Lee Tsao Yuan
Singapore
“My last point and, perhaps, the most important, is that the fundamental tenet of democracy is that it must bring the greatest good to the greatest number of people.”
“Clarification, Minister. I think my question was really regarding the last part of your comment which said that you would change the Constitution in order to state whether what part of NII would belong to past reserves and to current reserves. Perhaps I was wrong in this matter.”
“As I see it, Minister, if the change of the Constitution is to define the portion of NII that belongs to past reserves, then would the Minister also consider at the same time including in the Constitution the definition of "reserves" that was stated in the White Paper? Because right now it is not in the Constitution.”
“The Minister stated that he would consider changing the Constitution in order to define NII or the part of NII that goes to current or past reserves. Would the Minister also consider at the same time changing the Constitution in order to incorporate the definition of past reserves in the Constitution?”
“Another clarification, please. As far as I understand from the White Paper, and I could be obtuse, supposing you have a future government that informs the President of the day that it disagrees with the definition of the value of State land, in other words, the value of State land at fair market value at the point of transaction, then tho…”
“The Minister said that the principles in the White Paper are binding and that if a future government so decides to define fair market value as not at the point of transaction but at the time it took over office, then that is clearly in violation of the definition of past reserves.”
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“The second reason why we do not favour a public register is that allowing public access to Members' declarations of assets will encroach upon their personal privacy. It is already difficult enough to persuade able and talented men and women to come forward and stand for election without subjecting their private affairs to close scrutiny. To require their and their family members' personal assets to be publicly known is to make it more difficult for able people to come forward to serve in Parliament.”
“The Minister for Home Affairs (Mr Wong Kan Seng) (for the Prime Minister): Sir, the Prime Minister has asked me to answer on his behalf. There is no need to introduce such a register. The Member's proposal for public disclosure of Members' assets is not new. He had raised the subject in this House on two occasions, in 1981 and 1985. The then Prime Minister, Mr Lee Kuan Yew, gave a full answer to this issue. It had also been raised on other occasions by some other Members like Dr Lee Siew Choh and Mr Chiam See Tong. I shall repeat the two reasons why having Members of Parliament declare their assets publicly is not practical. First, the proposal cannot guarantee clean and uncorrupt practices. An MP who is corrupt will not list his assets from corrupt gains in his declaration of his assets. Unless he is stupid, he will not flaunt his corrupt gains by ostentatious living or keeping them in his name in Singapore. What the Government has done is to require every Minister and office-bearer to file a declaration of his assets with the Prime Minister at the beginning of his term of office. The declarations are then shown to the President. These are requirements under the Code of Conduct for Ministers and Office-Holders. In addition, the Prime Minister requires all PAP backbenchers, though they are not in charge of Government policies or Ministries, to declare their assets to him. When an allegation of corruption is made against an office-holder, or an MP, his declaration will be available for investigations. We can have any number of laws, regulations and declarations to curb corruption but ultimately it depends on the reputation and integrity of the Government and its commitment to tackle corruption effectively.”
“Will the DPM consider giving scholars the option of pursuing post-graduate studies immediately upon graduation from their undergraduate studies? Because this is one potential deterrent for them taking up the scholarships, that they have to come back to serve before pursuing post-graduate studies. BG Lee Hsien Loong: There is some flexibility in this. PSC often allows scholars to do Masters degrees immediately as a continuation of their undergraduate course. For PhDs, they are more selective, but it is not a blanket no. It really depends where we think you can be valuable and whether this fits in with our career plans for you. If you go on an academic scholarship from the university, then, of course, you go on to a PhD and come back to a teaching career. If you go into a scholarship to serve in the SAF, and you say, "I want to go on and spend three years doing a PhD.", I think the SAF will legitimately ask, "How does this help you to serve me better? Or will it only make you more reluctant and more difficult to fit into the organisation after you complete your PhD, and therefore we would have to be more careful in making decisions?" But even then, we have had SAF scholars who have taken no-pay leave, after working for some years, and gone and done PhDs. One of them is now the CEO of the URA. So it has been done. But the education is for the purpose of enhancing your ability to contribute to Singapore. If it is purely self-fulfilment, then it is something which you have to look after on your own. MEMBERS OF PARLIAMENT (Register of assets) 10. Mr J. B. Jeyaretnam asked the Prime Minister whether he will introduce a Members' Register for Members of Parliament to declare all assets of whatever nature held by them or in the names of their spouses.”
“Sir, the Minister mentioned that the ERP system has led to an overall lowering of transport costs and that Government revenue has decreased to 60% of that under the ALS scheme. However, we do not know from the consumers' point of view, in other words, the motorists' point of view, whether it has actually taken them a longer time to reach their destinations because of travelling on alternative routes, or that they actually had to rearrange their time schedules in order to have a reduction in terms of price. Therefore, we do not necessarily know that from the motorists' point of view there is an overall reduction in terms of all sorts of costs, including time. Would the Minister therefore consider doing a survey to find out from motorists how they have actually adjusted their traffic patterns and whether they have saved in terms not only of cost but also in terms of time travelled?”
“Sir, that is a percentage of the turnover. What about the percentage of the income?”
“Could the Minister give some ballpark figures of the cost of the chiller or the monthly instalments vis-a-vis the monthly rental or the average income of these stallholders?”
“This is in order to allay fears that those who vote for the Opposition could be identified and, therefore, possibly included in the black book of the Government which would be counter to the daily cherished democratic principle that elections should be free and fair. In conclusion, to the extent that the Bill before the House does not in any way impinge upon the two principles: (1) that the vote should be genuine; and (2) that every vote should be secret, I support the Bill.”
“Mr Speaker, Sir, I would like to focus on the amendment which provides for the authentication of ballot papers by new means, instead of by perforators. There are two larger issues or principles involved here. The first principle is that every vote should be genuine. In other words, that there should be no false votes by fictitious persons or votes by persons masquerading as other persons. The second principle is that every vote should be secret. The Amendment Bill seeks to update techniques for providing for an official mark on the ballot papers for authentication. Since the authentication of ballot papers is precisely to ensure that the first principle of genuineness of the vote is upheld, I therefore do not see any problems on this score. The question, however, that I have is: do the new authentication methods uphold the second principle, that of secrecy of the vote? I note that section 40(3) of the Parliamentary Elections Act, which is just before the proposed insertion of the new authentication clause, states that, "Each ballot paper shall have a number printed on the back and shall have attached a counterfoil with the same number printed on the face." If this is the case, then it is technically possible to trace how an individual voted by matching his name and IC number on the counterfoil against the serial number on the ballot paper. Could the Minister please clarify whether this is indeed the case, and whether the vote is indeed secret? In addition, could the Minister please clarify the purpose of these serial numbers?”
“Will the Government assist existing fresh pork sellers to transfer to the sale of chilled and frozen pork?”
“Sir, may I ask two questions? The first is: is pork, which has been infected with the Nipah virus and the Hendra-like virus, safe for eating? The second question is: how can we ensure that if we eat pork we would not suffer from eating pork precisely since there was a case of pigs being smuggled into Singapore recently?”
“Sir, I have more or less the same issue as Mr Peh and, that is, the issue of whether deregulation of bus services would indeed lower the costs to commuters and also encourage enterpreneurship as well. At the present moment, there are two bus operators, SBS and TIBS, together with some Scheme B operators and private shuttle services. But as far as I understand, there are no private operators running services along trunk routes or along selected routes which are not feeder services. It would seem to me that selective allowance of private operators would improve services to commuters without severely affecting the profitability of the present bus companies. I am aware that bus companies use the profitable routes, such as the trunk services, to cross-subsidise unprofitable routes. However, I am not convinced that deregulation of selected services would, in effect, result in a loss of financial viability of the two major bus companies. A service precisely in point is the one from the Clementi Interchange to the NUS campus that Mr Peh talked about. One specific suggestion I have is to open up the route from the Clementi Interchange to the NUS campus at Kent Ridge to private operators and see whether this would indeed result in a fall in bus fares and an improvement in service. I would also like to seek clarification regarding the Minister's statement that the longer term plan is to have at least two main operators running both rail and bus lines, together with several smaller bus operators, and whether this plan in effect means a deregulation of bus services.”
“Sir, I am aware of the time. I would be grateful for as detailed a reply, perhaps in written form, as the Minister has given to the other Members who have spoken. My idea is really the fact that when we move to a knowledge-based economy, I think we also require a fundamental change in the way in which we work, from one whereby the office hours are fixed to one where we have flexible working arrangements. Precisely because in a knowledge-based economy, creativity does not merely just come in the office, it can come anywhere. Also, because of the fact that we do have advanced means of communication and IT, we can also work anywhere and still be in communication with our office colleagues. So I would urge the Government, in particular, to start this move of changing to flexible working arrangements. Some companies have already done so and perhaps the Government could further give impetus to this move by allowing flexible working arrangements for those whose work has a high component of creativity.”
“Since it costs more to roll out the cable to landed homes, landed homes pay more. I subscribe to this principle. What I find difficult in understanding is, however, how the rates are arrived at and why there is such a large differential between HDB flats on the one hand which pay nothing for the hook-up, and landed properties which pay up to about $6,000 for the hook-up fee? My question here is: is there also the principle of the ability to pay used in terms of charging? In other words, in terms of charging $6,000 for landed properties, is there a sense that because landed property owners can afford it, so therefore they should pay more? Or is it merely based on the issue of cost for service? Does it cost that much more to roll out a cable to a landed property home compared to a HDB flat, private condominiums and so on? I would like to ask whether it is true indeed that there was a Government grant to SCV to wire about 7,000 HDB blocks but no grant for private flats and I presume no grants for landed properties. This was a point which was mentioned during last year's debate. And if this is indeed true, what is the size of the grant and why is it this grant was not granted across the board to all households, and why only to HDB flats? Lastly, the take-up rate for cable television as at end January 1999 was 18.5%. After having made the entire nation cable ready, it would be a pity if only one in five homes were actually hooked up and it will be worthwhile to find out why the other four homes have not subscribed up to this point. The aim should be a 100% take-up rate either by cable or ADSL in the near future. Then, only then will Singapore ONE become a reality.”
“Sir, I would like to continue my focus on regulation in the examination of whether deregulation could result in lower cost. Singapore ONE is an exciting new infrastructure which, when fully operational, will thrust Singapore into the information age. There are two ways to access Singapore ONE, either through SingTel ADSL network or through Singapore Cable Vision cable network. SCV's $500 million nation-wide cable network is expected to be completed by September this year, three months ahead of schedule. All these are commendable achievements. I would like to seek clarification with regard to four aspects. First, this is the first time in Singapore's history that a nation-wide infrastructure has been installed by a private company and not by a Government agency. I would like to ask the Minister to elaborate on why this is the case. What aspects of the company, that is, the Government and presumably SBA regulate, and how much subsidy is involved in developing the cable network, if at all? Second, what I find uncomfortable is that SCV is the monopoly provider of access to TV channels, such as CNN, CNBC, Discovery Channel, and so on. Singaporeans do not have a choice in this matter because satellite dishes are not allowed in Singapore. I have no alternative but to subscribe to SCV if I want to watch CNN or Discovery Channel. The question I have is: would the price be reduced and service improved if indeed there was an alternative provider to cable television than just SCV? For example, could not SingTel ADSL network provide the same TV quality services so that consumers have a choice whether they wish to subscribe to Magix or to SCV? 5.15 pm Third, there is also the issue of the hook-up fee. I understand that the hook-up fee is based on the cost for service principles.”
“In conclusion, the goal that manufacturing should contribute 25% to GDP needs active policy support from all relevant Government agencies and an inter-agency approach, including EDB, JTC, Land Office and URA. I would appreciate the Minister's clarification regarding whether this is indeed the case.”
“Sir, recently, in its presentation of Industry 21, EDB reiterated the goal that manufacturing and manufacturing-related services should contribute 25% to GDP. This objective has been in place for some years already. I agree with the rationale that in a sovereign state, it is desirable to have both manufacturing and services, and that both should constitute the engines of growth. For the last three years, the actual share of manufacturing has in fact been slightly lower at about 23%. The point I would like to make is that the achievement of such a goal needs proactive policy support and policy alignment of all agencies concerned. First, there needs to be an inflow of high value added manufacturing to replace the lower value added manufacturing, which is being relocated to other more cost effective destinations. Hence Industry 21 and its focus on knowledge-driven industries. Second, industrial land has to be priced appropriately. Even with the recent reductions in JTC and HDB rentals, industrial land is costly in Singapore. Hence, I agree with the CSC's recommendation that the pricing of industrial land needs to take into account cost competitiveness. Land Office, I believe, therefore needs to re-examine its pricing of industrial land. Third, more can be done to maximise the usage of industrial land. JTC's Industrial Land Plan 21 is a good start, but more needs to be done. Again, the CSC Report has some concrete recommendations. One such measure is to increase the maximum allowable plot ratio in industrial estates beyond the present 2.5. Fourth, JTC can, in formulating usage requirements, take into account the increasing integration of manufacturing production and manufacturing related services, such as design and logistics.”
“The answer is not too obvious and varies from industry to industry. For example, Singapore's share of the electronic market in the US has dropped in recent years. But was this due to competition from the US or from companies, including US multi-nationals located in third countries, which are also selling their products in the US market? In other words, export destination may no longer be identical with the country which is the source of competition. Conversely, Singapore's relative unit labour cost in manufacturing vis-a-vis that of the other NIEs was a key indicator used in determining the extent of the total cut in wage cost needed last year. There was a time when our major competitors in manufacturing were indeed the other NIEs. But I doubt if that is true today. For example, Hong Kong has very little manufacturing left. I therefore think it would be timely for MTI to come up with new indicators to benchmark Singapore's cost in order that we can carefully monitor our cost competitiveness in the near future.”
“Sir, during the next three to five years of the economic recovery phase in Singapore and the region, it is important for us to monitor our business costs very carefully in order to ensure that costs do not increase at such a rate as to render doing business in Singapore uncompetitive. During the Budget debate, I mentioned the need to systematically examine the regulatory environment to see if it contributes to cost. I would like to focus on the monitoring of business cost in this speech. The tracking of business cost can be done at two levels. The first is direct feedback from companies. Some of this is already occurring and I am sure that MTI's statutory boards, namely, EDB, TDB and JTC, do receive real time feedback from companies. It may be timely to formalise this practice. One efficient and cost-effective way to do this is via the Internet, and for MTI and each of its statutory boards to create a dedicated e-mail address each where business people can e-mail their feedback to the Government. The second type of monitoring should be at the macro level by tracking Singapore's business cost vis-a-vis that of its competitors. In my view, there is room for improvement where our indices of cost competitiveness are concerned. First, there is a unit business cost index of manufacturing but there is none for services. Perhaps it is time to start a unit business cost index for selected services sectors. Second, the unit business cost index of manufacturing is based on the 1988 input structure. I am sure that the industrial structure has changed significantly over the last 10 years as to render an update timely. The most important question, however, is which countries are Singapore's major competitors in order that we can benchmark our cost against theirs.”
“Sir, I will take less than one minute. One of the areas most in need of regulatory review is the existing building regulations. The Building and Construction Authority will begin operation next month. I would like to propose that one of its first priorities be a comprehensive review of building regulations. There are many regulations which have been inherited from the British which are now outdated. Others should be brought up to the standard of international best practice with regard to safety standards, standardisation to achieve efficiency and use of technology.”
“In conclusion, we need to do our best to ensure that the property bubble of the scale that was experienced in the past does not occur again and, in particular, that policy changes do not inadvertently contribute to the development of the bubble.”
“However, the financial crisis has taught us otherwise, and I hope that we learn this very important lesson that investment in property has its risks and property prices can fall as well as rise. However, expectation was not the only cause. Changes in Government policy which were implemented to achieve certain specific objectives, such as home ownership, contributed to the increase in demand and hence the property price escalation. For example, the price of a 4-room HDB resale flat rose from about $96,000 in 1992 to over $260,000 in 1996. The 1996 Cost Review Committee identified two factors which contributed to this price escalation: (1) the relaxation of mortgage financing rules in 1993, which allowed for loan financing to be granted up to 80% of current valuation instead of the 1984 posted prices; and (2) the revised resale procedures to ease cash upfront problems which occurred in 1995. 1.15 pm In future, it would be advisable that account be taken of the possible impact on property prices before policy changes are made. The property price escalation has another undesirable effect. There was a time when property development was the best business in town. Every large company in Singapore was considering property development even though its core business was entirely unrelated. Although each company should decide what is best for its bottom line, I question whether, from the national point of view, this is a desirable allocation of business resources. The way to reduce this is not to interfere at the company level but to ensure that the macro incentives are conducive to a desirable pattern of resource allocation.”
“Sir, in land scarce Singapore, land will always be costly if sustained economic growth continues to generate a high demand for land. That is a fact that we have to live with. Having said that, it is important to examine whether there are other factors which contribute to the high cost of land and, if so, what can be done about it. Mr Lew Syn Pau and Dr Wan Soon Bee spoke about land sales and disagreed. What I would like to speak about would be policy changes on the demand side. We all know that there was a property bubble which started from about the beginning of 1992 when there was a discernible escalation in property prices. From the first quarter of 1992 to the second quarter of 1996, when the anti-speculation measures were imposed, the residential property price index increased by about 160%. What this meant was that a property which costs about $1 million in 1992 would have cost $2.6 million, some four years later. On hindsight, the May 1996 anti-speculation measures, by curbing the sky-rocketing of property prices, also helped prevent an even steeper drop during the financial crisis which began to seriously affect Singapore in early 1998. That same piece of property which cost $2.6 million in 1996 would have cost $1.4 million at the end of 1998. And I think that what three of the MPs before me have been saying is that this kind of up and down movement in property prices is undesirable. One reason for the property bubble was the expectational spiral. When prices started rising, the expectation of even higher prices in future spurred demand, which in turn caused prices to increase in an ever increasing upward spiral. During that period, property was seen as a one way street to increasing wealth, much faster than earning a salary.”
“Hence, it is important to remove or modify regulations which hinder the move today towards a knowledge-based economy. I would therefore like to propose that the Government initiate a systematic and comprehensive review of all regulations, to examine whether they inadvertently or otherwise contribute to costs or inhibit entrepreneurship in Singapore. This can be done by each and every Ministry, with feedback from the business sector which would know best which regulations are excessively irksome where cost and entrepreneurship are concerned. This applies not only to business costs but also to costs which impact directly on the consumer, and which would ultimately feed back into business cost through the demand for higher wages. In conclusion, now that the macro framework has been settled, it is time to focus on the micro and, in particular, on modifying regulations, where necessary, in order to keep costs down and remove unnecessary constraints to entrepreneurship.”
“There are currently three supplies to the Pool - Power Senoko and Power Seraya - which are separate entities owned by Singapore Power as well as Tuas Power. I look forward to the awarding of the tender of majority ownership of Tuas Power in the near future, for it would be interesting to see if the change of ownership would result in lower prices of electricity which would benefit both businesses and the general public alike. It is precisely this kind of liberalisation, which we have already seen in these three markets, which serves as useful examples. And we need to see if there are other industries which could benefit from liberalisation and the entry of additional operators. During the Committee of Supply, I will be speaking on certain areas where I believe that a regulatory review would be beneficial. One might ask why the need for a regulatory review now, at this point in time. There are strong reasons to support this. First, Singapore is likely to encounter even more aggressive competition in the near future when the region recovers. Companies in the region will not only be leaner, trimmer, hungrier for business, but they will also have the initial advantage of a nominal depreciation vis-a-vis the Singapore dollar. Hence, it is important that costs in Singapore do not bounce back quickly to pre-crisis levels in the near future. In the light of this, a thorough examination of regulations which impact on costs would be timely. Secondly, I believe that the crisis has accelerated the pace of Singapore's restructuring towards a knowledge-based economy, just as the previous crisis in 1985/86 accelerated the pace of restructuring towards a higher value added economy in Singapore.”
“In the telecommunications sector, we have witnessed how the entry of additional suppliers in various telecommunications market has resulted in dramatic reductions in cost of service to the consumer. For example, the launch of the third Internet service provider, Cyberway, in 1996, led to the offering of attractive price packages by the three Internet service providers. Till this day, both SingNet and PacificNet continue to take full-page advertisements to advertise innovative offers to attract new customers. Similarly, in the mobile phone market, Mobile One and SingTel continue to engage in aggressive price competition, much to the satisfaction of mobile phone users. In the fixed line segment of the market, a second operator, Starhub, is due to start operations next year. I look forward to likely reductions in price when this occurs. The lesson we learn from this is that in industries where there are few, or even one supplier, a monopoly situation, the entry of new operators will, by intensifying competition, result in more competitive prices and a wider range of products with a better quality. Consumers definitely benefit. Existing operators also seem to be energised by the enhanced competition. They have risen to the challenge and continue to be profitable. For example, PacificNet was even successfully listed on Nasdaq recently. This also goes to show that the Singapore market is not too small to support more than one or two suppliers. Another industry which is in the midst of reform is electricity. It was only very recently that the Singapore Electricity Pool came into operation. This is a wholesale electricity market designed to facilitate competition.”
“The first category comprises regulations which, because they discourage competition, either do not allow prices to fall as much as they can, or do not provide sufficient incentives for suppliers to offer better quality products or services. What is needed, in this instance, is to examine whether deregulation or liberalisation will be beneficial to consumers, without affecting the financial viability of existing suppliers. The second category of regulations comprises those which have been introduced for perfectly good reasons in the past, but which could be rendered outdated and obsolete today, because the reasons for which they were introduced may no longer be valid in today's changed environment. However, because these regulations are still in place, there is an added cost of compliance which may be an unnecessary burden on businesses and consumers. The third category of regulations are what I call kiasu regulations. These are regulations which have the objective of protecting the consumer or general public, but because of the fact that they are overly protective, they may inadvertently hinder entrepreneurship. The twin objectives of lowering cost and encouraging entrepreneurship should be readily accepted. In fact, regulatory reform is precisely what has been occurring in three sectors in Singapore today - finance, telecommunications and electricity. In the financial sector, we are all aware of what is amounting to a paradigm shift where a wide-ranging series of liberalisation and promotional measures have already been announced, including the demutualisation of the stock exchange and SIMEX. These are designed to enhance Singapore's competitiveness and to further promote Singapore's positioning as a financial centre.”
“Hence, in terms of the Government reserves, the Government would not be drawing down on past Government reserves. The $5.1 billion deficit therefore, in my view, is entirely appropriate in a time of crisis and, in short, I support the financial policy of the Government. For the remainder of my speech, I would like to focus on one aspect of the economy that deserves particular attention. Compared to other countries in the region, Singapore has not been as badly affected by the financial crisis. This, in large part, has been due to the sound economic structure and capable economic governance, including the series of decisive cost cutting measures, the proactive drive towards building capabilities for the future, and the promotion of innovation and entrepreneurship, particularly technopreneurship. In short, during this period of crisis, the macro framework has been refined and updated in order to sustain economic growth, both in the immediate future as well as in the medium term. Since the macro-economic aspects of economic governance are well in hand, I believe that it is now time to examine the micro-economic aspects of economic governance. What I have in mind is a comprehensive and systematic review of the regulatory environment in Singapore, to serve two objectives. The first objective is cost. Regulations can, inadvertently or otherwise, contribute to cost. The second objective is to examine whether regulations inhibit the flexibility and freedom required for creativity and entrepreneurship. There are three categories of regulations which I have in mind.”
“Mr Speaker, Sir, after the major cost-cutting package announced last November, it was not expected that there would be anything spectacular about the Budget. True enough, the Budget contained few surprises. As expected, there was an income tax rebate and rebates on HDB rentals and S&C charges; and sector-specific fiscal incentives. I am glad that spending on education has increased to 19% of total Government spending or just under 4% of GDP. Preparing the young for their future is one of the most important challenges that we face. The only aspect that I think is insufficiently covered is expenditure on the upgrading and retraining of workers. In my view, this is a task of some urgency. The transfer of $79 million for the Skills Redevelopment Programme in FY98 notwithstanding, surely more than $150 million could be allocated to the Ministry of Manpower this year for this purpose. The projected deficit is $5.1 billion. The majority view expressed yesterday was that this deficit was appropriate, citing as a reason the increase in development expenditure. I share this view. I would also like to add that the deficit is well within the current Government's means. After taking into account the overall projected deficits in FY98 and FY99 - the technical term is net receipts in excess of outlays - there is still an estimated $2.6 billion left in Government reserves during this term of government. The actual budget surplus in FY97, the first year of this current government, was $5.25 billion, which is not sufficient to cover the combined budget deficit in FY98 and FY99 of $5.5 billion. However, the receipt in excess of outlays in FY97, which includes land sales, was $13.5 billion, which is $2.6 billion more than the net outlays in FY98 and FY99.”
“Does the Minister of State envisage that there would be any policy change in the conceivable future? Assoc. Prof. Ho Peng Kee: Sir, the answer is no.”
“Does the Minister agree that this whole incident, particularly in terms of the public communication, could have been better handled?”
“I would like to ask the Minister whether the regulator is being unnecessarily cautious in this regard, for example, if the operator wants to cut prices, to automatically allow the operator to do so, and if there are any conditions attached, such as loyalty conditions, to ensure that the operator makes this clear that there is a note in this regard that there would be a third operator that comes in in the year 2000.”
“I salute the Committee for being able to complement each of them by the other and include them in one Report. I support the motion.”
“Instead, not only has there been the ability to garner the support necessary for the short-term measures, we have also been able to plan ahead and be pro-active and take measures necessary to sustain our future competitiveness. Here, we see, in some ways, good governance in Singapore in action and I believe that good governance must surely be one of Singapore's most precious assets. My fourth and last point is regarding compassion. I would urge the Government to help ease the burden of the wage and CPF cuts. Although interest rates have fallen in recent months from their high early this year, many households would face difficulties in meeting housing loans, and the wage cuts would mean a consumption squeeze for many families. I hope that the Government would adopt a compassionate approach by accompanying the labour cost reductions with measures, including schemes to ease or defer mortgage payments and an increase in educational bursaries and textbook allowances for school children for families with financial difficulties. I would also argue for an income tax rebate to help alleviate the squeeze on disposable incomes. One alternative to the proposed differentiated CPF cut that has been advocated by my Parliamentary colleagues is to find ways to reduce the financial burden of the lower income group, for example, in terms of rebate for S&C charges, and so on. The private sector can play its part. Banks, in particular, can also help by providing bridging loans for those who bought private properties. In conclusion, I would like to state that the CSC's Report is indeed a well-conceived Report that not only provides for immediate relief but also for a long-term vision.”
“I would therefore like to propose that the CSC organise a conference on the long-term vision for the business community and labour sometime next year in order to extend the buy-in and ownership of the vision. Some brief comments about the vision itself. One may ask: what is new about the vision? I believe that more than being a completely new paradigm, the vision is a useful articulation of a continuing trend towards greater technological sophistication and stronger capabilities. I believe that one of the main highlights of the vision is the fact that it articulates manufacturing and services as twin engines of growth for the economy and, for the first time, we see services coming to the fore in terms of the pro-planning approach of the Government. This is exactly in line with Singapore's likely future cost and capabilities profile. I therefore agree with this emphasis on manufacturing and services as twin engines of growth. My third point is regarding the process of crisis management. The economic crisis has revealed the importance of fundamentals, not merely economic fundamentals but political and social fundamentals. In this time of crisis, social capital and the legitimacy of the political leadership are crucial. We in Singapore are fortunate that at a time of crisis such as this, the trade unions and politicians can gain support for a wage cut and maintain social cohesion so that racial and ethnic fissures do not appear. There is no policy indecisiveness, no dithering, no stalemate, as we see, for example, in some of the other countries around us.”
“Having said that, it is of course difficult to convince workers to accept a wage cut if the economy were not in recession and I can imagine that it will be difficult to think of wage cut earlier than now because of the fact that we have to wait for the third quarter result of -0.7%. Therefore, I believe that now that we are considering all these cost-cutting measures, it is better to implement them as soon as possible in order that they can kick in as early as possible in order to save jobs. My second point is regarding the long run vision. I suspect the CSC Report will be remembered for advocating the 15% cut in labour cost more than for its articulation of a vision for Singapore for the next 10 years or so. While the immediate survival is understandably the paramount issue, we should not lose sight of the longer term issues. It would be desirable to re-visit this vision again when the economy recovers and immediate concerns become less critical. Any vision, once formulated, needs to be disseminated. There needs to be a buy-in and greater ownership by the relevant parties, in this case, the business community and labour. In future, Singapore's economy would need greater and not less participation by the relevant sectors, namely, business and labour. A case in point is the objective of developing a vibrant, entrepreneurial culture and developing world-class companies that we can call our own. How can we forge a better partnership between GLCs and local companies? How can flexi-work hours be implemented which will help working mothers and the aged? These are all issues which can be deliberated in greater detail in the framework of a public sector business-labour partnership.”
“But if we look at some figures, in terms of the Input and Output Tables of 1990 - I realise that they are outdated but this is the most recent that we have - the 1990 Singapore Input-Output Table states that for every dollar increase in final demand, the value-added multiplier for commerce is 81 cents; for transport and communication, 67 cents; for seaport and related services, 61 cents; for financial services, 89 cents; business services, 88 cents. For manufacturing, it is very low and that is 40 cents out of every dollar of final demand for non-oil manufacturing. In other words, the pump priming measures that can be implemented should be seriously examined, particularly since there is anticipated fall in domestic demand because of the wage cuts. What about the timing? Is the timing appropriate? The question here is whether the cut should actually be implemented sooner than early next year. The reason why I say this is recently, both the IMF and OECD have come out to forecast that positive growth is expected in most of the affected Asian emerging economies by the second half of next year. If that is indeed the case, then it could be true that again, maybe by the second half or the later half of next year, we could also have positive growth in the economy. If anything else, I think the depth of the recession in Singapore would be for the last quarter, this quarter and the first two quarters or maybe the third quarter of next year, provided there is nothing more serious in terms of a fall in demand or a global deflation or recession in the economy, for example, if Japan fails to recover or China devalues and a whole lot of other reasons. The global economy is very uncertain.”
“This is a policy too because the JTC and HDB are major lessees of industrial land and zoning, plot ratios, usage and other regulations are important determinants of land price. In land scarce Singapore, property prices and rentals constitute one of the main reasons for cost escalation in the 1990s. This was pointed out by Dr Wang Kai Yuen in his speech. I therefore agree that land rentals should be reduced. I also support the CSC's call for an MTI-led multi-agency task force to develop competitive land pricing and zoning policies for our hub services. However, I would go one step further and ask that the terms of reference of this proposed task force to examine land pricing policy in Singapore be expanded to include not just hub services but all other sectors as well. The last cost-cutting measure advocated is that of Government taxes and levies. It is here that I believe there is room for manoeuvring and some flexibility. And this, I think is the nub of the issue: is $10 billion enough? There is room to do more, if needed. I believe that budget considerations should not be the main consideration in this regard. After all, the budget surplus in fiscal year 1997 alone was $4.2 billion. On the other hand, in terms of the June cost-cutting measures, the estimated budget deficit was only $0.8 billion. In other words, there is room for much more expansion in this regard even without touching Government's reserves accumulated during pervious Governments. I believe also that there is limited room for pump priming. And I believe that this should be seriously looked into particularly since the wage cuts will result in a decreased demand. I know that two-thirds of demand is actually externally driven.”
“In Singapore, we have been experiencing not a positive inflation rate, but in fact a negative inflation rate for four months since June. Second, while we are a very open economy and import most of our intermediate products, there is still a domestic component to costs, and an exchange rate depreciation would lower the cost of the domestic component in foreign currency terms. For example, it has often been cited that our imported components constitute a large proportion of our total output. That is true. For example, materials constitute 63% of total output in manufacturing in 1997, but it is 63%. Value added comprise 23.5%. So therefore even though it is true that the domestic component in terms of the intermediate inputs do actually comprise a large percentage there is still room to effect a real exchange rate depreciation. Third, to the extent that a nominal depreciation is not entirely wiped out by inflation and wage increases in the other affected countries, then for them, a real exchange rate depreciation in fact has been effected, thus increasing their competitiveness. I am not suggesting that we engage in competitive devaluation vis-a-vis these other countries. I agree that this would prove counter-productive in the long run. However, I think that it is time and appropriate to adopt a more nuanced approach. In other words, I agree with the CSC's view that a delicate balance needs to be maintained between facilitating recovery of the domestic economy on the one hand and maintaining confidence in the Singapore dollar on the other. I would therefore echo the call of the CSC itself for greater flexibility and a wider band in the management of the exchange rate. I now come to the issue of optimising resource management and the pricing of land in Singapore.”
“For example, while unit labour cost in manufacturing has risen by 27% since the index was first compiled in 1988, unit labour cost for the entire economy has risen by much more, 43%. It would therefore have been appropriate if the Committee had compared the overall unit labour cost and not just the unit labour cost of manufacturing to that of other countries. In addition, the comparison is to the other Asian NIEs. However, are they our main competitors these days? In what sectors? And what weightage was given to each of the other three Asian NIEs so that only one graph was obtained and presented in the Report? In short, while I agree with the fact that labour costs need to be cut, I wish that more explanation were given as to why the Committee thought that 15% was the appropriate figure. If the real reason is that 15% was the figure achieved via the process of bargaining and compromise between business and labour, with the 15% reduction in business cost in electronics sector as the benchmark, then I accept that it is actually a political compromise. I realise that, ultimately, the practice of policy is an art, not a science. Nevertheless, since it is stated in the Report that it is to bring wage competitiveness back to the 1994 levels and the RULC was used specifically, then I think that one should endeavour to be as rigorous as possible, when possible. Regarding the exchange rate, I agree with the Committee that the main target of exchange rate management should be price stability. Having said that, I believe that there is room for some flexibility in the management of exchange rate on three counts. First, there is no risk today in the global economy of inflation. In fact, it is the very opposite.”
“Mr Speaker, Sir, I would like to congratulate the CSC on its Report. It is attractive in more ways than one. It is well written, pragmatic and comprehensive. There are six proposals to deal with the crisis and eight proposals to sustain competitiveness in the longer term. As they make sound economic sense, I agree with most of them. I would like to highlight four main points. First, I would like to discuss the cost-cutting measures; second, the long run vision; third, the process of crisis management in Singapore; and fourth, balancing the wage and CPF cuts with relief measures. First, the cost-cutting measures. The economic crisis represents for us in Singapore a severe external demand shock. The CSC advocates essentially four cost-cutting measures - labour costs, exchange rate, land prices and taxes and levies. The key issues, I believe, are, first, the magnitude of the cost-cutting measures; second, the balance of the various components of the package; and third, the timing of the measures. Please allow me to discuss each of these in turn. [Mr Deputy Speaker in the Chair] 4.23 pm First, the magnitude of the package. The key cost-cutting measure is the reduction of labour costs by 15%. The objective, as stated in the CSC Report, is to bring our relative unit labour cost (RULC) back to 1994 levels. While I agree that labour cost reduction is a drastic measure for a drastic situation, it would have been good if there was more explanation of why the Committee thought that 15% is the appropriate measure. First, RULC measures only unit labour cost in manufacturing vis-a-vis that of the Asian NIEs. However, unit labour cost in the overall economy has increased even faster than that of unit labour cost in manufacturing.”
“Is there any sense that there is a thinking among the ASEAN countries to impose capital controls as well?”
“Is there any sense that the other ASEAN countries are slowing down on their liberalisation momentum because of this recent event, including Malaysia's imposition of exchange controls?”
“Sir, may I ask the Minister when will the Government announce the public sector bonus in December and whether the 13th month annual wage supplement is part of flexi-wages for the public sector?”
“Fourth, the community also has a role to play. During times of economic downturn, there are those in our society who are genuinely hit hard, families whose main breadwinners have been retrenched, wage cuts which eat into their already meagre income and so on. We do not have a social safety net in the form of unemployment benefits in Singapore. But what can be done at a time like this? It is for the community to bear in mind that there are those who are worse off than ourselves, and to continue to give. The Government should also increase funding for the Government and voluntary welfare organisations precisely so that they can continue to help those in need. In conclusion, where there is confidence that the political leadership can implement the appropriate policies, convince the people to swallow the bitter medicine and unite society, half the battle is already won. I would like to state that I, for one, have that confidence in our Government and I am sure that this view is shared by many. This is the time to close ranks, face the crisis together as a nation. I support the motion.”
“Second, the role of workers. Workers must be willing to be trained and flexible enough to ensure that there is no mismatch in capabilities. NTUC's effort in promoting retraining through the SRP and the Government's support for this effort has been crucial and timely. It is also encouraging to note from Minister Lee Boon Yang's response this afternoon that workers nowadays are more willing to be retrained. Also, if workers are retrenched, they should not be choosy about job options. Third, financial institutions also have a role to play. It is understandable that they are concerned about non-performing loans. However, banks and financial companies should not take advantage of this situation to force companies and individuals to top up so long as they are able to service their loans. Also, while there is a lot going for the DBS/POSB merger, it does have a negative side effect on Credit POSB home loan repayments. It has been said that, at current levels, readjustment of Credit POSB interest rates to the DBS' level would, for a 20-year loan, require an increase in monthly repayment of $92 for every $100,000 borrowed. In other words, a person who borrowed half a million dollars on a 20-year loan would have his repayment increased by $460 a month, and not a small sum indeed. Considering that Credit POSB housing loans amount to an estimated $7-$8 billion, the effect of this on the economy is not small. Even though there is a grace period up to the end of 1999, and the adjustment will take place over a three-year period, this is definitely bad news for the mortgagees affected. Could not the grace period be extended at least by one year up to the end of the year 2000 to soften the blow on those who have already borrowed money from Credit POSB?”
“Considering that more than 100,000 households are already withdrawing the maximum allowable from the CPF for housing loan payment, a CPF cut should only be used as a last resort and, even then, should be accompanied by means to help those with loan repayment difficulties. And this is where, I believe, a compassionate Government should chip in - the realisation that a CPF cut, or whatever cut, is needed in order to reduce labour costs would be painful, would be harsh and would affect many. Second, the long-term measures. As Lim Swee Say has spoken at length and very eloquently on these measures and I think he has given us a very good lecture on the economic possibilities, I shall not elaborate on these measures. Suffice to say that the Government can focus its mind and channel resources on the opportunities and that we do not need to wait for full recovery and once the region bottoms out, there are going to be growth areas. We also need to diversify and we should prepare ourselves for these opportunities and be quick on the uptake. The third role of the Government is to rally the people. A national crisis calls for all hands to be on deck. Everyone has a role to play. Allow me to outline what I think should be the role of business, workers and the community. First, the role of business. I have consulted a number of business leaders. Mr Stephen Lee, President of the Singapore National Employers' Federation (SNEF) has said that he supports the motion. He said that SNEF's stand is to minimise job losses. In order to stay afloat, companies can agree to stop hiring, they can agree to terminate contract work, cut overtime, cut the variable component of wages and redeploy staff. Retrenchment is the last resort. But it is a legitimate response to save the company.”
“Even lowering the corporate income tax would be useful only for those companies which pay tax and is irrelevant for those suffering losses or those with pioneer status. Difficult though this message of limited effectiveness is, I think that it is important for all sectors, including the business community, to understand and to accept this. It is important for the business community to expect neither bailouts nor handouts. In my view, the $2 billion off-Budget measures announced in June are appropriate and sufficient for the time being. However, as the downturn gets worse in the future, a further round of off-Budget measures would be needed. The timing of the second round is all important. It should be early enough and large enough to have an impact. The action should be decisive and strong. I believe that the second round of measures should include some of the policy options mentioned above. They may not be as effective as we would like. However, in times of crisis, it is not just the hard and fast numbers which count. Confidence is all important and signals an impact that can extend beyond their actual dollar value. But we may have to face the harsh and painful reality that what would have the most direct impact on business costs is the reduction of labour costs. The variable component of wages which constituted 16% of total annual wages last year should be the first to go. Furthermore, in my view, the public sector should carefully consider what annual variable component it is going to give in December, if any, and announce this early in order to send a signal to other employers. And then, there is the CPF.”
“Mr Speaker, Sir, the rallying point for a country in times of crisis must be the political leadership. The Government must lead and must be seen to be leading in the process of alleviating the hardship and in the process of restructuring. In the midst of pessimism, the Government needs to encourage. Where people are disheartened, the Government needs to inspire. Where people are suffering, the Government should show that it cares. I agree with the motion that the Government can act in three ways. It can take short-term measures, it can take long-term measures, and it can rally the people. First, the short-term measures. I think the Government faces a genuine dilemma. Nobody, not even our competent Government, can tell how long and how severe the downturn will be. It depends on a whole host of external factors, Japan, China, US, Indonesia, and so on. And on top of that, the relatively painless measures that the Government can take are limited in effectiveness and in scope. For example, the traditional pump priming measures, such as increases in public sector spending and even temporary cuts in income tax and GST have limited effect because the Singapore economy is so externally driven. In 1986, for example, there was a 25% income tax rebate. This time around, because 70% of the people do not pay income tax, the effectiveness of an income tax rebate is therefore limited. What about policies to cut business cost? The problem is that every levy or charge has its specific micro allocation objective and reducing these charges would disrupt the attainment of these allocated goals. This applies, for example, to the foreign worker levy which is used to discourage use of unskilled foreign workers, ERP charges which discourage use of certain roads and utility charges.”
“Mr Ong Kian Min asked the Minister for National Development (a) how many applicants (first-timers and upgraders) are on the waiting list to purchase a new Housing and Development Board (HDB) flat; (b) whether the waiting list has lengthened or shortened when compared to June 1997; (c) what is the average waiting time between submission of application and taking possession of a HDB flat; (d) whether the Government will maintain the pace of its public housing building programme in view of the current state of the property market; and (e) what impact, if any, this will have on the HDB resale market.”
“The Minister of State cited figures for juvenile offenders. In the Minister of State's assessment, is this merely the tip of the iceberg? In other words, is there an increase in terms of youth joining youth gangs? Is there an increase in ill-discipline in schools, for instance? To what extent are these figures on juvenile offenders which give us no cause for concern really just something which may not be indicative of a general trend as a whole? Assoc. Prof. Ho Peng Kee: Youths go through phases in their lives. At a certain age, when they are probably in secondary 1, secondary 2, secondary 3, I think they are looking for excitement. They are very easily influenced by peers. So what is important, as I have said in my answer, is the parenting effect. The key point which we would have to emphasise continually and work with the CDCs and other VWOs is to help parents understand what their teens are going through. The important thing is that whilst the teens undergo through this phase, which I think all teens will go through, they should not fall beyond the abyss. They may do naughty things but they should not do anything which is so serious that will lend them in jail or put them in violation of the law. As I have said in my answer, it is a multi-faceted problem. Fighting is something that has emerged, but it has been contained. I would say that we must continue to press on, bringing everybody on board to tackle the problem. HOUSING AND DEVELOPMENT BOARD FLAT (Number of applicants on waiting list) 16.”