Lim Hng Kiang
Singapore
“The company has made commitments to recycle the ash, and as for renewable energy, the gasification project is not an energy project, it is not a generation company (genco). It is to produce hydrogen and carbon monoxide or, essentially, carbon. Because as feedstock to the petrochemical sector, you need more C and more H2.”
“The Government will continue to recover the IIA awarded if the company fails any conditions or breaches the legislative amendments. I would like to highlight that there are no errant cases in the last five years for IIA and the current amendments are, therefore, not reactionary in nature, but are being made for legislative clarity.”
“In addition, the IIA scheme will be extended till 31 December 2022. Clauses 10 to 13 give legislative effect to this change. The remaining legislative changes arising from our periodic review of the income tax system are either administrative or technical in nature.”
“Data on household and individual savings rates by income groups are not available. However, data on the aggregate level of household financial assets can be obtained from the Household Sector balance sheet compiled by the Department of Statistics.”
“The aggregate level of financial assets owned by Singapore’s household sector6 in each of the past five years is provided in Table 1 below. Data on the amount of financial assets owned by households and individuals in the different income percentiles is not available.”
“The Second Review of the Comprehensive Economic Cooperation Agreement (Second CECA Review) is ongoing. The review is taking some time as both countries have our respective interests to work through, such as in the area of labour mobility. Our agencies regularly engage Indian counterparts to work through issues collaboratively.”
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“Second, the Government releases land for private-sector industrial developments through a half-yearly Industrial Government Land Sales Programme to ensure that there is sufficient land and industrial space to meet demand and to support our economic growth, as well as to maintain the stability of the industrial property market. With an increase in the supply of land and industrial space, the industrial price index has decreased by 16.6% from its peak in 2014, while the industrial rental index has declined by 13.4% from its peak in 2014. Third, we have also made public the statistics on industrial space prices, rents, as well as occupancy rates to improve transparency and help companies make informed decisions. We must continue to take bold strides to seize opportunities to innovate and not let our domestic constraints of a tightening labour market and scarcity of land to hold us back. Mr Chairman, we have put in place initiatives to ensure that our companies remain competitive and are well-poised to tap into growth areas and take up future challenges posed by the global economy. Coupled with the positive growth forecast in the year ahead, I would like to encourage our companies to take advantage of the firm global economic prospects to persevere on their transformation and growth journey. We welcome companies to be actively engaged in our efforts as we work to expand Singapore's economic space through building and deepening linkages, and establishing innovation networks to foster relationships and create opportunities. Over the next decade, our collective efforts should enable us to grow by 2% to 3% per year on average. This is how we can work together to create an economy that can offer sustainable wage growth and good jobs for all Singaporeans.”
“My colleagues will also elaborate further on the progress of our ITMs and our restructuring efforts. Dr Tan Wu Meng asked about our strategy to help our companies remain competitive and support sustained growth, especially given our overheads and cost structure. Along the same vein, Mr Leon Perera asked about the Government's approach to keeping industrial land costs competitive. The Government monitors business costs closely to ensure that we remain competitive. In 2017, the overall Unit Labour Cost (ULC) for the economy fell by 0.3%, moderating from the 2% increase in 2016. However, there were differences across the different sectors. While manufacturing ULC declined by 8% on the back of strong productivity gains, ULC for some services sectors, such as the accommodation and food services sector, rose by 2% as wage growth outpaced productivity growth. The overall ULC is likely to see a modest increase this year. Wages are expected to rise amidst a gradual recovery in the labour market. The key, therefore, for companies to manage their labour costs and have sustainable wage growth for Singaporeans, is to have continued productivity growth. For companies in the manufacturing sector, rental costs constitute a relatively small proportion of business costs, and are usually less than 2% on average. We have, nonetheless, taken measures to ensure that industrial land costs remain competitive. First of all, JTC Corporation benchmarks its land prices internationally to ensure that they are competitive.”
“A key component of GIA is to create a network of Innovation Launchpads around the world. We recognise that our Institutes of Higher Learning (IHLs), companies and agencies have already established their own networks abroad. GIA seeks to integrate them into a single network that companies can readily tap on to launch their innovations into the relevant markets. My colleagues will share further on the progress of our R&D efforts and GIA initiative later on. We will also take advantage of our ASEAN Chairmanship to work on an ASEAN Innovation Network (AIN). The intent is to strengthen the networks among the innovation ecosystems in ASEAN. This will further enable our companies to expand abroad and help them to better respond to demands from the increasingly sophisticated and growing consumer base in our region. Mr Chairman, this focus on internationalisation and innovation is part of our larger industry transformation efforts. We announced the S$4.5 billion Industry Transformation Programme in Budget 2016, recognising that each sector is different and that transformation, coordinated at the sector level, can deliver more targeted results. In this vein, we introduced the ITMs. The ITMs are designed to keep our industries competitive and generate growth for Singapore. Each ITM takes into account the unique circumstances of the sector and customises efforts through the four key pillars of innovation, productivity, jobs and skills, and internationalisation. We have launched 22 ITMs to date, and I am happy to inform Mr Liang Eng Hwa that we would have rolled out all 23 ITMs by end of this month. Moving forward, we will continue to refine the ITMs, together with our partners, working closely with all stakeholders, including companies, TACs, unions and workers.”
“We will also continue to extend our reach into other ASEAN countries, such as Myanmar and Vietnam, where our companies have strong and sustained interests. Mr Chairman, the second major driver of our economic success is innovation. With shifting factors of production now favouring technology-intensive economies, Singapore’s focus on innovation and technology puts us in a position of strength to transform our installed base, capture new investments and create new solutions for the market. Our strengths in innovation and technology have been developed through consistent R&D efforts over the years, which have raised Singapore’s global competitiveness and enabled many of our sectors to move up the value chain. Beyond R&D, we are also making a strong, committed push towards building innovation networks and partnerships to link up companies across major innovation hubs. This is a reflection of the nature of innovation in a digital age, and the importance of cross-market perspectives for businesses to reap new opportunities. The Global Innovation Alliance (GIA) was launched last year and seeks to strengthen Singapore’s connections to major innovation hubs around the world. It creates more opportunities for our students, entrepreneurs and businesses to gain overseas experience, connect and collaborate with their overseas counterparts. The connections facilitated under GIA will allow ideas and talents to cross-fertilise across different innovation hubs and provide access to interact with and identify local partners for collaboration. This injects vibrancy into our local innovation ecosystem and bolsters our value proposition as a springboard for foreign companies to come and testbed new ideas here before expanding into the region.”
“And, this year, as part of Singapore's ASEAN Chairmanship, we are pursuing an ASEAN agreement on e-commerce to help our businesses expand and leverage the e-commerce market potential in Southeast Asia. The ASEAN e-commerce scene is still at its infancy, with some companies finding it confusing to navigate the varying e-commerce regulations in various ASEAN countries. This agreement that we are aiming to sign this year will streamline some of these regulations so that aspiring entrepreneurs and SMEs can market their products and services regionally with greater ease and make it safer to send and receive electronic payments. With this agreement, companies like Coldwear, a local winter wear and travel accessories retailer, can expect to use e-commerce solutions to expand into the ASEAN region more easily. Coldwear has successfully entered the Indonesian market and plans to venture into the wider ASEAN markets, including the Philippines, Thailand and Vietnam. Mr Chairman, our strategy of engaging ASEAN will also take place at the bilateral level. We will press on with our suite of bilateral initiatives to deepen our economic linkages and help our companies take advantage of the opportunities in our neighbouring ASEAN countries. We will intensify our engagements with our long-term partners, such as Malaysia and Indonesia. New collaborations, such as the High Speed Rail and the Rapid Transit System will enhance bilateral connectivity, business links and people-to-people exchanges between Singapore and Malaysia. ESG will continue to explore areas of synergies in Indonesia. The Kendal Industrial Park in Central Java, a joint venture between SembCorp Development and an Indonesian company, is one example. We hope to be able to facilitate more of such partnerships in future.”
“15 pm Despite the rising nationalistic tendencies and anti-trade sentiments elsewhere in the world, ASEAN has stayed on course in its trajectory of regional economic integration. ASEAN is also navigating the rapid pace of technological change and digital disruption. For businesses seeking to enter or expand their presence in ASEAN markets and beyond, AEC, since its realisation in 2015, has lowered entry barriers, reduced transaction costs, widened choices for consumers and generated job opportunities in the region. Take, for instance, Trends Home Electrical. The company started out as a single home appliance shop in 1998. Today, their products are carried by over 450 retailers in Singapore, Malaysia, Indonesia and Thailand. It has been using the ASEAN Trade in Goods Agreement since 2015 for its products to enjoy tariff savings and has experienced a close to 15% increase in exports since then. Trends Home Electrical plans to continue innovating, upgrading its capabilities and further expand into Southeast Asia to capture the growth opportunities there. At this juncture, Mr Chairman, I would like to clarify on Mr Low Thia Khiang's comment that while AEC was established by the end of 2015, but ASEAN failed to achieve one-fifth of the 506 measures and had deferred them for 10 years to 2025. It is true that ASEAN did not quite achieve all 506 measures in 2015. We achieved about 80% of them. But we have not neglected the rest. We continue to track, monitor and work on the rest of the measures, and I am happy to report that, to date, 88% of the AEC measures have been implemented. So, we are not deferring them to 2025.”
“For instance, Singapore and China have recognised our strong complementarities and are jointly developing the China-Singapore (Chongqing) Connectivity Initiative Southern Transport Corridor (CCI-STC), which aims to improve connectivity between western China and Southeast Asia. Three Singapore companies – Pacific International Lines (PIL), PSA International and YCH Group – have entered into two joint ventures with Chongqing companies to steer the development of the STC projects. We are also collaborating with the Government of Andhra Pradesh in India to develop the state’s new capital city of Amaravati, as well as to promote greater economic collaboration with Andhra Pradesh. In 2017, Ascendas-Singbridge and SembCorp Development formed a Singapore Consortium to master-develop the commercial core of Amaravati, together with its government. Since then, our companies have been actively exploring smart city urban solution opportunities in Amaravati. Closer to home, ASEAN has strong potential as a market. We are strengthening our engagements with ASEAN through both regional economic integration as well as bilateral initiatives with the ASEAN countries. Miss Cheryl Chan, Mr Henry Kwek, Mr Low Thia Khiang and Ms Sun Xueling asked about our plans to work with other ASEAN member states to unlock ASEAN's potential to benefit Singapore and Singaporeans. As a region, ASEAN is making good progress in deepening economic integration under AEC. The prospects are good. ASEAN is currently the sixth largest economy in the world and enjoy a steady growth rate of 5%. By 2030, ASEAN has the potential to become the fourth largest single market in the world after China, the US and the EU. 6.”
“The upgrade looks to deepen bilateral benefits by enhancing areas, such as investment provisions, trade facilitation, rules of origin, and improved market access for Singapore businesses, especially in the services sectors. We are expanding Singapore's connectivity by joining regional FTAs, such as CPTPP, which will be signed next week, and the ongoing Regional Comprehensive Economic Partnership (RCEP). Singapore is also negotiating FTAs with major regional blocs, such as the Eurasian Economic Union and the Pacific Alliance. Assoc Prof Randolph Tan observed that more should be done to promote the opportunities of CPTPP to our SMEs. Our pursuit of FTAs is for the benefit of our companies and their workers. We will continue to work with the Singapore Business Federation (SBF) and TACs on outreach efforts to help our companies, in particular, our SMEs. These efforts include company outreach sessions, FTA training courses, and even one-on-one sessions to follow up on specific concerns or opportunities which companies are keen on. Mr Henry Kwek and Ms Sun Xueling asked about the Government’s plans to help Singapore companies take advantage of the shift in global economic focus towards Asia. Indeed, Asia's growth brings about many opportunities, with rising consumption as well as demand for infrastructure in Asia offering significant export and investment opportunities for Singapore-based companies. We are working with China on commercially meaningful areas in its BRI. BRI has the potential to foster regional cooperation, enhance connectivity and accelerate infrastructure development across Asia. Singapore companies are well-placed to tap on BRI opportunities.”
“It is by staying open to trade, people and ideas that we can participate in global growth and build the deep capabilities needed for our people and companies to access new markets, on-board cutting-edge technologies and create good jobs. Singapore, therefore, remains committed to the multilateral and rules-based trading system. Over the years, we have built depth and breadth in our international linkages. We have an extensive network of 22 implemented FTAs and Economic Partnership Agreements with 33 trading partners. Our FTAs have helped our companies benefit from tariff savings of over S$1.1 billion in 2016. To illustrate with an example, plastics product manufacturer Singa Plastics Ltd has taken advantage of several of our FTAs, such as the ASEAN Trade in Goods Agreement, the ASEAN-Korea FTA, as well as the Singapore-Australia FTA, to grow its business and maintain competitive pricing for its exports into these countries. The company’s exports have increased by close to 30% since it began using these FTAs. As Singa Plastics also exports to France, Germany and Greece, it is keenly awaiting the ratification of the EU-Singapore FTA (EUSFTA). We will continue to enhance our connectivity by strengthening connections with existing trading partners as well as forging new connections with emerging markets. We will continue to work with the European Commission to expedite the ratification of the EUSFTA. We review our FTAs from time to time, and upgrade them to ensure that they remain relevant and useful to our businesses. There is, for example, the ongoing negotiations with China to review and upgrade the China-Singapore FTA.”
“Growth is also expected to broaden to domestically-oriented services sectors like retail and food services as consumer sentiments improve in tandem with the ongoing recovery in the labour market. However, the performance of the construction sector and the marine and offshore engineering industry is likely to remain lacklustre due to weak operating conditions. We are experiencing three major global shifts. First, rapid technological change. Innovation cycles have shortened, and new technologies are disrupting many sectors. Second, global value chains are changing, as major trading partners promote in-sourcing and move up the manufacturing value chain. In the US, the Trump administration has highlighted its plans to boost its manufacturing sector. China has embarked on a "Made in China 2025" initiative, and India has its "Make in India" initiative, too. Third, there is a shift in global economic weight towards Asia. We are witnessing the rise of China, India and Southeast Asia with a growing middle class, increased urbanisation, and infrastructure development efforts, such as the BRI. To strengthen our competitive edge, we must, therefore, continue to strengthen our linkages, innovate and deepen our capabilities to prevent being displaced by the global shifts that I mentioned just now. Looking ahead, we recognise two major drivers of economic success – internationalisation and innovation. Dr Tan Wu Meng asked about our trade priorities and whether our pursuit of FTAs is still relevant in the current global economic climate. As a small country with an open economy, connectivity is core to Singapore’s survival and prosperity. Having free and open markets is critical for Singapore’s development.”
“Mr Chairman, I thank Members for their comments and suggestions. Mr Yee Chia Hsing asked about the outlook for the global economy in 2018 and the implications for the Singapore economy. The global economy ended on a firm note in 2017, posting the broadest growth since 2010, according to the International Monetary Fund (IMF). We expect global economic growth to pick up slightly in 2018, partly on the back of improved growth prospects in the US due to the recently approved tax reforms. However, as compared to 2017, growth in most of Singapore’s key final demand markets, such as the Eurozone, China, the Newly Industrialising Economies and ASEAN-5, is projected to moderate or remain unchanged. At the same time, while global macroeconomic risks have receded to some extent since the end of 2017, there remain some downside risks to global growth. First, there remain concerns over protectionist actions, which could disrupt global trade and economic growth if they translate into trade barriers. Second, the US' economic recovery is in a relatively mature stage of the cycle. An upside surprise in inflation could lead to a faster-than-expected normalisation of US monetary policy, with consequent impact on the US and the global economy. Against this backdrop, Singapore’s economic growth is likely to moderate in 2018, but still remain firm. Specifically, MTI expects the Singapore economy to grow by 1.5% to 3.5% in 2018, with growth likely to come in slightly above the middle of the forecast range. We expect the performance of our sectors to vary. The manufacturing sector, alongside externally-oriented services sectors, such as finance and insurance, transportation and storage, and wholesale trade, are likely to sustain growth due to firm external demand.”
“The company has made commitments to recycle the ash, and as for renewable energy, the gasification project is not an energy project, it is not a generation company (genco). It is to produce hydrogen and carbon monoxide or, essentially, carbon. Because as feedstock to the petrochemical sector, you need more C and more H2. And to do that, you need to convert coal into hydrogen and carbon monoxide. Because we are not adding on to refineries in Singapore, we have 1.3 million barrels of refining capacity and that has not changed for many decades, so we need additional feedstock from other sources. Therefore, we have looked towards gasification of coal. I want to assure Members here that, in terms of energy generation, we are still depending on natural gas which is the least pollutive of all and, of course, supplemented by solar energy in a limited way. So, this is not a genco.”
“In granting the licence to the operator, MEWR has set very strict conditions on the disposal of the ash, in particular, that it will not add to the dumping requirements that we have. The company will meet those regulations. On reconciling the two, this is a delicate balance that we have to try to achieve. On the one hand, we have a fairly thriving chemicals and energy sector, contributing 1.8% of our GDP, employing more than 25,000 workers, all with very good jobs. We have to maintain the competitiveness of that sector and, for that, we need competitive feedstock – hydrogen and carbon monoxide. We have explored the different ways of introducing that feedstock and gasification appears to be the most sensible approach. At the same time, we have made very strong commitments on the Paris Agreement and the Singapore Government intends to meet those commitments. So, in balancing the two, we have reached an agreement with the operator on the regulations that they have to meet, both in carbon dioxide emissions as well as in other standards. And they have agreed to deploy best-in-class technologies.”
“Mr Speaker, Sir, under the Paris Agreement, Singapore has pledged to reduce our emissions intensity by 36% from 2005 levels by 2030, and to stabilise our emissions with the aim of peaking around the same time. A lower emissions intensity means that each dollar of gross domestic product (GDP) will be achieved more efficiently and with a lower impact to the environment. Under the Jurong Island Version 2.0 initiative, Singapore explored alternative feedstock options to enhance the long-term competitiveness of the energy and chemicals sector, while keeping to our climate change commitments and ensuring environmental concerns were addressed. After extensive evaluation, gasification was assessed to best meet industry's demand for competitive hydrogen and carbon monoxide as feedstock. To minimise the impact on the environment, the Ministry of the Environment and Water Resources (MEWR) has worked together with the Economic Development Board and the plant operator to put in place strict regulations and standards on emissions of carbon dioxide and air pollutants, as well as to deploy best-in-class mitigation technologies. The plant's emissions will also be closely monitored to minimise the impact on the environment, and the plant will be subject to the carbon tax that was announced in Budget 2017. With 2018 designated as the Year of Climate Action, the Government will increase efforts to raise awareness and increase involvement of companies and individuals on the necessity and the benefits of taking action to achieve sustainable growth and move towards a low-carbon future.”
“The Government will continue to recover the IIA awarded if the company fails any conditions or breaches the legislative amendments. I would like to highlight that there are no errant cases in the last five years for IIA and the current amendments are, therefore, not reactionary in nature, but are being made for legislative clarity. Mr Speaker, the Government will continue to review our incentives and schemes regularly to ensure that they remain relevant and support capability development and the needs of companies. Mr Speaker, Sir, I beg to move. [(proc text) Question put, and agreed to. (proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Lim Hng Kiang.] (proc text)] [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]”
“These programmes, which are company-centric and sector-specific, can also be implemented through collaborations with external training providers. Mr Thomas Chua has accurately pointed out the value of having both MNCs and local enterprises in our ecosystem to drive our economic growth. Mr Louis Ng and Mr Azmoon Ahmad have asked how SMEs can benefit from these amendments. In general, our tax incentives, including the ones in EEIA, are open to application by all companies, regardless of size, as long as they are able to commit to making significant contributions to our economy. In this instance, with the liberalisation of IIA, SMEs can enjoy more flexibility in their business arrangements with their foreign counterparts. I would also like to clarify one of the points that Mr Thomas Chua mentioned regarding LIUP. I would like to clarify that LIUP was not phased out but was rather subsumed under the Partnerships for Capability Transformation (PACT) scheme. As Members would remember, the LIUP scheme essentially caters to the relationship of our local SMEs who are suppliers to the multinational or the large companies. But we think the relationship can go beyond that of just a supplier relationship and, therefore, we have expanded the LIUP scheme to the PACT scheme which encompasses different forms of collaborations and partnerships, beyond just a supplier relationship. The second point that Mr Thomas Chua mentioned about the new section 97ZHA, it has always been our practice that if the companies do not adequately meet up to their commitments set out in the incentives, we will withdraw the incentives and recover the incentives made to them. So, this is nothing new. This section is just to regularise our practice.”
“This, among other things, includes the definition of IP Income, which will be made clear in the subsidiary legislation. As I mentioned in the earlier debate in 2016, it is better and more effective for us to define IP Income in the subsidiary legislation than in the main legislation so that the objective is still achieved. You have transparency, clarity and, at the same time, you have more responsiveness and flexibility by doing so in subsidiary legislation. So, these amendments in this Bill will help to provide our companies that have invested in or are continuing to invest in Singapore with more certainty. This is because our incentives have been reviewed by the international community and they meet international tax standards ahead of many other countries and jurisdictions, which are still in the midst of reviewing their tax regimes. We remain committed to being a competitive location for anchoring substantive economic activities and will continue to monitor global developments. On Mr Louis Ng’s point about fair employment practices, we support that and we agree that companies recognise the commercial value of having such practices in place. This is because by hiring fairly and based on merit, companies would have access to a wider talent pool and reap the benefits from increased productivity. The Singapore Government, of course, helps our companies to develop the career of Singaporeans in their employment. In our engagements with companies, we work with them to develop training and career development programmes for their employees, for example, the SkillsFuture Leadership Development Initiative (LDI) is one such schemes that employers registered or incorporated in Singapore can leverage to create and enhance in-house leadership development programmes.”
“Mr Speaker, I thank Mr Thomas Chua, Mr Louis Ng and Mr Azmoon Ahmad for their support of the Bill. As all three of them mentioned, these amendments are very important, and we have to see how these amendments fit in with our overall strategic goal for Singapore, which is to encourage companies to continue to undertake investment, expand their capabilities and create new jobs. To do so, our economic agencies require a suite of tools to engage our companies and, therefore, our Government regularly reviews our incentives and schemes, be it tax incentives or non-tax incentives, to ensure that they continue to be relevant and effective as our economic and operating environment continues to evolve. To be in line with international standards and, in particular, to align ourselves with BEPS guidelines, this Bill will, therefore, amend the legislation to exclude IP income from PSC and DEI companies. Companies that are committed to undertake substantive economic investments and create good job opportunities in Singapore can continue to benefit from the PSC and DEI schemes. Meanwhile, we will continue to encourage the use of IPs arising from a taxpayer’s R&D activities under the new IDI. Taxpayers can apply for IDI regardless of whether they are currently on PSC and DEI or not. As for IDI itself, the Government is currently in consultation with companies and the incentive will be legislated in the Income Tax Act consequently. Secondly, in response to Mr Louis Ng’s point about the definition of IP Income, I agree that companies need clarity to plan their businesses and to execute their growth strategies. In this regard, the Government has proactively reached out to the companies and consulted them on the draft legislation.”
“In addition, the IIA scheme will be extended till 31 December 2022. Clauses 10 to 13 give legislative effect to this change. The remaining legislative changes arising from our periodic review of the income tax system are either administrative or technical in nature. Mr Speaker, the proposed changes to the Economic Expansion Incentives Act (EEIA) seek to encourage economic activities in Singapore. These changes also reflect the Government’s commitment to keep Singapore competitive and relevant as a place for investment as our external economic conditions change. Mr Speaker, Sir, I beg to move. [(proc text) Question proposed. (proc text)]”
“Mr Speaker, I beg to move, "That the Bill be now read a Second time." The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2018 puts into legal effect the income tax changes introduced in Budget 2017, as well as other amendments arising from the regular review of our tax incentive regime. Let me draw Members’ attention to the two key legislative changes contained in the Bill. The first change is to exclude Intellectual Property Income from Pioneer Service Companies, and Development and Expansion Incentive. To encourage the use of intellectual property (IP) arising from taxpayer’s research and development (R&D) activities, the Minister for Finance had announced in Budget 2017 that an IP Development Incentive (IDI) will be introduced. Accordingly, IP income will be removed from the scope of the Pioneer Service Companies (PSCs) and Development and Expansion Incentive (DEI) schemes, which currently provide for tax exemption or concessionary tax rates respectively on income from qualifying activities, which may include IP income. Clauses 2, 5 and 9 amend sections 3 and 19M, and introduce section 19A to give legislative effect to this change. The second change is to enhance the Integrated Investment Allowance (IIA). The IIA scheme provides additional allowance to a taxpayer who has incurred fixed capital expenditure on qualifying equipment used abroad by an overseas company for approved projects. Currently, to qualify for the allowance, the overseas company is required to use the qualifying equipment wholly for the approved projects. As announced in Budget 2017, this will be liberalised to only require the qualifying equipment to be primarily used for the approved project by the overseas company.”
“The aggregate level of financial assets owned by Singapore’s household sector6 in each of the past five years is provided in Table 1 below. Data on the amount of financial assets owned by households and individuals in the different income percentiles is not available.”
“Data on household and individual savings rates by income groups are not available. However, data on the aggregate level of household financial assets can be obtained from the Household Sector balance sheet compiled by the Department of Statistics. These financial assets comprise (a) currency and deposits, (b) shares and securities, (c) life insurance attributable to households as policyholders, (d) Central Provident Fund (CPF) balances, and (e) pension funds. Over the last 10 years, households' financial assets have increased steadily from $584.3 billion as at the end of December 2007 to $1,126.1 billion as at the end of September 2017.”
“The Second Review of the Comprehensive Economic Cooperation Agreement (Second CECA Review) is ongoing. The review is taking some time as both countries have our respective interests to work through, such as in the area of labour mobility. Our agencies regularly engage Indian counterparts to work through issues collaboratively. This is with a view to arriving at mutually beneficial outcomes, before the conclusion of the Second CECA Review. To this end, Singaporean and Indian officials have had discussions on a wide range of bilateral economic topics, including CECA and the movement of natural persons. These discussions are useful in promoting better mutual understanding of the rationale behind each party’s policies and policy changes, as well as addressing implementation details that may arise from time to time.”
“Another facility is JTC Space@Tampines North, which comes with units that can cater to smaller companies, and a structural design that allows companies to expand their space as they grow. I understand that a number of HDB's customers have made enquiries to take up units in this facility. JTC will, therefore, continue to engage companies, including the transferred HDB customers, and explore new facilities where JTC can add value to support their needs. Mr Speaker, Sir, the consolidation of all public sector industrial properties in JTC will provide greater convenience to companies and allow the Government to better support their space needs. We are committed to providing a smooth transition for the transferred customers and working closely with them to grow and improve their businesses after the transfer. Mr Speaker, Sir, I beg to move. [(proc text) Question put, and agreed to. (proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Lim Hng Kiang.] (proc text)] [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]”
“Third, many of these new facilities include units of different sizes so as to cater for enterprises of different needs, whether you are micro or small and medium enterprises, and allow them to grow from micro to the large SMEs and have the same space cater to their different stages of growth. Finally, these facilities come with structural designs that make it easy for the companies to expand into adjacent units when they grow their business. I can give Members a few examples. One upcoming facility that JTC is planning to build is the JTC Automotive Hub. Targeted for completion in 2020, this facility will provide ready-built space to support SMEs, including our micro-SMEs involved in the maintenance of heavy and light vehicles. It will also come with modular units to provide flexibility for tenants looking to expand their businesses. Apart from this, there are plans for shared facilities and services, including centralised spray painting and car washing facilities, to help the tenants reduce their upfront capital as well as their operating costs. I understand that some of HDB's customers in the Alexandra Village Industrial Estate have already expressed interest to expand their businesses in the Automotive Hub. JTC has another two facilities that would benefit HDB's customers. The upcoming JTC Furniture Hub has already attracted encouraging interest from HDB's customers. The facility will bring together furniture companies and furniture-related service providers across the value chain to facilitate business collaboration. These companies can also look forward to integrated showrooms, a design studio as well as an onsite training institute that will help them enhance their design capabilities.”
“First of all, this refers only to the standard common user industrial space where JTC has decided to let market forces play their role in providing it, because JTC does not see any value-add in providing common user high-rise industrial space. So, it divested its properties and it now has only about 8% of the market share. This is to allow market forces to work, and JTC's involvement is then through the Land Sales Programme. I think the Workers' Party has a different proposal or policy. That is entirely their right − you are left-of-centre. We are more centre. So, this is your Party programme and I encourage you to continue pursuing those and explaining your policy in the next election. Let me turn towards the role that JTC can play more effectively, and not participate in the general purpose, common user type of properties. As we all know, JTC has, in recent years, been concentrating on looking after the sectoral needs of different sectors. And this is done to look after the needs of all the enterprises from micro, small, medium to the bigger enterprises. In the redevelopment of these cluster facilities, JTC does so in consultation with the industry and with trade associations, so that it can take into account the specific needs of the different groups, something that Mr Thomas Chua has advocated very strongly. So, these facilities will then benefit companies in a number of ways. First, by having these facilities, we help to cluster companies along the same value chain which will facilitate business collaboration. Second, we provide shared facilities and services to help companies reduce their upfront capital investment and operating costs.”
“Mr Louis Ng also asked about JTC's plans to redevelop the older HDB properties. JTC will continue with HDB's Industrial Redevelopment Programme to intensify land use. It will also look for opportunities to share infrastructure and amenities across adjacent estates to optimise the use of industrial land. Let me now respond to Mr Leon Perera's questions. The dispute settlement mechanism in section 41 of the Bill states that the Minister for Finance may decide on any disputes over (a) whether an asset, a liability, an employee or a record has been transferred from HDB to JTC; or (b) whether any contract or document relates to a transferred asset, liability, employee or record. And his decision is final and binding. Dispute settlement mechanisms are a standard provision in Bills of this nature. They are intended to provide clarity on how disputes may be settled. For example, a similar mechanism was included in the SkillsFuture Singapore Agency Bill in 2016 for the transfer of the assets and liabilities of the Council for Private Education and parts of the Workforce Development Agency to SkillsFuture Singapore. The removal of section 64 is part of the set of amendments to harmonise the enforcement powers between HDB and JTC. This removal will allow JTC to carry out prosecution for offences related to the common properties and open space of its industrial estates, without having to seek the consent of the Public Prosecutor for each case. These are the same powers that HDB currently has. So, it is just to harmonise the process. As for Mr Leon Perera's views on the industrial space policy, we have had this debate before. Let me just explain and reiterate the Government's thinking.”
“This is in line with our focus to ensure a smooth transition for HDB's customers. Ms Thanaletchimi asked a few questions about the affected HDB officers. All the officers currently serving the affected HDB customers will be transferred to JTC, so that they can continue to serve the customers seamlessly after the transfer. However, we will exercise discretion on a case-by-case basis where there are extenuating circumstances. As I mentioned earlier, the smooth transfer of the HDB officers is a priority for us. So, the Bill safeguards the officers' remuneration, their leave rights and other terms of service. This also means that their years of service will continue to be recognised. Both before and after the transfer was announced, HDB and JTC has conducted engagement sessions with the officers to brief them about the transfer and to address any questions that they have. JTC also designed an onboarding programme to familiarise the officers with JTC's work environment and to facilitate teambuilding. The two agencies also consulted the HDB Staff Union and the Amalgamated Union of Public Employees. I understand that both unions supported the transfer. Regarding disciplinary investigations, section 39(4) of the Bill states that "any investigation into the conduct of an affected HDB officer before the transfer date has to be completed by HDB even if the investigation ends after the transfer date". This is the practice that follows the same principle in the Employment Act. Let me now turn to divestment and redevelopment. The Government has no plans to divest the HDB properties that JTC is taking over. If we wanted to divest, why would we want to take them over in JTC? We might as well ask HDB to do the divestment exercise and let HDB and MND carry the can.”
“Mr Speaker, I thank the Members who have spoken on the Bill and would like to address their comments. Mr Louis Ng and Mr Thomas Chua asked if HDB's industrial property customers will face an increase in their bill for their new tenancies under JTC. I would like to clarify that both HDB and JTC adjust their rents based on how market rents change. Because market rents have moderated in recent years and are likely to moderate in the near future, the majority of HDB's existing customers are, therefore, unlikely to see their rents go up when they renew their tenancies in 2018. Some of them will, however, face increased rents when they renew their tenancies in 2018, because of the low contracted rents in their current term. For example, some of the HDB customers who shifted from HDB's Eunos terrace workshops to HDB's Kaki Bukit Autohub were allowed to pay the same rents they paid in Eunos to help with the transition. When they renew their tenancies in 2018, they will have to pay the market rents for the Autohub, which are higher. To cushion the impact of rent increases, JTC offers tenants a staggered rent scheme. This means that the rents of the tenants will be capped in the first two years of their new tenancies, which effectively spreads out the rent increase for them. Both HDB and JTC already offer this scheme today, and JTC will continue this practice after the consolidation. In addition, for those facing genuine difficulty in payment of their rents, JTC does exercise discretion to offer and provide further rental assistance on a case-by-case basis. Besides the rental policy, the other tenancy policies of HDB and JTC are generally aligned. There are some differences in the operational processes, but HDB and JTC are working towards aligning them.”
“This will minimise disruption to the transferred customers and ensure consistency and greater efficiency in JTC's treatment of customers across the consolidated property portfolio. The third set of amendments is administrative in nature. It repeals Part IV of the JTC Act, which covers the sale and management of residential properties. These provisions were included in the JTC Act because of JTC's role in the 1970s and 1980s in building affordable flats and executive flats, largely for industrial workers. JTC no longer plays this role. All the affordable flats that JTC has built have been transferred to HDB, and the executive flats have been privatised and brought under the Land Titles (Strata) Act. Therefore, Part IV of the JTC Act is now obsolete. With these amendments to the JTC Act, the Town Councils Act will also be amended to remove the references to HDB's industrial properties. The Housing and Development Act and the Residential Property Act will similarly be amended to delete references to Part IV of the JTC Act. Mr Speaker, in summary, the consolidation of all public sector industrial properties under JTC, via the JTC (Amendment) Bill 2017, means greater convenience for businesses, better Government support for industrialists' infrastructure needs and a more competitive economy. I beg to move. [(proc text) Question proposed. (proc text)]”
“Section 38 also provides for the transfer of the HDB officers currently serving the HDB customers to JTC. These officers will continue to serve existing HDB customers seamlessly as part of the JTC family. We have also placed emphasis on engaging the affected customers. Following our announcement of the transfer in 2016, HDB and JTC held several engagement sessions with the customers and their associations to hear and address their potential concerns. Many appreciated the greater convenience they would enjoy after the consolidation. Some HDB customers were concerned that rents may increase after the transfer. JTC has assured them that their contracted rents with HDB will continue for the current tenancies. In addition, HDB and JTC rents are largely similar. They are set based on similar principles and in line with market conditions. The smooth transfer of the HDB officers is also a priority for us. Section 39 of the Bill safeguards the officers' remuneration, leave rights and other terms of service. JTC has also conducted engagement sessions with the officers and designed an onboarding programme to familiarise them with JTC's work environment and to facilitate team building. HDB and JTC will continue to keep in close communication with the affected customers and officers in the lead-up to and after the transfer. Mr Speaker, Sir, the second set of amendments enables JTC to take on similar powers as HDB in managing the common properties and open spaces of its industrial estates. Instead of taking protracted and costly Court action for minor offences in these areas, section 27 will allow JTC to prescribe offences and associated fines for non-compliance.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The Jurong Town Corporation (Amendment) Bill 2017 comprises three sets of amendments to the Jurong Town Corporation Act. The first set of amendments provides for the transfer of the Housing and Development Board's (HDB's) industrial properties to Jurong Town Corporation (JTC). With the transfer, all public sector industrial properties will be consolidated under one agency. This will make it more convenient and faster for industrialists as they will only need to approach one agency for their business space needs. Industrialists will also receive better support for their land and space needs across the different stages of their growth because JTC will be able to better match their needs across all the public industrial land and space in Singapore. This includes JTC's customised industrial facilities, which offer shared infrastructure and services to help industrialists reduce their setting-up and operating costs. After the consolidation, the Government would be able to undertake more holistic master-planning of industrial estates across Singapore. We can better cluster complementary economic activities. We can also better easily identify opportunities for the sharing of infrastructure and amenities across adjacent estates. In addition, the pooling of industrial master-planning and infrastructure expertise under one agency improves public sector capabilities and operational efficiency. Our focus is on ensuring a smooth transition for HDB's industrial property customers. Sections 37 and 40 of the Bill thus provide for the transfer of the HDB's contracts and records associated with the transferred properties to JTC, with no change to the contractual terms for existing HDB customers.”
“As of June 2017, 1,826 GIP applicants have been granted permanent residency since the programme’s inception in 2004. Of these, 67 have been granted citizenship. The age at which they were granted citizenship varies between 25 and 58 years old. One GIP investor had his PR status revoked upon review.”
“These include intelligence and research projects that would lead to the development of industry-specific solutions.”
“The Government publishes a range of data on business costs on a regular basis, from the business cost structure of companies in the key business sectors, to trends in key business cost components, such as labour and rental costs. For instance, the Department of Statistics (DOS) compiles and publishes the Unit Labour Cost Index, which measures the change in labour cost per unit of real output, at the overall economy level and for key business sectors on a quarterly basis. Similarly, rental indices for industrial space and commercial space are compiled and published by JTC and the Urban Redevelopment Authority respectively on a quarterly basis. Specifically for the manufacturing sector, DOS compiles an overall Unit Business Cost (UBC) Index on a quarterly basis. The main components of the UBC Index are labour cost, services cost and Government rates and fees. The services cost component, in turn, includes work given out, rentals, utilities and transport costs. As for overall business cost trends in the services sector, the Monetary Authority of Singapore estimates and tracks the Unit Business Cost Index for the Services Sector, which is used alongside other cost and price indicators for monetary policy purposes. For a summary of the business cost structure and latest trends in business costs, Members can refer to the Economic Survey of Singapore published by MTI. At the same time, the Government welcomes private sector initiatives to deepen insights into business trends that would inform and facilitate industry transformation efforts. For instance, the Local Enterprise and Association Development (LEAD) programme, which is co-administered by SPRING and IE Singapore, supports Trade Associations and Chambers in driving industry development initiatives.”
“Large scale projects, such as malls and industrial parks led by Singapore companies, help lower the barriers for small and medium enterprises (SMEs) to access overseas markets. SMEs would tend to be familiar with the project developers, and the projects would typically provide a more familiar ecosystem for the SMEs. International Enterprise (IE) Singapore actively partners Singapore project developers to bring Singapore SMEs into the overseas projects and industrial parks. For example, IE and Capitaland have been working on the Datansha Urban Renewal Project in Guangzhou to bring on board Singapore SMEs. These SMEs have been able to adapt and innovate to offer value-added products and services that address specific niches in-market. They include SMEs like Singapore Garden City and Orange Valley, which offer specialised and differentiated architectural and landscaping design and eldercare services respectively. In Vietnam, SMEs are already accessing the market through the seven Vietnam-Singapore Industrial Parks (VSIPs) co-developed by SembCorp. As VSIP tenants include local enterprises and international corporations, SMEs can tap on this network to seek complementarities and customise their production to meet market demand. For example, Singapore companies in the food industry have set up in VSIP 1 in Binh Duong province to cater to the growing middle class and expanding appetite for premium food products. IE Singapore will continue to facilitate partnerships between SMEs and large-scale projects led by Singapore companies, to help SMEs scale up and establish themselves in overseas markets.”
“Each Centre will consolidate the overseas networks of economic agencies to create single points of contact in key markets. This offers a common touchpoint to Singapore-based companies venturing into the specific market, while allowing each agency to offer their respective expertise based on the companies’ needs. Both EDB and IE Singapore are part of our global network of Singapore Centres, and help companies gain new market access and grow their businesses through their joint efforts. The Ministry of Trade and Industry will continue to review the structures, processes and operations of our economic agencies to ensure that our companies are supported effectively.”
“The Government takes a holistic approach towards economic planning and development. As the Committee on the Future Economy (CFE) reaffirmed, close collaboration amongst Government agencies and partners is critical to implement our economic strategies effectively and create good jobs for Singaporeans. Economic agencies, including the Economic Development Board (EDB) and International Enterprise (IE) Singapore, have mutually complementary strategic functions. EDB focuses on bringing in investments and strengthening Singapore as a global hub for business, while IE Singapore focuses on growing trade and overseas investments by helping Singapore-based enterprises internationalise. These roles allow agencies to specialise and build deep expertise in their respective areas. We have in place various mechanisms to ensure close collaboration amongst agencies. How the Industry Transformation Maps (ITMs) are being developed and implemented is a good example of interagency and stakeholder collaboration. Each ITM is led by one Government Agency, which spearheads efforts in coordinating across agencies and bringing together the different types of support available to meet the specific industry’s needs. ITMs do not only identify strategies, they also bring together the stakeholders to jointly execute the strategies. For example, the ITM for the logistics sector was launched on 16 November 2016. While EDB is the lead agency coordinating the ITM, IE Singapore has also been keenly involved to develop and execute strategies to help our logistics firms internationalise, which includes leveraging specialised logistics handling capabilities to complement other sectors like food and healthcare. The overseas Singapore Centres introduced in Budget 2017 is another example.”
“The Ministry of Trade and Industry (MTI) works with our economic agencies, such as the Economic Development Board (EDB) and International Enterprise (IE) Singapore to raise awareness of our free trade agreements (FTAs) and to ensure that our companies can benefit from our FTAs. Trade negotiators from the Ministry and IE Singapore's FTA promotion and advisory team regularly engage Trade Associations and Chambers to help companies use FTAs. To illustrate, IE Singapore had conducted industry-specific workshops on the benefits of FTAs with the Textiles and Apparel Fashion Federation for the garment manufacturing industry, and with the Singapore Food Manufacturers' Association and Singapore Manufacturers Association for the food and beverage and manufacturing industries in 2016. This year, IE Singapore plans to conduct industry-specific workshops for companies in the services sector. In addition, IE Singapore also conducts customised, one-to-one FTA consultations with companies. Over the last five years, around 3,500 companies have benefited from workshops and seminars aimed at building greater awareness and knowledge of how FTAs can be utilised. An additional 2,000 companies have benefited from one-to-one FTA consultations with IE Singapore. The beneficiaries of these efforts include local small and medium enterprises in diverse sectors that wish to capitalise on FTAs in penetrating export markets. Company feedback is integral to trade agreements, which are intended to help our businesses access foreign markets. MTI and our economic agencies will continue to engage our companies prior to the start of new FTAs, during negotiations and when we review existing FTAs, to ensure that these agreements stay relevant to the needs of our businesses in the various industries.”
“Mr Deputy Speaker, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2017/2018, and ask leave to sit again on Monday, 6 March 2017.”
“Sir, may I seek your consent to move that progress be reported now and leave be asked to sit again on Monday, 6 March 2017?”
“An open and connected Singapore will be better placed to tap on the opportunities of the future economy. Industry Transformation Programme”
“SMF also helped to oversee the consolidation of our companies' exports, shipping them to the supermarkets in shared containers. Through this collaboration, our companies were able to bring their products overseas at a lower cost, compared to if they had done so themselves. The final way which we will support our companies is through the Global Innovation Alliance (GIA), as announced by the Minister for Finance. The future economy will be characterised by a global network of innovation and talent. Cities which are plugged into this network will have a strong advantage. By linking our enterprises and students with overseas partners in major innovation hubs and key demand markets, our companies and people will benefit from the opportunities as well as the overseas exposure. Similarly, Singapore can also tap on the best global talent and ideas to stay at the forefront of innovation. GIA's focus in each city will be tailored according to its strengths. In cities like San Francisco and Beijing, where there are thriving, world-class innovation ecosystems, we want our students and companies to be immersed in the environment and to be able to interact with them. In cities like Jakarta, innovation ecosystems are just rapidly taking shape and our companies should, therefore, be participating in these developments. Minister Iswaran and Minister of State Dr Koh Poh Koon will explain how our SMEs and startups can benefit from this initiative. Mr Chairman, over the years, Singapore has adopted a consistent and deliberate strategy to remain open and connected. This has opened up new opportunities for our businesses and people, even during challenging times. Amidst the uncertain operating environment, we are convinced that staying the course remains the right thing to do.”
“So, working closely with our economic agencies, we will identify mutually beneficial partnerships at the state level. The third way we will support our companies is by strengthening our internationalisation efforts. The digital economy presents opportunities for SMEs to access new markets. Kino Biotech, an SME which sells healthcare products, such as collagen drinks, is using e-commerce to augment its internationalisation efforts to enter the Chinese market. With IE Singapore's assistance, Kino Biotech began listing their products on Alibaba's Tmall Singapore Shop in 2016 and found e-commerce to be an effective sales channel. They have now developed their own e-commerce platform, Kinofy, to serve as a marketplace for health and beauty products targeted at the Chinese market, and this platform will soon be supporting products from other companies as well. In addition, Singapore companies can partner larger companies to venture abroad. InvitroCue, a home-grown biotechnology firm that was spun-off from the Agency for Science, Technology and Research (A*STAR), provides cell-based models for global pharmaceutical companies to test drug and medical devices. Since August last year, InvitroCue has collaborated with Qiagen Suzhou, a joint venture between Dutch MNC Qiagen and Suzhou Industrial Park Biotechnology Development, to jointly develop, brand and market new technologies. Singapore companies enjoy greater economies of scale by going abroad together. TACs play a unique role in such collaborations. Last year, the Singapore Manufacturing Federation (SMF) and IE Singapore partnered our companies to help them collectively obtain lower product listing fees and better shelf displays, as well as organise promotional activities.”
“For example, the Vietnam-Singapore Industrial Park (VSIP) projects are spread across six provinces in Vietnam and cater to the priorities of each province, taking into account the locals' skillsets as well as investors' demand. So, Singapore food companies, for example, have set up in VSIP 1 in Binh Duong province in southern Vietnam to cater to the growing middle class and the expanding demand for premium food products. Meanwhile, companies in electronics manufacturing and logistics services have set up in VSIP 3 in Bac Ninh province in northern Vietnam to support the increased presence of consumer electronics MNCs. We should also deepen our engagements at the city level. For instance, in Indonesia, Bandung and Makassar are keen to incorporate digital solutions in their city development. With IE Singapore's assistance, a Singapore e-government solutions company, Ecquaria, set up a software development centre in Bandung and is in discussions with the Bandung City Administration on the provision of e-government services. IE Singapore also signed a Memorandum of Understanding with Makassar to facilitate Singapore companies in providing Smart City solutions and technology. There are also opportunities to be seized in developed markets. Singapore has hosted delegations from US states like Texas, Alabama and Washington, all of whom have been eager to find new markets for their exports and welcome new investments. At the same time, there is interest from Singapore companies to invest in the US. For example, AC Global Energy acquired technology from their US partner to convert pine wood to green diesel, biochar and wood vinegar. They currently operate a biodiesel plant in Tennessee and are looking to build another plant in Alabama.”
“Miss Cheryl Chan and Mr Lee Yi Shyan also asked what is next for our trade agreements, and Dr Tan Wu Meng asked how we are working with our regional partners to deepen cooperation on standards. Under the ASEAN Economic Community, ASEAN member states are looking at the harmonisation and mutual recognition of standards across a wide range of sectors, including automotives, cosmetics and medical devices, and aligning them to international standards wherever possible. We are also working with our ASEAN member states to improve trade facilitation through the ASEAN-wide Self-Certification regime and the ASEAN Single Window (ASW). These initiatives will also reduce the administrative burden and cost to our traders. We will also press on with our efforts for greater regional connectivity through the Regional Comprehensive Economic Partnership (RCEP). We will also ensure that our agreements meet our changing business needs, especially in the digital economy. Common trade rules governing e-commerce will promote greater digital connectivity in the region by reducing barriers to e-commerce and improving security of electronic transactions. All these will be introduced and incorporated in our new trade agreements. The second way we can support our companies is by deepening our linkages at the provincial, state and city levels. We can do so through bilateral platforms and government-to-government (G-to-G) projects. In China, Singapore companies have made inroads through our seven provincial business councils. Our third G-to-G project, the Chongqing Connectivity Initiative (CCI) will also enable us to engage the provinces in western China. 6.00 pm As provinces and cities within a country will differ in strengths and challenges, we also adapt accordingly.”
“Trade and external demand are key drivers of our economy, accounting for two-thirds of our GDP. Small and open economies like Singapore are especially vulnerable to global developments but, at the same time, our external linkages can also make us more resilient. Our trade connections across the world have enabled our companies to access new markets and cutting-edge technology and have created good jobs for Singaporeans. International Enterprise (IE) Singapore's 2016 Internationalisation Survey showed that our companies' overseas revenue grew 4.2% year-on-year, compared to the total revenue growth of 1.3% year-on-year. So, going overseas allows us to tap into the higher growth potential of Asia. When companies internationalise, about 60% of jobs created are for professionals, managers, executives and technicians (PMET) jobs. So, internationalisation helps us to create good jobs for Singaporeans. Miss Cheryl Chan and Mr Saktiandi Supaat asked how we can support our companies to tap on overseas opportunities. We can do so in four ways. First, we must continue to leverage our trade agreements. We have a network of 21 FTAs with 32 trading partners in multiple regions. These agreements helped our companies to benefit from tariff savings of over $900 million in 2015. Our trade agreements also lower other barriers to trade. Under the Gulf Cooperation Council (GCC)-Singapore FTA, there is mutual recognition of halal standards. This means that a product that is halal-certified by the Islamic Religious Council of Singapore (MUIS) does not have to go through additional halal certification processes when it enters the GCC countries. So, this provides added certainty for companies which export products to the GCC countries.”
“For example, in startups where it is not so commercially viable to provide the space, the Government will step in and, indeed, we have. JTC set up LaunchPad@one-north in 2015 and plans to build a network of LaunchPads around Singapore. The next one will be completed in the Jurong Innovation District this year. JTC has also been developing industrial facilities with shared services for SMEs in order to reduce their capital expenditure and operational costs in such specialised facilities. Mr Henry Kwek suggested reducing property tax for retail real estate. This will not help most of our retailers because the landlords would benefit directly and it is very difficult for the Government to instruct landlords to pass on the tax savings to tenants. We cannot compel them to do so in return for the rebates, as such a condition will not be enforceable operationally. Therefore, the Government has other ways to support our businesses, including schemes like the Capability Development Grant, which encourages businesses to build business capabilities by defraying up to 70% of qualifying project costs. This is a sustainable way to manage business costs, rather than through direct intervention through rental rebates. Mr Chairman, let me now turn to the medium- and long-term challenges. We are confident that Singapore is well-positioned to seize opportunities of the future. CFE has identified two key thrusts − first, remaining open and connected and, second, building deep capabilities. Let me elaborate on the first thrust, and Minister Iswaran will speak more on the second. Mr Liang Eng Hwa asked how our strategy of remaining open and connected will serve us, given the rise of anti-globalisation sentiments globally.”
“But anyway, the Government continues to monitor the sector closely and we track indicators, such as order books and output levels in the sector, and we continue to evaluate the feedback from industry players. Third, we will continue to keep a close eye on business costs to ensure that they do not rise excessively. The unit business cost (UBC) index for the manufacturing sector fell 8.5% from 2015 to 2016. For the services sector, the unit business cost index increased at a more moderate 0.1% year-on-year for the first three quarters of 2016, compared to an average 0.5% increase per annum of the four years before that. Mr Henry Kwek, Ms Cheng Li Hui, Mr Chen Show Mao and Mr Dennis Tan spoke about rental costs, which are a component of unit business cost. Let me try and address the issues in the following way. First, we have to understand the contribution of rental costs for the different sectors. We do acknowledge that SMEs in the retail sector and in the F&B sector, rental cost, as a share of their total business costs, is around 30% and is, therefore, significant. But for the other sectors, rental cost is not so significant. For example, in the manufacturing sector, rental cost is a small share of total business cost at between 0.7% and 4.8%. Similarly, in most services sectors, rental cost constitutes around 5% of business cost. Second, in the last three years, the rentals have been declining in all the various sectors ‒ industrial space, commercial space, retail and office. So, the problem has not been so severe in the last three years. Third, the Government believes in letting market forces set the rent and we allow the private sector to provide the responses in supplying the demand. Where we intervene is where we recognise some possible market failures.”
“Through the use of automation, CCC improved the quality, consistency and range of their confections. Their output per shift doubled, even though they used less manpower than before. This allowed CCC to scale up and take on larger business opportunities as well as supported its long-term goal to expand regionally and to the Middle East. Second, the Government closely monitors our economy and stands ready to take decisive action if needed. In November last year, we introduced the Marine and Offshore Engineering (M&OE) Bridging Loan and enhanced the M&OE Internationalisation Finance Scheme to facilitate M&OE companies' access to working capital and financing. Both aim to stabilise the M&OE sector as it copes with prolonged weaknesses in oil prices. Dr Tan Wu Meng asked if the support measures have been successful. The measures are expected to catalyse about $1.6 billion in loans over one year. As of February 2017, applications amounting to more than $90 million of loans have been approved. Based on feedback from participating financial institutions, we expect the pipeline demand to be strong, with more than 100 companies already indicating interest in the scheme. The access to financing will help companies finance their operations, bridge short-term cash flow gaps and take on new projects. Stabilising the industry will help to preserve Singapore's core capabilities in the sector and save jobs. With the stabilisation of oil prices, we are beginning to see some upstream and mid-stream activities taking place in the oil and gas sector. There is, of course, a certain amount of lag in the sector, so some of the suppliers and stockists may not feel the impact as yet.”