Lew Syn Pau
Singapore
“Mr Speaker, Sir, one of the greatest problems SMEs are facing in this downturn is the sudden decline in orders and decline in revenue and, as a result, some SMEs are not able to get enough cash flow to service the interest.”
“Sir, I thank the Minister for his reply. We look forward to increases to come. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $29,360,000 for Head F ordered to stand part of the Main Estimates. The sum of $3,716,700 for Head F ordered to stand part of the Development Estimates. Head P -”
“If you take a look at the Enterprise 50 companies, Sir, a lot of them have gotten to where they are today without financial support from the Government, and it has taken them a long time, many years. Some of them have been in operation for more than 10 years.”
“This is especially important for the design-and-build projects where the contractors take the lead in a construction team which even includes the appointment of a QP and the payment of his fees. This amendment Bill does not seem to address this concern.”
“Thus, the Government is not in favour of awarding prestige or acknowledgement scholarship without the scholar making a commitment to serve in the public service. There is already much flexibility in the treatment of Government scholars.”
“Sir, there have been a lot of discussions in the papers about compulsory acquisition of flats. Does the Minister not think that the compulsory acquisition of a HDB flat is a bit too severe, because it punishes the family members who are innocent, rather than the offender himself?”
The complete record
Every one of 352 lines we hold for Lew Syn Pau, in date order, each linked to its source. Free to read, in full, without an account. Page 1 of 8.
“On GST, I would like to add also here my call for the Government to consider suspending temporarily the 3% GST to reduce cost of transactions and cost to companies. On the personal side, the Government has been generous in granting an additional 5% rebate for personal income tax for the Year of Assessment 2001. Some individuals are currently encountering difficulties in paying their taxes and I hope the Government will consider allowing these individuals to pay their income taxes from the previous year over a longer period of time as this would help to lessen their cash-flow problem. On infrastructure projects, I am happy to note that the Government would be injecting $3.5 billion into the economy to speed up infrastructure projects. However, given the open economy of Singapore, how do we ensure that the benefits of this expenditure and its multiplier effects will stay in Singapore and accrue to Singaporeans? The Government may wish to consider schemes for this to be achieved, all other things being equal. If there is too much leakage out of our economic system, our efforts would have been futile. In the longer term, I would like to suggest some measures. Singapore has become quite an expensive place to do business in, especially for rentals, transport and manpower costs, compared to our neighbouring countries. Moving up the value-added ladder by being more innovative and creative will take some time. In the meantime, the Government should look into more measures to reduce domestic costs within our control so that more of our companies will be able to survive.”
“The Government should seriously consider starting a SME bank, or a development bank, which has been raised by the SCI at a press conference a few days ago, and also by some of my colleagues in this House. Without a development bank, like what we had in the 60s and 70s, many of the companies that we know of today will not have flourished and succeeded. I am happy to note that the Government will be establishing a micro-loan programme to help very small companies. I will wait for the details to be announced. Next, cash-flow management. I thank the Government for the corporate tax rebates that will certainly help to ease cash flows of companies. To help some companies tide over this period, the Government should allow companies that have corporate tax payments from previous years' profits to defer these or restructure and pay in smaller quantums over a longer period of time. The Government should also allow for tax offset on losses incurred in overseas ventures by local companies. Transport costs. To help companies reduce their transport costs, the Government has reduced petrol excise duty by 5%. This is most welcome. It should also consider removing the ERP charges, except during the peak hours of, say, 8 am to 9 am and 5 pm to 7 pm. I drive into the CBD from time to time during off-peak hours and I do not see any heavy traffic, or traffic jam, at all to justify ERP charges during off-peak hours. With the ERP system in place for some time now, it is also time for the Government to further reduce road taxes, ARF and import duties for cars and other commercial vehicles on a more permanent basis. We are still the most expensive place in the whole world for owning and operating cars and other commercial vehicles, and these all add up to the operating costs of companies.”
“In the longer term, however, the Government should seriously consider reducing the CPF contribution rate from 16% to something lower, say, about 12%. It is a significant saving for employers and will help them to retain more workers and be more competitive in the long term. In the short term, employers of course will take other measures to reduce manpower costs to a level commensurate with the volume of business, such as salary cuts, shorter work week, compulsory no pay leave, and so on. To maintain industrial harmony at the workplace at a time like this, it is important that employers discuss and share their problems and plans with the employees. Second, rental costs. This item is less flexible to adjust unless landlords are prepared to reduce rentals. I welcome the Government's decision to further increase the quantum of property tax rebates. I urge all landlords to pass this saving to all their tenants. Next, financing costs. I am glad to note that DBS bank has taken the lead in reducing its prime rate to 4.5%. I urge other banks to follow suit. Interest rates have remained rather high for some time, despite the substantial lowering of interest rates in the USA since the beginning of this year. More importantly, banks should be more flexible and understanding at this time of crisis and be prepared to restructure loans to help companies to ride out this downturn. In this respect, MAS has influence over the banks and finance companies, and I hope that it will exercise its moral suasion accordingly. For job creation, new companies must mushroom and existing companies must expand. SMEs have difficulty accessing capital at times like this to grow and create jobs.”
“Mr Speaker, Sir, thank you for giving me this opportunity to add my comments. The economic slowdown in the region triggered by the US economic problems took another dive after the 11th September terrorist attacks. Many Singapore companies, especially the SMEs, are hurting badly because this time around, they have lower reserves, having barely recovered from the previous crisis in 1997/1998. Revenues are down as demand for goods and services dries up. The only way for companies out there to survive this severe downturn is to cut costs drastically while waiting for demand to revive. For most companies, the major fixed costs are rental and manpower costs. The Singapore Confederation of Industries, of which I am a Council Member and also Vice-President, came up with a wish-list three days ago. It contains a list of what we feel would be necessary and helpful to companies to survive this downturn. I am happy to note that many of these requests have been taken into consideration in the package announced today. I would like to thank the Government for such a generous and bold package. It has generally met expectations which are high. It has something for almost everybody, from national servicemen to the elderly, from entrepreneurs to retrenched workers. I am sure it will assist many companies in helping them to contain costs and retain as many workers as possible during this trying time. However, I would like to make the following comments and suggestions that the Government may wish to consider further. First, on manpower cost cutting. For many companies, wage cost, including CPF contributions by employers, is one of the biggest cost items. I agree with DPM that the CPF should not be used as a tool for adjustment of short-term labour costs.”
“Mr Speaker, Sir, one of the greatest problems SMEs are facing in this downturn is the sudden decline in orders and decline in revenue and, as a result, some SMEs are not able to get enough cash flow to service the interest. I wonder whether the Government can actually do something to help these companies in the short term service their interest or even some other working capital problems. BG George Yong-Boon Yeo: Mr Speaker, Sir, when times get more difficult, it is natural that interest rates go up for higher-risk loans, and some companies face difficulties getting financing for working capital. The assessment of such risks cannot be done by the Government, cannot be done by PSB. It can only be done by banks and by lenders. Whether or not we can tweak LEFS in such a way as to provide some assistance is something that we can consider, but I need to get my staff to study it more carefully before agreeing to the proposal.”
“Sir, I would like to add my call again for more funds to be set aside for the upgrading of private housing estates and for this programme to be expedited. Last year, only five lucky estates were selected. There are many more old estates that could do with a comprehensive and systematic upgrading programme. As the construction industry has been in a slump for a number of years now, perhaps bringing forward some of these upgrading programmes would also help to boost the construction sector and save money for the Government, as the cost will be lower too. Assoc. Prof. Koo Tsai Kee: Sir, I thank both speakers who have spoken on behalf of their residents. This time last year, the Ministry announced the Estate Upgrading Programme (EUP). I am pleased to announce that this year we will be calling for nominations from the advisers again, after the COS debate, and we will do a selection towards the end of this year and, hopefully, we will be able to announce a second batch of EUP candidates at the end of this year or early next year. The Government has set aside an EUP budget of $40 million, up to the year 2005, and this includes the $18.4 million set aside for batch one EUP. As to whether priority will be given to estates which have predominantly landed property in character, I will ask my staff to consider the criteria.”
“Sir, presently, the HDB's rental programme is meant only for those who are very poor and cannot afford to purchase flats, and also for those waiting in the queue to purchase flats and are eligible for transitional rental flats. I would like to put up a case for HDB to consider renting out flats to young married couples who are eligible for the purchase of flats but have not decided whether to purchase one yet. Their incomes, however, are not low enough to qualify for a rental flat under the existing rules. This group may want to rent one for the following reasons. Firstly, they may not have decided in which location to live in on a long term basis. Secondly, they may be preparing to work or study overseas for a few years before returning home to Singapore. Thirdly, they may need the money to start up and nurture their companies rather than spend it on purchasing a property. Fourthly, they may just be waiting to go straight into the private property market at the appropriate time, rather than be tied down by the 5-year time bar imposed by the HDB. Right now, there is a social stigma attached to the renting of HDB flats. It is associated too much with poverty and low income. If we liberalise the rental scheme and take into consideration this group of young couples, we remove the stigma and meet the needs of many young people at the same time. To prevent abuse, we can have some rules to allow couples to rent up to a maximum of 3-5 years. Older couples can also use the scheme later in life for short periods of time, such as when their flats are being renovated and they need somewhere to live in temporarily, or when their houses are being rebuilt and so on. Sir, I hope the Minister will look into this proposal. 1.30 pm”
“Government is the largest land owner in Singapore. It controls the supply of land and housing through its land sales programme, zoning and plot ratios. It estimates the demand for land and puts up land for sale accordingly. It determines the price indirectly and can decide whether to award or not to award the tenders, depending on the price. In cases when tender prices were considered below market value, tenders were not awarded. My question to the Minister is: how does the URA decide what the market prices should be? Is it not the slate of latest tender prices reflective of the latest market price unless there is collusion among the tenderers? When the bids are high, sometimes even twice the expected market value, the Government always awards the sale. However, when the bids are low, the Government sometimes withholds the award of sale. By so doing, the supply of land to the private developers will be curtailed and the prices of land will be controlled. This is unlike the sale of COEs, when COEs have been sold for even as low as $1. I am not suggesting that land be sold for as low as $1. We can all become property developers then. What I want to ask really and to generate some discussion on is why should there be a difference in the two assets put up for sale by the Government. Both are assets with market values and they can be financed by the banks and other financial institutions. I would like the Minister to comment on this.”
“If so, would the Government compensate those owners affected?”
“In Marina South where we are planning a new downtown, I hope the Government will have enough high-rise residential developments mixed with commercial ones to bring life there at night, so as to bring greater value to these properties built on land reclaimed at great expense. The next issue which has been brought up by my colleague, Dr Teo, is regarding the possible relocation of one of the airports to the southern islands. I support his call. I think if we need to reclaim land to join the islands, if necessary, we should try to do so. This would free up a lot of land for other uses on the mainland. Has the Government considered leasing on a long-term basis some small islands from our neighbours for industrial and recreational uses? That is something that I hope the Government can look into. Building to high density will obviously bring about greater congestion on our roads. We should try and promote more walking and cycling, especially in the new downtown areas, with more connecting paths and walkways. Some of these can be built underground or overhead. Walkways for pedestrians should be covered, if possible. Island-wide, we should build more cycling paths to connect all parks in the island. This would help to promote a healthier lifestyle too. Netherlands is an excellent example for us to follow in this respect. In reviewing the Concept Plan, like, for example, in 1991, I would like to ask the Minister whether we have reduced plot ratios in certain areas downwards. If so, have we ascertained how the reduction in plot areas has impacted the owners of such land financially? Do we compensate them in the same way that we ask for development charges for raising plot ratios? For Concept Plan 21, do we anticipate that we might need to reduce plot ratios in some areas?”
“I would like to join my colleagues in commending the Ministry for its Concept Plan 21 initiative. The Ministry has been successful in getting wide-ranging views and suggestions from all segments of society through its two focus groups and the public forum organised. The discussions and debates have been so comprehensive that we would be hard put to offer new ideas today. What I am going to say today would be more an expression of my views and preferences. I think we all agree that we have to better intensify the use of land for housing, commercial and industrial needs, if we want to support a larger population. The density of plot ratio we can go up to will depend on the height and other constraints. I would like to make a special call for greater density in the prime housing areas, especially within the CBD. We should build higher so that more of our younger population can live in the prime areas and help to bring more life and vibrancy to the city. We should have more residential developments mixed with commercial developments so that our downtown would not be dead at night, as has happened in Shenton Way, Raffles Place and the Marina area. The Marina area is less so because of the hotels and restaurants we have in the area. This move would help to better utilise the facilities and other infrastructure in downtown built at great expense. It would help to boost the retail and restaurant sectors of our economy that currently is still too much centred around Orchard Road area at night. Orchard Road area is so successful, in my view, because of the high number of high-rise condominiums in the surrounding areas of Cairnhill, River Valley, Orchard Boulevard, Stevens Road, and so on.”
“Sir, I thank the Minister for his reply. We look forward to increases to come. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. The sum of $29,360,000 for Head F ordered to stand part of the Main Estimates. The sum of $3,716,700 for Head F ordered to stand part of the Development Estimates. Head P -”
“I hope the Minister will review this sympathetically.”
“Sir, I beg to move, That the sum to be allocated for Head F of the Main Estimates be reduced by $10 in respect of Code FA 1500. Sir, most backbenchers, like myself, are working people. We have to juggle between work in the office, parliamentary work, grassroots work and family. We need support for research and other secretarial duties so that we can discharge our political responsibilities and duties more fully. I am sure you like us to be more active in debating Bills in this House. Ten years ago, allowances for legislative and secretarial assistants were introduced to help backbenchers to employ help. We started with $500 for a legislative assistant and $250 for a secretarial assistant. Since then, the amounts have gone up to $550 and $275 respectively, which is 10% increase in 10 years. This works out to about 1% increase per year. This amount includes the employer's share of CPF which means that the net amount they take home is substantially lower after deduction of CPF. It is difficult to employ anybody with relevant experience with these small sums nowadays. In many Parliaments overseas, I know that MPs get allowances for the full-time employment of two to three aides and assistants. I am not asking for that right now. But I think we can afford a little more so that we can employ some part-time assistants with more experience and quality. It would certainly uplift the quality of our work which seems to be increasing all the time. The volume of our work has increased with the formation of town councils, the GRCs, the Community Development Councils, and so on. We are now even doing charity work as well, that is, fund-raising for charity. I do not know what would be next. But I know that it will not get any lighter.”
“Sir, we are planning for a population of 5.5 million people. We have a population of 4 million today, out of which only 3 million are Singapore citizens. I suppose we could take about another half a million to one million more Singapore citizens. Singapore citizenship is a much sought after commodity. We only need to talk to people from China and India to realise this. Given the limited numbers available, it is understandable that we should be selective in whom we give citizenship to. I would like to ask the Minister if he can tell us what are the key criteria for Singapore citizenship. The process has never been very transparent. At my meet-the-people sessions, I have frequently come across cases that I thought worthy and deserving, but were rejected time after time. Many of these cases involved relationships with Singaporeans, spouses and children born overseas of Singaporeans living in Singapore who have often been rejected for citizenship without reasons being given. Some of these involved Singaporeans who have done their national service and they become bitter over these rejections for their loved ones. In some cases, we lose them all, as they decide to move overseas. I would like the Minister to be more sympathetic in cases involving relatives and loved ones of Singaporeans. Singapore can only be our home if our loved ones are with us. Otherwise, it is as good as telling them all to emigrate. We have given PR and Singapore citizenships to families who have not contributed to Singapore yet. We took them in on their potential. We should review our policies involving Singapore citizens with roots here and have already contributed to the country's progress and prosperity.”
“If you take a look at the Enterprise 50 companies, Sir, a lot of them have gotten to where they are today without financial support from the Government, and it has taken them a long time, many years. Some of them have been in operation for more than 10 years. If they were to become big in the region without financial support from the Government, imagine how long more it will take for them to become a regional company and even a world-class company. I do not think we have this kind of time to wait. So I am suggesting that perhaps the Government should lend them a hand so that they can actually become a world-class company a lot quicker.”
“Sir, before I begin, I would like to say that I am already aware that the Government is providing a lot of assistance schemes and programmes to help the SMEs, through the PSB, EDB and many other Government agencies. But they are given more in the form of technical assistance schemes such as training, consultancy and so on, to help the companies modernise their management, adopt technology and help them to become more productive and efficient. I believe that we have come to a stage today where the SMEs need more than just these. And I am talking about support today by the Government in the form of equity to help them to capitalise better and to grow more aggressively so that they can go into the region. I know that the Government does this already through Temasek Holdings, NSTB, EDBI, and so on. But these are more investments in large companies, large projects, and when they have already succeeded, they start looking at you and putting money into you. At the very start-up stage, we have got Vertex and some start-up funds, venture capital funds, to look at start-up phases. But SMEs are somewhere in-between where they seem to lack financial support from the Government. So this is a gap which I hope the Government would address and try to close. I am not talking about big stakes, I am talking about token stakes of 5% to 10%, and they should leave the management of these companies to the founding entrepreneurs and to professionals employed, so that they will not become a GLC. When they go into the region, they should also not be perceived as a GLC. But, I think when the market knows that there is financial support from the Government in the form of a shareholder, this would help them when they regionalise.”
“I want to clarify that I am not suggesting a bail out of ailing local companies. I am suggesting that the Government look at good SMEs with viable business models and distinct competitive advantages that have not yet obtained access to the stock markets for their capital for expansion. These companies need our support to grow and eventually become world-class. Next, I would like to touch on the CPF top-up scheme. I commend the Government for its unique but nevertheless generous way of sharing our budget surplus. Putting the money directly into the CPF however may not be the best way of doing so because many Singaporeans do not see the money and probably do not even know when the money was credited. If they do not even know or feel it, would they appreciate the handout? Perhaps, the Government should consider giving it in cash, cheque or vouchers for a change. This would also help to boost the economy in a year of uncertainty. The last point I would like to comment on is Edusave. In my view, it is one of the more popular Government initiatives to support procreation and education of our young. However, I still fail to understand why the Government would not extend this to families with four or more children. I am sure the amount involved would not be large. If we want families to have three or more children, we should be consistent in our policies and not discriminate against the fourth or fifth child in such a manner. I hope the Government will review this policy again seriously. With these comments, I support the motion, Sir.”
“I would also like to suggest that we set aside more funds for the upgrading of private housing estates for the benefit of private housing estate residents. Last year, only five private housing estates were selected for upgrading although many qualified under the criteria given. This year, I hope that there will be more such estates selected. The Government has set aside funds to help SMEs through the Productivity and Standards Board and the Economic Development Assistance Scheme. They are given more in the form of technical assistance, training and consulting to help them modernise management, adopt technology and become more productive. These initiatives are good and will continue to be welcome. SMEs, however, need more than just technical assistance and training today. They need some support from the Government too in the form of equity to grow more aggressively. The Government, through Temasek Holdings, the EDB Investments, the National Science and Technology Board and other Government vehicles, takes stakes in our local companies from time to time. However, I notice that many of these investments tend to be in big local companies or big projects. Government venture capital companies, such as Vertex, take stakes in start-ups. There seems to be a gap where the SMEs are. I would like to ask that the Government consider investing more in our SMEs. They need more financial support to go into the region with their existing businesses and to venture into new businesses. The stakes need not be big. They should leave the management of such SMEs to the founding entrepreneurs and professionals employed. The confidence of the market, business associates and customers from such Government support will give them a much better chance to succeed in the region.”
“Of more direct benefit to the SMEs is the new tax exemption scheme that will exempt three-quarters of up to the first $10,000 of a company's chargeable income, and one-half of up to the next $90,000 from corporate tax. It will help the SMEs reinvest their initial profits into the business. I would like to ask the Minister for Finance to consider again the possibility of allowing companies to group their profits or losses for tax purposes. Today, group companies need not be large conglomerates that are usually profitable. Many SMEs today start new companies for new markets or form joint ventures with local partners overseas for new businesses. Property companies are required by law to have a new entity for each project. The new projects are usually not always profitable in the initial years. In fact, those that are not doing well are usually wound up after a few years as the original founders cut their losses. Their cumulative tax losses cannot be utilised unless the companies are bought over by some other companies. The Government should allow such group companies to offset profits of one company with losses from another as long as these companies are subsidiaries of the group. This will lighten the cash flow problems of many companies and encourage them to continue to invest in new markets and go into new businesses. Given that FY2001 would be a more difficult year, I would like to urge the Government to bring forward or speed up more public sector projects to help the private sector. For example, given that our projected budget surplus is still very respectable, we could increase the number of Main and Interim Upgrading projects which will also benefit our HDB dwellers.”
“Sir, I join my colleagues in thanking the Minister for Finance for a very generous Budget this year. It is a Budget aimed at making our companies more competitive and, at the same time, put more disposable income in the pockets of the people. I only have a few comments to make. Last year, Singapore's economic performance was beyond the expectations of many, growing by 9.9%. According to economic statistics disclosed recently, most sectors did better than in 1999, except for the construction sector. Feedback from small and medium-sized enterprises (SMEs) however seem to suggest that 1999 was still very tough for many of them, especially for those who have ventured into the region at the Government's urging and are still not profitable. I do not have statistics to support this assertion as the feedback is mainly anecdotal. Many such SMEs feel that the cost restorations, such as in the employers' share of CPF payments, have come a little bit too fast. This situation was exacerbated by the significant fall in asset values of shares and properties, making many feel even poorer. The outlook for this year is slower growth. This portends an even worse time for the SMEs. Many such companies offer supporting services or products to the Government, the GLCs, MNCs and other large corporations based in Singapore. Many have ventured into the region and some even further afield to look for new markets. Many have been hurt by the untimely downturn in the region. Some are even in need of recapitalisation to survive. In this respect, the Government's reduction in corporate tax rate by 1% to 24.5% is welcome.”
“They feel that $10 million is a fair limit as most of the jobs in town are below $10 million. So, they have set this as the prescribed limit in the first instance. Again, as I have indicated, with experience, if we need to change that, we will do so. Finally, on walls and slabs, I am not sure what exactly Dr Teo means by this, but I will ask the BCA to look into it. As I understand it, in the relevant section, the most important point is that it is the total value of the building works that is relevant. If the total value of the building works exceeds $10 million, then it cannot be handled by individuals. If it is below, it can be done. I presume that walls and slabs will be included in the total cost of the building. I cannot imagine a building being put up without walls and slabs! 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 Mah Bow Tan]. Bill considered in Committee; reported without amendment; read a Third time and passed. REPORT OF THE COMMISSION ON PARLIAMENT STAFF”
“In the light of the Hotel New World disaster and indeed, in a certain way also, because of the Compassvale incident, it is important for us to look at the AC system, to see whether it is still relevant and the recommendation and finding is that it is still relevant. The only point is that we need to refine it a little bit more. While I do agree with Dr Teo that the professionals must take primary responsibility for their work, I must also add that it is incumbent upon the BCA whose mission is to make sure that buildings in Singapore are structurally sound and properly designed not to remove the second level of check. Dr Teo also asked some specific questions about some clauses in the Bill. He mentioned something about the word "appropriate" in new section 10. Basically, what he is asking is why do we need to use the word "appropriate". Essentially, when we use the words "qualified professionals" in the Bill, we can either refer to the structural engineer or, in some cases, we can refer to the architect. The word "appropriate" really allows us to pinpoint the responsibility. In the case of designs, we are looking at the structural engineer who is the appropriate qualified person. Why do we prescribe a limit of $10 million? In my speech I did allude to the fact that, in the case of larger jobs, it is deemed necessary for the Accredited Checker to be able to have access to more resources. It is essentially a matter of how much time you have available and how many assistants you have available to help you to do the checking. Larger jobs require more checking. It is as simple as that. As to whether the limit should be set at $5 million, $10 million or $20 million, BCA made an assessment of the number of jobs that are available in the marketplace.”
“Mr Speaker, Sir, actually I was referring to professional services, like engineers and architects, not the contractors. Mr Mah Bow Tan: Similarly, for professional engineers and architects, if they are registered with the relevant professional boards, then they would be qualified to tender. And when it comes to the awards, it is not a matter of price. There are certain criteria for awarding these contracts to these professionals. Price is one of the factors, but is not the only factor. I think I have answered Mr Lew's questions. I turn now to the questions posed by Dr Teo Ho Pin. Dr Teo makes the general point that the accredited checking system should be changed, that we should not have a second level of check because it would then distract attention from the responsibility of the qualified person who, in this case, would be the structural engineer. He makes the point that professionals should take responsibility for their work and I totally agree with him on this. But having said that, it would be irresponsible of us not to, in the light of experience, have a second level of check. Singapore is not unique in this. We are unique in the sense that we have an AC system, a second person to check the plans. But we are not unique in having a second level of check. There are many countries which have a second level of check. The only difference is that this second level of check is done by the building authorities. So if we were to follow the system, for example, in Hong Kong and UK and some other countries, we would have the Building and Construction Authority (BCA) doing the check rather than an AC. I do not think, and this is the view of the Review Committee, that having the BCA itself check is in any way superior to having the accredited checker do the checking.”
“This is especially important for the design-and-build projects where the contractors take the lead in a construction team which even includes the appointment of a QP and the payment of his fees. This amendment Bill does not seem to address this concern. On a separate but related matter, there is concern from professionals in the construction and building sector that the public sector is relying too much on competitive bidding or lower pricing to select professionals for Government jobs. This method may level down the industry and contribute to shoddy work. The local professionals would like to see selection based more on quality of work and design. I would appreciate it if the Minister can comment on this. With these comments, I support the Bill.”
“Can the Minister tell us how much administrative cost would be involved in requiring such renewals on a yearly basis? Secondly, the new provisions allow individual accredited checkers to check building works below $10 million only. Checking of plans of building works above $10 million can only be given to accredited checking organisations. This assumes that the organisations would have more resources to do higher value added work. This new requirement is of concern to the individual accredited checkers, as it would reduce their business to some extent. My question to the Minister is whether individual accredited checkers have been found to be less able to handle bigger projects than organisations. For example, when we see a doctor or a lawyer, we seldom ask how many partners or directors there are in the company. We base our decision on the professional reputation of that person whom we are employing or seeing. In this amendment Bill, the maximum penalty for the qualified person for breach of duty has been raised from $50,000 and/or a jail term not exceeding 12 months to $100,000. This is double the maximum penalty for breach of duty by the accredited checker, and this is meant to reflect that the primary responsibility of building designs lies with the qualified person and not the accredited checker. In principle, I can understand the rationale for this. I am told by the professionals in this industry that this Bill does not give recognition to the fact that contractors should be held equally responsible. The QP or designer can only be responsible for the design. The contractors should be responsible for the construction. Proper structural design and proper construction are both necessary ingredients for the safety of the building.”
“Mr Speaker, Sir, I rise to support the Building Control (Amendment) Bill. The collapse of the roof at Compassvale School last year was a shock to many of us, as we are known to be very stringent in our building control and regulations. In the aftermath of the incident, we have been told that it was a result of human error: firstly, the design error of the professional engineer; and secondly, the failure of the accredited checker to spot the error. We are told that this is the current system and that this system of the accredited checker checking on the work of the professional engineer is sufficiently stringent. I can agree with that. What we need are competent and diligent professionals who take their jobs seriously and not by adding another layer of checkers. In principle, therefore, I support what the Bill proposes, and that is to ensure that professional engineers and accredited checkers exercise due diligence in their design and checking work. On the measure to require accredited checkers to renew their registration annually or after any period prescribed by the Minister, I think there is a need to balance the desire of control over administrative cost and convenience. The present registration of the accredited checker is for life. This new measure is a drastic change and I am not sure whether it is entirely necessary, given that the Minister today already has the power to deregister any errant accredited checker at any time. I think renewal of registration for everyone in three to five years may be more appropriate and reasonable. Using the same argument, for example, what about doctors and lawyers and other professionals? Do we need to require them to renew their registration simply because one or two of their kind have been negligent?”
“Thus, the Government is not in favour of awarding prestige or acknowledgement scholarship without the scholar making a commitment to serve in the public service. There is already much flexibility in the treatment of Government scholars. First, scholarship bonds have been shortened from six to eight years to now four to six years to keep up with the times. Scholars are now encouraged to pursue a much wider range of disciplines. Many scholarships also allow scholars who meet the criteria to go for postgraduate studies. For example, those who are on SAF, Police or PSC Overseas Merit Scholarships, have a Master's programme worked in as part of their scholarship term as long as they complete their studies in four years. 1.30 pm”
“Participants will have wider latitude to take business and market risks, and to judge the merits of investment proposals for themselves. But there will be absolutely no change in the high standards of professional conduct demanded of financial intermediaries, and in our strict enforcement of rules and laws to prevent unfair practices and false markets. It is not surprising that during the transition from merit- to disclosure-based regimes, some participants will test the limits of what is permitted. But I am confident that after a few salutary test cases, they will discover where the limits lie and the consequences of transgressing these limits, and a new balance will be established. SCHOLARSHIPS 6. Dr Lily Neo asked the Deputy Prime Minister whether the Government will consider giving (i) more varieties of scholarships in terms of varying years of bonding and amount of pecuniary involvement; (ii) prestige or acknowledgement scholarships with no monetary involvement; and (iii) scholarships with flexible terms like deferment of bond service for further postgraduate courses and/or training. BG Lee Hsien Loong: Mr Speaker, Sir, Government scholarship today already vary in terms of the years of bond as well as in the pecuniary amount involved. The number of years of bond associated with the scholarship depends on the type of award and country of study. For PSC, for example, the bond is six years for US and UK; five years for France, Germany, Japan and PRC; and four years for the local scholarships. The amount of sponsorship also varies across countries, depending on the cost of the university education as well as the cost of living. All Government scholarships are given for the purpose of identifying, inducting and grooming talent for the public sector.”
“Nevertheless, in the light of this incident, the Exchange will review whether to prohibit underwriters from subscribing to IPOs that they underwrite, or to impose stronger disclosure requirements where they do subscribe. The Exchange will study practices in other developed markets before deciding on the best approach. MAS has also been looking into the continuing disclosure requirements for companies once they are listed. These requirements are currently only non-statutory SGX listing rules, not legal requirements. They concern the disclosure of material information regarding a company's operations, and any matter that may materially impact its share price. The MAS is studying legislation to give these requirements the force of law. The Government's role in investor education is indirect. MAS works with industry bodies and public associations such as the Exchange, Investment Management Association of Singapore and the Securities Investors Association of Singapore, while introducing programmes to educate the public. The CPF Board also intends to educate its members about the products available under the CPF Investment Schemes. The Government encourages industry efforts at education and will support them with funding from the Financial Sector Development Fund. But the primary responsibility for educating retail investors lies with financial institutions and their representatives, who are in direct contact with their clients. Shifting from a merit-based regime of securities regulation to a more liberal, disclosure-based regime is a process that takes time. Investors, listed companies, and financial institutions need to learn how the new regime works.”
“The MAS, having carefully studied the text of the announcement published in the Straits Times on 4th August 2000 by UOB Asia, the text of the statement issued by the Singapore Exchange on 11th August and the statement issued by UOB Asia on 14th August has formed the view that the 4th August announcement was sufficiently misleading to the ordinary investor to justify an investigation into whether an offence had been committed under the Securities Industry Act, in particular section 99. This section makes it an offence for any person knowingly to make a false or misleading statement in a material particular that is likely to induce the sale or purchase of securities by other persons or is likely to have an effect in maintaining the market price of securities. Accordingly, the MAS has referred the matter to CAD for investigation. Issue managers are professional advisors. If they fail to discharge their duties to the highest standards of care, competence and responsibility, especially after being expressly instructed by the Exchange, then they must face the consequences. The problem in the eWOS case was a deficiency in professional judgement and conduct, rather than a shortcoming of the rules and regulations. Such conduct would have been unacceptable even under our previous merit-based regulatory approach, when companies seeking an IPO were screened on their commercial merits. High professional standards are all the more important under a disclosure-based regime, where investors need full information to evaluate what is on offer. The Exchange cannot create explicit rules to cover every scenario, or to pre-empt all professional misjudgements.”
“Mrs Lim Hwee Hua asked the Deputy Prime Minister, in light of the recent unsatisfactory handling of the eWOS initial public offer, if the Government will (i) ensure that the public has access to minimum disclosure standards for future IPOs and (ii) intensify public education efforts. BG Lee Hsien Loong: Mr Speaker, Sir, I have a long answer but I will try and finish it within six minutes. The unsatisfactory handling of the eWorld of Sports.com Limited's initial public offering was the result of a failure to make full and proper disclosure. Although UOB Asia Ltd did disclose United Overseas Bank Ltd's subscription of 10 million eWOS shares under the public tranche, it failed to distinguish these shares from those that UOB was absorbing as underwriter. The 1.3 times public subscription figure that was disclosed was misleading. UOB Asia also failed to disclose that 1 million shares under the public tranche had been allocated to GK Goh Securities, who was the co-underwriter. The Exchange had reprimanded UOB Asia for falling short of the high standards of disclosure that the Exchange expects of issue managers, and is essential to foster a fair and transparent market. Separately, the MAS has stated that it reviews all such cases for possible infringements of the Securities Industry Act. It is an offence to create a false or misleading appearance in the market for a share counter.”
“Sometimes, the contrary, because then, they may find out something is wrong with the company. Or knowing that there is a civil servant on the board, the Government may be doubly cautious not to make an exception or exercise discretion when otherwise it might have done so. These are issues which we have to work out. We have to take the steps very carefully because we have a very strong reputation to uphold. The integrity of the civil service and the ethos of the civil servants - that they are in the Government and that is their primary job. There are other things which they can do and which we think is good for them to do, and we make arrangements, but do not forget where their primary job is. I think we want to preserve that. But if you are in a research institute and you have developed a patent, or got a new idea, or some new protein or drug, and you want to go and start up a company and profit from this, but we say that you cannot do that, then the only people who are going to work in research institutes are the ones who are not going to have ideas. Because the ones who have ideas will be off on their own, and there are many other places in the world where these arrangements have been made and there are opportunities to do it, including universities like MIT, Harvard, Stanford, Cambridge or Oxford, which also have been trying to find the right interface between where the university stands and where the private sector begins. So we have to find the right form. I assure you we will try and do it very carefully. INITIAL PUBLIC OFFERS (Minimum disclosure standards) 5.”
“Sir, there may be no conflict of interest where the individual civil servant is concerned, but where the companies are concerned, there is a perception in the private sector that such companies with senior civil servants on the board have an unfair advantage over the other companies. How do you address this concern of the private companies without the privilege of having senior civil servants on the board? BG Lee Hsien Loong: Mr Speaker, Sir, first, we must make up our mind whether there is a problem and then decide how to deal with it if there is one. If there is not one, whether there is a perception and whether there is ground for it or not. It is not a new thing for civil servants to serve on company boards. They have done it for GLCs for many years - DBS, SIA, Sembawang, Keppel. And frankly, some of these companies would not have been built up had there not been very strong and effective civil servants, like Joe Pillay in SIA, to run these companies and build them up into what they are today. We are now in a new position. We could continue the old scheme where we make these arrangements for GLCs and then say, "For non-GLCs, you are beyond the pale." Or we have to review the position and say, "Well, it is a new situation. Whether you are a GLC or not, it is not a crucial distinction." The crucial distinction is: is it going to make a difference to Singapore? Is it in the national interest? And is there any conflict of interest when the officer serves on the board? Does he make a contribution? If so, then we work out schemes which enable us to do this and maintain the integrity of the civil service. And people in Singapore know that if you have a civil servant on the board, you do not get favours done.”
“Sir, there have been a lot of discussions in the papers about compulsory acquisition of flats. Does the Minister not think that the compulsory acquisition of a HDB flat is a bit too severe, because it punishes the family members who are innocent, rather than the offender himself? He has also said that he would review the range of penalties. Has the review been completed?”
“I would like to ask how do you treat somebody who is an executive initially at the time the scheme is introduced, but subsequently becomes non-executive. Does he still qualify after he becomes non-executive?”
“Sir, on the question regarding the Director of Primary Production, I think I should make myself a bit clearer because under clause 46 of the Bill, it says that any reference made to this person is actually a reference to the Director-General, Agri-food and Veterinary Services. Under the new statutory board, there is actually the position of the Chief Executive. But today, if the Director of Primary Production is the Chief Executive of a department, my question is: is he, under this new title, also the Chief Executive of the new statutory board?”
“" The Bill does not seem to address any of its structuring, rationalisation and possible redundancies that may occur in the process. I would like to ask the Minister whether there will be such redundancies and, if so, how will these be addressed by the Authority. Clause 39 regarding powers of enforcement states that any person found guilty of an offence shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding six months or to both. My question to the Minister is: have these powers of enforcement been increased as a result of the establishment of the Authority or have they remained the same? In clause 46 there is a reference made to the Director of Primary Production Department and it says that it should be read as Director-General of Agri-food and Veterinary Services. Actually, I am a bit confused whether this job is the same job as the Chief Executive of the Authority or will this be a different person. I am not very clear about this. This is not stated very clearly in the Bill.”
“Sir, I support the Agri-food and Veterinary Authority Bill which basically establishes a statutory board for the current Primary Production Department. As we all know, a statutory board gives greater autonomy to the Authority, both in the employment and deployment of staff and greater speed and effectiveness in carrying out its functions. Even as a department today of the MND, it is already doing a good job, as can be seen in the way it has dealt with several crises recently, for example, in the Mad Cow Disease, the chicken flu and the pig diseases of Malaysia. If anything, I think the PPD has always been very fast and too conservative in the way they have dealt with food crisis. In this case, I am not complaining and I think we should continue to remain conservative whether the PPD remains a Government department or statutory board. The PPD has always been seen more as a regulator than as a promoter of domestic food production. Given our limited land resources, it is understandable that most of our food products would be imported. However, with new technology, new food production may take up a lot less space or land. With the PPD becoming a statutory board, I would like to urge the new Authority to be more proactive and take more initiatives to make Singapore more self-sufficient in our food supplies, in addition to its role as a regulator. I would like to touch on a few specifics of the Bill. In clause 31 regarding the transfer of employees, it states here that "all persons employed immediately before that day . shall be transferred to the service of the Authority on terms no less favourable than those enjoyed by them immediately prior to their transfer.”
“Sir, although some of the questions have not been asked yet, I would like to thank the Minister, the Minister of State and the Senior Parliamentary Secretary for their attempts to answer as many questions as possible and for the comprehensive replies. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“Sir, I shall be very brief on this amendment on the upgrading of private estates as we are running out of time. This subject has been answered to some extent recently when my colleague, Mr Heng Chiang Meng, filed a Question in Parliament last week. I would just like to add the following questions. What is the budget set aside for this purpose? And is it all held under the budget of the Ministry of National Development? How would the pilot projects be selected? What criteria will be used in the selection? Would the MPs, with a lot of private housing estates in their constituencies, have some influence in the selection process? How would the Government prioritise the selection of items to upgrade? I would like to suggest that the age of the housing estates be one key factor that should be taken into consideration.”
“The HDB upgrading programme has been generally well received by residents. Most residents vote for this programme, pay their share of upgrading cost, are prepared to put up with the inconvenience during the upgrading, and are happy with the outcome when the upgrading is finished. Many see their flat values rise significantly after upgrading. The only source of unhappiness and contention, especially during the upgrading, is the selection of the space-adding item within their flat and the choice of finishing of their flat. Two of my blocks in my constituency had their main upgrading not too long ago. I must confess that the upgrading within their flats caused quite a few problems, with differing views on the space adding items, choice of tiles, leakage problems and some lack of cooperation on the part of residents who refused entry to contractors to work in their flats for whatever reasons. A few felt that they were not given what they wanted despite having to pay for them. This brings me to the question whether the HDB should be involved in the upgrading of the interior of HDB flats during the Main Upgrading Programme. Why do we not just focus on the upgrading of the common areas at the precinct and leave the renovation of the inside of flats to the owners themselves? Different households are at different stages of their lives and have different needs and different capacities and resources to pay for them. We should leave the upgrading of the interior of flats to the owners to allow them to maximise their economic utility and also help speed up the upgrading process. In my view, the main upgrading process now takes far too long, in fact, long enough for you to pull down the entire block and rebuild. I hope the Minister will review this policy.”
“Sir, we have a public housing scheme that is the most comprehensive in the world, catering to 82% of the population. This means that even the upper-middle income people live in public housing. You would think that this group of people would appreciate and thank the Government for the privilege of being able to live in public housing at subsidised prices despite their income levels. Yet, we know that this is not so and they all aspire to move to private housing at the earliest opportunity, whether in landed properties or condominiums. This brings me to the issue of our public housing policy. The question is: should we continue to cater to the needs of upper-middle income Singaporeans through premium HDB flats and executive condominiums? I think no matter what name we give it, and whatever finishing we put on it, it is still deemed a HDB flat and is regarded as public housing. In fact, such upper-middle income Singaporeans, who are usually younger professionals, are a bit embarrassed and apologetic when they disclose that they still live in HDB flats. I would like to suggest that the Government review this policy of building premium HDB flats and Executive Condominiums and let the private sector assume a bigger role for this segment of the market. We could release more land to the private sector for this purpose so as to keep the lower end of the private housing market affordable and provide a more gradual and seamless transaction from public housing to private housing. When we provide so much public housing, we are unwittingly creating an over dependency syndrome on the Government, which will be an obstacle to the promotion of greater entrepreneurship and innovation. I hope the Government will review this policy seriously.”
“I know that the CIDB, and now the BCA, has been working hard to improve the productivity and quality in the construction sector. It has been 15 years since we started the CIDB. I would like to ask the Minister how the productivity of our construction sector compares with that of the developed countries, like USA, Germany, Australia and Japan. I am given to understand that it still takes a lot longer to build a building in Singapore than in some of these countries. Why is that so? Are our workers still less productive because we are still over-reliant upon foreign workers who are mainly unskilled? What are our plans to further improve their productivity? How many foreign workers in the construction industry do we have and what is their average length of stay in Singapore? Are we wasting resources training them only to lose them quickly when they return home? Are we able to get architects and engineers to come up with more buildable designs that will enhance productivity in the construction sector?”
“In future tenders of sites, we should have more mixed use or white sites. Hotels can be built with retail and commercial outlets on top of MRT stations, as in the case of Raffles City, which is a prime example of mixed use. We should also allow residential units and hotels to be built on the same plots of land. The JTC and the HDB should relax their strict rules on the use of industrial land for industrial/administration purposes and for subletting. The way we work in the future will be changed drastically by the use of computers, the Internet and e-commerce. We may be able to work more from home and at all hours as the world becomes more inter-connected. We should also liberalise the use of the home for work so that more people, whether housewives or others can work and look after their children at the same time. This would also help to solve the problems of over-reliance on foreign maids. In order to support this for the future, we have to wire up all our buildings in the planning and building phases, not just for private, but also for public housing. I am sure that many people will have many ideas to contribute towards the Concept Plan 2001. I hope the Government will consult widely with the people and the business community in drawing up the Plan.”
“Can we not do the same for foreign workers, not by law, but through planning and spreading out the building of recreational and retail facilities that cater to their needs? With competing demands for the use of land, how do we decide how much should be set aside for housing, how much for commercial use and how much for industrial use? Whatever the ratio or percentage we come up with, I think there is no running away from the need to build on our land more intensively. For housing, the Government has increased the plot ratios in many areas already, leading to a deluge of selective en bloc sales and windfall profits for many lately. I urge the Government to continue to allow the building of residential housing to a much greater density and plot ratio in prime areas so that more of our residents can live in prime areas. We should also build more intensively in the light industrial parks and the science hubs. If you take a drive through our science park, you will notice that it resembles the Silicon Valley area. By that, I mean it is mainly low rise, well spread out and beautifully landscaped with open-air car parks everywhere. In USA, they have plenty of land, hence building low rise is logical and perhaps more economical. In Singapore, as we are short of land, I think we should start planning for our science parks and other light industrial parks to be built to a higher plot ratio. The same policy should apply to our educational belts as well. Our universities and polytechnics still use a lot of land, with many open-air car parks. In their next phase of expansion, I think we should encourage them to better intensify the use of their existing premises. Co-location of facilities is another principle we should adopt to continue to encourage the better use of our land.”
“Sir, I beg to move, That the total sum to be allocated for Head U of the Main Estimates be reduced by $100. Singapore is a small nation with a limited supply of land. As we grow economically, there is competing demand for the use of our limited land resources. Singapore is renowned internationally as a very well planned and organised city. This did not come about by chance, but through forward planning and the political will to execute the plan. The last concept plan was done in 1991. I understand that there will be one done for Year 2001, called Concept Plan 2001. I would like to ask the Minister what are the main planning criteria which he will use in formulating concept Plan 2001. We have a current population of 3.9 million people. What will be the targeted population in 10 years' time? On what basis is this number arrived at? With the emphasis now on recruiting foreign talent, what will be the targeted ratio between foreign workers and the indigenous workforce? How can we meet the housing needs of both local and foreign workers? Is the Minister satisfied with the accommodation provided for foreign workers? Today, if you go downtown on a Sunday, you will see the Filipina domestic workers gathered at the Botanic Gardens or along Orchard Road, the Indian workers in Little India and the Thai workers along Beach Road. In 10 years' time, will we continue to see these ethnic enclaves in our main commercial districts? Or should we not start working towards a better distribution, and perhaps, even integration of our different ethnic foreign workers to different parts of Singapore, to the different HDB commercial areas, for example? We have this for public housing already where we impose a quota for each ethnic household in the HDB estates.”
“I urge the Minister to consider putting all assets together for the purpose of estate duty exemption. I also support the plan to introduce enhanced tax treatment for stock options. While the study on the details is still underway, I would like to ask that tax concessions be considered for companies providing supporting services to such start-up companies and who are paid in shares rather than in cash. This is getting increasingly common as lawyers, accountants, auditors, consultants and financial advisers provide services for such start-up companies and accept shares in lieu of cash payment. The shares are of value only if the start-up succeeds and goes for IPO, otherwise these professionals end up working for free. The tax treatment should take the risks of such professionals into consideration. With these comments, I support the motion.”
“Can the Minister give us some indication on how much funds of Singaporeans are parked overseas and the estimated tax loss to us as a result? Is there any measure the Minister plans to take to encourage Singaporeans to repatriate some of these funds home? The property tax rebate on commercial and industrial properties of 55% will be extended for one more year at a reduced rebate of 25% only. Given the weak state of the rental market, I urge the Minister to consider extending the rebate at 55% as before for one more year. This will be one way to help the construction sector recover more quickly. Similarly, the tax exemption on property tax for land under development could have been extended for another year or so to encourage construction. I am heartened by the Government's initiative to give tax concessions to inventors and innovators and to extend such incentives to cover the non-manufacturing sector. To encourage entrepreneurship, the Government should consider giving some tax incentives to start-up companies per se, whether they have inventions or innovations that are protectable. Perhaps, all start-up companies should be given a reduced corporate tax rate of three years to help them to reinvest and grow the business faster. Currently, the Government is giving estate duty exemption for residential properties up to $9 million and only $600,000 for all other dutiable assets. I have spoken up on this before and I still find that this law encourages over consumption in residential properties that are not productive assets. I still maintain that other assets such as stocks and shares should be given the same exemption, especially now that we are encouraging more Singaporeans to be entrepreneurs, so they would be owning shares rather than residential properties.”
“The Minister has said that the construction and business services sectors have not recovered from the recession. Can we not do more in terms of tax concessions for these two sectors to help speed up their recovery? I support the Supplementary Retirement Scheme to encourage Singaporeans to supplement their CPF savings by contributing voluntarily to private funds over and above their CPF savings. Since there is already a percentage cap based on the employee's salary, I would like to ask the Minister to make the contributions totally tax exempt. As it stands, the SRS only defers the payment of tax to the time the savings are withdrawn. The system may be inequitable depending on the marginal tax rate of the contributor at the time of contribution, and again, at the time of withdrawal. Those who are successful and continue to work way past the age of withdrawal of the funds may end up paying more taxes in the end than if they were to save the money on their own. I hope the Minister will take this point into consideration in formulating the details of the scheme. I laud the Government for bringing down the corporate tax rate by 0.5% to 25.5%. However, I am a bit puzzled why the maximum personal income tax rate for the individual is not brought down in tandem. There is now a gap of 2.5 percentage points between the top personal income tax rate and the corporate tax rate. Will this not encourage the very wealthy and financially savvy to exploit the difference? At 25.5%, we are also still about 9.5% higher than Hong Kong. I know that many high net worth individuals and even companies park most of their funds in lower tax regimes like Hong Kong.”