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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“Mr Inderjit Singh asked the Minister for National Development (a) how many people who registered for HDB's Design, Build & Sell Scheme (DBSS) flats at Boon Keng lost their booking for the flats and their deposits (in terms of option fees) because they failed to secure their loans from HDB or the banks; (b) whether HDB processed the loan applications before or after the applicants paid their 5% option fee; and (c) how many flats remain unsold as a result of cancellations due to whatever reasons.”
“The Global Schoolhouse initiative is only possible because we have adopted a whole-of-government approach to develop this area with the support of many government agencies across different ministries. Besides EDB, others include the Ministry of Education, the Monetary Authority of Singapore, the Singapore Tourism Board and the Immigration and Checkpoints Authority, just to name a few. All our agencies work together to enhance Singapore’s educational ecosystem and allow the delivery of quality educational services. For example, the introduction of the recently announced “EduTrust” is an initiative that was rolled out by the Ministry of Education. EduTrust builds on the standards that had been achieved through CaseTrust, by providing the necessary regulation required to bring the private education sector up to the next level of development. We also adopt an open immigration policy to allow legitimate students to easily pursue their education in Singapore. The government through SLA, releases suitable sites to private hostel operators, to increase the supply of hostel accommodation. This ensures an adequate supply of affordable accommodation for the growing community of international students. We are thus confident that the Global Schoolhouse initiative is well on track to create a vibrant education hub in Singapore. HDB'S DESIGN, BUILD AND SELL SCHEME FLATS AT BOON KENG (Applicants who lost their booking and deposits) 20.”
“The Global Schoolhouse initiative was launched in 2002 with the objective of developing Singapore into a Global Schoolhouse, comprising a rich diversity of quality education institutions and programmes at all levels from pre-school to post-graduate study, and attracting an interesting mix of students from all over the world. Today, Singapore hosts more than 16 leading international institutions, as well as 41 preparatory and boarding schools (comprising 38 foreign system schools and three privately funded schools) in Singapore. In recent years, we have successfully attracted a range of reputable foreign institutions to set up their campuses in Singapore. Besides leading foreign universities such as INSEAD and University of Chicago Graduate School of Business, we have also brought in renowned institutions, such as University of Nevada Las Vegas, New York University Tisch School of the Arts, Cornell University and Duke Graduate Medical School. The market for international education is growing quickly, especially in Asia. Singapore has many strengths: high education standards, secure and high quality living environment and our unique East-meets-West, cosmopolitan city. This puts us in a good position to secure high quality educational institutes. The strong growth in the number of international students in Singapore is evidence of the growing demand in this market – there are 86,000 international students studying in Singapore currently as compared to 50,000 students in 2002. We foresee similarly strong growth in the years to come. There is potential to grow to 120,000 international students over the next three years and to 150,000 international students in the longer term.”
“Mr Christopher de Souza asked the Minister for Foreign Affairs (a) whether the delay by the Myanmar government in accepting foreign aid for people displaced by Cyclone Nargis and allowing the entry of foreign aid experts to assist with basic relief efforts, breaches the spirit of Article 1 [Purposes 7 and 11] and Article 2 [Principle 2(i)] of the ASEAN Charter; and (b) if so, what can Singapore, as a member and present Chairman of ASEAN, do to ensure that the spirit of the ASEAN Charter will be adhered to by Myanmar once the Charter's ratification process is completed. 6. Mr Siew Kum Hong asked the Minister for Foreign Affairs (a) what measures are being taken and what safeguards are in place to ensure that aid contributed by Singapore and Singaporeans reach the victims of Cyclone Nargis; and (b) what is the Government's position on the legitimacy of the referendum conducted by the junta in the immediate aftermath of the cyclone.”
“Mr Speaker, Sir, that is still our central scenario, that is, in the second half of the year we should see an easing-off of inflationary pressure both for domestic reasons as well as for external reasons. For domestic reasons, because of the way we calculate the inflation, the impact of the GST, it would ease off after July and also the impact of the annual values of HDB flats. For external conditions, you can see that the sharp run-up of food prices, for example, the momentum ought to ease off towards the second half of the year or, at least, this is what most analysts are projecting. AFTERMATH OF CYCLONE NARGIS (Assistance measures by ASEAN and Singapore) 3. Ms Irene Ng Phek Hoong asked the Minister for Foreign Affairs (a) what measures are being taken by ASEAN and Singapore, in particular, to assist the people of Myanmar in the aftermath of the cyclone disaster; and (b) whether the Myanmar junta has welcomed humanitarian relief from ASEAN. 4. Miss Penny Low asked the Minister for Foreign Affairs (a) what is the Government's position on the catastrophe deadlock between the Myanmar junta and the foreign aid agencies; (b) what can Singapore, as a member of ASEAN, do to help bring the much needed aid to Cyclone Nargis victims; and (c) what can our residents, which include Myanmar nationals, do to help the catastrophe victims. 5.”
“Mr Speaker, Sir, our approach is aimed at the medium term. The GST adjustments that we put in are necessary to have a better balance between direct and indirect tax. So I do not think it is useful for us to tweak the GST tax rate in response to a short-term phenomenon which is the cost increases we face. I think we should look for an array of tools or instruments with a medium-term outlook. The petrol tax is, in fact, very modest if you compare it to many countries, particularly in Japan or Europe. Our petrol tax rate is not out of sync compared to other countries.”
“As our MAS' policy statement puts it, we strive to aim for a modest and gradual appreciation. This means that we try to prevent sharp volatility of the Singapore dollar so as to create as stable a condition and environment for both importers as well as exporters as much as possible.”
“The saving grace is that, being a global phenomenon, the competitors of our exporters also face cost pressures and therefore the situation is not as bad as in the 80s where Singapore alone faced much higher inflationary pressure and cost pressure compared to our regional surrounding countries. The situation today, in the light of a more widespread inflationary and higher cost trend, is that our exporters are keeping up. Third, the impact on tourism. We have been fairly successful in attracting tourist arrivals to Singapore and so tourist arrivals have continued to grow at a fairly decent 4%-5%. Our biggest constraint is really the shortage of hotel rooms and this is part of the supply constraint that we face in different sectors of our economy. To this end, URA and STB have been very active in promoting new sales of sites and we should see the entry of additional hotel rooms soon and that will help alleviate the pressure in the tourism sector and help bring us to the target that we are aiming for, which is to double the visitor arrivals by 2015 and to triple tourism earnings by 2015. Dr Lily Neo (Jalan Besar): Mr Speaker, may I ask the Minister whether there is an upper limit or threshold on the Singapore dollar's appreciation to mitigate inflation, after which it will be counter-productive or it will result in side-effects?”
“Mr Speaker, Sir, I think the key message we want to get through to Singaporeans is that we face global inflation – energy prices are up, food prices are up, wage costs in some countries have also gone up. Therefore, there is no way we can completely insulate ourselves from these global forces. What we can do, as I explained in my answer, is a multi-pronged approach. First, we have a stronger Singapore dollar so as to dampen import inflation. Second, we look at supply constraints and release some of these supply constraints which cause some domestic cost increases, whether it be office space or residential land, and even labour constraints and also new sources of food so that we are not impacted by any disruption from any single country. Third, of course, is a more direct fiscal approach of assisting lower income and middle-income Singaporeans directly through the various policies and distributions like the Growth Dividends and the GST offsets. I think this broad strategy works, as it has panned out. Compared to many countries where the inflation rate is much higher, our inflation rate here is still high compared to our recent history but lower than what other countries have faced, and lower than if we had done nothing. I think this is a considered approach and it has gone some way to mitigate the impact. But we cannot completely shield ourselves and we cannot hope, over the next few months, to bring our inflation down to 1%-2% as we were very accustomed to, because the global trends have changed. Second, as I have mentioned, we need this balance – a strong Singapore dollar helps to lower imported inflation but, at the same time, it affects our exporters who have to compete.”
“Together, these schemes would help defray a large part of the increase in the cost of living that households would experience this year.”
“This was a considered and measured response to counter the inflationary pressures that were building up, while providing support for sustainable economic growth. In the current environment of high global inflation, MAS' exchange rate policy of a strong Singapore dollar has helped to reduce the cost of our imports. For example, between January 2007 and March 2008, global food prices – measured by the IMF food price index – surged 50% whereas the domestic cost of food imports rose by a much lower 14%. While MAS' exchange rate policy stance has helped to dampen the effects of global food and oil inflation, we cannot insulate ourselves completely from the effects of higher world prices passing through to the Singapore economy. MAS has to strike the right balance in the setting of its exchange rate policy taking into account both inflation and growth considerations, mindful in particular that external demand conditions have weakened especially in the G3 markets. The Government has therefore adopted a multi-pronged strategy to cope with inflation, which was announced as early as February this year in the Budget speech. Besides monetary policy, some of the other measures include the diversification of food sources to minimise spikes in prices due to supply disruptions from any one country, as well as raising public awareness of cheaper food choices and substitutes. At the same time, the Government is providing direct assistance to Singaporeans who are adversely affected by the higher cost of living. In addition to the GST Offset Package introduced in last year's Budget, the Government has also announced other relief measures this year, such as Growth Dividends and personal income tax rebates, targeted especially at lower- and middle-income Singaporeans.”
“Mr Speaker, Sir,Singapore adopts an exchange rate-centred monetary policy to maintain price stability for sustained economic growth. Given the small and open nature of our economy and our dependence on trade, the exchange rate has an important impact on domestic prices. This regime, in place since 1981, has served us well. For example, domestic inflation has been low over a sustained period, averaging 1.7% over the period 1981 to 2007, compared with an average of 5.5% for the OECD countries. The objective of our monetary policy has always been and will continue to be focused on maintaining price stability over the medium term. An environment of low and stable inflation helps preserve the purchasing power of Singaporeans' income and savings. It also provides a stable and conducive environment for businesses to undertake long-term investments, thus enhancing competitiveness and job creation, and providing the basis for sustained economic growth. In turn, the success of our economic growth strategy, which leverages on global and financial market integration, has supported the continued appreciation of the domestic currency consistent with the economy's strengthening economic fundamentals. These include prudent fiscal policy and a large reserve position, flexible product and factor markets, as well as a robust and sound financial system and domestic corporate sector. Since 2004, MAS has adopted a policy of targeting a modest and gradual appreciation of Singapore's trade-weighted exchange rate, amidst robust economic growth in the economy. In its last two policy announcements in October 2007 and April 2008, MAS said that it would allow a stronger appreciation of the Singapore dollar, through a steeper slope and an upward re-centering of its policy band, respectively.”
“Mdm Ho Geok Choo asked the Acting Minister for Manpower in light of the predicted 20,000 new jobs created with the upcoming Integrated Resorts, whether he will provide an update on the measures being taken to fill the potential deficit in persons working in the hotel and MICE industries.”
“The EDB Monthly Manufacturing Index of Industrial Production tracks changes in production output in real terms. For the data that is collected from companies in dollar value or nominal terms, they have to be converted to real terms using appropriate price deflators, and finally compiled into the Manufacturing Index. The price deflators are calculated from manufacturing price data obtained from the Department of Statistics (DOS). In May 2007, the base year of the DOS’ manufacturing price index was revised from 2000 to 2006. Since the base year for EDB’s Manufacturing Index remained unchanged, it was necessary to perform an additional step to normalise the DOS’ price index back to the 2000 base year, so as to ensure consistency in the Manufacturing Index series. In computing the January Manufacturing Index, an error was made during this additional step of normalising the DOS’ price index. Specifically, an error was made in entering the formula for doing this normalisation of the price index. This meant that the wrong price deflator was used to derive the Manufacturing Index for January. The error was discovered by EDB during the subsequent analysis of the data. To avoid such an incident from happening again, EDB will run independent calculations of the additional step so as to counter-check the results. This step will not be needed after April 2008 when EDB’s Manufacturing Index is rebased and the DOS’ manufacturing price index can be used directly. MANPOWER SHORTAGE IN THE HOSPITALITY AND MICE INDUSTRIES 35.”
“Spanning three weekends, it features a line-up of special events and festivities for race-goers, visitors and local residents. Key events include the Singapore River Festival, Singapore Motorshow at Suntec Singapore International Convention & Exhibition Centre as well as the Singapore Biennale, which will have installations at City Hall, South Beach and around the Marina Bay area. In addition, the National Museum of Singapore will be hosting the acclaimed Formula OneTM – The Great Design Race exhibition from London which traces the design development and technology of F1 cars over the years. I am confident that Singapore will be buzzing with activity during the Singapore GP Season with exciting events catering to tourists and locals alike. CPF MEMBERS RECEIVING CONTRIBUTIONS BY COMPANIES FALSELY CLAIMING TO BE EMPLOYERS 28. Mrs Josephine Teo asked the Acting Minister for Manpower whether his Ministry has been notified by CPF members who have received contributions by companies who falsely claim to be their employers and, if so, what was the Ministry's response.”
“The Singapore F1 race has already started generating opportunities for businesses. As I mentioned to the Committee of Supply last month, we estimate that 30% to 40% of all spectators will be overseas visitors. With the influx of tourist, hotels will be key beneficiaries. At present, a few hotels have already been fully booked for the entire race period duration. The increased visitorship during this period will also generate spending in retail and on food and beverage. All in all, the F1 race is expected to generate additional tourism receipts of about $100 million in 2008 alone. The exact number of jobs that will be created on a prolonged basis is more difficult to quantify, since the F1 race will only be held over three days, but the service industry is expected to recruit additional workers to cater to demands during the F1 race period. Several local companies have also benefited from F1 related contracts, ranging from provision of services such as security and food and beverage, to the construction of the Pit building, grandstands and corporate suites, road works, additional overhead bridges, race circuit barriers and night lighting system. Local businesses should position themselves for business opportunities arising from the F1 event. For example, retail and food and beverage establishments could conduct special promotions or stay open for longer hours during the race period. Companies could also take the opportunity to entertain their clients and associates. The entertainment platforms for business clients, visitors and Singaporeans will not be limited to the F1 race alone. The Singapore Tourism Board will be organising the Singapore GP Season, a lifestyle season held in conjunction with the F1 race from 20th September to 5th October.”
“Mr Speaker, Sir, as I mentioned in my reply earlier, EDB has not received any feedback from both potential and existing investors that the Mas Selamat episode will have a major impact on the investment interest in Singapore. As for the impact on the economy, because of the security checks at the Causeway and other areas, this is an on-going operation. It does have an impact but we will have to watch as it goes along. CURBS ON EXPORTS AND ILLEGAL HOARDING OF RICE 9. Er Lee Bee Wah asked the Minister for Trade and Industry in view of moves from some rice exporting countries to curb their exports (a) how will this impact the supply of rice to Singapore; (b) whether there is any government-to-government contact to secure supplies for Singapore should the situation worsen; and (c) whether there is any special government task force monitoring the situation. 10. Mdm Cynthia Phua asked the Minister for Trade and Industry what steps have been taken to ensure that there is no illegal hoarding of rice by unscrupulous traders or retailers to take advantage of the rising prices.”
“Mr Speaker, Sir, the Mas Selamat issue has not been raised as a concern in EDB’s interactions with existing and potential investors. Investor confidence in Singapore has been built up over time, based on our successful track record of getting things done. While the Mas Selamat's escape is a serious security lapse, analysts, such as the Political and Economic Risk Consultancy (PERC), are confident that the Singapore Government and its institutions will learn valuable lessons from this and change the way we do things.”
“Sir, we have explained the petrol kiosk sector in Singapore several times. First of all, it is a competitive sector. The Government does not interfere with the price-setting. We believe there is enough competitive pressure among the key players. We encourage the posting of prices and discounts so that motorists know what they are paying before they enter the petrol kiosks. Over the years, we have been tracking the petrol prices. They have gone up as oil prices go up, and they have come down, albeit with a bit of a lag, when oil prices come down. So I believe the petrol sector reflects the competition that is already existing there.”
“So, if you look at our whole research strategy, we have been quite successful and quite good in the middle area working with the big companies, both MNCs as well as the local big companies in mission-oriented research where we give them research grants, we work and collaborate jointly. In fact, we set up a research institute for each one of the strategic cluster that we have in Singapore. And this has been a very successful strategy. But going forward, we need to go upstream into our universities and to basic sciences, and we need to go downstream into our polytechnics, into providing researchers to our industries, first to the industry associations as well as to the companies. And I think the answers that Mr Iswaran has given cover all these areas. So we have a fairly comprehensive research strategy. The results will only show itself, I am afraid, over the medium and long term. But this requires us to maintain this very sustained effort and to build up our resources from bottom-up. In the meantime, if we do not attract foreign talent, the so-called whales, I think we will be taking a far longer time to reach the end stage that we want. So by incorporating foreign talent, we shorten the time for us to build up the capability and, we hope, as Mr Low Thia Khiang described it, the guppies that we nurture will eventually also become world-class renowned scientists.”
“Sir, as Minister of State Iswaran explained, R&D is a very long-term effort and we need to harness all available talent, both overseas and Singaporeans. We cannot embark on a R&D strategy that is anchored on Singaporean talent alone. If we do so, I think we are shortchanging ourselves. If you visit any R&D institution anywhere in the world, and you go to any of these research laboratories, the first thing that strikes you is the number of nationalities that the researchers come from. So we will be shortchanging ourselves if we just concentrate on Singaporeans and we do not draw in foreign talents. Our intention is that, out of the whole R&D pool that we have, 50% will be Singaporeans and, out of the Singaporean pool, half of them would be PhD-qualified. We are using that framework and we are providing the scholarships and the opportunities. As Mr Iswaran said, the scholarships that we offer, we encourage the people who take them up to take up Singapore citizenship before they come back and work. So, eventually, all those who take up our scholarships, when they sign the bond, they will be Singapore citizens. The whole research effort covers the whole spectrum. We have previously been very successful at research working with the companies, what we call the mission-oriented research, related to the industry. We realise that, going forward, we need to build up a stronger basic science base, both in our universities as well as in our research institutions. At the same time, we also need to cover the other end of the spectrum, which is the applications research that will benefit our SMEs.”
“So we have to work with all the various entities to make sure that, for every vocation, we train the people ahead of time.”
“Sir, I thank the Member for seeking the clarification. On the whole, we do realise that, with the economy growing so strongly, manpower is one of the key constraints holding back further growth. We have been working very closely with the Ministry of Manpower and, to their credit, they have relaxed the quotas, they have expanded S-Passes and, as I have explained in my speech, we look at each cluster and we try to tackle the manpower needs of each cluster. Sir, take the example of the IRs. We do recognise that, with the two IRs and the many plans that we have in place for tourism, we are generating some 60,000 jobs over the next few years. When we see this in the context of the 180,000 jobs in the tourism sector, we are talking about a 30% increase over two to three years. So we have been working with all the stakeholders. I would not describe it as poaching, but there will have to be some reshuffling of the manpower assets. We cannot have all the new employees in the IRs just coming from new sources. So they will be employing some of the people from existing hotels, and existing hotels, for example, would have to have recruit new people. As Minister of State Iswaran explained just now, we have, in fact, been working very closely with the stakeholders to put in place a very comprehensive plan covering all the vocations needed. We have worked down to great details what are the vocations. Members might be interested to know that the biggest challenge is really animal trainers because, with the IRs, and especially Resort World with seaworld and marine world, they are looking for animal trainers, and the only people today employed as animal trainers are really at our zoo.”
“You must look at JTC's role in two key areas – land and prepared industrial space like flatted factory space. For the flatted factory space, JTC in fact is a small player in the market. JTC's market share is around %. So we take our cue from the market and it is this sector that we are divesting because we believe that industrial space in Singapore is a fairly competitive market. So JTC need not stay in this space. JTC will concentrate on land. For the pricing of JTC's industrial factory space, this is set by the market. But for the pricing of land, we benchmark ourselves against our competitive locations and we are very careful to make sure we do not price ourselves out of the market. Ms Lee Bee Wah asked about our efforts to promote a culture of buying Singapore products. We cannot force or make it mandatory for Singaporeans or Singapore agencies to buy Singapore products. What we do is to promote the quality, the value, the price competitiveness, the brand, and reputation of Singapore products so that Singaporeans will buy Singapore products because Singapore products give better value. And this is also the same approach for encouraging the exports of Singapore products and services overseas. So it is the same strategy, both domestic and overseas. 12.45 pm Miss Penny Low asked about social innovation. I think innovation and R&D cut across the entire economy, not just in the manufacturing sector but also in the services sector. But, as I said, this is a very long process. The Ministry of Finance has announced schemes to help encourage innovation and R&D also in our SMEs, and I am sure we will adapt and improve these schemes as we gain more experience. Formula One”
“Mr Inderjit Singh has pointed to tough global conditions. He is right. But despite these challenges, the outlook for Singapore is for slower but still healthy growth in 2008. MTI's forecast for the Singapore economy for 2008 is 4%-6%; 6% if the US slowdown is short and shallow, and 4% if the US economy goes into a deeper and longer recession. More importantly, thanks to the restructuring and reform efforts since 2001, Singapore is in a strong position to weather these storms. We have a very strong investment pipeline. We have built up strong market positions in our strategic clusters. Our global footprint is spreading. R&D and innovation will take us further up the value chain. We will therefore use this period to consolidate our gains, strengthen our fundamentals and position ourselves for the upturn. In a slower growth period like this, we must pay more attention to training and upgrading our workers to be ready for the new jobs that are coming their way. We will continue to address our growth constraints, restructure ourselves, identify new areas of growth and add further ballast to our economy. My Ministry intends to make growth work for Singapore. We should not stop growing or take grow-slow approach when the going starts tough. I have set out how we can stay in the race, and in the lead. Besides remaining competitive, we should also look to set the pace, break new ground and set fresh benchmarks. While doing so, we keep enabling our businesses to make the most of the opportunities available. I believe we are on the right track, and that we have the right growth strategy for Singapore. Sir, let me now address a couple of the issues raised by the Members. Mr Inderjit Singh asked about JTC's role. JTC's role remains the same.”
“There are also MedTech players undertaking R&D in Singapore. So as we continue to invest in our R&D, we can expect more of such cross-sector benefits to accrue to us. Exploit Technologies Pte Ltd, or Exploit, which is A*STAR's commercialisation arm, has successfully spun-off many new technologies that have been developed. But this is just the beginning. We would continue to encourage the commercialisation of new technologies and the results of our R&D efforts. Sir, in the increasingly competitive global environment, what keep investors coming to Singapore? Let me quote an example from a recent project that we landed – Renewable Energy Cooperation from Norway. They recently chose Singapore to invest a multi-billion project in solar panel manufacturing. The President and CEO, Eric Thorsen, said, and I quote, "Singapore does not have the cheapest land, labour or electricity, but it offers the best combination of such factors, along with things like access to technology centres and research programmes, market access, stability and security." So a key part of our growth strategy is to create the total package of conditions to keep Singapore competitive. I recognise Members' concerns about our rising costs and how these would impact on our competitiveness. But, really, the final factor of competitiveness is value creation. So my Ministry continues to monitor our competitiveness closely. We advanced one notch to 7th place on the Global Competitiveness Index in 2007. On the softer side, Monocle ranks Singapore as the 17th most liveable city in the world. In fact, MTI monitors a whole host of rankings to make sure that we continue to remain competitive. With our fundamentals and growth strategy in place, what is our outlook going forward?”
“The value of our exports which benefited from preferential FTA tariff concessions increased by more than 120% between 2004 and 2006. This is to address Mr Inderjit Singh's concern. We are indeed making full use of the FTAs that we have signed. IE Singapore, for example, introduced new outreach mechanisms such as an FTA Symposium and created an FTA Panel of Advisors. We have also conducted a series of outreach workshops last year. As a result, our companies enjoyed $380 million in tariff savings in the first three quarters of 2007, an increase of $60 million from the equivalent period in 2006. Looking ahead, we need to continue to move up the value chain, and this calls for an innovation driven and knowledge-based economy. To drive innovation, we have invested heavily in mission-oriented R&D. R&D, as you know, is a long process. But I am glad to report that we are making good progress, as Mr Low Thia Khiang noted in A*STAR's Annual Report. I think we all know that the key is talent, and we must keep investing heavily to build a pipeline of our local talent. Presently, we have a pool of more than 700 A*STAR's scholars. Our goal is to train 1,000 local PhDs by 2015. Our investment in R&D brings real benefits to the manufacturing sector. Let me illustrate from the Biomedical Sciences. Because Singapore is able to support cutting-edge drug discovery research, several large pharmaceutical companies – like Lilly, GlaxoSmithKline, Norvatis and Takeda – have all set up drug discovery and development centres in Singapore. The base of our local and international biotechnology companies such as S*Bio, Merlion and CombinatorX is growing. They were seeded by EDB's Bio*One Capital, which has supported 30 innovative growth companies.”
“I will leave to MOS Iswaran to speak on this later on. Beyond developing our strategic clusters, we need to expand our economic space, as suggested by Mr Teo Ser Luck. We grow our external wing in three ways. First, we deepen our presence in existing markets. In the West, we want to deepen our links with top export destinations like the US and the EU. In Asia, we tap on the rapid growth of China and India through our strong trade and investment links. For example, since the Comprehensive Economic Cooperation Agreement, or CECA, came into force in August 2005, our total bilateral trade with India has increased by more than 40%. India has moved up two notches to become Singapore's 11th largest trading partner in 2007. Closer to home, we are committed to ASEAN. The Blueprint of the ASEAN Economic Community, which we signed last year, aims for a single market and production base in ASEAN by 2015. There are many prospects for Singapore companies when we achieve such an environment. The second approach is to seek opportunities in emerging markets. We have new platforms for economic and business cooperation with the Middle East, where some of our companies have clinched significant deals. The Gulf Cooperation Council-Singapore Free Trade Agreement was substantially concluded in end January this year. For Latin America, the Singapore-Peru FTA and the Singapore-Mercosur MOU, concluded last year, will enhance our market access in Latin America. Russia has also huge economic potential for our companies. In April, we will host the 3rd Russia-Singapore Business Forum to showcase the business opportunities in Asia, Russia and CIS countries. The third approach is to continually seek to expand our network of 13 Free Trade Agreements, or FTAs.”
“We also need to train our talent pool through our educational institutions, reskill our employees through conversion programmes, and support company-level training in order to meet future demands for manpower in the BMS sector. As we develop our strategic clusters, we also ensure that the General Manufacturing cluster, which has many SMEs, can tap on the many opportunities made available. The Government's approach is to help these companies to upgrade through the Local Enterprise and Association Development, or LEAD, programme. So far, SPRING has tied up with 16 industry associations to develop their sectors. Each industry association accounts for between 0.1%-0.3% of our GDP. So, collectively, the 16 industry associations contribute some 3% of our GDP. The Government and the associations have pumped in some $78 million to the SMEs' projects. When realised, these projects are expected to contribute $1.4 billion in value added and $3.4 billion in revenue as well as create 10,000 new jobs. One example is the furniture sector, which has evolved from mostly small family-run businesses to become a global player. Its output grew 15% annually in the past five years to more than $2.4 billion today. Many Singapore furniture companies maintain their higher value-adding activities – like R&D, design, marketing and IT – in Singapore, while leveraging on innovative design to compete successfully overseas. HTL, Koda and Design Studio are listed among the top 200 furniture manufacturers in the world, and they are able to keep their most valuable activities in Singapore. Sir, I have spoken extensively on our strategic manufacturing clusters. We also have a robust strategy for developing our services. Tourism is one example.”
“About 90% of the companies in the PE sector are SMEs, contributing to 42% of the sector's output. PE SMEs have been constantly upgrading themselves to move up the value chain and create higher skilled jobs. Our SMEs have reinvented themselves from manufacturers of ordinary commodity parts to producers of higher-value products and systems. As a result, we now have a large pool of suppliers in the PE cluster, who provide services to both local and foreign companies across diverse industries, ranging from the semiconductor equipment and aerospace and oil and gas equipment, to medical devices and automotive components. Our economic strategy is also to diversify across sectors. That was the driving force for developing the Biomedical Sciences or the BMS cluster. BMS makes sense for us. It fits in with our strength and capabilities. Its manufacturing is not easily uprooted, and the heavy investment required in science and technology cannot be easily replicated by our competitors. It is high value-added in nature and is resilient to economic downturns. 12.30 pm In the six years since we embarked on developing the BMS sector, BMS manufacturing output has almost quadrupled in size. Today, BMS manufacturing alone accounts for 5.5% of Singapore's GDP, creating over 11,500 jobs. Singapore has established itself as a highly competitive and trusted site for pharmaceutical bulk actives and secondary manufacturing. But we face very stiff competition with other developed centres such as Boston, the Bay Area, Ireland and Puerto Rico. We need to continue investing in scientific, industrial and physical infrastructure, such as the Biopolis and the Tuas Biomedical Park.”
“Today, Singapore has a leadership position in the Asian aerospace industry, capturing one quarter of the Asian maintenance, repair and overhaul (MRO) sector. Two weeks ago, Rolls Royce broke ground for their Singapore plant. It is the first in Asia to assemble and test large commercial aircraft engines. We faced keen competition when we tried to secure this project. Having this plant here is significant, because it moves us up the value chain, from maintenance and repair, into a whole new area of testing and assembly of aircraft engines. The growth of the aerospace industry will create good jobs. I was pleased to learn that an aerospace career programme organised by the Association of Aerospace Industries Singapore (AAIS) and its partners during the Singapore Airshow gathered overwhelming response, with 1,100 students participating. Since its launch in 2005, NTU's aeronautical engineering programme has been oversubscribed several times. According to NTU, the eventual entry cut-off points were similar to those for Medicine. Obviously, many students see aerospace engineering as an exciting course leading to an even more exciting career. Sir, we have gone after wafer fab plants and aerospace engineering not just because they provide good economic benefits, but also because they drive the growth of supporting industries where many of our SMEs are. Precision Engineering (PE) is one cluster that has benefited from other strategic clusters. In the early years, PE grew predominantly from supporting our electronics sector. As other low cost locations became more attractive to low-end electronics manufacturing, we developed PE to support other sectors, such as the growing aerospace industry. This allowed us to reduce the pain of restructuring away from lower-end electronics.”
“The electronics cluster provides another example of competitive pressures that we have to strategically seize the opportunities in order to move up the value chain. From our roots in assembling simple transistor parts, we moved into hard disk drives, and now we have moved into semiconductor wafers. Wafer fabrication produces high value-add jobs, anchors capital and knowledge, and also attracts other innovation-intensive activities to Singapore. The competition for wafer fabs is intense, coming from both developing and developed economies. Moreover, industry players tend to invest their wafer fabs in one single location over time, so as to achieve economies of scale. If we miss out on a single window of opportunity, we, in fact, miss out on a whole slate of future investment opportunities, and hand the advantage over to our competitors. Today, we have successfully landed 14 wafer fab plants. As global demand grows, we would need more than 20 wafer fabs in Singapore to consolidate our position and to establish critical mass. The strategy for the transport engineering sector is to push the envelope. For the marine sector, we have successfully gone beyond ship repair and ship building to specialised oil and gas platforms. Now we set our sights on the air transport sector. Singapore is located in the fastest growing air travel market in the world, accounting for 36% of new aircraft orders by value. We have therefore moved to take advantage of this. The aerospace industry is one of the fastest growing industries in Singapore. It registered a 10% growth last year, reaching a record $6.9 billion, and employs 19,000 people, the majority of whom are Singaporeans.”
“For us to remain a top petrochemical hub, we need to anchor a critical mass of refining and cracking capabilities in Singapore, which can in turn catalyse other developments in the chemicals cluster. The petrochemical cycle peaks approximately every seven to eight years. In other words, we do not land a chemical cracker project at a time of our choosing. In fact, we have to catch the cycle. When we found out that ExxonMobil was planning to invest in the new world-scale cracker, we went the extra mile to secure the project. We knew that one critical consideration for ExxonMobil was sufficient space to integrate the new project with its existing facilities in Singapore. As a result, the Government proactively diverted and realigned a stretch of Jurong Island Highway, together with 17 live pipelines and four core fibre optic cables. The Shell cracker project is also illustrative. The industrial land was prepared well in advance so that Shell could break ground and start work within a month of their final decision. Such advance planning is one of the reasons why we are attractive to investors. The Shell investment led in turn to the recent announcement by Lanxess AG that they will invest €400 million or over $800 million in a state-of-the-art butyl rubber plant. Lanxess AG came in because they knew that they can rely on the feedstock from the Shell cracker by the time their plant is up and running. These two multi-billion dollar projects are expected to double our current ethylene production to about four million tonnes per year. They open up a whole range of investment possibilities in downstream petrochemicals and in specialty chemicals.”
“I hope that from a better understanding of our strategic clusters, Members will appreciate that our economy is now more resilient than ever. Mr Low Thia Khiang, Mr Teo Ser Luck and Mr Zaqy Mohamad will also be convinced that we are building a top quality economy – one that is well diversified across sectors and markets, with a strong external wing that allows us to seize new opportunities overseas, and an innovative economy powered by R&D, enterprise, and entrepreneurship. Growing our market share in these strategic clusters, exploring new growth opportunities, building more economic linkages, and entrenching the spirit of innovation throughout the economy will give us the competitive edge we need in order to thrive and succeed. Sir, we operate in a fast-paced and rapidly changing world where there is intense competition. To build up our economic clusters, we need clear strategic directions for each of the clusters. We need to plan ahead, anticipate needs, seize the opportunities when they arise, and work hard to resolve any resource constraints. Let me illustrate by going through the key clusters that we are concentrating on. First, on chemicals cluster. Jurong Island today has developed into one of the world's top three oil refining centres and a leading chemicals hub. It is home to more than 90 companies with investments in excess of $30 billion. But even as we speak, the Middle Eastern countries are diversifying from oil and gas production to building petrochemical hubs of their own. China and India are also building up their own capabilities to meet their own needs.”
“Sir, first, let me thank Members for their comments and suggestions. As pointed out by Members, 2008 will be a challenging year. The global environment is more uncertain and we face increasing cost pressures. How do we remain competitive, grow the economy, and create jobs? These are the key issues raised by Members. We had a good run in the last four years. Our economy has enjoyed 18 consecutive quarters of positive growth. Real GDP grew by a cumulative 36.3% from 2003 till 2007. We have created nearly 600,000 jobs. Not just more jobs, but high quality jobs. From 2004 to 2007, about two-thirds of new jobs taken up by Singapore citizens were in the professional, managerial, executive, and technician or the PMET category. Wages have grown by a total of 17.4% during this period. Consumer prices, on the other hand, have increased by 5.3%, though the main increase took place in the second half of 2007. Our strong position today did not come about by accident. Previously, Mr Inderjit Singh, during the Budget debate, described our approach as "growth at all costs" and therefore one of the primary causes for the increase in the cost pressures. I think Mr Inderjit Singh exaggerates for impact. I am sure he is not advocating that we plan to just grow at a comfortable rate and forego opportunities if they do not fit our plan. I prefer to describe our approach as growing strategically, not tactically, by developing the clusters that we are competitive in and tapping the opportunities that arise within these clusters and across the clusters. Through this approach, we are also better able to address the resource needs and the cost pressures arising within each cluster, a concern raised by Ms Jessica Tan.”
“Members know, in our last policy review in October 2007, MAS increased slightly the slope of its policy band, allowing a slightly faster rate of appreciation of the Singapore dollar. At that time, already there was heightened uncertainty in the external economic environment, including the financial markets, and MAS' response was to counter the inflationary pressures that were already building up. So the MAS exchange rate policy stance has therefore helped to keep inflation low by dampening some of the higher import costs. But we must be clear that we cannot insulate ourselves completely from the effects of higher global prices. It is important to recognise that there is a limit to how fast the Singapore dollar can appreciate without hurting our growth and, eventually, causing employment and wages to fall. MAS will continue to monitor the price and cost developments in our economy very closely. In the next scheduled policy review in April, MAS will be carefully reviewing the macro-economic conditions and will then determine the most appropriate policy, going forward. Hiring and Re-hiring of Older Workers”
“30 pm (1) The interest rates in Singapore are, therefore, determined by the market and largely influenced by the US market; and (2) Because of the trend appreciation of the Singapore dollar as a tool to contain inflation, this tends to result in low domestic interest rates, and this has been the case historically and, in fact, it is a good environment for business and economic growth. So, interest rates in Singapore are historically about 1% to 2% or sometimes even 3% below US interest rates, given the trend appreciation of the Singapore dollar. Let me just say that what Mr Inderjit Singh said, that we have been in a negative interest rate environment for some years now, is not accurate. In fact, up to the middle of last year, our inflation rate was very low and it was lower than our interest rates. It was only since late last year, as the nominal rates declined in Singapore following the drop in the US interest rates, that real interest rates have also come off and that we face this negative interest rate phenomenon. But our experience has shown that negative interest rates in Singapore have typically been short-lived and reflect cyclical factors, such as slowing growth and the higher consumer prices in the global economy. In fact, when we measure real interest rates against longer-term inflation expectations, we will see that these have not fallen as significantly. Dr Lily Neo asked similar questions and whether this is the appropriate stance. As I explained, this is the balance that we have to strike between tackling inflation and also not hindering our export competitiveness. She asked whether or not we would allow the Singapore dollar to appreciate at a faster pace. As hon.”
“Sir, I thank both Mr Inderjit Singh and Dr Lily Neo for raising the issues. Mr Inderjit Singh asked whether the exchange rate as the lever of our monetary policy is effective and whether or not we ought to consider interest rate as an additional lever. Sir, Singapore chose exchange rate as the main tool of our monetary policy because this is the most appropriate given the structure of the Singapore economy. Singapore economy remains one of the most open economies in the world. As Members all know, total trade amounted to some 350% of our GDP last year and we maintain a very high degree of openness to our capital flows. Studies by MAS over the years have shown that consistently, the exchange rate has a more significant impact on growth and inflation than interest rate. Mr Inderjit Singh asked why not have the interest rate as an additional tool. Once we have a very open capital account, the monetary policy can only influence either the interest rate or the exchange rate, but not both. So, take the example that Mr Inderjit Singh raised that, currently, the interest rates are very low. If you try to have an exchange rate at a certain level and you still want to raise the interest rate, what will happen is that you will attract a lot of inflows of foreign capital and your exchange rate will then strengthen far beyond what was the intended level. So you cannot have both. Given our exchange rate policy regime and our openness to capital flows, we really have to accept that: 4.”
“Within the ASEAN countries, our key investment countries are Malaysia, Indonesia, Thailand, Philippines and Vietnam, as can be expected. The sub-prime crisis has not affected these flows. As I have mentioned, even though our statistics are collected from the balance of payment data and tend to be at least one to one- and-a-half years' lag, anecdotal feedback from our companies shows that interest within ASEAN countries is still very strong. SPECIAL NEEDS SCHOOLS (Teachers and therapists) The following Question stood in the name of Mr Chiam See Tong - 6. To ask the Minister for Education (a) whether there are sufficient teachers and therapists for special needs schools; (b) whether his Ministry will improve the benefits of teachers in special needs schools to the equivalent of teachers in mainstream schools in order to attract more people into special needs education; (c) what are the career advancement opportunities for Special Needs Officers employed under his Ministry; and (d) what is the rationale for not having degree level courses for special needs education despite its importance.”
“Mr Speaker, Sir, ASEAN remains the top investment destination for Singapore companies. According to preliminary data from the Department of Statistics, the stock of direct investment from Singapore companies into ASEAN stood at S$50 billion as at end 2006, accounting for nearly a quarter of Singapore's total direct investment stock abroad. Singapore companies' investment in Malaysia and Indonesia, our two top investment destinations within ASEAN, amounted to S$16 billion and S$15 billion respectively. Singapore also continues to welcome investments from ASEAN countries. Preliminary data from the Department of Statistics shows that the stock of foreign direct investment (FDI) from other ASEAN countries into Singapore was more than S$10 billion as at end 2006, with the top investors being Malaysia, Thailand and Indonesia. Between 2004 and 2006, FDI inflow from other ASEAN countries into Singapore doubled from S$0.9 billion to S$1.8 billion. According to data published by the ASEAN Secretariat, FDI inflow from other ASEAN countries into Singapore accounted for about one-fifth of total intra-ASEAN investment inflow in 2006. We will continue to encourage companies to invest in ASEAN and draw on the unique strengths of each ASEAN nation. Increased intra-ASEAN investment flows are important, as they would result in tighter regional economic integration that will enhance the overall competitiveness of ASEAN.”
“In addition, there is also a wage component in FIFA, which should be taken into account if we consider a wage-to-GNI ratio. Such a ratio would be sensitive to changes in investment income to/from abroad. Column No : 429 CIVIL SERVANTS (Pensions/retirement benefits) 4. Ms Sylvia Lim asked the Minister for Defence (a) how many former civil servants are currently receiving pensions below $300 per month; and (b) what other retirement benefits are they entitled to.”
“(a) Singapore's Gross National Income (GNI) As Gross National Product, or GNP, is essentially the net income accruing to a country from both domestic and overseas economic activities, we can also refer to it as Gross National Income or GNI. From 1993 to 2007, GNI grew at a compounded annual growth rate of 6.7%. As a result, GNI in 2007 was S$235 billion, about 2.5 times the level of S$94 billion in 1993 [Figure 1: Nominal Gross National Income, 1993-2007 - please refer to Appendix. ]. (b) Percentage of wages as a component of Gross Domestic Product (GDP) and Gross National Income (GNI) Wages as a component of GDP Wages as a component of GDP has been fairly stable, averaging 43% in the period 1993-2007. Wage share of GDP tends to be slightly higher during periods of slower economic growth, for example, during 1998-2003. This is because profits tend to fall faster than wages during periods of economic slump. The wage share of GDP in 2007 was 41% [Figure 2: Compensation of Employees as a share of GDP, 1993-2007 - please refer to Appendix. ]. Wages as a component of GNI We do not publish statistics on wages as a component of GNI [1 ] . (c) Proportion of wages going to Singapore residents and non-residents There are no available statistics on the resident and non-resident share of wages. While data is available on the numbers of Singapore resident and non-resident workers, employee compensation is not broken down by Singapore resident and non-resident workers. [1] "Wage share of GNI" is not a commonly published statistic. GNI is defined as GDP plus net factor income from abroad (FIFA). FIFA comprises largely investment income, the estimates of which are derived from our Surveys on Overseas Investment and other administrative data sources.”
“Mr Speaker, Sir, as we explained at the press conference yesterday, the baseline forecast assumes the US economy entering a recession in the early part of this year and recovering because of the actions done by the Federal Reserves and the fiscal stimulus that the US government has introduced. That is the baseline forecast. If the US economy slows down further and the recession is deeper and longer, then, of course, we will go to the lower end of our forecast range. Column No : 317 TAX POLICY ON PETROLEUM, DIESEL, FUEL OIL AND NATURAL GAS (Review) 2. Mdm Cynthia Phua asked the Minister for Finance in view of the high oil prices whether his Ministry will review its tax policy on (i) petroleum and diesel to help reduce cost to commuters and transport operators; and (ii) fuel oil and natural gas to lower the cost of power supply to households and businesses.”
“Mr Speaker, Sir, the revised CPI and GDP forecasts for 2008 were released by my Ministry yesterday. The Minister for Finance will also cover these two issues in his Budget speech later. Based on MAS’ latest projection, the revised CPI forecast range for 2008 is 4.5%-5.5%. This latest forecast takes into account the sustained increases in global energy and food prices in recent months, and the stronger pass-through of higher global energy and food prices to domestic retail prices. The current GDP forecast range for 2008 is 4.0%-6.0%. The lower growth forecast reflects the higher downside risks stemming from a US economic downturn. Compared to three months ago, there is broad consensus now that the US economy is entering a slowdown. The key uncertainty is over the length and severity of this slowdown. This will influence how the rest of the world, including Singapore, will be affected. We will continue to monitor the situation closely and update the growth forecast where necessary.”
“EDB has launched a $17 million Clean Energy Research and Test-bedding platform to test-bed solar photovoltaics, and to determine the optimal solar energy systems for Singapore. HEARING AND EYESIGHT PROBLEMS IN SENIOR CITIZENS (Treatment) 14. Assoc. Prof. Kalyani K Mehta asked the Minister for Health whether the Ministry (i) has plans to address the very low rates of senior citizens above 55 years old who are receiving treatment for hearing and eyesight problems as reported in the National Survey of Senior Citizens 2005; and (ii) would consider the idea of "Eye and Ear Camp" programmes which some countries, such as India, conduct regularly to render free treatments by professional volunteers to needy seniors.”
“Mr Speaker, Sir, the use of solar energy in Singapore is still very limited. Our total installed capacity for generating solar energy is currently only 0.15 megawatts, compared with our peak electricity demand of more than 5,000 megawatts. Even buildings with installations for tapping solar energy cannot meet their own needs from solar energy generated, and they have to tap electricity from the grid. This situation is not unique to Singapore. The use of solar energy is still in its infancy in most parts of the world. According to the International Energy Agency (IEA), renewables such as geothermal, wind, solar and other combustible waste accounted for only 2% of global electricity generated in 2004. Solar photovoltaics (PV) alone accounted for just 0.005%. The main reason is cost. Current technologies for tapping solar energy are still not efficient. Solar-derived electricity is thus two to three times more expensive than our electricity tariffs for households. While costs will decline with the advent of better technology, fossil fuels such as oil and gas will still remain a dominant part of the global fuel mix in the medium term. Singapore is no exception. Nevertheless, our energy strategy is to continue to diversify our energy sources and invest in research and development in clean energy, including solar energy. To facilitate new energy technologies such as solar energy, we have adopted open and flexible regulations, such as removing the market participation fee for all facilities that are paid for export to the grid. EMA has also put out information on how to install and connect photovoltaic systems to the grid. The National Research Foundation has set aside $170 million for research into clean energy, with a focus on solar energy.”
“Mdm Ho Geok Choo asked the Minister for National Development (a) to provide an update on the impact of the recent withdrawal of the deferred payment scheme to manage the rising property prices; and (b) what other instruments will be considered by the Ministry to constantly review the property market.”
“Sir, as I explained in my answer, the MAS has been adopting an exchange rate policy that allows the Singapore dollar to appreciate gradually and modestly since April last year, and therefore it has helped us, because of the strengthening of the Singapore dollar, to reduce imported inflation. Again, in October this year, the MAS, in looking at the exchange rate policy, decided to allow the gradual and modest appreciation of the Singapore dollar at a slightly faster rate. So we are allowing the Singapore dollar to appreciate a bit more and this, of course, means that we have a better buffer against imported inflation. But as Dr Lily Neo has mentioned, the trade-off is, of course, we have to watch our export competitiveness, not just in terms of the tourism industry but, overall, in our exports. So this is the trade-off and the balance that we have to do. The composition of the CPI is reflected in fairly great detail. In fact, in the basket that we use to compute the CPI, food constitutes 23%, and there is a very detailed breakdown of uncooked food, cooked food, etc. It is a very detailed breakdown of what constitutes that 23% of food within the CPI basket. Similarly, transport is the second biggest item - around 21%-22%. And in that transport component, we break it down further into public transport, private transport and the different impact of the different components. So it is very detailed. More importantly, I am sure Members will remember that we also measure the CPI affecting different income levels - the bottom 20%, the top 20% and the middle 60%. So we have a better feel of how the CPI affects the different groups of Singaporeans. DEFERRED PAYMENT SCHEME (Impact of withdrawal) 3.”
“If we look at the oil prices this year, there was a sharp downturn where oil prices dropped to between US$50 and US$60 in the first part of this year but, in the second half, it has picked up. So, next year, again based on base effects, we expect to see the CPI being higher. But we expect the base effects to be washed out by the second half of next year.”
“We are tracking our competitiveness position very closely and, so far, we are in quite a good position for several reasons. First, as I explained earlier, our inflation rate, even though it is higher than what we have been experiencing, is still lower than in other countries. In that sense, comparatively, we are still better off. Second, even though wages had gone up last year, particularly the first three quarters of this year, we must see wages in the context of the last five to seven years where wages had not gone up so rapidly. So I do not think we should begrudge our workers for having their fair share of a wage increase in the last two years if we look at the broader 5-7 years' timeframe. But, more importantly, it is the productivity that we have been able to achieve. In the end, we have to look at the unit labour cost and not just wage increase. If we track the unit labour cost, we are still relatively well-off. We are watching these numbers closely but, right now, it has not affected our competitive position. The reason why we estimate that inflation will tail down in the second half of next year is because of the base effects that I explained earlier. First, we had the GST increase which will continue, in technical terms, to be reflected in the CPI up to June 2008. So in the second half of next year, the effect of the GST increase will be worn off. Second, we had the transport effect. Some of the adjustments to our road tax and the various costs of owning cars resulted in low inflation in 2007 and, in 2008, because of the base effects, we will see a blip in the number. Third, of course, is the oil prices.”