Leong Horn Kee
Singapore
“My question is that, although at the point of purchase when the blocks were built, this may not be structural deficiency, as the Parliamentary Secretary said, but it is now because the demand or desire is for lift access.”
“Lastly, by centralising at MOM, I wish to urge the kind Minister to provide more funds and resources for job search programmes. Most feedback from residents is that they are not getting sufficient help and satisfaction on job search services at the CDC level.”
“At the same time, our SAF soldiers are better educated and trained to handle more sophisticated fighting system. Thus, the combination of both modern weapon systems and better trained soldiers will provide a good platform for our SAF to build a strong and capable integrated fighting force.”
“All right, "may" allow two months of disruption. But in terms of cohort, after the students have left school, they are no more in the same cohort. They actually enter enlistment at different times of the year. So this issue of relating cohort to enlistment period may not be valid. Therefore, why not just have a clarity of rule?”
“Sir, on this issue of early disruption of two months, we should actually look at it not from the two months' point of view of early disruption, but from the 10 months of waiting time. The servicemen will have to mope around waiting for 10 months for his tertiary education.”
“If the safety and personal security in Johor is not improved, no matter how excellent or scenic a bridge we build, Singaporeans will be hesitant to visit Johor and spend time and money there.”
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“Moreover, the freeing of the commissions of transactions on the SES will benefit the ordinary investors, especially the small retailers. Of course, the speed of implementation depends on our ability to find suitable management for the merged entity and conduct training for the staff and executives of the merged exchange. Sir, I would now like to refer to clause 13 of the Bill which pertains to the regulatory functions of the merged exchange. I would like to ask the Deputy Prime Minister how he intends to separate the regulatory functions of this merged entity with its other interests. As the entity will eventually be listed, it will have profit oriented objectives. Hence, if the integrated entity were to be responsible for some of its regulatory functions, areas of conflict of interest may arise. The Deputy Prime Minister has said that the new exchange will continue to perform routine regulatory functions, like listing approvals and market surveillance. I am concerned that even such regulatory functions may on occasions be at conflict with the financial interest of the exchange. As in the case of the corporatisation of the Singapore Telecom, the Public Utilities Board and others, when they were corporatised, the Government set up separate bodies to undertake their regulatory functions. In this instance, therefore, I wish to know whether the integrated exchange will continue to be a self-regulatory body over the long term, or that the Government intends to ultimately take over all the regulatory functions of this exchange. I think this is important as the exchange will be listed in about five years' time. The interests of the shareholders, the broking houses, the management and the public may not coincide.”
“Mr Speaker, Sir, I fully support this Bill. As the Deputy Prime Minister has said, this Bill will be beneficial to Singapore. The restructuring and merger of SES, SIMEX and SCCS will help the merged entity to become a premier exchange in Asia and make Singapore a hub for financial markets in the region. The trend worldwide is towards the merger of exchanges, as the Deputy Prime Minister has said. We find ourselves in an increasingly competitive environment. We have to compete not only with the other exchanges in the region but also against the major financial centres around the world. Therefore, creativity and product innovations will enable the integrated Singapore Exchange to stay in line with competition. As I understand it, the creation of a single integrated privately-held company through the merger of SIMEX and SES will be completed by end 1999. Then the open access of both SES and SIMEX to qualified foreign investors and financial institutions will take place within three years by January 2002. This will coincide with the freeing of SES commissions. The initial public offering (IPO) of the merged holding company may occur within five years. Since the proposed demutualisation and merger will be very beneficial to Singapore, I would like to ask the Deputy Prime Minister whether he would consider speeding up the process, assuming the various parts of the merger exercise progress expeditiously and smoothly and ahead of schedule. Waiting three to five years for the entire process to run its full course appears to be a long time. Since the said result will strengthen our pole position as a top financial centre in this region, it would be worthwhile to hasten the process.”
“Mr Speaker, Sir, I would like to ask the Deputy Prime Minister whether it is true that the Suzhou project costs the Government more than $30 billion of public funds, and this was apparently alleged by Dr Chee Soon Juan in a speech he made at Raffles Place in December last year. BG Lee Hsien Loong: Mr Speaker, Sir, there is no truth at all. I had already given Parliament a full update on the status of SIP in January 1998, giving figures similar to what I have just stated again, which is $147 million. Dr Chee Soon Juan made a speech last year at Raffles Place where he said that if we continued talking about Suzhou, we were bailing out $30 billion of public funds, not "his" money ("his" meaning Mr Lee Kuan Yew) but $30 billion of taxpayers' money. I do not know where he got his figure from, but Members will know that this is Dr Chee Soon Juan's statement and, with him, accuracy and facts are matters of taste rather than morals.”
“As for the legal process, as I said in my statement, SES is taking legal advice and the shareholders' association is also taking legal advice. I do not think we should rule anything out but neither are we seeing that as the only solution. As to when the whole package can be solved, as Members have been reading in the newspapers recently, the Malaysians are gearing up for elections and I think their minds are likely to be on other weightier matters for the time being. So it will be some time before the matter would be solved. On special cases like rights issues and warrants, I have to ask the Stock Exchange to look into the matter but we will have to study the specific cases.”
“Sir, I would like to ask the Deputy Prime Minister whether he has any expectation on the timeframe by which this issue could be resolved since the CDP-SCANS Agreement would have to do the transfer by the end of the year. And if it is not done by the end of the year, would it lead to some legal process being introduced to enable the Clob investors to get their shares transfered? The second question is whether the SES will assist in special cases where there are rights issues or warrants which have a timeframe expiry, for example, rights issues may be called within a certain timeframe or warrants may expire within this year, and whether the SES can approach the KLSE for special considerations to allow the Singapore owners to either exercise their conversion rights for such issues. BG Lee Hsien Loong: Mr Speaker, Sir, on the timeframe, it is not the case that the end-of-the-year is the deadline, because the agreement was settled last year (signed in September 1998) and was meant to be implemented as soon as possible. There is no specific timeframe. The end-of-the-year is not a deadline for the agreement between CDP and SCANS. There have been some statements by one of the offerors, I believe, that at the end of the year, if this matter is not settled, the shares may be confiscated. But the SES is taking advice on that, and its advice so far is that even if the shares are transferred to the Minister of Finance in Malaysia, the titles still belong to the shareholders and they still have a claim on those shares. So they are not expropriated. But we are clarifying this position because it is an important point on which I am sure Clob shareholders would want reassurance.”
“As to whether this will make a contribution to housing loans, we will have to consider which components of the CPF we restore first. When we cut the CPF we cut 6% from the Ordinary account and 4% from the Special account. The Special account is the first priority for CPF members to build up, because that is put aside for old age and as the absolute crucial nest-egg, as opposed to something a little bit more than that which you can use for housing or other investments. When we restore it, my preference would be to restore the Special account first. But we will decide that later on. I think it is premature to count our chickens now.”
“Mr Speaker, Sir, I have two supplementary questions. The first question is whether the Ministry would have the revised forecast for the GDP growth for 1999 in view of the strong recovery of the economy in the first half. The second question is, in view of the strong recovery of the economy, would the Deputy Prime Minister consider advancing the reinstatement of the CPF cut to an earlier date than two years so as to enable depositors to use their CPF money to help finance existing housing loans and make new investments. BG Lee Hsien Loong: Mr Speaker, Sir, as I explained, we will review the forecast when we have the full second quarter figures. We expect to make a revised forecast come National Day, which is our usual timing. As for advancing the CPF restoration, I had explained also that we have to look at CPF and wage take-home pay as one package because it is the total wage cost which makes the difference to the competitiveness of the economy. If we hold down CPF but allow wage costs to rise, then we are actually negating the effect of the CPF cut and, in effect, making it more difficult for us to increase the CPF later on because the wages would already have risen. If there is wage pressure because the economy is doing well and exports are strong, then it may be better for us to restore CPF earlier and maintain wage restraint longer, so that we can restore the CPF cut sooner, not in full, but progressively, and manage our total wage cost as the economy recovers. It is too early for us to commit now. We have said two years but, as I said, if the economy grows strongly, at the end of the year we will revise this and consider whether we will begin to restore the CPF come the year 2000, a year ahead of schedule.”
“Sir, may I ask the Deputy Prime Minister, in view of the present-day modern communications, in cases where the speculative fever is prompted by unfounded rumours, whether the SES can ask the company to issue an immediate statement on either the Internet, the Teletext or press agencies like Reuters and Bloomberg, rather than to wait till the end of the day or even ask for suspension of the shares? BG Lee Hsien Loong: I think it depends on the situation, but there are cases where an immediate statement will be helpful.”
“Sir, I would like to ask the Minister whether his Ministry has plans to issue more licences for mobile phones. If there are, when will they be implemented, what is the market size in Singapore and whether it can sustain more than two operators at the moment.”
“Sir, I would also like to join my colleague to thank the Deputy Prime Minister for the excellent speech covering many points. But I just like to ask one question. Can he explain why is it that it is not necessary for the Government to actually look into measures like income tax rebate for the personal level at this point in time, but leave it only to the Budget debate later in March next year?”
“Hopefully, some of this money will flow back into the economy. Sir, the CSC Report has focused on the business sector. Rightly so, as we need to formulate plans for the immediate and long term, concepts and strategies for Singapore to survive this current recession and remain competitive. The CSC Report contains 168 pages. It is a very thorough and well-researched report. Many sections are devoted to long-term strategies, some of which my other GPC Members will comment on. I feel strongly that a total review should be done to help everyone in Singapore. There should be constant monitoring and feedback. Besides the business sector, we should not forget the individuals. The total economic rescue package should also include help for the individuals, especially for the poorer segments of the people. A comprehensive rescue package will help garner total support from the entire population. The chances of success will be enhanced. Let us take heart. With effective measures and determination in the implementation, let us work closely together to pull ourselves out of this recession.”
“Under present income tax rules, holding companies are not allowed to offset the losses of their subsidiaries against their profitable ones, even though they are owned by the same group. This rule is particularly unfair for property developers as it is a Government requirement to impose on successful tenderers of Government land sales to form separate companies to own land sites purchased. Here, I wish to declare my interest as a director of a property development company. Because of losses incurred during this recession, companies are facing huge write-offs and provisions for losses. Yet, they cannot enjoy any tax offset against the profitable projects. Normally, if all the investments or projects (that is, both profitable and loss-making ones) are put into one company, they will enjoy the tax offsetting. The Government does not want to allow tax leakages by allowing group offsetting, especially for overseas projects. But I feel that for cases of definable local projects and investments, and also for new ventures in Singapore, R&D projects and other new investments that are likely to incur losses, the Government should consider allowing for group tax offsetting. Taxpayers are given a 5% tax rebate during this year's Budget announcement. This rebate we now see is too low. The Government can consider introducing reductions in corporate or personal income tax cuts. Otherwise, I would like to suggest that the Government consider allowing the tax rebates for Year of Assessment 1998 and 1999 to be higher, say, 15-20% for tax rebate. If we recall, Dr Mahathir, who is now the Finance Minister of Malaysia, has allowed a total tax relief for taxpayers in Malaysia in 1998. The idea of a larger tax rebate is to encourage our taxpayers and companies to have more disposable income.”
“Yes, MPs as well. The amounts and rates of reduction in Government-related fees and charges have not been specified in the CSC Report. To be complete, it is necessary for the Government to also specify the targeted reduction in various rates and fees. In fact, so as to achieve the overall savings in business costs by 15%, the Government should set definite rates of cuts to be made by all statutory boards and departments, such as in port charges, industrial rentals, utilities and telecommunications. Without setting the desired quantum for each fee item, I feel we may find that the desired target of 15% cut in overall business costs may not be achieved. The CSC has also suggested that the foreign worker levies be reduced. It has proposed that the reduction be from $50 to $100. This amount, I feel, is too low. To be bold, I think that the Government should consider a 50% cut in the interim 2-year period for such foreign worker levies. Similarly, I also feel that the Government should allow a 50% cut in maid's levy for an interim 2-year period. This reduction will help many Singaporeans and companies, particularly the middle-income families who have maids, to have more disposable income, which will help them to offset their loss in CPF and wages. Mr Speaker, Sir, I would like to pick on an important issue raised at page 130 of the CSC Report. The CSC has proposed that group tax consolidation be allowed. This will encourage companies to grow through new ventures and ease cash flow constraints. During this economic downturn, many companies will encounter losses, including those incurred by their subsidiaries. This is particularly so for property developers but applicable to all companies.”
“If need be, even to allow them to withdraw from the CPF savings of their immediate relatives if they are in such desperate straits. For the proposed wage cut, I feel that the lower level workers should not be made to suffer any basic wage cuts. There may be some cuts in their annual bonuses, depending on the performance of the respective companies. But for low wage earners, a cut of even $10 maybe very painful and difficult to manage as they are already living from hand to mouth. Hence, I support a graduated scale of 5% cut for the mid-level employees and a 7.5% cut for the senior and top executives. For the Ministers, as they have to lead by example, I consider a 10% cut, at least a 2.5% larger cut than the top civil servants, would be quite adequate. It may be hard on the Ministers but as national leaders, they have to lead by example. An hon. Member: MPs as well.”
“To mitigate the effect of the proposed 10% CPF cut, I would like to suggest that a 5% cut can be applied to the Ordinary Account and the balance 5% be applied to the Special Account. This would alleviate by half the impact of the drop in available funds for homeowners with outstanding mortgages. A 5% cut in their CPF Ordinary Account will be more manageable. In any case, the Government should nevertheless introduce some measures to help those who are badly affected and unable to continue servicing their existing housing loan repayments arising from the drop in the CPF contributions. The schemes proposed should be able to help not only those who are HDB homeowners, but also those who are private residential owners. One scheme I would like to suggest is to allow taxpayers to claim for up to a certain amount, say, $10,000-$50,000 yearly, depending on how generous is the Government, as tax relief equivalent to the interest payable due to the outstanding housing mortgages. This tax relief has been introduced in Hong Kong. I suggest that, to be equitable, both HDB and private homeowners be allowed to enjoy this relief but only for loan mortgages taken for owner-occupied homes. Sir, I know it is taboo or sacred cow to suggest that Government allow Singaporeans to draw on their CPF savings before retirement. Many people are now in severe financial difficulties. Their CPF savings of course are meant to be used for old age or retirement. However, I feel that for special cases, only on a case-by-case basis, the Government can allow Singaporeans who are out of job because of severe medical problems and very desperate of funds with no savings left to draw from their CPF savings now.”
“The second objective is to put back money into the people's pockets to mitigate the drop in their disposable income due to their loss in wages. Hence, in theory, although $7 billion is taken out of circulation from the people's spending, it is hoped that the Government will put back $7 billion, if not more into stimulating the economy. This sum of course could in fact come from the savings of the employers in their business costs. It can also be a combination of other measures like government cuts in industrial rentals, port charges, utilities, taxes and levies as well as in the form of pump priming by the Government through projects such as infrastructure development, roads, schools, IT programmes and R&D spending. The public's expectation is that the Government should contribute an equivalent, if not more, or at least equal to the CPF and wage cuts, which is $7 billion of this total package. We are in difficult times. It is crucial that the Government, employers and employees work closely together, hand in hand to overcome this formidable economic crisis. Sir, I am generally in support of the proposed level of CPF cut of 10% and the 5-8% of wage cut. I feel any deeper level of cuts would have too severe a contradictory effect on the economy. As a word of caution, I would like to urge that employers in the private sector do their part in preserving jobs and not overdoing the pay cuts of their employees. Companies that are doing well and maintaining profitability should avoid that basic wage cuts or year-end bonus cuts. At the same time, employers should also avoid using this occasion to be opportunistic and thereby deliberately reducing too excessively their workers' annual pay package.”
“If the Government were to spend just 5% of the total reserves to help Singaporeans, the amount to be used would be at least $6 billion. If you want to be more generous and use 10% of the reserves, this would be a very large $12 billion. I feel it is time for Government to be bold and decisive. Having the correct measures and strategies, and using our reserves wisely, will be consistent with the effective, efficient and level-headed image of the PAP Government. Hence, I would like to urge the Government to be bold to draw more from our reserves to help Singaporeans now. The proposed CPF and wage cuts would take up about $7 billion from the local economy in the form of lower disposable income of the people. The $7 billion is about 5% of our annual GDP. Based on a simple arithmetical computation, that means that the GDP could well contract by 5%. If we add the ripple effects of the loss of $7 billion in consumer spending, the impact on the economy will have a higher multiplier effect. Assuming that the multiplier effect is double, then the GDP could even shrink by a total of 10%. If this deflationary effect is to take its full course, this could be quite worrisome. Hence, counter-stimulating measures must be taken. During a recession, the contractionary effect of the CPF and wage cuts is very undesirable. People will stop spending and the economy will contract. The local retail and commerce sectors are already facing bad business. The mood will be further depressed. It will cause the economy to spiral downwards much faster. Therefore, it is imperative that the Government should introduce concurrently economic boosting measures. One area is by introducing cuts in Government tax, rates and fees. The first objective is to substantially reduce business costs.”
“The Government has previously announced a $2 billion off-budget measures in June 1998. We know now that $2 billion is not enough. The new package is now $10 billion. This amount would be more effective than the earlier $2 billion but the question still remains: is it enough? The other key issue which I would like to pose is whether this package is in fact expansionary or deflationary. Central to the package are the wage and CPF cuts totalling $7 billion. This is the people's money that they are asked to contribute by tightening their belts and bear with CPF and wage cuts. Hence, while there is a $7 billion saving for the private sector, this is dampened by a similar $7 billion drop in consumer spending. Moreover, the impression is that Government's contribution to the $10 billion package is only the remaining $3 billion, which is 30%. The equation looks rather unbalanced as the people are bearing the main burden of 70% and the Government's share appears to be 30%. We feel that Government can do more, and use more of the reserves. The Government has total reserves amounting to about $120 billion. Since the start of the recession, many individuals have dipped into their own reserves to weather this "rainy period". Hence, we must accept that the Singapore economy is not only in the rainy period but perhaps in a storm. Many Ministers and Government leaders have said this is the worst economic crisis that they have ever seen. Hence, it is time to draw upon our national reserves. We have already decided that Singapore can spend $5 billion to help Indonesia and I do not know how much we would draw upon to help our neighbours like Malaysia. But what about helping ourselves?”
“Mr Speaker, Sir, I rise in support of this motion tabled in the name of the Minister for Trade and Industry, Mr Lee Yock Suan. I am certain that this House will strongly endorse the strategies and policies set out in the Report of the Committee on Singapore's Competitiveness (CSC). I note with satisfaction that the CSC, except for the Chairman and Deputy Chairman (who are both Ministers for Trade and Industry), comprises mainly members who are from the private sector. Views were diligently collected from a wide segment of private sector members. I would like to commend the two Ministers for Trade and Industry and the Committee Members for preparing a comprehensive report that is brimming with new and creative ideas and suggestions. In order for our GPC for Finance, Trade and Industry to gather feedback from the ground and industry members, we held discussions with representatives of the Singapore International, Chinese and Indian Chambers of Commerce and Industry, and representatives from the Singapore Confederation of Industries, the Singapore Hoteliers Association and the Singapore Retailers Association. Our GPC members and I would like to thank them for their contributions. We shall relay some of their important comments to this House during the course of this debate. Sir, the Singapore's economy is officially in recession as we have negative growth for the third quarter 1998, and perhaps quite surely for the fourth quarter 1998. The CSC Report is timely as it sets out the key strategies for Singapore's survival in the immediate and long term. The question I would like to ask is: is this $10 billion rescue package that the CSC has proposed sufficient to pull us out of the recession?”
“The end result is that companies may actually choose to rather buy other companies' shares, which is subject to less restrictions, than to actually go through a more tedious process of buying back their own shares, no matter how attractive their own shares may be. Sir, the Minister may wish to clarify these issues.”
“Would this not give the companies more flexibility and choices? I would also like to ask the Minister on the disclosure of certain information such as the limit of 10% of total shareholding, the maximum price and the limitation of the date to buy the shares. First, on the limitation of 10% total shareholding. Companies may want to buy more shares when they want to go out and buy their own shares. So, would it not be beneficial for companies to be able to buy more than 10%? There may be sellers who want to sell more than 10% each time? So why not have a higher limit? Perhaps 15%, 25% or even 50% of their own shares to buy back. Secondly, the disclosure of maximum price can also create difficulty and curtail the flexibility of actions by the company. The buying and selling process is a very dynamic one. The parameters and market forces change very fast. Hence, I would like to ask the Minister: would it not create a better chance for them to buy back their shares if certain information is not disclosed to the public, such as the limitation on the date as well as the maximum price they want to pay? Moreover, the fact that the company has to seek shareholders' approval prior to taking action is in itself a deterrent to the companies concerned. There is also the risk that the public announcement of the company's intention to buy back their shares may cause the potential sellers to ask for higher prices. In the end, the company actually is at a disadvantage when they buy back their shares at a higher price than it originally intended.”
“Mr Deputy Speaker, Sir, I support the introduction of this Bill. I shall focus my comments on the main feature of the Bill which is to allow the buy back of shares by Singapore companies. This buy back arrangement is currently prohibited by the provisions of the Companies Act. At present, companies can use their financial resources to invest in or buy shares of other companies. Such investment decisions are usually made based on limited information of the target investments of companies. In some cases, the companies themselves may be good investments and the companies know themselves best. Hence, it may be worthwhile for companies to buy back their own shares rather than buy shares of other companies. This provision of allowing companies to buy back their own shares is an enlightened approach. It is permitted in many countries nowadays. If companies can buy other companies' shares, why not allow them to buy back their own shares which are or can be better investments? The share buy back scheme will also be in the interest of the shareholders. Sir, I note the present Bill has a few restrictions on share buy back. First, share buy back is only permitted for ordinary shares and not allowed for preference shares or other classes of shares. Second, a company is required to seek shareholders' approval where the following information has to be disclosed: (a) the total number of shares which may be acquired is limited to 10%; (b) the maximum price to be paid for the shares; and (c) the date by which the authority to purchase will expire. I would like to ask the Minister for some clarifications. First, why restrict the buy back of shares only to ordinary shares but not allow other classes of shares such as preference shares, convertible shares or even warrants?”
“However, many of the original POSBank customers, especially the older folks, would not go near an ATM and they would prefer their monies to be put and recorded in POSBank passbooks, instead of holding them as passcards which they cannot read and see. The POSBank customers are also quite satisfied with the service provided by the friendly smiles of the POSBank tellers and the 133 conveniently located branches. This large pool of housewives and older folks do not need better services. They are indeed very happy enough with the present services of POSBank. It also does not mean that a super bank is a safer bank. Super banks can make super mistakes. There were instances of large banks around the world, eg, in America, Europe, Japan, where they have to be rescued by the government on the brink of collapse. Hence, many of our local depositors see the POSBank, which is Government-owned and Government-backed, as a AAA credit-rated savings bank that they can trust fully. Now the enlarged DBS may not give them the same sense of security. POSBank depositors do not mind the slightly lower interest rates in return for better security and better convenience, and they can sleep well. As reported in the press, DBS' acquisition of POSBank has raised two main concerns. One is the possibility of higher home loan interest rates and the loss of the Government's guarantee on deposits which POSBank offers. The Minister has just a moment ago explained how DBS will take certain measures to alleviate the above worries of depositors. I hope the Minister can do more.”
“Mr Speaker, Sir, the object of this Bill is to implement the Government's decision to allow DBS to buy POSBank. As explained by the Minister, this move to merge the two large Government-owned financial institutions is motivated by the desire to create a new super Singaporean bank to support and spearhead the plan to push Singapore as a regional financial centre. My view is that this objective can be supported. A larger, better capitalised Singapore bank will therefore have better resources to compete in the regional markets. Local depositors will also get to enjoy a wider range of financial services and facilities. However, the merger of POSBank with DBS will mean the dissolution of one of the most loved and trusted financial institutions in Singapore. The POSBank has been a symbol or icon of the virtue of thrift in Singapore. We lament the passing of this powerful icon of thrift for Singaporeans. We can recall the days in the seventies when as young students, we were encouraged by our schools and parents to save a little of our daily pocket money and deposit them into POSBank. Over the years, we have learnt to save and put out trust in POSBank. The merger of DBS and POSBank would mean that a larger bank will serve the local depositors. But I would like to point out that a larger bank does not necessarily equate to better facilities or a safer bank for depositors. Allow me to elaborate. No doubt there will be better resources and with more advanced computer technology, the enlarged DBS can create more services and facilities.”
“If we were to ditch that, how is it going to help Singapore, when roads are heavily congested, when people take inordinate amounts of time to get to work or meetings, when goods are stuck on the way to the port and to the airports or on their way to the factories? I think the cost to Singapore will be much, much higher, especially the cost to business.”
“Sir, I would like to ask the Minister whether he would agree that the ERP system will actually transfer loading of the transportation cost from the non-business sector to the business sector. In the process, actually the cost to the business sector is increased, which in turn is against the current Government's intention to lower overall business cost for the business sector. Mr Mah Bow Tan: Sir, I dispute that entirely because, as I have indicated, for the bulk of the industry, their transportation costs have actually been lowered. There is a small sector of the business community which depends on very frequent use of ERP-controlled roads which will see an increase in their transportation cost. I think it is inevitable in a situation like this that there will be some businesses which cannot lower their transportation cost, even if they try to change their travel patterns, but these are, I submit, in the minority. The indications are that the bulk of businesses are actually saving and some of them are saving very substantial amounts. So, the question really is: what do we do with the very small percentage of businesses which are affected by this higher business cost? I would say that the first thing that they would have to do is to relook at their business conditions and see whether there is a way for them to reduce cost by making less use of ERP-controlled roads, by changing their travel patterns, by relooking at the total logistics system. But we cannot change the entire system just because a small percentage of the business community is adversely affected. Indeed, the fact that ERP is successfully keeping our traffic flowing smoothly is benefiting the overall business community.”
“Subsequently, other Indonesian officials have expressed their appreciation. The Indonesian media has also generally reported favourably on our humanitarian assistance. Kompas, a major Indonesian daily, on 12th August 1998 referred to it as evidence "that our bilateral relations remain in a good state". We will continue with our humanitarian assistance. Singapore and Indonesian officials are now working out the details of the second delivery of aid. As for the proposed Bilateral Trade Finance Guarantee Scheme, we remain prepared to proceed with the scheme, as we believe it can help to restore confidence in Indonesia. Singapore officials held the first meeting with their Indonesian counterparts in April. The Indonesian officials said at the meeting that they would have to study the proposal in greater detail. In his recent Jakarta trip, Minister Teo agreed with Coordinating Minister for Economy, Finance and Industry, Ginandjar Kartasasmita, that officials from both sides should continue discussions on the BTFG. Singapore officials are ready to resume discussions as soon as their Indonesian counterparts convene the next meeting.”
“Subsequently, on 6th July 1998, the Singapore Government announced that it would provide humanitarian aid in rice and medicine worth S$12 million to Indonesia. Singapore and Indonesian officials have started work on implementing the assistance. Minister for Education and Second Minister for Defence, RAdm (NS) Teo Chee Hean, visited Indonesia from 5th-7th August 1998 to deliver the first shipment of humanitarian aid. Indonesian Minister of Defence and Security/ABRI Commander, Gen. Wiranto, received the humanitarian aid on behalf of the Indonesian Government at a hand-over ceremony on 6th August 1998. In his speech, Gen. Wiranto expressed his appreciation and gratitude to Singapore, and described the handing-over ceremony as a milestone in strengthening the ties of friendship between the two nations. On 4th August 1998, just before Minister Teo's visit to Indonesia, the Asian Wall Street Journal (AWSJ) had published an interview with President Habibie, covering Indonesia-Singapore relations. It quoted President Habibie as saying that "a friend in need is a friend indeed. I don't have that feeling from Singapore", and that "There are 211 million people (in Indonesia). Look at that map. All the green (area) is Indonesia. And that red dot is Singapore. Look at that." Minister Teo's visit to Indonesia was planned and scheduled earlier. It was not made in response to President Habibie's comments to the AWSJ. Minister Teo called on President Habibie on 6th August 1998. President Habibie repeated to Minister Teo what he had said to the AWSJ. But he also told Minister Teo that he had a vested interest in maintaining good Singapore-Indonesia relations. He thanked Minister Teo for Singapore's humanitarian assistance.”
“Mr Speaker, Sir, as the Deputy Prime Minister has said that he would not comment on the case, I would not ask about the case. May I ask him whether he could explain what are the rules and penalties against manipulation of shares? BG Lee Hsien Loong: Mr Speaker, I believe manipulation of shares is a criminal offence and one can go to jail. HUMANITARIAN AID AND FINANCIAL ASSISTANCE TO INDONESIA 2. Mr Zulkifli Bin Baharudin asked the Deputy Prime Minister whether the Singapore Government will review its humanitarian aid and financial assistance to Indonesia in view of the unfavourable comments and doubts expressed by Indonesian President B.J. Habibie. The Minister for Foreign Affairs (Prof. S. Jayakumar) (for the Deputy Prime Minister): Mr Speaker, Sir, in his National Day Rally speech on 23rd August 1998, the Prime Minister laid out the rationale for our assistance to Indonesia. We have a vested interest in Indonesia's stability, growth and prosperity. Indonesia is a close neighbour and a major trading partner. We have large investments in Indonesia. An Indonesian collapse would hurt Singapore as well as affect the regional economic and investment climate. The Prime Minister also pointed out that because Singapore is a small country, our capacity to help Indonesia is limited. But we are committed to helping our neighbours within our means, so that Indonesia and the region can recover from the present crisis as soon as possible. At the sitting on 1st June 1998, the Deputy Prime Minister had informed Members that the Singapore Government would be proceeding with humanitarian aid to Indonesia as well as the proposed Bilateral Trade Finance Guarantee (BTFG) scheme.”
“Sir, I would like to ask the Minister two questions. First, I would like to know what are the difficulties that the Malaysians are facing with regard to locating their CIQ within their own territory. While these talks are going on and they realise that the talks may break down, have they made any preparation on their CIQ arrangements or use their own platform within their own territory so that they can cater for an alternative in case co-location in Singapore cannot be agreed upon? The second question, Sir, is whether there has been any request from the Malaysians, since the talks have been reaching a difficult stage, asking for deferment on our part on the implementation of the movement of CIQ from tomorrow. And if Singapore were to be given this request, will it be possible for us to accommodate, given that we already have plans to move our own CIQ to Woodlands?”
“The Association of Banks has recently advised its members not to take a short-term view of the viability of their customers' businesses, or to pull back loans that are being regularly serviced. Banks can be expected to be cautious in the current slowdown in the Singapore economy. But if all banks were to pull back loans precipitately, even to good borrowers, the quality of their loans as a whole will suffer. It is not in their interest to see this happen. The evidence to date does not show that the banks are contracting credit excessively. The total volume of loans outstanding has shrunk slightly since the start of the year, but this is mostly because the demand for new loans by companies and individuals has fallen. Loans outstanding in June 1998 were 2% below the level in December 1997, although they were 5% higher than the level a year ago, in June 1997. Banks have continued to accept new loans. Among the major banks, both foreign and local, the value of new loans accepted as a percentage of loan applications was about 87% over the last three months. In June 1998 it was actually 105% but that is a statistical anomaly because of the lag between applications and acceptances, and 87% is higher than the level of 1997 when only 60% of new loans were being accepted, or in the middle of last year when 64% were being accepted before the economic slowdown. The overall volume of bank loans also remains high. The ratio of loans to deposits in the banking system averaged 108% over the last three months. In June 1998, it was 107%. This is below the peak which was 115% at the end of last year, but it remains above the levels seen at any time in the last 10 years.”
“Sir, I wish to ask the Deputy Prime Minister whether it is true, as mentioned in recent press reports, that the banks have been deliberately curtailing their loans unduly to customers or unfairly forcing them to top-up on the value of their collaterals pledged. BG Lee Hsien Loong: Mr Speaker, Sir, banking is a business, not a social service. Banks have to act on sound commercial considerations. They cannot afford to extend loans which are imprudent, or fail to recover loans which are not performing. Otherwise they will undermine their own viability, lose money and run into serious trouble, as recent events in several Asian countries have vividly shown. The Government and MAS cannot persuade banks to extend loans which in the banks' judgement are not viable. If Government were to intervene, it would be obliged to compensate the banks should the loans eventually prove irrecoverable. Then we would be no different from any of the other countries, whose governments have sought to influence lending decisions of banks, and brought their banking systems to the brink of collapse, with banks carrying a very high burden of non-performing loans, and requiring government resources, in other words, taxpayers' money, to bail them out. On the other hand, neither has the MAS required banks to curtail lending or call on their customers to top-up on the value of collateral pledged on their loans. These are matters for the banks to decide on, based on the merits of each loan and good banking practice. However, banks should take a long view of their customers' prospects and needs, rather than over-reacting to the immediate mood of the economy. A bank that expands loans recklessly in good times and contracts credit unthinkingly in bad will soon acquire a bad reputation.”
“I want to say that actually I had a flu a few days ago and I saw a doctor. He gave me medicine, like the Minister said, antibiotics for the phlegm and so on. Now after a few days, I am cured. I want to say that for the Singapore economy, I have trust on Dr Hu.”
“Yes, I will ask two more questions, Sir. I want to ask the Minister how come he did not consider the foreign worker levy and the foreign maid levy as components for cost cutting. These are very heavy costs to the employers and they have to incur substantial costs to employ some of these foreign workers. For families which employ foreign maids, they also can look for some form of relief for their households. Finally, I note the Minister has not provided any particular incentive for the individual. Could he also explain why in this case he has not considered giving, say, an increase in the tax relief from 5% to 10% that was given last year. In this particular package, I do not see any provision for individuals to improve on their own cash flow and increase spending, so as to help stimulate the economy.”
“I would like to say that the Minister has come out with a good package for a specific sector, which is the property sector. I note that the measures are very well conceived and well thought through. Once again, we would like to appeal that this 80-20% payment between the bank and the individual might also be a point that the Minister would like to review, since it is an item that can help purchasers in their cash flow. Perhaps they can use their CPF savings for that 20%. This might help them to buy properties, especially for first-time property purchasers who may find that this is the time for them to enter the market if they are able to find the finances. Mr Speaker: Order. Mr Leong, may I remind you that you are not allowed to make a speech. Please ask your questions.”
“Mr Speaker, Sir, I like to take this occasion to ask the Minister a few questions. First, I would like to congratulate him for having presented a comprehensive and a well-done Off-Budget Budget. Reading his speech, it sounds really like a Budget session to us. And I believe the Minister has put in a lot of thoughts by introducing measures that are able to stimulate the economy and bring us back to a good footing. I am particularly impressed by the Minister's coverage on how he intends to cut down corporate expenses and costs. In this respect, I like to congratulate the Minister for having introduced many new cost-cutting measures, especially by JTC, HDB, CAAS and various other quarters. I would like to ask the Minister a few questions. First, on the proposed property tax rebate for commercial and industrial properties, which is a very substantial 40%. Why is it that the Minister did not also include the residential sector as a component to enjoy this rebate? The Minister mentioned that for this entire Budget package, there will be a negative budget of $800 million. It seems to be a very prime pumping Budget. May he explain whether this $800 million negative is just for operating budget or does it also include the capital expenditure of the Government? On the question of interest rates, of course, the Minister explained that the Government cannot ask banks to be more accommodating. But I think the Government revenue collection agencies can be more accommodating. In their collection of rates, fees, various payments, perhaps the Government can instruct the Government agencies like JTC, HDB, PSA and even IRAS to be more accommodating. Since times are difficult, many companies and individuals are facing difficulties in meeting cash flow requirements.”
“When a hacker gains access into a computer, he can get the account numbers and signature codes of users. Thereafter, he can withdraw large sums of money or use another person's account and electronic signature to purchase goods in the cyberspace market. Similarly, a user of a service has to provide his account number and signature code. Hence, there is an inherent risk that others can get unauthorised access, and use the information for fraudulent purposes. Where the sums of money involved in computer frauds can be large, I wish to ask the Minister whether the present level of penalties proposed in the Bill is adequate to serve as a deterrent. My third point is on foreign participation. I wish to ask the Minister whether foreign-based individuals and companies can register with the certification authorities and participate in the electronic commerce in Singapore. On the one hand, if we limit the participants to just Singapore-based individuals and companies, we are also limiting the size and scope of the market. On the other hand, if we were to extend the coverage to outside Singapore, there are many legal and physical problems. Legally, do our laws have extra-territorial coverage? How do we police and exercise controls? How do we handle claims and suits? Do we have the capacity to deal with the volume? These are the many issues and complications of the cyberspace. Essentially, the question is: who has the rights, the means and the clout to become the "government" in cyberspace where there are no physical boundaries. Sir, I hope the Minister will enlighten us on these questions.”
“Mr Speaker, Sir, I wish to express my support for this Bill. The introduction of this Bill is both opportune and necessary. It is opportune because Singapore has aimed to be wired up nation-wide under the Singapore One programme as a fully integrated and networked nation, striving to be one of the most progressive nations in the area of information technology in the 21st century. It is necessary because with the advent of widespread use of the world-wide web and the Internet for electronic commerce, there will be a need to set rules and regulations to protect both the providers and users of goods and services offered on the Internet. The future market place is in the Internet or the so-called cyberspace. This cyberspace market is a burgeoning market where the volume and value of transactions will explode. As the Minister has stated, by the year 2001, it is expected to grow to S$200 billion. Hence, it is imperative that there should be proper rules to govern this market. Sir, I have three main points to raise with regard to this Bill. First, on publicity programme. This concept of electronic commerce is still very new to many people. Most are not aware of the full implications; how it works; what are the risks and responsibilities; what is an electronic signature; and how do the certification authorities such as Netrust operate. Hence, I feel that the Government should undertake a comprehensive publicity programme to educate the public on the entire concept and the system. Second, on the protection of the users. I wish to ask the Minister whether the present level of controls and penalties are adequate to protect the users, particularly the small consumers. Electronic commerce is very vulnerable to computer frauds.”
“I would like to ask the Minister whether it is also worthwhile for Ministers to lead some business delegations overseas so that they can bring along local businesses to attract foreign investments into Singapore. BG George Yong-Boon Yeo: The answer is yes.”
“Sir, if you consider the business sector, it has actually gone into negative growth this year. If that is the case, would the Ministry look into some measures to be introduced as quickly as possible?”
“Sir, I want to ask the Minister about the growth forecast of 2.5-4.5%. We are looking at the weak regional growth now. Malaysia has announced a negative growth, so did Hong Kong. Thailand and Indonesia would not be much better. On that basis, how can we expect the Singapore economy to be on a positive note? If so, would he now implement the measures sooner than later?”
“It has been a long day for MTI. I just want to thank the two Ministers and also the Senior Parliamentary Secretary for their very detailed and deliberate answers, especially from Minister George Yeo for his very expansive discourse on cyberspace and IT technology. If we ever form the Ministry of IT or Cyberspace, I think you will know who will be the best choice as Minister. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“I would like to urge other Members who missed their cuts to make their points and put their questions to the Minister.”
“Sir, we are ahead of time, in fact, by a couple of hours. It seems many Members have missed their chance to speak. May I ask for your generosity to allow Members who have missed their cuts to speak as well?”
“Sir, the objective of the Government is to maximise the use of local manpower resources. Many MPs have been exhorting the Government to concentrate on training and retraining of workers, particularly during this period of economic slowdown. I feel that this is a good time for companies to be given short-term assistance by the Government for retraining of workers, so that local companies and their workers can rightfully adjust to the changes in the economy. One idea is to ask the Government to consider increasing the subsidy level for SDF-funded training programmes from the current top level of 70% to, say, 90%. This increase can be a short-term measure for, say, two years, so as to encourage companies to devote more funds to retrain their workers during this difficult period.”
“Our focus on the regional crisis now seems to be on Indonesia, and Singapore being its closest neighbour would be particularly concerned with the adverse impact should there be a major implosion in Indonesia. I would like to ask the Government how it intends to handle the situation should Indonesia suffer a major financial and political crisis. Indonesia's economic collapse will have an adverse effect on Singapore's investment, trade and commerce with them. Singaporeans are naturally concerned that a collapse in Indonesia will have a major impact on Singapore and Singapore's economy. Perhaps there are ways to shield ourselves from an Indonesian fall-out arising from a collapse which, of course, we hope will not happen. I would like to ask the Minister whether there are means for Singapore to isolate ourselves from the Indonesian difficulties.”
“Many companies have responded to the Government's call to regionalise by investing overseas. The task of seeking opportunities overseas has been a difficult and arduous one. Those who have ventured out find the going even tougher now, as they are being exposed to the Asian market's financial crisis. These companies venture out to invest in the region on their own with their eyes open. Therefore, they cannot blame the Government when they encounter difficulties or incur losses. According to the statistics released by the Government in October last year, the total cost of direct investments overseas by Singapore companies grew 21% to $46 billion as at end of 1995. About 35% of these companies invested in ASEAN countries and about 59% invested in the whole Asian region. These regional investments have left Singapore firms exposed to the Asian economic slowdown. Sales in these countries are dropping and coupled by the appreciation of the Singapore dollar against the ASEAN countries, the returns are depressed and the risks are now higher. Several years of effort have been put into promoting the regionalisation drive. Many companies have established good connections in neighbouring countries. I feel that although there is a temporary setback on the regional crisis, Singapore companies should not give up their regionalisation drive. Those with the financial strength and manpower resources should continue to look for opportunities in the region. The idea is to use the neighbours as low cost manufacturing bases for Singapore firms. For example, the idea of promoting cross border investment holdings with Malaysian companies may be meaningful, as it would be helpful to enhance the comparative advantages of both countries for mutual benefit.”
“Most small firms are charged 2-3% above prime rate for bank borrowings. In addition to borrowing cost, they also have to incur higher interest charge, and thereby weakening their already poor cashflow. I would like to ask the Minister whether the Government would consider doing a comprehensive review of the problem of cost of doing business for local firms, in the light of the economic slowdown. In addition, I also like to urge the Minister to look into the problem of credit squeeze faced by local companies. As a result of the higher costs and tightening bank credit, many local firms may be forced to close. This will have serious repercussions on the economy. It will, in turn, create unemployment and hardship for Singaporeans. Hence, I would like the Government to monitor closely the health of the local industries.”
“Sir, I beg to move, That the total sum to be allocated for Head W of the Main Estimates be reduced by $100. Sir, local companies have been lamenting about the rising cost of doing business in Singapore for several years. They have been encountering cost pressures in terms of increases in wages, fees and rentals. Now, with the economic slowdown, local companies are facing the added problems of lower business turnover and credit squeeze. As I have mentioned earlier in my speech during the budget debate, more than 50% of local firms feel that their businesses will be badly affected by the economic slowdown, both in terms of local and foreign sales. On the other hand, they also encounter difficulties with banks which are now putting a credit squeeze on their banking lines. It is fair to expect that banks would wish to review their loan exposure and minimise their doubtful debts. However, in the process, local companies are being further squeezed by higher interest cost and fewer credit facilities. In the area of cost of doing business, local companies wish to see that the Government could consider reducing rates and fees such as HDB and JTC rentals, instead of just putting a freeze on them. In the area of increasing costs, local firms have found that in the last two years, PSA has actually increased their fees three times. Now, with the expected introduction of ERP, businesses are also concerned that their transport costs will increase, since it is essential for them to travel, especially along the expressways so as to ensure fast delivery of their products. Hence, ERP may, over a longer term, cause them to incur higher transportation costs. Local companies are also faced with the burden of higher financing cost of borrowings.”
“Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.”