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 Amendment, by leave, withdrawn.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 3 of 8.
“Mr Speaker, Sir, I join my colleagues in supporting the Budget Statement. At a time like this when all our neighbours are tightening their belts, I think we are very fortunate to have a budget with $2.7 billion in surplus, no increase in taxes (except on cigarettes), but on the contrary, we have new tax concessions to promote the financial sector, the transport and logistics sector, exhibition organising, cyber trading and even the recruitment of foreign talent. In this very difficult period, the people in the neighbouring countries are rallying behind their leaders. The Thais, for example, have their "Thai help Thai" campaign, and the Indonesians have their "Love the Rupiah" campaign. Perhaps, we in Singapore, should also have an "Appreciate Singapore" campaign to drive home the message to younger Singaporeans on the need for and the benefit of hard headed economic, social, political and financial policies, which have stood us in very good stead in this current turmoil, but which have been the butt of many criticisms at many other times. Having said that half in jest, I must add that we must be careful that while drawing lessons from the current Asian economic and currency crisis for the education and edification of our young, we must be sensitive to the needs and feelings of our neighbours. In fact, we should certainly use the occasion to extend a helping hand to them, within our means, of course, whether in monetary support or in kind. Such financial support, I presume, will not be reflected in the Budget, but off-Budget, in our balance sheet at the appropriate time. I think the people of Singapore should support our leaders as they try to do this as sensitively as possible.”
“Mr Speaker, Sir, if I remember, the objective of this exercise is to prevent very old developments from degenerating into slums. So if you put the age as 10 years, does he not think that it is a bit too early? Because many of the developments below 10 years old are still in very good condition. Does he not think that maybe 20 to 30 years would be a much better age, before they are subject to this law? Assoc. Prof. Ho Peng Kee: Sir, essentially, the decision now is left to the owners. Of course, partly it is in the national interest, if older developments are rejuvenated, and enhanced plot ratios are realised. But if the owners decide in a development that is less than 10 years old, they must get 90%. If they decide to come together for community living, and after all, strata title living is community living, and if circumstances change, and a significant majority, 90% agree that they should all sell to a developer who will then develop the property, then I think we should make it possible for them to do so. So we have taken age as this criterion: below 10 years, 10 years and above, because we feel that, as rightly pointed out by Mr Lew, for older developments you may have more owners who are interested in selling. If we peg the percentage for these older developments too high and if it is not attained, then a larger group of owners' interest will be thwarted. That is why we have decided that age will be the criterion and 10 years will be a reasonable time-frame for this distinction.”
“Sir, when will the new laws come into effect? Assoc. Prof. Ho Peng Kee: Sir, we will need to amend the Land Titles Strata Act. We hope to finalise our position by the end of this year.”
“Although, from time to time, we come across foreign maids being abused by their employers, none can match the seriousness of physical and mental damage inflicted on this maid. The public outcry that followed brings little comfort to the foreign maids working here, although it does show that our Singaporeans are generally decent and compassionate. What is worrying is that for every maid abuse case being reported, probably there are many more that went unnoticed because the victim for some reasons did not make any official report. Although all foreigners working here enjoy the same legal protection as Singaporeans, however, being foreigners, they may not be aware of such provision or simply not knowing where to turn to when they are in this predicament. As these foreign workers are working in our country, I think we have a moral obligation to ensure their safety and well-being. I would like to ask the Minister whether a unit can be set up to look into the welfare and security of these foreign maids. Although it is impossible to actually monitor every foreign maid in Singapore, at least they can be made aware of the existence of such a unit, and that it is easily accessible to them when they run into any difficulties with their employers. This unit can also have officers to conduct random interviews with the foreign maids - I do not mean you go to every house and interview them everyday - so that at least, psychologically, their employers are aware that their maids may be monitored, otherwise there will always be some gullible ones who think that they can do anything to their maids and get away with it. The Ministry can fund this unit from the foreign worker levy collected.”
“Sir, with the grave shortage of labour in Singapore, the employment of foreign workers is becoming to be a fact here. Currently, there is a mix of Government controls, through the use of dependency ratios, selective admission, depending on the type of business the applicant is in and also depending on the source of the supply of labour, and even the paper qualifications of the foreign workers. The perception is that the rules are less than transparent and there is too much emphasis on the paper qualifications of the workers rather on work experience. In addition to all these rules that the Government imposes, there is also the financial burden of companies who have to pay hefty foreign worker levy. This is now viewed as a revenue-generating exercise since non-monetary measures are already in place. It may be timely for the Ministry to take a step back and review its policy on the regulation on the employment of foreign workers from basic principles. If we want to control the import of foreign workers, through things like the dependency ratios and other quotas, is it necessary then to impose the foreign worker levy? If, on the other hand, we want to adopt a free market policy, could we not decide upfront how many foreign workers our economy can absorb without straining the social infrastructure too much, perhaps maybe 500,000 or 600,000, and then let the market decide which sector or which company can afford the foreign worker? Can the Ministry review and enunciate its foreign worker policy more clearly? Mr Kenneth Chen Koon Lap (Hong Kah): Sir, the recent incident where an Indonesia maid has been brutally hurt has shocked many Singaporeans.”
“Sir, not too long ago, we had a big debate in this House about the need for Government to control the number of doctors. This is done through both the control and intake of medical students into NUS, and a drastic cut in the number of overseas medical schools which are recognised by the Singapore Medical Council. About two months ago, I read in the Sunday Times that there is now a shortage of doctors. My question to the Minister is: have we been unnecessarily stringent in controlling the number of doctors previously? Should we not let market forces decide the number of doctors to be allowed into Singapore or to have in Singapore instead of letting the Government control the numbers? Would the Singapore Medical Council now recognise more overseas medical schools than the current 28 for purposes of admitting graduates for registration as doctors? For example, why does the Singapore Medical Council recognise more UK and Australian medical schools than those from US and Canada? I am told that out of 125 accredited US medical schools, only about 10 are recognised. Would the Minister consider reviewing the list of recognised overseas medical schools?”
“Sir, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“Today, too many of our workers work for multinational companies or foreign firms. I do not have the exact figures available, but I suspect it is a large proportion. Perhaps the Ministry may be able to give us the figures. We know today that the MNCs are in Singapore not because they love us, but because of the profit motive. When things turn sour in a crisis, for example, whether they will stay in Singapore is very debatable. The ones who will stay will probably be the SMEs because they are all Singaporeans. I touch upon the sentiments of the SMEs earlier when I talked about the role of GLCs in business. They feel the crowding-out effect by the GLCs when the latter diversify into all kinds of businesses that traditionally are their turf. They would also like to have more support from GLCs in their regionalisation drive. Perhaps, as mentioned earlier, the GLCs could invite some SMEs, not just large local companies like the Hong Leongs and the Thakrals, but also SMEs, when they look for joint ventures overseas. I acknowledge that there are already incentives available at EDB to help SMEs. As more emphasis on creative thinking and entrepreneurship is given today, more and more Singaporeans desire to set up their own private enterprises. The Government should encourage such drive and nurture them as they can become the home-grown MNCs of the future, like what we have today, Creative Technology and IPC. Can the Minister review the incentive schemes for SMEs to help them to grow to become Singapore MNCs?”
“Is there someone coordinating and monitoring the different policy changes from different Ministries to determine the total impact on our business costs and our competitiveness? Different cost increases by different Government departments tend to be announced separately outside the Budget session. Its individual impact, taken singly, may not appear significant but, when added together for all departments, can become alarming. Would the Minister consider adopting an integrated approach towards the management of such business cost increases and have them presented during the Budget session every year instead? Will he also look into lowering the costs of doing business in Singapore, especially for the three main components of labour, rentals and transportation, which I have talked about earlier?”
“The growth rate of indigenous labour is not high enough to sustain our economic growth. So we turn to foreign labour which is controlled today by the Government using both the dependency ratios in approved sectors and also Government decision to disallow in certain other sectors other non-traditional sources. In addition, businesses have to shoulder the workers levy which is quite substantial even when approval for such foreign labour is obtained. Furthermore, wage costs have been outstripping productivity growth for many years. And add to that, the difficulty in hiring staff because of a mismatch between demand and supply. In fact, our traditional sources are drying up because they are also growing and developing very fast and they also need labour. The second component is rentals. This is a major concern for retailers. Manufacturing companies are also not spared as property prices have escalated in the last few years. Our rentals have gone up to three times that of our neighbouring countries. The third component is transportation. The high cost of vehicles and COEs, coupled with the fact that the MRT today is still not too comprehensive and does not reach the suburban industrial estates, has made transportation cost an important element of business costs. Many companies today still provide door-to-door transportation for workers. Otherwise, they will have a tough time in getting enough workers to man their factories. The above three items of cost I have used as an illustration come under the purview of three different Ministries. In the case of labour, the Ministry of Labour; rentals, the Ministry of Trade and Industry; and transportation, the Ministry of Communications.”
“Sir, I beg to move, That the total sum to be allocated for Head W of the Main Estimates be reduced by $100. During the recent visits of the GPC for Finance and Trade and Industry to trade business associations, the most common grouse among business people fed back to us was that the costs of doing business in Singapore have gone up, are still going up and are eroding our competitiveness. They are extremely anxious that the Government should address these cost issues before we fall into another recession of the same magnitude as that experienced between 1985 and 1987. The question of rising business costs is not new. In fact, it has been raised over the years since we moved out of the recession way back in 1987. It has also been addressed by the Government in different ways. For example, in 1993, the Cost Review Committee devoted a whole chapter to business cost and competitiveness. The recent concerns raised have also led to the setting up of a committee to look into the long-term competitiveness of Singapore. The point I am making here is that, to be really objective and fair, the Government does respond in different ways to feedback and suggestions on rising business costs. However, as different businesses are impacted by cost increases in different ways, action taken thus far may not be to the total satisfaction of all. The main components of costs which concern business people today are labour, rentals and transportation. These three items are perceived to be within the power of the Government to manage better, unlike imported materials and other stuff which are subject to world market prices. The first item is on labour cost. Labour costs have gone up mainly because of the shortage of supply.”
“But today, since we allow the properties to be grouped together, why do we not just allow both assets to be grouped together for the purposes of estate duty?”
“Sir, I still do not quite understand because, as far as I understand it, the $9 million is actually not for one owner-occupied property. The $9 million actually allows you to group several residential properties together. So in fact the other properties are for investment purposes. There is no difference therefore investing in a second or third property, versus investing in shares or other cash instruments.”
“Sir, the Minister has not answered my question directly on the issue of estate duty. I am not asking actually for the ceiling or the limits to be raised. I am just asking that there should be no differentiation between the $9 million for residential properties and the $600,000 for other movable properties, because there is really no reason for it.”
“First of all, they will crowd out local entrepreneurs with an uneven playing field. GLCs have access to huge Government funds or capital and also the cheap POSB funds for borrowings. They have access to better information, perhaps even greater influence through the old boys' network and Government as their common shareholders and, in some cases, even directors. Many GLC directors, we all know, are also senior civil servants. Some cynics have even commented that at this rate, in the future, Singapore will become a nation of just employees. You either work for the MNCs, the Singapore Government, or the GLCs. The second reason is that Singapore is very short of talent. The GLCs are hunting for talents for the same businesses, from the same hunting grounds. And this duplication, in my view, is a waste of resources. To conclude, the GLCs should specialise and grow internationally in their own areas of expertise, for example, the acquisition of APL by NOL is a step in the right direction. They should pool their resources in order to compete more effectively overseas. They should also invite SMEs to join them in their overseas ventures. If the huge cash reserves do not earn enough return on equity or assets, they should return them to the Government. And when they have to borrow at market rates like true private enterprises, the decision-making process to embark or not to embark on new projects will become much more vigorous. Sir, may I move on to the next few cuts?”
“Sir, regarding the role of Government-linked companies in business, nobody disputes that there is a need for Government-linked companies (GLCs) in Singapore. However, the mission of the GLCs should be clearly defined. GLCs are needed for strategic industries, for example, national defence, for businesses that are at the cutting edge of technology that private enterprises do not have the management and technical expertise or financial resources to embark on and for businesses that require immense financial capital and judgment. When a GLC is diversified or goes onto the acquisition trail to expand, it should stay within its related fields, for example, SIA should stay in the airline or airline-related industries and not go into property development, except for its own needs. Today, many of us are a bit concerned that GLCs are becoming less focused in their activities. They seem to be more driven by the profit element than their original mission. They stray into any new business that can make money. This problem is exacerbated by the fact that many GLCs set large reserves of cash that are earning only very modest returns in this low interest rate climate. In order to show a greater return on equity and assets, they attempt to move into other areas that local private enterprises seem to be making good money on. And the latest fad is property development. If the Government leaves the GLCs totally to their own devices, very soon every GLC will have a property division and a telecommunications licence. If we allow this to be pursued to its logical conclusion, every GLC will become very similar-looking corporate animals, very often looking for the same prey. I would like to suggest that each GLC confine itself to its own unique mission for the following reasons.”
“It was quoted second to Hong Kong for property purchases relative to annual salary, and also second to Bombay for annual rental as a percentage of salary. This was the finding of a survey done recently by property consultant Knight Frank. I would like to suggest that the Committee on the Long Term Competitiveness of Singapore should also examine the long term implications of our large budget surpluses year after year. Finally, I suggest that the Ministry of Finance work harder to get the estimated budget surplus figure closer to the actual realised. If you look at the record of the last five years, our estimates have always been far too conservative, and have been off by several billion dollars every year. This year, for example, with an estimated surplus of $4.09 billion, I take it that the actual perhaps may be nearer to S$10 billion. Sir, with this comment, I support the motion in the name of the Finance Minister.”
“This is a dubious honour that I think we should look in greater detail. It could mean that we are collecting revenue way above the Government's spending needs, thereby taking away cash and hence liquidity from the economic system. The retailers would like to believe in this theory as they attribute the poor purchasing power of consumers to lack of disposable income on households who are committed to large mortgage payments on houses and their cars. If this theory is correct and liquidity is tight, then you expect the interest rate to be high, which is not. In my view, the weak retail sector is due to more than just poor disposable income. Our consumers here and those from neighbouring countries have become much more discerning and are going for greater value-for-money purchases elsewhere in the region and even further afield as more and more people travel abroad. If we take a closer look at the details of the revenue breakdown, we will notice that $4.4 billion come from the Ministry of Communications, presumably from car and road taxes and COEs. This is more than the total estimated budget surplus of $4.09 billion for FY 97/98. Do these taxes take money out of the system? Obviously they do, as a dollar more spent on a car would be a dollar less spent on other goods. What are the long term implications of having large budget surpluses on our local economy year after year? I am not an economist and I do not know the full answer right now, but I share the sentiments of many that it must be taking away some of the vibrance and enthusiasm of living in Singapore and contributing to the perception that Singapore is a very expensive place to live in. Last week, Singapore also won another dubious honour of being among the most expensive cities for expatriate housing.”
“Will the Minister help explain the rationale for this? Next, I also fail to understand why the top marginal tax bracket for individuals should be maintained at 28%, which is 2% higher than the corporate tax rate of 26%. Today, very high net worth individuals who are affected will have tax consultants and private bankers to help them to minimise their tax exposure. The end result may be more funds being kept abroad in tax havens to minimise their tax burdens. I have some suggestions too on property tax, estate duty and tax reliefs to promote regionalisation, which I will touch upon in greater detail in the Committee of Supply. Rebates on HDB Service and Conservancy and Rental Charges. These rebates were introduced some years ago as a result of the GST offset package which made 70% of individuals non income tax payers. Although these rebates were initially meant to be one-off, the Government has been giving these rebates year after year now because of good budget surpluses. My concern is that we may soon have 70% of the population developing a welfare mentality as they come to expect this and other handouts such as Edusave, CPF top-up schemes and so on year after year. What I would like to see is for these rebates to be confined to the lower income only, ie, perhaps the 1-roomers, 2-roomers and 3-roomers who are tenants or lessees who are more in need of financial aid. Budget Surplus. First of all, I think it is commendable that we have a budget surplus year after year. Many countries with much heavier tax rates are still grappling with breaking even on their budget. Recently, I read that we have broken the record of having the biggest budget surplus in the whole world, both as a percentage of GDP as well as in absolute quantum.”
“To further encourage regionalisation by local companies, the Minister may wish to consider allowing such companies to group their losses for an initial period of, say, five years, provided certain conditions are met. This will certainly help such companies to make longer term investment decisions overseas. The Government could also help local companies venturing into new markets, such as Vietnam, Myanmar and Cambodia by setting up insurance schemes for country risks to help reduce their exposure to risks arising from war, terrorism, rebellion, insurrection, coup d'etat, etc. These events are usually not insurable commercially. If available, they are either limited in coverage or the premium would be too hefty. Such Government support, I am sure, would be most welcome by many Singapore companies and would certainly encourage them to venture more boldly into new markets. Tax Changes for Individuals The across-the-board one-off rebate of 10% on individual income tax in the Year of Assessment 1997 is indeed a welcome relief for all of us, especially in a year of high property prices and escalating COE prices. For many of us, it is probably not enough to pay for the increase in the COE prices since the beginning of the year. I commend the Government for finally consenting to raise the income tax relief for dependants by a modest amount of $500. My only regret is that the Government did not use the opportunity to increase the allowable relief for wife to at least the same level as for our aged parents at about $3,500 to $4,500. Those of you who have wives who are not working and also aged parents to support will know what I mean. Why should a non-working wife who is active economically managing your home be given a tax relief which is lower than that for your aged parents?”
“So they simply poach from one another and drive up the wage costs in the process. There is therefore little transfer of technical expertise to our local people. In Thailand, I am told, foreign financial institutions are restricted in the number of expatriates allowed to be brought in. I am not suggesting that we do likewise here, but I certainly feel that more training of younger staff should be undertaken so that our pool of qualified financial professionals can be increased in the long run. If all the firms involved are compelled to train younger local staff, there will be less fear of poaching among them. This is important if we want to add breadth and depth to our financial markets. So I hope the Minister for Finance will look into the possibility of linking some of these tax incentives to the imposition of some requirement to train younger local staff to add to our pool of financial expertise. In the longer term, this will also ease the tight labour market for financial professionals and make it easier to further attract more financial institutions to Singapore. Overseas Enterprise Incentive (OEI) The OEI was introduced as part of the Government's effort to encourage Singaporean companies to regionalise. Thus far, the tax incentives are aimed at companies that are profitable, with income or dividends to remit home. The further relaxation of the OEI scheme is welcomed. Companies that venture overseas usually do not make profits in the initial years. Right now, their losses cannot be grouped together, although they can be carried over for a number of years at the individual company level.”
“For example, the first $2 million in taxable income could be taxed at, say, 15%, the next $3 million could be taxed at 20% and the rest above $5 million at the long term rate of 25%. In this case, local companies could be defined as companies with 100% Singaporean ownership. This concession could be given for an initial period of between five to 10 years. We are already helping many MNCs in Singapore in a similar way by granting them pioneer tax status for 10 years in the first instance. And this period, I am told, is sometimes extended depending on further investments made in their plants in Singapore. In the financial sector, we have already introduced similar multi-tier corporate tax rates, although in their case, the tax rate is lower or even exempt for selected activities above a certain threshold. Tax Incentives for Financial Services Sector Most of us do not begrudge the tax incentives given to the financial services sector to further attract high value-added activities, mega fund managers or reputable credit rating agencies to Singapore. In this way, we enhance the development of Singapore as an international financial centre. The question most frequently asked, however, is how do these tax incentives translate into benefits for Singaporeans. These tax incentives are mainly benefitted by the foreign financial firms. Although there are some requirements for some of these firms to employ a certain number of staff based in Singapore in order to qualify for these tax incentives, many firms simply transfer their expatriate staff from their home country to Singapore. Many of them bemoan the difficulty in recruiting qualified local staff but, at the same time, they are reluctant to train younger local staff for fear of job hopping among them once they are trained.”
“There is a perception that nobody seems to be monitoring and coordinating measures to contain, if not to reduce the cost of doing business here. Otherwise, a package to this effect would have been announced at this Budget Statement. Perhaps, the Government is waiting for the Committee on the Long Term Competitiveness of Singapore to come up with its findings first before taking action. Whatever the real reason may be, the message I would like to put across today is that our business community is extremely anxious about the current state of affairs and would like to see an integrated Government approach in dealing with the issue of cost. The Government should also not hesitate to revisit fundamental assumptions, or "sacred cows" that many policies are predicated upon. Today, many policies have been formulated based upon a mix of Government controls and free market forces. Perhaps, we should challenge some of these premises today and ask ourselves whether our economy and the people are mature enough to let market forces have free and full play. I will touch on these in greater detail in the Committee of Supply. Let me now deal with the budget details, item by item. Corporate Tax Rate The corporate tax rate is held at 26% although the announced long term rate is 25%. I agree that at 26% today, we are already one of the lowest in the world, after Hong Kong, for corporate tax rate. Since we have brought this down to 26% only last year, I agree that there is no real urgency to bring it down further. For the longer term, however, I would like to ask the Minister for Finance to consider a multi-tier corporate tax rate that will help small local growing companies that need to plough back their profits into the business.”
“They had wishlists which were largely not met by the budget. I will dwell upon them later. Our GPC also met up with our resource panel members comprising many prominent business people and professionals from a wide spectrum of the finance and business community. And this we did after the Budget Statement was announced. Their reaction generally was that the budget benefitted only the larger financial institutions and a small select group of business people involved in logistics. The local business community was generally disappointed. I share some of the sentiments of the local business community. However, if we regard this more like an interim budget and also remember that the Committee set up to look into the long term competitiveness of Singapore is still hard at work, we put these into perspective, we will feel less disappointed. I think we should also be grateful that there were no new tax increases, not even the perennial ones on cigarettes and liquor. We should also not forget the number of positive tax reliefs on the personal side. In my view, this year's budget is moderately positive, although skewed too much towards the foreign financial community. This budget does not address the main concern of business people, and that is, reducing the cost of doing business in Singapore so that our enterprises can become more competitive vis-a-vis our neighbours. I believe some time before the Budget Statement, the JTC did announce the freezing of rentals for industrial properties at current prices. There were also some adjustments made to the foreign workers' levy for certain sectors. Off budget action taken to control costs, however, gives the impression that such action appears ad hoc and uncoordinated.”
“Mr Speaker, Sir, this year's budget has been announced at a rather unusual time in July, instead of March every year. It has also come at a time when the US economy is surging ahead very strongly with low inflation, with the Dow Jones hitting a record 8000 recently while the regional economies here seem to be taking a beating with the Thai baht and the Philippine peso having depreciated significantly against the US dollar. The ringgit has also come under pressure lately. Even the Singapore dollar has weakened somewhat against the US dollar. There is general consensus that we are facing an economic slowdown today. The good news so far is that it does not seem to be as bad as the one we experienced back in 1985-87, many of whom have already forgotten as it was so brief. In fact, this slowdown is useful as it serves to remind all of us that prices do not just go up one way. They can also come down and stay down, just like the share prices have done since January 1994. On the other hand, the bad news is that our costs of doing business have been creeping up, eroding our competitiveness. And unless some concerted action led by the Government is taken, the slowdown may become much more severe. In the light of this economic backdrop, it is not surprising that the business community expects the budget to address the issue of competitiveness and to offer some relief to the high costs of doing business in Singapore. The Government Parliamentary Committee for Finance, Trade and Industry met up for informal dialogue sessions with three trade associations, just before the Budget Statement was announced, namely, the Singapore International Chamber of Commerce, the Singapore Confederation of Industries and the Singapore Chinese Chamber of Commerce and Industry.”
“Recognition could perhaps follow along the same line as the recognition given to national servicemen. Involvement in community service should be strongly promoted because volunteers meet up with the underprivileged class and are more grateful for what they have achieved. The community service awards that we have today, the PBM, BBM and BBM(L), are not exactly user friendly or prestigious. May I suggest that we consider something more prestigious, like the equivalent of Malaysian Datukship or the British knighthood to reward those who have contributed significantly to community service and their fellow Singaporeans. In conclusion, let me restate categorically that I support our economic and social policies that generate high growth. My concern is that the Government should also address the unintended negative consequences of high growth and success. I know that our main competitors, the other newly industrialising economies (NIEs) face similar problems of materialism, asset inflation, work ethics and even law and order. They are struggling to address some of these issues today. In Singapore, the problem may not be as acute, but it is never too early to work on these issues. In summary, I believe that the Government, in spite of our ambition to stay ahead, should address some of these unintended consequences of success by managing the expectations of our people better, giving greater priority to inculcating core values of hard work, thrift, modest living and community spirit. Most important of all, the Government should control asset inflation more effectively so that our citizens, while working here, need not worry too much about the future of their children, or for that matter, for their own future on retirement.”
“As almost all land in Singapore is in Government hands, the Government is best placed to control the escalation of property prices. They can do this through timely release of land, setting realistic reserve prices at tenders, speeding up the building programmes, and also increasing the plot ratios. In this respect, I urge the Government to consider allowing residential buildings to be built on a much higher plot ratio, even to 50-60 storeys high to better intensify the use of land, especially in prime areas and the waterfront. If we can control asset inflation better, we will also enable the elderly and the retired to keep their homes and their hearts in Singapore. Thirdly, to improve public infrastructure. Many people living in London today do not own cars. The subway system is excellent, complemented by widely available taxi service. For the few occasions that Londoners need to venture beyond the city, they rent a car at fairly affordable prices. In Singapore, we should improve the coverage of our MRT and LRT system island-wide as quickly as possible. The greatest bugbear of most commuters today is that the nearest MRT station is just too far away for them to use. In this regard, the Government should review the basis for funding for infrastructure projects such as the LRT to make it as widely available throughout Singapore as possible. If we can meet the transport expectations of Singaporeans, we would have resolved one of the main grouses of Singaporeans. Fourthly, to give greater recognition for community service. In tandem with de-emphasising wealth creation, the Government should also give greater recognition to those who perform community service to help their fellow Singaporeans.”
“We should also not over promote glamorous lifestyles which only the very rich can indulge in. For example, the Government has been talking a lot about waterfront housing as something we can look forward to. Yes, but in reality, however, at today's cost, only a very small minority can afford such housing. The remaining large majority who cannot afford them will be envious, or perhaps even resentful. I would also like to suggest that the Government stop publishing the list of the top earners in Singapore derived from income tax returns. Income tax returns are confidential and should remain so. Most people can be contented with their lot if they do not know what others have. When envy and discontentment set in, there will be upward pressure on wages and consumer prices, as everyone wants a bigger share of the pie. A vicious cycle then begins. Such a situation will make bonding of people and society much more difficult. Secondly, control asset inflation. I am all for enhancing the assets of our people through the HDB upgrading programme. Asset enhancement is not the same as asset inflation. Asset enhancement takes place when real economic value added has been imparted to the assets, thereby justifying the price increases. Asset inflation results when the same asset increases in price simply because the demand for it far outstrips the supply. And the asset still remains the same. Many have argued that the majority of Singaporeans are better off today with the high property prices as most Singaporeans are property owners, whether public or private. I do not think so. Most Singaporeans only own one property, the one they live in. They worry about their children being unable to buy one at today's high prices. And they are unable to help unless they sell theirs and emigrate.”
“It has encouraged further speculation in assets which do not create wealth. It has made a mockery of thrift and hard work. Those who have geared themselves to the hilt in the last 10 years have benefited most from asset inflation. With such asset inflation, those who want to retire comfortably are considering retiring elsewhere where the cost of living is lower. Today, even HDB owners have that option to retire elsewhere given the current prices of HDB properties. My concern is: will Singapore become only a good place to work in and make money, but not to live and retire in? If so, where will the hearts of our people be even though they may be physically working here in Singapore? Sir, this brings me to the main subject of what I want to say today, ie, what should the Government do to address the problems of the unintended consequences of high economic growth? I wish to offer some suggestions. The first one is: let us not over emphasise on wealth creation. Although economic growth and wealth creation are necessary for progress, one should not over emphasise them. It should be seen as a means to an end, not an end in itself. We need much more balance in our lives to be happy and caring. The role models that we hold out today to our people, especially the children in our schools, should not be only successful business people like Bill Gates or Warren Buffet, but also successful people from all walks of life - successful sports persons, successful professionals like lawyers, doctors and teachers. And success should certainly not be measured just by the amount of money they make, but by their contributions to their particular fields of expertise and knowledge. Contributions to society and mankind cannot be just measured in monetary terms.”
“With monetary wealth comes the inevitable pursuit of all the symbols of material success - houses, condos, posh cars, foreign branded clothing, fine dining and overseas vacations. It would not have been so disturbing if all these were only pursued by those who have already earned them. Unfortunately, many born in the post-independence era crave after them even before having earned them. The second is high expectations. Our children today, fortunately or unfortunately, I am not too sure, are brought up in much more comfortable surroundings. Having come from a higher base, they also have unnecessarily high expectations. For example, children who now live in a private property with their parents and are sent to school by car every day, will find it very hard to start life again in a HDB flat, and take a bus to work. The young who start to work today compare themselves to their seniors and are impatient and unhappy when they have to wait longer for the same promotion, that same car or house. Many among the young expect the Government to meet their expectations from good jobs to affordable housing and cars. Some also expect parents to continue to provide for the lifestyles they have been accustomed to. Unfulfilled expectations very often turn to dissatisfaction, disenchantment and resentment against the establishment, which is most unhealthy. The third is asset inflation and work ethics. With too much money chasing too little goods, prices will go up. The asset inflation in the last 10 years, especially of properties, has made instant millionaires of many. The capital gains from many of these assets are more than what an average worker can ever hope to save from earned income in a lifetime. Many are now contemplating early retirement. It has blunt the will to work.”
“Mr Speaker, Sir, thank you for allowing me to join in this debate. I join my colleagues in thanking the President for his Address to Parliament. Singapore has performed extremely well economically since independence in 1965. Our per capita indigenous GNP grew from $2,478 in 1970 to $34,220 in 1996. Our annual growth in GNP was mostly in double digits. More importantly, the benefits of our economic growth have been shared fairly equitably across all segments of society. Our fair and open meritocratic system allows the more able, talented and hardworking to move up the social and economic ladder. Many of us today in this House have benefited from this system. However, because of our humble beginnings and modest backgrounds, many of us still embrace the values of thrift and hard work. Three decades of continuous high economic growth may have benefited all of us in terms of living standards and quality of life, but it has also led to some unintended consequences which, if left unchecked, may lead to a society without a soul. What are some of these unintended consequences? First of all, materialism. There is so much emphasis on the creation of wealth at national level and company level that it inevitably flows down to the individual level. Everyone wants to get rich quick. Success in life seems to be measured by the amount of money you make - it does not matter what the job is. For many, the pinnacle of success would probably be to appear in the list of the one million dollar club, ie, the 200-odd people who earn more than $1 million per year, and which the Government has chosen to publish every year. Although the names are not mentioned, you could make an intelligent guess of who they are, given the small business community here in Singapore.”
“Sir, if for some reason like personal family circumstances, would the Minister be prepared to give a waiver on this policy and allow them to attend international schools?”
“Sir, I do not quite understand the policy because the Minister has decided not to make education compulsory in the first place, which means that, effectively, children can stay at home. But, at the same time, they cannot attend international schools. So I do not understand the inconsistency in the policy. Mr Lee Yock Suan: Sir, there is no inconsistency. We want all our Singaporean children to attend school. We have not made education compulsory because there is no need to. Almost every child of school-going age is in school. The reason why we insist that they go to Singapore schools is for the purposes I have explained. We have our own curriculum. We have, for example, a bilingual policy. We also try to inculcate in our children certain values. International schools are meant for expatriates. For Singaporeans, we want them to go to our schools.”
“I believe MAS and the foreign banks have a public relations task to allay such anxieties of foreign customers. Singapore has grown as an international financial centre because of the confidence instilled in customers through our legal framework. We should do our best to maintain that confidence. Lastly, the new section 46A provides penalties for unauthorised communication and misuse of such information, in the course of the work of foreign authorities. My last question to the Minister is: how do we enforce these laws on persons who violate this Act who are living in other countries?”
“Stronger banks have greater access to quality customers and better cost of funds and can therefore compete more effectively. The smaller banks may have to merge or be absorbed by their parent companies to meet this requirement in five years. Clause 4 to amend section 26 to shorten the time allowed for banks to submit their monthly statements from 15 calendar days to 10 calendar days is, in my view, reasonable, considering the high level of computerisation in banks today. As a matter of fact, MAS had already implemented the 10-day deadline since February last year through a circular issued to all banks dated October 1994. Generally, banks should have no problems meeting this deadline, except perhaps in months when public holidays and weekends fall within those 10 calendar days. In those cases, I hope the MAS would be understanding and give banks a bit more time to file their returns. Next, I have some questions regarding the provision to allow, under certain circumstances, a foreign supervisory authority to carry out an inspection of a branch in Singapore of a foreign bank under its supervision. This will give foreign authorities a complete picture for specific audit and investigation purposes. My question to the Minister is: apart from the few countries which have been mentioned, will the foreign authorities of other countries reciprocate and allow MAS to do likewise? If not, will Singapore be disadvantaged vis-a-vis other financial centres where customers' perception of our banking secrecy is concerned? I do realise that the possible access by foreign authorities to their branches' books in Singapore is subject to the approval of MAS and a host of other conditions. But, unfortunately, the fear of compromise of confidentiality is sometimes irrational.”
“Mr Speaker, Sir, before I begin, I would like to declare my interest as a banker. I would also like to say that the views I express today are entirely personal. I do not represent my bank here or any banking group. Some of these views, however, have been formed after informal discussions with people in the banking community, many of whom have been in banking much longer than I. The stated mission of the MAS is to promote sustained and non-inflationary growth of the economy, as well as to foster a sound, progressive and competitive financial services sector. The resounding success of Singapore as an international financial centre is testimony to the good job MAS has done in this respect. The Banking Act has served MAS well thus far in maintaining a sound financial regulatory framework which could withstand incidents like bad debt crises of less developed countries, stock market crashes and even the recent Barings Bank failure without any investor or financial institution in Singapore losing any money. But as the external pressure for liberalisation of our financial services grows, there is a need to review our supervisory system to ensure that we are prepared to manage the greater volatility in the financial markets that may result. I believe this Banking (Amendment) Bill is a step in the right direction, and I support it. First of all, the provision to require existing banks incorporated in Singapore with capital funds of less than $1.5 billion to increase their capital funds to that level in five years will result in fewer but stronger local banks. This, I believe, is necessary if we intend to compete in a big way in the international market place. The recent mergers of Chase and Chemical Banks and Tokyo and the Mitsubishi Banks are aimed at achieving precisely this.”
“I feel that we should not have policies that divide and weaken the OBA, but we should have policies that strengthen them.”
“Sir, we all want the best for our children. We all want them to start off correctly in life by going to the right school. Therefore, the Primary One school criteria have always been very sensitive. Generally speaking, the Primary One criteria have been fine-tuned over the years and for the better. The only point I would like the Minister to review is the new requirement introduced last year that the parent could only register his or her child in the same primary school that he or she came from and not in another one of the same group. I am going to use Anglo Chinese School (ACS) as an example. In the past, an ACS old boy could register his son in either ACS Primary School (ACPS) or ACS Junior School (ACJS). The new ruling has created a problem of mis-match between applications and vacancies, between ACPS and ACJS. This is because ACPS used to have 10 primary classes in each cohort many years ago. But today they have only five. Whereas ACJS, the junior school, used to have five classes, but today they have 10. Today, we see a large cohort of ACPS old boys from 10 classes fighting for places in only five classes in ACS Primary School, whereas ACJS has many vacancies to spare. I think the Ministry should allow parents and schools some flexibility in this instance to register their children in either primary or junior school and in this way, redistribute the demand to match the vacancies better. Incidentally, this is already allowed under Phase 2B. A member of the Methodist Church, for example, can register his or her son in either school. Secondly, there is only one Old Boys' Association (OBA) irrespective of which school the students graduated from. Many activities such as fund-raising and so on are conducted at the OBA level.”
“I would like to suggest that such activities should be recognised and taken into consideration like other school ECA during performance appraisal and promotion time in school, all things being equal.”
“Sir, I have expressed concerns before about the difficulty the Ministry of Education faces in recruiting teachers for the schools, especially male teachers. I would like to know whether progress has been made in this area, both in the recruitment as well as the retention of teachers. I join my colleagues in urging the Minister to look into improving the terms and conditions of service of teachers. I am particularly concerned about the need for the teaching profession to have its fair share of male teachers because young boys are at a very impressionable age and need some male role models to look up to. As it is, young boys are already surrounded by females from birth - from the mother to the maids to nursery and kindergarten teachers. Admittedly, the father should also play his role in providing some nurture to the boy but, unfortunately, most fathers can never find enough time as they are busy working or travelling. Can the Minister consider more incentives for the men to join the teaching service? Sometime ago, SAF officers who retired early were given an option to become physical education instructors in schools. I would like to ask the Minister how this scheme has fared and whether we are still getting more SAF officers opting for this scheme. Can we use the qualified SAF officers to teach other subjects apart from physical education? I believe the NIE could also help them in the transition through some retraining courses. Finally, I know of many teachers who stay in touch with the adult world outside school by doing community work in charitable and other community organisations. Many of them spend a fair amount of time on such extra-curricular activities. But they do not feel appreciated by the schools.”
“Sir, first of all, let me commend the Government for the HDB upgrading programme. It has created a lot of enthusiasm among HDB dwellers and of course created a lot of value to old estates. Unfortunately, it has also created some anxiety and unhappiness among the people in the estates not selected yet, especially when they see newer estates being upgraded before theirs. I would like to ask the Minister to consider using the age of the estate as the most important criterion for the selection. Next, I notice that in the upgrading programme, usually by precincts, public facilities and amenities like hawker centres or markets within the precinct would not be included in the upgrading programme. In my view, such public places should be included to make the upgrading complete. Otherwise, they would literally stand out like a sore thumb. Besides, after upgrading, these hawker stalls or shops can be sold at a higher price during the sale of shops or stalls programme and of course the HDB would then get back its investments. Furthermore, upgrading causes a lot of inconvenience and I think we should not cause inconvenience more than once if we can help it.”
“Sir, for many of us, investment decisions are some of the most important decisions that we have to make in our lives. The returns from a good investment can be more than what one can save from earned income for an entire working life. Sometimes, it makes a mockery of hard work. For example, those who have invested in landed properties in the last few years are laughing all the way to the bank. Similarly, investment decisions are equally important for the Government as it is for the individual. Sound investment decisions will multiply our budget surpluses and create greater wealth for all of us. Without revealing too much market sensitive information, can the Minister tell us what our investment policies are? Are there targeted rates of return? Are there policies on diversification by products and markets, geographically? With many countries in Asia today growing at double digit figures, are we investing more in Asia today? Are there policies about co-investments with the Singaporean private sector overseas? 3.45 pm”
“Sir, feedback from businessmen, especially from the small and middle-sized enterprises, showed that the cost of doing business in Singapore has gone up and one of the contributory factors is the rising cost of industrial land. Price is a function of demand and supply. With strong economic growth, the demand for industrial land rises. Supply, however, is very much in the control of the Government. So my questions to the Minister are, firstly, has the price gone up because we have been releasing industrial land too slowly? What is our stock of industrial land and how long will it last at our current rate of release? How do prices of our industrial land compare to those in our neighbouring countries of Malaysia and Indonesia? Are we losing MNC investors as well as local ones to them because of our higher prices of industrial land? Are our SMEs able to pay the same price for industrial land as the big MNCs? Can we make out a case to assist the SMEs in meeting their need for industrial land at a preferential rate?”
“But on 3rd March 1996, Mr Ling How Doong was reported as saying that this so-called 2% rebate benefits those in the high income bracket to the extent of $7,000, and that the rich will benefit more than the poor. By making this remark, does it mean that within a few days, between 24th February and 3rd March, his Party had already changed their mind about the demand for a 2% tax cut plus $1,000 rebate? Or has he regretted that his Party had made the demand and he wants this demand to be withdrawn? If we take the $7,000 tax rebate which, according to him, would benefit the rich, then this high income group would be paying income tax of $98,000. Because, under the new tax structure, only those whose chargeable income is more than $91,000 will benefit by $7,000. If he thinks this is very unfair, does he remember that on 24th February his Party asked for a 4% reduction of corporate income tax? If that is the case, how much will the big corporations be benefitting? According to the annual report of DBS, its 1995/96 pre-tax profit was $700 million. A tax deduction of 4% will mean that DBS will benefit by $28 million, which is 4,000 times $7,000. Does Mr Ling How Doong not think that this is extremely unfair? From all these analyses we can say that Mr Ling How Doong and his Party do not have a very comprehensive understanding of the full facts of the financial policy. They are just playing to the gallery to please the crowd, and in so doing they are contradicting themselves.”
“It means that the people are suffering with no home, no income, and no basic necessities. Can you say this of the people of Singapore? We are living in an affluent society. Materially speaking, we can say that we are close to some of the advanced countries in the West. I agreed with Mr Peh Chin Hua who said the arguments of Mr Cheo were those of the 1970s. They were outdated. This is an unprecedented budget. I would like to try and look at the budget from the point of view of an ordinary citizen. I have made a simple calculation. A family living in a 4-room HDB flat would enjoy benefits amounting to $1,765 from this budget. How do I come to this? Let me give an illustration of a two-member family with a total income of $20,000 per year. One of them has been a national serviceman and they live in a 4-room flat. Under this budget, they will get CPF Top-Up of $400; SOTUS, $700; S&C rebate of $80; PUB utility rebate of $100; income tax reduction for Year of Assessment 1997, $250; National Service rebate, $75; and 1996 once-off tax deduction of $160, making a total of $1,765. Yesterday, in this House, Mr Ling How Doong said that the Government was like a farmer who sheared a lot of wool from the sheep but gave back little to the poor creature. I think this is an unfounded analogy because he does not care to read carefully the rebates announced in the Budget Statement. Mr Ling How Doong's Party has also expressed their views before and after the announcement of the Budget. On 24th February 1996 the Party asked for a flat cut of 2% income tax with a $1,000 rebate. They seem to be quite accurate in their forecast, because the Government has indeed given a 2% tax cut and also a tax rebate of as much as $1,765, as I pointed out earlier.”
“Mr Speaker, Sir, before I was interrupted, I was saying that in many households today, women stop working, not to do the housework and dispense with the maids, but to provide nurture to the children and inculcate in them social and moral values that foreign maids are not in a position to impart, and most do so at great sacrifice to their career and financial status. They should not be penalised further with tax disincentives. The NSmen's tax relief should also be given to the family as a package and not allocated rigidly for wife and parents. Next, I urge that the tax relief for the wife be increased from $1,500 to $3,500 which is the same for the dependent parent. I think we all know that wives cost as much, if not more, to maintain than parents. Besides, the amount of $1,500 has not been increased for a long time despite many years of inflation. Another point I would like to raise refers to the tax on the net annual value of owner-occupied property exceeding $75,000, which has been raised now to $150,000. I raised this subject some years ago and was told that this tax affects only a few hundred people. If that is so, why do we need to retain this tax, which is basically a wealth tax for only several hundred people. As wealthy people are already taxed in many other ways, abolishing this tax might save a few staff at the Inland Revenue Authority. With these comments, Mr Speaker, Sir, I support the Budget. Assoc. Prof. Low Seow Chay (Chua Chu Kang)( In Mandarin): Mr Speaker, Sir, I support this motion. The Opposition Member, Mr Cheo Chai Chen, said that the people of Singapore are living in hardship and great difficulties. I do not know whether Mr Cheo understands what is the meaning of "hardship and difficulties".”
“Next, I move on to our tax system which, I fully agree, should be simple to facilitate compliance and also to lower administrative and business costs. I would like to commend the Government for a very generous budget, especially for the individuals who will save from either tax rebates and tax cuts, or rebates from HDB rentals and/or service and conservancy charges, and rebates on PUB bills. We will be hard put to think of some segment of the people who will not benefit in some way, unless they do not live in HDB flats or they do not pay taxes. Sir, I would like to use the opportunity to make a few suggestions. One of our core values is that the family is the basic building block of society. Given this core value, should we not tax the family as a unit, irrespective of whether both husband and wife are working, or only one spouse is working? This means that reliefs and rebates for the family should be allowed to be taken by both or either spouse. For example, in the case of the foreign maid levy, there is no reason why it should be allowed to be taken only by the woman and not by the man. In many households today, women stop working, not to do the housework and dispense with the maids, but to provide nurture for the children.”
“Another issue of concern to me is the Government's role in helping our people to prepare for retirement. The average family income at today's cost of living does not leave much to be saved for retirement, apart from the 40% contribution to the CPF account by both the employer and the employee. With regular wage increases and concomitant higher CPF savings, the family usually upgrades to a bigger flat as the children grow up and require more space. When they retire, the children are usually grown up and married and have flats of their own. The couple's entire life savings are locked away in their 4- or 5-room flat with a small amount in the CPF Minimum Sum Scheme, adequate for only basic necessities. The Government does not budget for any retirement fund or welfare scheme for the old, and rightly so. The question is: how will the couple then enjoy their retirement, unless they can realise more cash by selling their flat in the open market and down-sizing to a small one? Alternatively, they could sell and move overseas to a place where the cost of living is much lower. This, I am sure, is not what we want to see. I am sure we do not want Singapore to be a place where only working people can afford to live in. Therefore, down-sizing to a smaller flat should be encouraged. My concern is that in the future, down-sizing to a smaller flat bought in the open market may be a problem, as the Government has stopped building small 2- or 3-room flats. Therefore, given the above situation, I would like to urge the Government to reconsider its decision to stop building small flats as there will be a greater demand for them as our society ages.”
“Although I agree with it in concept, in practice, the prices can be very sensitive to how assets, including land, are revalued, especially for utilities that use a significant amount of land in their production. In most businesses in the commercial sector, most assets, including land, are carried at the lower of cost or market value. They are not revalued every year. In the case of Singapore Power, I gather that because all assets have been revalued by the Government before transferring them to Singapore Power, the accounting return on equity drops, compared to other power companies, and we conclude that our tariffs are therefore too low. My question to the Minister is: firstly, are we comparing using the same base year for valuation of assets? Secondly, if we increase the tariffs first in order to get a higher return on equity before selling Singapore Power shares at a higher price, how do domestic shareholders benefit from privatisation, ie, if we exclude the portion sold at a discount? Share value goes up only when earnings increase, which means when tariffs are raised and if we assume that the efficiency of the company remains constant. Perhaps some foreign shareholders who do not consume local power may benefit, but that is not the purpose of privatisation. The point I am making is that in the case of monopolies like Singapore Power, the Government may not need to privatise since it is not in need of funds as we have budget surpluses. Even without privatisation, Singapore Power could and should restructure and rationalise its mode of operations and management so that all factors of production are priced correctly. This argument applies to all statutory boards that are virtual monopolies.”
“Mr Speaker, Sir, we have had many good years and every year seems to be better budget-wise. Our budget surplus seems to be getting bigger and bigger, from $1-2 billion per year, we are now budgeting a surplus of $7.1 billion for FY96. This is no small sum, as it is 27% of the total budgeted revenue or 38% of the budgeted expenses of $18.9 billion. With such surpluses, the Government is left with a happy problem of thinking of new ways of distributing some of it back to the people to assist select groups of citizens, such as the Medifund for the very low income people, or to encourage and reward certain behaviour, such as the Edusave Fund to encourage our children to do well in school. I support these programmes because I believe and subscribe to the social objectives we aim to achieve. However, the bulk of the budget surpluses, I understand, are invested to prepare ourselves for a rainy day. The question then arises as to how these surpluses are invested, and what kind of a return are we getting from these investments. In the Budget book on page 53, our investment income is given as $3.87 billion. But we do not know if this is a good return considering the total amount invested, the types of investments and the risks we are taking. Are we generating better returns than the market benchmark for similar investments? If not, this leads me to the issue of whether we should collect less revenue, have less budget surplus and let the people invest their own funds to yield a higher return. I hope the Minister will look into this issue. The Minister has also spent some time in his Budget Statement expounding on the need to price factors of production correctly to avoid distortions to the economy.”