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.”
The complete record
Every one of 2,677 lines we hold for Lim Hng Kiang, in date order, each linked to its source. Free to read, in full, without an account. Page 3 of 54.
“First, given the tightening credit situation, we are introducing measures, such as the SME Working Capital Loan. This will allow SMEs to access unsecured working capital of up to S$300,000 to complement existing financing schemes to support viable SMEs. Mr Leon Perera asked whether the loan scheme would sufficiently incentivise the banks to extend loans when they otherwise would not. As the Government will co-share 50% of the default risk of the loan portfolio with the participating financial institutions, we expect this to catalyse approximately $2 billion of total loans to companies over the next three years. The second broad thrust is to provide more support to help companies restructure and transform as well as develop critical capabilities. One way is through the Automation Support Package, which can help companies to improve their productivity by scaling up through automation adoption. 5.00 pm The third broad thrust is through the provision of infrastructure. The needs of the different sectors are quite diverse. JTC has, therefore, developed a pipeline of innovative developments for the various sectors to better cater to their different needs. Some of the facilities that will be ready this year include Aviation Two @ Seletar Aerospace Park, Chemicals Hub @ Tuas South, Space @ Gul and Space @ Tampines North. Others, like the Food Hub @ Senoko, Furniture Hub @ Sungei Kadut and Logistics Hub @ Gul, will be ready in the next few years, and were developed together with the trade associations and companies to ensure that they meet the specific needs of these sectors.”
“With growth in global oil demand expected to remain weak, further adjustments in global oil supply will have to be made. As a result, there may be continued uncertainties surrounding oil prices. In addition, we will face structural adjustments domestically because of our demographics and ageing population. The local workforce will continue to grow, but at a slower rate than before as more Baby Boomers approach retirement age. Overall workforce growth will be around 1%-2% per annum for the rest of the decade. While all sectors will have to adjust to the tighter supply of labour, labour-intensive services sectors, such as food services, will likely be more adversely affected. The factors above point to an uncertain economic environment for the next few years. Against this backdrop, we expect Singapore's economic growth to remain modest between 1% and 3% this year. When we are on a slow growth trajectory of 1%-3%, some sectors will grow more strongly than the 1%-3% range and some sectors will be below the 1%-3% range. As Mr Liang Eng Hwa observed, this means that, for some sectors, they are contracting and feel like they are in a recession. This is one of the consequences of a low-growth trajectory. And that is why we are also addressing the challenges at the sectoral level. Given the current global economic outlook, Mr Liang asked how the Government will help companies ride through this difficult period. We recognise that companies are facing headwinds. The Government is watching the situation very closely and we are prepared to take further action, if necessary. We remain committed to working with companies to overcome these challenges. Let me highlight a few key initiatives.”
“Mdm Chair, I would like to thank Members for their comments and suggestions. Mr Liang Eng Hwa asked about the global economic outlook and the implications for Singapore's economy. The global economic recovery has been weaker than expected and the IMF has again downgraded its global growth forecasts. It has done so almost every year since the Global Financial Crisis. We are now in a paradigm of slower growth, compared to the previous decade. Meanwhile, there are significant global rebalancing forces that must work themselves through over the next three to five years. First, the key developed economies have been implementing loose monetary policy through measures, such as quantitative easing and low interest rates, in an attempt to revive their economies. Some of them have even introduced negative interest rates. This is unsustainable in the long run and these economies will have to normalise their monetary policies at some point. As the monetary policies normalise, it will affect financial and currency markets as well as capital flows around the world, especially in emerging economies. Second, the reforms in China are creating a "new normal". Besides rebalancing towards consumption and services-led growth, China has also been increasingly in-sourcing the intermediate goods and services required to produce its manufacturing output, rather than importing them. While China is making this transition, the countries which trade with China will also be affected because supply chains will have to adjust. In Singapore, we will need to find new growth niches in order to remain relevant as China makes its adjustments. Third, in commodity markets, there has been an oversupply of oil in the global market due to over-investment, leading to a sharp drop in oil prices.”
“IE Singapore helps our companies on their internationalisation efforts and EBD works closely with our local enterprises to develop our economic and various industry clusters, including partnering SMEs on capability transfer and supplier development through initiatives, such as Partnerships for Capability Transformation (PACT). I would like to thank Mr Ng again for his comments and suggestions. The Government will continue to review our incentives on a regular basis to ensure that they remain relevant and meet the needs of the different types of companies that we have. [(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)]”
“And over time, in fact, they have also raised the bar and the requirements for the various criteria to ensure that only deserving companies receive the incentives. EDB keeps companies informed of the PC and DEI schemes through regular engagements and companies interested to apply for these schemes are, of course, welcome to approach the EDB for further details. Mr Ng also asked how SMEs and startups can benefit from these schemes, especially those with the potential to become globally competitive. In addition, he has also requested for details on the total number of PCs awarded and of those awarded, how many are awarded to SMEs and start-ups. Madam, we had awarded the PCs to a total of 239 companies over the past 10 years and, more recently, 71 companies had been awarded PCs between 2011 and 2015. And of these 71 companies, two were SMEs, of which one was a local SME. As Members can well understand, PC requires companies to commit to economic contributions of substantive scale and, therefore, it is quite natural that the bigger companies will tend to qualify. Although the PC and DEI may not be the suitable platforms to develop our SMEs and start-ups, I would like to assure Members and Mr Ng that the Government agencies have a range of programmes in place to support the different needs of companies along their various stages of growth. For example, SPRING Singapore partners incubators to support innovative startups to scale up. SPRING also supports SMEs to innovate and raise productivity through schemes, such as the Capability Development Grant.”
“Mdm Speaker, I thank Mr Louis Ng for supporting the Bill. Mr Ng has suggested that we provide more clarity on the qualifying criteria for the Pioneer Certificate (PC) as well as the Development and Expansion Incentive (DEI) so as to raise companies' awareness of the incentive under the Act. Madam, we share the same intention of ensuring clarity, transparency and a level playing field. But at the same time, we also have to be flexible and responsive to the complexities and special needs of the different economic sectors as we have to deal with a very complex economic environment. Let me start by first clarifying that the core objective of the PC and DEI is to encourage companies to undertake substantive economic activities in Singapore, thereby creating good jobs for Singaporeans and create spin-offs to our economy. The objective really is to encourage "queen bees" to set up operations here and thereby help build a cluster around them. Applications are, therefore, assessed based on the scale and the qualitative aspect of their economic contributions to Singapore. The exact level of support is thereafter calibrated to commensurate with the level of economic contributions from the company. As Mr Ng noted, the PC and DEI are listed on EDB's website, along with the broad factors of consideration for each scheme. And within these perimeters, the Government assesses the merits of each application based on the range of criteria, including, very relevant, the fixed asset investment, total business expenditure, skilled jobs created, capabilities and technologies developed, as well as spin-offs to the rest of the economy from each proposal. The actual incentive awarded to the company will depend on the combination of these factors.”
“DEI was introduced to encourage companies to expand by investing in technology as well as major upgrading of equipment and operations. Under the EEIA, the tax relief period under DEI is generally capped at 20 years and currently applied on the company, instead of the incentivised qualifying activities. As DEI similarly aims to encourage all companies engaged in high value-added manufacturing or services activities, including existing ones, to continue to expand in Singapore, the EEIA will also be amended to make clear that the maximum tax relief period will apply on the qualifying activities for DEI. Therefore, clauses 17 and 18 amend sections 19J and 19K respectively to give legislative effect to this. The remaining legislative changes arising from our periodic review of the income tax system are technical in nature or relate to improvements in tax administration. Mdm Speaker, the proposed changes to the EEIA seek to encourage economic activities in Singapore. These changes also reflect the Government's commitment to monitor the effectiveness of our tax incentive regime and to keep it competitive and relevant as economic conditions change. Mdm Speaker, I beg to move. [(proc text) Question proposed. (proc text)] 3.07 pm”
“Mdm Speaker, I beg to move, "That the Bill be now read a Second time." The Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2016 puts into legal effect the income tax changes introduced in Budget 2015 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 this Bill. First, is to apply the maximum tax relief period for each Pioneer Certificate (PC) on the incentivised activities. The Pioneer Incentive is designed to attract and anchor new economic activities, that is, pioneer activities with significant economic benefits to Singapore and to encourage companies to acquire new technologies. The objective of the incentive is to drive the growth of high value-added or high-technology industries in Singapore. A company can be awarded multiple PCs when it anchors different qualifying economic activities in Singapore over time. However, the Economic Expansion Incentives (Relief from Income Tax) Act (EEIA) currently only allows for each company to enjoy a maximum tax relief period of 15 years, regardless of the number of PCs awarded to the company. To encourage all companies, including existing ones, to continue to anchor more pioneering activities in Singapore, the EEIA will be amended to make clear that the maximum tax relief period is to be applied on the incentivised pioneer activity, instead of the company as a whole. Clauses 3, 4 and 13 amend sections 5, 6 and 17 respectively to give legislative effect to this. The second major change is to apply the maximum tax relief period for each certificate issued for Development and Expansion Incentive (DEI) on the incentivised activities.”
“The occupancy rate of Jurong Town Corporation's (JTC's) and Housing and Development Board’s (HDB's) industrial facilities dropped from 97% in 2012 to 96% in 2013 and 94% in 2014. For the overall industrial space market, the occupancy rate fell from 93% in 2012 to 91% in 2014, following the Government’s release of more industrial land and space in recent years. An average of about 1.8 million square metres (sqm) of industrial space is expected to come on-stream each year in 2016 and 2017. This is higher than the average annual supply Page: 147 and demand of around 1.5 million sqm and one million sqm in the past three years. Of the upcoming industrial space, new JTC developments will contribute about 340,000 sqm. The projects include JTC Chemicals Hub @ Tuas View and JTC nanoSpace @ Tampines. The Government will continue to monitor the industrial property market closely and make available more space when necessary.”
“For instance, as part of SkillsFuture, workers will be able to tap on schemes, such as SkillsFuture Credit and SkillsFuture Study Awards, to deepen their skills to meet the needs of companies. Page: 126”
“Business cost trends in Singapore are tracked using two indices: the Unit Business Cost (UBC) index for the manufacturing sector and the Unit Services Cost (USC) index for the services sector. UBC and USC are defined as the total business costs required to produce one unit of real manufacturing and services output respectively. From 2010 to 2014, the UBC index and USC index rose moderately, at a compounded annual growth rate (CAGR) of 3.1% and 2.7% respectively. The increase in the UBC index was driven mainly by services cost and, to a lesser extent, unit labour cost. The key drivers for the increase in the USC index were similar, with the unit labour cost and services cost contributing roughly equal shares to its increase. The rise in unit labour costs in both sectors were, in turn, due to productivity growth in the respective sectors, lagging behind the increase in labour costs. Over the longer term, the only sustainable way for Singapore to contain the impact of rising business costs and, at the same time, enhance our competitiveness and grow the economy is by raising our productivity. To this end, the Government has put in place many schemes, such as the Productivity and Innovation Credit (PIC) and Innovation and Capability Voucher (ICV) schemes, to encourage businesses to engage in process improvements and technological innovation. The National Productivity Council (NPC) has also rolled out various productivity initiatives, which have benefited 24,000 companies as of December 2014. At the same time, the Government has stepped up efforts to support workers so that they can upgrade their skills as well as acquire new ones to take on higher value-added jobs.”
“Based on preliminary estimates released on 11 August, the Singapore economy grew by 1.8% on a year-on-year basis in the second quarter of 2015, slightly higher than the 1.7% based on the advance estimates. The wholesale and retail trade and finance and insurance sectors were the key drivers of growth in the second quarter. The wholesale and retail trade sector expanded by 5%, following the 5.3% growth in the first quarter. Growth was driven primarily by the wholesale trade segment, which was supported, in turn, by an increase in domestic exports in volume terms, especially in oil products. At the same time, the finance and insurance sector expanded by 7.1%, extending the 7.8% growth in the previous quarter. Growth was largely Page: 125 underpinned by the robust expansion in the fund management segment. The breakdown of gross domestic product (GDP) growth into the contribution of SMEs and non-SMEs is not available. However, SMEs contributed around 50% of GDP in 2014.”
“The Partnership for Capability Transformation (PACT) programme was expanded in Budget 2013. Under the programme, EDB and SPRING Singapore support partnerships between large organisations1 (LOs) and SMEs from the manufacturing and services sectors. SMEs can benefit through the upgrading of their capabilities by being suppliers to LOs. They can also work together on joint innovation projects. In total, $60 million has been committed to the PACT programme from FY2013 to FY2015. Since 2013, SPRING Singapore has supported 14 PACT projects and 461 SMEs in the services sector. In the manufacturing sector, the programme has benefited 167 SMEs and 78 PACT projects.”
“These include measures like enhancements to medical subsidies and waiver of national examination fees, which have lowered the prices of consumption items, such as healthcare services, medication and education. Page: 164 Second, the dampening effects of lower oil prices and budgetary measures are expected to dissipate. Specifically, the Brent benchmark oil price recently rose from a trough of US$49 to around US$64, and market expectations are for prices to edge up gradually into 2016. As such, the drag posed by oil-related items on overall inflation on a year-on-year basis should dissipate towards the end of the year and into 2016. Similarly, the impact of the budgetary measures on year-on-year inflation is expected to start to dissipate towards the end of the year. Reflecting these factors, the MAS Core Inflation is expected to stay subdued at around the current rate over the next few months, while CPI-All Items inflation could ease further due to the drag from car prices and housing rentals. However, both MAS Core Inflation and CPI-All Items inflation are projected to rise towards the end of the year and into 2016, on account of higher global oil prices and as the effects of the budgetary measures dissipate. For 2015 as a whole, MAS Core Inflation and CPI-All Items inflation are expected to average 0.5% to 1.5% and -0.5% to 0.5%, respectively. In sum, MTI's and MAS' assessment is that the Singapore economy is not experiencing deflation nor is it likely to slip into deflation. MTI and MAS will continue to closely monitor price developments in the economy.”
“In the first five months of 2015, CPI-All Items inflation averaged -0.4% on a year-on-year basis. However, the negative inflation rates are not an indication that the Singapore economy is experiencing deflation, as the price declines are not broad-based nor are they expected to persist. First, the negative rates of inflation experienced were primarily due to price declines in specific categories of the consumption basket, rather than broad-based price declines which would have been symptomatic of a general weakness in demand in the economy. In particular, the negative inflation rates largely reflected the impact of three factors. One, lower car prices and housing rentals, which contributed to a 0.7 percentage-point drop in CPI-All Items inflation on average in the first five months of the year. These price declines were, in turn, the result of a deliberate effort by the Government to cool the property market, following the sharp run-up in housing costs over the past few years, as well as lower Certificate of Entitlement (COE) premiums this year due to an increase in the supply of COEs. Excluding the costs of private road transport and accommodation, MAS Core Inflation, which is a better measure of underlying price pressures, was positive at 0.8% from January to May 2015. Two, the sharp fall in global oil prices since late 2014, which has dampened the domestic prices of oil-related items, including petrol, electricity and gas. In all, the decline in the prices of oil-related items contributed to a 0.6 percentage-point drop in CPI-All Items inflation on average in the first five months of the year. Three, the disinflationary impact of a suite of budgetary measures introduced by the Government to help households cope with the cost of living.”
“The National Productivity Council (NPC) tracks Value-Added (VA) per worker at the macro-level. This is the most consistent and internationally recognised measure of productivity improvements. The NPC also supplements this measure with sector-specific indicators which better reflect the nature of each sector’s business cycles and help to enrich our understanding of the progress of our productivity initiatives. In the Hotels and Food Services sectors, there have been steady improvements in the sector-specific indicators between 2009 and 2013. For example, revenue per worker in the Hotels sector grew 9% per annum, and revenue per worker and revenue per square foot in the Food Services sector grew 4.3% and 6.7% per annum respectively. This suggests that mindsets towards productivity have changed and companies are taking steps to raise space productivity. In this regard, the Government will continue to assist companies, including those in the Hotels and Food Services, to innovate and boost their topline. The NPC will continue to track VA per worker and sector-specific outcome indicators closely to monitor the progress of our productivity drive at the macro- and sector-levels. We will also continue to expand the range of sectors for which such indicators are tracked where feasible and consider publishing them at appropriate platforms in future.”
“The Gini coefficient compiled annually by the Department of Statistics (DOS) covers the income from work of resident households with at least one working person. A resident household refers to a household headed by a Singapore Citizen or Permanent Resident. The income from work of foreigners in Singapore, excluding domestic helpers, would be included in the compilation of household income for the computation of the Gini coefficient if they are members of a resident household. DOS is unable to provide a Gini coefficient that incorporates the income from work of the entire foreign population in Singapore as data on foreigners who are not members of resident households are not available. Due to different household and income coverage, Gini coefficients are not strictly comparable across cities. Singapore’s Gini coefficient is based on income from work of resident households with at least one working person. On the other hand, the Gini coefficients for New York City and Hong Kong cover all households, and include income from both work and non-work sources. The UK Office for National Statistics does not publish the Gini coefficient for London. Page: 133”
“The number of establishments in the Food and Beverage (F&B) sector has increased from 6,000 in 2009 to 7,000 in 2014. The total number of workers employed has also increased at an annual rate of 4.8% from December 2009 to December 2014, which is higher than the overall workforce growth rate of 3.9% over the same period. This trend is not sustainable given our labour constraints. In addition, sales volume in the F&B sector is slowing down and companies are facing greater competition. It is, therefore, important for the F&B sector to improve its productivity and become more manpower-efficient. Under the Food Services Productivity Roadmap, SPRING has implemented strategies to drive sector transformation through mass adoption of productivity initiatives. These include kitchen automation, workflow redesign, centralised dishwashing, vending machine formats, grab-and-go formats and digital services. F&B enterprises can tap on SPRING’s Capability Development Grant (CDG) and Innovation and Capability Voucher (ICV) to develop capabilities, improve productivity, adopt technology and innovation to reduce reliance on manpower.”
“Rental leases are decided based on commercial considerations, with the rates determined by supply and demand. As a general principle, we should allow the market to operate without the Government prescribing how landlords and tenants structure their leases. This would lead to inefficient outcomes and make all parties worse off. There are other ways to help our companies manage their rental costs. In consultation with key stakeholders and with support from the Ministry of Trade and Industry, the Singapore Business Federation released the Business Leasing Guide in January 2015, which provides information and shares best practices to guide companies when they negotiate lease contracts with their landlords. Information on retail rental rates is also publicly available on the Urban Redevelopment Authority’s website. The data is updated every quarter. The user is able to access statistics on monthly rents at the postal district level, broken down by the 25th percentile, median and 75th percentile for a range of floor areas and floor levels. This provides useful information for companies when they are making leasing decisions and negotiating with their landlords.”
“The Average Household Expenditure on Basic Needs (AHEBN) is an estimate of the average monthly expenditure that households spend on essential needs, such as food, clothing and shelter. The data used to compile AHEBN is primarily from the Household Expenditure Survey (HES) which is conducted once every five years. Based on the latest HES conducted in 2012/2013, the AHEBN for a four-person household was about $1,250. As HES does not collect information on whether households include persons with disabilities, it is not possible to compile AHEBN for households consisting of persons with disabilities. AHEBN is also not available for other household types besides household size.”
“The Department of Statistics (DOS) currently compiles and releases estimates on services exports on a quarterly basis as part of Singapore’s Balance of Payments statistics. Merchandise exports data are compiled and released by IE Singapore on a monthly basis. The release of services exports data on a quarterly basis and merchandise export data on a monthly basis is in accordance with the IMF’s Special Data Dissemination Standard (SDDS). Merchandise export figures are compiled from administrative data collected from the customs declarations of traders. On the other hand, services export figures are based on surveys of companies, as there are no similar administrative records that can be tapped on. To minimise compliance cost while keeping with international standards, MTI and DOS do not currently have plans to increase the frequency of surveys of companies to enable monthly compilation of services export data.”
“These include one-on-one briefings and consultations to companies and industries, as well as seminars co-organised with Trade Associations and Chambers to inform and educate the business community on the benefits of each FTA. There are also a range of capability-building initiatives, such as the FTA Certificate Programme for companies and train-the-trainer sessions for Trade Associations and Chambers. Feedback channels are also open to companies to assist them with FTA implementation issues.”
“The Trans-Pacific Partnership (TPP) is envisioned as a high-quality agreement that will boost regional economic integration and improve market access for our exports. It also serves as a possible pathway towards an eventual Free Trade Area of the Asia-Pacific (FTAAP). Significant progress has been made over the past five years of negotiations. All Parties are working hard to conclude negotiations as soon as possible, given the economic and strategic importance of this agreement. Singapore already has bilateral FTAs with nine of the 11 TPP Parties. The additional economic benefits of the TPP will come through enhanced cooperation on regulatory measures and integration of this region into a single manufacturing base and market. Our businesses will find it easier to operate across all TPP countries and participate in the global supply chain. Furthermore, common trade facilitation rules across TPP Parties will reduce Page: 97 compliance costs for businesses and generate substantial gains in supply chain efficiency for traders operating across them. These benefits are particularly important for SMEs, which will be able to operate with reduced cost and greater certainty. The TPP will also include disciplines on new growth sectors, such as e-commerce and intellectual property, which will help foster innovation and commercialisation of new insights and discoveries to benefit consumers. IE Singapore promotes the awareness and utilisation of the various FTAs we have signed among Singapore-based companies, big and small, through both customised and broad-based outreach efforts.”
“The Government’s approach to consumer protection is based on promoting fair trading among retailers and helping consumers make informed purchasing decisions. The majority of retailers are legitimate businesses who want to serve their customers well. As the nature of consumer purchases can vary widely in practice, broad-based restrictions, such as imposing a cap on deposits, could have the unintended effect of restricting trade and increasing transaction costs. This will result in greater inconvenience and higher costs for consumers. If there are specific sectors which require additional safeguards to protect consumers’ interests, we are open to working with the Consumers Association of Singapore (CASE) and relevant industry associations to explore possible arrangements. MTI is currently studying ways to enhance the effectiveness of Singapore’s consumer protection regime, with reference to practices in other jurisdictions, such as Hong Kong and Australia. These will include measures to prevent errant retailers from side-stepping restrictions under the Consumer Protection Fair Trading Act by setting up new business entities. The review will be completed by mid-2015.”
“A quick answer. Again, we have to be realistic. We can do much better in China and ASEAN than we can in Latin America and Africa. But we are continuing our efforts in Latin America and Africa.”
“Mdm Chair, basically, we have to be realistic. When we look at the PIC statistics, the easiest thing that companies can apply for and the quickest way to get applications approved is the generic ones, whereas R&D is very specific and very in depth and we cannot expect too high a percentage. But we will continue to work to improve this. As Second Minister Iswaran mentioned the other day, the research institutes work with the companies, especially through the Technology Adoption Programme, and try to transfer the technology from the research institutes down to the companies. So, that process is working quite well.”
“First of all, this off-cycle adjustment was prompted because we have been receiving data and the inflation performance has been much more benign than we anticipated. Therefore, MAS felt it necessary to intervene ahead of its typical April schedule. Because of that, and due to the oil price decline, inflation is projected now to come in much lower. We expect the lower appreciation trajectory of the Singapore dollar not to disrupt the inflation numbers we have projected. 12.30 pm On interest rates, the pattern started way ahead of the off-cycle adjustment. If you track the interest rates in Singapore, this is prompted more by anticipation of the US Federal Reserve Board raising interest rates sometime this year. Being a very open economy, interest rates have moved in anticipation of that decision by the US Federal Reserve Board. Page: 29”
“Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2015/2016 and ask leave to sit again on Monday, 9 March 2015.”
“Mr Chairman, may I seek your consent to move that progress be reported now and leave be asked to sit again on Monday, 9 March 2015.”
“This will go towards creating on-the-job training programmes with leading companies, anchoring Centres of Excellence and establishing relevant executive and specialist development programmes. And third, EDB will support our companies in developing high-potential Singaporeans through the SkillsFuture Leadership Development Initiative. This will help Singaporeans to gain the necessary competencies as well as global and regional exposure to take on leadership roles in their industries. Mr Chairman, let me summarise the key points of my response. First, despite the major disruption and the continuing aftershocks from the Global Financial Crisis, we are making steady progress and Singaporeans enjoy close to full employment. Second, our emphasis on restructuring, innovation and productivity is gaining traction in the manufacturing and the exportable services sectors. And third, we must persevere in our efforts so that we can replicate these improvements in the other sectors, particularly the domestic-oriented sectors. In short, MTI will continue to help our companies enhance their productivity, raise their competitiveness and create good jobs for Singaporeans. At the same time, we will equip Singaporeans with the skills and expertise to take on these new jobs. Mr Chairman, if we stay the course, I am confident that we will continue to grow and do well. The Second Minister for Trade and Industry (Mr S Iswaran): Mr Chairman, may I have your permission to display some slides on the screens?”
“Our companies can also look forward to further liberalisation of the service markets in the region, which will bolster the strong growth of our services exports. Finally, these three initiatives will also deepen the protection of investments in the region, which will not only facilitate the internationalisation of our companies but also enhance the attractiveness of Singapore as a place to do business and anchor regional and international headquarters in Singapore. Mr Chairman, I have spoken about our growth sectors, which will create new and exciting jobs. To complete our mission, we must ensure that Singaporeans are well-equipped to take up these opportunities. Mr Liang and Mr Vikram Nair asked what MTI will be doing to support the SkillsFuture initiative. Let me illustrate with three initiatives by the Economic Development Board (EDB) to support the SkillsFuture effort by working with industry partners to develop talent at all levels in our key growth areas. First, to ensure that our workers have the core skills needed to support future growth, EDB will work in partnership with MOE and WDA to encourage companies to build their Page: 145 training capability and expand their training capacity. EDB will support these efforts in seven pilot sectors, namely, Logistics, Electronics, Biopharmaceuticals, Chemicals, Precision Engineering, Marine and Aerospace. Second, our future growth clusters will require domain experts with deep specialist know-how as well as competencies such as advanced manufacturing, business analytics and systems integration. EDB will develop these capabilities in partnership with industry as well as the Institutes of Higher Learning.”
“We already have a network of around 20 Free Trade Agreements (FTAs) with 32 trading partners, which account for more than 70% of our trade in goods. We will expand this Page: 144 network as well as review existing FTAs to maintain their relevance to businesses. Here, I would like to respond to Mr Charles Chong's example. Under the Korea-Singapore FTA which Mr Charles Chong talked about, we have surfaced our industry's request for continued exemption of customs duties for goods re-entering South Korea after maintenance, repair or overhaul, that is, MRO in Singapore. The Korean government recently announced that it would postpone the implementation of these customs duties till 2017. We will continue to work with Korea to resolve this issue as a part of a more comprehensive review of the Korea-Singapore FTA. Singaporean companies can look forward to further developments on three fronts in our trade negotiations: the implementation of the AEC by the end of 2015, the Regional Comprehensive Economic Partnership or RCEP and the Trans-Pacific Partnership or TPP. I have spoken about the opportunities presented by the AEC. The RCEP links ASEAN and the six ASEAN dialogue partners while the TPP connects half of ASEAN with the US and countries on the other side of the Pacific Ocean. Both the RCEP and TPP are designed to be inclusive so that we can eventually have an FTA of the Asia Pacific. The AEC, RCEP and TPP will enhance the economic integration of the region and is expected to boost intra-regional trade significantly. For goods, our companies will be able to have better import and export opportunities because of the significant reduction of tariffs.”
“Senior Minister of State Lee Yi Shyan will share more details on these enhancements. Our other services cluster will also provide the kind of jobs that Mr Liang, Ms Tan and Mr Gan alluded to – jobs that increasingly educated and qualified Singaporeans want to do. Take the professional services sector for example. Since 2008, employment in this sector has been growing at 5.5% per year. As of 2013, the sector provides over 220,000 jobs and Singaporeans hold more than half of the PMET positions. 6.30 pm This achievement is in large part because Singapore has become a choice location for regional headquarters activities. The 2014 Economist Intelligence Unit Business Environment Rankings study ranked Singapore the best place in the world to do business. Consultancy firm Roland Berger also found that European companies consider Singapore the preferred location for regional HQ activities, with Hong Kong and Shanghai being close competitors. To sharpen our competitive edge, we are working with global leading companies to develop Centres of Excellence specialising in diverse fields ranging from analytics, growth markets, consumer insights to cybersecurity. Professional services firms such as McKinsey, KPMG and PricewaterhouseCoopers (PwC) have already chosen Singapore as the location for their Centres of Excellence. These Centres of Excellence will not only help create more job opportunities for Singaporeans but offer good quality jobs. Mr Gan Thiam Poh asked how we can keep Singapore relevant as a key hub for the international movement of goods and services. In addition to the schemes that I have described, we also intend to reduce trade barriers so that our companies can compete more effectively.”
“In terms of the value of our services exports, Singapore now ranks 11th in the world and fourth in Asia. Despite keen competition from the bigger economies, we have been gaining market share of global services exports. Take our trade in services with China as an example. We are in fact now China's third largest foreign trading partner for services after the US and Japan. So, for a small economy like us, we have in fact gone up the ladder and we are now China's third largest foreign trading partner for services, just after the US and Japan. We have done well in the financial services sector, the wholesale trade sector as well as the transport services sector. We must seek new opportunities for growth in the other services clusters. Let us take the logistics sector, for example. Many companies in this sector have found ways to overcome manpower constraints and pursue higher value-added endeavours. More are also growing their commercial presence overseas. YCH Group is one such company. A homegrown logistics company, YCH has transformed the traditional business model for logistics service suppliers, by adopting innovative end-to- Page: 143 end supply chain management solutions, by embracing e-commerce and developing its own proprietary software. Today, YCH operates in more than 100 cities worldwide and continues to expand its network of e-fulfilment services. To help more companies like YCH, we will strengthen schemes to help companies internationalise. IE Singapore currently offers the Market Readiness Assistance or MRA and the Global Company Partnership or GCP to help local enterprises defray the costs of internationalisation. Starting this year, we will enhance these schemes by raising the grant support levels to SMEs.”
“This will provide greater support for co-innovation between SMEs and the large enterprises and help local contract manufacturers Page: 142 upgrade to supply higher-technology components. In addition, to enable more projects to qualify for support, PACT will now be able to support SMEs even if the partner large enterprise does not receive funding, so long as the large enterprise is committed to develop the local company's capabilities. We will also improve and enhance the Capability Development Grant or CDG. CDG is a flexible grant that can be customised for each individual SME. SMEs can choose to defray up to 70% of the project costs in 10 areas ranging from technology innovation to intellectual property and franchising. It has been well received and has supported over 1,200 projects in 2014. We will be extending the enhanced support under the CDG so that companies can continue to get 70% support till 2018. We will also simplify the application process for projects under $30,000 so that smaller companies can access this grant more easily. To illustrate how all these programmes are coming together, we can look at the restructuring of the precision engineering sector. Taking advantage of the various Government support programmes, the precision engineering sector has been able to upgrade and now support the aerospace as well as the Medtech sector, in addition to the traditional electronics sector. Over the last five years, the output and productivity of the precision engineering sector have both grown by 9.9% per year. Let me now turn to the growth prospects of our services sectors. Our services exports have performed well in recent years. Since 2007, our services exports have grown by 6.9% per year.”
“In addition, 3D printing could disrupt established supply chains as it erodes the competitive advantage traditionally held by mass production and enables the emergence of efficient, yet small-scale domestic production hubs. So, one can argue that 3D printing and advanced robotics have the potential to disrupt the competitive landscape. Smaller niche players can now take on the bigger players. Mr Liang Eng Hwa, Ms Jessica Tan and Mr Gan Thiam Poh asked how MTI will be facilitating the creation of the right sort of jobs for Singaporeans. The evolution of the manufacturing sector will create jobs which require new competencies such as data analytics, engineering and operations expertise. For instance, technicians in a wafer fab will require analytics and operations skills to monitor production output and quality and advanced robotics capabilities to troubleshoot and repair the robots which will take on the lower value tasks. Mr Chair, we are taking steps to ensure that our SMEs can keep up with leading-edge technologies. This is one key reason why we will provide greater support for collaboration between large enterprises and SMEs through the Partnerships for Capability Transformation or PACT programme. We introduced PACT in 2010 to help SMEs build up their capabilities and track record. The scheme was expanded in 2013 to cover new industries as well as to include new forms of collaboration. It now provides support for supplier qualification, test-bedding of innovative solutions, knowledge transfer and productivity improvements. PACT has achieved good progress and we will be extending the scheme by another three years, to March 2018. PACT will cover a broader spectrum of co-innovation to include joint product development at the proof-of-concept stage.”
“Three days ago, I attended the ground-breaking ceremony for the expansion of Micron Technology's NAND flash memory wafer fab. This will be Micron's largest and most advanced wafer fab location in the world. It entails an investment of US$4 billion. When fully operational, it will create about 500 highly skilled jobs. Last November, I was at the opening of Amgen Singapore's biologics manufacturing facility. This facility is Singapore's ninth world-class biologics manufacturing plant, and the first in the world to use Amgen's latest proprietary technologies and manufacturing processes on a Page: 141 commercial scale. Each biologics plant will create 100 to 200 highly skilled jobs. Cutting-edge projects like these will keep us at the forefront of global manufacturing. Our steady pipeline of investments will keep us in the game for the next five years. To remain competitive in the longer run, we will have to adopt disruptive technologies such as 3D printing and advanced robotics, something that Mr Gan Thiam Poh also raised. This will enable us to create new business models and take advantage of new opportunities. For example, rapid prototyping through 3D printing enables faster innovation, helping companies bring their products to market faster while using resources more efficiently, which would not be possible using traditional manufacturing techniques. 3D printing enables more cost-effective small-volume production, enabling new business models which rely on mass customisation, such as the Consumer-to-Business (C2B) model as well as the personalisation of goods like running shoes tailor-made for the individual.”
“Against this backdrop, we can expect Singapore's economy to grow between 2% and 4% in 2015. Mr Liang Eng Hwa has also asked for the outlook for growth in ASEAN and how this will affect Singapore in the lead-up to the ASEAN Economic Community or AEC this year. ASEAN is expected to achieve a growth rate of 5.6% per year between 2015 and 2019. If ASEAN continues on this trajectory, ASEAN could become the fourth largest single market by 2030, after the EU, the US and China. We must, therefore, position ourselves to take advantage of the opportunities that deeper integration through the AEC will bring, and indeed, we have been actively engaging businesses to do so. To achieve the growth of between 2% and 4%, Mr Liang Eng Hwa, Ms Jessica Tan and Mr Gan Thiam Poh have asked what our key growth sectors and key growth opportunities will be in the years ahead. Mr Chair, our economy is well-diversified. Previously, we highlighted the Asian growth story. The prospects of an increasingly integrated ASEAN remain positive. In our projections, manufacturing will continue to be an important part of our growth story. The manufacturing sector has achieved steady value-added growth of 4.3% per year since 2007 and this was achieved while keeping the labour force in the manufacturing sector approximately constant. In 2008, the manufacturing sector employed a total of 565,000 people. In 2014, this was 536,000. We will continue to move up the value chain into advanced technology and high-value areas, as well as to seek productivity improvements in existing sectors. Our achievement has been underpinned by a steady pipeline of projects that we have secured across our manufacturing clusters.”
“While the charts are being distributed, let me explain the intent of the charts. The charts will compare our performance in GDP growth, employment and median income growth. These are our KPIs showing how our overall economy is doing, whether there are enough jobs for our people and how well our workers are being paid. For comparison, I have selected two sets of countries. The first set comprises the advanced economies, that is, the US, the EU and Japan and the second set comprises key Asian economies. So, if Members look at the first set of charts, in terms of GDP growth, Singapore has grown by 4.7% annually since 2007 [Please refer to Annex 1.] As the charts show, we outperformed both the developed economies as well as the key Asian economies. In the next chart, on the jobs front, our unemployment rate has not exceeded 3% [Please refer to Annex 2.] This was so even at the depth of the Global Financial Crisis. Since 2008, we have created approximately 112,000 jobs every year. More importantly, over two-thirds of the jobs created in the resident workforce were professional, managerial, executive Page: 140 and technical or PMET jobs. The final chart is the median income of employed households headed by Singaporeans [Please refer to Annex 3.] This has been on the rise, with a real annualised growth of 2.9% per year since 2007. Mr Chairman, as our economy matures, we will need to get used to a lower but more sustainable rate of growth. In addition, our tight labour market is a continuing reality. These domestic challenges will also affect our growth trajectory. But as the numbers show, our efforts in the past few years have put us on the right track and we are making progress despite significant headwinds.”
“Mr Chairman, I would like to thank Members for their comments and suggestions. Mr Liang Eng Hwa asked for the economic outlook for Singapore in 2015. Mr Liang correctly pointed out that there is considerable uncertainty in the global economy. This is because, seven years after the Global Financial Crisis struck, the world is still affected by the aftershocks of the crisis. The recovery has been uneven and relatively weak and we can expect this sluggish global environment to persist for some time to come. 6.15 pm But if we step back and review how Singapore has fared over the Global Financial Crisis, in fact, we have performed relatively well. Chairman, may I have your permission to distribute some charts?”
“The Department of Statistics (DOS) compiles the Consumer Price Index (CPI), which tracks the price movements of goods and services consumed by resident households. The CPI basket includes local hawker food items sold in both air-conditioned and non-air-conditioned cooked food establishments, as well as common household groceries. Prices of more than 100 types of hawker food commonly consumed by resident households are obtained every month from hawker food centres, coffee shops and food courts throughout Singapore. These hawker food items include, but are not limited to, noodle-based dishes, for example, fish ball noodles, mee goreng and mee rebus; rice-based dishes, for example, chicken rice, economical rice, nasi briyani and nasi padang; local delicacies, desserts, beverages and cut fruits. The changes in the prices of hawker food captured in the CPI basket over the last five years can be found in the table below. For common household groceries, the prices of more than 1,000 types of food items from major retailers, including wet markets, supermarkets and provision shops, are tracked in the CPI. These items include rice and other cereals, meat and poultry, dairy products and eggs and vegetables which are commonly consumed by Singaporeans. The price changes in the last five years for all retail food items captured in the CPI basket and for selected food items commonly purchased by households can be found in the table below. DOS also publishes the average retail prices of these selected food items in its publication "Monthly Digest of Statistics Singapore", which can be downloaded from its website. Page: 119 Page: 120 Page: 121”
“The Government supports cross-border M&As with a range of tools. International Enterprise (IE)'s Global Company Partnership (GCP) grants support Singapore companies in areas, such as M&A strategy development, market feasibility study, target identification, due diligence, valuation and post-merger integration. M&A-related GCP grants have increased from 11 cases in 2012 to 21 cases in 2013 and to 32 cases in 2014. In addition, non-financial assistance, such as outreach and seminars, as well as the M&A tax allowance, are available to internationalising companies.”
“SMEs with less than $1 million in annual revenue are known as micro-enterprises. These SMEs generally employ fewer than 10 employees. The Government has been providing support and assistance to these SMEs to help them improve productivity and enhance their competitiveness. This is done through three main schemes. The Innovation and Capability Voucher (ICV) supports SMEs for consultancy and implementation of solutions in the areas of innovation, productivity, human resources and financial management. The Micro-Loan Programme (MLP) provides loan financing of up to $100,000 for micro-enterprises. The Productivity and Innovation Credit (PIC) is a tax incentive for investments in innovation and productivity improvements. About 20,000 micro-enterprises received assistance through these three schemes in 2012. In 2013 and 2014, the number increased to around 24,000 and 33,000 respectively. Under the ICV and PIC schemes, micro-enterprises received $20.1 million in 2012, or $983 per company on average. The quantum increased to $107.9 million (average of $4,760 per company) and $281.6 million (average of $8,968 per company) in 2013 and 2014 respectively. Likewise, there is an increase in the total loan amount supported through the MLP, rising from $119.6 million in 2012 to $124.1 million and $197.5 million in 2013 and 2014 respectively. The corresponding average loan quantum per SME was $62,800, $64,300 and $59,800 in 2012, 2013 and 2014 respectively.”
“SPRING Singapore defines small and medium enterprises (SMEs) as enterprises with operating receipts of not more than S$100 million or employment size of not more than 200 workers. Based on this definition, rental costs accounted for less than 5% of the total business costs of SMEs in the manufacturing sector in both 2012 and 2013 as shown in the table below. Page: 116 As for the SMEs in the services industries, the share of rental costs in their business costs in 2012 and 2013 varied significantly by industry as shown in the table below. For example, while rentals were a key cost component for SMEs in the retail trade and accommodation and food services industries, they accounted for only a small proportion of SMEs' total business costs in the other services industries. A breakdown into the rental cost shares for SMEs with fewer than 10 employees and 10 or more employees is not available for all industries. As for the rental cost statistics for 2014, they will be ready at a later date.”
“Basically, by issuing a certificate of sponsorship, the sponsoring government is declaring to ISA that we accept the responsibility to ensure that our sponsored entity will carry out its activities in conformance with UNCLOS and the ISA regulations. And in tabling this Deep Seabed Mining Bill, we are, in fact, establishing a framework for carrying out this responsibility. Page: 48 Finally, the Member asked about the jurisdiction of a Seabed Disputes Chamber and how it will work with the various states. The Seabed Disputes Chamber has jurisdiction over activities in the deep seabed and, if the Seabed Disputes Chamber were to find a Singapore-licensed company responsible in the dispute and orders compensation or reparation, then clauses 18 and 19 of our Bill will allow for such an order to be registered and thereafter treated as a judgment of our Court. And this will then allow Singapore to work with the ISA to enforce against any errant activities should the need arise. Madam, I believe I have answered the questions. [(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)] Page: 49”
“So, to qualify, a company must possess the technological and financial capabilities to undertake the activities they plan to do; and, secondly, demonstrate that it has planned its activities in a manner that complies with the relevant regulations in order to minimise any potential damage to the marine environment. To do so, we have set up an inter-agency taskforce comprising MTI, MEWR, MFA, MinLaw and AGC and this inter-agency taskforce has been formed to oversee such applications for licences and how we would want to sponsor the companies. And where necessary, this taskforce will consult external experts in the maritime and marine environment fields, some of whom are engaged by ISA. The next question is how would monitoring be carried out, because such contracts may last 10 to 15 years. As part of ISA's regular monitoring mechanism, contractors are required to submit annual reports relating to the exploration activities that they have carried out in the deep seabed. Singapore will also require our licensed companies to file the reports with us on a regular basis and we will monitor our sponsored entities on this basis and will intervene if our companies are at risk of non-compliance. The next question that the Member raised is about the training and capacity building that ISA has and whether any Singapore companies are involved in this. Currently, we are not aware of any Singapore companies involved in ISA's training programmes and capacity building. On the certificate of sponsorship, the question is what this sponsorship comprises of.”
“Mdm Speaker, I thank the Member for Marine Parade GRC for her support of the Bill. She raised several pertinent questions and sought some clarifications. Let me try and respond. First, she asked how many, if any, Singapore companies are currently involved in deep seabed mining. Madam, to date, as far as we know, only one Singapore-based company – Ocean Minerals Singapore (OMS) – has notified us about its intention to undertake deep seabed exploration. This company is a joint venture between Keppel and Lockheed Martin. Second, the Member asked about the preparation of the exploitation code by ISA and whether we would undertake regulations to enforce this code. Singapore is participating in ISA's deliberations together with other ISA members in the development of the exploitation code. This Bill, when enacted, will enable the Government to introduce further regulations should the need arise, to comply with evolving international standards and regulation of Page: 47 deep seabed mining. Madam, the Member asked how would the contracts be evaluated and whether we have the capability to question and scrutinise these applications. Let me explain that deep seabed mining consists of two limbs. Any company wanting to undertake deep seabed mining has to apply for a contract with ISA. At the same time, they need the country where the company is based to sponsor that application. So, as far as the Singapore Ggovernment is concerned, we will evaluate applications from companies for sponsoring of the licence, from both the economic as well the environmental angles.”
“The deep seabed licensing regime is established under Part II of the Bill, consisting of clauses 4 to 17. Page: 45 Let me highlight some of the key elements. It will be an offence for a Singapore company to engage in deep seabed mining without a licence issued by the Minister and a contract with the ISA. Offenders may be fined up to S$300,000 for an initial offence and they may be subject to a further fine not exceeding S$50,000 daily for a continuing offence, capped at S$500,000. As an added deterrent, individuals, including company directors who are complicit in the offence, may also be imprisoned for up to three months. These penalties are benchmarked against those imposed by other countries which have enacted similar legislation, such as the UK. They are also pegged at a level to provide sufficient deterrent effect. The Bill requires that companies meet certain conditions, such as having the technological and financial capabilities to carry out the activity that it wishes to conduct and undertaking necessary measures to minimise damage to the marine environment, before such a licence can be awarded. Mdm Speaker, I beg to move. Question proposed.”
“Mdm Speaker, I beg to move, "That the Bill be now read a Second time." The Deep Seabed Mining Bill aims to establish a licensing regime to regulate the exploration for, and extraction of deep seabed resources by companies sponsored by Singapore. Let me explain why we need to enact this Bill. This Bill will allow Singapore companies to enter the deep seabed mining industry. This is an emerging industry. We can leverage on our strengths and experience in the offshore oil and gas, the marine engineering as well as our trading sectors to capitalise on the growing opportunities in deep seabed mining. Introducing this Bill will bring us in line with the provisions under the United Nations Convention on the Law of the Sea (UNCLOS) and the International Seabed Authority (ISA) regulations. The proposed licensing regime will ensure that our companies undertake deep seabed exploration and extraction activities in a responsible manner and not cause damage to the marine environment. Penalties will be put in place to serve as deterrence against potential violations or, in the event of non-compliance, to hold errant companies accountable for their actions. Under UNCLOS, the Government bears a "due diligence" obligation to ensure that a company sponsored by Singapore carries out its activities in a manner which conforms with relevant provisions of UNCLOS, ISA regulations and its exploration contract with ISA. This obligation will be met by Singapore enacting this Bill to secure the sponsored company's compliance. In doing so, the Government will also be protected from any liability arising from environmental or non-environmental damage caused by any failure of a sponsored company to comply with its obligations.”
“ASEAN’s trade with APEC stands at almost US$2 trillion5. Singapore’s investments in the APEC region account for more than 60% of our outward investments. More than one-third of foreign direct investment in Singapore comes from APEC economies6. An FTAAP, when realised, will further enhance this. In addition, an FTAAP ensures that major economies, like the US and China, continue to have an economic and strategic stake in the continued prosperity and stability of our region. Page: 140”