Ow Chin Hock
Singapore
“Thirdly, I believe that Mr Simon Tay referred to links with ASEAN+3. Let me say that we do not preclude any such flexibility. Indeed, APEC is an established forum linking Australia and New Zealand with ASEAN and East Asia.”
“Sir, I am not an expert on the Constitution, but I am aware that the Supreme Court's ruling is different from Mr Estrada being impeached and convicted in the Senate. NUCLEAR WEAPONS AND UNITED STATES ARMED FORCES IN SINGAPORE (Facilities) 2. Mr J. B.”
“However, we are mindful that nowadays, Singaporeans who like to experience living and working overseas, have many other attractive career options, in both private and public sectors.”
“Sir, let me thank the Minister on behalf of the 3-room flat dwellers. My supplementary question is: in future, if any rebates are given, will the Minister consider making the amount of the rebates inversely proportional to the size of HDB flats, in other words, the smaller the flat the greater the amount of rebates?”
“Lastly, clause 8 of the Bill also proposes to amend the Banking Act to allow the Singapore branches of foreign banks to transmit information to their head offices or other overseas branches for data processing.”
“These requirements would help to ensure that such businesses are run in a proper manner, and that records are kept to provide an audit trail of transactions, in order to deter illicit transactions from being conducted via such businesses. However, these requirements impose additional costs on the licensees.”
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“Or should our universities also play a higher role and serve as trend-setters, widening the intellectual horizons of our citizens and defining the values, philosophy and goals of our society? Finally, Sir, I would like to suggest to the Minister that the universities should offer part-time courses. We should offer second chances to those who missed their opportunities the first time. Here, let me quote the then Minister for Trade and Industry. In the appendix to the 1981 Budget statement, the then Minister for Trade and Industry and now the First Deputy Prime Minister, said: 'More students must make it into the higher ranges of education in the Eighties by increased intakes, and offering second chances to those who fail their entrance, and by part-time and full-time programmes for those already in employment ...' Sir, may I ask the Minister for Education to seriously consider these proposals?”
“The proposed increase of the university intake must be done in stages. The major constraint on the supply side is not physical facilities, but the recruitment of teaching staff of high calibre. If the universities are to maintain 1 : 10 staff-student ratio, an additional 100 staff members must be recruited for every increase of 1,000 students, and that is not an easy task. Secondly, the Minister is also worried about the rapid increase in the university's annual intake which may result in unemployed graduates or some of the graduates may become hawkers, waiters or waitresses. I think not. Firstly, our graduates are less likely to become hawkers, waiters or waitresses. They are more likely to become supervisors, restaurant owners and even entrepreneurs. Secondly, it is a question of pay. In the 1985-1986 recession, our graduates were realistic enough to adjust their expected salary downwards and hence none of them were unemployed. Thirdly, even if in future some graduates cannot find jobs locally, they can seek employment outside Singapore. Is it not our economic policy to encourage investments overseas? Here, let me quote the First Deputy Prime Minister. He told the NUS students on 1st August 1985 and I quote: 'If there are enough students who can make it to university, and if this requires the doubling of the intake, we should encourage it ...' And he went on to say: 'If there are graduates who cannot find employment in Singapore, at least they can find employment outside Singapore.' I agree with him. One question, Mr Deputy Speaker, Sir, which we should ask ourselves is: Should our universities serve merely as service stations to the economy, producing technical and professional manpower as required by our economic growth and re-structuring?”
“(b) Increase NUS intake by 750 from the 'A' level output; and (c) Increase the NTI intake to include 500 polytechnic diploma holders. These proposals will meet several objectives: (1) Increase output of technical manpower; (2) Improve quality of technical manpower output by improving quality of inputs to the polytechnics and vocational institutes; and (3) Reduce the number and proportion of 'A' level students who cannot get into universities and hence reduce the frustration of these students. These proposals also have some additional benefits, namely: (1) They partially meet the increasing demand for university education; and (2) They emphasize that the polytechnics offer a better option for the average or above average 'O' level school leavers (with, say, 12-20 points for five subjects) than the junior colleges and pre-U centres. If most of these students eventually cannot make it to university, then why should we, in the words of the Minister for Education on 25th February and I quote: 'hold out false hope and, eventually, to do a disservice to them...' On the other hand, if these 2,000-plus 'O' level school leavers who would have opted for 'A' level education otherwise are now channelled to the polytechnics, nearly all of them will get a polytechnic diploma in three years. And for these students, the polytechnic diploma has a higher value than the 'A' level certificate, the point made by the Minister just now. At the same time, the best among them will still have the chance of entering the NTI if the NTI increases its intake as proposed. On 25th February, the Minister made two points. Firstly, about the academic standard. I share the concern of the Minister for Education regarding the academic standard of our universities.”
“Mr Deputy Speaker, Sir, I am an academic but I do not just talk. I am here to offer a solution. I propose to look at the issue of tertiary education from another angle, namely, the alternatives open to 'O' level school leavers. Sir, with your permission, may I ask the Clerk of Parliament to distribute two diagrams? Illustration A presents the current alternatives for 'O' level school leavers. The figures used here, I must stress, are estimates for illustration purposes only. Take a cohort of 35,000 'O' level school leavers, 4,000 enter the labour market, 12,000 take up VITB courses, 7,000 go into the polytechnics and roughly 12,000 get into junior colleges and pre-university centres. Out of the 12,000 'A' level students, approximately 6,000 eventually make it to university. (But if we use the ratio quoted by the Minister just now, this figure should be adjusted to about 7,000). Another 1,000 'A' level school leavers go to the Institute of Education or other institutions or re-enter polytechnics and the remaining 'A' level students enter the labour market. The current situation has given rise to two major problems: First, there are too many 'A' level students but too few are admitted into the local university, the point just stressed by the Minister. The second problem is that competition from junior colleges and pre-U centres has resulted in a substantial number of 'O' level students with poorer results entering the polytechnics and VITB courses. I would like to propose different alternatives for 'O' level school leavers and this is presented in illustration B. The proposals are: (a) Reduce the number of 'A' level intake from 12,000 to, say, 10,000 and rechannel these students to polytechnics.”
“A few questions for the Minister. First, a simple one. How long is long-term? Five years, 10 years, 30 years? The second question is a related question. What is the assumed or expected inflation rate over this period? Thirdly, has the Minister considered varying the contribution rates according to income levels rather than age groups or in addition to age groups? If not, is he implying that differential rates based on income level is less equitable than the differential rate based on age? Finally, how will the new rates affect (a) aggregate consumption, and (b) national savings ratio.”
“Financing of the Trade Development Board (9) That the sum to be allocated for Head V be reduced by $10 in respect of Subhead VI-01 of the Main Estimates. Financing of the National Productivity Board (10) That the sum to be allocated for Head V be reduced by $10 in respect of Subhead VJ-01 of the Main Estimates.”
“Is it the goal? BG Lee Hsien Loong: Yes. That is our policy, but it will take some time. The Member for Boon Lay asked about leading indicators and whether we should not encourage private institutions also to make their own studies and therefore give us a better range of predictions. Yes, I think we should do that. Not only private institutions, but also the University. In fact, - I think the Members for Whampoa and Leng Kee will be aware of this - my Ministry has been in contact with the Economic Department of the University, to seek ways to tap their expertise, their judgment, their analytical powers, to develop models, to make studies of different aspects of the Singapore economy and produce more reliable forecasts and a better comprehension of how the system works. There are many advantages of doing this, not just to MTI, not just to the academics themselves, but to the economy as a whole. From MTI's point of view, we get the benefit of a wider range of professional advice. From the point of view of the University, they get access, they understand our thinking better. I think it will help the University to do more relevant, more insightful work on the Singapore economy and incidentally provide them more opportunities to publish useful articles in learned journals. From the point of view of the nation, this is the way to tap our talent to the fullest. If any other private organizations are interested in this sort of work, we will render them whatever cooperation is feasible.”
“Could I just add one or two points? Retail business is not equal to banking business. In banking business we have licence restrictions. In fact, I asked the question earlier in my speech. Is the pie really growing? Is the retail trade market growing enough to support both the increasing number of tourists and local consumers? On counterfeiting, I do not think the Minister has answered me. Could I have a firm commitment from him or consult his colleague, the Minister for Law, whether we can pass a law on counterfeiting?”
“And what share of the market? (4) Has the Senior Parliamentary Secretary consulted our local retailers for their views on this? And if our retailers need to learn about modern retailing methods or other management skills, they can always do so by travelling overseas, or probably go on trade missions led by the Senior Parliamentary Secretary or the Minister and not by competition at their doorstep. Let me now come to counterfeiting. I think, Mr Chairman, Sir, it is very close to your heart. I have to press on this point. I did not inform the Minister that this is the second oldest profession in the world. I simply quoted from Tian Xia. The caption of the article is shi Shang di er gu lao di hang ye ( ) in the issue which I quoted. I am very serious about this. We are gaining an increasingly notorious reputation of being a distribution centre for counterfeits and fake goods. Last Monday I attended a seminar on China's modernization. I have a story to tell also. I met an American scholar from the American Enterprise Institute. Some say that it is a Republican Party's outfit. He asked, "How come a decent country like Singapore also have so many fake goods, like fake watches, in Orchard Road area?" Other NICs, like Hong Kong and Taiwan, I was told, have enhanced penalties and have taken severe action against counterfeiters so as to clean up their image, as they realize the damage being done to their reputation and the USA has threatened to take certain measures against them. I understand that it is very difficult to prevent buyers from buying counterfeit or fake goods but there could be a penalty on the dealers and suppliers.”
“Mr Chairman, Sir, a few questions for the Senior Parliamentary Secretary and for the Minister. First, on departmental stores. I believe the Senior Parliamentary Secretary is really ban men nong fu ( ). We talk about not having a paternalistic type of government, and he is using the analogy of parents, children and so on. A few questions here: (1) Why can we not promote four or five big local retailers just as we have promoted four or five local banks? (2) Are we encouraging the foreign retailers, departmental stores or supermarkets to buy from local sources so as to help our manufacturing exports? (3) He mentioned that about 70% of our departmental stores and supermarkets are locally owned. Am I right? It is 70%. How big are these local firms compared to the giants?”
“Not only counterfeiting is unfair to retailers and wholesalers who deal in genuine goods and their employees but it may also provide an excuse for our industrial trading partners to take protectionist measures against us. I am quite sure the Minister is aware of a magazine in Taiwan called "Tian Xia" (Commonwealth). The "Tian Xia" ( ) magazine in its February 1986 issue referred to counterfeiting as the "world's second oldest profession". So may I ask the Minister what he proposes to do with this second oldest profession. We have passed the Copyright Law in January this year. Is it not a logical extension to cover counterfeiting as well?”
“But the upgrading of the hotel, I was told, has encountered some difficulties because the lease period will expire only by the end of 1995 and is under the Rent Control Act. May I ask the Minister what is the present status and when will the restoration work of the hotel begin? Apart from developing Singapore as a tourist destination and offering tourist attractions, we must also explore other possibilities: (1) Promotion of Singapore as a convention and exhibition centre so as to attract high yield or high value added tourists. (2) Cooperation with other Asean countries or other countries like China in promoting tourism. May I ask the Minister what progress have we made in these two areas? The second point I would like to raise is the retail trade. Here I have a complaint for the Minister. Our data on the retail trade and wholesale trade are outdated. The latest data I can get is 1983. In 1983 the retail trade sector employed some 66,000 people and had a turnover of about $10 billion. So it is a fairly large sector. Whenever I read in the newspaper about the opening of a new foreign departmental store, I could not help wondering whether our domestic retail trade market has expanded so fast. I also wonder how many young workers competed away from our manufacturing and other sectors. Do we really need so many foreign departmental stores? Could our local retailers compete effectively with these giants? Perhaps the Minister could give us an update on the demand and supply situation in the retail trade. A related problem is counterfeiting of trade marks or fake goods. This issue is very close to your heart, Mr Chairman, Sir. You have raised it twice before.”
“Mr Chairman, Sir, the first issue I would like to raise is tourism. In 1985, the then Minister for Trade and Industry and the current Minister for Finance promised that we would develop Singapore into a major tourist destination in his Ministry's Addendum to the Presidential Address. I asked myself at that time, that looking from the viewpoint of a tourist, what could Singapore offer? We do not have the Great Wall, Taj Mahal, Grand Canyon or River Rhine. We are supposed to be a City in the Exotic East, but some people observed that we have lost the oriental mystique and charm. We are supposed to be an Island in the Sun, yet we have inadequate beach resorts and sea sports facilities. Our world's tallest man-made waterfall in Jurong Bird Park and our third world's largest oil refinery impress no one except economists. Hence, I welcome the proposed $1 billion tourism development projects. This package of projects represents the Government's first and major investment in tourism. This project, when completed, will offer a variety of tourist attractions so as to attract more tourists from different regions and different countries and to encourage them to stay longer and spend more. As I understand it, this $1 billion sum is supposed to be seed money. This is to attract the private sector's participation in the development of this tourism project. I have three questions here for the Minister. (a) What is the expected return on these investments over and above the 16% of foreign exchange earnings at present? (b) Apart from F&N participation in the Haw Par Villa project, what are the responses from the private sector so far? (c) The Raffles Hotel. This hotel is a unique asset to Singapore. It is an anchor project in the proposed Heritage Link.”
“Supplementary question, Sir. How many per cent of the cohort of students had 15 to 20 points? Dr Tay Eng Soon: Sir, I do not have the figures with me but I can supply this to the Member. MASJID HAJI MOHD SALLEH (Progress on repair and renovation works) 5. Encik Othman bin Haron Eusofe asked the Minister for the Environment (a) what is the progress on the repair and renovation works currently carried out at Masjid Haji Mohd Salleh at Palmer Road; and (b) what is the expected completion date of the project.”
“Sir, just a few points. The unemployment rate in June 1986 was 6.5% and by the end of 1986 it was reduced to 4.6%. May I find out from the Minister some information regarding the profile of these unemployed people, whether they are young workers, or middle-aged workers, whether they are first-time job seekers or they are workers who have been retrenched, whether they are female or male workers. Last year workers have made tremendous sacrifices. They accepted wage restraint and CPF cut. Their sacrifices have helped us improve our export competitiveness. These together with the increase in our external demand by 4% have helped our economic recovery. But the economic recovery has not been even and it is still fragile. Therefore workers have been asked to accept wage restraint for another one to two years. Here, I want to submit one point, that is, it is easier to convince workers to accept wage restraint if the price level is kept stable. Last year, the inflation rate was minus 1.4%. In other words, the price level in fact declined by 1.4% in terms of the Consumer Price Index. And the nominal wage increase was 1.6%. Therefore the increase in real wages was 3%. Therefore, could I ask the Labour Minister to convince his Cabinet colleagues not to raise any Government charges or fees, particularly on those services which affect workers during this wage restraint period? The increase in hospital charges, although the quantum is moderate, may create a psychological effect of resistance from workers to accept wage restraint. It may create some problems for our union leaders to convince workers to accept wage restraint.”
“Mr Chairman, the Minister has missed one point, and that is, about the development financing of statutory boards. I understand that they will be allowed to retain the accumulated surplus. But I have suggested two alternatives. One is to charge as high as possible or as high as the market can bear and generate the surplus. This surplus can be used for future financing of their development projects. There is another alternative, that is, to lower their price and charge on a cost recovery basis and borrow from the market to finance their development projects. This involves an inter-temporal choice. Whether the Minister will issue a guideline on which alternative would be better?”
“This will give the statutory boards certain flexibility in planning their future expansion but, at the same time, they will be still within certain controls. Just now I mentioned a second alternative and I hope this alternative is worthwhile considering as part of the guidelines. Finally, certain statutory boards and their subsidiaries have to keep a certain amount of foreign exchange for their transactions. But not all of them have the expertise to deal with foreign exchange management. So it is desirable, in my view, for statutory boards to approach the MAS to cover their risk exposure in borrowing from abroad. Moreover, statutory boards should also be discouraged from foreign currency investment as far as possible. The Minister may like to make it mandatory for statutory boards which wish to make foreign exchange investment to have their funds managed by the MAS.”
“This form of organization has also allowed statutory boards to enjoy autonomy and flexibility in their operations. But at the same time they are supposed to be accountable and subject to the control of Parliament. Over the years, the rapid economic expansion has increased the demand for their services. And in the process, some of these statutory boards have diversified into other activities and become more profit oriented. This can be seen from their pricing policy. As natural monopolies or near monopolies, they pass increases in cost, eg, rising manpower or fuel cost, to consumers. The operating rules of the statutory boards seem to be charging the rates which the market can bear and to build up their surpluses and reserves to finance their development projects. Before 1985, surpluses were not passed on to consumers in the form of lower tariffs or charges. The Public Accounts Committee (PAC) has recommended in its 1985 Report that the surplus funds of the statutory boards in excess of their long term development needs be returned to the Government. I am glad that the Minister has agreed to the recommendation with respect to the accumulated liquid surpluses of the statutory boards. The practice of charging higher rates than average cost and generating surpluses implies that the current consumers actually pay for the investment which will be enjoyed by the future generation as well. An alternative will be for the statutory boards to price their services on a cost recovery basis and borrow to finance their capital investment. In that case, future generations of users will have to repay this loan. In 1985, the PAC also recommended that the Government should issue some guidelines on the ways in which statutory boards are to finance their development projects.”
“The civil servant directors and managers tend to be more cautious, prudent, less flexible and generally they are risk averters. At the same time, however, we must realize that the public sector has absorbed a large pool of talent and trained manpower. The question is whether the private sector has sufficient management expertise and necessary financial resources to take over the GLCs, particularly the large ones. If not, whether privatization will create the so-called succession problem as pointed out in the report. I wonder when the GLCs are privatized, whether the civil servant directors and managers will also be privatized. In that case, we may have a peculiar situation where the ownership is transferred to the private sector but the control remains with the public sector. On the question of capital formation, privatization means the transfer of ownership from the public sector to the private sector and the flow of funds from the private sector to the public sector. The mere intersectoral transfer of funds does not lead to capital formation. It does not lead to expansion of our productive capacity and it does not create wealth. While privatization will definitely benefit the stock market in the medium term and reduce the Government's role in the business sector in the long run, I wonder whether there will be liquidity contractionary effects in the short run because a large sum of money will be withdrawn from the private sector. What the Government will do to the financial resources released from the divestment is very crucial. Could we have the thinking of the Minister on this? The second issue I would like to raise is the pricing policy and surpluses of statutory boards. The statutory boards were established to achieve certain economic and social objectives.”
“Mr Chairman, Sir, our economy has been a market economy but the Government has intervened in a big way. The Government has also assumed the role of state entrepreneurship. This model of mixed economy has served us well in the last 26 years. However, the Government's direct involvement in productive and commercial activities through public enterprises has created a number of problems: (a) crowding out effects through demand and supply sides; (b) unfair competition with the private sector, whether this is real or perceived; and (c) possible price distortions and misallocation of resources. Moreover, as our economy becomes more mature and diverse and as most of the GLCs or Government-linked companies have withstood the test of market forces, it is wise for the Government to decide to reduce its direct role in economic development, to withdraw from commercial activities and allow the private sector to be the engine of growth. It is with this background that I welcome the decision of the Government to privatize and to divest. On privatization, the report of the Public Sector's Divestment Committee has made some realistic, well-balanced and cautious recommendations, although some people regard the report as not very exciting and not specific enough with regard to some issues. There are two important issues on privatization which I would like to raise here: (a) efficiency and control of GLCs after they have been privatized; and (b) implications for capital formation and the flow of funds. With regard to efficiency, it is generally believed that people from the private sector being profit motivated have greater initiatives and seize new opportunities and adjust to changing market and technological conditions more rapidly.”
“Financing of the Singapore Polytechnic (33) That the sum to be allocated for Head L be reduced by $10 in respect of Subhead LJ-01 of the Main Estimates.”
“Financing of the National University of Singapore (32) That the sum to be allocated for Head L be reduced by $10 in respect of Subhead LG-01 of the Main Estimates.”
“Sir, may I find out from the Minister of State whether the subsidy for the Poly students refers to full-time students or both full-time and part-time students?”
“Sir, I thank the Minister of State for giving the assurances and the statistics so that the students got a realistic picture of the careers and courses. I agree with him that Polytechnic staff members and VITB staff members must do their share of counselling and guidance. In fact, we have seen the results - the 9,000-plus applicants for the polytechnics in no small part is attributed to their help in the last few months. However, may I ask the Minister of State: is it not more effective for principals and teachers in secondary schools to provide this information and guidance? Because students have been conditioned day in and day out to think only ofJCs and universities. So how could staff members of polytechnics and VITBs, within a few hours of counselling, talks and consultations, change their attitude and counter their biases against technical education of the polytechnics?”
“Secondly, he should give top priority to the redevelopment of old housing estates and to offer new flats to tenants or applicants on the joint balloting scheme so as to encourage children to stay with their parents in these estates.”
“This is obvious if we look at the number of babies born, or the number of children aged 4 and below, or the number of kindergarten pupils, constituency by constituency. We have discussed population issues at length but we have not discussed or focused on another dimension of population, namely, the locational or geographical redistribution of population from the old city centre and old estates to suburban areas and new housing estates. This redistribution of population has serious social and political implications. In this context, I see the current relocation exercise as a means to arrest this trend or solve this problem. I also see that this exercise could achieve two objectives: (a) to inject new blood or infuse the younger generation to revitalize the old housing estates; and (b) to allow tenants in old housing estates to upgrade themselves to bigger flats. But under the relocation exercise, the current rule is that if the vacancy rate of a rental block reaches 30% (I stand to be corrected), it is earmarked for demolition. But this rule should not be applied rigidly. For instance, if a rental block has 120 units, the HDB needs to resettle 84 households. But if a rental block has only 20 units, HDB needs to resettle 70% or only 14 units. So the resettlement problem is quite different. It is not only the percentage that counts, but number also counts. There is another problem. Some rental blocks have not yet reached the 30% vacancy rate and yet they are becoming increasingly isolated. The tenants living in these blocks are therefore worried about their safety. Here, I would like to suggest to the Minister that when he applies the vacancy rule in this relocation exercise, he should take the whole neighbourhood or zone into consideration, and not block by block.”
“Sir, I would like to raise two points. First, I would like to reiterate my reservations and doubts about the implemention of town councils in old housing estates. There are a few reasons. Let me summarize them here: (a) The need for repairs, maintenance and upkeep of old flats is much greater and they cost more. (b) There are inadequate amenities or a lack of facilities such as playgrounds, parks, sports facilities, polyclinics and so on in older housing estates. (c) The percentage of rental flats in old housing estates is generally higher. In 1985/86, out of 58,893 1-room rental flats in Singapore, 11,366 are in Toa Payoh estate, 5,943 in Kallang Basin and 3,052 in Bukit Merah. This is just an example. Given the fact that most of the tenants in rental flats are from the low-income group, their ability to pay for maintenance and upkeep of estates is therefore much lower, and limited. So if we have a town council in an old housing estate, the council would face very serious financial constraints and difficulties. Even at the national scale, with cross- subsidization, HDB still incurred a deficit of $102 million last year in services and conservancy activities. But Singaporeans like to compare and contrast. Whether they live in old or new housing estates, they expect the same kind of facilities, the same standard of services and the same kind of living environment. It is therefore neither fair nor equitable to ask MPs and grassroots leaders in old housing estates to run town councils. My second point, Sir, is about the current relocation exercise. Not only are old housing estates getting older but the people living there are getting older also. Their children grow up, get married and move to new towns or suburban areas.”
“--- whether there is a choice between air-con and non air-con buses because MRT will be air-con.”
“No. But the Minister has missed a point ---”
“The Minister missed one point of my question, that is, whether the bus commuter has a choice between air-con and non air-con buses.”
“Three questions for the Minister. First, will the MRT fare system result in a higher fare for all bus commuters, including those who will not be served by the MRT? Second, whether bus commuters will have a choice between air-con and non air-con buses? Third, will MRTC consider peak-load pricing?”
“Would the Minister of State agree that a multi-racial and multi-cultural society is an attraction to tourists? If so, what are the plans to preserve temples and other religious buildings as well as names of streets, for example, Chinese street names in Chinatown.”
“Sir, could the Acting Minister tell us how often will the economic indicators and data be made available to the public? BG Lee Hsien Loong: Sir, the index of leading indicators is just in the process of being developed and validated. I think it will be a few months before we are confident that it works. In fact, we would not be certain until it has predicted several turning points successfully. We will release the data quarterly, the same way as we have been releasing GDP statistics quarterly, and as promptly as we can. And if it is necessary, we will do it more often. But there is a cost to producing data more frequently than that.”
“Thirdly, those older people have gone through the difficult periods with the first generation political leaders in the past and have gone through the baptism of fire in the process of nation building. They have very intimate bond with the older leadership. But the present younger generation and younger leaders have never gone through such severe test and trial. Therefore, this afford an opportunity for them to go through same kind of experience. If they cooperate with the present leadership to weather through the storm together after the winter is over, our younger political leaders, union leaders and people could be united together and be mutually dependent on trusting each other just like the older general. Our present economic difficulty is only temporary. It will be and can be overcome by us. We should not be blinded by our present adverse situation. We must have a vision to see far, and our people should be concerted in our effort towards a better future, not just overcoming our present difficulties. I do not agree to what the Member for Queenstown has mentioned "man proposes, heaven disposes." I say that it all depends on human efforts and human efforts will prevail ( ). We must make "another great stride towards realizing our mission of a Nation of Excellence" as the President said in the concluding sentence of his address. 2.58 pm”
“This is the matter concerning sharing the gain of productivity. From the long-term perspective, the present economic situation is not entirely bad. First, it will help us to see clearly the weaknesses of our economic structure, and that we are easily affected by decline in external demand and other unfavourable external factors. If we cannot adjust to external and internal influences, then we will be the worse for it. As regards extenal influence, we may not be able to do anything. With regard to internal factors, we can restructure our economy, lower our operating costs, and make our wage and tax systems more flexible so that we can meet changes in technology and market conditions. At the same time, if we do so, we will be sending the signal to foreign investors that our people are able to make sacrifices and adjustments when necessary. Secondly, the economic recession will also wake up our people, particularly the younger ones to realize the threat to our survival so that they will have a crisis mentality. All the other three Asian little dragons have this kind of mentality. South Korea is always faced with the confrontation of North Korea. Taiwan is also facing the threat of diplomatic isolation. Hong Kong has the worry of the 1997 deadline. What about us? After 20 years of wage increases and improvements in material lives, our younger people have never had any experience in crisis and difficulties. They take prosperity and high standard of living for granted. So this is the time for many to lower their expectations of material living standard and attune themselves to the new situation. If we have this crisis mentality, it can be translated into a positive force to motivate our people to seek further progress and be able to meet with future crisis and difficulties.”
“These two phenomena have caused the fact that since 1968 we have been implementing the home ownership scheme, and there has been yearly increase in CPF contributions from 30% to 50%. High savings ratio is a good thing. The problem is because of the lack or willingness to invest, inadequate opportunity for investment and low return on investment. Therefore, the Government whould try to provide market information and other data to our local people to invest abroad. The Govenment may even take an equity share in the investments and share the risks. However, our professionals, technicians and skilled workers should also be prepared to go abroad with our investment overseas. They must try to adjust to the different living environment, like the South Korean workers. Another point is about wages and productivity. The Economic Committee mentioned that in the coming years, the increase of productivity is expected to be between 3% and 4% per year and I hope that wage increase should also be within 3-4% annually. It should be linked up one with the other. Productivity here refers to total productivity, and not only labour productivity. Moreover, this is applicable to macro level. If a certain company has increased its productivity to 4%, then the workers should also be benefited. The Straits Times on the 20th February had an article entitled "Wages, Productivity and the Loose Link" reporting on the seminar organized by trade union in respect of this subject. I feel that a more proper headline should be "Wages, Productivity and the Missing Link". The missing link is demand. If the investment is in an economic activities where demand is large and increasing, if productivity increases, not only wages can increase, profits can also increase.”
“The Economic Committee has suggested to spend $400 million on allowance on investment in machinery and equipment. Instead the Government spends $430 million on property tax rebate. This is contradictory to the concern of the Economic Committee too much investment being in properties while too little investment in machinery and equipment. I support in principle the gradual shift from direct taxes to indirect taxes. Many advanced countries have done so. There are certain advantages: first, it would prevent certain professionals and entrepreneurs from taking advantage of the situation. For instance, if a professional's income is paid from his Hong Kong's subsidary, his income tax would be much lower. Secondly, those Singaporeans who have not been paying income tax cannot avoid sales tax or consumption tax. Thirdly, if direct taxes were to be changed to indirect tax, then people will have more options. They can choose to spend, to invest or to save. As the Member for Queenstown has suggested, consumption tax is more disadvantageous to lower income. The First Deputy Prime Minister yesterday mentioned that consumption tax is to be based on more selective items. The essential will be exempted from consumption tax. However, the definition of "essential goods" varies from from person to person. Although I agree to shift the tax on income from production to consumption tax, I hope that in these two years when our economy is not likely to do better, we should not impose this consumption tax because it may affect the retailers and, shopping centres and so on. It is not very suitable. It is not timely. The third point is about savings and investment. The Committee has mentioned that our savings rate is too high whereas investment in property is too much.”
“Therefore their company tax rates are also higher than that of Hong Kong. Another reason is that we will have to spend large sums of money on education and on infrastructure. Perhaps one more reason is that Government is trying to avoid too big a deficit in its Budget. The reduction in company tax is from 40% to 33%. It is 3% difference from that suggested by the Economic Committee. This 3% would cost the Treasury to lose another $200 million. The rebate from income tax would cost the coffer another $250 million. The property tax rebate has increased from 30% to 50%, the loss in revenue also increase from $258 million to $430 million, an additional loss of $172 million. The Government has injected $842 million, plus the loss of original property tax rebate of $258 million, the total sum amounted to $1.1 billion. Of course, there are people who hold the view that the Government has saved $400 million as the Ministry of Finance has rejected the 30% investment allowance as proposed by the Economic Committee. Moreover, these people pointed out: let us not forget first, the $1.5 billion of CPF cut being channelled into the private sector, part of the fund will be recovered in the form of company tax on profitable enterprises and secondly, the Government itself is the largest employment, it will save 12% on labour cost. Some critics observed that when it comes to CPF cut, the Government is bold and resolute, one cut amounts to $1.5 billion. But when it comes to tax cut, the Government is very cautious, doing it step by step. Is the Government being prudent, or is it too stingy? Of course, when it comes to tax cut, people can never be satisfied, they always ask for more.”
“Moreover, if we do not make a 15% cut, it may lead to collapse of more companies. It is a last resort, and it has to be done. Not that I am very willing in conceding to this measure but this is a passive view of looking at CPF cut. The more positive view is that, coupled with reduction of taxes and other measures, more investments will be induced and more employment opportunities created. Then in the long term, the CPF cut and other measures would be very effective and good. The Unions' attitude towards the cut in CPF is praiseworthy. But the CPF cut is a very blunt instrument. Regardless whether the company is making or losing, whether the company is efficient or inefficient, every company will save 12% in labour cost. As regards those companies which are about to close, the CPF cut may give them some breathing space, hoping to be able to recover during the short space of time. As to companies are still making money, I hope that they will make use of the money saved through this way on training of their workers or investment in machinery and equipment. This will be of benefit to both the employer and the employee, and this will help improving the relationship between the two parties. The second point is about taxation. The Government has agreed to reduce company tax and personal income tax. These are most welcome to all. However, some people still think that the Government should be more resolute to reduce company tax to 30%. The First Deputy Prime Minister explained that we are different from Hong Kong. We have to spend on national defence because Hong Kong is not a nation. It is true. Just look at Taiwan and South Korea. They have large arm forces to maintain and they have to spend large sums of money on military expenditure.”
“This figure compared with what I mentioned about the loss of 16.3% in our GDP following the British military withdrawal, there is a very great difference. Can the Member for Potong Pasir make a calculation of that? The Member for Anson on 31st August last year and again in this sitting moved amendment motions expressing his so-called "regret." I regret even more about his regret. He suggested to provide unemployment benefit to unemployed, trying to show himself to be a philanthropist. I say that it will be better for the unemployed to try to find alternative job or employment. I know the unemployed has to lower his expectations and make other adjustments. If the unemployed is to be given employment, at least he is providing his own means of living on earned income through his own effort and need not beg others for alms. We must respect the self-respect of the unemployed. Not everyone is willing to receive alms from others. In fact, the whole Economic Committee Report is to promote our economic revival through reduction of taxes, increase in investments to create more employment opportunity. This is the most positive and correct approach. On the measures proposed by the Economic Committee, I would like to make several points. First, about employers' CPF cut. CPF is not a sacred cow nor a trojan horse. Last year, I did not agree to the cut in CPF contribution. Even now I am not entirely convinced about this as being the most effective measure because CPF contribution is part of the income of employees and to cut it, it will also affect many people in their ability to buy flat and property. Yesterday, the First Deputy Prime Minister announced a few measures to help these people who use CPF to buy property.”
“We must have more confidence in that if we can make short-term sacrifices and to make the necessary adjustments, we should be able to overcome economic difficulties facing us now. During the economic recession, there bound to have people criticizing each other, putting the blame on the others. The Member for Anson said that the Government has misled the people, the Government should be responsible for the present economic problem and unemployment situation. The Member for Alexandra also blamed the glut in property market on the URA. To certain extent, what Member for Alexandra said, may be true. But we must know that if the URA has to shoulder the responsibility, then what about the developers themselves? If the cow is not willing, how are you going to pull the cow and force it to drink. Now is not the time to put the blame on anybody. Even if now we off the head of the Minister for National Development, there is no remedy at all. The empty hotel rooms and the offices and other properties will still be empty. Now the Government has done what need to be done, private enterprise should make positive measures to overcome our difficulties. During the economic recession, there are also many so-called pundits and quacks who utter various kinds of misleading sophistries, trying to divide the employee from the employer and to create mistrust between them, and between the people and the Government. Their ulterior motives could be clearly seen by people. ( ). The Member for Potong Pasir yesterday had mentioned that the prosperity of our country in 1960s was because of the Vietnam War. But let me tell him that at that time, our trade with Vietnam mainly consisted of oil, and plus some maintenance services, which together, occupied only 1.5% of our GDP at that time.”
“(In Mandarin) Mr Speaker, Sir, earlier on I have mentioned that in 1968 the Minister for Finance at that time proposed several measures to deal with the impact of the British military withdrawal: (1) Between 1967 and 1971, the Government would spend $1,000 million, one-third of which to be spent on build-up of our national defence force. (2) Through tax concessions and other incentives to attract foreign investments. Our industrialization strategy also changed from import substitution to one based on export promotion. (3) Through Employment Act and Industrial Relations (Amendment) Act to curb the power of the unions to improve the industrial relation between employers and employees so as to make the atmosphere conducive to foreign investments. Since the implementation of these measures after 1968, there was influx of foreign investments, more jobs were created. Because of the sacrifices made by workers, the economy became prosperous and the living standard was raised. Even the 1973 and 1979 oil crises could not stop our economic development. In that year, when the Prime Minister thanked the President for his address, he enumerated three valuable resources: (1) human resources; (2) geographic location; (3) accumulation of many years of infrastructure and the experiences in managing these infrastructure. We have made use of our advantageous geographic location and develop our port into one of the world's largest port. As for the other resources, our present position was much better compared with that 18 years ago. In addition, we have accumulated $25 billion of reserves and crisis management experience, we are in a much better position than 18 years ago to deal with crisis.”
“Mr Speaker, Sir, what else can I say after all these announcements? It remains for me to thank all my PAP colleagues for their support of the motion. And I will ignore all the petty remarks made by the Member for Potong Pasir about me. I am grateful to the Firs Deputy Prime Minister for his reply, particularly the tax concessions he has just announced. I believe all Members, including the Member for Anson, will support these latest measures taken by the Government. Question put, and agreed to. Resolved, That this House, noting with concern the present problems with the economy, commends the Trade Unions and the workers for their responsible attitude towards wages; and supports the measures so far taken by the Government and urges the Government to take all further steps necessary for the Nation to adept to the changing environment, including steps to strengthen the role of local businesses in the economy. REMUNERATION OF MEMBERS”
“The present economic difficulties, in fact, present a great opportunity for Singaporeans, particularly younger Singaporeans, to work closely with the younger political leaders. Business leaders are a(ready now working closely with the Government. Trade unions and workers have responded positively. There is a sense of togetherness. So let us rally solidly behind the Government to overcome the difficulties facing us. When the storm is over, we shall emerge leaner, fitter, stronger and with the new accord well established between the younger leaders and the people. On this new relationship, we shall endeavour to achieve our social goals and vision, and our economy will shine like gold. Sir, I beg to move. Question proposed.”
“Sir, the provision and sundry shops and beauty saloons perhaps represent somewhat extreme examples. Many small and medium-sized local businesses in other industries have taken the initiative to upgrade themselves. Others with some assistance from the Government in the form of training, consultancy and low-cost loans will be able to compete and compete efficiently. There have been allegations that the Government tend to favour foreign companies. There are also complaints that local foreign contractors not only monopolize major projects but they also compete against local contractors for small projects. Here we see a conflict of interest and objectives between economic efficiency and non-economic considerations. By non-economic considerations, I include political considerations and, as some argue, moral obligation to look after our own people. While many local businesses may operate at higher cost, nevertheless, we have to preserve the local component and local sector. We must bear in mind that economically optimum solutions are not necessarily politically acceptable solutions. We may have to settle for the so-called "second best" solutions. The Government has to decide on the respective roles of the local businesses versus foreign companies. The Government must help strengthen the role of local businesses in the economy. Sir, apart from the economic and technological environment, the political environment is also changing. The composition of the electorate has changed, the torch of political leadership has passed on to the younger generation. In the past 25 years, the people and the first generation leadership have gone through many difficult times and crises together. These crises and difficult times help to foster the bond between the people and the Government.”
“It makes economic sense for these shops in the same HDB block or the neighbourhood to merge into a more efficient-sized unit, but this runs against their great desire and wish of Singaporeans to be their own towkays. We have to respect their wishes.In that case, other avenues of cooperation must be found. Many provision shops in fact joined the Provision Suppliers Cooperative (PSC) and they enjoy the benefits of greater discount for bulk purchases. Some of them, about 130 shops, have gone a step further in 1982 to become Econ-Mini-Markets. These Econ-Mini-Markets enjoy not only a cheaper source of supplies, with free delivery of goods, they also have easier credit terms. And they also minimize the number of employees per floor space. Yet these 130 shops form only a very small percentage of the total number of provision shops. Other shops still carry on, running and managing their businesses in the traditional way. We do not like to see these shops disappear as they are all owned by Singaporeans. But if they do not change, the final reality will come when the foreign supermarket chain moves into the retail market in HDB estates. The Government can buy them time and do whatever is practical to assist them. But eventually it is the shopkeepers themselves who have to decide their own future. I have spent hours discussing with some shopkeepers and some of them confide in me that their children, with better education and training, will not want to continue with the family business. The shopkeepers therefore are faced with a dilemma. They will not survive if they do not upgrade; on the other hand, if they invest considerable sums of capital to upgrade, their businesses may not last beyond their lifetime.”
“Mr Speaker, Sir, when Parliament adjourned yesterday, I was talking about small and medium-sized local businesses. These businesses have great disadvantages. They have many handicaps, high labour cost, low productivity, low capital investment and dis-economies of scale. Let me take some industries in the commerce and service sectors as examples. First, provision and sundry shops. In 1981, there were 4,625 provision and sundry shops. The total number of employees was 11,604 but value added per shop was $20,000 per year, operating surplus $12,000, capital assets $6,000. The second example is coffee shops. In 1981, there were 1,457 shops. The total number of employees was 4,959, value added per shop was only $31,000 per year, operating surplus $13,000 per year, capital assets at the end of the year $8,000. The third example is ladies hairdressing shops and beauty saloons. In 1982, there were 1,190 shops employing 4,556 employees, value added only $28,000 per year, surplus $7,000, capital assets $11,000. Mr Speaker, Sir, all these statistics tell the same story: large number of establishments in the same industry, each with a small number of employees, low value-added, low operating surplus, low capital investment. When I walk down an HDB block, I find three or four provision shops, each offering the same variety of goods at about the same prices, and there is no location advantage between these shops because they are in the same block, I cannot help asking myself, "Can the shops survive?" It is very sad because these shopkeepers and their family members all work very hard and many of them are our supporters.”
“A few steps need to be taken: (1) To encourage research and development activities; (2) To upgrade workers' training and education; (3) To provide information on technology, market and management system; (4) To groom our local entrepreneurs; (5) To encourage local businesses to link up with MNCs and foreign companies; and (6) To assist local businesses to improve on their production techniques and management systems, All these require not only the efforts of the Government but also the full support and cooperation of the people. How do we, as a people and a nation, face the challenges of the new era will determine what kind of future we have for ourselves and for our children. Sir, let me now turn to the last topic, ie, the local businesses. Small and medium-sized businesses have great disadvantages. They have many handicaps: high labour cost, low productivity, low capital investment, dis-economies of scale due to small size. Let me take some industries in the commerce and service sectors as examples. First, provision and sundry shops. In 1981, there were 4,625 such shops.”
“Some experts, such as Mr Kenichi Ohmae, a Japanese consultant with McKinsey & Co, has warned of the 'Triad power' - the cooperation and linking up of the large corporations in the three economic polars - America, Western Europe and Japan. In the region, probably at the latest by the end of this century, we may see China emerging as an economic power, exporting large volumes of labour-intensive manufactured goods. This will alter the economic balance in the Asia-Pacific region. In our domestic economy, we must realize the period of low-wage low-rent is over. We are moving up the technological ladder. To stand still is to be left behind; unless we move ahead of other countries in the region and countries with ample labour-supply, like India and China, we will be swamped. But when we enter the era of higher technology, we are confronted with a different set of problems: investors will face greater uncertainty and greater risk. Technological changes may render investment obsolete within a very short time, investors are therefore hesitant. At the same time, the industrialized nations and the NICs are all trying to identify the new growth industries. If too many move into the same industry with similar technological level, all will suffer from excess capacity; a potential growth industry (what the Prime Minister called the winner) may turn out to be a loser. How do we prepare ourselves for these changing economic and technological environment?”
“These allegations and accusations are irresponsible and misleading. Our economy is a small open economy, just like a small sailing boat in the Pacific Ocean. A powerful wind will propel our economy full steam ahead, but a thunder storm may be enough to capsize our boat. No one can give us accurate weather forecast. This is the problem faced by all small open economies, not just Singapore. To manage such an open and small economy requires delicate skills, and so far the Government has been very successful. That is why we see the living standard going up and there is economic prosperity in the last 25 years. The economic restructuring is like strengthening the structure of our economic boat, so that it can ride the storm better and move faster ahead of our competitors. Sir, now let me turn to the changing environment and the new challenges we face. Economic measures taken at this point must not aim at solving the current economic problems alone. They must be part of our economic strategies which will enable our economy to respond more rapidly and effectively to the changing economic conditions and technological progress. In the world economy, the old economic problems, such as slow-down of world trade expansion, protectionism, and the debt problem of the Third World countries and some Eastern European countries, are still hanging there, At the same time, new challenges have emerged: industrialized nations have started a re-industrialization drive, and their large corporations have adopted the strategies of investing behind each other's tariff walls.”