Lee Yock Suan
Singapore
“The position will be clear when the regulations have been drafted. Right now we are debating it in the absence of actual wording of the regulations. The regulations will be fair, they are meant to maintain a level playing field, and we should wait for the regulations before we pass judgement. The intention is not to go after everybody.”
“I think the Member will be aware that Internet is a very dangerous place. We can have all kinds of poison letters and they will just spread like wild fire. So we must have some means to try and minimise this and make sure that everything is orderly and fair.”
“The other Members have no problem supporting the Bill, including Mr Chiam. I think the position is about 95% clear. 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. - [Mr Lee Yock Suan].”
“Then we will have to see the actual situation. But, as I said, the intention is to go after the popular sites, the main sites of parties and non-party political sites. If it is an individual, eg, a young man posting up his own site and saying "These are my views", we are not going to go after those people.”
“The intention is to make the rules clear for the main parties involved in the contest, in other words, the party websites. These are the areas we are mainly after.”
“I thank Mr Chiam for reminding me about his question. On listening to his speech, I was under the impression that he was asking whether this ban on opinion polls applies to the mass media. The answer is yes, it applies to all media, not just the Internet but also newspapers, TV and so on. Thank you for pointing this out.”
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“In the end, what we will see in cyberspace will be competing jurisdictions, each levying fees or taxes at levels which have to compete with each other, according to the level of services they provide. Our job is to tax lightly and the approved cyber trading scheme is precisely to ensure that normal taxation rates do not apply for certain categories. We are also working with other agencies in the world, like electronic commerce committees in the OECD, the European Community, the US and the World Intellectual Properties Organisation (WIPO). It is a complex field. It is evolving so fast that it is very hard to keep up. Dr Toh See Kiat asked why do we not create a Ministry for Cyberspace or a Cyber Ministry. It is not so simple because, if we think about it, IT will pervade every aspect of our life in Singapore. Every entity which exists in the real world must eventually find a reflection in cyberspace. You do not need one Ministry in cyberspace. You need every Ministry to be represented, which is why Dr Toh's proposal is not realistic. What we are trying to do is to encourage every Ministry to anticipate the new technology and to help promote it, and all agencies and all Ministries. Many of them already allow and encourage members of the public who need to apply for permits or whatever to deal electronically through the PC.”
“If they trust the system in Singapore, if they are confident that their properties will be protected, that there is a way to resolve disputes, a way to collect monies, a way to enforce, then we will flourish. As part of this, we are funding R&D, conducting market surveys, and developing our local capabilities. We have schemes in place, which local companies, including SMEs can tap for their ventures. Funding for consultancy, equipment, manpower and training is available under the Cluster Development Fund and the Innovations Development Scheme administered by NCB. Funding for R&D is available as well under schemes managed by the National Science and Technology Board. But we should go beyond the specialists. We must bring in members of the public. NCB has been working with other Government agencies and industry players to raise public awareness and acceptance of e-commerce. For example, together with the Singapore Tourism Board, they organised a "Shop on the Net" event in July 1997, the first electronic sales in Singapore. E-commerce promotion is also being carried out through Singapore One clubs at various community centres and through regular road shows held in shopping malls. In addition, broad based e-commerce training and awareness programmes are being carried out for companies. The approved cyber trading scheme is part of this total effort to position Singapore as a hub for e-commerce. I do not think that cyberspace will be completely tax free, which is what the Americans want. I do not think it will be completely tax free because services are being provided and these services have to be paid for.”
“We have this thing called the Electronic Commerce Hotbed, which is to try and encourage those in the private sector to make use of electronic commerce. Of course, Government agencies are also jumping in. We are using these Government agencies to spearhead the effort and to get people used to it. Of course, information technology is changing so fast that it is hard for us to catch up. Every 10 years, there is a generational gap. We must accept this. Young people will swim in this new environment. Old people will be frightened off. But even if our grandparents are not comfortable in this technology, they should at least have enough knowledge and enough wisdom to want their grandchildren to be familiar with it. And so we now find in Singapore many old people who instinctively know that it is very important for their young charges to be taught the computer. And, as you know, whether it is schools, whether it is the financial sector, whether it is Singapore One, whether it is marketing ourselves to Bill Gates or to Netscape or whatever, we are positioning ourselves in Singapore for the electronic age. And we are also providing a conducive legal and policy framework to facilitate electronic commerce. We are preparing a new Electronic Transactions Bill which will be tabled in this House to include things like what is a public key. What does it mean to be legally identified in electronic transactions? What are electronic notaries? Many of these things have got to be defined in clearer detail because the present laws do not quite cover the new technology. 5.15 pm We also need to legislate to prevent computer misuse, to protect privacy and to protect intellectual property. The key is that people must trust the system in Singapore.”
“And that you are whom you claim you are. Therefore, identification is important. We need electronic signatures. We need public keys, private keys. Then in the event of disputes, whose jurisdiction? And, of course, we have to keep the taxes light, because trade goes to where the taxes are lightest. So our approach towards electronic commerce is a total one, not just to create the bandwidth. Bandwidth is the least of the problems. But if we can create many trust networks in Singapore, with good arbitrators, with good jurisdictions, then electronic commerce will flourish around us. And we will find eventually in cyberspace, cyber hubs which are electronic cities, each a collection of trust networks, where if I want to buy a lottery ticket or I want to make a contract, I say, "OK, I choose this jurisdiction." I may have to pay, because it is worth paying for good government. So what are we trying to do in Singapore? We are doing many things. We are providing infrastructural services such as on-line secure payment with credit cards and the setting up of Net Trust which issues digital certificates for electronic identification. Last year, for the first time in the world, the first secured electronic transaction was carried out in Singapore by Visa. It is still a little cumbersome, a little complicated, but as these things get debugged, as people get used to it, more and more companies will do a part of their business in cyberspace, and we must position ourselves for it. We are promoting it. The agency that is pushing this is NCB. We have a National Information Technology Committee chaired by Admiral Teo Chee Hean. The adviser is DPM BG Lee. And agencies representing all Ministries are on it, because there are many aspects to consider.”
“We can have electronic mail, but there is nothing to substitute for a handshake and a chat over a glass of beer. And this is part of the human aspects of a scientific community, which we must try to create in Singapore. Finally, Dr Tan Boon Wan and Dr Toh See Kiat spoke on electronic commerce. All of us know that with the growth of the Internet, electronic commerce will explode in the coming years. For it to realise its full potential, there must be money. Cyberspace will not be sustained by window shoppers, by Net surfers. In the end, cyberspace will only be sustained by electronic commerce, by people investing in it and making money out of it. In order for cyberspace to develop like that, we need contracts. We need protection of property. We need the enforcement of contracts. We need arbitration. In other words, we need the whole panoply of facilities which are to be found in the real world and they must be replicated in cyberspace. Right now, it is a Wild West, anything goes. But eventually, like the Wild West, it will be settled. I do not think for a long time to come, we are going to find a world government in cyberspace. But jurisdictions will eventually creep in. Banks, credit card companies, bookshops, haberdashers, they will all jump into cyberspace. Today, many of us are familiar with amazon.com. It is a very easy way to order books, quite cheap, very generous return policy. It is very convenient, the largest bookshop in the world. Or you can buy your shirts from Lands End. If you are not happy with it, you can return it to a post office in Singapore. This will grow. But in order for it to grow, you need, like in the real world, trust networks, which means a way by which transactions are secured, that someone else will not see your credit card number.”
“Because it is this game which will maintain a high standard of living for Singaporeans, young and old, in the next century. We are also active in the multi-lateral arena including the ASEAN Committee for Science and Technology, the Asia-Pacific Economic Cooperation Forum, the Association for Scientific Cooperation in Asia and the Asia-Europe Meeting. What we have to do in the end, like for high-tech entrepreneurship, is to create an environment in Singapore which attracts talented people from all over the world to come here. If we have to depend upon local talent to staff all our laboratories in Singapore, we must surely fail. If you visit any of our research institutes, a very high proportion of the scientists and engineers there are non-Singaporeans. What we have to do is to create reputation, create a total working environment, which makes it attractive for them to come here. And as part of this move, we are master planning a Science Habitat in the vicinity of the Science Park and the universities in the Ayer Rajah area, an ambience with watering holes which brain workers will find attractive, and well served by schools, public transportation and other facilities. Silicon Valley is, of course, much bigger than the whole of Singapore. It is sprawling. It has got highways and connected by cars. But there are not all that many watering holes in Silicon Valley. In Silicon Valley, there is a feeling of a small community. If you are a person who matters, everyone knows you and you are recognised, even by the waiter. What we need to do in Singapore is to create one aspect of us which is like that, where there are watering holes, where people will retire in the evening for a drink, just to talk, to meet.”
“Technology brokerage events are also co-organised with overseas partners to establish and build on networks and linkages that will maximize market access opportunities for Singapore-based companies. Two days ago, I opened a new facility in Singapore set up by Genset from France. They are a very interesting company. For some time now, there has been a French team consisting of very brilliant scientists whose objective is to completely map the human genome, which means to map the entire DNA coding of human beings. With computers, it can be done and it is being done. This company sees enormous possibilities in health care therapies, in drugs, in solving many of the medical problems which are genetic in nature. It is a small facility. And what they produce at the end of the day, in a test tube, is a little drop of electrolyte, a single strand of DNA artificially synthesised from the four amino acids. This is a new game. What biotech means here is the creation of life. If you put this strand of DNA into the primordial soup, it replicates itself. Of course, this would eventually pose enormous moral problems for human beings, but the genie is already out of the bottle. Either we get into this game ourselves or others will get into it and we will be left behind. These are some of the areas which NSTB is trying very hard to promote. The CEO of Genset told me that he had full confidence in Singapore. He did not even visit our facility before he decided to plonk it there. And when he came to see it for himself, it was beyond his expectations. In other words, we have a certain reputation in the world. We should safeguard it and build upon it, multiply our networks and get into this game.”
“5 billion in sales revenue attributed to R&D performed in Singapore, about 79% of this revenue, was from commercialized products and processes launched within the preceding two years. [Mr Deputy Speaker in the Chair] 5.00 pm Another index of success is number of patents. The number of patents filed by Singapore companies and individuals has increased from 142 in 1993 to 316 in 1996, an average annual growth rate of 31%. This is not bad. The number of patents granted as a result of R&D work carried out in Singapore has also risen from 20 in 1992 to 91 in 1996. Our research institutes and centres, which form part of the knowledge infrastructure that supports industry, have also been doing well. To date, they have participated in 1,000 joint projects with industry, developed 150 new products and processes and signed 76 licensing agreements for technology development. And some of them have gained a certain international reputation. Although there may be instances of specific R&D projects not doing well, this is to be expected. If all projects are successes, it means that we are not taking enough risks. Nevertheless, I fully agree with Dr Wang Kai Yuen that we should conduct regular reviews critically to monitor the effectiveness of our investment in R&D. Singapore's policy on international and regional R&D collaboration is to focus on areas which will help to build a strong base of technological capabilities in Singapore. We have been very active. We have bilateral activities with 15 countries including China, India, Israel, Germany, Canada, the US, Japan and the Netherlands. Activities cover projects in areas such as biotech, advanced materials, IT, environmental technology and advanced manufacturing systems.”
“The problem is we can easily measure inputs. But how do we measure outputs? Mr Zainul Abidin was concerned that our inputs were not sufficient. Dr Wang Kai Yuen was concerned that we were not measuring outputs carefully enough and therefore we might be wasting money. This is a difficult area. We know that to remain competitive, we must continually upgrade our technology base through the promotion of industry-relevant R&D and innovation. And the Government's general approach to R&D is encompassed in the National Science and Technology Plan, NSTB 2000. I do not think it is our objective to nurture rocket scientists in Singapore or astrophysicists. But at the same time, on the spectrum of the manufacturing process, from assembly all the way to pure research, instinctively we know that we must move rightwards if we are going to keep up in this knowledge game. We want to invest long term in projects whose outcomes are uncertain but whose results are not so far into the distant future that they are immeasurable even after a long period of time. That is the dilemma which we face. On the whole, NSTB 2000 is progressing quite well. Gross expenditure in R&D as a percentage of GDP, that is the input number, reached 1.35% in 1996. In 1990, it was only 0.84% and our aim is to raise it to 1.6% by the year 2000. More importantly, the private sector share of gross expenditure on R&D has risen from 54% in 1990 to 63% in 1996, against our target of 65% by the year 2000. The private sector companies have got to answer to stockholders. They have quarterly reports, annual reports, so they are much more careful. This statistic, the fact of their share of a growing pool of R&D funds in Singapore, shows that we are doing quite well. About 79% of the estimated $6.”
“So I visited his facility recently and was very inspired by his briefing and of his plans for the future. He has very big ambitions. I asked him this question, "To what extent do you owe your success to Singapore?" He is Chinese educated. He is not a university graduate. He only has a polytechnic diploma and he listed six success factors all starting with "F". He said, "Well, some of them like hard work and so on." They are Singaporean factors and he thinks that his Singaporean origins are very important and he must maintain his roots in Singapore which is why Creative is listed on our Stock Exchange. But he said there are other aspects like fun and failure tolerance which are more American in character and he wishes that we have more of them here. He wants to expand here. But he also has an operation in Silicon Valley. I asked him, "Do you do more creative work here or in Silicon Valley?" He said, "In the Valley. But Singaporeans are very good, very kiasu. When it comes to product development and manufacturing, debugging, Singapore is much better than Silicon Valley." We have got to take a very realistic view. I do not think we can ever be like Silicon Valley but we can swim close to it, be well-connected there and, at the same time, create an environment here for Asians, for Westerners who want a good wholesome family environment to locate here and to do creative work here. And if we do that, then we will succeed in technology entrepreneurship. If we do not, then it is very difficult to keep up with this very fast paced game in the next century. I would like now to answer the cut on R&D by Dr Wang Kai Yuen and Mr Zainul Abidin. Again, this is an area connected to what I have just discussed about technology entrepreneurship, which is key.”
“To further encourage the growth of the industry, the Minister for Finance recently announced in his Budget Statement that the current 10-year limit will be extended on a case-by-case basis, by up to a further five years, at a concessionary tax rate of not more than 10%. And this will further encourage the industry. In cases where private funds are not prepared to assume the high risks associated with investing in seed stage companies, the Government has stepped in by establishing venture funds, such as the $50 million Technology Development Fund (TDF) which co-invest with private firms to fund early stage ventures. The TDF has invested in more than 20 local start-ups and has attracted more than 10 overseas technology companies. Other similar funds include the $100 million Technology Commercialisation Fund and $100 million Pharmaceutical and Biotechnology Growth Fund. At the same time, EDB Investments Pte Ltd also runs venture capital funds which invest in start-up companies at various stages of development. In addition, we have various support schemes to assist technopreneurs and innovators, including NSTB's Technopreneur Assistance Centre and PSB's R&D Incubator Programme. These are infrastructural aspects. At the end of the day, what we need is to create in Singapore an environment which conduces high-tech entrepreneurship and the growth of start-ups. It is not an easy thing to do. It is a complex organic process and we have had a few successes. You take, for instance, Sim Wong Hoo's Creative Technology. 70% of PCs carry his sound card, the Sound Blaster. And he is quite a big name in Silicon Valley. I have met people there who hold him up as a model to emulate, not in Singapore, in Silicon Valley.”
“It does not mean that when you have the money, you have the rules, and you have venture capital. Two weeks before Chinese New Year, I paid a visit to Silicon Valley and had many interesting discussions with venture capitalists and lawyers who are experts in the field in Silicon Valley. These are experts. They watch the bottom line very closely. They are very good at sizing up human beings to decide whom to place bets on and they also recognise that many of these entrepreneurs who all have giant egos also have failings. They cannot manage people, they do not know how to institutionalise the procedures in the company. So these venture capitalists, in many ways, help to bring ideas through a process of metamorphosis, all the way to IPO. There is specialisation at different stages of the process of watering an idea and seeing it flower, and eventually bearing fruit. We are just beginning. In fact, we have brought down many experts and consultants to help us here. We will do everything we can, if necessary, to make our laws and regulations conducive but these are only the preconditions. Whether or not we will succeed depends on something more fundamental. In fact, we have not done all too badly. The Government has been actively promoting the venture capital industry since the mid-1980s. As at end 1997, there was over $7.7 billion worth of venture capital (VC) funds managed in Singapore. Currently, VC funds enjoy tax exemption on the gains from disposal of investments and on certain investment incomes for a maximum of 10 years. At the same time, fund management companies that manage such funds can qualify for pioneer status.”
“Creative which is listed on NASDAQ and in Singapore has 90% of its stocks transacted in NASDAQ and only 10% here. But we should try. And if it is possible to somehow make SESDAQ an attractive place to raise high-risk capital funds, we should try to do so, and we need to tweak some of our other rules and regulations as well, for example, our rules on stock options which are much too restrictive for high-tech start-ups. Mr Inderjit Singh also asked about Government helping R&D consortiums. In fact, the Government has been supporting the set-up of industry consortiums. This is an important way for industry, research institutes and universities to come together to work on common R&D projects. And through this approach, industry members benefit from reduced development cost and time, as well as from information sharing and technology co-development. The Government facilitates the formation of such consortiums and supports their projects through grants and other forms of assistance. Examples include the Aerospace Technology Programme, the Marine Technology Programme and the Intelligent Progressive Die Design and Manufacturing Software Programme. Our research institutes and centres are also spearheading a number of other consortiums. For example, the Institute of Microelectronics and the Gintic Institute of Manufacturing Technology lead a consortium involving 29 industry members from the printed circuit board assembly industry. Individuals or companies who have good project ideas and are interested can approach NSTB or any of the research institutes. Then the question of venture capital. Mr Inderjit Singh asked what we are doing to encourage this industry. Again, this industry is not as simple as it sounds.”
“In September of the same year, a further amendment was introduced to enable the Official Assignee to discharge more bankrupts by certificate. Our insolvency laws are being further studied to determine if additional amendments are necessary in the interest of both creditors and bankrupts. The problem with having many second chances is that of moral hazard. You use other people's money, that money is given or loaned to you in trust, and if it is so easy to fail and somehow betray that trust, then we create a very serious problem. But we recognise at the same time that in the specific field of high-tech, the investment is often in the nature of a debt and that if we are too harsh on the directors of these companies, say, for instance, by preventing them from becoming directors again, then naturally there will be very few people who will be prepared to become directors of high-tech start-ups for which the failure rate is very high. These are some of the areas we are looking at and, if necessary, we will make further amendments to our laws. Mr Inderjit Singh also talked about the rigidity of SESDAQ rules. In fact, under existing rules, a company applying for admission to SESDAQ need not meet any minimum profit or share capital requirements. Companies seeking listing on SESDAQ usually have three-year operating records, but companies having shorter operating records can also apply. This is an area which the Corporate Finance Committee, formed by the Government to study corporate fund-raising issues, is currently looking into. The problem is more complex than that. In Israel, where they have many start-ups, they do not have their own equivalent of SESDAQ or NASDAQ. Many of them, when they succeed, they list on NASDAQ. So they make use of the fund market in the US.”
“If all you are doing is welding or assembly work or metal bending, you are paid commodity prices. As a total economy, it is very important that we promote this particular area of high-tech entrepreneurship in order that we will be able to maintain our relative position in the world. In this area, no one can beat America. The Japanese tried but they are now left far behind. The centre is in Silicon Valley. It is a very exciting place and every important city in the world tries to re-create Silicon Valley within its midst. But obviously, it is not so easy. So when Mr Inderjit Singh talked about promoting high-tech entrepreneurship in Singapore, he is really asking a very fundamental question. How do we try to replicate some of the conditions there in order that, in this new world, we will also swim upstream and will have our share of the total value of the world's product? He made four specific recommendations which I shall now like to respond to. First, amending the bankruptcy law in order that we be more tolerant of failure and that Singapore be an economy with many second chances. Our bankruptcy law went through a major reform in 1995 with the new Act coming into force on 15th July 1995. One of the primary objectives of the new law was to encourage entrepreneurship, especially in cases where bankruptcy had arisen from misfortune rather than malpractice, by having a more liberal regime in bankruptcy discharges. With the scheme of easier discharges, bankrupts were also encouraged to work towards early discharge. Since July 1995, close to 6,000 bankrupts have been discharged. The Official Assignee is constantly reviewing bankruptcy laws and practices.”
“Firstly, on the letters of credit, my impression is that if a trader has a good export order and he needs to buy goods, he is able to use this to factor his export bills with banks, and banks will be willing to lend. Of course, if the trader is in a rather shaky position, then the banks will have to evaluate whether it is too risky to lend him the money and, in some cases, they may require collateral and so on. The problem is more pertaining to LCs from the other countries because in those situations, their LCs are no longer acceptable. So that is where the problem arises. Our traders or manufacturers may be selling to the region. But the LCs that their importers in those countries want to open with their banks are not acceptable to our banks here. And this is an area where Singapore has been trying to help Indonesia to see how we can facilitate this trade through some kind of a guarantee of their Bank of Indonesia. Firstly, the Bank of Indonesia will guarantee this group of banks which offer the LCs and we will guarantee the Bank of Indonesia. But that scheme is contingent on having a multi-national effort involving many countries, and at the moment we are still waiting for response from some other countries. 4.45 pm The Second Minister for Trade and Industry (BG George Yong-Boon Yeo): Sir, Mr Inderjit Singh raised a very important question about the promotion of high-tech entrepreneurship. As we all know, in the next century, the basis of wealth in human communities will not be in raw materials but will be in human knowledge. Those who are close to the sources of knowledge who are upstream, they get much more value than those who are downstream. If you were to look at a PC, there is a very high extraction of the total value, first, by Intel, then by Microsoft.”
“I can assure the Member that JTC is in close contact with the tenants. If nothing else, the tenants come to them and protest, if anything is not proper. But I take his point. I think it would be a good idea if JTC has regular surveys. I mentioned earlier on that, in fact, the posted rentals are set through surveys. They measure and find out what is the market rate. So even though we have said that we have frozen the posted rates, in fact, if the market rentals go down, then JTC will follow downwards. I suggest that at this point, we let my colleagues answer the other points. If need be, we can come back again on some of the other issues.”
“Yes, as I said, we are looking into how to simplify the schemes and I am in favour of streamlining the schemes, and not only for PSB's schemes relating to small and medium enterprises but the tax incentive schemes in general, because there is a big range of them. My impression is that in the eagerness of EDB and the others to promote investments and to help our industries, they have, in fact, made the schemes more and more to start with, and also more and more generous. So I think, on the whole, our businesses here should be very thankful for this.”
“I think the answer has already been given that it is not likely that in Singapore we will suffer a total blackout, like in Auckland, which happened to their central business district. I understand that some of their cables were, in fact, very old and not designed for this unusually dry weather. As a result, the heat was not carried away fast enough and there was a trigger effect. PUB and Singapore Power have assured us that they have taken all necessary precautions and a blackout of this nature, a total collapse, will not happen in Singapore. I will leave the other questions to my colleagues to answer.”
“But we see a situation of softening of the fuel oil prices, and if that continues, then I hope there will be a reduction in this component in the next round when we review the prices. The electricity price is composed of two components. There is a fixed component where you have the depreciation, the overheads, the wage cost, and so on, and the return, and there is this fuel component. The fuel component is just passed straight through. Unfortunately, there is a time lag between the actual cost and the price adjustments. As for the other components, I think this was debated thoroughly in 1996 when the decision was made to increase the return on investment of Singapore Power. At that time, it was found that Singapore Power was costing their electricity on a different basis. They did not take into consideration their capital which was invested in plant under construction, and they were only basing their return on plant in operation. So on that basis, they were earning a return which was adequate under the old basis, ie, under the World Bank basis, but not adequate for a viable business. The Government recognises that power is actually a very stable business. It is not one of those high-flyer types where it goes up and down. The return should be reasonable but on the low side and stable. So it is a very stable kind of situation. The key thing here is to make sure that our power rates are competitive. And I want to assure him that my Ministry is watching this carefully. The tariff rates have to be approved by the PUB and we will have to make sure that this component of cost is kept under control as well. Mr Chng Hee Kok, who is not here, asked about the blackout in New Zealand.”
“Following PM's visit to KL on 16th to 17th February 1998, the Government of Malaysia has agreed to continue the supply of water to Singapore beyond the expiry of the 1961 Agreement in 2011 and the 1962 Agreement in 2061 on terms and conditions to be mutually agreed upon between the two governments. This undertaking by the Malaysian Government will be confirmed in an agreement within 60 days of the issue of the Joint Communiqu� by Singapore and Malaysia. I share his view that this is a golden opportunity for us to try and settle this matter. I hope the Malaysians will proceed in a business-like fashion. It is a win-win situation; otherwise the water will be going to waste, and it is zero value for them. But if we are prepared to buy from them - it is very important to us, of course - if we can come to this agreement in the near future, this will remove a big psychological barrier between us. From then on, I hope it will be possible for us to really cooperate. As close neighbours, there is much that we can do together. As matters are still under discussion, I am afraid I cannot go into more details. 4.30 pm Concerning the electricity rates, the recent increase in the electricity rates has given rise to queries, both outside and inside the House. And I informed the House recently, in answer to an Oral Question, that this increase recently was just to pass on the fuel cost increase. There has been a time lag between the fuel price increase and the tariff increase, and this is unfortunate. Whilst the price of fuel has come down, in US dollar terms, because of the depreciation of Singapore dollar versus the US dollar, the actual cost in Singapore dollar has actually gone up leading to this increase in the fuel cost.”
“Mr Lim Swee Say made the point that we should try and project into the future in terms of the kind of economic structure that we will have and try and assess what kind of workers will be needed and prepare ourselves for that. This point is well taken. We will be working together with the Ministry of Manpower to see how we can do this. Of course, one of our main concerns is to prepare our workers well, not only the young ones, but also the older ones, so that we will not have a problem of structural unemployment. I think the Skills Redevelopment Programme fits in very well with the latter part of the programme. The data from EDB shows that most of the investments coming in now tend to involve more skilled jobs, something like 70% or so for the newer industries. So it is very important that we upgrade our workers so that they can fit into those kinds of jobs. But I would be reluctant to have a situation where there are retrenchments and we provide the workers with wages for them to train, because in our tight labour market - Members will be surprised that our markets is actually still quite tight - there are plenty of jobs available. So when workers get retrenched, the best thing for them is to find a different job quickly, and be prepared to adjust their expectations. In the process, of course, we will help with the training as well. But they should not expect to sit at home or be paid just to learn. That will be carrying it a bit too far. We also have various schemes to help the housewives and retirees to come back to the labour force. This is known as the back-to-work programme and it has been going on well. Next, I would like to turn to the point made by Dr Wang Kai Yuen. First, he asked about the water agreements.”
“The answer is, yes, we do, especially if the foreign workers have three-year work permits, which means that they are skilled already, and we feel that it is useful for us to upgrade their skills further. Within certain limits, we also allow training of two-year work permit holders. But here we have a cap because we want to make sure that the funds are used more to train our own people rather than transient workers. With regard to executive training, this is supported if it is part of the company's total training and development plan. But for executives, there are other schemes. For example, EDB's INTECH scheme is used to train executives for new projects when they have to send employees overseas to train in headquarters so that they can bring back the knowledge and help start up the local operation. INTECH has also been used to send people for training, to man our regional plants for example. Several Members have asked for the percentage support under SDF to be increased from the current levels. Here, I would like to say that PSB is generally sympathetic and is aware that under the current economic situation, some companies may be more reluctant to train. So maybe there is a need to increase the funding level on a temporary basis. The general level of support is 50% of fee course. But for the more desirable skills, the higher skill areas, the PSB does go as far as 80%. But we do not want to go too far because it is important that the resources are not wasted. If we go up to, say, 90% and the employer only pays 10%, there is a possibility that the training may not be so well regulated and there could be wastage. I think 50:50 is in fact a good ratio. But for special cases, we can go somewhat higher.”
“But the employers themselves have to train the workers for their own needs. That is the most effective way of training. We cannot foresee what kind of industries will come, even though we know there are certain general directions. And even for different companies in the same industry, they may have their own needs. But having said that, I think there is a case for us to upgrade the general ability level, for example, literacy, computer skills and other skills of our workers so that they are able to do the higher level jobs. What I am not comfortable about in this SRP is this part about the absentee payroll, because we do not want to get into a situation where we pay workers just to learn. We think that it is better that if they are holding a job and they are learning on- the-job. In the situations that I have quoted, these employees are actually still working and contributing to the existing employers, but they are pulled out for, say, 20% of their time to undergo training in ITE either on a part-time or full-time basis. On that basis, EDB has supported the programme under their INTECH scheme, up to 70% of the absentee payroll. The course fees are paid up to 80% via SDF. Anyway, the point is that we support the scheme. We are evaluating it and we will discuss with the Ministry of Finance and see how we can get money for the scheme. In the meantime, the scheme can just push on and money would be forthcoming, say, from the SDF funds which still have several hundred million dollars of resources left. There should be no need for us to slow down the scheme for reasons of lack of funds. One of the Members asked whether we allow the SDF to be used for training foreign workers.”
“Thank you, Mr Chiam. I would not split hairs here. I was just trying to make a general point that these are public funds, in a way that the Government has imposed it on the system in its overall taxation, as it were, and directed it towards certain uses. The money is put in the SDF. In the past, we had in fact payroll tax and this was replaced by the SDF. It is, of course, not true to say that Government has not been spending money on training. We have the ITE and other schemes which are in different parts of the Budget. But I take the point that for the purpose of the Skills Redevelopment Programme, we have not had any budget yet in this latest annual budget, the reason being that there was not enough time for us to evaluate the scheme fully and come out with a recommendation to the Ministry of Finance to have it in the Budget. But I would like to assure all the Members who have spoken that we support the scheme, and my Ministry is evaluating it to see how we can fund it and expand the scheme, because the scheme fits in very well with the need to upgrade our older workers. It is a wonderful idea if, whilst they are working in certain low skilled jobs and there is a threat that they may lose their job, we train them in a systematic way with certification so that they can be upgraded into higher level and better paying jobs, say, for example, in the wafer fabrication industry. Of course, we must make sure that the training is relevant and that there is no wastage. Very often, when you train a young person, say, in ITE, he does not apply the training after that. So we have been adopting this principle that the Government's responsibility is to provide good education and skills up to a certain level, ie, 10 years of schooling and also skills in the ITE.”
“We have plenty of office space and this is a very good field. It helps us to control the operations in the region and they can source components here and engage in development work and so on. So it is a very desirable form of high level activity, for example, international trading. In fact, they are doing trading which does not pass through Singapore. All they need is a phone, some fax machines and some able staff, and, of course, plenty of good contacts overseas. Several Members have spoken about this important topic of training and retraining of our workers. I can assure Members that training has always been a top priority for us, together with education. Mr Chiam See Tong made the point that we only give lip service to training but where is the money. Here, may I just make the point that in fact SDF in a way is also like public funds because in the past, before we had SDF, in fact we had payroll tax. So payroll tax was in a way converted to SDF and subsequently it was increased to four percentage points and adjusted down to 1% now for workers who earn less than $1,000 per month. So he might like to look upon it as a kind of taxation which is directed towards training, the idea being that companies contribute to this fund based on the number of employees, and the more they train, the more they get their money back. This is to encourage and support them. In the same way, the Government's other revenues are mostly taxes. It comes from the whole economy. The Government itself does not generate this income.”
“15 pm However, I want to reiterate that the granting of loans is a decision that is best left to banks to make on commercial grounds based on prudent assessment of risk and return. This is the best approach to avoid abuses or misallocation of resources. Several Members have spoken about the retail industry and the tourism industry. I am leaving them to be answered by Mr Tang Guan Seng. So please bear with me on this area. Mr Low Thia Khiang asked about the Regional Headquarters Scheme and whether the Ministry is satisfied with the progress made so far. He quoted a figure of 22 companies which have been granted the Regional Headquarters (RHQs) or Business Headquarters (BHQs) status and whether the incentives are enough in view of the recent slowdown. I wish to inform Mr Low that the scheme has in fact worked very well. Since the figure that he quoted in 1991, the number of RHQs has increased very significantly. I do not have the actual figures here, but I think it exceeds 100 companies now. The contribution to the economy runs into billions of dollars in terms of expenditure that they incur here. So it has been a very good scheme and the EDB will continue to promote the scheme. In fact, with the slowdown, it has indirectly led to more companies coming here for this purpose. When these companies pull out from the region, they still want to have a presence in Southeast Asia, and the natural place is Singapore. So we are in fact seeing some of that flow coming back. Contrary to the reports recently in some newspapers that we are losing people, we may be losing some of these expatriates in certain areas like banking, but we are getting a gain in other areas. Mr Low asked about the target. We do not have any targets, the more, the merrier.”
“He commented about the Local Enterprise Technical Assistance Scheme (LETAS), whether the grant quantum could be increased from 70% to 90% of the allowable cost of engaging external consultants. On this point, I wish to inform him that, in fact, the PSB already allows 90%. For certain projects which benefit the industry as a whole, not on a company basis, but where it is a scheme or a study meant to benefit the whole industry group, the PSB does approve 90%. A good example of this is the recent relocation of small factories from Woodlands to make way for the wafer fabrication plants in Woodlands. These factories have all been moved to a new multi-storey flatted factory and, in the process, PSB has to come in and help them to lay out the factory, plan various things and so on. The funding for that was at 90% level. Mr Tay also asked whether we could give financial grants to trade associations to engage professionals. I would like to inform him that the Government does provide LETAS grants to the Singapore Chinese and Malay Chambers of Commerce and Industry to implement projects that upgrade their members' operations. PSB will continue to work with trade and industry associations on worthwhile projects that have industry-wide applications. On the suggestion that Government provides soft or matching loans to finance joint investment projects in ASEAN, the Nominated Member may wish to note that this is available under the Local Enterprise Regionalisation Finance Scheme for machinery loans. This scheme is administered by EDB and is meant to help our companies set up factories overseas. The loans are provided at I think low cost or low rates for them to set up factories and to buy machinery. 4.”
“Next, I would like to turn to the question of the small and medium enterprises (SMEs). As Mr Inderjit Singh has mentioned, there are some 60 schemes to help our SMEs. I also get confused with the large number of schemes. I can assure Members that the statutory boards, like EDB, PSB and so on, have been trying their best to help the small and medium enterprises, and they have come up with all these different ideas, incentives and what have you, to help our companies, to cater for their different needs. Maybe it is time now for us to have a relook and streamline the operations. Last year, when we debated this issue, there was this comment that we did not publish the booklet in other languages. The PSB has since done so and they are also in the process of trying to simplify the application procedures, to make the forms easier for everybody. The PSB has also set up its first-stop SME centre in the PSB building in April last year to facilitate and coordinate access to all schemes offered to SMEs. The centre serves as a focal point for guidance and advice to SMEs not familiar with the various upgrading schemes. If our SMEs have any problems, they can approach this first-stop centre and get assistance. Mr Singh also asked about tax deductibility for `Q' plate cars. On this issue, the Member may wish to note that the registration of `Q' plate cars will be discontinued under the new vehicle tax structure that has just been announced recently. All company cars registered after 1st September this year will be subject to the same taxes as for private cars. This is the information we have obtained from LTA. I hope this answers his point. Next, I turn to the points made by Mr Tay Beng Chuan.”
“Whilst we sympathise with companies which are selling, for example, to the Indonesian market and now find that the market has practically disappeared in some cases, I think it is just not feasible for Government to come in and help in those situations. But if there are companies here which have viable operations and they have good export orders, and they also have good collateral here which can be used to pledge to banks, then it is up to the banks to decide whether to lend them money. And they can then perhaps use that money to finance the operations in, say, the Riau Islands. This is what is being done by multi-nationals. They treat their regional plants like cost centres, sub-contractors. So they do all the sales here. They do all the purchasing of parts and components here and they feed the regional plants. So they are able in that way to insure those plants and isolate those plants from the turmoil. If some of our local companies can do likewise, I am sure our banks can consider and where it is viable, they will provide them with the assistance. Mr Inderjit Singh also said something about whether banks, Government or whoever can guarantee the LCs issued by local businesses. This point is not very clear to me. The problem, for example, in some of the regional countries is that the banks which give guarantees for LCs are no longer acceptable. For example, maybe some banks in Korea may already be in serious trouble. So foreign lenders do not have any confidence in that bank and are not prepared to accept LCs from that bank for the purpose of selling them products. In our situation, our banks are very strong and there is no problem for them to issue LCs for the import of materials from overseas. So I am not quite clear what Mr Singh meant in this situation.”
“In the financial sector, the House was informed recently that as at 31st December 1997, the exposure of the six local banking groups to Indonesia was S$5.4 billion, representing only 2.3% of their total assets. So while Singapore cannot remain unaffected by the Indonesian economic downturn, our global linkages and diversified economic structure will buffer us from any fall-out effects. Of course, we are hoping that the economy will recover and there will not be any serious setbacks. Next, I would like to turn to the topic of the Local Enterprise Financing Scheme (LEFS). Mr Inderjit Singh has expressed concern that the recent enhancement of the LEFS is insufficient to help local companies ride out the regional financial turmoil. I wish to emphasise that the LEFS is not intended to bail out sick companies but to support viable local enterprises. The lending decisions are made by the participating banks with the Government sharing part of the risks. The LEFS has been popular with smaller companies. As at January 1998, over 4,000 smaller SMEs, ie, those with less than 100 employees each, have benefited from the scheme. The coverage offered by the enhanced LEFS has now been extended so that SMEs with fixed assets up to $30 million or employing up to 300 people can also qualify. Government has increased its provision in LEFS loan lines from $760 million to $1.1 billion. With the Government's share of the risk for working capital and factory loans increased to 50% and the doubling of the limits for such loans, more assistance will be provided for our SMEs. It is not feasible to have an IMF-style bail out package for our companies which are caught in the regional financial turmoil.”
“But tax concessions for individuals may not be effective, since these individuals are unlikely to pay any taxes in Singapore. If the employees have to go overseas and they pay more for the overseas schools, very often, it is the employer who is bearing the cost. So if any help is provided, maybe it is to the employer that we should be giving the help. With regard to Singaporeans counting their period of absence overseas into the minimum occupational period of HDB flats, MND has informed my Ministry that they have already made provision for this. Those posted overseas on official duties are allowed to include the period of subletting their flats in the computation of the minimum occupation period, subject to a maximum of three years for direct purchase flats and one and a half years for resale flats. I hope the Minister for National Development can confirm this when his turn is due to discuss the budget. Mr Inderjit Singh and Mr Leong Horn Kee have inquired about the impact of the Indonesian economic problems on Singapore. The events in Indonesia will have an impact on the entire region. Singapore will not be an exception. However, we should not speculate on a possible collapse of the Indonesian economy. Many countries including the US, Japan, Australia and ourselves have been discussing measures to help Indonesia towards economic recovery. Much of our trade with Indonesia is in the form of intermediate goods as part of the regional supply chain for final products for OECD markets. Similarly, a significant portion of our investments in Indonesia are manufacturing investments situated in the Riau islands linked to plants in Singapore which supply products to countries like the US and the EU.”
“This is the export of business and professional services. A linkages indicator which measures the percentage of sales of overseas manufacturing affiliates which were channelled back to Singapore shows a high of 20% or $4.7 billion. This is indicative of the extent of linkages between the parent companies and their overseas affiliates. To promote regionalisation, Government has put in place a number of incentive schemes and bilateral mechanisms to assist our businessmen. In encouraging businessmen to go regional, we must never mislead our companies to go beyond what is commercially prudent. Whilst there are opportunities to reap rewards, companies must weigh the risks as well. Some Members have stated during the main Budget debate that we do not allow losses from overseas ventures to be offset against Singapore taxes. In fact, the Minister for Finance explained clearly why this has been the case. But here, I would like to point out that when local companies go overseas, they can, in fact, apply for what is known as the Overseas Investment Incentive Scheme. This scheme allows companies to offset the capital losses arising from the liquidation of approved overseas investments against the company's other taxable income. Before they invest, if they apply to EDB for this incentive and if EDB approves it, then they have this insurance that in case they have to liquidate the companies and there are losses suffered, those losses can be brought back and offset against local taxable income. Mr Inderjit Singh has suggested that tax rebates should be provided for families to defray the higher cost of children's education overseas. As explained before, there are various schemes to help companies in their drive and there are also various tax incentives.”
“It is time for companies with the cash reserves to look around and see how they can tap into the region and establish useful linkages in the region. But, as I said, they must do so with care because if something happens, there will be no government to bail them out. That is the basic policy of the Government. You go in, you go for your profits, but if things turn bad, hard luck. If things turn out well, very good, please invest more. Dr Lee Tsao Yuan made some comments about having GDP plus and whether we can develop better indicators to help us assess the extent of our regionalisation efforts and its contributions to our economy. I think the points are well taken. In fact, I think this is one area where she may give me some lessons on the different components of GDP and GDP plus, and so on. But I have some data here that may reassure her on this aspect. Our approach to regionalisation is to build an external economy which is strongly linked and beneficial to the domestic economy in a way that strengthens Singapore's role as a business hub without hollowing it out. Thus, even as factor income from abroad has increased from 1993 to 1996, the contribution of foreign operations to value-added in the Singapore economy fell from 12% to 11%. In other words, the domestic economy continues to grow and, in fact, grew faster even as we developed the second wing. That is why the contribution from the external factor is, in fact, less than before. It has gone down from 12% to 11%, even as we invested more and more overseas. I see Dr Lee shaking her head. Maybe I have to go to her for the lesson! Moreover, our export of business and professional services has expanded due to regionalisation. It almost doubled between 1993 and 1996 to reach $2.45 billion.”
“On Mr Inderjit Singh's suggestion to help start-up manufacturing companies with preferential land pricing, he may wish to note that there are already several existing schemes which assist start-ups in various aspects of their businesses. JTC is planning to introduce as part of the local enterprise programme a plan to help start-up companies which are engaged in higher valued-added manufacturing activities. More details will be announced in a few months' time. I think I have covered most aspects on this topic of cost of doing business. Next, I would like to move on to the topic of regionalisation. I am very happy to note that all the speakers who spoke on this issue made the comment that we should not let the current temporary setback divert our attention from the longer term goal and it is imperative for us to go regional, in fact, global. This is one of the strategic thrusts recommended by the Competitiveness Committee which I am chairing, that in our Singapore context, because of our resource constraints, or land, labour, and so on, it is unavoidable that we must move offshore. As we do so, we try and retain the linkages between these offshore operations and the Singapore operations so that in the process, we are able to push ourselves upward and be in a position where we manage the operations, ie, we do the designing work, research, higher value manufacturing, services and so on, and harness the resources in the region. So this is something that we will continue to do. Whilst the present situation presents opportunities for us to invest overseas, of course, we have to do so with great care because the situation in neighbouring countries is still rather unclear. We do not know whether there are any hidden losses in some of the books, and what is going to happen.”
“JTC did a review of its subletting policy in August last year as part of IP 21 and has decided that lessees of JTC land and ready-built factories are now allowed to sublet up to 30% of their space for the first five years of their lease or the first three years for factory lessees and up to 50% thereafter. They can sublet up to 70% if the sub-tenants are related companies. As JTC tenants are on relatively short terms of typically three years, they may also prematurely terminate their tenancies at any time if their space requirements have changed. JTC recognises that some tenants may find themselves in genuine difficulties and is prepared to consider their special requests for subletting. I think I must say that Mr Choo was a bit unfair when he said that JTC is inflexible. I think it is far from the case. They have in fact been very flexible and even before the latest moves by the Government as announced in the Budget, they have on their own been adjusting their rates down. So I think we should give due credit to JTC. As for Mr David Lim's point that current HDB and JTC rules make it difficult for businesses to streamline their operations by swapping premises, JTC does allow requests for swapping of units by existing tenants. The swap will have to be mutually agreeable and the usage compatible with the adjoining users and consistent with the existing JTC guidelines. JTC is also prepared to consider not imposing a rental adjustment upon a swap for bona fide cases with valid reasons, such as for purposes of business consolidation. As for HDB premises, I will refer Mr David Lim's suggestion to HDB for consideration.”
“I would like to inform him that there is already a mechanism in place to ensure that major fee hikes are coordinated since all such increases require the Cabinet's approval. It is also Government's practice to fully explain the rationale behind any major fee increase. The Government has done so on all occasions when fees have been increased. My Ministry also monitors the impact of such increases on both the Consumer Price Index and the Unit Business Cost Index to ensure that Singapore remains competitive overall. Mr Leong Horn Kee and Mr Inderjit Singh spoke on the question of PSA charges and said that the charges have increased three times in the last two years. I presume they meant three occasions. I was told that this is not quite right. The last tariff revision was done in January 1996 and there has not been any revision since then. So I do not know whether there has been some misinformation. Nevertheless, MPA and PSA Corporation are keenly aware of the need for Singapore to keep its port tariffs competitive. The Marine and Port Authority (MPA) reduced port dues for container ships by 20% in May 1996. Further, PSA Corporation negotiates on a case-by-case basis to grant rebates for terminal handling and towage charges to its customers. So I can assure Members that PSA will remain responsive and make sure that they are competitive in terms of their rates. Mr Choo Wee Khiang and Mr Inderjit Singh made some points on the question of subletting of JTC space in situations where there has been a business downturn and there is extra space available. I can assure them that JTC is flexible in this area.”
“In fact, with the freezing, something like 70% of the tenants will not have any rental increase, even based on the current posted rates. The others will have some increase but this will be kept at certain levels. JTC will be announcing the details soon. But the point I was just making is that in addition to that, JTC also does an annual review in May or June and if at that time it is clear that the market rates are below posted rates, then JTC will adjust its posted rentals down further. So if we freeze rentals, it means they cannot go up but can come down, depending on the market situation. So maybe this is a bit of good news for the manufacturers and other businesses, that we are capping rentals, but there is a possibility of a downward adjustment. The adjustment, if it comes, will of course depend on the market situation. At the same time, Government should refrain from introducing unnecessary rules and regulations that will increase the cost of doing business. If the economic situation worsens, the Government is ready and prepared to implement further measures. We should remember, however, that business costs are only half of the competitiveness equation and will continue to reflect Singapore's basic resource constraints. While we continue to manage our costs, we must also focus on the capability factors and constantly upgrade the productivity of our workers and companies so as to sustain our economic competitiveness. This is the collective responsibility of the Government, the employers and the workers. Let me now turn to the point raised by Mr Tay Beng Chuan on whether we need to set up a Government charges and levies review committee to coordinate and review these charges and levies to ensure Singapore's competitiveness in the region.”
“So in fact, many of the companies are enjoying rentals which may be less than 50% of the posted rents, and even the posted rents tend to be lower than the market rents. JTC does surveys of the market and they peg the posted rent and the tendency has been to peg it much lower than the market rate. As mentioned in the Budget speech, JTC and HDB will be extending rental concessions to their tenants and lessees. The Government will also be giving a 15% property tax rebate for commercial and industrial properties. The third factor concerns Government rates and fees. In this area, the rate of increase has moderated since 1995. The Unit Business Cost Index of the manufacturing sector shows that the Government rates and fees actually fell by 1.8% in 1997 as against a growth of 5.1% in 1996. In any case, the fees are quite a small component of cost and in recent years, in fact, it has fallen. But we should not be complacent. We should continue to watch. And with Members' comments, it will in fact make it easier for MTI to press the other people to keep costs down. At this point, we do not see a need to further reduce JTC rentals substantially. Any fall in market rents will be taken into account at JTC's annual review of posted rents in May or June. If the posted rents are reduced at the next annual review, new lessees and tenants will benefit from these lower rates. The rents for existing lessees and tenants will also be adjusted downwards accordingly when the current rates are due for their annual review. This point may be a bit confusing because Government has said in the Budget speech that we are going to freeze the posted rent and we are going to moderate the increases for those who are far below the posted rent.”
“To help businesses to control costs, we have to pay careful attention to the following: 3.45 pm Firstly, wage costs. The National Wages Council will be meeting soon to deliberate on wage guidelines for the year. Over the years, we have built up the annual variable components of salaries to provide for the eventuality that wage costs may have to be cut in a recession. Now we are not yet in a recession. I hope we will not be. But when the NWC meets and before it concludes its deliberations by late June, I think the economic situation will be clearer and I hope the NWC will be able to look at the different sectors, the impact, the total situation, and come out with guidelines to help us overcome this problem. On its part, the Government will also be reducing the levies for skilled foreign workers in the manufacturing, marine, construction and service sectors from $200 per month to $100 with effect from next month. This is for skilled workers. So the intention is to lower cost and also make it more advantageous for employers to recruit skilled workers and also for them to train the workers and upgrade their skills. So the orientation is towards that area. The second important factor is of course rentals, and many Members have spoken about this. I would like to inform Members that in July last year, after JTC did its annual review, half of JTC's estates enjoyed a drop in posted rents, while the rest have their posted rents frozen. Many of JTC's lessees are paying rents that are well below market rates. The reason for this is that there has been a cap of 7�% on the extent to which they can raise their rents yearly. So as the property market shot up over recent years and the rises were very sharp, JTC was prevented from going up so fast by the cap.”
“The Unit Labour Cost (ULC) index of the overall economy rose by 1.1% in 1997, slower than the 4% in 1996, and 3.3% over the 1990 to 1995 period. The ULC of the manufacturing sector registered flat growth in 1997. There are several reasons for this. One, of course, is that the NWC has been recommending flexi-wages and keeping the wages under control. The Government has also been more flexible in allowing in more workers, both work permit holders as well as employment pass holders. So these have helped to check the labour cost situation. It is also one reason why we have such a big number of foreign workers in Singapore now. I think Dr Richard Hu mentioned a figure of more than 450,000. So this would be a good buffer for us in terms of employment, in case there is a severe downturn and some workers will lose their jobs. In that situation, of course, we have to retrench the least productive worker first, but at the same time there will be openings created, and if the Ministry of Labour, by then Ministry of Manpower, could be more careful in issuing work permits, this will provide more job openings for Singaporeans. Of course, they will have to be prepared to be flexible and not insist on the old salaries or the same kind of jobs, but jobs there will be. And our projection so far is that we do not see a severe retrenchment or unemployment. In fact, in the recent situation when Seagate retrenched some workers, I was given to understand that some of the workers were very happy. They collected the retrenchment benefits on one hand, and they got new jobs very soon thereafter. And the ones who were unhappy were, in fact, the ones who were not retrenched. So it is quite an unusual situation that we have in Singapore, despite the crisis that we are going through.”
“The corresponding figures for the services sector are about 9% and 7% respectively, 9% for rentals and 7% for Government taxes and fees, as compared to 3% and 2% for the manufacturing sector. If you compare this with Hong Kong, remuneration accounts for about 60% of business costs in Hong Kong (Hong Kong's manufacturing sector), while rentals account for another 8%. Hence, compared with Hong Kong, our remuneration share of business costs is about 60% of Hong Kong's share, while our rental share of business costs is only about half. This is for purpose of comparison. Of course, it depends on the structure of the economy, the kind of industry they have, and so on. In Hong Kong, the manufacturing sector has mostly moved to China and even in the past, the manufacturing sector tended to be rather labour-intensive, electronics, garments, toys, and so on. So, therefore, their labour cost component will tend to be higher. Similarly, now with the move towards more of the service sector, the cost component again is mainly manpower as well as rentals. So in the case of Hong Kong, rentals are an important factor, more important than in Singapore. With the pegging of the Hong Kong dollar to the US dollar which has been maintained so far, and also with the high cost in Hong Kong, which used to be higher than Singapore, I think they are fearful of losing their competitive edge. And that is one reason why they came out with such a strong plethora of concessions for the economy. In our case, we have been watching costs very carefully and we are not quite in the same situation. In fact, I think we are very different. And also our currency has depreciated by about 15% versus the US dollar. With rising productivity, labour costs have moderated in Singapore in recent years.”
“Sir, I wish to thank all the Members who have spoken for their valuable suggestions and views. I wish to assure them that my Ministry will give their views utmost consideration. I was told that we are well ahead of time. So the answers to be given by myself and my colleagues in the Ministry will be somewhat longer than usual. I hope Members will bear with us. I can assure you that that is not our usual style of answering questions in Parliament. First, on the topic of cost of doing business. Several Members have spoken about this topic and they have made impassioned pleas for Government to do more to reduce the cost of doing business. The signals have come across loud and clear, and I can assure you that we are monitoring the situation very carefully. Unlike what Dr Lee Tsao Yuan said that we might be caught flat-footed, I can assure her that we, in fact, have a number of indicators, and should there be a downturn, I think we would be able to spot the downturn fairly quickly. We are not just depending on the quarterly statistics. In fact, we have preliminary statistics, then we have actual statistics as the trade figures come in, and so on. So that is the reason why we feel that if the need arises we will be able to adjust very fast; sometimes, maybe too fast, because the Government is able to decide very quickly on various measures. First, as Mrs Lim Hwee Hua pointed out, it is instructive to look at the composition of business costs in Singapore. The largest component is wages. In Singapore, remuneration accounts for about 35% of total business costs. This is a key component to moderate for Singapore to stay competitive. For the manufacturing sector, rentals account for only about 3% of business costs, while Government taxes and fees account for about 2%.”
“Source: Data compiled by Department of Statistics from the records of RCB. PATIENT VISITS AT SPECIALISTS CLINICS 3. Dr Teo Ho Pin asked the Minister for Health (a) how many patient visits were made at outpatient specialist clinics of government hospitals in 1996 and 1997; and (b) what is the patient load of doctors at these clinics.”
“Table 3 Company and Business Formation and Cessation Number Formation Cessation Net Formation Total Companies1 Businessess2 Total Companies Businesses Total Companies Businesses 1990 24,101 6,503 17,598 15,544 2,024 13,520 8,557 4,479 4 ,078 1991 25,745 6,654 19,091 16,294 1,978 14,316 9,451 4,676 4,775 1992 27,082 7,220 19,862 17,213 3,839 13,374 9,869 3,381 6,488 1993 30,285 8,816 21,469 21,138 2,469 18,669 9,147 6,347 2,800 1994 31,404 9,811 21,593 21,980 2,449 19,531 9,424 7,362 2,062 1995 31,163 9,468 21,695 23,131 2,748 20,383 8,032 6,720 1,312 1996 32,720 9,473 23,247 23,252 3,225 20,027 9,468 6,248 3,220 1997 32,099 8,918 23,181 17,640 3,881 13,759 14,459 5,037 9,422 1990 1H 12,388 3,330 9,058 7,963 1,040 6,923 4,425 2,290 2,135 2H 11,713 3,173 8,540 7,581 984 6,597 4,132 2,189 1,943 1991 1H 12,787 3,293 9,494 6,503 885 5,618 6,284 2,408 3,876 2H 12,958 3,361 9,597 9,791 1,093 8,698 3,167 2,268 899 1992 1H 13,578 3,475 10,103 9,429 2,243 7,186 4,149 1,232 2,917 2H 13,504 3,745 9,759 7,784 1,596 6,188 5,720 2,149 3,571 1993 1H 15,488 4,252 11,236 11,484 1,339 10,145 4,004 2,913 1,091 2H 14,797 4,564 10,233 9,654 1,130 8,524 5,143 3,434 1,709 1994 1H 15,644 4,694 10,950 11,775 1,187 10,588 3,869 3,507 362 2H 15,760 5,117 10,643 10,205 1,262 8,943 5,555 3,855 1,700 1995 1H 15,781 4,704 11,077 10,770 1,316 9,454 5,011 3,388 1,623 2H 15,382 4,764 10,618 12,361 1,432 10,929 3,021 3,332 (311) 1996 1H 16,400 4,830 11,570 11,901 1,481 10,420 4,499 3,349 1,150 2H 16,320 4,643 11,677 11,351 1,744 9,607 4,969 2,899 2,070 1997 1H 16,296 4,584 11,712 10,945 1,894 9,051 5,351 2,690 2,661 2H 15,803 4,334 11,469 6,695 1,987 4,708 9,108 2,347 6,761 1 Companies refer to private and public listed companies. 2 Businesses refer to sole proprietors and partnerships.”
“2 Foreign refers to branches of foreign companies only. 3 Refers to the total number of "live" companies and businesses in each sector based on RCB's records. Source: Data compiled by Department of Statistics from the records of RCB. Although company and business cessation has increased slightly in recent years, the total number of company and business formations has also grown (see Table 3). This is normal in a vibrant market economy. The impact of the regional financial turmoil has not shown up in the number of cessations in 1997. This is in line with the robust growth in 1997. However, as the turmoil exerts its full impact this year, we can expect the number to rise.”
“The records of the Registry of Companies and Businesses (RCB) show that 6,695 companies and businesses ceased operations1 in the second half of 1997, as compared with 10,945 in the first half. The total of 17,640 in 1997 is substantially less than the number of 23,252 in 1996 (see Table 1). The lower number in the second half of 1997 could, however, be due to late reporting and is subject to revisions as and when companies and businesses report to RCB. Table 1 Cessation of Companies and Businesses, 1990-97 Period Number 1993 21,138 1994 21,980 1995 23,131 1996 23,252 1997 17,640 Source: Data compiled by Department of Statistics from the records of RCB. 1 Refers to those that have been liquidated, ceased, struck off RCB's registers, under receivership or dissolved. Details by industry and ownership are given in Table 2. In absolute numbers, company and business cessation is highest in the commerce sector. As a percentage of the total number of entities in each major sector, cessation is highest for the construction and commerce sectors, each accounting for 7.4% of the number in the sector. In terms of ownership, 6% of foreign companies ceased operations in 1997 compared with the average of 6.9% for the whole economy. We do not have the breakdown by size. Table 2 Cessation of Companies and Businesses in 1997 by Industry and Ownership Category Number As % of Total Entities In Category3 Breakdown by Industry Manufacturing 1,864 6.3 Construction 2,123 7.4 Commerce 7,886 7.4 Transport & Comms 957 6.2 Financial & Biz. 3,083 5.7 Svcs Others 1 1,727 8.4 TOTAL 17,640 6.9 Breakdown by Ownership Foreign Companies 2 101 6.0 Other Companies and 17,539 6.9 Biz. TOTAL 17,640 6.9 1 Agriculture, fishing, mining and quarrying, other services, and activities not stated.”
“The Ministry of Trade and Industry does not have any data on the size and number of businesses owned and operated by women. However, according to the Inland Revenue Authority of Singapore (IRAS), there were about 18,630 women who derived their principal source of income from business in 1996. The latest data on women managers are captured in the 1995 General Household Survey. The survey showed that there were 33,583 women managers, senior officials and working proprietors, representing an increase of 37% over the 24,577 figure in 1990. Increases were recorded in all sectors of the economy as shown in the table below. Number of Women Managers/Senior Officials/ Working Proprietors by Industry Sector 1990 1995 Manufacturing 3,401 5,445 Construction 747 824 Commerce 12,311 13,361 Transport 1,374 2,512 Finance and Business 4,470 7,803 Services Community and Social 2,214 3,477 Services Others 60 161 Total 24,577 33,583 (Source: Department of Statistics) HOUSE-CLEANING AND HOME-MEALS SERVICES 9. Mdm Claire Chiang See Ngoh asked the Minister for National Development whether the Housing and Development Board will encourage and support the creation of affordable house-cleaning and home-meal catering services to service the needs of HDB households to ease the burden of working couples who cannot afford to hire foreign domestic help.”
“(c) Mall of Singapore Thematic Zone. The first prototype of the Mall of Singapore will be Orchard Road. This aims to make Orchard Road more retail friendly. (d) The Great Singapore Sale. Launched in 1995, this helps retailers present a more vibrant and attractive shopping experience for Singaporeans and visitors. Within the more domestically-oriented retail sector, several schemes and measures are targeted at helping retailers improve their performance. Examples are : (a) Encouraging retailers to join franchises or form economic groupings. (b) Using Information Technology (IT) to help small shops improve shop management, eg, ShopNet (grocery trade) and BookNet (books and stationery trade). (c) Generic upgrading programmes for retailers in areas, such as stock control, visual merchandising, housekeeping and customer service. Concerning rentals, HDB and Pidemco have provided some assistance. In the private sector, the market trend is also towards lower rentals. WOMEN IN BUSINESS 8. Mdm Claire Chiang See Ngoh asked the Minister for Trade and Industry if there are any data on the size and number of businesses owned and operated by women, and statistics on the number and positions of women managers in various industries and professions.”
“Mdm Claire Chiang See Ngoh asked the Minister for Trade and Industry, given the severe downturn of retail businesses in general, how the Government will help to revitalise this sector and what measures have been thought of, eg, lower rentals or subsidies for computer modernisation, to make retail owners more competitive as this is an important value-added sector for attracting tourists to Singapore. Mr Lee Yock Suan: Excluding the motor vehicle trade, the retail sector has grown at an average of 3.5 % per annum in real terms between 1993 and 1997, slower than the growth of 5.9 % over 1988-93. The sluggish growth is caused by a number of factors, some of which are structural in nature and existed even before the regional financial crisis. To counter the decline in visitor arrivals, the Singapore Tourism Board (STB) is intensifying its promotion efforts in markets such as the USA, Europe, Australia, Taiwan, and China. Singapore hotels and SIA are establishing joint promotion tie-ups in Europe and the US. These efforts should have spin-off benefits for Singapore retailers. STB will continue to spearhead schemes to help retailers restructure and upgrade through the following programmes: (a) The Singapore Gold Circle. This is a quality recognition and branding programme. It will set performance benchmarks for participants, facilitate collaborative marketing and quality promotion, and assist individual members in business development activities. (b) Tourism Development Assistance Scheme. This is aimed at encouraging the development and upgrading of the tourism industry. For example, grants will be provided to retailers to assist them in developing new marketing ideas and flagship stores, as well as to collaborate and form economic groupings (e.g. central warehousing).”