Richard Hu Tsu Tau
Singapore
“Sir, I think it is eminently fair, because the proposal really is for the Government to spend money to give shares to Singapore citizens. Either you agree or you do not agree. Or, if you agree, perhaps you consider the amounts insufficient or too much.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2001.”
“I think the Prime Minister and DPM Lee have already explained it will be based on income levels, with people living in flats as a proxy. So there is no political content in it. It depends on the income level, whether you have served national service or whether you are an elderly person.”
“I really do not understand. I know you are arguing on technicality for which I agree that you may have a point. But, nevertheless, because it is a proposal to share Singapore's surpluses with the population, the distribution is not something which you can argue against.”
“As I said, the estimates will be available around mid-October. I do not think, at this time, I want to give a specific date when the second package will be announced, but it will be done as soon as practicable. IN-PRINCIPLE AGREEMENT WITH MALAYSIA ON OUTSTANDING BILATERAL ISSUES (Assessment) 4.”
“Mr Speaker, Sir, when the $2.2 billion off-Budget package was announced in July this year, we said that the Government would do more to assist Singaporeans if the global economic situation worsened in the coming months.”
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“In case of an international disaster where there should be major trade wars leading to economic decline in the world and since we are heavily dependent on exports, our growth could collapse and revenue would, therefore, decline badly.”
“"Imports" are the total imports into Singapore.”
“No. I said that we should try and increase our reserves as much as we can without over-taxing our people. So the more we can accumulate during periods of good economic growth, as we have seen in the last two years, the more we should attempt to accumulate.”
“They are the liquid assets of MAS and BCCS.”
“Sir, it is generally accepted internationally that countries should have hard currency reserves of between three and six months' of imports. Depending on a country's degree of self-sufficiency, reserves at these levels should be sufficient to act as a cushion against temporary dislocation in the country's economy. In the case of Singapore which imports all its energy and practically all its food, our level of reserves should clearly be around the upper bound of the 3-6 months' range and more, if possible. Our current official foreign reserve of more than $60 billion is equivalent to about seven months' imports. However, as a country without natural resources, our aim should be to accumulate, over time, as much reserves as we can afford to do so without over-taxing our people and without denying ourselves the expenditures necessary for economic growth. I should also point out that our existing absolute level of reserves cannot be allowed to remain static. It must increase in line with our GDP growth. As our population grows and our standard of living increases with economic growth, so will our imports grow.”
“To all other persons entering Singapore. PAP MPS' OFFICES AT VOID DECKS OF HDB ESTATES (Demolition) 4. Mr Chiam See Tong asked the Minister for National Development how many offices of People's Action Party Members of Parliament which were situated at the void decks of Housing and Development Board estates and which have been taken back by the HDB have been demolished.”
“At the moment, our Customs officers at the airport use their discretion in waiving duties on the basis that travellers are asked, "Are you bringing in any substantial goods or do you have anything to declare?" They will use the same discretion in allowing through goods free of GST. The objective is not to cause congestion at the Causeway.”
“Mr Speaker, Sir, all goods brought into Singapore, whether by air, road, rail or sea will be liable for GST. However, all bona fide travellers entering Singapore will be allowed to bring in a reasonable amount of goods for their own use without having to pay GST. The value of goods which each person may bring into Singapore free of GST will be announced at a later date, but the amount will be reasonably generous. Singaporeans returning from visits to Johore Bahru should therefore not face any problems unless they are importing large quantities of goods. Relief from GST will not be extended to liquors and tobacco.”
“Hopefully, of course, GST will not need to be raised if we do not come under pressure for large amounts of public subsidies. I do not quite understand his point on the impact of GST on transhipment business. I hope he is not suggesting that we should encourage smuggling. Mr Ibrahim Othman has asked about the impact of GST on certain Muslim donations. On cash donations for mosque buildings, GST will not apply. Payments for pilgrimages and air fares are zero-rated. For goods bought for sacrificial purposes, unfortunately, GST will apply, but it should not be very heavy. I think I have covered most of the points raised by Members. Mr Cheo Chai Chen( In Mandarin): Mr Speaker, Sir, last week when we were debating the Budget Statement, I said that we should improve productivity, increase foreign exchange earnings and to create better conditions to attract foreign investments.”
“Finally, Mr Chia has asked about the split between direct and indirect taxes. I should explain that when he adds the sums together, income taxes should be included with assets taxes or property taxes as a direct tax component, in which case the ratio will work out to be about 60:40. He has also asked why we have introduced GST: Is it because we are worried that some of the other indirect taxes would somehow be reduced in the future, therefore, we need the revenue? We have explained in the White Paper that we have significant other forms of indirect taxes now in the form of taxes on cars, tobacco, alcohol, gambling, and so forth. But we have also explained that these are very narrowly based taxes and there is a point beyond which you cannot raise such taxes without leading to reduction in revenue. A situation could arise where, because of public pressure for Government to increase subsidies, revenue has to be extracted from somewhere. If we have in the meanwhile cut corporate taxes, we surely do not want to increase it again. This might drive investors away. So what do we do? We have two choices - either use the GST or we can increase taxes on liquor, tobacco, gambling, cars. But these taxes are levied for specific control purposes and it is not possible to increase them to the level where, for example, liquor and tobacco, it would just stimulate massive bootlegging, as they had in America in the old days. Any increase in gambling taxes will merely encourage illegal gamblers to proliferate. Because they are narrowly based, we cannot rely on them for substantial increases in tax revenue in future should we need it after we have cut direct taxes, and the only alternative is GST.”
“Members will note that the compliance levels are relatively small percentages of turnover at any level above the equivalent of S$1 million per annum. They will have to do a mental conversion on the pound and New Zealand dollar. Some Members, including Dr Ow, have asked for Government to continue to maintain a programme to explain the mechanics and the impact of GST to the public. I entirely agree, because my own perception is that it is widely misunderstood and we will need a lot of publicity, a lot of campaigns, and we will be working out the detailed programme to ensure that this is done, including, hopefully, TV seminars, and even perhaps video-tape simulated GST transactions which can be widely viewed in the CCCs and in the community centres. It is clearly something we need to do and we will do it. There have also been calls for the establishment of a Price Review Committee. In this connection, we will solicit the support of CASE and in doing so, if they can come up with good programmes, Government would be pleased to increase the funding of CASE. Dr Soin has asked whether the education subsidies to disabled schools could be raised. I think the decision has been taken that all subsidies for Government-aided schools will be increased. But some of the disabled schools are privately funded and this is one area which the Ministry of Education is examining. Mr Ling, who is not here, has suggested in passing that in the case of foreign worker's levy, we should, in place of the levy, introduce Government regulations. But this seems to be contradictory to the SDP's position that what we do not need more in Singapore are Government regulations. I suggest that Mr Ling should sort it out with his Secretary-General.”
“Presumably, this statement is based on their experience with GST elsewhere: "It is difficult to make an accurate forecast of compliance cost for business in Singapore as it depends on the nature of the individual business. However, the experience of other countries will provide some guide." I will now ask the Clerk to circulate a table (Cols. 1649 - 1650) to Members. [Copies of table distributed to hon. Members.] This is a table showing the cost of compliance based on surveys conducted in the United Kingdom and New Zealand. In the UK it is VAT, and in New Zealand it is GST. The data will show clearly that the compliance cost, expressed as a percentage of annual turnover of a business, is highest for small traders and declines with increasing turnover. It is something which we would expect. It is for this reason that we have decided to establish a relatively high exemption threshold of $1 million. This is to ensure that the large number of small businesses in Singapore will not have to bear the compliance cost of introducing GST. table - COMPLIANCE COST OF GST/VAT (Cols. 1649 - 1650) For Singapore, we would expect that the cost of compliance should be lower than in the United Kingdom and New Zealand, because we have kept the GST system simple and because we have established a very high threshold. At the moment, there are 181,000 active companies registered in Singapore, of which 143,000 or 79% have annual turnovers below $1 million. That is the reason why we have established a high exemption limit so that the small companies will not be burdened with the need to introduce accounting systems which they are not familiar with.”
“The Inland Revenue Authority of Singapore and the Customs and Excise Department will need 294 and 86 additional staff respectively or a total of 382 extra persons. The increase in manpower and associate costs will be in the region of $26 million to $29 million. It includes some capital equipment. The current cost of operating the Inland Revenue Authority is around $100 million. So this shows the proportion of increase in size. Existing establishment for the Inland Revenue Authority is 1,873 and the Customs and Excise Department is 1,162. Part of the cost of collecting GST, which I have just mentioned, will be offset in the future from savings in the administration of existing income tax. A preliminary estimate shows that at least 120 posts can be saved. This is possible because the reduction in personal income tax will result in about 67% of individual taxpayers not paying income tax as well as the suspension of existing indirect taxes. Over time, as the administration of GST is streamlined, I would expect more savings can be achieved. Cost of compliance for business. The GST has been frequently criticised for imposing a major compliance cost on the taxpayer, and for shifting the incidence of the cost of collection from Government to business. This criticism has arisen largely from experience in countries with complicated GST systems, principally in Europe. It is simply not true of simple GST systems and studies in Europe have shown that even with complex systems, the cost is largely one-off, with continuing cost being minimal. The foregoing is a direct quote from a technical newsletter sent out by Price Waterhouse. It is not what Government said.”
“We import 100% of our energy requirements, practically all our food, 50% of our water and 70% of our total imports are either consumed or used as raw materials for manufacture of exports. Given our heavy dependence on imports, we should never draw down our reserves except in an emergency. In fact, it is essential that our reserves should continue to grow so that its size, expressed as a percentage of imports, can be maintained. If it does not grow, its size, relative to imports, will fall to unacceptable levels over time. The easiest way to achieve this is not to spend the income we earn from our reserves, but to allow it to accumulate. Other countries, with land and natural resources, can in an emergency fall back to live off the land. We have no such fall-back except our financial reserves. I think I have dealt with most of the basic issues which the Opposition has raised. Mr Low Thia Khiang has produced a table but I will not take up Members' time. We have produced a table (Cols. 1647 - 1648) ourselves which I will ask the Clerk to distribute. [Copies of table distributed to hon. Members]. It shows the correct way of calculating it. Basically, what Mr Low has done, with the best of intentions, is to apply GST on top of GST. Unfortunately, that is a very, very common misconception of the impact of GST and it is helpful for Mr Low to bring it to the public's attention at this time. I thank him. You do not apply GST on top of GST. table - Mr Low Thia Khiang's Table 2, Correct Version of Table 2 (Cols. 1647 - 1648) Before I take up individual points raised by Members, Dr Ow Chin Hock has asked about the compliance cost of GST. For the Government, the main cost is manpower.”
“I have said that if our GDP continues to grow at around 4-6% and Government expenditures are kept under control, there will be no need to raise the GST rate beyond 3% and that it would be even possible to cut income tax further without raising GST. Members will appreciate, however, that there can be no assurance that there will be no downturns in the world economy. The possibility of trade conflicts is very real, as a new GATT agreement is nowhere in sight, and protective trading blocs are beginning to emerge as alternatives. As income tax revenue is strongly correlated to GDP growth, a budget surplus now could quickly turn into a budget deficit if we are hit by a recession. It would therefore be highly irresponsible and short-sighted to cut income taxes without putting into place an alternative GST which is much less dependent on GDP growth. It has also been suggested that since we have large reserves, the income from these reserves should be used to offset income tax cuts, and therefore no need for GST. Again, this is an extremely short-sighted and unacceptable proposal. Our external reserves now stand at around $60-odd billion. This appears to be a very large sum, but let me remind Members that it only represents about seven months of total imports for Singapore. This is a comfortable level now if there are no upsets in world trade and our economy continues to grow normally. If things turn sour, we will need every dollar of our reserves to keep our economy alive until external conditions return to normal. There is no way to predict how long this might take. We must never forget that we have very little land and no natural resources.”
“However, even if the population growth rate is stabilised, we would still be faced with the problem of an aging population because of the rise in life expectancy. In 1957, life expectancy was 60.3 years for males and 65.2 for females. With better nutrition and health care, this has risen to 76 years for males and 78.3 years for females in 1992. By the year 2030, it can be expected that male life expectancies would rise to 78.8 years and females to 81.6 years. The impact of this change can be dramatic. As we have said in the White Paper, currently eight working persons support each aged person. By the year 2030, only three working persons would be supporting each aged person above 60. The demographic and family lifestyle changes associated with rising affluence are realities we have to face and plan for. The introduction of GST at this time is a recognition of a future need which has to be addressed now. Let us just imagine what Singapore would be like if we had a SDP Government 30 years ago. There would have been no population control policy, as they have advocated, so as to avoid an aging population. Every family will be encouraged to have as many children as possible so that Singapore could have an army of young workers. There will be no need for foreign workers, and no foreign workers' levy. Paradise would have arrived by the turn of the century. Singapore's population today probably easily exceeds four million and would still be growing at the rate of 4-5% per annum. By the year 2000, we would still have a very young population of 20 beggars supporting each 60 year-old beggar. The Opposition has also said that the Government has large reserves and big budget surpluses. Therefore, taxes can be cut without the GST. Let us examine this statement.”
“It is the insidious effects of a trend towards more spending instead of saving that we must resist for as long as we can. Mr Chiam and the SDP have also in the past said that the use of GST to broaden the tax base in the face of an aging population is wrong. He blames the aging entirely on the PAP's two-child family. I think this is a downright insidious, if stupid, argument. Let me explain. In the early 1960s Singapore was confronted with a classical problem of a small poor country trying to break out of the poverty trap. The population growth rate was over 4% per year. It was essential that the rate be brought down to a level which will allow the accumulation of capital for re-investment to sustain growth. Without this, any increase in GDP will be consumed by a rising tide of new mouths. The SDP should open its eyes and look around at the many third world countries still struggling with this population growth problem. Look at what China and India are both doing over population control and ask yourselves why are they doing it. Singapore is now faced with a different set of problems arising from prosperity. All developed industrial countries face declining fertility rates. With rising affluence, as I have explained, and better education, more women work and families become smaller. As an urban society, we have arrived at this stage much earlier than most countries. Our recent population increase initiatives have staved the decline in fertility. When combined with a judicious immigration policy, it should be possible for Singapore's population to reach a sustainable level of around four million sometime in the next century.”
“It is about giving Singapore entrepreneurs a better return on their investments in Singapore so that despite our higher wages, they will continue to invest in Singapore and not move their operations completely offshore, but only the labour intensive components. It is also about allowing Singapore entrepreneurs to keep a higher share of their after-tax profits so that they can expand overseas. The Opposition has also said that Sin gapore has already a very high savings rate and does not need GST to encourage more savings. I believe this is a rather foolish notion. In an uncertain world, no nation which wishes to grow and become richer in the long term and has any concern about the welfare of its future generations should ever say that it has enough savings. If a country is to grow, it must continually add to its capital stock. The more a country invests in increasing its capital stock, the more output it can produce for a given labour force and the richer it grows. If a country is to invest heavily without relying on external borrowings, it must have a high level of domestic savings. I think the record is clear. Countries with high domestic savings grow faster than countries with lower savings. As countries mature, two trends work to reduce the level of savings. First, declining fertility rates and rising life expectancies combine to raise the average age of the population. Savings will decline as the proportion of savers, who are working persons, declines and the proportion of dissavers, the retired people, rises. Second, rising affluence always encourages spending. Reversing the first trend is particularly difficult because as nations become richer, families become smaller and life expectancies rise with better nutrition and health care.”
“Unfortunately, the package in its timing was clearly unsaleable. The lesson for us is that GST cannot be introduced in a recession when the unemployment rate is 11%. Certainly not a GST as large as 15%. The offsets offered were nowhere near enough to offset the impact of a 15% GST on the lower-income groups. Many of them do not even have jobs. Australia could not afford the kind of offsets required because the country is in recession. The government has a budget deficit and the country has an external debt of over US$120 billion, perhaps one of the largest on a per capita basis in the world. Hence our decision to introduce GST now at a low rate when we have full employment, healthy budget surpluses which allow us to fully offset the GST and give away more money besides. Mr Chiam and Mr Low have also said, both today and in speeches in the past, that GST will not make Singapore more competitive. In fact, in an anti-GST rally, the SDP has said that the Government's proposal to cut personal and corporate income taxes will not make Singapore competitive. They have said that cutting taxes would only give people more money to spend or save as they saw fit. I believe that this is an extremely naive approach and is unbelievably naive for the leadership of a political party. The proposed cutting of income taxes is not about giving people more money to spend, but to ensure that Singapore continues to attract its share of international investments in an increasingly competitive environment. It is not about giving Singapore entrepreneurs a better return on their investments in Singapore.”
“Secondly, the financial problems in Japan and the US have led to a withdrawal of investment capital as banks in the US and Japan rebuild their capital bases. Competition for the reduced pool of international investment funds will therefore be very fierce in the future. And we will be competing for this small reduced pool with countries with much cheaper labour and land. How then does Singapore compete? Firstly, we must continue to do what we have done in the past, which is to provide first-class infrastructure and a pool of high-skilled and educated workforce. Secondly, we must move upstream as quickly as possible into high-tech manufacture and services which demand good infrastructure and high-skilled and educated labour. Finally, we must reduce our corporate taxes so that foreign multi-nationals investing here can have a better return on their capital compared to other countries. As some Members have said, the issue is job creation. Without investments, both foreign and domestic, we will simply not have jobs in the future. So the introduction of GST through tax reductions, through the creation of investment capital, both domestic and attracting foreigners, we create jobs. Mr Chiam, who is not here unfortunately, has, predictably, I thought, used the Australian example to say why we should not introduce GST. I was waiting for this. But the Australian experience is useful in illustrating how not to introduce a broad-based consumption tax such as GST. Mr Hewson's tax programme was a brave attempt to radically reform the Australian tax system. He wanted to replace a complicated system of 15 indirect taxes, including payroll and wholesale taxes, with a single GST at 15%. Personal income taxes would also be cut but corporate taxes would be increased from 39% to 42%.”
“First, I will not cover the ground which has already been extensively covered by the Minister for Trade and Industry, particularly when he has explained the reasons for not extending the exemption beyond what we have already announced. I would like to begin by explaining why - this is a general question which has been posed - we have decided to introduce GST now, whereas in the past I have consistently said that we do not need a GST until we need the money. Historically, the need for GST was first mooted in 1985 by the Economic Committee. I also made specific mention of it in the 1989 Budget speech. At that time and regularly since, I have said that GST would not be introduced until our revenue position required it. Why have we changed? I think the answer is quite straightforward. It is that the world has changed drastically since 1989. In 1989, our main competitors for export markets and investments were the NIEs - Hong Kong, Taiwan and South Korea. Since then, two sea changes have taken place in the world environment. First, the collapse of the Communist/socialist system and the recognition by practically all developing countries that the key to economic growth was the opening of markets to foreign investments and the adoption of the competitive market mechanism. Secondly, there was the collapse of over-inflated financial and real estate markets in Japan, US, Canada and the UK. What are the consequences of these changes on Singapore? First, instead of competition for exports with the three other NIEs, we now face competition with a host of potential NIEs, including Indonesia, Malaysia, Thailand; and over the horizon loom even fiercer competition from China, India, Pakistan; and in the longer-term, all the East European countries including Russia.”
“Mr Speaker, Sir, I would like, first, to thank the various Members who have spoken in support of the Bill. Although many have understandably expressed concern over the impact of GST on the lower-income groups, particularly the retirees and aged persons, and its likely impact on tourism, I think in my previous speeches I have said that in the case of tourism we recognise that there might be a problem, particularly where tourists are purchasing high-value items and we are looking at a mechanism to correct this. But more generally, I do not believe that a 3% GST applied generally across the board can have a really significant impact on the depression of tourism. This is something that I think both the Government and the STPB will monitor very carefully. It is not something we are going to ignore because the tourism industry is a major component of our economy. As for the lower-income groups, particularly the older retirees, we recognise that they face a special problem. I have said that we would closely monitor the impact of GST on their welfare and, if necessary, we will introduce other measures beyond those we have already announced to ensure that they are not unduly affected. As for the Opposition, predictably, they have all opposed GST. I believe that these are knee-jerk reactions taken perhaps without real thought because they are popular reactions with a great deal of mass appeal. But because they might lead to a misunderstanding by the public, I intend to spend more time in addressing what they have said in order to make sure that a wrong impression is not conveyed to the public at large.”
“Like Singapore, they introduced GST not to increase tax revenue but to enable a more even tax distribution. South Korea took six years to prepare the people for the VAT reform, and Taiwan took four years to plan and implement. Singapore, being a small nation, may not take so long. But I would like the Government to give more time and attention so as to prepare our people and the businessmen for GST. Because the GST is only 3%, and the Government has assured that it would not raise the rate for five years or maybe longer, I support the Bill.”
“The reason is that while they have to pay a 3% GST, they will enjoy a 3% reduction in their corporate tax. Moreover, the 3% GST can be passed on to the consumers. There are some concerns on the dampening effect of GST on the retail, food and leisure sectors, as people might cut back on spending. Another matter which has been raised is how would the GST be applied for existing contracts. Next year, when the GST of 3% is introduced, GST has to be paid. This may give rise to commercial disputes as to which party should absorb the new GST. It will be helpful if the Government can make clear on these rulings. After the introduction of GST, many merchants will have to keep records and this may prove to be difficult to small merchants. Therefore, the Government should give them assistance and show understanding. Many people are afraid that GST will lead to inflation. If we have a very strict monitoring system, we will not have profiteering and inflation. The Government should set up a central watchdog panel to monitor the situation. And this panel can encourage each constituency to form watchdog sub-groups under the CCCs and RCs. These groups can keep close tab on prices of stallholders and shopkeepers. Where there is evidence of profiteering or unreasonable price increases, such cases should be reported to this organisation for investigation. To help people to compare prices before and after GST, the Government can prepare a "Prices Guide" of main consumer items for people's reference. Apparently, this was done in Taiwan and South Korea. I believe we can learn from the experience of South Korea and Taiwan in the implementation of the GST. They both successfully implemented GST.”
“The Government has healthy budgetary surpluses. (3) The objective of introducing the GST is not so much to cut corporate and individual tax rates per se, but also to introduce an alternative form of indirect tax, so as to give more flexibility and responsiveness in implementing Government's fiscal policies in future. Many people have a great fear of GST. I think there are several reasons for their fear. For the business people, firstly, they are afraid that this will have an impact on their businesses. Secondly, they find it difficult to keep business records to pay GST as required by the Government. For the ordinary people: (a) The tax is regressive. The poor and the lower-income groups who do not pay income tax now ha2ve to pay more taxes via GST. (b) Inflationary impact. People are afraid that the merchants will profiteer and make unreasonable price increases. Actually, there should be no fear of GST. It is not a new concept. In fact, consumption taxes of various forms have been introduced in over 20 countries, some as far back as 15 years. Among our neighbours in East Asia, GST was successfully introduced in South Korea, Taiwan and Indonesia. South Korea implemented VAT in 1977; Taiwan and Indonesia in 1986; and Thailand introduced VAT on 1st January 1992. The other Asian countries - Malaysia and Philippines - have general sales tax on manufactured goods for several years already. In fact, I understand that the introduction of VAT in South Korea and Taiwan has helped to spur export growth in these two countries. Now, let me address briefly the various concerns of businesses and individuals. On impact of businesses, Mr Speaker, Sir, I believe the impact is not serious.”
“Then, the basic question to ask is: Could the Government have reduced corporate and personal income tax rates by 3% without introducing GST of 3% or more? If we were to study in depth the national accounts of the Government, we will notice that Singapore is one of the rare countries that has been enjoying Government budgetary surpluses. In fact, it has been enjoying surpluses since 1968. In 1992, the Government's total revenue is $17 billion, its total expenditure is $12 billion, therefore, giving a surplus of $5 billion or 28.7% of the total revenue. This healthy surplus is achieved after taking into account the Government's expenditure for both operating and development purposes. This is quite remarkable indeed. Few countries can boast of such record achievements. The Minister mentioned in his Budget Statement that the 3% cut in corporate tax will incur a revenue loss of over $300 million and a 3% personal income tax loss is estimated to be close to $500 million. Therefore, the total revenue loss is about $800 million. This is only 16% of the revenue surplus of $5 billion for 1992. The Minister announced that the budget surplus for FY 1993 is only $1.7 billion. This surplus is still higher than the expected $800 million loss in corporate and individual taxes. Hence, my contention is that in view of the healthy budget surplus of the Government, the Government can afford to do the following: (1) It has the capacity to reduce further both corporate and individual taxes in the near term without increasing further the proposed GST rate of 3%. (2) Our financial position is sound and healthy. The people need not fear that after introduction of the GST, the Government is under budgetary pressure to substantially increase the GST rate above 3%.”
“In order to deter the unscrupulous businessmen from profiteering, to protect the interest of the people and to prevent profiteering from affecting the implementation of the GST, it may be necessary for the Government to be ruthless in severely punishing one to deter the others ( ). Mr Speaker, Sir, some clauses in the Goods and Services Tax Bill need to be further deliberated. For example, in clauses 17 and 18, the market values seem to be different. Some values have already included import tax, that is to say, tax upon tax. Other values do not include import taxes. The definition of "international services" in clause 21 and the special method of taxing second-hand goods in clause 23 also need to be further expounded. Clause 39 specifies that the businesses have to keep all the invoices for seven years. Although this data can be stored in the computer, approval of the Inland Revenue Authority is required. Perhaps this condition can be waived or maybe the seven-year period may be shortened. This may be a legal requirement. But I think we should try our best to avoid giving too much burden and trouble to our enterprises and businessmen. These are technical details which may be looked into by the proposed Select Committee on the Bill. Mr Speaker, Sir, I support the Bill. Mr Leong Horn Kee (Thomson GRC)( In Mandarin): Mr Speaker, Sir, I would like to start by addressing the question of whether the Government truly needs to introduce the GST. The Government explains that the basic objective of the GST is to enable the Government to lower the corporate tax rate and personal income tax rate, so as to encourage the spirit of enterprise and maintain an attractive business environment.”
“The most convincing facts are: (1) 74% of our families will not have to pay income tax from next year; and (2), various rebates and tax reductions resulting in the Government losing $1.1 billion in revenue. Second, determination ( ). Once we have decided after careful deliberation, we should adhere to the principle and implement it. Do not hesitate. Since it is announced that GST will be implemented with effect from 1st April next year, we should implement it as scheduled. Similarly, it is announced that GST will remain at 3% for five years. So we should never, never go back on our words. We should be determined and keep our promise so as not to tarnish our reputation. Third, patience ( ). From feedback received, many HDB residents do not really understand the issue of GST and the various rebates that they will be receiving. Perhaps they think that GST will only be implemented sometime next year, perhaps they are too busy with their commitments, maybe they are spending too much time guessing who will be the winner in SBC's "Star Search" programme. Whatever it may be, the Ministers, PAP MPs, trade unions and community leaders should exercise greater patience to explain to the people even further so that they will understand that in the long run, the tax reform will be to their benefit. I suggest the two Ministers - Minister for Finance and Minister for Trade and Industry - should go on television, present a show and explain the issue of GST in order to reach out to the people. Fourthly, ruthlessness ( ).”
“Otherwise, it would give a wrong impression that we only "allow the magistrates to burn down houses while the common people are forbidden even to light up their lamps." ( ). Thirdly, the problem with the implementation of GST is its effect on different sectors and industries. I would like to know, apart from the $30 million to be incurred by Government agencies, what would be the compliance or collection cost incurred by the various enterprises each year. I hope that the Inland Revenue Authority will try its best to simplify the procedure for tax returns and tax refunds and shorten the time taken for the tax refund. On tourism, I agree to the refund of GST to tourists. Conceptually, GST is meant to tax domestic consumption and retained imports. Articles purchased by tourists are meant to be consumed outside Singapore - as though they are exports. Never mind how many tourists may find it too troublesome to claim for refunds, psychologically, we should not create an impression that shopping in Singapore is getting more and more expensive and then you have to pay tax on top of that. This is certainly not conducive to the development of tourism in Singapore. Mr Speaker, Sir, it is my belief that the fundamental principle of governing a country is in taking care of the people and in applying a policy of benevolence. The way of governing is by care, by determination, by patience and, if necessary, by being ruthless. When implementing GST, I suggest we should also proceed likewise. First, care and concern ( ). Looking after people from all walks of life, particularly the lower income families and retirees, and avoid increasing their burden. In this respect, the Government has done its best.”
“In fact, 60% of the participants in our dialogue session supported the exemption of rice from GST, and some others suggested that we should exempt public transportation charges from GST. I personally understand that the compensation method is better than the exemption method because the compensation method offers a greater freedom of choice for the consumers and it does not reduce the comprehensiveness of the GST. However, the Finance Minister should also consider the non-economic factors. On the one hand, you exempt financial services from the GST. Yet, on the other hand, you are taxing the public transportation services and medical services. I am afraid we may have difficulty convincing the people. Secondly, another problem of GST is inflation and profiteering. I agree with the Finance Minister that the GST itself will not lead to inflation. At most, it will cause a once-off price increase. However, I must remind the Finance Minister not to neglect the effect of price expectations which may well lead to inflation. I am confident that the cooperation of the Government, the trade unions, the consumer association and the community organisations in containing profiteering will achieve positive results. However, I do not agree to price control because this is not in line with the operation of market economy and is unable to control the quantity, quality and specifications which go beyond the prices. Furthermore, we have to distinguish between profiteering and price increase brought about by cost increase. In other words, price increase is not necessarily profiteering. In this respect, when Government departments, statutory boards and state-owned companies are to adjust their prices or fees, they must have very good reasons for doing so.”
“Our Government Parliamentary Committee (GPC) supports the introduction of the goods and services tax because we understand that the economic efficiency of the tax reform, ie, from direct taxation to indirect taxation, is aimed at enhancing our international competitiveness. I have been very concerned with the issue of consumption tax since quite some time ago. In May last year, I appointed an economics graduate of the National University of Singapore to be my Legislative Assistant to conduct a study on "Consumption Tax - Theory and Practice". I have submitted the report of the said study to the Ministers in charge and all the members of our GPC. The Feedback Unit conducted a dialogue session on GST on 16th February. Notes of the discusion, together with three submissions, were submitted to the Ministers in charge. On 8th and 9th February this year, when we debated on the Budget Statement, many of my Parliamentary colleagues also presented many valuable views on the proposed GST, with the exception of Mr Chiam See Tong who mixed up the turnover tax with the value-added tax. Summing up all these discussions, I notice that the focus of discussion is not on the rationale and principles of the GST, but rather on its implementation and practice. On implementation, the key issues which we are most concerned with are, first, the impact of the regressiveness of GST on the lower income families. I believe the income tax reduction and the various rebates and subsidies are sufficient to offset the GST burden of these families. One controversy related to this issue is whether essential goods and services, such as rice, foodstuff, public transportation, etc. should be exempted from GST.”
“In serious offences, for example, when a person evades or assists another to evade tax, he is liable on conviction to a penalty of three times the amount of the tax evaded, and a fine not exceeding $10,000 or to imprisonment for a term not exceeding seven years, or to both such fine and imprisonment. In some other offences, the maximum fine is $5,000. The GST Bill, as drafted, is sufficiently flexible to allow subsidiary legislation to be drawn up to modify the detailed operation of the tax where necessary. Over the next few weeks, my Ministry will be circulating the draft regulations. Members of the business community can study these regulations and let my Ministry know if they have any suggestions to modify and improve on them. Mr Speaker, Sir, the GST is a wide ranging tax on consumption of goods and services in Singapore. It is completely new to Singapore. Government will refer the GST Bill to a Parliamentary Select Committee. Members of the public and the business community will be invited to make submissions to the Committee. Government welcomes suggestions to improve the administration and the provisions of the Bill. This process may take up to several months, leading to the Third Reading of the Bill in the last quarter of this year. I hope that through this process we can collectively develop a GST system best suited to the needs and circumstances of Singapore. Sir, I beg to move. Question proposed. 12.58 pm Dr Ow Chin Hock (Leng Kee)( In Mandarin): Mr Speaker, Sir, I support the Bill in the name of the Minister for Finance.”
“General insurance, on the other hand, does not have a savings element and will be taxed as is the case in New Zealand. Clause 29 of the Bill allows the Minister to make regulations for the GST to apply in respect of general insurance services. Following the imposition of GST, the general insurance company will have to charge GST on the full value of its premium. If the insurance company meets a claim by directly replacing the lost or damaged item, it can deduct the tax incurred on the purchase of the replacement item. If it settles the claim in cash, the payment made by the insurance company will have to be increased to compensate the insured party for the GST that it will have to bear when replacing its losses. The insurance company can deduct the VAT supplement which is computed by applying the GST inclusive rate on the value of the claims it pays. This approach ensures that the insurance company is taxed on its value added. If an insured party is a taxable business, it can deduct the GST it has incurred on the insurance premium. If it receives a claim payment, the insured business has to pay an output tax on the claim it receives as though it is making a taxable supply. On the purchase of the replacement item, it can deduct the GST it has incurred on the purchase. On the appeal procedures, the Bill provides for the constitution of a Board of Review to hear appeals on GST. The constitution and proceedings of the GST Board of Review are patterned after the Income Tax Review Board. Finally, the offences and penalties are specified in Part IX of the Bill.”
“Without the provision, an exempt or partially exempt trader could avoid paying GST on his inputs by obtaining services from overseas rather than locally. The reverse charge provision will apply to all services received from abroad except when the same service supplied locally is exempt. With regard to the application of GST to Government, clause 28 provides for Government to charge GST on services it supplies in competition with the private sector. This is to ensure a level playing field. The GST Bill allows special rules to be made for GST to apply to second-hand goods, games of chance and general insurance. In the case of second-hand goods, the prices would have included GST incurred when the items were first bought. In view of this, a special scheme will be provided to allow GST to be charged on the second-hand dealer's margin in the event that the dealer purchases goods from non-registered persons and would therefore not be able to claim the input tax credit. Clause 23 of the Bill allows the Minister to make regulations to provide for this scheme. Where the dealer purchases a second-hand good from another registered person, GST will apply in the normal way. In the case of betting, sweepstakes, lotteries and other games of chance, clause 34 of the Bill enables regulations to be made for GST to be levied on the proceeds after deducting the pay-out. This recognises that the gambler does not explicitly pay a price for the services of the betting agent, but rather as an expected return which is reduced by the services supplied by the agent. Life insurance is difficult to tax as it contains a savings element. Consequently, it will be exempted from GST as is the practice in other VAT administrations.”
“Consequently, zero-rated supplies will be completely relieved of the tax. Export of services is also zero-rated. As services are not physical commodities, the export of services is defined according to certain characteristics such as the recipient, place of performance and location of the property in connection with the service. These services known as "international services" are specified in clause 21 of the Bill. If a supply is exempt from GST, no tax is chargeable on it. At the same time, the supplier cannot claim credit for any tax he has paid on his inputs. The list of exempt supplies is specified in the Fourth Schedule. It is confined to specified financial services, and sale and lease of properties approved exclusively for residential use. The list of exempt financial services was prepared without the benefit of consultation with the financial community. In view of the complexity and the range of financial services available, the list will be reviewed following submissions to the Select Committee. Clause 24 of the Bill allows the Minister to grant by order relief from GST. This provision enables Government to exempt from GST, imports by diplomats, foreign armed forces, regional or international organisations where this is required under the respective international or bilateral agreements as well as personal effects and normal duty-free entitlements of bona-fide travellers. I have said earlier that goods imported to Singapore will be subject to GST. In the case of services which are imported, clause 14 of the Bill requires the business, which is receiving the service from an overseas provider, to charge itself GST as if it had provided the service. This "reverse charge" provision is to prevent unfair competition from the overseas supplier.”
“There has been some concern that as GST is collected at every stage of the production and distribution chain, the consumer will end up paying GST at more than 3%. I would like to assure Members that this will not happen. This is because the taxable person can deduct the GST he pays on his inputs from the GST he collects on his outputs. The balance has to be paid to the Comptroller within 30 days after the end of every three month accounting period. This is provided for under clause 19 of the Bill. If in any period, the input tax exceeds the output tax, he can claim a refund from the Comptroller. An exporter, for instance, could constantly be in a refund position. To enable exporters to have quicker refunds, the Comptroller will allow a shorter accounting period of one month. There will also be a scheme to allow approved exporters a waiver of the GST on imports. Members will be pleased to know that the Bill requires the Comptroller to pay interest on late refunds. Details on the interest rate and the period beyond which interest is payable will be specified in the regulations. In the case of a taxable person who makes both taxable and exempt supplies, clause 20 of the Bill provides that he can only deduct the GST he has paid on inputs used in making the taxable supplies. In the case of common overhead resources, the clause also provides for the Minister to make regulations to prescribe the method of apportioning the input tax to be paid to the taxable supplies. As GST taxes only consumption within the country, goods exported from Singapore will be zero-rated. This means that the exporter does not collect GST on his outputs but is able to claim a refund from the Comptroller for the GST he has paid on his inputs.”
“GST will be charged on any supply of goods or services made in Singapore by a taxable person in the course or furtherance of business, except where the supply is exempt; and on goods imported into Singapore by any person. This is provided for under clauses 7 and 8 of the Bill. A taxable person is anyone who makes or intends to make taxable supplies of turnover above $1 million per year. These persons are required to register with the Comptroller. Those whose annual turnover is below $1 million may apply to be registered provided they are prepared to remain taxable for a minimum period of two years. Such persons are usually those whose customers are businesses which require tax invoices to claim deduction of any GST that is incurred in the business purchases. Detailed provisions relating to registration are specified in the First Schedule. I have earlier announced that the GST will be at the rate of 3%. This is specified in clause 16 of the Bill. The tax is charged on the value of the goods or services supplied. Clause 17 provides that if the supply is for a consideration, the taxable value is the amount of money excluding GST which the customer has to pay. If the consideration does not consist wholly of money, the taxable value is the open market value. This is the value the supply is likely to fetch in the open market. As GST is intended to be a tax on the final transaction price, the taxable value will include customs duties and other indirect taxes levied on the supply. In the case of imports, clause 18 provides that GST shall be payable on the value used for customs purpose, excluding local handling charge, but inclusive of customs duty. Special rules on valuation are specified in the Third Schedule.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Goods and Services Tax Bill, as its name suggests, provides for the imposition and collection of the goods and services tax (GST). Government's proposal to introduce the GST as part of the tax restructuring to shift reliance from taxation on income to consumption has been explained in the White Paper on the GST. GST is introduced to enable us to lower our corporate and personal income taxes to promote enterprise and growth, and to make Singapore a more competitive place for doing business. It is not about raising more revenue. The proof of this is in the package of tax reductions, rebates and subsidies that I have announced in the Budget Statement to offset the GST. These measures will ensure that practically all households would not be worse off after the tax. Members of this House have debated on this package. Allow me now to explain to the House the main features and provisions of the GST Bill. The GST Bill is modelled after the United Kingdom Value Added Tax Act, with modifications based on the New Zealand legislation. The Bill follows the UK legislation in specifying in Schedules various aspects of the tax, eg, liability for registration, details on valuation and the list of exempt supplies. It, however, excludes provisions peculiar to the United Kingdom and the European Community which would complicate our GST system. More importantly, the Bill confines exemption to only the sale and lease of residential properties and specific financial services which are difficult to tax. In the case of zero-rating, it will apply only to exports of goods and services. I will now turn to the main provisions of the Bill. First, the scope of the tax.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. ADJOURNMENT”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to make provision in accordance with Clause 2 of Article 148 and Clause 2 of Article 148(C) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 1992. The additional sums have been presented as Supplementary Estimates which have been considered and approved by the House as Command Paper No. 4 and Command Paper No. 6 of 1993. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. SUPPLEMENTARY SUPPLY BILL Order for Second and Third Readings read.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In accordance with Article 148 of the Constitution, heads of expenditure to be met from the Consolidated Fund and Development Fund, other than statutory expenditure, have to be included in a Bill to be known as the Supply Bill. The purpose of the Supply Bill before Members is therefore to give legislative approval for the appropriations from the Consolidated Fund and Development Fund to meet expenditure in the financial year 1st April, 1993 to 31st March, 1994. The heads of expenditure and the sums that may be incurred in respect of each head are shown in the schedule to the Bill. These have been approved by the House in the Main and Development Estimates of Expenditure for the financial year 1st April, 1993 to 31st March, 1994, and appear on pages 41 and 42 of Command Paper No. 5 of 1993. The Supply Bill, when approved, will empower me to issue warrants, authorizing expenditure up to the amount for each head as shown in the Bill to be paid out from the Consolidated Fund and the Development Fund. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. First Resolution reported - "That the sum of $10,262,911,110 shall be supplied to the Government under the heads of expenditure for the public services shown in the Main Estimates of expenditure for the financial year 1st April, 1993 to 31st March, 1994, contained in Paper Cmd. 5 of 1993." Second Resolution reported - "That the sum of $8,458,263,400 shall be supplied to the Government under the heads of expenditure for the public services shown in the Development Estimates for the financial year 1st April, 1993 to 31st March, 1994, contained in Paper Cmd. 5 of 1993." Dr Richard Hu Tsu Tau: Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." Question put, and agreed to. Resolutions accordingly agreed to. SUPPLY BILL Order for Second and Third Readings read.”
“Sir, the Primary Production Department (PPD) has a comprehensive food safety programme which helps to ensure that locally produced as well as imported farm products for sale in Singapore are safe for consumption. In particular, the PPD firstly accredits overseas and local farms, abattoirs and food processing factories. It also inspects imported farm products at the point of entry, and it does extensive laboratory testing of all foods. These measures ensure that farm products sold here are drug and pesticide residue free and are, therefore, safe for consumption. The comprehensive safeguards in place make it unnecessary, we believe, to introduce compulsory labelling of farm products. Labelling of food products is controlled by the Environment Ministry. Labelling has to be selective. Otherwise the cost to producers and consumers of essential food items may be too high. The Environment Ministry requires labelling for dressed poultry to indicate the date and place of slaughter. Labelling to indicate the expiry date is also required for key food items which have a relatively long shelf life. However, as mentioned earlier, compulsory labelling of farm produce is not necessary because of the PPD's comprehensive food safety programme. Assoc. Prof. Low Seow Chay: I thank the Minister for his reply. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“Sir, the PWD has two main criteria for providing sheltered or covered walkways. First, the shelter must link two covered areas. Secondly, pedestrian volume must exceed 1,200 pedestrians per hour during the peak hours. In response to the MP's request during the 1992 Budget debate, the PWD has reviewed these criteria. The PWD is now prepared to construct covered walkways at certain sites provided the pedestrian volume there during the peak hours is at least 1,000. In particular, if one end of the walkway leads to a MRT station or bus interchange, PWD will construct the shelter for the walkway even though the peak hour pedestrian count is only 1,000. The MP has previously requested that the pedestrian bridge across Yishun Avenue 2, near Khatib MRT Station, be covered. A recent traffic survey by the PWD shows that the peak volume is about 1,030 per hour. As pedestrian count now exceeds the revised minimum level, PWD will provide a shelter for the pedestrian bridge. On the question of whether provision will be made for covered linkways within the estate, if the CCC or Town Council wishes to extend the shelter from the bridge to the nearest block, it will have to make its own arrangements. If the walkway is located on the road reserve, PWD will fund the construction of the shelter. However, if the shelter is on land managed by a Town Council, the CCC can make an application to the CIPC Committee for 75% funding. The CIPC is also prepared to consider funding in full construction of that portion of the shelter which is outside the road reserve and not on Town Council's managed land.”
“We receive feedback and when timely and where such changes are necessary, they will be introduced. He has asked whether there may be a review of rules and regulations for the use of industrial land because of the changing nature of manufacture, new products, new systems. Indeed, we do recognise this. Therefore, we have started Science Parks. We are in the process of developing Financial Parks for companies which wish to conduct their backroom computer operations outside the city area. There are specific areas designated for aerospace industries and such like developments, petrochemicals, and so forth. So it is in recognition that the nature of industries is changing quite rapidly that we need to be flexible in providing for the use of industrial land. On the question of allowing integrated developments, I think this is a more complex issue and we are looking at it, but, certainly, it is not something which we will not consider. Finally, he has asked whether the Ministry could produce a guide book on the new initiatives. I think that is a good idea. We have, in the past, been issuing regularly guide books on, for example, conservation areas, and so forth. And we will certainly put together new issues for the guidance of the developers and for the public at large.”
“The Ministry's strategy in this area is to provide a steady supply of land for property development and to announce the three-year rolling sale of site programme in advance so that everybody, including property developers and home buyers, are aware of the potential supply for the private sector. Since 1991, URA and HDB have been releasing land for landed property development. Some 490 units of landed property are being built on the land released in 1991/92. I have said earlier that from 1993 to 1995, my Ministry would be releasing enough land to build 1,000 units of landed property each year. My Ministry will make a review at the end of this year to see whether changes might be necessary. If the situation requires it, we are prepared to release more land for landed property development. We hope that through the planned release of more land to increase the supply of landed properties, prices of landed properties will remain affordable and more people will be able to own such properties if they wish. Dr Low has asked whether more strict rules might be applied to permanent residents in the purchase of landed property because of the strong demand for landed property. I would tell him that landed properties are controlled under the Residential Properties Act and only citizens of Singapore are allowed to buy them without specific permission. Finally, Mr Robert Chua has asked whether the Government would periodically review the regulations and rules for the development of properties. I can assure him this takes place all the time and, in fact, there is a continuing dialogue with property developers, architects, and other members of the construction industry to ensure that the system does not get out of date.”
“Some 490 units of landed properties will be built on land released by the URA and HDB in 1991 and 1992. In 1993, land will be released for the development of 1,070 units. Another 2,300 units are expected to be built on land to be released in 1994 and 1995. Thereafter, the rate of supply would be about 1,000 units of landed properties a year. Marina South is prime land, part of which is intended for the future down town core. The planning intention is therefore to have high density housing to optimise the use of land. This will allow more housing units to be built to give more people a chance to live next to the city. I think it is not practical or economically sensible to have landed properties to be located in Marina South. The land at Bukit Turf Club has an area of approximately 135 hectares. It will be used predominantly for landed properties. Supporting facilities such as neighbourhood centres, civic and community institutions and sports and recreation will also be developed. Dr Low Seow Chay has asked about the release of land for private development. He is concerned about prices of such properties getting out of control. I would point out that property prices are determined by market forces of supply and demand. Like commercial properties, property prices would vary with the health of the economy. Landed property prices, for example, fell during the recessionary years in 1985 and 1986. But they have since recovered and increased substantially over the last two or three years, mainly because of the good performance of the economy. 4.30 pm It is not feasible for the Government to regulate the market to prevent the fluctuation of prices in landed properties or in any other type of property.”
“Where there is a glut of commercial space, this will be reflected in the supply. One should note that the supply of commercial space for sales sites will only be realised some five to seven years after the launch of sale. So there is a very long lag gestation period. The Government does not intervene to regulate the commercial property market. How the market fares depends on a host of factors affecting the demand for and supply of commercial space. For example, it would depend on the strength of the economy, the investment decisions of property developers and investors. The Government's basic strategy is therefore to adopt a steady supply policy which will not exacerbate the peaks and troughs of the market. At the same time, Government tries to provide comprehensive and timely information on the existing stock and potential supply of properties to assist interested parties to make their decisions on property investments. In the end, it has to be left to the market to decide what they wish to build and how quickly, based on the supply of land which Government makes available. If there is a glut, then the market should reflect this in the lack of interest in the land purchases. On private housing, the Government also releases land each year for the development of about 3,000 dwelling units. The strategy is to release enough land to underpin the long term demand, therefore, keeping prices affordable. Since 1991, URA and HDB have been releasing land for the development of landed properties. Government will release more land for the development of landed property to meet the demand for such types of property. In this way, prices of landed properties should remain affordable and more people will be able to own such properties.”
“But for the present, we are not going to impose restrictions because it is necessary to ensure that public land is sold at the best possible price. It will be difficult to impose restrictive covenance on the sales terms. However, we will monitor the situation. If, in fact, all future land sales of this type are monopolised by one or two companies, then we may want to re-consider. Finally, on the question of completion time. There will be a 48-month time imposed on the completion of construction after the contracts are awarded. This is to ensure that the development as a whole gets completed at about the same time. Otherwise, you might have units left empty and development would be very untidy. Dr Wong Kwei Cheong raised questions on the sale of land for commercial and residential developments. On the question of sale of commercial space, the Government will release land this year for the development of about 105,000 square metres of net commercial space. This level of release is expected to be maintained over the next two years. The Ministry of National Development has a three year rolling plan reviewed annually, taking into consideration the long term trends of supply and demand for commercial space. The actual amount released each year will be announced in an updated three year rolling plan made public yearly. The supply of commercial space to be completed over the next three years can be gauged from the number of projects in the pipeline. URA has estimated that this supply in the pipeline could be about 1.59 million square metres. The Government land sales programme is targeted at meeting the long term demand, taking into account the existing stock and the potential supply in the pipeline.”