John Chen Seow Phun
Singapore
“Sir, Singapore has signed FTAs with a number of countries, including the developed nations, such as the US and Japan. These FTAs give us better access to these developed markets compared to other countries for goods that need the rules of origin.”
“Sir, I thank the Minister for asking the HDB to relook at the case I brought up, but I hope that he would not rule out providing the same loan amount to the family. I understand the need for credit assessment policy, and so on. But I think the policy should not be applied blindly.”
“It can also be stipulated that the grants can only be used to pay part of their mortgage loan monthly. I think this will go a long way in helping these families pay for their flats. I hope the Minister can look into this and see whether these families can be given such help.”
“My point is that the Minister should reconsider this case and exercise flexibility, so that the family will be helped. Otherwise, if the family was asked to sell their flat, it could be negative equity and the problem would come back to HDB. And HDB would be owed money and I do not think that is good for HDB as well.”
“We need to come up with a regular mechanism where older and lower income workers can benefit without the pitfalls of a crutch mentality. I think, in this regard, the Government has not spent enough time or thought to look into what other mechanisms that we can have.”
“On the other hand, at best, we get one Singapore pavilion with a dozen or so companies, and that is about it. If we are really serious with our globalisation effort, our Government agencies must put in more resources to encourage more companies to participate in such events.”
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“Indeed, the immediate superior should now, in turn, become the customer's advocate to help the applicant obtain his approval. If a satisfactory decision still cannot be made, the matter should progress further up the civil service hierarchy. As far as possible, it should not be a matter that needs to be brought up at a meet-the-people session and be resolved by MPs writing to the Minister. In this way, all avenues can be explored before turning down business applications with sufficiently good ideas. New ideas do not come about easily. Surely, we must give them due consideration before tossing them into the bin, just because of some old rule. If such due process is given before rejecting applications, the entrepreneur will at least be encouraged by the experience. He will be willing to try again in future because he can see that the Government and civil servants are on his side, and not another obstacle to be surmounted. Mr Speaker, Sir, this is one way we can encourage more entrepreneurship in Singapore. Another important issue affecting competitiveness is land. Members have spoken about it. Land cost is an important factor of production. I am glad that the ERC has recommended that our industrial and commercial land be priced competitively in relation with competing nations. In order to achieve this, land should not be priced according to alternative use but in accordance with its direct industry use. Being the largest land owner, the Government can exert a great influence over land cost. While there is a need to lower land cost generally, I understand that there is also a dilemma. If land prices fall too drastically, existing land owners and lessees will be hard hit. Our financial system may be affected thus worsening our already fragile economy.”
“It is commonly perceived that when a civil servant is faced with an application for a new business activity, which does not conform with some existing rule or policy, his gut reaction will be to simply reject the application. This is what Minister of State Raymond Lim earlier referred to as the default "No" button. The civil servant will, at best, and in line with our campaign for a gracious society, find a nice way to write the rejection letter. However, it does not solve the problem of the business applicant and, worse, if the applicant has come with a brilliant, revolutionary idea which can benefit Singapore. So what should civil servants do? First and foremost, if it has not already happened, the attitude of just following the rules has got to change. Yes, we must follow rules, regulations, policies and guidelines. They are needed for good order. However, they must not be obeyed blindly. When an application from a business with a new idea comes along, civil servants ought to try to help it obtain the approvals it needs. In the new economy, and if Singapore is to remain competitive, that should be their duty. This is how they can become the "customer's advocates". If the application cannot be approved due to some rule or policy, the civil servants should help the applicant find a way around the problem. If the case is good enough and is beyond his authority to approve, he should bring it up to his bosses. He should never wait for the applicant, who is his customer, to appeal to the "higher authorities". Being the advocate, he should initiate the appeal on his "customer's" behalf. Secondly, in our civil service system, his immediate superior should welcome such initiative instead of finding it bothersome.”
“But what if I had not appealed? The problem should therefore not have remained unresolved in the first place. This will be the case if the relevant Government officer believes that he also has a duty to assist businesses. Let me give Members another example. A construction company recently bought over a cement plant to produce cement for its own use. One way to make its cement competitive compared to imported cement is to lower the cost of importing the raw material. The company found that if it is allowed to unload the raw material at the existing Government jetty, which is being used now for unloading of sand and granite, it can save substantially on import cost, as opposed to unloading the material at Jurong Port. The company applied for permission to do it on the grounds that the physical form of the raw material to be imported is similar to sand and granite. In addition, if the cement plant survives, it will continue to provide jobs and utilise a substantial amount of electric power. The authority, however, rejected its application. One official actually told the company that it should just import the cement instead of producing it in Singapore. Mr Sim Wong Hoo, therefore, hit the nail on its head when, according to his book "Chaotic Thoughts From The Old Millennium", he told his customer service officers that they were in fact the customers' advocates and they had to be fighting with him for their customers' interest rather than the other way round. I believe civil servants must adopt the same attitude. They must realise that they work for Singapore, as part of Singapore Inc, and that the businesses which they deal with are their allies, as well as their customers, and not an adversary to be challenged at every opportunity.”
“This will require a new mindset on the part of the Government, in that the Government, together with civil servants must stand on the side of businesses to help them survive and prosper. I am glad that Minister of State, Raymond Lim, has recognised the need for this new mindset in his speech earlier, and Mr Inderjit Singh has also spoken on this. It is not unlike the role of EDB helping MNCs to set up their businesses in Singapore. Likewise, SPRING Singapore, and indeed all Government agencies should go all out to help businesses in their thoughts and actions, be more market-friendly, and when an application goes against existing rules and regulations, find ways to justify the applications, without making the rules meaningless. Let me give one or two simple real-life examples to illustrate my point. A grassroots leader of mine operates an eating house along Race Course Lane in the central area. The property next to his has an extension jutting out from the main facade. As a good businessman, my grassroots leader put up his eating house sign above his gate away from his facade, but in line with his next door extension, so that the visibility of the sign would not be obstructed and his business would not be affected. Lo and behold, he was asked to remove the sign by the authority because advertisement rules in the central area require the sign to be flushed with the property facade. He appealed but was rejected. I found this unacceptable and so I appealed on his behalf to the Minister, arguing that if the next door extension had been allowed, and had already changed the facade of the original row of properties, why should the authority insist that the eating house sign must be flushed with its own facade? Fortunately, the Minister agreed and the appeal was granted.”
“Mr Speaker, Sir, I am happy to note that the Finance Minister in his 2003 Budget has taken into account many of the points made by the ERC and its various sub-committees. The ERC Report highlights the problems Singapore faces in the transition towards a full-fledged first world economy. Its recommendations will serve us well in the future as we strive to find our place in the new knowledge era. I would like to congratulate members of the ERC and its sub-committees for a job well done. The current gloomy scenario is a good time to take stock, consolidate and plan for the future. However, we must not confuse ourselves between the effects of the current downturn and the effects of long-term change, which is brought about by globalisation, the new economy and Singapore's progress into the premier economic league. The ERC should be commended for addressing both the short-term and long-term problems. Today, I would like to comment on the issues of Singapore's competitiveness and helping dislocated Singaporeans to remain employed. First, on competitiveness. I believe that Government can and should help Singapore businesses, be they domestic or international, to be competitive. We can do it by taking the Singapore Inc approach. By "Singapore Inc", I mean Government and businesses consider each other as partners to promote a flourishing economy. There is greater urgency for this now as we compete as a nation in a globalised environment. Government agencies must therefore seek ways to facilitate businesses and encourage entrepreneurship by removing obstacles and help the implementation of new and novel ideas.”
“Assessment of Project Work is also rather subjective in nature, and this could lead to accusations of unfairness. I suggest that the universities use a pass/fail requirement for PW rather than taking into account the actual PW grade for their entrance consideration. I support the White Paper's recommendation for Integrated Programmes, private schools and specialist schools. This is because they bring about greater diversity for the system and more flexibility and choice for the students. I also support keeping open the 3-year pre-university centres for students who would prefer to take more time to do their "A" levels. I hope that transfers between these different types of schools will be possible, so that students will have better flexibility to pursue their intended goals. Lastly, I would like to mention that more resources will be needed to truly achieve the goals of this reform. Teachers themselves need to be retrained. Their knowledge of the subject may need to be far wider and deeper than just the syllabus, because the better and more intelligent students may bring up such issues during discussion sessions. I have no doubt that the reform will be difficult for some. However, I think that it is beneficial and that it can be done. I agree with the White Paper's recommendation for more teachers and teaching resources in order to facilitate this improvement in our education system. I would also like to caution that all will be in vain if schools and JCs pay lip-service to these changes without truly understanding and accepting the basic philosophy underlying the reform. Mdm Deputy Speaker, the White Paper has provided the right concept and framework for reform. It remains to be seen whether and how we can implement it. Mdm Deputy Speaker, I support the motion. 6.20 pm”
“Next, I would like to touch on the subject of university entrance requirements. I find that the local universities are rather rigid in their methods of selecting students for entry, and for most departments. Generally, points are assigned for various "A" level grades, and these are summed. If you meet the cut-off mark, you are in. Otherwise, you are out. I find this much too clinical. How many points would you give Remy Ong for his three Asian Games Gold medals? A few years back, I appealed on behalf of a national level badminton player for admission to NUS to study engineering. He missed the cut-off mark by one or two points. I appealed several times, right up to the highest level at the university, because I believe that it is good for NUS to accept such a student. But, alas, the appeal was rejected, citing the need to adhere strictly to the rules. Mdm Deputy Speaker, borderline applicants ought to be given a chance. An interview could be conducted for these cases. Consideration must be given for special circumstances and achievements outside the normal curriculum. After all, if more effort and time were spent on his "A" level subject instead of his badminton activities, much better "A" level results might have been obtained. On the other hand, some other applicant may be able to show during his interview that he is far better in a certain subject than his "A" level results indicate, and his lower mark could be due to an illness during his examination paper. Surely, such cases deserve a chance. I would also like to comment on the use of Project Work (PW) for university entrance requirements. I hope this will not add to the stress and workload of our already over-taxed JC students.”
“While the main examination paper can continue to test for knowledge and standard applications, some questions that test the students' understanding, ability to think and reason, and the ability to draw conclusions in non-standard situations should be included. This is to encourage developing knowledge skills, in addition to merely absorbing information. I note that certain subjects also produce a disproportionate number of As. The Ministry of Education may want to check this out. Surely, it is possible to equalise this by adjusting the difficulty of level of the examination questions, and by some moderation. We ought to try to remove any incentive for choosing a certain subject due to the ease of getting an A in the examinations. Another cause of passive students that we have today is due to our teaching methods. I think there is too much spoon-feeding in our schools and JCs at present. While this may be a very efficient way to scoring high marks in the examinations, it is like a drug. It deadens the mind and the processes of thought, and the student will be nearly all lost once this is removed. Yes, we should continue to provide lecture notes, but students should be made to refer to some text and reference books. I know of JC students who relied only on lecture notes and never read a book for their Physics paper. Students should be made to look for facts and details by themselves. They should also be taught how to collate, process and present these facts. There should be more student interactions and discussions during tutorial classes in JCs. The teacher could merely chair the discussions instead of doing most of the talking. I strongly recommend more activities like peer group teaching, student seminars, debates, forums and workshops.”
“Their interest in the various subjects has not been fully developed and cultivated. Many make choices due to peer group pressure and by what they hear from the media and their friends. Schools should provide better advice and counsel to students making such choices. This should be done on a continuous basis through career talks, visits, career guidance, and other such activities. This process is a long-term one, and should not be done over a short period, just before such choices are made. It is such interest, developed and cultivated over the years, that becomes a passion. Such passion is a seed of possible greater things in the future. JCs should be asked to allow more subject combinations. Ideally, students should be given freedom to choose their own subject combinations. This will in turn produce diversity through the diverse subject combinations. Although there may be an administrative and resource problem, we should allow, whenever possible, students to study subjects that they love. I understand from feedback that it is not possible to do "strange" combinations like Literature and Biology. Should this not be allowed? I understand that giving absolute freedom of choice may also have its undesirable effects. In our achievement-oriented society, many will go for the combinations that will maximise their chances of getting the most As, rather than taking subjects that interest them. This brings me to the topic of examinations. I have touched on the weakness of our examinations earlier. I would like to discuss this in more detail here.”
“Let me go through a few other interesting points. The Report suggests "A Broader and More Flexible JC Curriculum". I support increasing the breadth in our education system. However, this should be done through "moral suasion" and education rather than by strict rules. Imposing breadth upon the student's choices may lead to mechanistic rote learning in order to achieve a good result in a subject, taken not because the student loves it, but taken in order to fulfil a government requirement. Is this education? The very thought of imposing such a requirement runs directly counter to the main idea of flexibility. (In a way, diversity also suffers because you are eliminating the possibility of generating some students who would do well in pure Science or pure Arts.) I would therefore urge the Education Ministry to consider very carefully how we produce breadth in our JC student's education. Ideally, it should be done by convincing the majority of the students that this will serve them well. It will suffice that a large majority of the students, say, 80% accept this. If the Ministry still decides to impose it as a rule, we should still try to convince the students and their parents of the merits of such a rule. In addition to this, I would urge the Ministry to consider allowing an all-Science (and Mathematics) or an all-Arts option for exceptional cases. In such cases, students may be asked to show that they are highly committed to this very specialised track. This commitment could be shown through, say, doing some of the subjects at the H3 level or special project work. Giving students more flexible options is a good thing. However, many students are not well informed enough to appreciate these options.”
“Apart from the formal classroom environment, more student activities like debates, seminars (where the presenters are students themselves), oratorical competition and student workshops should be organised. Another important skill which is somewhat lacking is the ability to keep proper (by proper, I mean detailed and precise) records of scientific work. This stems from the over-emphasis of getting the job, such as an experiment, done rather than paying attention to the proper procedures and recording of the conduct of the experiment. Teachers must be also made to realise that laboratory sessions are not only for teaching the basics of the subject matter. They are also to teach students how to conduct and record an investigative procedure in a proper manner. This is an important aspect as R&D activities, especially in the biotech field, will necessitate such skills. (3) Teamwork. This has already been addressed in the White Paper. However, I would like to add that students should not be participating in CCA because it is compulsory, or merely for the CCA points which can help in university admission. There is much that can be learnt from being a committee member of a society or representing your school in swimming. Participation should come from interest and enjoyment, not CCA points. (4) Decision making. This point may not have been addressed in detail in the Report. However, it is related, yet different, from the first point on thinking skills. Decision making goes beyond ability to think, reason and fact finding. It involves a certain measure of courage, confidence and leadership. Some will argue that this cannot be formally taught. However, like teamwork skills, we can create the correct environment for students to acquire this ability.”
“Further, it is also very difficult to teach properly because a teacher has to be good enough and confident enough to accommodate many different points of views from the students. CHIJ Katong believes that the study of Literature teaches their students life-long skills that will serve them well during their lifetime and it is not for the benefit of scoring A1s during examinations. If the A1s do not materialise, so be it. So what are the skill sets which we should try to impart on to our students? There are four basic skill sets which our students should learn by the time they leave the JCs. They are (1) ability to think, reason, self-learn, research for facts, probe by asking intelligent questions and critique. Without this capability, whatever our students learn in their JCs will soon become outdated, if it has not faded from their volatile memory before that. They will certainly not be able to produce new knowledge nor lead in any R&D activity. Hence, I would suggest that As and distinctions should not be given for various subjects until a student has clearly demonstrated his thinking and reasoning capability. It is too easy to get an "A" if all it requires is the reproduction of lecture and tutorial notes given by the teachers as model answers. Even a dumb photocopying machine can do this. (2) Communications, ie, writing, presentation and recording. As pointed out by the Review Committee, this is a major area of weakness for many of our students. Inventions and discoveries can be useless if nobody understands your achievement. The best business plan will fail from day one if you cannot convince your investor or your potential customers of the superiority of your product.”
“If you are a bright student scoring many As, try telling your parents that you want to go into drama school to do acting instead of taking up the place offered to you by RJC! Secondly, there is an over-emphasis on knowledge per se. Classes become information download sessions. Often neglected are the skills associated with learning, thinking and research. This leads to poor ability to critique, rigidity, poor reasoning skills, low creativity and a spoon-feeding attitude, in which the students (and later our workers) invariably await instructions and information from the higher authorities. Thirdly, these problems are compounded by "short-termerism", ie, study only for the examinations! Try asking a student something about what he has studied two months after his final 'A' level paper. Or try asking him to read up on something which is interesting but is not in the syllabus. This problem arises from the fact that our examinations are very poorly structured. Questions can be "spotted". Answers are memorised wholesale, sometimes without real understanding of the subject matter. Indeed, even students from our top JCs memorise GP, essays or economic analysis, hoping that their "spotted" topics will "come out" in the final examinations! Is this what we want from our education system? In this regard, I must commend CHIJ Katong for being brave enough to make Literature compulsory for their 'O' level students. Literature is sometimes a much dreaded subject. It is difficult to score an A1. There are no good "standard" solutions - no model answers are ever good enough, no DS solution, as we say, in the Army. And everything can be argued from different points of view.”
“Mdm Deputy Speaker, some 13 years ago, when I first entered this reputable Chamber, I commented that our education system produced many students who were "exam-smart", extremely capable of only scoring very many As. I questioned then whether this was what our nation wanted to achieve. Now, 13 years on, I am very glad to note that at last the problem is being addressed in a substantial way. I agree with many points made in the White Paper. While our system has been efficient in mass producing trained and skilled workers for our early years of industrialisation, it is no longer good enough to take us into the next 30 years in this information era. In this new age, we must be capable of not only producing goods and services, but also new knowledge and intellectual property. Unlike the traditional industrial goods producing economy, the new winners of the information age are companies which own significant IPR like CISCO, Microsoft and Pfizer. Are our top students creative enough and enterprising enough to fit into this new era to take Singapore into the brave new world? We must address this problem now. Otherwise, like many other countries, we may get caught in the sandwich class: trapped in between the newly industrialising, low cost countries like China and India, and the western countries who own and produce most of the world's IPR. What are the problems we have to address in our education system? Please let me comment on some points from the Report. Firstly, many of our schools and JCs adhere strictly to the syllabus published by the Education Ministry. This leads to a homogenous student population with little variation - hence the lack of diversity. But, parents are also to blame.”
“And they would have to work out the wage structure for their own companies to cope with the cycles of business. The CPF will now focus on providing the broad majority of Singaporeans with their basic needs.”
“So, I am saying that Members can make a difference. Do not leave it to the unions and union leaders to push. If the Members of Parliament do their part in their respective companies, I think we can make more progress. The ERC's recommendations, therefore, address several long-term issues, and they help workers over their lifetime. Certainly, to some workers, the small changes may hurt. The effects can be mitigated, and employers would do well to make transitional payments to those immediately affected when CPF is restored for those below 50 years. For those working in unionised companies, I am sure they will get their transitional payments. Others have said it is unfair to some older workers who are value for money and, therefore, unfair, because the CPF will not be restored. Here, I fully agree with my colleagues from the unions that employers are free to pay them in cash. Here, let me just make a note that the report in today's Straits Times about the TCTC may give people the misunderstanding that it will be a top-up into the CPF. I do not think it is intended to be a top-up to the CPF, but rather a top-up where the employees, in this case, the civil servants, will get it in cash. Finally, let me highlight another recommendation that has not attracted much debate, that the CPF should be used as a counter-cyclical tool only as a last resort. Twice the CPF has been used to help us out of recession. Each time, we have devised new, flexible elements into our wage system, learning from the experience of the recessions. This statement in the ERC's recommendations means that in future recessions, employers should not expect the employers' contribution to CPF to be cut, at least not so readily as in the last two times.”
“A separate 4-year Department of Statistics (DOS) study of 14,000 workers retrenched from October 1997 to September 1998, during the Asian financial crisis, shows that a significant number are now not working - almost 30%. It is a sign that we have structural unemployment. And, unfortunately, we must expect more to come. The DOS findings for those who found re-employment were sobering. More than half had wage cuts; one in seven had their earnings halved; another one in five suffered cuts between 25% and 50%. Those who suffered wage cuts were the older ones, aged 40 and above. Again, age, not education, was the key factor. So, to help them avoid the trap of structural unemployment, we have to do several things. Bring their wage levels closer to their productivity, so they stay in their jobs. Altering our seniority-based wage system to pay by performance is the way forward, but it takes a long time. Not restoring the employer's contribution to CPF will help, at least right now. Mr Gan Kim Yong disagreed yesterday, saying that cutting CPF for older employees will only entrench the seniority-based wage system. But employer's contribution to CPF is also part of total wages. Lowering it will narrow the gap between top-end wages and commencing salaries. Certainly, adjusting wage costs is not enough. I fully agree. In addition, we should retrain them and redesign jobs to raise productivity. The unions have pushed for it. They say employers are not retraining enough. I hope that Members who are in management positions in their respective companies will give retraining of their employees a greater push, and they will be the ones who can make the difference in the redesign of jobs so that their employees can be more productive and paid more.”
“We know the people are paid according to length of service, still very much so. Not as much as it used to be, but still there is a very significant gap. If I were operating a hospital and all my employees belong to the mature group or have been working a long time, then I know that if a new hospital were to set up and employ young people under our system, the new hospital is going to be more competitive than the old hospital. That is why we have got to restructure our wage system to that based on the job rate and on performance. Helping older employees avoid structural unemployment There has been another good reason for the reduction in employer's contribution to CPF, ie, to help employees in this age group. They may not see it as such. But retrenchment figures show that a higher proportion of them are laid off when companies restructure. Mr Matthias Yao gave some figures yesterday. We expect restructuring to continue. So, why should we place them at higher risk, especially when they also find it hardest to find re-employment? Ministry of Manpower data shows that workers above 40 years take longer to find re-employment. Mrs Yu-Foo Yee Shoon informed Members yesterday of the experience of South West CDC, where the workers looking for jobs, and having a hard time, are those aged 40 and above. Members can get a good idea of the problem, if they spend time in their CDCs helping those looking for jobs. Age, not educational level, is the key factor, as what the Ministry of Manpower's information tells us. So, is it age discrimination? Or is it the seniority-based wage system?”
“But in an aging society, it has become necessary to revise the seniority-based salary, to keep down total personnel costs. An increasing number of enterprises are raising the proportion of performance-based wages as an incentive for higher performance." So, the Japanese realised that and they have been making changes. And, as Mr Matthias Yao said, the right way is the job rate. We have pushed that since 1986. At least, I have pushed for it since 1986. Although years of modification has narrowed the gap between commencing and maximum salaries, on average, an office clerk in the age group of 50-55 is now paid 60% more than one in the early 20s doing the same work; an electrician, 40% more; and managers, 200% more. These are from the same statistics that Dr Maliki mentioned earlier. With these gaps, the 4-percentage points less in employer's contribution means they will still be paid more than those with shorter service. So I do not think this can therefore be described as discriminating against the young-old or the not-so-young, as Dr Maliki has described them. Dr Maliki was right in pointing out that in some other classifications, eg, cleaners, the increase in wage levels across the age profile is very minor. In fact, we can find somewhere the wage level actually drops. But we have to understand why this is the case. In many cases of production, the length of work of the employees is short. And there are not so many in the older age group. In the case of cleaners, there are not so many in the young age group. Most of them are in the older age group. So, we have to understand why that is the case. But working with the unions, we know what is provided for in collective agreements and, typically, there is a salary scale, with a commencing salary and a maximum point.”
“Seen in this light, the change in the long-term contribution rate for those in the 50-55 age group cannot be described as discrimination against them. And we should never use the term "ageism" lightly. Addressing the seniority-based wage system Our wage system is seniority-based. As my colleague, Matthias Yao, said yesterday, our system is uncommon. I studied wage systems in different countries in the 1980s. So I know our seniority-based wage system is inherently flawed. I knew then that it was uncommon, because other countries used a different principle. My younger colleagues in the unions did not take my word for it. They checked for themselves, as Mr Matthias Yao said yesterday, and confirmed what I found out almost 20 years ago - that the prevalent system applied elsewhere was one based on job rate. Only the Japanese have a seniority-based system similar to ours. From the late 1980s, Japanese companies have had to change it. The Japanese MNCs knew after a period of time that the average wage costs go up under that system and they become uncompetitive. They tried to change, progress was slow. But they have persisted. Let me quote from the article "The Death of Lifetime Employment" in the publication Look Japan, August 2002: "The second mainstay of the customary employment system in Japan, seniority-based pay, has also changed. An aging society with fewer children is one of the underlying factors. A salary curve that rises sharply along with employees' age was acceptable in times when there were a greater number of young people. The total personnel costs could be suppressed during times like that, because a greater number of people are paid lower wages.”
“The chart is similar to the one that Members can find in the Cost Review Committee Report of 1996. Any measure that has increased demand has merely pushed up prices. That is why the feedback I get from my colleagues in the NTUC and my grassroots, after yesterday's announcement, is why are we allowing 10% cash payment and 10% from the CPF for private housing, because that would create demand. And they asked me why is it that we do not have other complementary measures to prevent the over-consumption of housing. For example, should we not institute a rule on how much of the monthly wage should go towards mortgage payment? People would then be able to cope with the payment over the life of the loan, knowing the changes that may happen in the economy which may even cause some of them to be out of work from time to time. The other point that they told me was that we should not allow the so-called ballooning schemes that became popular in the early 1990s. These are schemes where one does not pay the principal sum; one only services the interest payments. They feel that this is a trap which we should not allow our people to get into. These are prudent suggestions which the banks and other financial institutions, when they issue housing loans, should bear in mind. Having said that, I hope it is now a bit clearer what the CPF will do for people at different stages of life. In the early years, it would be to help them to buy their first property, as well as save up some for their retirement and medical needs, the principal one being for housing. But, in the later years, it would be to save up for retirement spending and healthcare.”
“Sir, for a long time now, the CPF, working with the HDB, has been more of a housing society to most Singaporeans than a fund for retirement. With Singapore's rapid growth, it has allowed many Singaporeans to upgrade their homes. Today, more than 90% own their homes. The quality of our housing is already high by world standards. We cannot expect the same fast pace of upgrading to continue. What happens to the Swiss standard of living? The Swiss are blessed with more land, and great natural beauty. Many Swiss live on landed property. For those who live in Swiss cities, surely we do not see the majority living in fenced-in condominiums complete with swimming pools! That is why I said, by world standards, the kind of accommodation that Singaporeans have now achieved equals the best around the world. Sir, the total CPF contribution rate will be 40% up to the age of 50 years. It means the CPF will continue to help each one buy his first property. Those who wish to upgrade will have to plan and save separately. The Ordinary Account will be less, most likely not enough for upgrading without other savings. Beyond the age of 50 years, the CPF will concentrate on helping the individual save for retirement spending and healthcare. The prudent valuation limit on use of CPF funds for mortgage payments will prevent the erosion of hard earned savings. This will contribute to a more stable property market. But it will not prevent bubble-like price rises in the future. However, the swings may not be as wide as in the past. And future leaders will do well to remember that in dealing with such situations, they should not cause demand to rise further as that would merely pump up prices. The property price index chart, on page 4 of Business Times today, is instructive.”
“Now, the ERC has clearly stated that the CPF is for the broad majority of Singaporeans - those above the lowest 10% and below the top 20% by income. The lowest 10% will need help through other means. The top 20% should be able to plan for themselves. For the broad middle 70%, what does the CPF provide? Retirement expenditure, healthcare and home ownership - at the basic level. At the basic level, I think is a point that should be highlighted, so that we will not continue to have misconceptions of what the CPF will provide for us. Perhaps, it would be better if we define even more clearly what we mean by basics. Because basic housing differs from one person to another. Basic medical care also differs from one person to the other. And if we can define what is basic, then we will know that beyond the basics, it is our individual responsibility to plan and save for what we desire to have. Then perhaps like what my colleague does, take up insurance-linked investments. But not everybody is like my colleague. I regard her as belonging to the top 20%. For the broad majority of Singaporeans, their CPF savings provide them their basic needs in retirement. For more than the basics, they should save what they can, and their children should support them. I think we should all remind ourselves that pensions have a history of about 150 years. Our CPF has a history of barely 50 years. Before pensions and CPF, parents raise their children, and children support their parents when they grow old. This cycle has not changed. For the broad majority of people, CPF supplements the traditional compact between parents and children. Without it, demographic changes will put the traditional compact under severe strain.”
“The reach may not be that extensive in the past, but personally I think it is a good scheme of forced savings with protection. To me, retirement income should be financed with individual savings, insurance, and subsidies from children, if any." However, my colleague knows a single mother who worked hard to raise eight children, but they seem too caught up with their own families now, giving her little support, if any. I told my colleague that I have seen tears well up in the eyes of 70-year old residents seeking help at meet-the-people sessions when I ask them how many children they have. They know the next question I would be asking is: How much support do they give you each month? Voice breaking, the answer would be "Not much." And yet they would defend their children saying that life is hard for them too. Sir, if there is a disconnect between Government and people, it is because people look at the immediate while the Government takes a holistic view. Any unhappiness that people express is understandable because changes affected their immediate needs. The CPF is for their needs over a lifetime, especially their retirement needs. What we should take care to do is make sure the adjustments we make do not cause undue hardship. I believe the ERC's recommendations that the Government has accepted, have done that. It will squeeze some people, but not unduly. Sir, the ERC has restated the principle of the CPF. That is important. We did not have such a clear set of principles before, so the CPF had become different things to different people, and I have illustrated from the comments of my colleague, for many people, CPF is for housing.”
“Over the years, Government Ministers have consistently stated that the basic objectives of the Central Provident Fund (CPF) are savings for retirement, medical treatment and housing. But what is at the top of each person's mind? Last week, NTUC conducted several discussions with union leaders. After attending the discussions, one of my colleagues, in her early 30s, a graduate, married with two children, sent me this observation, and I quote: "At different stages of our life, we have different expectations of CPF. For me - and my cohort - CPF is for housing. Which is why most of us do not really bother about the Minimum Sum or Medisave retention sum, but more concerned on how much is left from my Ordinary Account (OA) for housing. For those in the late 40s, they could have grown-up kids. The working group may have slightly better savings and income, and therefore may aspire to upgrade. So CPF for housing again. That is why in the dialogue sessions over the last few days, we do not hear people complaining that the 4% freeze will affect their retirement income, but that it will affect their mortgage loans. Which shows most are committing almost the maximum of their OA into housing. Urgency to save for healthcare needs will come at a later stage. Children will want to use their Medisave for their parents, so that their parents can draw out the excess from their CPF when they retire. I do that for my parents, and I understand most of my friends do that too. For those not married, they should have more savings relatively - as they have less to spend on. In fact, though not many have achieved the Medisave Minimum Sum, with MediShield, it may not be that inadequate. I think insurance would serve as a good source of income for many retirees in future, to complement CPF savings.”
“Mr Speaker, Sir, although I agree that lowering the employers' CPF contribution for older workers would enhance their employment opportunities, I do not think that we should lower the total monthly CPF savings of the lower paid workers. Therefore, my proposal is for the Government to subsidise or pay for part of the CPF for older workers below certain income levels to help them remain employed. This measure can be put in place for a limited period of, say, five years. This should be long enough for other younger workers to adjust their financial and retirement plans. As an example, affected workers earning up to $1,200 per month can have the 4% cut in the employers' CPF contribution be made good by the Government. Those earning more will enjoy the same benefits of those earning $1,200. In my calculations, this will work out to approximately $60 million per year when the CPF rates are fully restored. The affected workers will then have up to $2,880 restored to their CPF balances when they reach 55 years old. This sum may be small to those who are well off, but will mean a great deal to those in the lower income bracket, struggling to make ends meet. Sir, the Government has decided to compensate the civil servants in the 50-55 age group through the transitional CPF top-up. My question is: why not also extend this to other Singaporeans? Sir, I hope that the Government will consider the merits of my proposal when implementing the measures proposed by the ERC. The Minister, Prime Minister's Office (Mr Lim Boon Heng): Mr Speaker, Sir, first, let me bring us back to fundamentals. What does the CPF mean to each person?”
“Mr Speaker, Sir, thank you for allowing me to join in the debate. I would like to join my parliamentary colleagues in speaking up for the workers in the 50-55 age group. Sir, the Government has accepted the ERC's proposal to lower the CPF rate for workers in the 50-55 age group to 16%. This is the current rate for the employers' contribution for all employees, lowered from 20% due to the current economic condition. Although there is presently no difference between the CPF contributions for workers in this age group and those below 50, there will be a 4% difference in the CPF rate once the full 20% is restored. This has been causing unhappiness and concern among those affected. These workers fear that housing payments may be affected as well as their retirement funds being reduced. The Government needs to balance the harsh economic solutions to help our companies survive with the welfare of our workers. It must balance companies' cost of doing business with the retirement needs of our older, less well-off employees. In my view, the Government can and must chip in and help bridge the gap between the two competing needs. In the past, the Government helped the lower income group through the various rebates - asset enhancement schemes, New Singapore Shares and generous one-off CPF contributions. This helps narrow the disparity between our high income earners and the less fortunate. However, we need to adopt a more targeted approach towards those affected by the Government's own measures. We do this for the GST increase and we should also do this for the CPF reduction. This is not only fair but will also show that we still care for our workers from the previous generation who have contributed to Singapore's success.”
“Sir, the Minister has visited Batam and talked about the profitability of companies there and enjoying the Free Trade Agreement that we may have with the USA. I would like to ask him for his assessment of his trip to Batam and whether there are opportunities for small and medium enterprises in Singapore to make use of the opportunities there.”
“--- Hong Kongers is because of lack of flexibility. Sir, I would like to ask the Minister to please comment on the points that I have made.”
“This leads to the requirement on access to funds. The Government has set up TIF. So far, the fund has been mainly invested in big and famous international VC funds. These are safe investments. It may have helped to kick-start the VC industry in Singapore, but it does little to encourage entrepreneurs or entrepreneurship. The Government should therefore look into how it can take more direct equity participation in SMEs and start-ups to encourage entrepreneurship. Finally, a word about flexibility. To compete in the new era, we must develop the skill of flexibility without sacrificing fundamental principles. This skill must permeate every level of our society, right from civil servants executing Government policies to businessmen making a deal. One of the reasons why Singaporeans are not as successful as the Taiwanese and ---”
“This is the main cause of the aversion to anything risky among the better trained in Singapore. This mindset needs to be changed through education in order to lower or even eliminate the social cost of business failure. I would like to remind Members that, in America, CEOs of failed start-ups are actually sought after for their experience, so that mistakes made can be avoided in the future. What is worse in Singapore is that many entrepreneurs also have to risk personal wealth in order to fund their ventures. This could lead to personal bankruptcies when failure occurs. Surely, persons who contribute their good ideas should not be made to risk their total savings, or house as well. This factor is one big difference between Britain and America.”
“To do the former is easier as we have been successfully doing it over the years and are quite capable of continuing. However, to do the latter will be more tricky as the environment must be right for it to take root and bear fruit. Members may note that Singapore's early economy has been founded primarily upon trade and commerce. Many of our pioneering fathers were businessmen, traders, shopkeepers, etc, or dreamt of becoming one. They all desired owning a business, and entrepreneurship was in their blood. How then are we to re-create this spirit of risk-taking? Have we got too comfortable? A new economy with a thriving entrepreneur sector cannot be created overnight. We need the essential ingredients placed in the right environment. The Government should at least try to create this environment for entrepreneurship to flourish. It will be these smaller companies that will find the right niche industries to survive or even thrive in. One such success story, which is often told, is Creative Technology. Singapore certainly needs many more such companies. Many factors are needed to make up the right environment for a successful entrepreneurial economy. I will speak on three major ones. They are, one, plentiful bright ideas; two, low cost of failure, including social costs; and, three, access to funds. Firstly, without bright ideas, there will be no start-ups and no ventures. We should not only attract ideas locally but also ideas from all over the world to incubate here. Successful ideas will then find their market globally. So EDB should not only attract FDIs but also actively pursue foreign ideas to locate in Singapore. Secondly, there is a general stigma attached to failure in Singapore.”
“Sir, as we move into the knowledge era, the structure of Singapore's economy will undergo fundamental changes. This, coupled with our maturing economy, is expected to result in (i) a slower growth rate; (ii) a greater reliance on external demand which rose from 68% of GDP in 1990 to 77% in 2000; and, (iii) a manufacturing sector which is becoming more knowledge intensive with a corresponding reduction of manufacturing jobs. Regionally, the Japanese locomotive is declining, while there is competitive pressure coming from China and other newly industrialising countries. Within ASEAN, Indonesia's recovery is uncertain and, at best, difficult. Malaysia is moving away from her primary industry base and is trying very hard to beat us in the seaport, airport, petrochemicals, infocomms and logistics sectors. The newly industrialising countries, with their mass of cheap labour, will focus on mainstream economic activities that are labour intensive to provide jobs for their people. The developed countries in the western world have plenty of resources in technology, capital and infrastructure. Singapore, unfortunately, is caught in between. Under such an economic landscape, I too would like to ask the Minister what is the Government's strategy to make Singapore internationally more competitive. In the past 35 years, we relied on foreign direct investments (FDIs) and MNCs, as well as GLCs to provide growth, with SMEs playing the supporting role. Would this tried and tested approach continue to provide Singapore with future growth, or should we now emphasise on building an entrepreneurial economy? My view is that while we continue to attract FDIs to grow our knowledge intensive industry, we must nurture the future entrepreneurial economy.”
“It not only provides sufficient incentive for employers to consider hiring older workers, it also sends a clear signal to them that older workers ought to be considered on an equal, if not favourable footing because of their experience, when deciding on suitable persons for job vacancies. Most importantly, this is a meaningful and effective programme to ensure our social stability and cohesion as we face globalisation head on and the spectre of greater income disparity. I am sure the ERC can work out the details. Sir, I hope DPM could respond to these suggestions. On that note, I support the Budget.”
“However, we must remember our workers from the previous generation who have made Singapore the success she is today. The Government has already done much for the lower-income group, through the various rebates, asset enhancement schemes and the New Singapore Shares, etc. It helps to narrow the disparity between our high income earners and the less fortunate. Mr Lim also mentioned, and I agree, that workers over 40 would find it difficult to find a new job. This could be either because their skill set is now less in demand due to economic and industrial restructuring, or because employers simply prefer to employ younger workers. Mr Lim floated the idea of lowering the CPF for these workers, ie, those over 40 to make them more competitive in the job market. Mr Deputy Speaker, Sir, I agree that lowering the employer's CPF contribution for older workers would enhance the employment opportunities of these workers. However, I do not think that we should lower the total monthly CPF savings of these workers. Lowering the CPF rates is not without its associated problems. Firstly, it effectively lowers the worker's actual income although his take-home pay may remain the same. This may lead to a second problem of having less or insufficient funds for his retirement and healthcare needs. Workers with existing housing loan commitment may also be adversely affected by a lower CPF saving. I would like to propose an alternative. My alternative is for the Government to subsidise or pay for part of the CPF for older workers below certain income levels to help them remain employed. This is a better way to help lower-income Singaporeans, compared to our previous schemes of CPF top-up.”
“I urge the DPM to reconsider the move to a single tier scheme for company taxation. The old scheme of franked tax credits for dividend paid has served us well and could be retained or dividends can be paid untaxed, ie, companies need not pay tax on the portion of profits paid out as dividends. In the latter scheme, individual taxpayers must then pay taxes on the dividend earned. Since we are in the age of computers, there should not be much difficulty in administering either scheme. All listed companies are already reporting to the tax authorities the list of shareholders and their dividend distribution amounts via CDP computers. Sir, the next point I want to touch on is on taxation of bank interest. Interest paid on deposits is a form of compensation for the opportunity cost of using the money and inflation. Many individuals in Singapore, especially the more risk averse, save their money in savings, deposits and fixed deposit accounts. Like the long-term investors I mentioned earlier, they are saving for their retirement. The Government ought to encourage this activity by not taxing the fruits of such savings. I encourage the Government to bring forward the plan to waive taxation on interest as recommended by the ERC sub-committee. I am speaking especially for the man-in-the-street, who should not be penalised for saving his money in a deposit account by having his interest taxed. Sir, the last point I want to make is on CPF review. It has been noted by Mr Lim Boon Heng that our older, lower income workers would face increasing uncertainty as our economy transforms. The world is entering into a new economic era and the impending restructuring of our economy cannot be avoided.”
“Perhaps a registration system could be implemented and administered by a Government agency. The second point I want to touch on is on the single tier system for company taxation. The reduction of company taxes to 22%, with an eventual target of 20%, has been coupled with a single tier system for company taxation. This will result in the individual investor paying more taxes on the dividends he receives. The retirees who have saved their money in the form of share investments pay little or no tax. It is this group of people who are the hardest hit by this measure and they are a group of people who can ill afford the additional burden. Sir, as the economy matures, growth rates of companies will be slow, and a greater proportion of their profits would be returned to the investor as dividends. An investment strategy based on yield now becomes increasingly plausible compared to a growth strategy. Apart from the professional fund managers and corporate investors, there are many individuals who invest long term to build up a retirement fund. The Special Retirement Scheme (SRS) has recently been introduced by the Government to encourage this group of people. The dividend payout and the taxation it attracts affects the motivation of these long-term individual shareholders. The Government should not put them at a disadvantage compared to the pre-Budget situation. Investment holding companies which make losses at the company level also suffer from the single tier proposal. Due to their nature, investment holding companies' only revenue source is from the dividends paid by their subsidiaries and associate companies. Since no tax credit can be claimed from the subsidiary's dividend, they cannot offset their running cost against their subsidiary's income.”
“Mr Deputy Speaker, Sir, Mr Tan Soo Khoon is a good friend of mine. Whenever he speaks, he catches my attention and I enjoy listening to him. I am impressed with the well-researched figures he produced earlier. However, he told only half the story. I would be happier if he had juxtaposed his tables with another table showing the income, education and quality of life of Singaporeans over the same period. The point we should consider is not how much surpluses we generate but whether at the end of the day Singaporeans' lives have improved. And this is what this Budget and the GRC work are all about. Sir, I wish to commend the Deputy Prime Minister on a very good Budget in Singapore in what is very challenging times. The restructuring of our fiscal system to make us nationally more competitive is critical to our long-term economic survival, as we face new challenges from globalisation and from newly developing countries like China. I wish to propose four points for the Deputy Prime Minister to consider and, if he thinks fit, take them into account in the final Budget. Sir, the market size in Singapore is limited. To survive globalisation, companies must expand regionally and internationally. In fact, the Government has been encouraging them to do so. However, when these companies make losses in their overseas investments, they are not allowed to offset these losses from their taxable profits in Singapore. To be fair to these companies that heed the call by our Government, the group tax offset for loss making local subsidiaries should also apply to overseas subsidiaries. This will provide additional incentive for our companies to risk their dream abroad. In order to prevent abuses, certain limits could be placed.”
“Sir, may I ask the Member: how do you compete with only one player? HANDPHONES (Health risks) 17. Dr Teo Ho Pin asked the Minister for Health (a) whether the use of handphones will pose any health risks to phone users; (b) how are handphones tested to ensure they are safe for use in Singapore; and (c) will boosting handphone stations and antennae pose health risks to residents staying near such facilities.”
“Sir, I agree with the Member that there is economy of scale if you have got a big operation. But there are also the disadvantages of the operator being the only operator, ie, being complacent and so on. So I think our approach of managed competition is a correct one. I would not support a situation where you have numerous operators and that would also not be good.”
“When we say "world class", of course, we compare ourselves with the best in the world. But how do you achieve that? If we have comparison between two operators in Singapore, that also gives us assurance that they are doing the right thing.”
“Mr Speaker, Sir, as our public transport operators are publicly listed companies, they make their own commercial decisions when it comes to issues of merger. However, while the merger of all public transport operators (PTOs) may provide greater economies of scale, it is in the interest of the general public for sufficient competition to exist in the industry. Competition ensures that the PTOs will strive to improve their service and provide better value for money to commuters. The proposed merger of SMRT and TIBS will result in a multi-modal transport operator, while SBS will be the second multi-modal operator next year when it commissions and operates the North East Line. These two multi-modal operators will be well positioned to provide integrated and seamless travel to commuters.”
“The fares I am talking about are the fares they have paid to take the SLRT. PUBLIC BUS AND MRT/LRT COMPANIES (Merger) 16. Mr Thomas Thomas asked the Minister for Communications and Information Technology if his Ministry will work towards the merger of all public bus and MRT/LRT companies to gain economies of scale and provide commuters with a more integrated and cost efficient public transport system.”
“Sir, I am talking about the fares that they have incurred. Yes, if they have paid, for instance, a dollar or 60 cents, they could approach SLRT.”
“Sir, obviously, the Member has not listened to the answer that I have given earlier. I told him that the results of the last 20 months' operation have shown quick improvement. We have attained the target of 99.7% service reliability. If this is not world-class standard, what is it? Sir, as far as competition is concerned, this issue has been raised in the House and the Minister has said that we are reviewing it and we will make an announcement in due course.”
“I will ask the operator to consider that.”
“Sir, as I have explained earlier, the requirement for the service availability to attain 99.7% is a very high standard. So this is of world-class standards. The safety and reliability aspects are all benchmarked against world standards. As for the time-frame, LRT has been improving since it begins operation. It is not unusual for train operations to experience problems initially, even for MRT. When it first started, there were problems. And these problems will get less and less frequent. Even today, MRT also encounters problems from time to time. As for the audit, as a first step, we have SLRT to work with the system supplier and, if need be, we will bring in a consultant to do an audit. I do not know whether Mr Chiam will be happy about that. But, if necessary, we will do it. As for redress, SLRT has provided free bus services during the disruptions. So if there is any claim from residents, who were affected by the service disruptions, they can claim back from the operator.”
“Finally, Mr Ong asked how we could make sure that people would not argue that they had not received the notifications or notices of summonses. The amendment here is to make it clear that, by using one of the means indicated in serving a notice, it is deemed to have been served. In fact, Mr Ong said that we should make clear that this is so. That is what we are doing now, that is, by passing this law and publicising it. As long as notices are served by one of these means, it is deemed to have been served and that it is the responsibility of the owner to comply with the requirement of the law. We cannot force the owner to acknowledge whether or not he has received the notice. What the law requires is that the Government agency has served the notice and it is therefore up to the individual or vehicle owner to comply with the requirement. Sir, I believe I have answered all the questions and I thank Members for their support. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr John Chen Seow Phun]. Bill considered in Committee; reported without amendment; read a Third time and passed. ADJOURNMENT Resolved, "That Parliament do now adjourn to a date to be fixed. " - [Mr Wong Kan Seng]. Adjourned accordingly at Fifteen Minutes past Six o'clock pm to a date to be fixed.”
“In addition, the appointed towing crew comprises two operators, one would assist to recover the stalled vehicle, and the other would ensure that safety procedures, such as the use of safety cones, are observed. This would ensure maximum safety inside the tunnel. Unlike other towing companies, they usually have only one-man-operated tow crew. Sir, I come to Mr Ong Ah Heng's questions. First, he asked why the unclaimed surplus money could not be given to charity and why should it go to the Government. Sir, forfeiture of unclaimed surplus money to Government, after setting off against outstanding charges under section 123A, is consistent with the other fiscal provisions in RTA. These provisions are correct because we should not mix charity with the provision of unclaimed money going to the Government. The Government would have its own programme and budget for charity work. But this is unclaimed money and it should go to the State. Sir, Mr Ong asked whether, under section 123A(8), publication by Gazette before the vehicle is auctioned, we should also make it a requirement to notify the owner before it is auctioned. Let me say that this notification in the Gazette is a requirement before the vehicle is put up for auction. But, administratively, once the vehicle is towed to a parking place, the vehicle owner will be notified, and if he does not collect the vehicle, he will be reminded to collect the vehicle. In the end, when the vehicle is not collected at all, it will then be put in the Gazette for a month before it is auctioned. Yes, administratively, I can ask LTA to send another letter again to tell him that we are going to auction his vehicle. We can do that administratively, but it is not required to be put in the law.”
“In fact, this number is manned 24 hours. Of course, they can go to the police if they want, but the police would also ask them to call the EMAS hotline number. Prof. Chin asked how would one know whether or not a tunnel is part of the expressway. Currently, the CTE tunnels have signages delineating the entrances of the tunnels to give motorists advance notice. With this amendment coming into operation, these tunnels, as part of the expressway, would also be gazetted and additional publicity would be given. The last question raised by Prof. Chin is whether, in a tunnel, the motorist can arrange for his own tow truck to tow away the vehicle. Sir, motorists are allowed to use their own towing service on expressways, which are not tunnels, provided that the private towing service arrives before the EMAS towing service. But to ensure the safety and convenience of the other motorists on the expressway, it is important that stalled vehicles are towed away quickly, and not be left on the carriageway or shoulders. Therefore, if the EMAS towing service arrives first, the stalled vehicle would be towed away by the EMAS towing service. When it comes to a tunnel, it is a very vulnerable environment. Because overseas experience has shown that a small accident in a tunnel could lead to a major disaster involving many casualties. Hence, it is necessary that tow operators are familiar with the tunnel regulations, entrances and exits. They should also be equipped with first aid and fire fighting skills, familiar with the location of tunnel safety equipment, the safety procedures and assist in an emergency evacuation. LTA's appointed towing operator is fully equipped with the set skills and knowledge. Other towing operators may not be trained to operate safely in the CTE tunnels.”