (the employees of the companies) who take up regional and international assignments. Rebates can be used to offset the higher cost of the children's education in international schools in case the company does not provide the loss of spouse income and other incomes for the employees who leave Singapore.”
“While I know there have been calls by some quarters and some Members in this House to reduce the GST by about 1 or 2 percentage points, I disagree with this because there are no clear reasons for this at this stage and also the 3% that was set some years ago is a realistic level. My request is a very specific one for the purpose of helping the very small businesses that cannot afford the resources needed to process and keep track of GST collections. This then becomes a hassle for them. While the $1 million level set as a threshold for businesses that have to apply the GST ruling some four years ago might have been all right, but now, as our economy has grown, I believe we can review this. With this in mind, I would like to propose the following two suggestions: First of all, can the threshold be raised from $1 million to $2 million? For companies that do sales less than $2 million per year, I suggest that we no longer need to process GST. This will help them reduce the processing and manpower cost, especially for the smaller companies, and also hopefully result in lower cost which will be passed on to the consumers in the long term. Secondly, can the GST collection be delayed by about one to two quarters so that the short-term cash flow problems can be resolved?”
“Of course, certain fundamental parameters of the economy must still be the instruments that the Government can handle, to turn the knobs to set the general long term of the economy. Once again, I feel that the strength of the dollar and the interest rates are something that the Minister should moderate.”
“Sir, one year ago, the Singapore dollar was strengthening against the US dollar and to some extent against the regional currencies and this badly impacted the cost of doing business in Singapore. Today, the regional currencies have devalued substantially against the US dollar and against the Singapore dollar while our dollar remains relatively strong against most OECD countries. Sir, I would like to ask the Minister the following questions: First of all, just as Mr Leong has asked, can the Singapore dollar remain strong at the current level for our economy to continue to be competitive or will this erode our competitiveness against our neighbours and also against the countries in North Asia? In a recent report in the Business Times, it was argued that the Singapore dollar needed to be around $1.83 (at that time comparing against the value of other North Asian currencies) for our exports to the west to remain competitive. In fact, the report suggested the sensitivity of export competitiveness to the value of the North Asian currencies against the Singapore dollar and should these currencies fall some more, the Singapore dollar will have to devalue accordingly to remain competitive. I would like to ask the Minister's opinion on this report. Thirdly, what can the Monetary Authority of Singapore or the Ministry of Finance do to moderate interest rate increases which have risen three times in the past six months? I do believe that the Ministry or the MAS should set a strategic direction for both the dollar strength and the interest rates while it minimises interferences in other areas by letting market forces rule.”
“Especially in the area of commercial vehicles, with the registration fee coming down by a drastic amount, a lot of companies that have placed orders for vehicles are waiting or cancelling their orders. This has actually created problems for motor traders, and there is a wait-and-see attitude. In my opinion, since we have decided to implement the scheme, we could bring forward the implementation date.”
“Sir, since the Minister intends to implement the system anyway, can I can ask why do we not bring the implementation date forward to the 1st April? The scheme has already started to create a lot of confusion to the motor traders. Since we plan to implement it, why do we not implement it on 1st April?”
“One final question. From the lesson that we have learned from Micropolis, have we put in place any additional safeguards to ensure that such future problems are avoided, although I do support that we should continue to participate in these high-risk, high-return types of investments?”
“Sir, I would like to ask the Minister on the issue of Micropolis. The loss, I believe, in the reply he gave me yesterday, amounts to about half a billion dollars. I would like to ask whether any of these is coming from CPF or is it some other source that has drawn into our reserves.”
“Sir, the Minister mentioned that the decision made was independent of the lobbying by developer groups. The reason why I ask the question is that it seemed quite a coincidence that the action came quite soon after we heard the lobby from REDAS which was basically made to the Government. The second point I have is: when did the Government realise that the property market was heading for trouble? Was it after the developer groups lobbied to the Government or was it through some other assessment?”
“I would like to ask the Deputy Prime Minister, in the Government's assessment, in the long-term, will the problem be solved? If the problem cannot be solved and the current situation remains, what will be the next step for us to take? BG Lee Hsien Loong: Mr Speaker, Sir, perhaps it is best if I just re-read the last paragraph of my answer: Both the Chinese and Singapore governments recognise the importance of the project, and its benefits to both countries. President Jiang Zemin has given his full support to resolving the problem. Singapore too is fully committed to the success of SIP. We are confident that by being open, and tackling the issue directly and completely, we will solve the problems and restore the project to a strong and even footing.”
“Sir, I would like to move on a bit from here. I would like to clarify the answer given by the Minister that this package is specially just for Indonesia. So my question to the Minister is: is there any current plan to rescue any of the other ASEAN economies? Or will the Government consider doing so if there is a call for help?”
“Sir, I would like to ask the Minister who will administer the US$5 billion loan. Will IMF do it or will Singapore do it directly? Is the loan targeted for any specific spending in Indonesia or is it a general fund? Secondly, if the loan is administered, will it affect any Singapore Government's spending plan for the next few years, eg, in upgrading programmes or any other programmes like the MRT lines and so on?”
“Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $3,566,198,570 for Head L ordered to stand part of the Main Estimates. The sum of $1,125,340,900 for Head L ordered to stand part of the Development Estimates. The Chairman: I shall now deal with the remaining heads of expenditure in respect of which no amendment stands on the Order Paper Supplement. In respect of the Main Estimates, they are Heads B, C, D, F, G and Z. I propose to take these heads of expenditure en bloc. Question, "That the sums stated for those heads of expenditure which appear in the last column of the Schedule of Estimated Expenditure under the Main Estimates on page 37 of Paper Cmd. 2 of 1997 stand part of the Main Estimates," put and agreed to.”
“Sir, I beg to move, That the sum to be allocated for Head L of the Main Estimates be reduced by $10 in respect of Code LC 1500. I will make my speech short. We have seen in this House and heard a lot of talk about the question of arresting the teen gangsterism problem. But I believe all of these are containment actions which are not going to solve our problems. I believe that many of us conclude that the root cause of our problems happens to be in our secondary schools where the students start going wayward in secondary schools and their behaviour continues to be a problem as they grow up. This will, in the long term, be a social problem for our country. I have talked about this in my maiden speech in May this year and about a similar problem that happened in Taiwan. My contention is that our school teachers are not given enough authority to discipline their students similar to the way that I was disciplined when I was studying in school. My questions to the Minister are: Is anything being planned to arrest this problem at the root cause, ie, to allow teachers to discipline students in school? My second question is very specific, ie, the use of tamagotchi or cyber pets in schools. I would like to ask the Minister what is the Ministry's policy towards children bringing these toys or cyber pets in school? I believe UK and Hong Kong have banned it in their schools. Do we have a similar policy in Singapore?”
“I will not speak, Sir. The sum of $56,083,310 for Head S ordered to stand part of the Main Estimates. The sum of $8,421,000 for Head S ordered to stand part of the Development Estimates. Head U -”
“I would like to suggest that the Ministry consider allowing employers to reclaim or retain the first six months of employer's CPF contribution, if an employee decides to leave the company within the first six months of employment. If the employee stays on, the employer should release the full amount due to the employee. The idea is not to deprive the workers of their CPF money but rather to compensate the employers for their cost they incurred in hiring and training their employees who did not stay on long enough to contribute usefully to the company. This will help the employer defray the cost he has to incur to hire and train a replacement. I would like to ask the Minister to consider this, or an equivalent alternative measure, to help companies arrest this issue as it is creating an image problem as well as affecting the productivity of our workforce, since you need the workers to be around a long time before they could contribute usefully.”
“Sir, the topic I like to talk about - job hopping - is not new. I believe our Hon. Prime Minister, Mr Goh Chok Tong, in his maiden speech also talked about the concerns of job hopping at that time. [Mr Deputy Speaker in the Chair] 4.25 pm We are continuing to see an unhealthy trend of job hopping, especially among our younger workers. In a report by the Hong Kong-based Political and Economic Risk Consultancy (PERC), our workers were ranked 10th out of 12 Asian countries surveyed in the category of loyalty to the company. Being from the private sector myself and in my many discussions with a wide cross-section of business and industry representatives, all of us feel that the issue of job hopping is starting to be a great burden for our employers and for our companies. At the same time, it is creating a negative image of our workers and in some cases, it is becoming a deterrent for investors thinking of locating in Singapore. While I understand that this is a market-driven issue where there are abundant jobs available and employers have to find ways to make it attractive for workers to stay on, I also feel that the Government needs to help by introducing some form of disincentives that will discourage workers from widespread job hopping. Sir, whenever a turnover happens in a company, the employer has to re-hire and re-train the new worker, and training takes time before the new employee can become a useful contributor to the company. All of this involves substantial cost. I would like to ask the Minister if he would consider using the CPF as a mechanism to control job hopping.”
“Sir, this is a shame, especially when seen in the context of the tight labour situation and high dependence on foreign labour. If we can get the participation rate of housewives and retirees up to that of, say, Japan, it is estimated we can have at least another 150,000 workers. This will go a long way towards addressing the tight labour situation that we have here. Would the Minister consider implementing a pilot scheme for pre-employment training or orientation for housewives wishing to return to work? Basic interviewing skills and familiarity with current computer technology as well as work practices should form part of this orientation. If necessary, would the Minister also consider some kind of co-sharing of training cost to be worked out?”
“Secondly, there is also a need to have a strong infrastructure built up, first of all, to train workers to prepare them for re-entry into the workforce, which the Member for Bukit Timah has just mentioned; a matching agency capable of utilising a pool of part-time workers efficiently; creating a mentality of useful part-time workers as opposed to using them for mundane jobs. Thirdly, the Government agencies and the public sector should take the lead so that the workers from these sectors can be released into the private sector. Sir, I would like to ask the Minister what other plans he has to improve the worker shortage problems that we have in Singapore. Mrs Lim Hwee Hua (Marine Parade): Sir, I support Mrs Yu-Foo's proposals and wish to elaborate on the importance of the issue. Even as Members here are making appeals for more training to upgrade the workforce, there still remains a gap in tapping potential manpower resources. All existing training efforts are aimed at people who are already employed, ie, post-placement. What about those who intend to but failed to get employed? There is currently no pre-employment training or orientation that they can turn to. We have a chicken and egg situation in our midst. Women who are willing to return to work after having taken a few years off work to look after their families often find job hunting a frustrating experience. They are intimidated by the quick pace of technology. They are often lacking in self-confidence as they offer only dated skills and frequently end up with little or no bargaining power. Ill preparation at interviews can only compound the difficulty at securing jobs. If they cannot even get employed, how can they be upgraded or trained in the very skills that they lack?”