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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“If we agree to make this into a national pension plan, we can make this plan a catch-all, so that it benefits and also covers those older Singaporeans who fall within the ad hoc employment category who have not been regular CPF contributors. These persons are presently a worry because they do not have enough savings generally. We can see that a well-funded, well-planned scheme will make people feel more secure about their retirement. It is crucial to the scheme's acceptability that it does not impose too high a burden on the public. To keep the scheme affordable, it may therefore be necessary for the Government to step in as a contributor to support the scheme. I feel that the Government is more than capable to help fund such a scheme. We regularly give back to Singaporeans through schemes like the Progress Package or New Singapore Shares. These go to even those who do not need it every time we do it. For the important national objective of funding retirement of Singaporeans, we should therefore not shy away from using part of our surplus or even part of our reserves to fund the national pension scheme. We have generated a critical mass of reserves already, and the amount needed for contribution to the national pension plan will not leave a big dent to our overall reserves. The current perception is that the Government will be taxing every Singaporean to support those who live beyond 85 years of age. I therefore feel that the Government should take some responsibility for funding the annuity scheme and not leave the full burden to Singaporeans alone. What I am asking is for the Government to co-pay or partially underwrite the scheme. It can be part of a new social compact for the future where every stakeholder contributes. This shift in the social compact is necessary.”
“And the asset base will therefore be broader and there will be more time for the funds to be accumulated and grown and therefore there will be a higher payout for all. The amount of contributions will also be lower, and this will therefore be more affordable and every Singaporean will benefit in the later part of their years. Sir, the suggestion to limit the payouts at the age of 85 and beyond is of course very unpopular, as many Members have said. Many people think that they will not live that long and so feel that it is taxing them when they are unlikely to benefit from it personally. Starting contributions earlier, as I have suggested, will enable us to structure a programme to provide an annuity from an age that is lower than 85, 70, 75 or 80. We can determine what that age is if we have a bigger sum to play around with. At any cost, we want to avoid the impression being given, ie, that we are taxing everyone, especially the poorer Singaporeans for whom the contributions will be significant when not everyone may benefit. Another big objection is that the families of members who do not live beyond 85 would have ended up paying but not benefiting anything. The scheme should therefore be modelled to return all or, at least, some part of the amount paid to family members, if they do not cross the age of 85 years. This amount, while small to the higher-income Singaporeans, is significant to the lower-income people and it will be important for their families. Sir, we should also take the opportunity to cover even those who fall through the cracks.”
“Let me first address the proposals for delaying the CPF withdrawals and boosting the Minimum Sum and annuities. Sir, by deferring withdrawals, we create a new problem for people who do not have the necessary Minimum Sum upon reaching the age of 55. They may, as a result, not have enough to see them to the next milestone, which is the age of 62, when they can draw on their Minimum Sum. This delaying will therefore only work if implemented hand-in-hand with the delaying of the retirement age and also protecting the employment of older Singaporeans. Allowing home owners to unlock the value of their homes will also help them during this period. And the proposed annuity scheme then provides for the much later years. So the overall ideas are therefore indeed holistic. Let me first speak about the proposed annuity scheme. This has been the most negatively perceived thing among all the announcements made. The chief reasons for this are that it is forced, that the benefit may not necessarily accrue to the member (since he may not live past the age of 85), that it is too late to purchase it at the age of 55, and also that the Government is not contributing to this. I think we could have avoided this negative perception if the Government could have fine-tuned the scheme a little. Effectively, what we really need is a national pension plan, as I mentioned. If we decide to create this national scheme through the annuity system, the contributions through CPF can start at a much earlier age, instead of age 55. In fact, they should start at a time when we start contributing to CPF. It therefore could be much broad-based so that even young people contribute to it.”
“It is sad that we face a situation where only one out of three Singaporeans has enough to meet the Minimum Sum criteria upon reaching the age of 62. So, what went wrong with our CPF scheme? The answer is simple. The CPF scheme was used to do too many things. Starting with the real objective of retirement savings when CPF was started, over the years, we made use of the same tool, the CPF, to do too many things, including promoting home ownership and as an economic stimulant. These goals have been pulling the scheme in different directions. Home ownership means less money for retirement savings. Using CPF as an economic tool and cutting employers' contributions to cut business cost similarly meant that there was less money accumulated for retirement savings. I am not saying that these ends were not important. After all, we have today one of the highest home ownership rates in the world. We were also able to recover from the various recessions and the Asian economic crisis by cutting the CPF rates to stimulate the economy. But at the same time, life expectancies have gone up and people will need more, and not less, cash in their CPF. So a simple retirement savings tool became one that was pulled in different directions and in opposing directions at times. So the problem we are seeing today has been brewing for quite a while. The real solution therefore is to either bump up the CPF savings or the contribution rates to CPF or create a national pension plan and also to reconvert the housing assets into liquid assets. The Prime Minister has therefore rightly envisioned a holistic approach, and I think the proposed plans, if fine-tuned correctly, will go a long way in addressing most of our retirement savings problems.”
“Mr Deputy Speaker, Sir, retirement savings seems to be one of the most challenging issues that the Government continues to struggle with since the last 30 years or so. In 1984, or around that time, we thought that the Minimum Sum scheme would be enough to solve the problem, but it did not do so. In the past, we have been addressing the retirement savings on a piecemeal basis and I am therefore glad that the Prime Minister has finally decided to take a more holistic approach in solving this very difficult issue for Singaporeans. It is, however, unfortunate that we have not convinced all Singaporeans with the various schemes that have been announced or spoken about in the past few weeks. The annuity scheme or the longevity insurance scheme has been perceived negatively and it is a pity because we know that this is definitely the missing piece, as what the Minister for Manpower mentioned earlier on. The variable interest rate for part of the CPF savings is also an unpopular move. Sir, the real issue is, and we all know this, that we want to ensure that Singaporeans have enough money to last them their entire retirement years, in fact, the entire lifetime. Where the differences of opinion lie are the extent to which it is believed that the Government should be responsible for helping Singaporeans. Sir, our social compact has been on the basis that retirement must be provided for by the people out of their own savings. The contribution rate that was initially thought to be necessary to provide for people's retirement was set at 50% of the salary to be contributed equally by the employers and employees. This is something that the Government seems to have lost sight of, the 50%.”
“Sir, I have two supplementary questions. First, on the issue of 10,000 to 15,000 students at the steady state. My question is: when did we expect them to achieve that level of enrolment? My second question is: how realistic has EDB been to expect a foreign university to achieve an enrolment of 10,000 to 15,000 students, especially if you look at it in the light of how long it took our universities to achieve that kind of enrolment rate? Were we unrealistic in expecting any university to achieve that kind of rate?”
“Sir, I welcome the inclusion of the Gas Network Code or GNC as per clause 25 of the Bill, by adding the new Part VII, sections 61A to 61F. Section 61D makes the GNC a binding contract between the designated transporter and each gas shipper. Then section 61E spells out the limitations of the GNC which effectively says some parties can still delay the open access of the gas pipeline network. My question to the Minister is: will this allow the current issue that PowerGas is facing with the incumbent to be further prolonged and hence making the GNC not immediately implementable? I also have the same issue with clauses 33 to 35 of the Bill on what it intends to do. While I understand that this provision is for the transition period, and for the Minister to help manage the transfer, the flexibility given could also mean that EMA may not be able to effectively direct the free access of the pipelines as desired, if the appeal process takes too long to complete. This could also be a loophole used to further delay the process of free access. I hope that the Minister will give a time limit for such a process. Sir, I am in full support of the spirit of what is being proposed in the Bill but, as I have spelt out, my worry is in the implementation. I hope that the EMA will be able to effectively implement the Gas Act and allow more competition into our energy market. With that, I support the Bill. 4.33 pm”
“Mr Speaker, Sir, I support the amendments proposed in the Gas (Amendment) Bill. In fact, it has taken too long for the Gas Bill to be correctly structured. Since 2001, the Gas Act has not been able to effectively allow market competition as originally intended. In fact, the weakness in the Gas Act has kept out new entrants into our energy market. I read from press reports that Island Power which is building a new power plant on Jurong Island has seen a two-year delay in their $1 billion project. If we have been successful, we would have seen the mergence of a new private sector energy company and I believe the consumers would have been the main beneficiaries of the new player, resulting in cheaper electricity charges. The main obstacle to the proper functioning of the Gas Act has been the control and access of the gas pipeline network. It is quite amazing that because of the protective behaviour of some incumbent players, the Government has not been able to make the Gas Act work the way it was intended to, which leads me to ask if the new changes will indeed result in changes which will effectively allow new players to utilise the gas pipeline as intended. Clause 16 amends section 38 of the Act and clause 17 of the Bill adds the new sections 38 and 39 to allow the Energy Market Authority or EMA to direct the parties to enter into an agreement for the allocation of gas in offshore pipelines. This is a good move. But how effective will EMA be this time when in the past, it failed to effectively help resolve the issues when after two years, PowerGas could not sort out the gas transport agreement with the incumbent user? I hope that, this time, EMA will be able to exercise its authority to speed up the open access of the gas pipeline network.”
“Provision should be made allowing parties affected and appealing against decisions of the Commission to apply to the Board or to the High Court or District Court for an interim order allowing a stay of execution of the decision in appropriate cases. In the light of the likely complexity of the competition law matters, I would suggest that the appointment of a specialist judge at the Subordinate Courts or perhaps even at the High Court be considered to hear competition-related matters. Sir, finally, I note that we have decided again not to bring the telecommunications sector within the fold of the general Competition Act framework. It is still regulated by the Code of Practice for Competition in the Provision of Telecommunications Services and therefore excluded from the Competition Act. My concern is that we would develop two separate bodies of law and regulations for these sectors in time to come. It may be better to consider integrating these bodies of regulations now when it is still early enough as the competition law is still in its infancy in Singapore. It may be harder to integrate these later. In fact, the telecommunications sector is quite open right now, and I see no reason why we still want to regulate it separately from the rest. Sir, on the whole, I think that the Bill is well thought out. I do however believe that it can be further improved as suggested in my speech. Sir, I support the Bill.”
“I am given to understand from some of my lawyer friends that where damages are adequate remedy, specific performance is usually not ordered by the Court. This is because of the public policy of not forcing parties to do things that they have decided that they did not want to do. It may be better instead therefore to punish a breach of commitment with a fine whose amount can be tailored to ensure that there is no incentive of non-adherence to the commitment. I therefore request that the Minister reconsider this provision as it will be difficult to enforce. Sir, on stripping of immunity, section 59(5) and (6) (in the case of anticipated measures) and section 60(5) and (6) (in the case of mergers) provide for stripping of the immunity given by a decision that no infringement will or has occurred by the anticipated merger or merger. All that is required once the decision has been made to strip the immunity is that the notice is given to the affected party that the immunity is to be stripped. The notice can even under subsection 6 provide that the immunity be stripped retrospectively. Sir, there is no provision in allowing the affected party to make representations before this is done and it is very onerous for the companies then. We should build in this provision in fairness to entities that may have gone to significant cost and taken much effort to merge. There is also no reason why a power to require further commitment cannot be applied in this case to mitigate the breaches of the section 54 prohibition. Sir, some other areas of concern, first of all, on stay.”
“Removing this power means that the Commission cannot reopen the decision even if new material effects of a merger come into light after the decision has been made, as long as the Commission was given proper information by the entities at the time it was deciding and based its decision on the information that was not incomplete, false or materially misleading. As business environment changes, circumstances could change but now this Commission will not be allowed to reopen the case. I note that the Commission can re-examine market abuses as and when they occur, even in the case of mergers that are approved. For the Commission to start a new investigation shortly after approval was given to a merger upon application would likely lead to uneasiness among businesses. It would therefore be good if the Commission can give red-flags for certain items where businesses know that the Commission will bring ongoing scrutiny as a preventive measure rather than coming back and investigating the situation. Sir, giving the Commission the power, as part of its decision-making process, would require commitment and also a power to reserve the right to require commitments going forward would go some way to correcting market abuses that could occur in the future, even if they are not foreseeable when the merger is being considered. Sir, the provision in the proposed amendment of section 85 for commitments to be registered in the District Court as if they were orders of the Court and enforced accordingly is, I think, likely to prove unworkable in practice. Many commitments would have been in the nature of restrictive covenants or commitments to do certain things. To enforce these would be in the nature of enforcing specific performance.”
“However, the Commission should be allowed to highlight areas of concern where safeguards would be needed. To that end, the Commission should be given the power to require minimum assurances, which can be re-evaluated or adjusted, say, every 12 months, as part of an ongoing review into a situation where there is some potential form of infringement. At the very least, the Commission could be given the power to request the entities for a proposal of assurances covering certain areas of market conduct by these entitles. This would facilitate the process of consideration of mergers or anticipated mergers by the Commission, and also engage entities in a continuous dialogue if the Commission feels that there is some potential area for infringement, as the business environment changes over a period of time. Section 60B is useful in that once a decision is made to accept a commitment from a party, the Commission must decide that there is an infringement of the section 54 prohibition. This serves as an incentive to comply with the commitments. I propose however a mezzanine-level decision should be built in, where the Commission can decide that the merger may infringe the section 54 prohibition but that as a commitment has been accepted, the Commission is therefore satisfied that it does not. Sir, such a power would be useful in view of the removal of the existing section 60(2)(a), which allowed in the past the Commission to reopen a decision that the merger would not infringe the section 54 prohibition on the basis that the Commission has reasonable grounds for believing that there has been a material change of circumstances since it gave its decision in the past.”
“Section 57(2) sets out that the Commission may make a decision on whether the section 54 prohibition will be infringed by an anticipated merger if it is carried into effect, and that if the prohibition will not be infringed, whether this is because of an exclusion whether by way of section 57(b)(i), an exemption under section 57(3) and section 57(b)(ii) or because of a commitment that has been accepted by the Commission in section 60A or section 57(b)(iii). Sir, for transparency and to allow the public to scrutinise why certain mergers were allowed, it would have been better to require the Commission to explain the reason why a particular proposed merger falls within an exclusion. A similar argument would apply to the consideration by the Commission of mergers under the proposed new section 58. Let me now comment on the commitments that can be accepted by the Commission. On commitments, section 60A allows the Commission to accept a commitment that would mitigate the substantial lessening of competition or adverse effects that may result from a merger or anticipated merger under scrutiny. The Commission does not have the power to require commitments. These have to be made on the initiative of the party offering the commitment. But there may be situations where the Commission evaluates a merger or anticipated merger and feels that it would infringe the section 54 prohibition, but this infringement could be mitigated by some minimum safeguards or assurances given by the concerned entities as to how they would behave in the future after they have merged. I can recognise the discomfort with the Commission telling these entities how to do their business or advising them as to the minimum safeguards that they need.”
“I would think that if a company is in doubt as to whether it will infringe the section 54 prohibition, then it should come forward anyway, regardless of the type of merger. I therefore would like to ask what types of anticipated mergers the Minister is being given the power to prescribe as requiring notification. Is it to be by market share, whereby anticipated mergers that lead to the merged entity controlling, say, x% of the market must be notified to the Commission, or is it by sector of the economy, for example, mergers of entities within the manufacturing sector or sub-sectors that must be notified? While the Minister may be concerned about certain types of mergers, that would not prevent other mergers from possibly being uncompetitive. It would be better to put the onus on the parties considering a merger to come forward and seek a decision. Sir, I notice that there is no time limit proposed for the Commission to revert with its decision. I think that such a time limit should be built in, say, for example, three months, which can, by permission of the Minister, be extended by another one or two months, so that the companies can have certainty within an acceptable period of time. This is important so that companies can plan their business activity as it affects their operations here in Singapore. Sir, I now turn to the decision-making process of whether anticipated mergers and mergers do infringe the section 54 prohibition. The proposed amendments to section 57 deal with anticipated mergers.”
“Mr Speaker, Sir, I support the amendments proposed in this Bill, but I also think that we could have covered more ground in it to establish a firmer competition regime in Singapore. Sir, I welcome the inclusion of anticipated mergers within the competition regulatory framework. It is also a good timing for this amendment as all around the world, we are seeing waves of mega mergers and, if not regulated, it could result in distortions of the marketplace as some entities attain dominant positions in the market. Although some mega-entities bring with them efficiencies for the consumers, the regulation should however ensure a dominant position is not abused over a period of time, even if it may have been all right at the time of the merger. Problems can arise if an entity only comes under regulatory scrutiny after it has merged, as the Minister has mentioned. If it is found to be anti-competitive under the applicable regulatory regime, then that merged entity may well be forced to break up, or to alter its business in the territory. De-merging is an expensive and complex exercise. Forcing such companies to take corrective action post-merger, when problems could have been foreseen before the merger took place, is economically inefficient. That is why I welcome the new section 56 which allows entities that are considering merging to come forward to the regulator and ask for a decision on whether the anticipated merger, if carried into effect, may infringe the section 54 prohibition (which regulates anti-competitive mergers). I note however that the proposed new section 56(3) allows the Minister to provide by regulations that only prescribed types of anticipated mergers may be notified to the Competition Commission.”
“Sir, I just want to clarify that I did not mean that the Prime Minister makes an arbitrary decision. I was saying that we already have 13 years of a track record of Minister salaries and that we now have a base of $1.2 million and, now that we have a base, to implement a system of increments or deductions like any company, based on the base that you already have developed and well accepted. It is not an arbitrary number.”
“While attractive salary in the top echelons of the Government sector is desirable, we could have achieved better results in this whole salary adjustment exercise had we been more sensitive to these emotive issues of using a benchmark and, also, the timing. Sir, I support the salary increase but I do not agree with the benchmark formula.”
“Coming as it is at a time of belt tightening for the public at large to cope with the GST increase, the timing of the proposed increases we are debating could have been better. As to the timing, although there have been some suggestions that the world would become catastrophic if the salary revisions were not done, I disagree. The danger we face is a slow attrition of talent in the Government. Has the Prime Minister really lost a Minister or a Permanent Secretary? Have any of the Prime Ministers in the past lost one purely because of pay? I think the issue is not as urgent as it is being made to seem. We were in the House about a month ago debating and arguing why we should not be giving our public assistance recipients, some 3,000 of them, another $100 monthly assistance increase and we are talking about million-dollar salary increases. And the total expenditure on civil servants' and Ministers' salary increases is almost the same as the total Workfare Income Supplement Scheme. What signal are we sending to Singaporeans? Sir, in conclusion, I broadly support the move to keep Ministerial and civil service salaries attractive but state that the benchmark has outlived its usefulness and the sooner we abandon it, the sooner the debate will be more focused on the real issues. Regardless of my support for the revision generally, I am just a little concerned at the timeliness of the measures, coming as they do hard on the heels of the painful measures that Singaporeans will have to learn to cope with after the GST is increased in July.”
“As an aside, many of them already cannot imagine a $1.2 million salary and another million for them is in the same order of magnitude, but their biggest issue is with the timing of the salary adjustment. I will therefore address the issue of timing. Timing Sir, we are in the midst of a long-term recovery from the poor economic years of the post-Asian economic crisis. We have just introduced Workfare for the less well off - surely an acknowledgement that times are tough for many people in Singapore. Things are going to get tougher for the man-in-the-street this July when the GST increases to 7%. The Minister for Finance, when delivering his Budget speech this year, said that the GST increase this year was expected to raise "additional $750 million this year, and $1.4 billion per year going forward". This is money that is to come from the taxpayers' pocket. It will be painful but necessary to reposition our economy. I can understand if this sum is needed to make the economy more competitive, for example, if the new revenue will allow us to cut corporate taxes so that more companies set up here, bringing jobs for Singaporeans. But how do we answer the man-in-the-street when he is told that about 1/4 to 1/3 of the expected revenue increase this year from GST is going to be the bill for the proposed Ministerial and civil service salary increases. I was told it is about $240 million. Many of those I spoke with now think that the key driver for a 2% GST increase was in fact to fund the salary revisions primarily for the civil service. This seriously undermines the Government's ability to make tough decisions and convince the public in future.”
“If later the Prime Minister cannot successfully hire certain people he wants and this becomes a systemic problem, he may need to review the overall compensation package to come up with one that can let him achieve his hiring and retention goals. Then he could do a check against the private sector chiefs who are earning to give him comfort that his Ministers and civil servants are not too far off from the top earners. Using the private sector salary benchmarks then would be merely one of the tools rather than the main means to calculate salaries in Government. I therefore strongly urge that the Prime Minister drop the benchmark approach. You needed a system 13 years ago but now let the setting of salaries for the public sector take a life of its own. You will achieve the same outcome. The Prime Minister should decide what he needs to pay the Ministers, whether it is $2 million or $5 million, the people will then decide whether they endorse the decision every five years when they go to the polls. Dropping the benchmark formula will go a long way towards taking the emotions out of the salary debate. Some will still question the high salaries but at least they will not feel that the Government is using a "smoke and mirror" approach of using private sector benchmarks to justify the high salaries. Among my grassroots leaders and residents, the general feedback is that they have already learned to accept the fact that Ministers need to be paid high salaries. So if the CEO of SingTel or Temasek Holdings can earn $5 million a year, should the Finance Minister who is overall in charge be earning less? The public understands this argument. And whether it is $1.2 million or $2.2 million, it is something, if the Prime Minister feels necessary, they will accept it.”
“So, to use a benchmark formula which compares to the private sector is a futile exercise and we will always draw criticisms and we will never win the argument of justifying Government salaries that way. It only serves to cloud the real issue, ie, whether high pay is deserved. A possible benchmark If the Government really wants to use a benchmark which, in any event, I do not recommend, then perhaps it should be pegged to the compensation and benefits of Ministers and officials in other similar developed countries but adding in the additional perks and benefits which they get during and after their service. That may have some hope of being better accepted than the current benchmark comparing, as it would, apples with apples. The 1994 decision to benchmark in context Does this mean that the decision to move to a formula-based system in 1994 was wrong? Let us give the Government the benefit of doubt, perhaps it had no other way but to develop and use the famous "6 professions" benchmark. I think many countries have since also increased their salaries to justify why civil servants and Ministers should be paid as high by referring to Singapore. Sir, 13 years later, we are already used to this new range of million-dollar salaries that Ministers are paid. I feel that there is no longer a need to use such an arbitrary benchmark formula for justifying further increases in Ministerial and civil servants' salaries. Sir, we already have a good base from $1.2 million and, like any other company, all that is needed is regular internal reviews to make adjustments.”
“And, also, in reference to the handout given for the SR9 grade, it clearly shows that in the last two years, we did not adhere to the benchmark because it was at 116% and 103% for the last two years. So we are not following the benchmark. People on the ground have told me, "Let's not kid ourselves with a benchmark formula, because we can target any number as the final number that we want a formula to calculate, and then reason backwards to find a formula that will give us a final number." Sir, elements in the formula can be varied, such as which professions are chosen, or how many of the top earners should be considered as part of the sample. And therefore, frankly, I can use just any formula to justify the final number I want. So, for example, if I want the salary to be $1 million a year, I can design a formula to choose the variables to give me the answer. And similarly, if I want it to be $5 million a year, I can design that formula. So this is what many, among the professionals, perceive this whole benchmark mechanism to be - although I can understand it is one way of measuring Ministers' salaries against a benchmark, they are very cynical about this with the kind of explanation that I have just spoken about - in other words, they think that it is an eyewash. The public finds this approach patronising. The professional and the better educated Singaporeans just do not agree with the comparisons made as there are too many variables and the scope of work and risks are a world of difference. I agree with this and, I think moving forward, there is little point in trying to justify salary increase using a benchmark formula.”
“So, if you really want to use a benchmark formula, a big discount would have to be given for the fact that CEOs are judged on an annual performance while Ministers face elections every five years. So are we then prepared to a discount of 1/5 of what the CEOs earn to account for the lower "risk"? What about a lawyer or a professional who is subject to law suits from clients if a job is poorly done? Their risk level is much higher than a Minister's or a civil servant's as they are immune to such law suits even if they do a bad job in their Ministries. Are we willing to throw in another discount for this? Or for the fact that Ministers have pensions while the top earners in the selected sample do not? So, let us add another discount factor because of the pension. And we can find many other holes with the benchmark formula and I am sure we will be hearing many of this in the next few days of the debate. So, therefore, why use a benchmark? In fact, over the years, the benchmark formula was not adhered to as planned, which is a reason why the Prime Minister has highlighted the big gap but has opened up in the salaries as compared to the top in the private sector. In the past 13 years after the benchmark formula was implemented in 1994, the Government and the PM decided what was thought to be fair compensation for the civil servants and Ministers and apparently never really used the benchmark. Salaries were still adjusted. So in some years, salaries went up and in other years, there were pay cuts, especially during the recession years. This alone shows that it is possible to do without a benchmark.”
“This benchmark is the reason why the whole debate has become emotional. Many holes have been poked into this benchmark formula. Some of the issues raised in 1994 about the benchmark remain the same till today, and I read many of them through this cutting [indicating ] that I get. First, the arbitrariness of selecting the six professions and why other professions are left out and why only the top eight are being selected. Second, the big difference in risk between the public sector and private sector. Third, the upward bias, I heard, of taking the top earners - those at the top in one year may not be at the top the following year, whereas the Ministers would always be getting paid based on whoever was at the top, insulating them from the vagaries of the private sector. Fourth, the assumption is that the Ministers could have commanded the high pay had they been working in the private sector. Why then after 13 years we still have not been able to convince Singaporeans about the rationality of using the benchmark formula as it was designed? I do not intend to suggest a better formula. I know many Members in this House will do so. Mr Alvin Yeo also spoke about some of his suggestions on how it can be modified. Instead, I am going to suggest that we eliminate the use of the private sector benchmark to set salaries for the Government. Here are my reasons. First, if we were to stick with a formula-based system, we would have to be making discounts for many things. The risks CEOs and the professionals face in the private sector are much different from the risks faced by Ministers and civil servants.”
“The more we move towards a purely monetary-based compensatory package, the more we take the moral shine off our leadership. As we move more and more towards a system that is properly compensatory in monetary terms, the Prime Minister must also ensure greater correlation to performance and that each Minister or civil servant should be subject to stringent performance management. Hence, should there be less than the desired level of performance, strict action should be taken whether in adjusting the salaries or the total compensation or, in fact, removing non-performers and poor performers. No longer can we say that this person is just doing public service or is making great personal sacrifices for the nation and therefore we should be more tolerant towards less than top-notch performance levels of such people. So the whole system will naturally evolve towards one of Ministers doing a job and less of just doing service to the nation. Still, the proof of the pudding is in the eating. The facts speak for themselves. No country compares with the stability and security and the overall potential of Singapore. These are, in large part, the result of enlightened leadership. We cannot risk diminishing this. I therefore support the move to pay our leaders high enough salaries so that we have a team of people in place in Government who can continue to make the right policies for Singapore. So having addressed the issue of whether our Ministers should be paid top-dollar, I now turn to the question of what is the appropriate way to decide on the amount that they get paid. This is where the problems start to arise. The validity of the benchmarks - Do we need them and should we keep them? As we know, the Ministerial package is pegged to a benchmark.”
“So, in principle, I agree that we need to offer packages that, on balance, are comparable with the best in the private sector. Sir, I have heard the argument that Ministers and civil servants do not work as hard as people in the private sector. This is a wrong perception. It is well known that most politicians spend weekends and nights doing constituency work and other political related work. But it does not end there. It is also a 24/7 preoccupation for many of our top leaders, our Prime Minister included. Many a time, I have emailed the Prime Minister at midnight, and sometimes at 1.00 am, and five minutes later I get a reply, and then I am pressured to send him another email, and it makes me wonder whether he ever sleeps. About a week ago, I was in the USA doing my business and it was about 10.30 in the morning, my time in San Francisco, and I emailed a message to Minister Tharman. It was about 1.30 am (Singapore time). I got a reply five minutes later.And I also knew that Minister Tharman had to attend a breakfast meeting at 8.00 the same morning, a meeting which I was supposed to attend but could not because I was in the USA. I do not think that Ministers work less hard or have jobs that are any less challenging than anything one can find in the private sector. It is the same with MPs and many civil servants. The model that we are heading to Given that we then recognise that there is a need to pay top-dollar salaries for top talent, the question is where we are heading as far as the idea of public service is concerned. It is a fine balance to strike, but once we acknowledge the market reality, the logical conclusion is that we move away from the concept of pure public service to performance-linked pay.”
“Businessmen MPs could have spent more time on their business and made more money for their companies and for themselves, but they have made the choice to spend it serving the country. So, the Minister Mentor is not quite right in thinking that Singapore will sink if we do not make Ministers the highest paid in the land. Sacrifice and whether we should demand it But having said that, should we have a system or a situation where we demand sacrifice by all people who join the Government, whether the civil service, or as Ministers or as MPs? It sounds like a compelling argument but we have to be realistic and fair, especially in these times of intense competition for talent. We have to realise that on a system-wide level, altruism alone will not give us the critical numbers that we require in leadership, which SM himself noted in the debate in 1994. So, are we willing to leave the future of the economy to chance that we will get good people who will give up their competence without caring about their salary? We should not take advantage of the situation and the good nature of the people we bring in to work as Ministers and pay them less than what they should command. It is the responsibility of the organisation - in this case, the Government - to reward them even if they do not demand it. In enlightened organisations, good people do not worry about whether they will be well paid for the good job they do - they just go out and do the job and have faith that the organisation will ensure that they will be equitably rewarded. The Prime Minister should therefore take the responsibility to pay those who join the Government what they deserve even if they do not ask for it. We should want the best to know that if they are committed to give their best, they will not be worse off.”
“Sir, let me say at the outset that I strongly support the Prime Minister’s initiative to increase the remuneration of Ministers, but I disagree with the benchmark that is used to decide this salary scale or, in fact, the use of any benchmark, and I also have some concerns about the timing of the proposed revision. First, on the Ministerial salary – do our Ministers deserve so much of remuneration? Rationale Sir, the rationale for paying our Ministers and top civil servants so much has been explained by the Prime Minister, Minister Mentor and, also, by Senior Minister during his Prime Ministership, when the salary debate first took place in 1994. And today, the Minister for Defence also gave us the reasons. People generally have accepted the fact that our Ministers must be paid well. And I am in full agreement with the rationale although I cannot agree with the rather extreme scenario raised by the Minister Mentor of a meltdown and Singapore landing in the dumps if we do not increase our Ministers’ salaries from $1.2 million to $2.2 million this time. Our history over the last 40 years shows that we have had many committed men and women who have made sacrifices for the country by coming to serve at all levels of government. Many of the Minister Mentor’s generation, including the Minister Mentor himself, made such a sacrifice. Even in this generation, as the Minister Mentor highlighted a few days ago, we had three doctors who left lucrative practices to join the Government, giving up well-paying compensation packages. Many of the Members of Parliament even today are sacrificing a lot to serve the country. Some lawyer MPs are giving up clients because of the time that they devote to their constituency work.”
“Sir, thank you for allowing me to speak on this issue. The whole issue of salary adjustments for the civil service and the Ministers has been emotionally debated by the public and I can understand why it has become emotional. I feel that had the Government done things differently which, in my view, would not have been a very difficult thing to do, the public discussion could actually have been on the merits of the proposed salary revision, which I do support. The whole salary debate started with the debate on “Competitive Salaries for Competent and Honest Government” which the Minister spoke about just now, and it took place in this House sometime in 1994, and I still have all the cuttings [indicating ]. It has drawn a lot of interest. I was the newly appointed second adviser and I took a lot of interest on this issue and I have kept them since then. Thirteen years later, however, the debate has not shifted very much, which means that the Government has failed to address the contentious issues. The central question here is whether our Ministers and top civil servants deserve so much in the way of salary but discussions have unfortunately been clouded with other issues. I think people already accept that Ministers and civil servants deserve the high salaries but how the Government is justifying it is the main problem. My comments today will focus on three areas: (i) Whether our Ministers and civil servants should be paid the very high salaries; (ii) The usage of the benchmark to calculate the Ministerial salary increase; and (iii) The timing of the proposed increase in salary – in other words, whether it is something that needed to be done at this time.”
“Sir, I would like to thank the Minister and the two Ministers of State as well for clarifying and answering all our questions. They were wide ranging questions from nuts and bolts issues to colourful issues. At the same time, I like to take the opportunity to thank all the economic agencies under the Ministry for doing a very good job in steering Singapore's economy to the direction that it is heading. As I mentioned at the start of my speech, we are indeed seeing a "Goldilocks Economy" and we are thankful that this has happened and we hope that we have many more years of growth like this. With that, Sir, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $510,482,110 for Head V ordered to stand part of the Main Estimates. The sum of $4,605,637,800 for Head V ordered to stand part of the Development Estimates. Column No : 2714 Head N - Ministry of Foreign Affairs”
“Sir, on the energy sector, could I ask the Minister whether there have been any new applications for energy generation in Singapore and, if there are, how many? For the tourism industry, will the shortage of projected supply of hotel rooms become a bottleneck in our plan to grow the tourism industry?”
“Sir, on the issue of JTC divestment, can I ask the Minister how many companies or REITs will be managing the divested JTC properties? The reason I ask this is that if we want true market competition, then we need a bigger number. Perhaps the Minister can share with us what will the process be in this divestment exercise. There was also a question on dual economy that I raised together with Mdm Ho. Could the Minister comment on what the Ministry plans to do on this?”
“Sir, as Dr Loo Choon Yong and Dr Ong Chit Chung have mentioned, I welcome Mr Philip Yeo in taking over the role of SPRING Chairman. I believe if he focuses, we will achieve the results that we desire for small and medium enterprises and to grow local enterprises into our MNCs. SPRING needs greater focus and we need a rationalisation of the roles in technology adoption and also in internationalisation, all in one place. I think we will be very successful. Consumer Protection”
“It is time that SPRING, as a local enterprise agency, took over these roles of technology promotion, leaving EDB the main role that it is good at - bringing in foreign companies into Singapore. Sir, EDB cannot effectively serve local companies because I was told by someone in Government that EDB "cannot use the same gun to fire at ants and elephants". So, it chose to fire only at the elephants which are MNCs. So, we are kidding ourselves if we think that EDB can effectively serve both local enterprises and MNCs. Sir, there is a very good case, therefore, for SPRING to become that local enterprise champion that can also assist start-ups in the area of internationalisation and technology adoption. Sir, in all, the real value that any Government agency can act in the coming years in supporting local enterprises is in the area of capability development. As I mentioned, this must be in the area of technology and innovation adoption. So I hope that MTI will bring greater focus in helping local companies become better in what they do, especially in the area of management expertise. Sir, in case some Government officers misunderstand what I am saying, let me say that both EDB and IE Singapore have done well in doing what they have been tasked to do. The issue is not that the people in the two agencies did a bad job. The issue is with the structure which the Government has set up and, therefore, local companies do not get the optimal support that they desire. And I was told that some IE Singapore officers were a bit unhappy with my comments that appeared in the Today paper saying that they did not do a good job. This is what I meant, that is, the structure is such that they cannot serve the smaller companies.”
“Sir, based on a recent STEPS survey conducted by DP Information that Miss Penny Low talked about, it was noted that 67% of the start-ups had expressed their desire to enter the overseas market right from day one. In addition, the latest GEM survey also reflected that one of five businesses employs the latest technology. We currently do not have a satisfactory eco-system which can help companies which approach our Government agencies for Start-up, Technology and Internationalisation assistance. Sir, IE Singapore has done a good job in supporting companies already successful in Singapore to internationalise their operations or markets. IE is not set up to focus on start-ups and we cannot expect them to satisfactorily serve start-ups planning to internationlise because their needs are quite different compared to the needs of established companies. I feel that if we let one agency focus on local enterprise support from start-ups till the time they become our own MNCs, we will achieve better results. We can either merge the two agencies, IE Singapore and SPRING, to form a local enterprise champion, or have a rationalisation of roles with SPRING taking over certain roles plus resources from IE Singapore to help support start-ups to internationalise. This way, we will avoid the duplication of work, as I know SPRING has sometimes been asked by companies SPRING serves to help them tap overseas market opportunities. Sir, in the area of technology adoption in local companies, as I mentioned, I feel that EDB alone cannot effectively reach out to all our local enterprises. At present, some Government incentive schemes and promotion role for all enterprises including local enterprises reside in EDB. But EDB is primarily focused on bringing in FDIs as well as MNCs.”
“Sir, in the recent ACE's Finance Action Crucible study trip to Taiwan, Korea and Hong Kong, we observed that governments in the various economies took on SME financing as a developmental role. Hence, they did not expect any monetary profits from the financing that they provided to enterprises. My question is: should Singapore not adopt the same approach? In our current Government-supported financing scheme, MOF has set a requirement that the agency administering will have to return to MOF a certain return over and above the cost of borrowing. In other words, SPRING and other agencies administering such schemes are required to make money for the Government. For the countries we visited, we noted that all ended up writing off a significant portion of the funds provided to support SMEs every year. While I do not have the exact data, my projection based on information I got from a couple of banks showed that, in Singapore, SME lending as a proportion of total lending is a mere 2%. In some of the Asian economies that we visited, the evidence is that the number is closer to between 20% and 25% of the total lending going to SMEs. Sir, I believe that if we just make a simple adjustment where SPRING and the other agencies just have to break even for the funds provided, not make money, I think we would be able to reach out to many more companies and service those that are deserving and increase our percentage from 2% to a much better number. This profit making requirement should be eliminated because really this should be a developmental role and we can then service many more companies which can benefit from the growth of the economy here in Singapore.”
“A case in point about supporting industries, I was told, is that there is a lack of some ancillary services in the biomedical sector. Specifically, the lack of gamma-sterilisation facilities in Singapore meant that our companies are sending such work to Malaysia to get it done. So I hope that the new R&D strategy of the Government will not forget local enterprises and go the way that MNC strategies have worked in the past. Promoting Local Enterprises Overseas”
“Sir, while we have seen some successes with our five-year R&D plans, we have not been very successful in deploying the R&D funds administered mainly by EDB to local companies. Our MNCs, on the other hand, have benefited from Government funding to encourage them to do R&D in Singapore. I am concerned that the new technology plan managed by the NRF may again not effectively reach out to our local enterprises. Sir, MTI needs to rethink how it plans to deploy the R&D funds as past approaches did not fully achieve their objective for local companies and, therefore, today, we have very few local innovative, technology and high growth companies which arose out of Singapore. Let me point to the ongoing debate about how successful our biomedical strategy has been. On the surface, it seems to have worked and I think it did work exactly the way the strategy of attracting and growing foreign MNCs worked for many years through EDB's strategies. EDB's strategy for MNCs was to give them a whole lot of tax incentives and MNCs also got cheap land rentals, almost at negligible cost in many cases, plus a whole lot of other facilitation by Government agencies. If we look at the way the biomedical strategy has worked, it has been exactly the way the MNC's strategy was put together. We had lots of funding, lots of incentive and therefore we attracted many global researchers who did research in the way that they wanted and not necessarily the way it could have benefited the Singapore economy. Sir, my worry is that the strategy seems to have ignored the local companies and expertise. We should have additionally focused on building local capabilities at the high end as well as supporting companies at the lower end.”
“Sir, finally, I would like the Minister to comment on the effectiveness of the Competition Act or has it been mainly a white elephant. We still have cartel-like behaviour in certain industries, like the oil companies, taxi companies as well as the energy sector, where I have heard about one example of how a new entrant in the electricity generation sector is facing a lot of problems because of the uncompetitive behaviour of the incumbent big players in the energy sector. In fact, this energy player is facing problems from the gas sector too which is not being liberalised. Perhaps, the Minister can share with us how the Competition Act is working in Singapore. Economic Growth”
“It will require a combination of incentives, ecosystem and support which can incubate and grow such companies rapidly, including the adoption of latest technologies and also in helping them globalise. Sir, I do have two concerns which I want to raise for the Minister to comment on. First, the emergence of the dual economy and our strategy to address it. While there will always be weak sectors of any economy, I think the divide is not just among different industries but between big and small companies too. Is the Minister watching this dual economy development? Sir, the second issue is on cost competitiveness which is not a major issue right now but which can very quickly become an issue if you are not watching it. As I mentioned during the Budget debate speech, we had in the past allowed our economy to become uncompetitive as a result of cost increases which resulted in the formation of special committees from time to time to address cost competitiveness. This time, I hope that we do not get in the same mode but try to avoid major cost increases. And I talked about the triple whammy of cost increases we have seen - rentals going up, wages going up and also the input costs, including fees and charges from Government, that have gone up recently. Perhaps, the Minister can share with the House the measures his Ministry will be taking to avoid getting into another cost uncompetitiveness situation. Specifically, can the Minister reconsider its strategy to allow JTC to divest its assets? I will not want to repeat what I said during the Budget speech but needless to say that, if JTC divests its assets in the industrial property sector, this will price some of the industrial land beyond the reach of some of the companies that could still operate out of Singapore.”
“Sir, I beg to move, That the total sum to be allocated for Head V of the Estimates by reduced by $100. Sir, I have heard the term "Goldilocks Economy" used to describe the Singapore economy. The "Goldilocks Economy" term is used to describe when things are just right. Indeed, in Singapore, after the tough few years, last year has been good for the economy and the outlook looks good. Most sectors of the economy are doing well and the outlook remains good for the foreseeable future. But external factors can quickly change the status quo and just right things can become too hot or too cold for us. In such times we should not get complacent but instead should take the opportunity to position the economy for future growth and also to prepare to weather any storms that we might face. Let me ask the Minister to share with the House on what future growth drivers we will develop for the economy. Specifically, after the biomedical sector and the Integrated Resorts, what will the next couple of areas we can seek opportunities in to become the major growth drivers for the future economy? What new engines do we plan to develop for Singapore? Sir, while we focus on new engines of growth, it is obvious that there is now an urgent need for us to nurture a new breed of innovation and technology-focused start-ups capable of very high growth and of becoming Singapore's own multi-nationals of the future. As more foreign MNCs exit Singapore, our best bet is to grow our own base of such companies. It will take a whole new approach for us to identify and support such companies quite different from the past approach of focusing on the already successful SMEs and to help them grow further.”
“But, unfortunately, we had a precedent set by the former Chief Justice where, under the case of Public Prosecutor vs Zhong Tian Hao, he decided that punishment for this offence should be a jail term. And subsequently, the Subordinate Courts are bound by this precedent. I am not a lawyer, but I think they are bound by this precedent set by the High Court. I think the courts should not be playing the role of Parliament and I hope that the Minister can explain this. I suggest that the Minister look at Chapters 7 and 13 and also the harshness of this rule to be reduced.”
“Sir, I have raised this issue of bankruptcy in this House before. Essentially, there are two issues. The first is how to avoid entrepreneurs from being rushed into bankruptcy. And, second, when they are already bankrupt, how to make it easier to rehabilitate and facilitate their quick entry into the economic life? Sir, I had suggested that we consider the US model which is a dual-track model of Chapters 7 and 13 for individual bankruptcy. Under Chapter 7 of the US Bankruptcy Code, an insolvent person can apply to put himself into bankruptcy if he cannot pay his debt. He is subsequently also counselled as a consequence of a bankruptcy under Chapter 7 on the effect of his credit history. In this section, he will also be told of the alternatives under Chapter 13, in which he has to continue to pay his creditors or reaching a private settlement to avoid bankruptcy. Under Chapter 13, there is no wiping clean of the slate but neither is there the stigma of being a bankrupt. This is a good system for us to follow here in Singapore. Sir, one particular example of how harsh the regime here is is the case of bankrupts who leave Singapore. As Minister Prof. Jayakumar said in the Bankruptcy (Amendment) Bill debate on 25th August 1994 in this House, the intention of the OA is not to prevent every Singaporean bankrupt from travelling. Yet, we still have many bankrupts who do not apply to go overseas because they have difficulties in getting approval. Many of these persons get hauled up before the courts and face criminal sanction under the Bankruptcy Act, section 131, where the Act punishes them with either a $10,000 fine or a jail term of two years.”
“Sir, I would like to thank the Minister of State for her comprehensive answers to all our questions. As you notice, this year, under MOF, there were very few cuts and that is because this year's Budget was a good budget. There was a comment in the Straits Times that too many of the PAP MPs were praising this Budget. But I think we make no apologies for praising the Budget because it was indeed a good one and the result was very few cuts for this Ministry. Sir, I beg leave to withdraw my amendment. Amendment, by leave, withdrawn. The sum of $437,696,370 for Head M ordered to stand part of the Main Estimates. The sum of $147,503,000 for Head M ordered to stand part of the Development Estimates.”
“Budget Policy Sir, over the years, the budgeting process seems to have shifted from project funding where MOF approves specific projects for each Ministry and the Ministries have to justify the economic value of the projects they plan to undertake. The system, however, has evolved into a block budgeting system where Ministries are given block budgets and then they have greater flexibility in spending the budget that Parliament approves. While this does look like an efficient system and delegates more responsibility to the respective Ministries, the risk is that the Ministries might spend funds that they receive from the Government on projects which might not necessarily align with the Government's objective or national interest, nor would it be the type of projects that they were originally intended for. How can MOF ensure that the budget allocated is spent consistently with this approach? And how does the Auditor-General then audit whether the Ministries are indeed spending the money as intended? With the block budgeting approach, it will surely make it difficult for the Auditor-General to audit this aspect. Could the Minister share with us how Ministry of Finance is controlling the other Ministries through this approach? Key Performance Indicators for Ministries”
“Sir, I understand that many non-corporate entities like societies and charities have had to follow a financial reporting standard for companies. The Minister for Community Development, Youth and Sports mentioned in Parliament earlier this year that the Government is considering setting up an Accounting Standard Board to issue accounting standards for charities. Could MOF outline what the Government is doing to change the accounting standard regime for these non-corporate entities or what they will have to comply with under the proposed new system? In fact, for corporate entities, both listed and unlisted, we do not really have an authority to regulate accounting standards. Such a system is a practice in many countries and it helps maintain certain standards of governance and disclosure for companies. How can this strengthen the corporate governance and disclosure regime in Singapore for the various entities? Sir, at the same time, while we desire for better standards, we should also avoid going overboard, like in the USA, where rules like the Sarbanes-Oxley Act have made it onerous for listed entities in the US to the point that it is deterring many companies from either listing in the US or pushing them to plan and exit from the US markets. Perhaps the Minister can share with the House what we could do to implement an effective corporate governance standard and monitor and even enforce compliance, including for private companies, while not deterring investments here. What needs to be done is to strike the right balance between corporate governance and flexibility to make Singapore an attractive and yet transparent place for business.”
“00 pm Sir, the amount can be quite significant and the burden on the companies could be quite huge, especially for very capital-intensive companies. For example, I remember when I started UTAC in 1998, it took us almost a year to get the facilities ready for production, and we spent a lot of money and also borrowed some. It was quite a huge burden on us when we tried to operate a company with that kind of taxation and we could not deduct the borrowing costs from the amount that we have to pay for tax. Finally, on GST. It is a welcome move that the Government will be helping smaller companies offset the cost of becoming GST-registered. Some Members have brought this up. The issue really is the cost of operating a GST-registered company. This cost will be much more than the cost of starting up as a GST company. The companies will have to employ additional resources to manage their GST-registered status. Further, we have heard many times that, sometimes, it takes a long time for IRAS to credit companies making GST claims, especially when there are a certain number of queries that may have arisen. It could take a couple of months before the companies get their returns back from IRAS. This, therefore, will result in a huge cashflow burden for smaller companies. Could the Minister look into simplifying the procedures so that we can encourage many more companies to become GST-registered and, therefore, benefit from what the Government is trying to achieve by sponsoring their start-up to become GST-registered companies?”
“And the losses incurred, as a result of the investment not being successful, could also be allowed to be carried forward, in terms of income tax computation. Sir, the expected benefits include encouraging angel investors which we are greatly lacking here in Singapore. Sir, the second suggestion is on deferral of taxation or payment of assessed tax for companies that are investing in overseas expansion. The proposal could include removing funds marked for overseas expansion from assessable income to allow companies to accumulate the capital base to make strategic investments overseas. Alternatively, such companies could also have their taxation deferred to facilitate their move overseas. Third, tax incentives for investment funds to be housed here. Presently, we have incentives which are geared to encourage investment activities out of Singapore. Funds themselves, however, are likely to continue to be parked overseas in the tax havens. This proposal would target having these funds move here from these tax haven countries. This could also be coupled with other incentives to encourage investment in private equity in startups that I talked about earlier. Expected benefits are that it would bring greater liquidity to the local investment scene and it will also encourage companies overseas to raise funds in Singapore. Sir, fourth, is on the slight change that we have on the deductibility on borrowing cost. As I understand, the cost of borrowing is not eligible for tax deduction during the start-up or construction period of an asset, even if during this development phase, the assets are being built to generate funds for future revenues, the cost of borrowing is not deductible and I do not understand why. 2.”
“Sir, I beg to move, That the total sum to be allocated for Head M of the Estimates be reduced by $100. Sir, I have a number of tax suggestions to make. First of all, paying tax on the current year's income. Some years ago, there was a discussion in Parliament about the current year's assessment or Pay-As-You-Earn system for income tax. The gist of this is that it sees people pay tax for the income that they are earning during the current year. This can be deducted at source for those who are employed and the expected benefits of such a system are: first, it would enable the Government to use tax policy as a stabiliser for the economy and as a counter-cyclical tool to mitigate slowdowns and dampen overheating of the economy. Under the current model, the tax is levied on the income earned in the previous year of assessment, and the impact of any tax initiative will have some lag before it is felt effectively on the economy as people's present consumption and investment decisions take into account the amount that they have to pay for the previous year's assessment. It would also lessen the burden on people who lose employment but still have to pay tax on the previous year's income. Sir, now, I will move to a few suggestions of promoting entrepreneurship and overseas expansion of enterprises. First, to provide tax incentives for individuals and companies to invest in private equity and start-ups. These could also be refined to encourage investment in the areas that Singapore sees itself developing a strategic strength in. The mechanics of the proposal could include income tax deductibility in whole or in part of investments made into private equity funds or in start-up companies.”
“Sir, I would like to ask the Deputy Prime Minister about our attitude towards attracting back former Singaporeans, whether citizens or PRs. We are doing quite a lot to attract new citizens but the feedback I had got is that we are making it actually very difficult for those who give up their PR or citizenship to reapply for a PR or residency in Singapore. Could the DPM please explain?”