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 Amendment, by leave, withdrawn.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?”
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“5% for this year. It is a balanced budget in that it attempts to retain certain tax concessions given away during the recession, reduce some in sectors that have not fully recovered and remove others totally in sectors that are deemed to be growing. This budget has also addressed the need to be competitive globally, especially in the financial sector and the promotion of technopreneurship in Singapore. At the same time, the budget also addresses the need to look after our elderly relatives. Although the economy has recovered, achieving a respectable 5.4% last year, the growth is not even across all the industries. There is concern in sectors that are lagging behind, mainly construction, business services and small and medium-sized enterprises. They fear that the stock markets may have moved ahead of fundamentals and misled the Government into removing or restoring tax rebates and concessions a little bit too early. Let me say that my feedback on this is based on anecdotal evidence through informal conversations with business people from SMEs, and not from any formal surveys or studies conducted. Let me now move to the specifics of the budget. In Part II, page 5 of the Budget Statement, it is stated that the Development Expenditure includes a provision of almost $1 billion for new priority projects that may materialise in the course of FY 2000. I would like to ask the Finance Minister whether we always make such provisions, which is a large amount. What are some of the priority projects that may arise, or have arisen in the past, that require the use of such provisions? Are these provisions responsible for some of the actual budget surpluses over forecast that we get at the end of every fiscal year?”
“Mr Speaker, Sir, I rise to support the motion standing in the name of the Minister for Finance. This recession that we have just emerged from reminds me in many ways of the recession we had between 1986 and 1987. Firstly, it was short and we seemed to have recovered even before the full impact was felt. Secondly, the Government was quick to take measures to cut costs, improve productivity and help businesses look for new markets further from the region affected by the downturn. Thirdly, the cost cutting measures, especially the reduction in CPF contributions by the employers, were fully supported by the trade unions again. The speed with which we have recovered ahead of our neighbouring countries reflects several inherent strengths that have often been taken for granted. These are: Firstly, an honest, stable, decisive and competent Government. Secondly, an enlightened trade union body with bold leaders and supportive members and workers. Thirdly, a sound banking and financial system. Fourthly, many years of conservative budgeting resulting in healthy cumulative financial reserves that are able to tide us over periods of recessions; and, Fifthly, business people with the drive and tenacity to innovate and think of new ways of doing business. It is remarkable that even in a recession year in 1999, we were able to accumulate reserves of about $3.2 billion. The Minister has given the reasons for it but I do not think we are surprised any more because in the last 12 years since I have been in Parliament, the actual surplus has always been a few billion dollars more than budgeted, whether in a recession or periods of economic growth. This year's budget reflects the unexpected economic recovery last year, with a growth rate of 5.4% and forecasted growth of between 4.5% and 6.”
“I would like to touch on the issue once again of the upgrading of older private residential housing estates. I have made this call many times and I am glad that the Ministry is planning to look into this object more seriously. Many older private housing estates do not have playgrounds, parks or the LRT in the vicinity. Many older folks living there cannot find the money to pay for the upgrading of their old condominium common areas. Many of them are retired or semi-retired. I would like to ask the Government to reconsider allowing the use of their CPF, up to a certain limit, for the payment of such upgrading costs. The reassessment of the new and higher annual values should also be deferred for a few years so as not to deter such upgrading. If we do not give private housing estates enough incentives, very soon some of these may turn into slums. Nationally, the Government should continue to look into improving the quality lifestyle of our residents. I hope they can speed up on the building of park connectors, walkways and bicycle and jogging paths to make living in Singapore more enjoyable. I would like to urge that playgrounds be built in national parks, including the Botanic Gardens for people to enjoy and use. Some parks such as the Chinese and Japanese Gardens are not well utilised because they impose entrance fees. I would like to ask the Government to consider opening such parks free of charge to all residents. With these comments, I support the motion.”
“I would now like to touch on some issues related to the Addendum of the Ministry of National Development. I am pleased to note that there will be a review of the Concept Plan to be completed by 2001. During this review, I hope the Ministry will obtain feedback and consult the industry players, members of the public as well as the GPC for National Development. In land scarce Singapore, I fully support the greater intensified use of land, whether industrial, commercial or residential. In fact, in the prime residential areas, I have always urged the Government to allow the developers to build to a much higher density so that more of our people can enjoy living in prime areas. In the Concept Plan, when use of land can be increased to a higher plot ratio, there are windfall profits to be made. More of such windfall profits should accrue to the State than to individuals. Development charges should therefore be adjusted accordingly. A new downtown will be developed in Marina South. As we are still in the planning stage, I would encourage the Government to tap on the expertise of private architects for ideas. I urge the Government to incorporate more residential developments so as to bring back more vibrancy and life to the city centre after working hours. There should be more bicycle lanes and pedestrian walkways to make other less pollutive and healthier modes of transportation more convenient for people working and living there. The Government may also wish to consider allowing water-based facilities and activities to be conducted in the Marina South waterfront, which Members can see in Hawaii. It should be exciting to be able to fully utilise our waterfront not just for commercial use, but also recreational.”
“My main concerns are in the areas of ownership of such financial institutions. Although it is wise to invite and welcome foreign ownership, whether through acquisitions or mergers, of our financial institutions, I feel that we should still require the Singaporean shareholders to retain majority control of such financial institutions. There is no doubt that foreign ownership, especially by big, international and progressive institutions, would benefit us, as they bring not only their international networking and business clientele but also their latest financial products and innovations. I welcome their foreign talents too, provided there is a systematic process for such foreign talents to transfer their expertise, skills and knowledge to the locals over a period of time. However, I believe that the ultimate majority control should remain in the hands of Singaporeans so that we would have a better control over our financial system. It would be a sad day indeed if all Singaporeans end up working for foreign financial institutions. The Singapore economy is a small economy and our biggest financial institutions are small by world standards. As we all know, many US Fortune 500 companies have market capitalisations that are larger than Singapore's gross domestic product. It is therefore very easy for large financial institutions to take control of us, if our regulators allow it. I would like to ask that despite the liberalisation of the financial sector which I support, the Government should continue to keep the majority control of Singapore's financial institutions in the hands of Singaporeans. The sense and pride of ownership is one of the social glue that will bind Singaporeans to Singapore.”
“Those whose parents cannot afford it will be handicapped. I would like to request that the Government allow the use of Edusave funds of the children to be used for the purchase of computers for home use. I believe that this use of the Edusave funds will be as important as using it for the enhancement programmes in the schools. Some studies have shown that computers and IT have actually widened the gap between the haves and the have-nots, because the have-nots cannot afford computers and computer training to compete in this global age of IT. We should try our best to narrow this gap and help the poorer families to own computers for the benefit of their children. IT is becoming a big industry, especially in the United States of America. All the new multi-billionaires there in the last five years are in the IT industry. With the Internet, IT businesses transcend borders and the world becomes our marketplace. It is appropriate therefore that the Government should support IT companies in Singapore and help them to grow and build a global business. Hence, I commend the Government for setting aside money to nurture and build a critical mass of intellectual property-based enterprises in Singapore. The next subject is regarding the restructuring of the financial sector. I am pleased to note that the MAS will create a more conducive regulatory environment and actively promote the financial sector. In particular, I support the five-year liberalisation programme for domestic banking sector to encourage the development and upgrading of local banks. I am also happy to note that the Government plans to develop Singapore as a premier insurance centre. At this point, I would like to declare my interest as a director of a local insurance company.”
“He did not understand why, neither did I when he asked me. The teacher wanted the words "bring back to consciousness". How can we encourage creativity if our teachers are so rigid in the way they mark? The word "resuscitate" may be a bigger word than "revive", but it certainly is not wrong. I do not mean to run down non-graduate teachers in the primary schools. Some non-graduate teachers I know of are very good too. I know that it would be too expensive and probably impossible to have all graduate teachers in the early primary schools for our children. Perhaps the Ministry may want to consider having one or two senior subject teachers in each standard or school as a point of reference for other teachers to refer to in the event of ambiguities and as a standard bearer. Mathematics papers today are a test of the children's English. Unfortunately, sometimes the problems are so badly phrased that I myself had difficulties trying to understand the problem, let alone the children. Today, we are encouraging our civil servants, and everybody else for that matter, to write directly, concisely and clearly. This should also apply to teachers who set examination papers. Teachers should avoid using double negatives, for example, when they set papers, and other ambiguous language when setting mathematics and other questions. It would help our children to be more focused on the subject matter than worry about the language and their understanding of the problem. I am delighted that the Government will equip the schools with one computer for every two students in the Information Technology Masterplan. Students, however, do not just learn in school. They follow up their learning at home. Students from better off families will have computers at home.”
“However, I feel that the Government should slowly go one step further, or backwards, by playing a bigger role in pre-primary education of our young children. Studies have shown that inculcating a good foundation in the languages and mathematics can start even earlier than Primary One. Children from richer families attend private nurseries and kindergartens that give them a headstart in this area. The quality of pre-primary education for the masses varies vastly. Many young children start Primary One, not on a level playing field, but with differing exposure and levels of skills, both verbal and analytical. I know the Government has responded to this issue before by stating that it would prefer to leave this aspect of our children's education to the private sector. The Minister for Education has also just spoken again on this subject. However, I feel that as our society progresses, and we can afford it, I urge the Government to reconsider its role in this stage of foundation building for our children. I am pleased to note that the Ministry of Education has decided to be more involved in pre-school education, by investing in curriculum design and teacher training, conducting research and tightening regulations. It is a step in the right direction. Secondly, I notice that many of our teachers in primary schools are not graduates, especially for the English language, which is the foundation for other subjects, even Mathematics. Teaching our young children in school proper English is extremely important. If they learn to pronounce words wrongly in their early years, it will take an even longer time to unlearn them. Recently, I was looking through the English work of my son. He was asked to give the meaning of "revive". So he wrote, "resuscitate" and was marked wrong.”
“As the economy begins to turn around today, the Government and employers should bear this in mind and find an appropriate time to reciprocate. The Government has suggested a restoration of about 2% of the employer's CPF contribution early next year. Some employers whose businesses have not recovered yet are naturally concerned about the early restoration. They are afraid that this would affect their turn-around. My own view on this is that the restoration should be a part of the recommended wage increase for next year. Companies that do well should be encouraged, and also be given the flexibility to pay more to workers in the form of a variable component. There are many challenges ahead as we recover. We will continue to face more and keener competition, not just from low-cost countries in this region, but even from other low-cost countries in other continents further away. We have to work on improving relations with our neighbours as our economies are interdependent. Political problems with our neighbours can distract us from our main task at hand of economic growth and social bonding of the people. The Government has identified several areas for us to focus on, to better compete in an increasingly global world. I shall just touch on two of these in greater depth. The first one is on people development. Given our lack of natural resources, there is no denying that people development will be the most important focus for us if we want to stay ahead of the competition. The Government has always regarded the 10 years of primary and secondary education as the period to provide a firm foundation for further education for our children. I support the initiatives to revise the curriculum to encourage more creativity.”
“Mr Deputy Speaker, Sir, I rise to join my colleague, Mr Davinder Singh, in thanking the President for his Address to Parliament last Monday. A lot has happened since we opened the First Session of this Parliament. Compared to our neighbouring countries, we have weathered the crisis much better than they have. This is not to say that we have not had our fair share of problems, such as falling demand and asset values, over gearing by companies and businessmen in their personal capacities leading to cash flow problems, over capacities in production facilities leading to retrenchments of workers and other cost cutting measures. We are much more resilient because of the sound financial and economic systems we had painfully put in place over the years. We also have a much stronger tripartite relationship between the workers, employers and the Government. Led by enlightened union leaders, the Government could implement a cost cutting package that could minimise job losses and help businesses to turn around more quickly. Many of us have taken the goodwill and cooperation of the unions for granted. It need not be so and, in fact, it is not the natural order of things. We can see this from the numerous labour disputes happening frequently world-wide. Our harmonious industrial relationship is a result of many decades of relationship building between the Government, the employers and the unions and workers. In fact, President Nathan himself spent a bit of time with the unions in the 60s. And many MPs have also spent a stint in the labour unions as well to help to build this tripartite relationship. In better economic times, the Government and employers keep their faith and share the good results with the workers.”
“I thank the Minister and the Parliamentary Secretary for their replies and seek leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“There is a tendency today for many Government contracts to be tendered out in large amounts of more than $100 million. This is disadvantageous to small and medium-sized contractors who are mostly local. The big lucrative contracts tend to be won by the foreign contractors and the local contractors then become the sub-contractors. In this period of recession, there is an urgent need to assist our local indigenous contractors and help them to tide over this downturn. The Government could do this by tendering out contracts in smaller amounts without sacrificing efficiency and lower cost. I hope that the Minister will look into this with the aim of giving local contractors more opportunities to tender for Government projects.”
“Every year, the Government has set aside a huge budget for the Main and Interim Upgrading Programmes of the HDB estates. For FY 1999 the amount is $413 million. Private housing residents are feeling a bit left out in this upgrading exercise. Many feel that they pay high taxes. Yet, when it comes to the provision of infrastructural services for private housing estates, they are asked to pay again. Let me give Members examples of how residents feel about what the Government's role should be in this area. First is regarding the re-laying of Singapore Power gas pipes. As you know, we have been told that when the pipes reach about 25 years old, it is not safe to continue using these pipes. They have to be abandoned and new pipes have to be re-laid if the residents want to continue using town gas. Again, here, the households have been asked to pay a few thousand dollars. Otherwise, if they do not contribute their share, they would have to use bottled gas. The next area is regarding cable TV. In many private housing estates today, they have been told that if they want to subscribe to cable TV, they are asked again to pay a few thousand dollars. For bungalows, it is as high as about $6,000. For smaller housing units, it is about $2,000 to $3,000. Here, again, the residents feel that this is really infrastructural and should be supported by the Government, if not fully, at least partially. So I hope the Minister will look again at this issue.”
“Executive Condominiums were introduced at the height of the property boom when the "sandwiched" class could not afford private apartments. At the same time, they were not qualified to apply for HDB flats or Executive flats because of the income ceiling. The Executive Condominiums served a useful role at that time. Since the decline of the private residential property market, the lower end of the private condominium market has become very affordable and already provides the next logical level of upgrade for HDB dwellers. Is there any need therefore for Executive Condominiums today? Besides, I believe that the Government should confine itself to providing basic housing for the masses and leave the supply of the more up-market ones to the private sector. Will the Minister tell us whether there is a review of the role of Executive Condominiums and, if so, whether there is any plan to continue building such Executive Condominiums?”
“The HDB studio apartment scheme is a new scheme that was announced in November 1997, and subsequently a pilot project was launched in March last year. I would like to ask the Minister how well received the scheme has been; how is the price fixed, and would it be lowered since the property market has declined substantially since the scheme was first announced; and how many more studio apartments would be released in a year.”
“Although I believe in a free market, especially with regard to prices of private properties, I also believe that the Government has a certain responsibility to regulate and ensure that the market operates smoothly and efficiently. A market is only perfect if every player has access to perfect information. Recent events highlighted in the newspapers on the confusion arising from the interchangeable use of the two terms - "built in" and "built up" - is an example of imperfect information which may lead to market failure. Some developers and marketing agents have compounded the problem by freely interchanging the use of the two terms. The Government has been thus far silent on the matter. I would like to ask the Minister whether the Ministry intends to standardise the use of these two terms so as to remove all ambiguities from their use in market brochures. The other issue which I would like to raise is with regard to the legal liabilities of purchasers when they default at different stages of the legal completion process. Here again, there seems to be some differences in the understanding or interpretation of the legal provisions governing property transactions. I think the Government should, through public education or otherwise, inform all prospective purchasers about their legal obligations. The amount of money involved in property transactions is very high and buyers should know what they are committing themselves to before they enter any transaction.”
“It is only fair that the Government intervenes when the property goes up and when the property goes down, it should see that it does not go down to such a state that it will affect the economy. Sir, we are proud of the Government's record that it has built houses through the Housing and Development Board. But there are certain sectors of the community that need private houses and their need has to be planned and looked after as well. Sir, because of the economic recession, people are very cautious as to how they are going to spend. Even those who have the money tend to be very cautious and this can be very counterproductive. If there is not enough money in the economy, it will be self-defeating because it is important, especially for the retail sector, to have money in the economy. We have to see how we can pump some money into the economy so that the retail sector will not be affected because many people tell me that some of them are having such a hard and difficult time. They find it very difficult to keep their business going. Sir, our tourist sector is also affected. It is very important for us to see how this area is not affected any further. Our hotels and restaurants are all tied up with this sector. It is very important for us because tourists are not going to our neighbouring countries. As a result of that, we are also affected. Sir, in conclusion, I would like to repeat that, if there should be a need in future, the Government should be prepared to draw on its reserves. I am not asking that we withdraw everything that we have kept. If there is a necessity, we should be prepared to draw on the reserves and help our people.”
“It is the responsibility of the community and the people as well to help those who are going through this difficult period. But, eventually, the Government must take the leadership. Once the Government takes the leadership, the people themselves will follow through. Sir, as my earlier colleague, Dr Tan Cheng Bock, has pointed out, the situation in Indonesia is difficult. The Indonesian people are going through a difficult period. We hope things will change for the better after the election. Singapore wishes Indonesia well because a buoyant economy in Indonesia will help us and we have every reason to see that Indonesia comes through the difficult period. Sir, another area I am a little worried is the economy in China. I do not know what is going to be in store in the future. Perhaps, the Minister may be in a position to enlighten this House. Should the situation change for the worse in China, what would be the repercussion on the Singapore economy? Sir, the other area which I would like to share my concern is the property sector. Sir, so much of our citizens' money is tied in the property market and it is worrying that property market values are going down month by month. Most people who buy properties in this country have borrowed from the banks and we have yet to see what is the exposure of the banks should the property market go down any further. In certain areas, the property market is going at half price. May I plead to the Government to study the market and to plan in such a way that the property market does not collapse. I am not asking the Government to bail out those who have speculated. But there are citizens who have genuinely bought property for their own occupation, while some may have bought for investment.”
“Its prudent policy in having surplus has to be changed. This is the time when the country needs the $5.1 billion, and I think the Government has done the right thing. Sir, we must credit the political leadership for presenting this Budget. But there is another institution which I would like to pay tribute to and that is the civil service. An honest civil service has made Singapore proud. It is very important for us to maintain this integrity because the political leadership cannot survive unless we have a very strong and honest civil service. Sir, we have rightly not cut our expenditure on defence, education and social service. Without a good defence, we will have no security and, without security and political stability, we will not have foreign investments. We are fortunate in this because, looking at our neighbours, investors know where to choose. Similarly, in order to create the manpower for the next century, we must spend our money wisely on education. It is a life-long learning process and we must strive not to stinge in this area. I am glad that the Government has been very generous and it should be. Sir, we as a people can take pride that, despite job retrenchments, loss of business and a not very favourable economic condition, we have maintained our social cohesiveness. It is times like this that we can test the people's will, and we can pride ourselves, and we hope that even in a worse situation, we can take the same stand. Sir, there is a likelihood that more jobs will be lost this year. I appeal to the Government to take care of those who will be losing their jobs. We must see that the families do not suffer because the breadwinner has no job, the children do not miss school and that they have textbooks and the amenities of life to keep them going.”
“To give further emphasis to the importance of lifelong learning and skills upgrading, the Government has decided to raise the tax deduction for actual expenses incurred by individuals for such upgrading from $2,000 to $2,500, an increase of $500. While the gesture is much appreciated, I must point out that very few courses qualify for such tax deduction. I would like to ask the Minister to relax the criteria on the type of academic and professional courses that would qualify for such tax deduction. For many of us, upgrading may not be by formal courses that will lead to diplomas, certificates or any other professional qualification. In this IT age, many of us would like to upgrade ourselves in the IT area through more informal courses, but such expenses do not qualify for tax deduction. Personal Tax Rate In line with my call for the Government to consider adopting the long-term corporate tax rate of 25%, I would like to ask the Minister to do likewise for the long-term maximum personal tax rate of 25%. We are still 2% away from this target. This would make us more competitive vis-a-vis Hong Kong and help us to position ourselves as a more attractive centre for finance and other commercial activities. With these comments, I support the motion. Mr Shriniwas Rai: Mr Speaker, Sir, I am obliged to you for giving me this opportunity to speak in the debate. Sir, even in times of a buoyant economy, it is not an easy task for the Minister for Finance to present a balanced Budget. The task is more difficult in times of recession. Nevertheless, the Minister has presented a very pragmatic Budget. There is a deficit of $5.1 billion and, as Mr Chiam has pointed out earlier, I do not think the Government has to be apologetic about it.”
“Waiver of Stamp Duty for Property Transactions I am pleased to note that the property market seems to have stabilised. However, one impediment to a smooth and efficient market is the stamp duty for property transactions. I would like to ask the Minister to consider waiving the stamp duty until further notice in order to help the property market recover further. In the November 1998 cost-cutting package, the stamp duty on contract notes for share transactions was suspended and will now be extended by another year. I believe the rationale for such suspension is similar for the property market. Property Tax Rebate. Currently, the 55% property tax rebate is only extended to commercial and industrial properties. Is there any reason why it should not be extended also to residential properties? Owners of such residential properties have also been hard hit by a very soft market for rentals that have come down substantially. A rebate will help such owners tide over this difficult period and survive the downturn. Goods and services tax The retail and tourism sectors have been very hard hit by this economic downturn. In fact, the retail sector has been very weak for a number of years. Our retailers are not competitive, not only because of the high rentals and wages, but also partly because of the Goods and Services Tax. I would like to ask the Minister to consider lowering the GST at this time to 2%. It is important to keep the GST mechanism in place. A cut of 1% would not impact the revenue collection too much, but would go a long way in helping restore confidence in the retail sector. Personal Income Tax Reliefs With the onset of this economic crisis, unemployment is rising. The Government is encouraging more workers to go for skills upgrading and redevelopment.”
“At a time like this, Singaporeans begin to understand and appreciate our prudence much better, although I have not changed my stand that in good years, we still have to be careful not to suck too much money out of our system. Let me now comment on some specific tax issues in greater detail. Corporate Tax Some years ago, the Government stated that its long-term target corporate tax rate is 25%. We are now still at 26%. I would like to ask the Minister whether we still maintain this long-term target rate of 25%, and if so, when do we plan to achieve this long-term target rate. Would this year not be a good year to do this in order to help investors achieve a better return on their investments? Tax Incentives for Businesses Going Abroad Given the current decline in demand for goods and services from the region, because of this economic crisis, companies have been asked to venture further afield to tap new markets. As we all know, marketing can be expensive, especially in faraway markets. I would like to ask the Minister to consider giving more tax incentives for companies to go marketing overseas. Tax Grouping for Property Developers I have raised this issue of allowing property developers, who are now required by law, to set up a new company for every new project, to allow them to group profits and losses for the purpose of tax reporting. It seems a bit unfair that tax has to be accounted for on a project by project basis. Other companies not compelled by law to set up new companies for every line of business can do so now, irrespective of the size of each business. I believe there is some anomaly here that should be addressed. I hope the Minister will look again into this matter.”
“Nevertheless, they are still in trouble and under grave pressure, especially from the banks that have reduced their credit lines. Worse still, some banks have even withdrawn those very bank lines vital to their survival. Although the Government has said that they would like to leave credit assessment totally to the private sector financial institutions, we must remember that these are extraordinary times, probably the worst since our independence, and hence we may need extraordinary measures to help these local companies from folding under. Many jobs are at stake. Our objective of strengthening the base of local enterprises would also be set back by quite a few years if the Government does not extend a helping hand. I know the EDB has the Local Enterprise Finance Scheme (LEFS) as well as a scheme to co-invest in promising local enterprises to help them enhance their capabilities and growth. However, the schemes are limited in scope as not many of these companies in trouble can make use of them. Given the current situation, I would like to ask the Minister whether any new measures can be introduced to help troubled local companies that currently do not qualify for either one of these two schemes. FY 1999 will yield a budget deficit of $5.1 billion. Given the severity of this current economic downturn, this deficit is not really alarming. This deficit is only the size of our budget surplus in a fairly good year. In fact, I would say it is commendable that at a time like this, there is still no need for this Government to draw upon the reserves of the past Government. The Government's budgeting has always been very prudent, yielding substantial surpluses and reserves in good years.”
“Many have now learnt painfully that asset prices that go up can also come down. This must also apply to what we see in the US markets today, which is why we are a bit nervous about the consequences of a downturn on Asia. Before this recession, there was so much job hopping during the days when the labour market was very tight that many workers never bothered to upgrade themselves or stay long enough in one job to master their craft or trade well. Such workers are most affected in this recession. This economic crisis in the region has also shown us how important the political and economic stability and prosperity of our neighbours are to our very own economic prosperity. It has also highlighted to us how fragile our markets are, and how important it is for us to venture further afield to new markets so as to broaden our market base and enhance our economic stability. The stage is now set for economic recovery this year and the next. It is important, indeed critical, that our policies and systems should provide the foundation for the next phase of economic growth. In this respect, I am pleased to note that the Government has identified correctly the main crucial issues, namely, to maintain the framework for continued economic activity; secondly, to help companies tide over the crisis and minimise unemployment and enhance capabilities and competitiveness for future growth. I would like to dwell a little bit more on helping companies survive this downturn. Many local companies have been hard hit by the sudden and drastic decline in demand for their goods and services from the region. Many of these companies are not new and small ones. Some of the ones I know of have been operating for more than 10 years.”
“Mr Speaker, Sir, I rise to support the motion in the name of the Finance Minister. This year's Budget is almost a non-event, as described by many. This is because of the two off-Budget measures in June and November last year when packages of $2 billion and $10.5 billion worth of cost-cutting measures were announced. Some of these measures announced will only be effective from this fiscal year. It is understandable, therefore, that we must give time to these measures to work its way through the system before deciding on whether we need new measures, and if so, in what form, and for what purpose. Nevertheless, I would like to ask the Minister what kind of time-frame would be necessary for us to see whether these measures work. In a sense, this Budget in March is more like a routine one to approve the expenditures for the Government Ministries and departments to function smoothly. There are not many major tax policy changes, except for some for the financial services sector to encourage and promote the bond market, dealing in Government securities, syndicated facilities and boutique fund management. There are also a few tax incentives for global OHQs, contract manufacturers and traders, and exhibition and conference organisers. Although some companies and businesses as well as individuals are in financial hardship during this economic downturn, in many ways, I feel this period of testing is good for us and holds many valuable lessons. The last recession between 1985 and 1987 was rather short and many people, especially the young, have either forgotten or not even known what a recession is. There was so much of euphoria in the last 10 years that many have taken economic growth and good government for granted.”
“With the corporatisation of the PWD, the Minister may want to look again more closely into the composition of the Board of Architects to give it a better representation from the private sector. I share the concerns of many of these points brought up by the industry. Some of these concerns may be unfounded. If they are, there is obviously a perception and communication gap between the Ministry and the industry. Perhaps, a better communication programme could be instituted to bridge this gap. In conclusion, let me say that I believe that the merger of the regulatory functions under BCD and the promotion of functions under CIDB into the BCA is a move in the right direction. The public and the building industry practitioners welcome the initiative. However, I hope the Minister will take the feedback of industry practitioners into consideration during this exercise. Sir, I support the Bill.”
“It is hoped that more of these functions can now be centralsied under the BCA to provide a one-stop shop for the convenience of industry practitioners. One of the functions of the new BCA, which is clearly stated under clause 9(1)(d), is "to promote good procurement methods and practices in the construction industry and advise and assist the Government in the procurement of construction works and services". According to industry feedback, today, frequently different Government agencies adopt different procurement methods and they are considered inequitable with the practice of the industry. With the passage of this new Bill, the industry would like to see the BCA standardise such procurement methods and disseminate to all Government bodies for compliance. In reviewing such procurement methods, special consideration should also be given to promote the local professionals and the local building industry. I am also given to understand that, currently, PWD has established several panels of private consultants for the purpose of undertaking public sector projects. As such, projects that PWD can farm out are given to these private consultants on the panels. With the corporatisation of PWD, it is recommended that the proposed BCA take over this role of managing these panels so as to create a more level playing field for all in the industry. With greater synergy and cost effectiveness, as pointed out by the Minister in the formation of the new BCA, the industry would also like to see lower fees for the processing of all kinds of applications by the industry practitioners. I understand that the Board of Architects right now has representation by three to four architects from the PWD.”
“Mr Deputy Speaker, Sir, I support the Building and Construction Authority Bill which basically merges the regulatory functions of the PWD, which are currently under the Building Control Division (BCD), and the Construction Industry Development Board (CIDB), under a new statutory board. I fully agree that with this merger it will yield greater synergy and cost-effectiveness as both deal with the design and construction stage of property development. I have been in dialogue with industry practitioners regarding the above Bill. Although they support the establishment of the BCA, they have expressed certain concerns that I would like to bring up to the attention of the Minister. Currently, the function of the BCD is regulatory in nature. It coordinates the technical departments such as the URA, FSB, ENV, LTA, National Parks, and so on, during the building/planning process. The CIDB's functions, however, are more promotional in nature. After the merger, the industry has expressed concern that the BCA might focus too much on regulation rather than promotion. So they hope that the BCA would continue with this promotional functions as before, as the name "Authority" may perhaps change the mindset of the civil servants. The promotional functions and efforts of the old CIDB have been much appreciated by the building industry in helping to lift the standard of construction. The continuation of this role under BCA, I am sure, will benefit all players in the industry. Presently, architects and engineers still have to get approval for building plans from a number of Government bodies, although the BCD coordinates many of these functions.”
“I would like to ask the DPM, with the reduction in the allowances for shopping overseas, how much GST does he hope to recover? And does he expect the Causeway jams to increase as a result?”
“The amendment to section 65J of the Act confers on the HDB the power to compulsorily acquire the whole of any particular flat in the precinct for the purpose of those upgrading works to be carried out in that precinct. I am very concerned about how this provision will affect certain individual owners who have lived in the precinct for many, many years. One could argue that he would be giving up his flat to benefit the majority, who might be given a kindergarten or an old folks' corner to utilise and enjoy. However, this provision should be used very, very judiciously, and perhaps only with the support of the local Member of Parliament. We should balance the right of the individual to continue living in the precinct that he has chosen many years ago, with the public good and interest. In the case of the acquisition of homes for roads or MRT lines, for example, it is more obvious that many thousands will benefit from the acquisition. In the case of acquisition of a flat for some communal facility, the number of neighbours who will benefit is much smaller and, in my view, less justifiable. If such an acquisition is deemed absolutely necessary for whatever reason, I feel that the compensation should not be at the last transacted price of a similar flat in the precinct or block, or even the average of the last few transactions, but at a significant premium above the market. This will make the HDB think very carefully before acquiring. It will also compensate the affected owner who has to move away from the neighbourhood he has grown accustomed to. Apart from these two comments, I have no other comments on the Bill.”
“Mr Speaker, Sir, I rise to support the Housing and Development (Amendment) Bill. However, I do have some concerns on two of the three main proposed amendments. This Amendment Bill introduces a new provision in the Act to empower the HDB to raise loans inside and outside Singapore through the creation and issue of bonds or otherwise. I would like to ask the Minister how this provision, which gives the HDB added flexibility to raise funds, would translate into better pricing of HDB flats for Singaporeans. Does borrowing from the market mean higher costs versus borrowing from the Government? Currently, how does the Government charge for funds extended to the HDB for its housing programmes? Since the Singapore Government has very large reserves, does it not make sense to borrow from the market only when the Government reserves are in fact earning more than the cost of borrowing from the market? Secondly, are these bonds targetted at institutional or retail investors? For the issue of bonds in Singapore, I would like to urge the HDB to consider issuing these bonds in smaller denominations of, say, even $10,000, so that the Singaporean retail investor can also participate in these bond instruments. This would give the man-in-the-street another avenue to invest his surplus funds which, I believe, will give a slightly higher yield than fixed deposits. Next, the HDB, together with the MAS, should help to create a more liquid secondary market for these bonds for the benefit of retail investors. The HDB should also apply to the CPF Board to allow the use of CPF funds for such investments. Such instruments give a fixed income at much lower risk than the equities market.”
“Sir, I would like to ask the Minister to perhaps consider changing the pricing of ERP during off peak hours so that at least the traffic along the ring roads will be evenly spread out.”
“Sir, I understand that since the implementation of the ERP, there is a shortage of taxis in the CBD. For businesses like taxis and courier companies, I do not know whether it is possible for the Minister to impose a certain maximum deduction from the ERP cashcard per day, so that we cap their cost for entering the CBD per day. This would help them to contain their cost. The second question is that since the ERP started, the ring roads around the CBD like Scotts Road, for example, which is within my constituency, have been really congested during the daytime whereas Orchard Road, which is just around the corner, is empty. It appears to me that actually there is a bit of mispricing problem. Perhaps during the off peak hours and during the day -”
“For older properties, the danger of degeneration into slums becomes more real. In this case, we should give greater weightage to the needs of the majority of the other owners. I agree that some judgement and subjectivity is involved. However, in my own view and judgement, I propose that for properties less than 10 years old, 100% of share values should still be maintained for en-bloc sales to proceed. For properties between 10 and 20 years old, 90% of share values could suffice, and for properties above 20 years old, then 80% of share values could suffice. In addition, tearing down of fairly new buildings is a waste of national resources and should not be encouraged. I believe my suggestion is more equitable and maintains a better balance between individual rights and the good of the larger society. And with this, at least the individual has the peace of mind that in the first 10 years of the life of his new property, he would not wake up one morning to be rudely told that he has to move out, because his neighbours have decided to cash out in an en-bloc sale.”
“The question therefore is: should the individual be made to subsume his interest to that of the society so that the latter can make more money? One could argue that money is not the only issue and that the main reason is really to prevent the condominiums or apartment blocks from degenerating into slums. If that was true, then one could argue that en-bloc sale is not the only way to prevent this from happening. One could go for upgrading programmes and refurbishment as in the HDB major upgrading programmes. In this case, under the current law, only 75% of share values in the estate need to approve for such upgrading to proceed. Since the larger society that benefits from self-sacrifice is not as noble in the case of en-bloc sales of private properties for redevelopment as in the case of acquisition for public projects, I contend that we should maintain a balance of individual rights over that of the other neighbours. The question then is: what is that correct balance? I suggest we should then go back to the fundamental reason for which this Bill was meant to achieve and, that is, to prevent the degeneration of old private properties into slums. This Bill proposes that, in the case of properties less than 10 years old, 90% of the share values would suffice for an application to be made to the Board for an order for sale of all the lots in common property to proceed. In the case of properties above 10 years old, 80% of the share values agreeing would suffice. My question is: are properties less than 10 years old in danger of degenerating into slums? To me, the answer is obviously no. In my view, the age of properties should be the key deciding factor here which determines whether the individual's right to hold out should be ridden roughshod over.”
“Mr Speaker, Sir, this Bill was introduced to facilitate the en-bloc sales of certain property. I support the underlying principle of the Bill because I believe that en-bloc sales, if made easier, would prevent old properties from degenerating into slums. In the last few years when property prices were higher and plot ratios in certain areas were increased, we saw many condominiums and apartment owners attempting to sell their properties en-bloc. Some succeeded while others failed. Those that failed owed it to the few owners who held out for various reasons. Some have noble, sentimental reasons, while others just wanted more money than their neighbours. Those that failed to sell en-bloc have missed the boat for the time being and are in danger of degenerating into slums during the trough of the economic cycle as many of these properties are fairly old. In a case like this, one could say that we had a tyranny of the small minority over the majority. I sympathise with the majority of the owners involved. In debating this Bill, one cannot do so without going into the issue of individual rights over that of society. Although one of our core values is society above self, in this context, we must look at what this larger society is, that self must sacrifice too. In the case of private land acquisition for public roads, highways, drainage or MRT lines, one can understand the need for this as the larger society that benefits would be people one can count in the realm of thousands, if not tens of thousands or hundreds of thousands, who use the public facilities. In the case of en-bloc sales, the larger society that benefits is one's neighbours, maybe 10, maybe 100, who just want more money for their units if sold en-bloc than if sold individually.”
“Mr Speaker, Sir, I would like to ask the Minister about the Local Enterprise Financing Scheme. He has increased the amount from $1.1 billion to $2 billion. My question to the Minister is, of the $1.1 billion set aside so far, how much of it has already been utilised? And does he think that $2 billion would be enough?”
“Mr Speaker, Sir, like my colleague before me, I would like to thank the Minister for Finance for the very comprehensive off-Budget measures. I am sure they will be welcomed by a lot of corporate business people as well as property developers. But I would like to ask why the Minister has not considered measures to stimulate domestic consumption, because I notice most of them are more cost cutting measures for companies. There are not enough measures given to the individuals to put more disposable income into their pockets and help to stimulate consumption. For example, I do not know whether the Minister would like to consider giving more time to the taxpayers to pay their income tax over a longer period of time and also, for example, the domestic and foreign worker levies could perhaps be reduced, so that there will be more disposable income for people to spend. In terms of property purchase, the Minister may want to take a look again at this 20% which is now to be paid for in cash when one buys a property. Perhaps the Minister may want to consider allowing both CPF and cash to be used to help stimulate the property market.”
“Sir, I thank the Minister and the Parliamentary Secretary for their replies and I would like to withdraw my amendment. Amendment, by leave, withdrawn. The Chairman: Order. I propose to take the break now. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.”
“Sir, I would like to ask the Minister to update this House on the intended corporatisation of the Public Works Department. There is some concern from the private sector that the PWD, after corporatisation, will compete for projects with the private sector. The PWD, given its size and technical expertise built up over many years, should focus on large infrastructure projects in Singapore. It should also regionalise to take advantage of its brand name and track record. It should also consider helping our local building and construction companies to go into the region. As Singapore is such a small nation with limited resources, we should be careful not to engage in wasteful competition, but leverage on one another's skills and competitive advantage to get ahead.”
“Sir, feedback received from architects, engineers and developers indicate that although they are generally satisfied with Government regulation on the building and construction industry, they would like to see a central regulatory body to coordinate all approvals required, from fire safety to compliance with other buildings and control regulations. What I am proposing is basically a one-stop shop for architects, engineers and developers. It is also in line with quality service that the Government has been emphasising. I am not sure how this can be best organised and whether this central body should come under the purview of the Ministry of National Development or the Building Control Department. I would like to ask the Minister to comment on this suggestion.”
“Sir, the upgrading of HDB estates has been well received by most HDB residents, even though it involves an element of cost sharing. The only negative feedback I have received is that the contractors for the works tend to take too long and hence inconvenience residents for an unduly long period of time of between two and three years, because they work on too many blocks (about 10 to 15 blocks) at the same time. My question to the Minister is: would it not be possible to get the contractors to work on a fewer number of blocks at one time, say, three to five blocks, so that they can shorten the duration of the upgrading works to just one to two years, instead of two to three years?”
“As the Minister probably knows, Singapore Power wants households affected to contribute to the laying of new pipes in the common properties, such as the road reserves or drainage reserves. And the cost per household can come up to about $5,000 to $6,000. If not enough households are prepared to contribute, the residents are asked to abandon their old pipes and convert to bottled gas. This has upset many landed property residents of old estates. My question to the Minster is: is it not possible for the Government to bear the cost of this infrastructural replacement? After all, when roads and drains are replaced, for example, in the old private housing estates, the residents are not called upon to shoulder the costs collectively. Besides, residents in the private housing estates believe that the then PUB had made enough money from gas subscribers to build up a sinking fund to pay for these infrastructural replacements. I hope the Minister can comment on this. The next issue related to upgrading here is regarding the establishment of residents associations (RAs). In the HDB estates, we have RCs while condominiums have their management corporations. Both of these have centres or clubhouses where the residents can meet to socialise. I believe we should try the same and establish RAs in landed housing estates in order to facilitate and build neighbourliness among the people living there. But to facilitate this, they need a small clubhouse to use for meetings and social activities. I would like to ask the Minister whether he could consider setting aside some land for RAs to establish such a clubhouse. This will make it easier for RAs to be established in the landed housing estates.”
“Upgrading of private residential estates. The Government has spent billions of dollars so far on upgrading the HDB estates, both in the Main and the Interim Upgrading Programmes. I do not think the residents of the private housing estates begrudge the HDB dwellers of old estates the benefit of this policy to prevent old HDB flats from degenerating into slums. What is perhaps not as obvious or noticeable to the public policy makers is that private housing estates which are very old can also degenerate into slums if no attention is similarly given. The plan to change the legislation to facilitate the en bloc sales of condominiums may help to alleviate this problem. However, en bloc sales would only be viable in locations where plot ratios have been increased significantly. What about those without the benefit of increased plot ratios? Many old condominiums have problems getting enough support to embark on a major upgrading because the residents, many of whom are old and retired, cannot afford to contribute tens of thousands of dollars required for a major upgrading. I would like to ask the Minister whether he plans to introduce any measure to help old private housing estates to upgrade. Could the Minister consider, for example, say, subsidising 20% of the total upgrading costs of old condominiums above 20 years old, subject to a ceiling of, say, $10,000 per household? This should apply only to condominiums where en bloc sales are not viable because the plot ratio has not been increased. In the landed private residential estates, some upgrading is also taking place in the form of replacement of old pipes by Singapore Power.”
“It influences sentiments and also the herd mentality of speculators and investors alike. The Government has a duty to do its utmost to stabilise the property market. The property prices may still be considered high today relative to the early 1990s. However, it is in no one's interest to see it crash, as the consequences on the entire economy may be disastrous. The Government has already introduced several measures such as deferring the Government land sales programme, extending the project completion period for Government land sales sites and suspending the stamp duty surcharge on contracts for the sale of properties within three years of purchase to stabilise the market. The question that I would like to ask the Minister is: what else does he plan to do to stabilise the market if it goes down drastically further? At the same time, the Government should also think of measures to prevent the market, after it bottoms out, from running away again, as it did between 1993 and 1996. What will the Minister do to prevent this from happening again? This is important as I believe the public expects the Government to be even-handed and respond as quickly to an upturn as it had been to a downturn in the market.”
“Sir, I beg to move, That the total sum to be allocated for Head U of the Main Estimates be reduced by $100. Sir, everybody has a view on the property market. At the right price, we can be either a seller or a buyer. Singapore's home ownership policy has made almost everyone here a home owner. Many non-home owners today are also aspiring home owners. It is no wonder then that when the property prices go up too fast, or come down too fast, we get some people angry and frustrated, while, at the same time, others may be laughing all the way to the bank. Unfortunately, those who are happy because they are better off are usually silent, while those who are affected adversely tend to be very vocal. They express their views publicly and lobby Government officials and the media. Very often, the noise generated and the perceived vested interests of the lobbies make it hard to see the gravity of the real situation. While not everyone can agree whether the price of the property market today is high or low or at just the right price, all of us agree, I believe, that we need some stability in the property market. The property price index of private residential properties doubled from about 150 in the first quarter of 1993 to over 300 in the second quarter of 1996, in just over three years. The Government was perceived by the general public then to have been slow in reacting to the runaway prices then. Since its peak in the second quarter of 1996, when anti-speculation measures were introduced by the Government, the index has only dropped about 16.5%. We are now back to the first quarter of 1995 levels. Price stability in the property market is important as it affects credit facilities by banks and financial institutions.”
“The structure today is still very complicated, and I believe the complex structure was a result of the need to include a wealth tax in the formula. My question is this: would it not be more efficient to collect the wealth tax upfront one-off in the cost of the car, for example, the Additional Registration Fee and the COE, than to do this every year through the road tax? The road tax, as we all know, is not really a usage tax. It is a fixed cost that we have to pay every year, much like a flat fee, just like the registration fee. The only real usage taxes that we have are the ERP and the tax on petrol because they go up with greater usage. So the ARF and the COE, in my view, could have been used as the sole wealth tax that vary with the OMV cost of the car. Strictly speaking, a larger engine capacity of a car does not necessarily mean that the car is more luxurious. So my message here is: in formulating taxes, I believe the consideration for equity should be balanced by the need for simplicity. With these comments, Mr Speaker, Sir, I support the Budget.”
“The efforts to boost the economy through counter-cyclical spending will not only save taxpayers' money during the regional downturn, but also be appreciated by all in the building and construction industry. Having said that, I would like to make an observation that we have been building many 5-star facilities such as the Changi Airport and so on, when we could afford them in better times. No doubt these facilities have helped to establish Singapore as No. 1 in many areas, from the best airport to the best port in the world. During this downturn, however, as part of our austerity drive, perhaps 4-star quality may suffice, especially for facilities for internal use which are not open to foreigners or tourists. For example, tiles should be used in place of marble or granite in some places. This would also send an important message to the young that we should learn to live within our means and tighten our belts when necessary. Next, I congratulate the Finance Minister for finally agreeing to abolish stamp duty on all instruments, except for those which relate to stock and shares, and immovable properties. I had brought this up last year in the Committee of Supply and I thank the Minister for his quick response this year. I am sure this move will go a long way to reduce costs and inconvenience to businesses and members of the public. Finally, I would like to comment on the Electronic Road Pricing and vehicle tax rationalisation. The ERP rates and the vehicle tax rationalisation scheme have been announced last week. Although I am happy that the exercise would be revenue neutral in about eight years, I must say that I was a bit disappointed that the Ministry did not take advantage of the occasion to simplify the road tax structure.”
“Our bond market is in an even greater stage of infancy as the Government which normally provides for the backbone for the bond market in most countries does not borrow from the public. I welcome the package of incentives to promote the development of an active bond market in Singapore. We certainly need a more active and vibrant bond market if we want to be a premier financial centre in Asia. So far, the incentives to promote our financial industry have been targeted at companies, ie, only the companies are seen to benefit from the tax concessions. I have been told by some people that this alone may not be adequate to entice companies to move to Singapore because employers are still finding it hard to convince their employees, especially those based in Hong Kong, to relocate to Singapore because they would be worse off in Singapore in terms of personal tax status. Some have even suggested perhaps that the Government should give special tax concessions for such employees to entice them over to Singapore. Personally, I do not support this suggestion as this would result in reverse discrimination, ie, foreigners would enjoy a better tax package than locals. I believe strongly in a level playing field for both locals and foreigners, whatever the origin. Next, I would like to express my support for the Government's decision to keep a tight lid on operational expenditure, but increase capital expenditure in the key areas of education, economic infrastructure and defence. It is certainly an ideal time to accelerate key economic infrastructure projects like the reclamation at Changi East, Jurong Island Phase 3, the upgrading of industrial facilities at Tuas, and even the construction of the North-East MRT line.”
“This Budget has been viewed by many again as a "Shenton Way Budget" for the many financial and tax incentives it contains to bolster the banking and finance sector. In my view, we should not begrudge the additional fiscal measures the Government is introducing to attract even more financial activities to Singapore so as to make it even more competitive than the other Asian cities. In fact, having been in the banking and finance industry personally, I can tell you that the feedback from many financial institutions in the last Budget was that the ceiling for some of these incentives was set so high that only a few bigger fund managers benefited. I am glad that in this Budget, the Minister for Finance has lowered the threshold requirement for fund managers to qualify for full tax exemption from $10 billion to $5 billion of non-resident funds for a period of five years. This will allow more fund managers to take advantage of the incentives. However, I must point out that many fund managers move to, or increase their operations in Singapore not only because of tax incentives, but also in the hope of getting more funds from the Government, statutory boards and Government-linked companies to manage. In this respect, the fund managers have been a bit disappointed with the great caution, or reluctance with which funds have been farmed out to the private sector for management, even after the Senior Minister's announcement of greater liberalisation in this area a few years ago. I am happy to note that the Government has given renewed commitment to liberalise the fund management industry and allow the private sector fund managers to manage more Government funds. This will go a long way to help our fund management industry to grow and strengthen further.”