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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“Sir, on the issue of value add, one thing that has always been on my mind is whether we have ever recovered all the investments that we brought in Jurong Island. Have we been effective in generating value add for the country?”
“Sir, I support the issues brought up by Mr Chew Heng Ching on the effectiveness of SBF. And I have a suggestion on how we can make SBF look like a value-added organisation and not compete with the various Chambers, and that is related to my question on the FTAs. I mentioned that companies have yet to see the benefits of FTAs. I think the organisation that could play a significant role is SBF. Just as in ACE through the internationalisation of Action Crucible, through very tedious mentoring approach, our members have been able to help Singapore companies internationalise. It is an accounts management approach done by volunteers. If SBF could take the responsibility to be the organisation that understands and helps to operationalise these FTAs, I am sure many companies will then want to go to SBF and will not question the value-added that SBF has. We will then also see the added benefit of our companies benefiting from the many FTAs that have already been signed and the many more that are coming on board very soon.”
“So, the Ministry's next focus should be on how to enable companies to capture a bigger pie of global opportunities that exist. The various FTAs could help show us how we can do this. Perhaps the Minister, therefore, can clarify and share with us what successes we have had with the many FTAs that we have already signed. The impression that we have is that these are, so far, paper agreements with no net benefits to companies in Singapore. Sir, I am also happy to note that we are increasing our efforts in promoting R&D in Singapore. We also have had many five-year R&D plans and the main beneficiaries for this have been either Government research institutes, big multi-national companies or Government-linked companies. We have had a very poor reach to SMEs. And I have talked many times in this House about how the equivalent jobs done in SMEs may not get the type of funding that MNCs may get for the jobs that they also do. I, therefore, ask the Minister to share with us how he hopes to ensure that the SMEs will capture a greater pie of this R&D budget that the Government is setting aside. I hope that, this time, we will distribute the funds in a more equal manner so that our local companies have a greater chance of accessing. Perhaps we can create a focus group, quite along the lines of what Dr Ahmad Magad mentioned just now, that can help cultivate the development of R&D in SMEs along with many other things that we want to do.”
“I also do not want to belittle the efforts put in by Spring and IE Singapore in supporting SMEs. In fact, I sit on the board of Spring and we know that a lot of good work is done there. I can see the passion of the people in both of these organisations at the board and management levels, and also the staff of these two organisations. But I know that unless the drive starts from the top, these two organisations will not get the right level of resources to allow them to do their jobs well. I see the opportunity to merge these two organisations as a combined entity, and perhaps this may be the equivalent of the local EDB that we are asking for. I am sure, with the rationalisation of the efforts and the combined resources and realignment of focus, we will see greater success in our efforts to create an environment conducive for the support and growth of SMEs into large multi-nationals of the future. If properly funded, this enlarged entity will be able to fulfil the needs and answer the call of the equivalent agency that we have been talking about, and this call has been going on for many years. And if it continues for many years, it just says that we need to do a lot more, and not enough is done in this area. I also like to say that in the last few years, we have done a very good job in addressing the cost issues for SMEs and companies in general. Now that we have restructured our economy - and companies which are surviving today are perhaps the stronger ones, and the weaker ones have probably collapsed by now - our next focus should therefore be on the other part of the equation, ie, the numerator side or the demand side to capture greater business opportunities from around the world.”
“Sir, as our efforts to promote entrepreneurship bear fruits, we will be able to create many more companies that will inevitably be SMEs as they start to grow. If we do not support our SMEs well, many will die prematurely and defeat the purpose and objective of trying to create many more local enterprises. Sir, SMEs need support and they need a focused effort as what my colleague, Dr Ahmad Magad, just mentioned. As I said many times before, we need a Government agency to play this role, one with equivalent resources given to do a good job. 1.15 pm I had in last year's debate talked about a LEDB, or local EDB. I am very confident that the results will far outweigh the cost to the Government. Just as the efforts of EDB have yielded the results in the area of FDI attraction and the efforts of ACE have helped in entrepreneurship, an organisation that dedicates its support to the growth of SMEs will yield similar results. In fact, I am worried about the type of FDIs we have been attracting lately. My impression is that the value add of these investments might not pay for the cost that the Government incurs, because the number of jobs created by these FDIs and also the amount of tax revenues the Government collects might be zero for the lifetime of such investments. Perhaps the Minister can share with the House the value add of the $8 billion or so FDIs that we had attracted last year, and also in previous years. I am sure that for every dollar that we spend on local companies' development and support, it will yield a bigger value add and return for the Government. I am not asking the Government to kill the efforts of the EDB but to redistribute the resources to do both jobs optimally.”
“First of all, I would like to declare my interest as a person helping to promote the setting up of an OTC in Singapore. I have been directly involved with a private company to encourage them to set up one in the manner which my committee in ACE envisioned. My involvement in this private company is purely voluntary and I derive no benefit or compensation from it. We have been talking about setting up of a private equity exchange or OTC which will be an excellent alternative platform to help growing companies raise funds. This is a big missing part of the whole puzzle which ACE has been trying to put together. I am sure many companies will benefit from its implementation. We passed the legislation about a year ago, I think in February last year, to allow something like an OTC to be set up in Singapore. I know that MAS has many concerns and hence the delay for approvals. But I also know that most of these issues have been resolved. Perhaps, the Minister can update us on the status of the implementation. Singapore Exchange”
“Sir, we now have regular updates from Temasek on its performance. GIC also seems to be generating very good returns over the years. I am encouraged by this. In my speech on the Budget, I mentioned about my hope that both Temasek and GIC will return higher percentages to the CPF so that our Singaporeans' returns will be better. But before we can do this, we, of course, need to ensure that we can continue to generate good returns. I have three questions in this regard. First, while the returns made by Temasek and GIC look good, how good is good? Can we understand how both organisations benchmark themselves? In other words, how do their performance compare to equivalent organisations, companies or funds which engage in similar activities? Second, how do we account for the significant losses that happen from time to time, like the large write-off recently made by DBS and the expected write-off by other Temasek companies which also have made high profile, expensive acquisitions lately? My main worry is whether we are moving into an era where we can no longer expect good returns from both these organisations. The question is: how do Temasek and GIC manage such write-offs? Third, how do both organisations account and manage the risk of investments done outside Singapore? I know that we can do this well in Singapore, but how do we do it outside Singapore? It will be useful to understand what is done to manage the risk to give comfort to Singaporeans, and moving forward, the money that we have will be well protected.”
“I support Mr Ahmad Magad's recommendation that we form a panel to just look at this retirement issue. Sir, in conclusion, this year's Budget is indeed a people's Budget. It has rightfully helped the people badly hit by the restructured economy. Many Singaporeans will continue to be affected as the economy continues to restructure. We have not ended it yet. We need to have in place the right support measures to help Singaporeans if and when they are hit by retrenchments and when they face prolonged periods of unemployment. We have entered a new era where we need to be realistic about our expectations in that we should not unrealistically commit to more than affordable assets like houses and cars. A greater proportion of our disposable income should go towards retrenchment and retirement support and the Government could play a role by formalising this support structure through changes in the CPF system or any other system. Sir, on the business front, we should keep our momentum of transforming our economy to an entrepreneurial economy. We should not think that things will be back to normal again. The world has changed and we must continue to change fast. We have all the right ingredients and now it is for us to make it work for us. Sir, I am very happy that with the series of Budgets that we have seen over the last three years, since 2003, which were intended to restructure the economy and now the final touch of taking care of people who have been affected by the restructuring is a master touch at the right time for all of us. Sir, taken as a package, the Budget over the last three years, we have one of the most enlightened Budgets in a long time. Sir, I support the Budget. 1.22 pm”
“In order to effectively achieve this at the operational level, every Singaporean must save for their retirement as well as for a rainy day and this rainy day includes medical needs and, lately and increasingly, potential retrenchments and extended periods of unemployment. The Government cannot possibly take care of everyone and, therefore, the programmes at WDA and Workfare cater for the lower income and the lower skilled Singaporeans. But what about the sandwich group of Singaporeans? Many of us in this House have over the years suggested the use of CPF as an alternative retrenchment benefits scheme where members borrow from the CPF. While this is an attractive proposition, the Government's argument has been that it is impossible as the CPF system is already overloaded with needs like housing, medical care, investment and education, including retirement, being fulfilled by the CPF system. Also, how do we possibly do this given that even the basic treatment needs cannot be fulfilled by the CPF? So unless we start with a new mindset that there need to be two equally important roles of the CPF, we will never be able to find an amicable solution. If we can think in the new mindset, then perhaps we can have additional savings made compulsory during productive employment years to help during years of unemployment, or a national unemployment insurance programme being implemented as a an integral or a subsidiary part of the CPF. I do not intend to talk about the perfect solution but how we can get to a solution by rethinking the role of the CPF as having dual objectives of retirement and retrenchment. I am quite confident that we will have the right solution once we can settle this issue.”
“The first issue is on the returns we get from the CPF. We all know that we will not have enough money to support our lifestyle upon retirement for most Singaporeans and, especially with life span increasing, it is indeed a matter of great stress for many of us. One of the first things that we need to do is to source for better returns on the funds that are being managed on behalf of the CPF. While the interest that we receive from the CPF savings of around 2.5% looks better than some bank savings rate, if we compare the CPF returns to the returns of pension funds from around the world, the 2.5% is a very low rate. Then, if we look at the returns that Temasek and GIC are making for the funds which they invest on behalf of Singapore, the returns are much higher than the 2.5%. So something needs to be done to liberalise the CPF funds closer to private sector fund management like pension funds in other parts of the world or perhaps the Government should return more than the 2.5% since the funds it manages through Temasek and GIC yield much higher than the 2.5%. If we can increase this percentage perhaps we may have a better chance of having enough money to spend upon retirement. Sir, the second thing I suggest on the CPF is that it should now switch its role from a primary retirement scheme to a dual role. This would help address the issues I raised about the sandwich group of Singaporeans. The primary roles, instead of being primarily to serve the retirement needs of Singaporeans, should perhaps include the need to address retirement as well as retrenchment. The operating principle of our Government has been for Singaporeans to help themselves in times of need and also be responsible for their own retirement. I agree with this basic principle.”
“One of the most unfair schemes is the Global Trader Programme where many of our local traders cannot qualify although the type of activities they do is no different from that of foreign traders who are attracted to Singapore because of this Global Trader Programme tax incentive. On technical grounds, local companies fail to qualify for this tax status. I should perhaps, at this point, declare my interest as the owner of a local trading company. This issue has been brought to my attention not because of my company, but through discussions in the feedback sessions that I have with some of these companies and local traders who actually have relocated out of Singapore into places like Dubai because of their feeling that Singapore is becoming less attractive. So if we can relook at how these schemes are designed and do some fine-tuning, our local companies too can feel that they are fairly treated. All they need is a level playing field. Sir, I believe that the CPF system is also due for another review and while the ERC did put in a commendable effort to make good recommendations, it was limited by what it could change because of the boundary conditions that it was given. Specifically, because the mindset was that the CPF remains primarily a retirement scheme, the changes recommended are not good enough to address the changing needs of Singaporeans. In fact, it is no longer effective as a retirement scheme. It looks more like a scheme for housing and investments. Over the years, we have lost the effectiveness of the CPF so much so that we are in trouble because Singaporeans will not have enough for their retirement. The CPF, therefore, needs some revamp for us to effectively achieve all the traditional objectives and the new needs to help the sandwich group of Singaporeans.”
“Therein lies the second problem affecting our efforts to create a pro-enterprise environment and that is the reluctance on the part of some civil servants at best, and civil servants, becoming obstacles in the worst case. We need a collective effort and everyone to become believers if we want to succeed in this effort. But, on the whole, we have made very good progress in the promotion of entrepreneurship and we should not slow down our efforts. We still have a lot of catching up to do and I am quite happy that the Government has been very supportive at the overall level of activities. Sir, the third topic is on the tax structure and CPF. We have now reduced our headline tax rate to 20% and this has been effective in attracting some businessmen, entrepreneurs and companies to locate in Singapore. But I urge the Minister to continue to watch the changes going on around the world. In Europe, for example, tax rates are starting to come down. In Ireland it is already at about 12 1/2%. Hong Kong just made a small change a few days ago. So we have to be prepared to make reductions if there are further reductions around the world. I know that this is a tough balance of income and expenditure and if we want to continue to have Government-driven programmes for the good of the nation the key thing is that we need to remain competitive. And if some day, others can manage to live with lower tax rates, we must also learn to do so. One issue I have about the tax incentives, and for that matter the way many Government incentives are administered, is the preference typically given to foreign companies, whether intentionally or unintentionally, because of the way the schemes are designed, for example, the various pioneer tax status of global or regional HQ status.”
“My answer is: please have patience. Rome was not built in a day, as they say. We have not created many world-class companies but are getting there. I ask the Government to have patience and have faith that the process is the right one and eventually the results will be good. We have been very late in our entrepreneurship promotion efforts. We should have started in the mid-1980s when we saw the first signs of stresses on our economy. We still have issues with some Government agencies. Those who understand what it takes to develop an entrepreneurial economy and in supporting smaller companies, like SPRING and IE Singapore, have been doing many right things and have been pro-actively supporting the initiatives in the promotion of entrepreneurship and local companies while others remain closed in mindset and in efforts to help in the process. An example is the effort which I undertook last year to review the various Government incentive schemes, the 60 plus or so schemes which exist today. We had a very good start in reviewing the schemes, which was reviewed by a task force I formed, composed mainly of private sector people. We managed to identify weaknesses and improvements for a number of schemes, a report of which we submitted to MTI for review. Of the 60-plus schemes, my committee managed to look at eleven so far. The outcomes have been encouraging and also encouraged us to look at the rest of the 60 schemes. But we did face roadblocks in that some agencies did not want to cooperate with us and we could not get the process going further, causing us to miss our deadline of reviewing all the 60 or so schemes that we had hoped that we could review.”
“This is because we have developed a unique model where ACE is mainly a private sector-driven initiative chaired by a Minister-in-charge of entrepreneurship, who in turn acts as a champion for ACE, or the private sector, in Government, especially at the Cabinet level, where it matters most in decision-making. So we have been able to make many changes and implement many new initiatives which ordinarily the old approach of governance would not have been able to achieve. This unique private sector and Government partnership has allowed us to achieve things like rule changes through ACE and also the good work of the pro-enterprise panel, another private sector-Government partnership. We have managed to introduce many new initiatives in the area of financing to support start-ups as well as SMEs, all again driven primarily by the private sector. So what is it that made things work for the promotion of entrepreneurship which the Government could not do well in the past? The answer must lie in the new approach of getting the private sector to drive things, with the support of Government agencies, which placed a greater faith in the private sector, believing that the private sector too can think and help shape policies and help develop the economy and the country and it is not the responsibility of the Government alone. And if we believe in this private sector contribution to policy-making, perhaps, we can take it to the next level and have private sector input at the highest level of decision-making - have nominated Ministers, who are not elected but appointed from the private sector at Cabinet level. I am confident that the quality of decision-making will further improve if we do this. Sir, many have asked about the success of ACE and our success of promoting entrepreneurship.”
“While on the topic of GLCs, I notice that we continue to have high level of involvement by our political leaders in GLC business activities, including listed companies. A case in point is the recent involvement by Minister Mentor with SIA, suggesting to the board and management on what business directions to take. Sometimes, I wonder why we have such high level board members appointed to such companies when they, the board members and management, still have to be guided by the likes of MM Lee, who has many other things to do too. MM suggested that SIA should spin off some of its businesses which seems very odd to me, especially when such issues are price-sensitive for listed companies. In this particular case, for SIA, I recall the share price of SIA sky-rocketed as a result of this recommendation. Sir, the specific recommendation that we made in the ERC was, and I quote, "Ensure GLCs are commercially run, with no interference from the Government". I guess we have failed in observing this practice and I suggest that we do something about it. Perhaps, we should just appoint MM and some of the Ministers permanently onto the boards of some of these GLCs that still need guidance to avoid such adhoc disturbances by Government in such companies. Sir, the second topic is on the issue of promotion of entrepreneurship. There has been a significant shift in mindset which the ERC proposed and the outcome was the formation of the Action Community of Entrepreneurs or ACE. The progress made by ACE has been encouraging and we managed to get the buzz about entrepreneurship going, and why has this been possible?”
“I therefore agree with the Prime Minister that we have done quite a lot in the last few years, especially after the ERC's recommendations and we should wait and see the impact of all the measures and then make a review in a couple of years to gauge the effectiveness of the measures and then think of new things that we can do to further strengthen our economy. Sir, I would like to touch on three topics today and many of them have got to do with the ERC's recommendations. First, Government-linked companies (GLCs). While Temasek is actively going abroad with its multi-billion dollar spending on acquisitions, and this is one of the recommendations that we made about GLCs expanding their external pies, I also notice that GLCs remain active locally. The question is: how successful have Temasek and other GLCs been in growing their external businesses? While I am not advocating a sudden scale down in Singapore, I want to be sure that GLCs can really become effective when they face real market competition outside their comfort zones in Singapore. I am, however, encouraged by the results shown by some companies, for example, SingTel, but there is less than obvious success for most other GLCs. I worry about the example of DBS having to write-off a huge amount as a result of the acquisition that it did recently. Perhaps, the Prime Minister can share with us the other success stories of GLCs which might not be so obvious to all of us. Sir, one of the recommendations in the ERC was for Temasek to focus its stable of companies to aggressively grow the global businesses and I am encouraged that it is doing this directly by making those big ticket items and we should continue to do this.”
“While I fully support and agree that the schemes will help about 45% or so of Singaporeans, we should have taken the opportunity to be a bit more generous with the Progress Package to help this group of people because they are not living in three or four-room flats. These days, when I sit around with a group of people of my age, the conversation is one of fear of losing their jobs, about the bleak future for the middle-aged and also about how they will have to struggle upon retirement. This is definitely not a healthy sign and we need to find a way to give greater confidence to this group of middle-aged Singaporeans. What about businesses in this year's Budget? The Budget seems scarce, in terms of initiatives to help companies, as my colleague, Dr Ahmad Magad, has mentioned. But I expected this year's Budget to be a non-event for businesses and many businesses also felt that way simply because over the past three years, after we released the Economic Review Committee's recommendations, the Government has implemented many measures over the years and these have helped us restructure the economy, the impact of some which we have already felt, like those addressing the cost and tax issues, while the impact of others has yet to be fully felt. Therefore, I think businesses did not expect much this year. However, because of the low expectations for companies, I am quite happy that the Prime Minister continues to fine-tune our system of taxes to make them more effective in terms of reaching the target areas. Examples like the zero-rating of tools for sub-contractors, the zero-GST warehouses and in anticipation, the fine-tuning for the Foreign Source Income, should be considered a bonus for businesses.”
“The Budget, however, did miss out on one important group of Singaporeans and these people have been called the sandwich group or the "asset-rich and cash-poor" group, a generation of those who bought into the Government's asset enhancement policy. Many of them live in bigger flats or in private apartments. It was an era where we all encouraged everyone to aim for the Swiss standard of living and go for upgrading of our properties every seven years, as one Minister once told me. It was an era where we were told that we should continue to aspire for greater things. Throughout the prime of their lives, from the ages of around 25, when they started working, till the time they became about 45, that is about how old I am today, everyone aimed and stretched their incomes to pay for the high prices of the bigger properties than what they should have bought. Worse still, the fact is that many of them are on negative equity on their properties right now, which means that they cannot lighten their burden by simply selling and downgrading their properties. So while the Budget seems to be a broad-based one, it missed out on this significant group of people. This group is a growing one and many have been hit by retrenchments or are potential targets for retrenchments as the economy continues to restructure. We know of many cases where double income families have suddenly become single income for prolonged periods of time. Employment remains elusive and they find it difficult to land jobs because of their age. They will have little benefit from the WDA's schemes and they will become the more difficult group to retrain and to deploy to new jobs. Because they are "asset-rich and cash-poor", they will not be getting very much from the schemes that we have devised.”
“Sir, this year's Budget is indeed a people's Budget and rightfully so. After many years of restructuring the economy, it is time that we did something to address the impact of the economic restructuring on the people of Singapore, and, as expected, the impact of the restructuring exercise on the people has been very significant. We have seen people losing jobs, especially manufacturing jobs, rendering many of our semi-skilled and lower-skilled workers having unusable skills for the jobs we created in the last few years. Our professionals, especially the middle-aged, have lost jobs in multinationals which have restructured or relocated and our older workers have not found the favour of employers. All these are permanent structural changes which cannot be addressed by the one-time initiatives like the ERS or the New Singapore Shares or CPF top-up schemes. We need a more systematic approach of solving these problems to help people affected by the restructured economy on a longer term basis. While other countries have a social welfare system to give comfort to the workers that should they lose their jobs, they have something to fall back upon, in Singapore, up to now, it has been every man for himself except for the low-income or needy Singaporeans. I am therefore glad that we have finally devised a system to systematically help Singaporeans for the longer term. The Workfare Bonus and the Opportunity Fund are the two most exciting developments this year and are very well-targeted so that we derive the maximum gain that we intend to. We all commend the Prime Minister for this.”
“Sir, for the little growth that we are expecting this year, does the Minister expect the growth to add any significant number of jobs or are we going to see a jobless type of growth?”
“Sir, I would like to ask the Minister on the outlook for manufacturing, particularly electronics manufacturing, in light of a few closures of some multinational companies who are relocating from Singapore to other countries. Is this trend increasing or do we see manufacturing strengthening again in Singapore?”
“Of course, the Committee would have preferred that the financial assistance should be left completely as a commercial decision, rather than requiring the process of going to the court and going through special exceptions. Sir, we also made a proposal for a majority decision of the board to be sufficient for an M&A activity where financial assistance is immaterial, ie, less than 10%. But with the changes, we still require an unanimous approval of all directors. This again, for the immaterial type of situation, was something that we could have gone a bit further by taking out the unanimous decision process completely. I do note that there are some concessions by way of new exceptions like in the event of immaterial financial assistance. (This is the proposed section 76(9A)). Sir, on the whole, I feel that the Bill is the first good move. As I have mentioned, we could have gone a lot more further. I do not think this will spur on the M&A activities that we would like to see. Neither is it going to help the acquiring companies to navigate around the financial assistance problems that they are facing. But in anticipation of further changes down the road, as the Minister has mentioned, I support the Bill.”
“My committee therefore felt that there was an urgent need for a revision of section 76 to make it less cumbersome for companies to apply for financial assistance. As I understand it, many countries have either eliminated the issue of financial assistance or made it a lot more flexible, so that companies will not have the restriction of financial assistance as we see it here in Singapore. We made a few recommendations to the Ministry, proposing an amendment to section 76 of the Act. I am glad to note that we have made some progress today which makes the process a little simpler, but I would like to say that the Bill does not go far enough and there are still many issues that restrict the M&A activities and these will still remain with the changes that have been put in place so far. We are missing an opportunity to allow our companies to go the M&A route, something which is very common in most developed economies. Sir, the first issue is that section 76, which has a general prohibition against companies providing financial assistance directly or indirectly to another company for the acquisition of its shares, still stands with the changes. I actually wish that we could have taken this part out completely and then the section could have focused on some guidelines on how to go about applying for financial assistance for M&A activities. Instead, we continue to use exceptions, as section 76, Part 10, shows. This section calls for the requirement of a special resolution of the company and a court approval is still needed. There is also a requirement of unanimous shareholder approval in the new proposed section 76(9B). The whole process is quite a difficult one and it is quite difficult for small companies to make it work for them.”
“Mr Deputy Speaker, Sir, I support the Bill. Sir, my focus today is on section 76 of the Companies Act, which covers financial assistance. Specifically, my opinion is that this financial assistance clause in the Act is a stumbling block for mergers and acquisitions for both the company that is acquiring, as well as the company that is being acquired. Sir, the Action Crucible for Financing of ACE has been looking at improving financing and funding activities, and we have looked at not just direct financing issues but also indirect issues, eg, ways to make an asset work for a company by the company using the asset to raise funds for itself. One of the significant issues that we uncovered was section 76, which makes it very cumbersome for companies to make acquisitions. We already have many struggling companies in Singapore, many of them small companies, and one way out for them to survive is to acquire other companies, merge with others or to get acquired. If we look around, the M&A activities in Singapore are relatively insignificant, compared to more developed economies. Sir, it is also quite natural for an acquiring company to make use of all the assets that it has at its disposal to finance its activities, and this includes the assets of the company that is being acquired. The way section 76 stands now, this constitutes financial assistance and requires a whole series of things to be done before it becomes legal to use the assets of the acquired company for financing the transaction. For many smaller companies, they will have little chance of navigating through some of these processes, and therefore resulting in them not being able to go the M&A route effectively.”
“And, from all the feedback that I have got, my conclusion is that many Singaporeans understand why the Government has to proceed with the IR. We have actually widespread support from Singaporeans because they realise that Singapore needs to continue to remake itself if it wants to survive and remain a vibrant country that we have already created and we hope to continue to keep it that way. The widespread support is from people of all races, not just from the Chinese, who may like gambling more than others. Finally, as an entrepreneur, I have made many judgments and taken many calculated risks as I mentioned, and my take on the IR is this: it is a risk worth taking as the returns will be tremendous, as long as we address the potential risks that Singaporeans might face by putting in place the safeguards. If we miss this opportunity, we will miss the boat and this is one boat that we cannot afford to miss for all the reasons which finally convinced me to make my stand as it is. Sir, I support the Prime Minister's plans for introducing the IRs in Singapore.”
“So the real argument for all of us who oppose gambling should be this: what kind of safeguards we want to put in place so that we can continue to keep our high moral standards, so that the value system and religious beliefs we have will not be eroded? I have the confidence in the Government's ability to not only identify what the safeguards might be, but also to implement and enforce them, as the PAP Government has always done in anything that it wanted to enforce. In fact, as we all know, we already have about 2% of Singaporeans classified as compulsive gamblers. This is a significant number. What we do not have today is a structured way of handling this issue. The new positive effect of introducing the IR with all the safeguards is that we will now have a much more systematic way of addressing these problems. Had the IR not been implemented, we could have missed the opportunity to address even this problem. Sir, I am glad that most of the religious and community leaders have come out hard opposing gambling and, with the decision to proceed with the IR, they should be even stronger in their resolve to discourage their followers and sphere of influence from taking up gambling. But I urge them not to treat the IR as the Government's attempt to promote gambling among Singaporeans. It is really an attempt by the Government to do what is right for the country - to make and keep Singapore relevant, vibrant, economically strong and a place that we can continue to attract people to visit, come to do business, and to live in. In conclusion, Sir, I have been doing extensive gathering of feedback, particularly from residents in my area about this issue in the last few days.”
“We, in fact, already have a full-fledged casino in Singapore, believe it or not. It is the Star Cruise. It is just a drive to the ferry point and then you are in the casino. Sir, four years ago, my whole family and the employees of one of my companies, we decided to organise an outing on one of these cruises. It was a "Cruise-to-nowhere" and we spent three days doing a lot of things. When the children were sleeping at night, my wife and I decided to take a walk into the casino. I was shocked. It was full. There was no opportunity for one to come in and I saw some of my Kebun Bahru grassroots leaders, mainly ladies, gambling away. So, to me, gambling is all around us. We are kidding ourselves if we think that the casino that we are going to put in place is suddenly going to erode our value system. In fact, I think this is just a small addition to the many outlets that we already have to gamble. Sir, my point is this. Despite us having so many gambling opportunities, we still have not seen a nation of gamblers emerging. Just as our religious beliefs have helped us, so have our value system which the Government has strongly upheld, resulting in a Singapore resilient enough not to give up the value of working hard to create success. So, what makes us think that the introduction of an IR with a small casino component is going to suddenly make Singapore any different? I understand that we may have a few more people who may get sucked into the gambling habit, but I am confident that we will have all the right support systems put in place to first help avoid people getting into the trap and, second, if they do get into the trap, to see how best to bring them out of it, or at the worst, to see how we can help them and their families to handle the situation.”
“If our people are going to have access to the casinos anyway, why not have them at home, where we can control things, where we can put in place the safeguards and where we can also gain economically? Why let others make that money? So I am convinced that the Integrated Resort is something that we cannot do without. But have I abandoned my value system and am I less religious as a result? Am I willing to have a different type of Singapore for my children and my grandchildren, if my children have any children? No. I am not. In fact, I am confident that the Government will not allow our value system to erode and will do even more to safeguard the good that we have already built over the last 40 years. I will continue to do the same as long as I can for my family and for my community. The value system and will we erode society? Sir, the second issue is one of the value system. Will they really erode? I believe that we are just kidding ourselves if we believe that by having casinos in Singapore, Singapore will suddenly become a sin city and that many Singaporeans will suddenly become gamblers. It will never happen. We already have all the opportunities to gamble in whichever way we want - 4D, horse racing, one-arm bandits and, for that matter, the high-roller type gambling like black jack and many others which I do not know the names of. They are at our doorsteps. We have heard about the Batam illegal gambling dens and Singaporeans were their main patrons. Then, a 4-hour drive can get one to Genting and any clubhouse in Singapore. I am a member of a few of these clubhouses. There are many of these machines. I bring my children to these clubs regularly, but this had not affected my value system. We do the things that we want to do, but we do not gamble.”
“Fifth, I see the structure of the Singapore economy changing from one of very few significant industries which contribute tens of percentage points to the GDP to one where we have micro industries contributing in a much smaller way to the GDP, but we need all of these micro industries to add up to the economic pie and to add jobs to the economy. So if the tourism industry can add five to six percentage points to the GDP, the life sciences industry adding five percentage points and the education industry adding another five percentage points, I think if we add all of these together, that is what the structure of Singapore economy is going to be in the future. So the $1.5 billion and all the spin-off effects will be very significant for the economy and for the success of Singapore in the future. Sixth, I am also convinced that if Singapore gives up the IR plans, these same plans will emerge somewhere else nearby. And, worst of all, it may actually even appear in Johore Bahru, Batam or Bintan or in Thailand. All the issues that we are worrying about, the value system, will affect Singaporeans because Singaporeans will anyway be patronising these places that are very easily accessible to them by road, train and budget airlines. If we have given up this opportunity, we will have lost the opportunity to make the money to our neighbours. We end up in a lose-lose situation. We lose the opportunity to add to the economy and we lose the value system argument and also fail to add the safeguards because we would have just dropped this whole thing from the radar screen because we decided not to do the IR.”
“They will be talking about it. They will talk about potential opportunities they will have, first in the projects to build the IR and to participate on the ongoing servicing of the IR and about how the tourists coming here will benefit them. And then about how they will see new types of businesses that may arise and how they can benefit from future investments that may come in as a result of this. This buzz alone, in my opinion, will help change the mood from a gloomy outlook to something to look forward to, and one from a lack of opportunities to one of many new opportunities coming our way. And even if the final result is that the outcome may not be as significant as everyone might be dreaming of, the mood alone will breathe a new life into the business community. And this is what we greatly need right now. Fourth, the number of jobs which could be added to the economy. Mr Lim Boon Heng was quoted as saying that there will be about 10,000 new jobs created. Last Sunday, I was out with about 200 of my residents for an outing and I spoke to some of them. A couple of them came up to me and told me that 10,000 jobs are not significant and we should not proceed with the IR just because of this. I disagree. I think that every 1,000 jobs that we can add to the economy are significant today. You try to tell that these 10,000 jobs are not significant to those Singaporeans who have been without jobs for quite some time. They will be telling you that they are thankful even if one job can be created for them. And now, we are talking about 35,000 jobs. If you look at the level of unemployment that we have today, I think this is a very significant number and it is going to create a big difference in generating employment, not just immediately but also in the future.”
“Other industries collectively can contribute, but how many the size of the IR can do so? Very few. Sir, second, the tourism industry is starting to wane. We do get tourists, but they do not spend money here. They are going to Genting and elsewhere in the region to spend their time and money. I happen to believe that the indirect impact to the economy will also be very significant, much greater than the $1.5 billion that was quoted by the Prime Minister. When we successfully doubled the tourist arrivals to Singapore and especially when we attract big spending type tourists, we will see an even far greater contribution to the economy, not only their direct spending, but also the impressions that they will have for Singapore, the kind of marketing that they will do for the country when they go back to their home countries. This will not only bring in more tourists but also help bring in other forms of investments because of the affordability and the type of people that we are going to attract down here. So I see a potential of several billions of dollars of future contribution to the economy on top of the $1.5 billion. Third, I feel that we need to recharge our tired businessmen and our tired local companies who have been battered by so many successive downturns that I mentioned. We need to change the mood. We need to create a new buzz in Singapore. We need to create optimism that Singapore is not getting old and uninteresting, not just for tourists but also for investors. We need boosters to our economy and I do not see any immediate instrument as a booster other than the IR. I feel that by just deciding to proceed with the IR, there will be a whole new buzz created around Singapore, even before we start the project. The businessmen are all getting excited.”
“In the last 10 years, we have seen very few initiatives which have been able to create the vibrancy in our economy. Yes, life sciences was a good initiative but it is a different ball game, different from the era of the electronics industries which created many jobs for Singapore and which created a buzz about how our economy was going to grow rapidly and how jobs will be created and that there will be many spin-off effects in many parts of the economy for many of our local businesses. Sir, today, in 2005, after successive tough economic periods, the business community is getting worn out. Every time we expected to see sustained strong economic recovery, they were disappointed because all we saw were actually relatively weak recovery for a short period of time before being hit by another downturn. With very little new excitement created in Singapore about the vibrancy of our future economy, people are losing confidence. Businessmen are feeling tired, losing faith, looking to uproot, go elsewhere, even beyond this region. Put simply, the mood remains bad for a long period of time. And if this continues, it spells disaster for Singapore and for Singaporean businessmen if they lose confidence and for our economy. The first thing that convinced me was the economic contribution that the IR would make to Singapore's economy. I see two levels of contribution. The first is the level of direct investments that is going to come in from foreigners - $4 billion to $5 billion. And then, the direct recurring contribution of about $1.5 billion to the tourism sector. This is not a small amount. I see very few projects in Singapore the size of the two IRs which can contribute to our economy by so much on a yearly basis.”
“And if we could do one in Singapore and yet have all the safeguards so that we do not erode our value system which have created Singapore's past success, I will be inclined to support it. But I wanted to be first convinced that the Integrated Resort will indeed be necessary for Singapore to remain viable and to succeed in the future. So as the debate raged on, for one year now, I shifted from not supporting it to one on sitting on the fence. Like everyone else, I too felt that Singapore can do better and does not have to have a casino to create economic success and to make our country a vibrant place for all. We could do other things to create the success that we desire for Singapore. But as I searched for the answer of what we could do today with all the options that we are presented with, I realised that there are very few options left for us. New options may arrive in the future but there are very few now. And can anyone put their hands on their hearts and say that they have a better solution? Sir, I am an entrepreneur. I have many ideas but I cannot think of any one that is going to be as significant as what the IR can create for Singapore. Therefore, Sir, I have now shifted to the position that I support the Prime Minister and the decision to proceed, and that we have no choice but to have an IR in Singapore. Let me share with everyone what was it that finally convinced me to change my stand twice, from negative to sitting on the fence and to finally supporting it. Economic contribution Sir, first of all is the economic contribution. We have seen so many years of poor economic performance. Starting from 1997, the economic cycles are getting shorter and the upsides of the economy are getting narrower while the downturns are lasting longer.”
“Sir, I would like to start by saying that I do not support gambling. I do not gamble and will never encourage anyone to gamble. But as an entrepreneur, I do take calculated risks and I call that judgement or investment. You know what I mean that the specific gambling that we are talking about is the casino type. Sir, originally, I was not planning to speak. I thought the best way out of this issue was to just keep quiet and not let anyone know what I feel or what my stand is. But I feel I owe it to the voters of Ang Mo Kio GRC and to my community to make a stand on this issue and also explain why. While I am strongly against gambling, I am however firmly behind the Prime Minister on his decision to proceed with the Integrated Resort, even though we have an element of casino included in this Integrated Resort. Sir, my religion teaches me a number of values and one of them is that you have to work hard for your living. Gambling is never in our vocabulary. The Singapore I grew up in also taught me all of these values and I saw my parents practising it, and in my career, I have also learned that there is no shortcut to success - you just have to work at it. So when the casino debate emerged, I was not supportive of having one in Singapore because the casinos go against my beliefs and value system and I also want my children to embrace this same value system that I grew up with. I do not want them to grow up in a different type of Singapore. But as the debate went on, I realise that the issue was more than one of a moral issue or our value system. It was about Singapore's future and its ability to compete to remain viable in the long run.”
“Has the Minister given consideration to the structure of the council and the timetable for the implementation of corporatisation?”
“Therefore, its risks for corporatisation, I believe, are low. Second, SMU. It is a new university. It started on the basis of being quite autonomous and the management structure and how it has developed itself has been almost the model that we want for the rest of the universities. So, again, I think for SMU, the risks are similarly low. But, on the other hand, NTU has a short history. If you look at the modern NTU, not counting Nanyang University, there are only 20 batches of alumni, or graduates, and I happened to be from the first batch. The earlier batches were only very small numbers - 600 in my batch - and it started to grow. So we have a relatively less established alumni base. Secondly, it is only now that NTU is trying to transform itself from a technological university to a comprehensive university. So I see this as a second major risk for NTU as it tries to make this move. I, therefore, ask the Minister to take this into consideration, particularly when it comes to the allocation of resources, whether it is funding or the type of people to support the changes. And, among all the three universities, NTU faces the greatest risk with this change. While I think NTU welcomes this - and I, as a Council Member, also welcome this move - I ask the Minister not to treat the three universities equally in this case but to give preference to NTU by way of support structures and funding, as NTU faces the greatest risk with this change. 6.00 pm”
“First of all, let me declare my interest. I am a Council Member of the Nanyang Technological University. Sir, I support this move to make the universities more autonomous by way of corporatisation. And I think that this move will be in the long-term interest of Singapore. To be successful, I have a similar concern, like Mr Gan Kim Yong, and that is the management structure. For this to work successfully, we probably would need to think of two parallel structures in the university. One, the management structure, run almost like a corporate, a CEO management type of skills. And the second, an academic type of structure. These two need to be run in parallel. I ask the Minister whether these have been taken into consideration and, if so, whether we are going to make some changes in the management structure in the universities before we make this move. Second, I am not so sure whether the problem of corporatisation and the related problems within the universities will arise because the universities are not able to handle this move, but more because of MOE's inability to let go and whether the problem will remain with MOE who wants to still exercise control and still expect the universities to move fast enough. This is another issue that needs to be thoroughly studied before we decide to go and corporatise the universities. The final issue I worry about is how we are going to handle the corporatisation of the three universities. All three of our universities, NUS, NTU and SMU, have different backgrounds. First of all, NUS is long established. It has a very long history and a very strong base of alumni who are able to support the university by way of funding or to become council members who can help manage the university.”
“Sir, on this issue of Warehouse Retail Scheme, as I recall, this was driven by a foreign company that was pushing for this scheme to be made available, and EDB was only championing this for the foreign company. Back to my basic point about local agency championing local enterprises, SPRING does not have the same clout as EDB has in trying to push these things through, and I think this is probably the root cause of the problem. In the same token, when the Minister talked about SPRING being the primary agency that is going to focus on local enterprise support, I welcome this. But I ask again that we look at how the resources are allocated. Today, there are some resources, for example, certain research grants, innovation development scheme, certain equity funds that are primarily controlled by EDB, and SPRING could apply through EDB for local enterprises. I ask that these be reallocated so that SPRING, who is going to be the local champion agency, will have the primary responsibility and control of these funds. It is only then that we can find equalisation of the treatment of foreign and local enterprises.”
“I would ask the Minister in-charge-of Entrepreneurship to think how we could further support these groups, so that they could go about doing their work in promoting entrepreneurship and developing a wider network and, at the same time, not handicapped by the resource limitations that they have. At the same time, I also ask for support of the development of the financing environment. I have talked about the OTC, the mezzanine financing. Also, there have been lots of talk by Members about micro-financing or micro- credit schemes. I think many of us have dispelled this for now. Again, my committee intends to take it up, to study how this has been successful in developed economies. We know that this is very successful in developing economies, but the question is: could it be successful in developed economies like Singapore? We would need some support there too, and I hope to get the support from the Government. Start-up Enterprise Development Scheme”
“It is not surprising, if you talk to entrepreneurs and start-up companies, we always hear the complaint that there are not enough people who are supporting them in the angel stages. It may be too early for them to seek venture capital financing or bank financing, but there are not enough angel investors in Singapore. So, in this respect, I would ask the Minister and ACE to look at how we could develop this important area. 30 pm Now, if we want to create many big successful companies of the future, we need many more small companies to start. Many, of course, will fail, but the only way we could support these companies is by developing the angel investment communities. I believe that in 1999 there was such a scheme. It was called the Business Angel Fund, I believe, driven by the then NSPB, where the Government participated together with angel investors, and the Government was willing to give up part of the gain that it would have made to the angel investors, but absorb the risk of failure. I thought that was a good scheme. It was discontinued sometime in 2001. This is one potential scheme, but I think we could think of many others where we could try to create a more vibrant angel investment community in Singapore. Sir, the other area of entrepreneurship promotion is done by many volunteer groups. We have many groups that have sprouted, and ACE is focusing in this area. While we try to build partnerships with these groups, I think we also need to see how we could provide them with resource support, particularly secretariat support. Many of these are volunteer groups, and they may not have much funds, whereas ACE has got good Government support.”
“Sir, first of all, I would like to commend the two Ministers who have been in charge of enterpreneurship - first, Mr Raymond Lim and then Dr Vivian Balakrishnan - for helping to make ood progress in the promotion of entrepreneurship in Singapore. Until ACE was formed, it was lip-service. But through ACE and because of the champions that we have now who promote this in Cabinet, we have been able to make a lot of progress. This private sector endowment partnership has created a buzz. As you go around getting the feedback from entrepreneurs and from people participating in business, they do sense things are moving. As we all know, the momentum is there but we still have a long way to go. I hope that the support will continue. Sir, one area I would like to focus on is in the area of early stage investments. One of the things that the Global Enterprise Monitor (GEM) looks at is the level of informal angel investment in economies around the world. And the conclusion is that the angel investment contributes significantly to the entrepreneurial development and the subsequent employment growth and economic vibrancy of most economies. In fact, the amount of angel investment money in this kind of economies is as much as five times that spent by venture capitalists in investing in companies. Further, if you look at the business angel prevalence rate, which is one of the measures that GEM measures, in 2003, Singapore was ranked 19 out of 23 countries, with Iceland, China, Hong Kong, Australia and USA ranking among the top few countries. This is a measure of the rate of participation by citizens in informal investing or angel investing.”
“With globalisation, competition is eating the pie of our local companies and, therefore, the demand part of the equation has dropped significantly for our local companies. We need to do quite a lot to try to redevelop this new demand. The FTAs are an excellent idea. The problem is that this has not translated to real businesses for our smaller companies. It may have worked for the larger GLCs, but the smaller companies do not know how to take advantage of these FTAs. It would be good if the Minister can operationalise the FTAs that we have put in place to show these smaller companies how they can take advantage and increase the demand side. Sir, finally, the issue of the many incentive schemes that we have in place. We always talk about the 60-plus incentive schemes, and many of us have brought up this issue of smaller companies actually not successfully applying and benefiting from these schemes as opposed to MNCs or GLCs benefiting from them. The ACE Action Crucible for Financing, which I am heading, intends to look at all of these schemes and try to settle this issue once and for all - whether it is really very difficult, and whether it is achieving the intended objective. And if it is not, we need to modify this scheme so that our local enterprises would finally benefit from them as intended. I hope to take up this effort. I see some resistance at the civil servants' level. I ask the Minister to give us this support, a few months of effort, so that we can try to solve this problem once and for all. SME 21”
“Sir, while I am disappointed that the Prime Minister has rejected our request for the formation of a Local Enterprise Development Board, I still do not want to give up this pursuit of trying to do more for local enterprises, and I echo the call made Mr Gan Kim Yong and Mr Lawrence Leow. While SPRING is trying to do this role, and sitting on the SPRING Board, I do notice that there is a greater effort to do more for SMEs. While it was a secondary role in the past, it is starting to look more like a primary role. But I would like to ask the Minister not to handicap SPRING by not giving it the type of resources that it will need, either the organisation structure that Mr Gan talked about or the one I talked about during the Budget debate, or giving it more people or more funds, just the way that we give to EDB. If we really want to be successful in this area, we have to do much more than just getting SPRING to just refocus. It needs all the resources if we want it to succeed. I am worried about the EDC scheme that Mr Lawrence Leow talked about. I remember we had a similar scheme called the EPC scheme that was supposed to do the same. It failed and now, we are trying to revive it by trying to farm out some of these things. I hope it can work, but it is not sufficient unless we have someone who primarily drives the development of local enterprises. Sir, the other area our local companies suffer from is something that, again, Mr Lawrence Leow talked about. It is a two- pronged problem. First is the equal system. I talked about the infrastructure, the local enterprise development and whether it is providing infrastructure cost, competitiveness and so on. We have done a good job in this area. The second problem is one of demand. MNCs have relocated.”
“We saw some of them being charged in court and some were actually sentenced to prison. We do not want to see parents being dragged to court because of their children's actions. I would like to suggest to the Ministry to consider embarking on a public education programme to ensure that Singaporeans are made aware of the new laws, especially to assist parents in monitoring their children's activities to prevent the violation of these IP laws. Second-tier Patenting System”
“The intellectual property laws were enacted recently to ensure that Singapore provides a competitive environment for innovativeness and for inventors, owners of ideas, to feel that ownership of original ideas and inventions is safe and protected. I wonder to what extent are Singaporeans aware of the new developments with regard to these new laws in relation to intellectual property (IP). I am concerned with the potential impact on the common man with regard to infringement of these laws, especially if many are unaware of what these laws actually mean to them. Specifically, Sir, I would like to raise the issue of ensuring that consumers at home are aware of the extent to which they are infringing the new IP laws, for example, downloading music, etc, including what used to be done like taping programmes or movies off the television and, at times, make duplicates and perhaps share with other family members. Are Singaporeans aware that such acts are considered as infringements of the law? Distribution of duplicates is actually a violation of the IP laws. More importantly, Sir, I wonder if the Ministry is aware of the current level of infringements that is happening in the private homes here. Many youngsters do many things on their PCs in the privacy of their own rooms. They may or may not know if they are actually infringing the laws, but, more importantly, it is for parents to be aware of these implications of the law as many of them are not aware of what their children are doing on their own PCs. Sir, we do not want a situation, like in the case of illegal immigrants renting rooms, where older folks who rent out their rooms to these illegal immigrants without knowing that they are actually violating the law.”
“Sir, yet, we can always say that they are responsible for their actions. They choose to take up those credits. They failed to exercise financial prudence. But what is worrying is that these people are getting into such a state at such a young age. Their days are often filled with glum and they have very little hope for their future. The future of their children is also at stake. I would like to ask the Minister whether his Ministry has tracked the profile of these cases of personal bankruptcies. Also, is there a growing trend of individuals seeking to be declared bankrupt as a way of coping with unmanageable debts? I think we need to understand more about these bankruptcy cases and develop more upstream preventive programmes to ensure that the problem does not worsen, again on what Mr Inderjit Singh suggested earlier. There is much that we can do if we are able to identify this group which is at higher risk and possibly target intervention programmes that can subsequently be developed. 12.15 pm I would also like to ask the Minister whether there are plans to develop programmes that will educate Singaporeans on the implications and effects of bankruptcies. In this regard, I would like to suggest that the education includes implications of bankruptcies on their assets that they have, especially, for example, their HDB flats if they take mortgage loans from commercial banks. Many may not be aware that they risk losing their flats if these flats are actually mortgaged to commercial banks. Intellectual Property Sir, my second cut is on intellectual property.”
“And if we can do that, the work may be a bit more onerous on the Ministry side, but we can at least help avoid bankruptcies so that businessmen could at least try to recover, take responsibility for managing their debts and also continue to do their businesses rather than to be made bankrupt. Because after they are made bankrupt, there is a tremendous difficulty in Singapore for any one of them to recover and to start a business again, unlike in the US or in other places which are more entrepreneurial. Sir, I hope that the Minister will take these two suggestions into consideration. The Chairman: Dr Mohamad Maliki, you have two cuts. Take them together, please. Dealing with Bankruptcies The Parliamentary Secretary to the Minister for Health and Acting Minister for Community Development, Youth and Sports (Dr Mohamad Maliki Bin Osman): Sir, my first cut is on bankruptcies. I echo the points made by both Mr Ahmad Khalis and Mr Inderjit Singh. Sir, we have heard much about the rising trend of personal bankruptcies over the last few years. The detailed effect of bankruptcy on the person and those around him is still relatively unknown, although anecdotal account suggests the reduction of self esteem, heightened marital discord and even marital dissolution. I have seen young people coming to see me and asking me for help to be declared bankrupt. These are those who are really at their wits' end, something that I had never expected before. These are people who are younger than me. Yet, they choose bankruptcy as an option in terms of coping with the mountain of debts that they have incurred, and the relentless harassment from the creditors or debt collectors, not to mention the legal suits filed against them.”
“Sir, we are talking of Ministry of Law, but my focus is still on financing. Sir, while cultural changes are taking a long time to happen, it is not easy to change the mindset among people to accept failures. But I think what we can do is to at least avoid people from being bankrupt in the first place. The general feedback I normally get is that the people, who were bankrupt before and came out of bankruptcy, find it very difficult to access to finance, whether it is banks or VCs, or even from their friends and families. The best thing that we can do is avoid bankruptcy in the first place. Sir, I would like to suggest two things. First of all, the judicial management that Mr Ahmad Khalis talked about. While it is working, it is probably not effective enough. I would therefore like to suggest that we look at something like Chapter 11 in the US, where instead of judicial managers managing the process, we let the companies continue to manage because they know best how to operate their companies, even in times of difficulty. From what I understand, judicial managers have problems actually operating the company without getting the help of the management themselves. There are also onerous tasks put on judicial managers. For example, they have to take personal liability for any new debts that are incurred. So I think a Chapter 11 system may eliminate some of these problems and make it more effective in avoiding bankruptcy. The second thing I am proposing is something akin to Chapter 13 in the US against something that Mr Ahmad Khalis talked about, ie, a similar mechanism to avoid bankruptcy for individuals.”
“In the same light, on this issue about manpower reduction, while I welcome the 3% reduction of manpower or whatever targets that had been set, I also have come across practices where the numbers may have reduced but the cost of manpower may have gone up because of the type of people that we hire. So in a real factory example, we may have reduced 100 production operators earning about $1,000 but may have hired 50 engineers that earn about $3,000 or so, the overall cost actually increases. So I would like to ask the Minister to clarify whether the manpower reduction effort has resulted in real manpower cost in terms of payroll reduction. Sir, another issue that I raised last year, and I would also like to raise this year, is the work done by the Cut Waste Panel. While the achievements are laudable, I believe that more could be achieved. Again, if we look at real cost reduction effort by giving each Ministry or each Government agency cost reduction targets of saving costs, real costs in Government, instead of depending on feedback from the public to suggest to the Government how they could reduce cost. Perhaps, one way to motivate Government officers to reduce cost is to share some of the cost savings that they have as part of their compensation. So if they could save more than what was targeted, let us share this with them so that they feel motivated that they would get a higher salary if they do a good job in cost reduction. Budget for Public Relations and Exercises”
“I would take this off-line. Again, the example I have come across is that this is a requirement by the Stock Exchange for the companies to put a profit forecast in the prospectus and they may be ruled by all those things that the Minister mentioned. So again, I would bring the examples up with him. He may not be aware, but perhaps this should be looked into. Budgeting Approach Sir, I am happy with the thought of cost control in Government. It is now quite prevalent in our Government agencies. I ask the Finance Minister, however, not to stop at cost control but to take another step and instead of thinking about control, let us talk about real cost reduction. While we want to compensate our Government officers in the way that we compensate the private sector employees, we should not just think of the upside part of the high salaries, but should get closer to how people in the private sector are also measured. In tough times, they have to go into serious cost reduction efforts to get profits, or just to survive, and most of it happens through real cost reduction and also in permanent overhead reduction. So I, therefore, ask that it is time that we now get serious about cost reduction. While I am happy that we are putting in place a 3% cap on spending last year and a 5% cap this year, on how the budgets are allocated to the Ministries, I believe that these are still not real cost reduction in nature, simply because if you look at the real spending, the spending has gone up from year to year. I highlighted this last year that for the last five years, or even longer, the spending in Government continues to rise and, therefore, it would be better if it could set cost reduction goals compared to previous years' budgets to show some real cost reduction from year to year.”