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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“At the APEC Summit held in Beijing in November last year, APEC Leaders1 endorsed a roadmap towards a Free Trade Area of the Asia-Pacific (FTAAP). As part of the roadmap, a collective strategic study will be done on how to realise the FTAAP. The study will look into the details of the FTAAP, including its membership, scope and coverage. The study is due for completion at end-2016 and will better inform us of the shape the FTAAP will take2. The extent of the FTAAP’s economic benefits would depend on the scope and ambition of its negotiated outcome. Notwithstanding this, regional trade agreements like the FTAAP, will naturally bring economic gains to Singapore and ASEAN. I outlined some of these in my response to Mr de Souza’s Question No 42 on the Order Paper for the sitting on 19 January 2015, on the benefits of an ASEAN Economic Community (AEC). Like the AEC, the FTAAP will facilitate and enhance the flow of goods, services and investment. Tariffs and other trade barriers would be reduced. Trade rules would be improved for an environment that better supports businesses. Our companies would thus be able to operate with reduced costs and greater certainty. Our region would be even more attractive to investments. Our citizens would benefit from having more choices and jobs created. With the FTAAP linking economies from both sides of the Pacific, Singapore and ASEAN would have a further expanded economic space. This means greater trade and investment opportunities. The FTAAP would offer a potential market of more than 2.8 billion people3. The Asia Pacific market is significant to Singapore and ASEAN. Singapore’s trade with APEC economies currently stands at more than USD560 billion (or more than 70% of Singapore’s total trade)4.”
“Of course, we do not indulge in state planning like in the Soviet Union but we try to create the supply in anticipation of our demand. With the Economic Development Board (EDB) attracting a constant pipeline – a regular pipeline of investments – we have some reasonable anticipation or idea of what jobs are needed. This is then fed back to our educational institutions and also in career counselling of the students so that we prepare the workforce for it. More specifically, before every company sets up its plant, EDB will have a dialogue with the company to see how they would grow their workforce and recruit the workers as the plant comes into operation. And many times, the company would train the workers in anticipation of their start-up, so we try to marry the process. But as the Member has rightly pointed out, this is a huge challenge and there will always be some mismatch along the way, but we try our best. 1.30 pm”
“The 40% is the cohort participation rate in our publicly funded educational institutions. Today, if you look at our workforce, overall, about one-third are already graduates. But if you look at the young workforce, those below 30 years in age, almost 50% are already degree holders. So, the publicly funded cohort participation rate today is around 30%. But Singaporeans, particularly our Polytechnic diploma holders, aspire to be graduates and they go on to take courses on their own. Similarly, as the Government's publicly funded cohort participation rate goes up to 40%, we can expect that they will be supplemented by others who will take up courses in private institutions. And, therefore, in our planning we expect the cohort participation rate for the young workforce to be much higher than 50%. Assoc Prof Randolph Tan (Nominated Member): Mdm Speaker. I would like to ask the Minister for Trade and Industry for a clarification on whether there are any significant difficulties with the fact that in advanced manufacturing, for example, which he referred to, the preparation time that is needed to induct graduates into the workforce in those areas can be quite substantial. During the course of the preparation of graduates, the needs of the Page: 39 industry may have changed and may have advanced, how significant are these challenges in the adjustment between the two different streams – the demand for graduates on one hand in specific areas, and the supply on the other?”
“Our approach is to create a competitive economy that creates the jobs that meet the aspirations of Singaporeans but, at the same time, we work under certain constraints. For example, we cannot have an economy that is, say, 50% financial services sector because 50% of our young Singaporeans want to work in the financial services sector. We need a diverse economy and that diverse economy will include the various sectors that we already have built up competencies in and that we can continue to be competitive.”
“Ministry of Trade and Industry (MTI) works with Ministry of Education (MOE) and Ministry of Manpower (MOM) to identify the current and future skillsets required and design education and training programmes to equip Singaporeans with these skills. For example, our Institutes of Higher Learning have industry engagement platforms to ensure that their curricula and learning outcomes are mapped closely to the skills and capabilities required by industry. The SkillsFuture Council will also work with industry partners to develop Sectoral Manpower Strategies to identify future skills and set out strategies for developing these skills in our workforce. The expansion of our publicly funded university cohort participation rate to 40% by 2020 has been designed to place an emphasis on applied degree pathways to create a diverse pool of graduate talent to meet the changing needs of our economy. We will Page: 38 continue to keep our economy competitive by pushing on with restructuring and our efforts to create good jobs. We will also continue to invest in education and training, including creating pathways for Singaporeans to upgrade their skills. However, it is equally important for Singaporeans to take ownership of their own career development and ensure that they develop the right skills and experience to make use of all these opportunities that are emerging.”
“Mdm Speaker, the Government adopts a two-pronged approach in its efforts to help our university graduates get good jobs. First, we keep our economy competitive and seek to capitalise on new opportunities in and beyond our region. We do this by growing knowledge-intensive industries that will provide good jobs, and also by pursuing sustained, productivity-driven growth in key sectors of our economy such as manufacturing, financial and business services. This allows our economy to grow amidst a challenging global environment and to create higher-skilled jobs for Singaporeans. Let me illustrate how this strategy is implemented in manufacturing. As we all know, manufacturing remains a vital part of our economy, providing more than half a million jobs while contributing about a fifth of our GDP. To build up our industry capabilities in advanced manufacturing, we are helping businesses to adopt and leverage on new technologies in areas such as Additive Manufacturing and Robotics. This will transform the way our companies operate to create new growth and business opportunities, as well as diverse jobs that provide good career development potential for Singaporean graduates. These jobs will require deep skills and multi-disciplinary knowledge, and the ability to synthesise the two. One example is a manufacturing operations design specialist, someone who needs to be able to design the manufacturing process for new products, rather than just implement an existing procedure. The second prong of our approach is to invest heavily in equipping Singaporeans with the skills to take on the jobs that we are creating.”
“We will also actively engage SMEs and gather their feedback on how Singapore businesses can benefit from new growth opportunities through internationalisation, innovation and collaboration.”
“Export-oriented sectors registered healthy productivity growth of 2.1% per annum from 2010 to 2013, which is significantly higher than the 0.2% per annum growth for the overall economy. These sectors accounted for 56% of value-added in Singapore’s economy. For other sectors, including retail, food services and construction, the Government will continue to work with companies and industry Page: 92 associations to raise productivity and improve efficiency. We have to persevere with these efforts as sustained productivity improvements are essential for Singapore’s economy to remain competitive and to provide good jobs for Singaporeans. The Government has also taken steps to manage cost increases affecting SMEs. For example, rentals for industrial space have been moderating, following our release of more land and space over the past few years. In the third quarter of 2014, the rental indices for overall industrial space and multiple-user factory space fell by 1.3% and 2.3% respectively, on a year-on-year basis. This is the first year-on-year decline since 2010. There will also be a steady supply of industrial and retail space in 2015 and 2016, which will help to exert downward pressure on industrial rents and land prices. In addition, we are improving the transparency of rental data for industrial, retail and office space, which will provide more information for SMEs to make their leasing decisions. The Government will continue to support our SMEs on the economic restructuring journey, to help them become more competitive and productive. This requires the collective efforts of all parties, including the Government, employers and workers.”
“As part of economic restructuring, the Government has provided continued support to small and medium enterprises (SMEs) to upgrade their capabilities and improve productivity through schemes, such as the Productivity and Innovation Credit (PIC), Innovation and Capability Voucher (ICV) and Capability Development Grant (CDG). We are seeing some encouraging developments and positive results from these initiatives. In a recent survey conducted by the Singapore Chinese Chamber of Commerce and Industry, 90.3% of surveyed companies have adopted productivity measures in 2014, compared to 83.9% in the previous year. Another survey conducted by DP Information Group in 2014 showed that a growing number of SMEs are pursuing productivity improvements and investing in new technologies. The Government has been actively engaging SMEs to raise awareness and to help them apply for different Government grants and assistance schemes. We have collaborated with trade associations and chambers to set up a network of 12 SME Centres to assist SMEs from different parts of Singapore. The SME Workgroup, comprising representatives from the Government and private sector, has also been reaching out to SMEs to gather feedback and explain how the companies can benefit from different Government schemes. Some initiatives which we will be implementing based on industry feedback are to facilitate the participation of SMEs in Government procurement tenders by publicising more information on how SMEs have successfully bid for such tenders and to work with the Singapore Business Federation on a fair to increase awareness of the available opportunities. To date, more than 22,000 companies have benefited from the productivity initiatives introduced by the National Productivity Council.”
“The Department of Statistics provides detailed statistics on households’ monthly expenditure and income based on the Household Expenditure Survey (HES). Data from the HES is analysed on a household basis and not on an individual basis to reflect the sharing of goods and services as well as income resources within the household. Many expenditure items, including food, utilities and household goods, are shared among members of a household and it would not be feasible to attribute a specific share of the household’s expenditure on each item to individual household members. In addition, income resources are commonly pooled to support household members who are not earning an income, such as children, the elderly or a non-working spouse. Similar to the case for expenditure, it would be difficult to ascertain how much income resources each household member has consumed. The use of the household as the basic unit of analysis for the HES is in accordance with international best practices recommended by the International Labour Organization (ILO), and is also adopted by other national statistical offices, such as those in Australia, Hong Kong and the United States.”
“Under the Committee on Autonomous Road Transport for Singapore (CARTS), the Government is studying the safety, regulatory and liability frameworks for AVs on public roads and spaces, and carrying out research and test-bedding of AV technology and concepts in Singapore. There are also pilots for EVs, including an EV car sharing test-bed conducted by EDB and LTA. Areas with heavy industrial activities like Jurong Island (JI) are less suitable for testing such vehicles, due to the high volume of heavy vehicle traffic and hazardous cargo transportation. MTI and JTC are working with MOT and LTA to enhance public transport to JI and improve the service quality of bus operators within the island. Longer term infrastructure, such as the Jurong Region Line, is also being developed which will further improve public transport options in the western parts of Singapore. Page: 139”
“It is with this in mind that ASEAN countries remain strongly committed. Therefore, during their Summit in November 2014, ASEAN Leaders reaffirmed their commitment to expedite the implementation of the remaining measures in the AEC 2015 Blueprint so as to create a politically cohesive, economically integrated and socially responsible ASEAN Community.”
“The AEC aims to create a single market and production base across ASEAN economies, with minimal barriers to trade and investment. The AEC has three elements. First, the liberalisation of trade in goods through the ASEAN Trade in Goods Agreement (ATIGA). Second, the liberalisation of services through the ASEAN Framework Agreement on Services (AFAS). Third, the liberalisation of investment through the ASEAN Page: 119 Comprehensive Investment Agreement (ACIA). Under these three Agreements, ASEAN members commit to facilitate and enhance trade in goods, services and investment flows in the region. The benefits for Singapore companies are significant. For instance, with the elimination of import duties under ATIGA, companies will enjoy greater price competitiveness for their products. Companies can also expand and establish a stronger and wider presence in the region. As these commitments are enshrined within the Agreements, companies will also be able to operate in a more stable and predictable business environment. Under the AFAS, companies will enjoy reduced barriers to services trade, such as the lowering of foreign equity limits and liberalisation of more services sectors. This will attract more investments, including from beyond the region. Investors in ASEAN will also benefit from stronger and pro-business investment rules present in the ACIA. Fundamentally, a more economically integrated ASEAN will generate greater opportunities for its citizens, including for Singaporeans. ASEAN is a growing market of 620 million people and they make up the third largest combined GDP in Asia – at US$2.3 trillion in 20131, behind China and Japan. Closer economic integration within ASEAN will not only raise living standards but also contribute towards stronger regional stability.”
“Moreover, it is important to note that any competitive advantage derived from lower oil prices will only be temporary in nature. To enhance our competitiveness over the longer term, it is more important for us to press on with on-going efforts to help our firms improve productivity and build up their innovative capacity.”
“Mdm Speaker, the recent rise in the US dollar and fall in the Euro reflect the diverging prospects of the US and Eurozone economies. While the US economy has been improving steadily, the pace of recovery in the Eurozone remains weak. In line with global movements in the US dollar and the Euro, the Singapore dollar has depreciated against the US dollar in recent months and appreciated against the Euro. However, such movements in bilateral currency pairs are not expected to have a significant impact on Singapore's economy. Under Singapore's exchange rate-centred monetary policy framework, the MAS manages the Singapore dollar exchange rate against a trade-weighted basket of currencies within a prescribed policy band and does not focus on any specific bilateral currency pair. This framework allows the Singapore dollar to be managed against short-term market fluctuations, while limiting the spill-overs that exchange rate volatility may have on the real economy. Page: 23 It is also important to note that the exchange rate is not used as a tool to directly manage Singapore's export competitiveness in the short term. Instead, demand conditions in our major export markets would have a more significant impact on Singapore's growth prospects. We expect the strengthening of the US economy, which underpins the appreciation of the US dollar, to be a positive factor for the Singapore economy. As for the impact of falling oil prices, I have explained the impact on Singapore's economy in my reply earlier. While lower input costs for our exporters due to falling oil prices may also help to enhance the price competitiveness of our exports, the impact is likely to be limited as other exporters will also benefit from lower oil prices.”
“Our main approach is to ensure that competition forces are at play. This is regulated and supervised by the Competition Commission of Singapore. In sectors where they are regulated, then, of course, we have to make sure that the regulation is transparent and the factors are clearly seen by everybody. For example, in the utilities sector, this is a regulated sector and EMA regulates this on a very transparent formula, taking into account fuel prices as well as other costs. As I have explained in my reply, this has translated into a significant drop in utilities prices. For the other sectors, for example, pump prices, we have to depend on competition and market forces to make sure there is no profiteering.”
“I think our attitude towards energy conservation and alternative energy is a long-term one. This is because we are an energy-disadvantaged country and we have to diversify our energy sources. We are anticipating a global agreement on climate change and we would have to meet these obligations. These are the long-term trends. Our strategy is to meet these long-term requirements, rather than be influenced by short-term volatility in oil prices.”
“So, for those in the oil and gas sector – which I presume the Member means the oil and marine sector, and those in oil rig construction – the prospects are okay for the immediate future and will only be adversely affected if oil prices remain low for a long time.”
“Mdm Speaker, as I have mentioned in my earlier reply, overall, there will be a slight positive impact on the economy because of the lower oil prices – because of the cost of the businesses as well as to the consumers. In terms of inflation, it will have a small benign effect; it will lower inflation. As we have indicated in our economic forecast, we expect the headline inflation to come down this year, lower compared to last year. But the core inflation will remain rather sticky because we still have a lot of economic restructuring. The high wage cost is likely to pass through to the core inflation. The Monetary Authority of Singapore (MAS) is watching the situation very carefully. We expect core inflation to remain still quite stiff, but the headline inflation will be adjusted downwards. On the oil and gas sector, as I had mentioned just now, there is a slight positive effect because of feedstock prices. But the petrochemical and chemical prices have also come down. So, the margins remain very small and tight. The main reason is because there is over capacity in the Asian region and, therefore, competition remains very stiff. In that sense, I do not think the impact on the oil sector will be too significant. The feedback we get from the oil and gas sector – if we look at the petrochemical cluster – they benefit from the feedstock, but they are also affected by the revenue. So, I think they will be quite neutral. For the oil and marine sector – those involved in oil rigs – the impact will be more in the longer term. For the immediate future, their order books are still very strong and I think that will keep them in good stead for the next few years. But if oil prices remain low for a prolonged period, then this will affect their long-term prospects.”
“As the price of natural gas, which is the main fuel used for electricity generation in Singapore, has fallen in tandem with oil prices, the electricity tariff has likewise been adjusted downwards. For example, between July 2014 and January 2015, average gas prices fell by 19%. As fuel costs make up around half the tariff, the electricity tariff between July 2014 and March 2015 accordingly fell by 9.3%. Pump prices fell by 15% between July and December 2014, compared to a 41% fall in crude oil prices over the same period. The fuel component of pump prices is not determined by the price of crude oil, but the price of refined products like petrol and diesel. In addition, petrol companies also have to take into account non-fuel costs, such as land and labour costs, when setting their prices. These are some reasons why pump prices fell by a smaller percentage compared to the drop in crude oil prices.”
“Thank you. Global oil prices have fallen sharply in recent months on the back of sluggish global demand and strong supply conditions. Since June 2014, the benchmark Brent oil price has declined from a peak of US$115 per barrel to around US$50 per barrel recently. Ms Foo asked about the impact of the decline in oil prices on Singapore's economy, businesses and consumers. As a net importer of oil, the Singapore economy will benefit from lower oil prices. In particular, a drop in oil prices will translate to lower electricity tariffs and fuel costs, which will directly benefit businesses and consumers. For businesses, lower electricity tariffs and fuel costs will help to lower their input costs. This will help improve their margins and could also dampen the pass-through of business costs to consumer prices. Consumers, on their part, will benefit from lower spending on electricity and other oil-related items, such as petrol. Lower inflation in the economy could also increase their purchasing power, thereby stimulating consumption and further boosting Page: 20 the economy. Mr Yeo asked about the impact of lower oil prices on the petrochemical sector. Overall, the sector will benefit from lower oil prices due to reduced input costs for oil-based feedstock and utilities. However, the upside of lower input costs may be limited, as prices of key petrochemical products have also fallen in tandem with oil prices. Mr Ong asked about the current adjusted prices of public utilities and pump prices and whether they fairly reflect the fall in oil prices. The Energy Market Authority (EMA) regulates the electricity tariff to ensure that the quarterly tariff revisions fairly reflect the underlying costs of production, including fuel costs.”
“Mdm Speaker, can I have your permission to take Question Nos 1 to 3 together?”
“In 2010, we set a target of 2%-3% annualised productivity growth over the decade starting from 2009. This ambitious target was set because productivity growth had been weak in the decade before 2009, at 1% per year, and we had assessed that there was significant room for improvement. Tracked against this target, we have achieved an annualised productivity growth of 2.9% so far2. However, a large part of this was due to the strong recovery in 2010. Annualised productivity growth since then has been weaker, at 0.2%. Nevertheless, we were still able to Page: 129 record good overall economic growth during the 2010 to 2013 period. Annualised GDP growth was 4.1%, which is within the 3%-5% projected for the decade. Some sectors have also done better than others. From 2010 to 2013, productivity grew 2.1% annually in the export-oriented sectors like Wholesale Trade and Financial Services. Such sectors make up just over half of the economy. Being globally competitive, they are able to transform and adjust processes quickly to changing market conditions. In comparison, domestic sectors like Construction and Retail performed more poorly, with an annualised growth rate of -0.3%. The National Productivity and Continuing Education Council (NPCEC) is focusing its efforts on measures that will significantly uplift productivity in these sectors. For example, we are taking more aggressive upstream measures in the construction sector. These promote greater use of pre-fabrication and other high-impact technologies to enhance productivity. It will take some time for these efforts to be reflected in the productivity numbers. Overall, we have made progress in our productivity drive, but more remains to be done. Economic restructuring is a long-term process and we will press on with it.”
“It is important that we do not let up on our efforts to steer the economy towards a more sustainable growth path. The Government stands ready to provide further assistance to support our companies as we continue on this journey. We remain confident that we will succeed in our restructuring efforts and that our economy will emerge stronger and more competitive than before.”
“In particular, the manufacturing sector grew at a slower pace of 1.5% and 1.4% year-on-year in the second and third quarters respectively, compared to 9.9% in the first quarter. The weak performance in manufacturing is partly due to lacklustre global economic conditions. Although economic activity in the US has started to improve, this was offset by anaemic growth in Europe. In addition, China's economic growth has continued to moderate Page: 128 amidst ongoing efforts to rebalance the economy. For the construction sector, growth slowed from 6.8% year-on-year in the first quarter of 2014 to 4.1% in the second quarter, and further to 1.4% in the third quarter. This was due mainly to lower output growth from private sector construction projects, following the cooling measures put in place by the Government to stabilise Singapore’s property market and tighter manpower conditions. Apart from construction, growth in other domestically-oriented, labour-intensive services sectors, such as retail and food and beverage services, has also been weighed down by labour constraints. In sum, the slowdown in our economy in the last two quarters was due in part to external headwinds, and in part to tighter labour constraints amidst on-going efforts to restructure the economy. However, there are also positive signs that firms in some sectors, especially the export-oriented ones like precision engineering, have adjusted to tighter labour market conditions by moving up the value chain and raising their productivity. MTI and the various agencies are working closely with firms in the domestically-oriented labour-intensive sectors, such as construction and retail, to raise their productivity. Economic restructuring is a long-term endeavour.”
“Apart from sharing the cost of productivity improvements, the Government has also introduced schemes to help businesses, especially SMEs, compete internationally. For instance, the Partnerships for Capability Transformation (PACT) initiative facilitates collaborations between SMEs and large organisations to enable knowledge transfers and capability development among the SMEs. In addition, the Global Company Partnership (GCP) programme, administered by IE Singapore, helps local companies tap overseas opportunities by helping to defray part of the cost of financial and market access studies as well as manpower development. The take-up rates for these various schemes have increased over the last few years. This is an encouraging sign that more of our SMEs are making a concerted effort to raise productivity to remain competitive. We urge more companies to step forward to tap on these schemes. The Government has also put in place support measures such as the Wage Credit Scheme and corporate tax rebate to help companies cope with higher manpower costs during the transitional period. This will in turn help to mitigate the pass-through of manpower costs to inflation. Notably, core inflation was 1.7% in 2013, lower than the median monthly nominal income growth of 6.5% over the same period. Er Dr Lee also asked which sectors of the economy have shown signs of growth slowdown in the last two quarters. Based on advance estimates, GDP grew by 2.4% year-on-year in the third quarter of 2014. This was the same pace of growth as that achieved in the second quarter, although slower than the 4.8% growth in the first quarter. The moderation in growth in the last two quarters was due mainly to the slowdown in the manufacturing and construction sectors, as well as selected services sectors.”
“The Government's policy of tightening access to foreign manpower is an integral part of our strategy to restructure the economy towards productivity-driven growth. Given Singapore's land constraints, it is not sustainable for us to grow our economy through a continuous increase in foreign manpower. Easy access to low-skilled foreign manpower also blunts the incentive for firms to invest in automation and improve their processes. By tightening firms' access to foreign manpower, our objective is to achieve a more efficient use of labour and raise productivity. Higher productivity will in turn enhance the competitiveness of our economy and translate into higher real wages for Singaporeans over the longer term. Page: 127 However, the Government also recognises that firms need time to adjust to tighter labour market conditions. As such, the Government has taken care to tighten foreign manpower policies progressively and gradually. For instance, reductions in the Dependency Ratio Ceilings (DRCs) were announced two years before they take effect fully. This calibrated approach has led to a gradual moderation in foreign workforce growth. In particular, foreign workforce growth slowed from 7.6% in 2011 to 5.9% in 2012 and further to 4.2% in 2013. At the same time, to help firms raise productivity and enhance their competitiveness, the Government has put in place many assistance schemes. These include the Productivity and Innovation Credit (PIC) scheme and the Innovation and Capability Voucher (ICV) scheme. Significant investments have also been made in Continuing Education and Training programmes to upgrade the skills of our workers.”
“Based on the results of the Household Expenditure Survey (HES) 2012/13, the average monthly income of households in the first income decile was $1,043, while their average monthly expenditure was $1,844. About 55% of their income was derived from work, while the remaining 45% was from non-work income sources, such as investment income and regular transfers from the Government. The stronger reliance on non-work income by these households could be attributed to the fact that around one-third of the households in this group were retiree households. Detailed data on the expenditure patterns of households in the first income decile can be found in the HES 2012/13 report on the Department of Statistics’ website. Information on home ownership by dwelling types and income quintiles has also been published in the HES 2012/13 report. Specifically, more than eight out of 10 households in the bottom income quintile owned homes. Among those who lived in HDB flats in this group, 81% owned the flats that they occupied. The ownership rate for those residing in condominiums and other apartments and in landed properties was higher at 88% and 95% respectively. However, specific data on the home ownership of households who spent more Page: 158 than they earned is not available from the HES.”
“Ultimately, while the Government can provide the necessary schemes and infrastructure to support new start-ups, entrepreneurs still need to recognise and understand the opportunities and inherent risks that come together with starting their own businesses.”
“The Government has several programmes to support entrepreneurship in our tertiary institutions, Polytechnics, ITEs and schools. SPRING's Young Entrepreneurs Scheme for Schools (YES! Schools) supports tertiary institutions, Polytechnics and ITEs to put in place comprehensive structured entrepreneurship learning programmes for their students. These programmes aim to help students develop an entrepreneurial mindset and acquire the skills to be an effective entrepreneur. The Action Community for Entrepreneurship (ACE) Schools programme engages aspiring entrepreneurs in our schools. Fourteen schools are currently onboard the ACE Schools Programme. Under the programme, 23 entrepreneurs have volunteered for the Entrepreneur-Adopt-A-School programme, with every school paired to at least one entrepreneur. Funding support is also provided to Polytechnics and ITEs for their startup and incubation programmes. The Government continually reviews assistance schemes to ensure that the needs of our startups are met. Start-ups have access through a range of grants, for example, ACE Startups Grant, tax incentives and investment schemes. Start-ups can also tap on the Micro-Loan Programme (MLP), which supports companies of less than three years from Page: 157 incorporation, for their working capital needs. More than 43 start-up incubators currently provide access to low-cost business space and support services to start-ups. In addition, JTC and SPRING are developing Launchpad@one-north as a start-up cluster. The Action Community for Entrepreneurship has also established many platforms for the entrepreneurship community to build networks, as well as programmes to match entrepreneurs with business mentors to support their development.”
“The privileges are clearly delineated in the FTAs and in CECA. As I have explained just now, say, for example, Intra-Corporate Transferees, if the Indians dispute that we are not giving them eight years as we agreed, then they can refer the case to us and, ultimately, there is a dispute settlement process.”
“Under the Free Trade Agreements (FTAs) that we negotiated, there is an exchange of preferential treatment. In India's case, in CECA's case, one of the privileges we extend to India was to create greater conveniences for business people to move between the two countries, Singaporean businessmen to India, and vice versa. One category is Intra-Corporate Transferees. That means if you got employees that you have employed and you are setting up a business in Singapore, we facilitate the transfer of your corporate employees to help you set up and run the business. Under the General Agreement on Trade in Services in the World Trade Organization, we grant such Intra-Corporate Transferees, say, five years. In India's case, we allow them to do so for eight years. These are the kinds of privileges. All these privileges do not deviate from our right to apply measures to regulate the entry as well as a temporary stay. So, the overall immigration and employment rules that we regulate have to be maintained. But where the special privileges are negotiated in the FTA, then, of course, the counter-party will enjoy those privileges. And we will follow these rules strictly.”
“Mdm Speaker, the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) entered into force on 1 August 2005. CECA provides for reviews to examine issues related to the agreement. The first review was completed in 2007 and the second review is ongoing. CECA has increased trade and investment flows between India and Singapore. Bilateral trade grew from S$16.6 billion in 2005 to S$25.5 billion in 2013. Foreign Direct Investment from India into Singapore grew from S$1.3 billion in 2005 to S$20 billion in 2012. This has helped to create good jobs for Singaporeans. CECA serves to bring conveniences to businesses by allowing temporary entry on both sides for certain categories of persons, including business visitors, professionals and Intra-Corporate Transferees. Under CECA, Singapore agreed to grant three bank licences with Qualifying Full Bank (QFB) privileges to Indian banks, subject to the prudential requirements of the Monetary Authority of Singapore. Two Indian QFBs, namely, State Bank of India and ICICI Bank, have been approved to date. At the same time, India agreed to allow the three Singapore banks to open a total of 15 bank branches in India and 11 branches have been approved so far.”
“About 17,000 companies ceased operations in 2013. There is no data on how many of these companies had done so because of curbs on foreign manpower. While manpower policies affect companies, there are many other reasons, including market forces, mergers and acquisitions, and personal choice, that could also have contributed to a company’s decision to fold. However, about 37,000 companies were formed in 2013, which means that there was a net increase in the number of companies in Singapore. More than 17,000 companies have benefited from productivity initiatives under the National Productivity Council (NPC) to date. As of 28 February 2014, under the Productivity and Innovation Credit (PIC) scheme, businesses have also enjoyed more than $1.5 billion of tax savings and cash payouts for engaging in a range of productivity-improving activities, such as the acquisition of IT and automation equipment, training of employees and R&D. Over the period from 2010 to 2013, exportable sectors such as Precision Engineering, Transport Engineering and Finance and Insurance showed healthy productivity growth of 4.1%, 8.1% and 2.2% per annum respectively. These sectors are globally competitive, and hence are able to transform and adjust their processes quickly to changing market conditions. In contrast, productivity growth in domestically-oriented sectors like Retail and Food and Beverage declined by 2.1% and 0.6% per annum respectively, as they continue to face challenges in moving up the value-chain and improving their processes. We will continue to work with these sectors as we press on with our restructuring efforts.”
“Based on findings from the Household Expenditure Survey (HES) 2012/13, the average monthly expenditure of households in the lowest income quintile exceeded their regular income by $210. About a quarter of these households were retiree households who had a bigger spending gap than non-retiree households. These households derive around 61% of their regular income from employment, 12% from business, and 27% from non-work sources, such as investments, regular Government transfers and contributions from relatives and friends. Households that are spending beyond their regular income may be financing their excess expenditure through irregular receipts such as proceeds from the sale of properties, capital gains on investment, ad hoc Government transfers and irregular contributions from relatives and friends, or a drawdown on their savings. The Department of Statistics (DOS) does not have further data to analyse the breakdown as income receipts that are non-recurrent in nature or arise from a reduction in net worth are not captured by the HES. The focus of the HES is on regular sources of income. This is in accordance with guidelines set out by the International Labour Organisation, the UN's System of National Accounts, as well as practices of other national statistical offices Page: 138 such as those in Australia and Canada. DOS has released detailed statistics and analyses on the monthly expenditure and regular income of households by income quintiles, as well as retiree households in the HES 2012/13 publication. Interested users can download the publication from DOS' website.”
“First, we ensure that the economy remains healthy, competitive and vibrant so as to create a wide range of jobs for Singaporeans. Second, through Workfare, we encourage lower wage workers to stay in employment to upgrade their skills and improve their ability to earn more. Third, even as we push for productivity improvements at all levels, we have encouraged employers to share productivity gains with their workers through schemes, such as the Inclusive Growth Programme. Over the last five years, the nominal wages of Singapore Citizens in the bottom 20th percentile increased by 5.2% per annum. Fourth, the Government supports low-income households through subsidies and transfers. In particular, the Government provides substantial subsidies in areas such as healthcare, childcare and education. Transfers and rebates such as the permanent GST Voucher scheme, public transport concessions and Service and Conservancy Charges (S&CC) rebates are also provided to qualifying households. According to the recently released Household Expenditure Survey 2012/13, among households in the lowest income quintile, Government transfers and rebates/subsidies amounted to 90% of their annual household income per household member before Government transfers. The Government will continue to monitor closely the cost of living in Singapore and help Singaporeans, particularly those in low-income households, cope with rising cost pressures.”
“MAS Core Inflation, which excludes accommodation and private road transport costs, averaged 2.1% between January and August this year, higher than the CPI-All Items inflation of 1.5% over the same period. One of the drivers for MAS Core Inflation this year was the higher cost of food imports from the region, partly because of weather-related supply-side disruptions. Another key driver was services costs. As the economy restructures towards productivity-driven growth, tight labour market conditions have led to wage cost pressures during the transitional period. This has exerted upward pressure on the prices of consumer services, especially those with high labour content. Specifically, services inflation averaged 2.4% between January and August this year, while food inflation averaged 2.9% over the same period. The Government remains committed to keeping inflation in check. The Monetary Authority of Singapore (MAS) has kept a gradual appreciation path for the Singapore dollar against a basket of currencies since April 2010. This helps to keep imported inflation contained and also moderates external demand for our exports, thereby reducing demand-led pressures on inflation. The Government has also put in place many productivity schemes, Page: 131 as well as transitional support measures, such as the Wage Credit Scheme, to help companies raise productivity and cope with wage cost pressures, thereby dampening the pass-through to consumer prices. Nonetheless, the Government recognises that Singaporeans, especially those in low-income households, have been affected by the rising cost of living. The Government has adopted a multi-pronged approach to help them.”
“The Department of Statistics (DOS) compiles the quarterly household sector balance sheet using aggregate data at the economy-wide level, and not data at the household level. This is because data on assets and liabilities for individuals and households are not available. Consequently, it is not possible to provide a breakdown of the household sector balance sheet data by deciles. DOS currently does not compile data on household wealth, as data on many components of household wealth, such as life insurance and bank deposits, are not readily available for statistical compilation. In particular, it is challenging to collect household wealth data through surveys, as personal wealth is a sensitive topic. In fact, the experience of other countries that have collected wealth data through surveys is that individuals tend to under-report their wealth. Nonetheless, DOS will continue to monitor international developments in the compilation of wealth statistics, and review the feasibility of doing so in Singapore if necessary.”
“The TPP negotiations are on-going. Nevertheless, one objective of the TPP is to ensure that environmental protection is not compromised while TPP countries pursue trade interests. Therefore, instead of having an adverse effect on Singapore's environment, the TPP will complement Singapore's efforts in protecting the environment and our natural spaces. Page: 92”
“The TPP commits Singapore to ensuring a stable and fair regime for foreign investors. In return, Singaporean investors in TPP countries are also ensured the same stability and fairness. The ISDS mechanism gives foreign investors the right to initiate dispute settlement proceedings against host countries to enforce this commitment. At the same time, to prevent misuse of ISDS, there are also provisions within the TPP which discourage and allow the dismissal of frivolous suits and allow TPP governments to direct the arbitral tribunals in certain situations. Our FTAs, including the TPP, do not restrict Singapore from adopting measures for legitimate public policy reasons, including the protection of public health and the environment. To date, no multinational company has challenged or threatened to challenge Singapore.”
“Again, we take this on-board, working closely at the sectoral level and together with NTUC. So, there are various schemes to upgrade the skills of the workers. 3.00 pm”
“I thank the Member for raising the questions. New regulation is really a challenge because the different regulatory agencies have to put up new regulations based on their objectives. So, we are putting together a whole-of-Government approach to see how these regulations, first of all, do not run counter to one another and, secondly, also to be appropriately paced because we do recognise that this is imposing high compliance costs on the businesses and we are also concerned about it. The second question is about whether it should be broad-based or it should be targeted. In fact, we are doing both. We have both broad-based schemes like the PIC, ICV and what we call horizontal schemes like IT support. At the same time, we have sectoral schemes that target the sectors working together with the trade associations, having champions in a sector to implement productivity schemes and the other companies would then take the cue and follow. And we have had a modest success. Some sectors are more amenable to quick changes in productivity. For example, in the furniture sector and the food manufacturing sector, we have had very good successes and the lessons that had been learnt are percolating to the other companies. Some other sectors face bigger challenges. For example, the construction sector, I think, faces a huge challenge; food services and retail sectors also face a bigger challenge and we have to work very closely with the trade associations to try and maintain the momentum. On job risk, this is something that is very important to us because the key to all these is to make sure that the skill levels of the jobs are raised so that we can justify higher wages and, commensurate with this, the skill levels of the workers have to be improved.”
“We have tried our best to encourage our companies, particularly the SMEs and the micro enterprises, to take up the schemes that are available. And we are approaching them through all the channels, particularly through the business chambers and trade associations. So, we are encouraged that the take-up rate is improving. Productivity growth has been averaging about 0.8%, 0.9%, for the last few quarters. If this can be maintained, we hope to see productivity growth of about 1% this year. Our labour force growth should be growing at about between 1% and 2%. So, that is why we are confident that our growth target for this year will be between 2% and 4%.”
“Our domestically-oriented sectors, such as business services, are expected to remain resilient, but we can expect some of our labour-intensive sectors, such as retail, to see their growth weighed down by labour constraints. So, taken everything together, as usual, barring downside risks in the global macroeconomic environment, we expect the Singapore economy to grow by between 2% and 4% this year.”
“As you all know, in the second quarter of 2014, GDP growth Page: 36 slowed to 2.1% year-on-year, compared to 4.7% in the first quarter. This is largely due to a slowdown in the manufacturing sector. Specifically, the manufacturing sector's growth decelerated to 0.2% year-on-year in the second quarter, from 9.9% in the first quarter, due to a contraction in electronics output and slower growth in transport engineering output. In line with the slowdown in manufacturing, domestic exports grew at a slower pace of 3.2% in the second quarter, compared to 3.3% in the first quarter. The weak performance in manufacturing and exports growth can be partly attributed to sluggish global economic conditions. In the US, economic activities are only slowly beginning to recover from the harsh weather conditions experienced earlier this year, while China's growth remains modest, given its ongoing restructuring efforts. Lacklustre global economic conditions have also, in turn, affected the exports of regional countries like Japan and Indonesia. As an externally-oriented economy, quarter-to-quarter fluctuations in our economic growth can be expected. On average, GDP growth in the first half of 2014 remained healthy, at 3.4%. Looking ahead, leading indicators in the US and the EU suggest a modest recovery in the global economy for the rest of the year. In tandem with this, we expect externally-oriented sectors, such as our manufacturing and wholesale trade sectors, to provide support for growth. In particular, our manufacturers are expected to benefit from improvements in the global economy, with the new orders and new export orders sub-indices of the Purchasing Managers' Index rising to 51.8 and 52.0 respectively in the second quarter.”
“For the PIC scheme, which provides businesses with enhanced tax benefits and cash incentives to invest in a broad range of productivity and innovation activities, the number of companies making use of the scheme rose from 36,000 or 33% of all active companies in Singapore in the Year of Assessment 2011, to 50,000 companies or 40% of all companies in the Year of Assessment 2013. As of 28 February 2014, the aggregate tax savings and cash payouts to companies amounted to $1.5 billion under the PIC scheme. Similarly, we have seen take-up rates for the ICV scheme increase over time. The scheme, which previously only supported consultancy services, was enhanced in March this year to also support the implementation of productivity solutions, such as the purchase of equipment, training of workers and the redesign of workspaces to enhance productivity. From 1 March to 13 June 2014, more than 2,700 vouchers were awarded to businesses. While these numbers are encouraging, clearly, more needs to be done. Economic restructuring is a long-term effort. We must continue to press on with our restructuring drive. We have the capacity to fund more productivity improvement projects and hope that more firms will step forward to tap on the various productivity schemes. We remain confident that the economy will be able to restructure successfully over time to be more productivity-driven. This will ensure a more efficient use of labour, which will not only help to relieve our labour constraints, but also support higher real wages without eroding the competitiveness of our economy. Ms Foo asked about Singapore's growth outlook in the light of the latest manufacturing and export indicators, while Mr Ong asked whether the economy would be able to ride on the global economic recovery.”
“Both Mr David Ong and Ms Foo Mee Har have asked for an update on the progress of our restructuring efforts. From 2009 to 2013, labour productivity grew by 2.9% per annum. However, this aggregate figure masks some cyclical fluctuations. The high productivity gains in 2010 were due to a strong recovery from the 2009 downturn. Notwithstanding the strong performance in 2010, recent productivity growth has been weak, with labour productivity growing by 0.2% Page: 35 per annum from 2010 to 2013. However, this is primarily due to sectors, such as retail, F&B and construction, which saw declines in productivity of 2.1%, 0.6% and 0.2% per annum respectively over the same period. At the same time, there have been some bright spots of sustained good productivity growth over this same period. For example, the transport engineering and precision engineering clusters saw productivity growth of 8.1% and 4.1% per annum respectively from 2010 to 2013. On the ground, the situation is improving. Based on our engagements with businesses, we observe that mindsets towards restructuring have shifted. Many have now accepted the need to restructure and are stepping forward to tap on Government schemes to improve their productivity. To date, more than 17,000 companies have benefited from the various productivity initiatives under the National Productivity and Continuing Education Council (NPCEC), with 7,000 companies in 2013 alone. Mr Ong asked specifically about the take-up rates for the Productivity and Innovation Credit (PIC) and the Innovation and Capability Voucher (ICV) schemes.”
“Mdm Speaker, can I have your permission to take Question Nos 13 and 14 together?”
“We have received many applications which we are jointly evaluating with the various agencies. Page: 122”
“The Entrepreneurship Review Committee (EnRC) was formed in July 2013 to identify key directions for entrepreneurship over the next 10 years. The Committee released its recommendations earlier this year. The key recommendations of the Committee are three-fold. First, the private sector should play a stronger leadership role in the entrepreneurship space. Second, focus should be placed on increasing market access opportunities for startups and, third, measures to improve the infrastructure support for and quality of startups should be implemented. The Government has started to implement the EnRC recommendations. The Action Community for Entrepreneurship (ACE) will be restructured, to enable the private sector to lead in shaping the entrepreneurship landscape. To help startups with market access, IE Singapore launched the Market Access Incubation Programme (MAIP) in March 2014. The MAIP works through incubators to help startups build networks in overseas markets through participation in business missions, trade fairs and other events. In parallel, SPRING Singapore has organised sessions for startups to pitch their ideas to large enterprises, to help startups gain access to business customers. We are also enhancing infrastructural support for startups and creating the conditions for a vibrant startup community. In March 2014, the Government announced the launch of JTC LaunchPad@one-north, building on the success of Block 71 in Ayer Rajah Crescent to create a cluster for startups. This development is on track to be completed by end 2014. LaunchPad will provide startups with opportunities to establish partnerships and gain access to networks and markets within and beyond Singapore. Interest in LaunchPad has been strong.”