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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“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 Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In accordance with Article 145 of the Constitution of Singapore, heads of expenditure to be met from the Consolidated Fund other than statutory expenditure have to be included in a Bill to be known as the Supply Bill. The purpose of the Bill before Members is therefore to give legislative approval to the appropriations from the Consolidated Fund to meet expenditure in the financial year 1st April, 1988 to 31st March, 1989. The heads of expenditure and the sum 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 Estimates of Expenditure for the financial year 1st April, 1988 to 31st March, 1989, and appear on page 49 of Command Paper No. 5 of 1988. 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. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Mr Deputy 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.”
“Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. First Resolution reported - "That the sum of $5,901,816,690 shall be supplied to the Government under the heads of expenditure for the public services shown in the Main Estimates for the financial year 1st April, 1988 to 31st March, 1989, contained in Paper Cmd. 5 of 1988." Second Resolution reported - "That the sum of $6,505,997,700 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, 1988 to 31st March, 1989, contained in Paper Cmd. 5 of 1988."”
“The answers are given in attached Tables I and II. Table I SEX DISTRIBUTION OF GOVERNMENT OFFICERS 1975 1985 1987 Particulars Number of % against Number of % against Number of % against Officers Sub-Total Officers Sub-Total Officers Sub-Total Division I Males 2,865 64.89 5,523 52.97 5,813 50.84 Females 1,550 35.11 4,904 47.03 5,620 49.16 Sub-Total 4,415 100.00 10,427 100.00 11,433 100.00 Division II Males 7,995 45.58 8,412 36.87 8,130 35.96 Females 9,547 54.42 14,401 63.13 14,481 64.04 Sub-Total 17,542 100.00 22,813 100.00 22,611 100.00 Division III Males 9,327 46.00 11,304 50.91 11,080 50.84 Females 10,950 54.00 10,898 49.09 10,714 49.16 Sub-Total 20,277 100.00 22,202 100.00 21,794 100.00 Division IV Males 12,084 73.05 7,581 53.43 7,328 53.66 Females 4,459 26.95 6,607 46.57 6,328 46.34 Sub-Total 16,543 100.00 14,188 100.00 13,656 100.00 Total for Males 32,271 54.90 32,820 47.13 32,351 46.55 Total for Females 26,506 45.10 36,810 52.87 37,143 53.45 Total for the year 58,777 100.00 69,630 100.00 69,494 100.00 Table II NUMBER OF FEMALE TEACHERS AND NURSES 1975 1985 1987 Particulars Number of % against Number of % against Number of % against Officers Total (a) Officers Total (a) Officers Total (a) Division I (a) Total No of Officers 4,415 10,427 11,433 (Male & Female) (b) Female Teachers 838 18.98 3,684 35.33 4,353 38.07 (c) Female Nurses 22 0.50 52 0.50 48 0.42 Division II (a) Total No of Officers 17,542 22,813 22,611 (Male & Female) (b) Female Teachers 6,784 38.67 9,620 42.17 9,442 41.76 (c) Female Nurses 1,751 9.98 3,021 13.24 3,128 13.83”
“My Ministry has urged employers and unions to discuss the raising of the retirement age during negotiations for renewal of collective agreements. The reduced CPF contribution rate for those above 55 years old will also provide some incentive for companies to do so. We will monitor closely the effect of these measures. If progress is slow, we may have to think of other measures. The services of the Employment Service Department are open to all unemployed persons, including retirees and married women. There is, in my opinion, no need to set up a special unit just to help this group. As I have explained earlier, the more critical need is for employers to devise attractive schemes to meet the needs of housewives and retirees and to raise the retirement age.”
“The attractiveness of part-time work to married women highlights the nature of this particular problem - how to make it easier for married women to reconcile their home and work responsibilities. The Government has played an active part in this respect. For example, it has promoted and subsidized the establishment of child care centres, making it cheaper and more convenient for women to leave their children at these centres while they are at work. Employers in the private sector have to play their part. They need to step up their own efforts to attract and retain married women in the workforce by taking account of their needs. Those who are able to offer attractive employment and work arrangements including part-time work will be more successful than others. It is important, however, for us to look at the entry of married women into the workforce in perspective. Over the years, because of better education and job opportunities, more of them have entered the workforce. The proportion of married women who are economically active increased from 22% in 1974 to 36% in 1987. This trend is expected to continue in the future. For retirees, I announced last year our intention to reduce CPF contributions to those above 55 years old. This should provide some incentive for employers to recruit retirees. However, the more critical need is to ensure that our workers do not have to retire at an age when they are still physically and mentally able to work. Today, many of our companies retire their workers at age 55. This is too young an age for our population to stop working as many can expect to live for another 20 years or more. The Government has therefore called for the retirement age to be raised to 60 years.”
“Mr Speaker, Sir, to date, Singapore Pools has appointed 150 agents, of which 147 are already operating and three will commence business next month. The 150 agents are spread over 61 constituencies. Generally, agents are located close to previous Toto booths or in HDB town centres or shopping centres. Agents are not appointed on the basis that each constituency should have at least one agent. The total gross sales for Singapore Pools in 1987 was $432 million and the net surplus after expenditure on prizes, betting duties, commission, etc, accruing to Singapore Pools was $32 million. WOMEN AND RETIREES (Rejoining workforce) 8. Mr Yeo Toon Chia asked the Minister for Labour, in view of the tight labour market, what plans his Ministry has to encourage more married women and medically fit retirees to rejoin the work force and whether it is necessary to set up a unit in the Employment Service Department to help this group of people to return to work. The Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, my Ministry has identified part-time work as one of the key areas to promote if we want more married women to rejoin the workforce. In a survey conducted in June 1987, 45% of the 19,800 housewives who would be looking for work said they would do so only if part-time work was available. My Ministry is presently studying what other measures are needed to encourage more employers to provide part-time work. This may include changes to the Employment Act to make it more flexible for employers and job seekers to agree on appropriate terms and conditions of part-time employment, whilst providing basic protection to the workers.”
“Sir, I agree with the Member that the civil service has since 1st July 1956 raised the compulsory retirement age of its employees appointed after 1st July 1956 to 60 years. In February 1982 the Ministry of Finance informed all statutory boards to similarly raise compulsory retirement age of their employees to 60 years. In the case of serving employees whose retirement age could not be changed under their terms of employment, the Boards were encouraged to liberally re-employ such officers beyond their current retirement age. As of now, almost the entire public service has raised the retirement age to 60. There are a few Boards which remain slow in following suit and these include the Telecoms and, I believe, the NTI and NUS, in the case of academic staff. Hence there is almost general uniformity in retirement age for all public sector employees except for the residual few. In the case of the three statutory boards, my Ministry will continue to urge them to fully extend the retirement age of all their employees to 60 years in order to be in line with the rest of the public service. In this, the Member's request has my full support. I would urge the Ministry responsible for the statutory boards to also lend their weight to this request. As regards PUB, it has in fact raised the retirement age of those of its employees who have been appointed after 1st May 1982 to 60 years. For employees appointed before this date, the PUB has been very liberal in extending their services or re-employing them up to the age of 60.”
“This substantial resource savings can now be redeployed by the Ministries to undertake new functions and to handle increased workloads in line with the zero growth manpower policy. The intangible benefits are enormous and numerous. Computerization has enabled the Ministries to offer new services and to upgrade the level of existing services to the public. This has resulted in shorter waiting time, faster turn around and more convenience in dealing with Government Ministries and departments. It has also enabled the civil service to contain its manpower increases as it now able to handle more work with the same level of staffing.”
“Sir, I agree with the Member for Ang Mo Kio that it is cost-effective for the NCB to handle a full range of data processing services on behalf of Ministries. This has, in fact, been the practice ever since the NCB was established in 1981. Apart from the NCB being the adviser to the Government on computerization matters, the NCB also manages the implementation of the civil service computerization programme. In particular, the NCB provides professional manpower required for each Ministry's computer information system. I can assure the Member however that there is no duplication between the work of the NCB headquarters and each Ministry's CISD. Each CISD is responsible only for the day to day running of the Ministry' computer centres and for the development and maintenance of computer application systems. NCB itself is responsible for ensurig that the CISDs have the right type and number of professional staff and that computer systems and applications are compatible across Ministries and there is no duplication of systems. NCB has also initiated the development of common systems which are used by all departments in the civil service. Examples of such common systems are the central personnel information system and the financial administration control system which are being developed for use throughout the civil service. In the latest cost benefit analysis review conducted by the NCB on the CSCP, the preliminary results show that tangible benefits alone have more than covered the cost of the computerization programme. Computerization has resulted in total manpower savings of 1,300 posts and manpower avoidance of an additional 1,900 posts.”
“Sir, the Civil Service Telephone Network was implemented in 1984 to achieve two main objectives. The principal objective was to replace obsolete manual and electro-mechanical telephone exchanges with up-to-date electronic exchanges which provide features such as direct inward dialling, automatic call back, call queuing, conferencing, etc. These new features and facilities have helped speed up communications and also improve staff productivity. A secondary objective was to link selected Ministries and departments in the network so that telephone operators could be pooled together to save manpower. All incoming public calls are now routed to the main exchange at the Treasury Building where there is a central attendant service serviced by 26 telephone operators. This central service has resulted in a more than 50% reduction in telephone operator posts. Prior to 1983, Ministries and departments operated a total of 121 stand-alone telephone exchanges which had to be adequately staffed. Telecoms, in fact, is the technical adviser for the project and has been very actively involved in the conceptualization, planning and implementation. The total system can be treated as a single inhouse system for the Government as a whole. Telecoms engineers provide technical support on the system operation and upgrading, and coordinate requests for additional telephone lines and system expansion. They also monitor network traffic and system performance, and provide maintenance services. The Telecoms, in fact, work very closely hand in hand with the Government service in this respect. The day to day running of the central attendant service including the provision of telephone operators is however the responsibility of the Government.”
“And thus they might be better placed than private sector consultants to come up with practical and cost - effective recommendations. They would also be better placed to assist Ministries in implementing recommendations arising from reviews. Moreover, in certain sensitive or security - related areas, it would not be advisable to use private sector consultants. However, their limitations are also recognized. Finally, I am satisfied that the returns from reviews conducted by the MSD far exceed the cost involved. For this financial year, savings arising from MSD's recommendations are estimated to be more than $280 million as compared with operating costs incurred of something like $2 million.”
“Sir, as a matter of principle, the Government would like to use a combination of both private sector and inhouse management consultants. From time to time, the Government has used services of management consultants and they are engaged either because they have special areas of expertise or because they are required to supplement the work of the Management Services Department of the Ministry. For example, over the last two years, private sector consultants have reviewed manpower utilization in the Police Force, the Customs and Excise Department and several selected statutory boards including the Singapore Broadcasting Corporation and the Jurong Town Corporation. Our experience with these consultants has generally been satisfactory and the Ministry will continue to use them to supplement the inhouse expertise available within the Ministry. However, I consider it important that Government develops and maintains a strong inhouse management service capability, both in the central Management Services Department and also in planning and review units in major Ministries. As I mentioned in my Budget Statement, each Ministry will be subject to a comprehensive zero base review by the Management Services Department at least once every five years. To achieve this target, MSD's staff strength will be increased over the next few years. In between each zero base review, Ministries will have to review selected programmes and operations to ensure that objectives are achieved and that there is efficient use of funds and manpower. The MSD will assist Ministries in building up such an inhouse review capability. The advantage of using MSD and their counterparts in the Ministries would be their familiarity with Government objectives, policies and operations.”
“Sir, I do not propose to go into a detailed rebuttal of the Member's excellent exposition in requesting medical benefits for female officers. Some of the arguments have been dealt with at length in the past and I agree that probably the most cogent reason for so far not agreeing to this proposal is financial. I shall not repeat some of what the Member has already said in quoting my earlier statements, but merely to say that at the time of the review in 1985 the economic situation weighed against any move which might be interpreted as setting a trend, leading to additional cost. The Finance Ministry had therefore decided not to consider the matter at that time. Although the situation has improved since then, there are, as you know and as I mentioned in my earlier Budget speech, indications of a possible slowdown. We must therefore continue to monitor our cost competitiveness carefully. However, the Ministry of Finance will revive the question of extending medical benefits to children of female officers this year and I can give her the assurance that the review would be completed by this year. And I have some sympathy for her views. Meanwhile, I should like to point out that medical benefits are, in fact, already granted to children of a female officer if they are solely dependent on her as in the case of a widow, divorcee or a woman who has been granted a decree of judicial separation. In other cases where the female officer is the sole breadwinner, the Government has also granted medical benefits on compassionate grounds. Such cases will continue to be sympathetically considered.”
“Sir, I think it is rather unfair of the Member to malign the Ministry of the Environment without their ability to respond. However, I take note of his recommendation that the private local industry should be given priority. They are, in fact, used quite extensively and foreign consultants are only used from time to time.”
“I would also like to stress that when public buildings are erected in high-value locations owned by Government in the business district, the design and finish of the buildings should reflect the value of the sites. This will ensure that unoccupied space can be rented out at commercial rates and that the capital values of the properties will appreciate with time. Only in such circumstances will the properties realize their full commercial values should Government decide to sell the properties at a future date. Finally, I have to say that it would be shortsighted to erect on choice locations low-cost but inefficient buildings not designed for a modern computerized office environment. Such buildings will get out of date very quickly, prove difficult to rent out, or require extensive re-modelling. The MND Building is one such example. Although constructed less than 20 years ago, it now has to be extensively re-modelled at substantial cost to meet current requirements. Overall, I would want to assure the Member that it is unlikely that expenditure on public buildings will lead Government into a secular decline. I would, however, urge all Ministries to keep his admonitions in mind.”
“For example, the Ministry of Community Development and its departments are now housed in a building purchased from the Singapore Labour Foundation. Similarly, the Ministry of Labour and its departments which are now spread over a number of different locations will soon be centralized in Havelock Centre which has been purchased from the URA. The Headquarters and many departments of the Ministry of Finance, Trade and Industry, Law and Foreign Affairs have also been relocated and are in rented premises in the Treasury Building. The Ministry of the Environment has, however, been put up in a new government building as there were no buildings available for rent or purchase with sufficient space to accommodate all its departments. The Member for Whampoa has expressed concern that Government departments might be spending excessively and unnecessarily in furnishing their new premises. I would like to assure the Member that this is not so. Norms for space allocation, furnishing and common facilities have been worked out by the Budget Division of my Ministry in consultation with the Public Works Department, and these have to be complied with by all Government departments moving to new premises. These norms are comparable to private sector organization norms and will need to be maintained even under the new budgetting rules. Furnishings are obtained and procured through open and competitive tender process which shows that quality furnishing is obtained at the lowest possible cost. The norms are generally not out of line of comparable buildings in the private sector, although the range of furnishings available to the private sector covers a much wider range of quality.”
“Sir, I find it difficult to respond to such eloquent language. However, I will try to do so. Before I go into answering some of the more direct questions, I would like to clarify the rationale for relocating Government departments in new premises. As you know, many Government offices were housed in old low-rise buildings which do not make effective use of scarce and expensive land. It therefore makes economic sense to relocate such offices into new premises so that the sites they had previously occupied can be redeveloped to their full potential. In relocating, the opportunity can also be taken to centralize services in one building. This will bring about greater efficiency and better service to the public. Because of lack of space in existing low-rise buildings, departments of many Ministries were dispersed over a number of different locations. Centralizing these departments in one building will not only reduce administrative overheads and facilitate supervision by the Ministry concerned but, more importantly, improve the level of service to the public as related services can be obtained under one roof. In new premises, it will also be easier to introduce labour-saving devices and productivity improvement measures such as telelift and office automation systems. Retro-fitting old buildings to facilitate mechanization and computerization is generally a much more costly alternative. When it is necessary to relocate, priority is first given to making use of space available in other Government buildings. Where this is not possible, office space could be rented or purchased from the private sector. Only after these alternatives have been explored and found infeasible, will approval be given for the construction of a new Government building.”
“Ministries and statutory boards have indicated that poor performance by contractors in the past and difficulties in ensuring consistent quality of service have contributed to the low usage of contract services. The Ministry of Finance is of the view that with proper specification of service levels and contract terms, these problems can be overcome. The scope of contracting out can also be extended to cover areas such as maintenance and repair of vehicles and vessels, printing, graphic design and laboratory services. The extent of contracting out will continue to increase as it is the Government's policy to rely to the fullest possible extent on the competitive private enterprise to supply its need for goods and services.”
“The total proceeds from Government's privatization programme and capital gains accruing to the holding companies were $1,126 million and $885 million respectively. Future plans. Over the longer-term, Government plans to divest its share in the bulk of Government listed enterprises, as we stated earlier and as recommended by the Private Sector Privatization Report. However, because the stock market has weakened substantially in recent months, this has slowed down the divestment process somewhat because our preference is still to divest through the stock market and we now need to assess the acceptability of new issues into the market before we resume our programme. Farming out. Regarding the question of farming out, the Government's policy is to encourage ministries and statutory boards to contract out all activities which can be performed more cost-effectively by the private sector. A survey by the Auditor-General's Office in 1987 found that ministries and statutory boards as a whole contracted out some $370 million. This works out to some 4% of total public sector operating expenditure. The bulk of the expenditure were in three major groups, namely, general cleaning and maintenance, repairs and maintenance, recruitment and security services. These services have been contracted out by most departments and statutory boards for many years. Contracting out, however, is increasing in many other areas. Notable examples are the closure of the Ministry of Health's pharmaceutical factory and the switch to purchase of pharmaceuticals from the open market and the contracting out of catering services at the Kandang Kerbau Hospital, old age homes and by the SAF. The extent of contracting out is not as large as it could be. This is recognized.”
“Sir, on privatization, first. The Government commenced its divestment programme in late 1985 and has to-date divested its stake in 22 companies. Of the 22 companies, 13 are fully divested while another nine companies were partially privatized, with the Government's average stake in these companies reduced from over 70% to less than 45%. Partial privatization or new listings. This is to increase the breadth and depth of the local stock market. Priority was given to the flotation of companies into the stock market. SIA was the first candidate to go public with an offer of 100 million shares to the public. In the favourable condition of the stock market in 1986 and up to October 1987, another six companies were also listed. These companies were Singapore National Printers, Resource Development Corporation, Sembawang Maritime, Jurong Shipyard, Singmarine Industries and DBS Land. Generally, the policy was to tend to favour the local small investor in the balloting of shares put up for public listing. The Government also further reduced its shareholdings in Singapore Airlines, Neptune Orient Lines and Sembawang Shipyard. In the case of SIA, from 63% to 55% holdings; NOL from 62% to 52%; and Sembawang Shipyard from 74% to 64%. The Government has also completely divested its stake in some 13 companies. These companies are neither strategic nor substantial and they included Cerebos, UIC, Chemical Industries and others. In the case of some of the bigger listed Government companies like DBS and Keppel, further privatization has also resulted from the dilution of Government's stake through conversion of bonds into new shares by other shareholders.”
“The manpower reviews completed have not only helped Ministries improve their efficiency but have also enhanced their effectiveness and service to the public as well. Manpower surpluses identified in certain areas have been rechannelled to other higher priority areas and the Budget Division maintains a comprehensive register of indices for various activities which are used for the purpose of checking expenditure requirements by individual ministries and public bodies. I have the figures available but because of time constraints, I do not want to read out the specific figures on breakdown of manpower savings by Division of public servants. I will make them available to the Member separately.”
“Sir, in my 1986 Budget Statement I announced Government's intention to reduce manpower usage in the public sector. Following the announcement, a programme of inhouse manpower scrutinies was instituted. At the same time, reviews of selected departments were also conducted by the Management Services Department of my Ministry, the Auditor-General's Office and management consultants from the private sector. By the end of 1987, a total of 56 inhouse scrutinies covering selected programmes in seven Ministries had been initiated. For scrutinies which have been completed, savings of 440 posts or about 6% of the total manpower reviewed have been identified. In the case of inhouse scrutinies by the statutory boards, savings identified totalled 1,738 posts. As for reviews by external consultants, a total of 2,374 posts have been identified. This amounts to more than 10% of the total manpower reviewed. In all, the reviews by external consultants have covered some 16,700 employees or 14% of the total public sector employment. I should like to assure the Member that all reviews have been and will be conducted in an objective and professional manner. The reviews involve comprehensive studies of whether particular tasks need to be carried out at all and, if so, how they can be performed more efficiently. There are no pre-determined targets for staff reductions by divisions or by grade of appointment. In a number of reviews, proportionally more officers in lower grades have been affected than those in higher grades, but this is not surprising as the opportunities for mechanization and computerization are greatest where the work is routine or repetitive. In conclusion, I would like to assure the House that manpower reductions will not be at the expense of quality of public service.”
“I should point out, however, that international bank lending is very short term, commonly with maturities ranging from overnight to no more than three months, so that banks have a great deal more flexibility to tailor their inter-bank lendings to their perceptions of risk. Finally, I have to say that there can be no iron-clad guarantee of safety in any financial system. In Singapore we have in place a legislation which ensures that banks and other financial institutions operate within conservative prudential requirements. The MAS oversees the provisions of these institutions through a regular programme of inspections and deviations from prudential requirements and practices have to be rectified promptly. With risks heightened as a result of internationalization, financial institutions and their supervisors will simply have to be much more vigilant.”
“It was severely tested during the October stock market crash and its spill-over effects into the futures market. But it came through with its viability enhanced. I will now touch on two specific questions raised by the Member for Whampoa. He says that published data in the Economic Survey of Singapore (1987) shows that the capital to asset ratio of banks in Singapore was 7.4% and whether this was sufficient in today's circumstances. The data in the Economic Survey refers to the total domestic Singapore dollar banking unit or system and includes the operations of the 22 foreign banks with full banking licences and another 14 banks with restricted local banking licences which allowed them to accept Singapore dollar deposits from Singapore residents. Because the local branches of foreign banks are the same legal entities as their respective head offices, they are not separately capitalized in Singapore but are required to maintain notional capital in the form of net head office funds. Legally, the entire capital of the parent banks can be called upon to support the local branches' requirements. Without the foreign banks the capital to asset ratios of local banks is over 13%. The Member was also concerned that local banks were now more exposed to international banking problems because of the internationalization of the banking system and the widespread practice of inter-bank transactions. It is indeed true that exposure to international risks is now much higher even for banks not directly exposed to bad international debts because of the inter-bank linkages.”
“The legislation and the regulations prescribe new financial requirements for stockbroking companies to ensure greater prudence in their operations. Besides minimum capital and marginal requirements, limits were also placed on exposure to single clients and to single securities. The breadth and depth of the stockbroking industry was also enhanced by allowing financial institutions and corporations to obtain stockbroking licences or take equity in existing firms. Reputable foreign institutions were allowed to hold up to 49% of equity in these companies. There are now 24 member-companies in the SES. With these changes and with the recovery in the stock market in 1986/87 the financial condition of the 24 stockbroking companies has greatly improved. In aggregate, their adjusted net capital has increased almost ten-fold, from only $39 million at the end of 1986 to $377 million at the end of last year. Earnings were $170 million in 1987 compared to a loss of $15 million in 1986. The stockbroking industry is now well placed to withstand unforeseen external shocks. Despite the severe plunge in local share prices in October last year which was triggered off by a collapse in Wall Street, our stockbroking industry emerged unscathed. The Futures industry in Singapore. Currently, 60 companies are licensed by the MAS under the Futures Trading Act to trade as futures brokers. They operate as members of Simex and the majority are affiliated to major financial institutions such as banks or merchant banks. The industry was profitable in 1987 with a return on capital averaging 14%. The prudential requirements in operations of the industry are carefully monitored by the MAS. Although it has a relatively short history, Simex has proved to be resilient and financially sound.”
“Sir, I will resume where I stopped at the Moment of Interruption yesterday, International Foreign Banks. Internationally, most foreign banks have over the past two years increased their capital bases. Many with substantial exposures to problem LDC and domestic debts have been able to build up substantial provisions for loan losses. They are therefore in a better position today than they were two years ago. Although a number of foreign banks were affected by domestic Singapore problem loans, adequate provisions have been made through arrangements with their parent banks. Overall, foreign banks in Singapore are profitable. On an aggregate basis, their profits in 1986 were some 17% higher than in 1985. Comparable data for 1987 are not yet available. Finance companies. There are 31 finance companies in Singapore, 15 of which are controlled by banks, 16 independent. The bank-backed companies accounted for 57% of deposits and 52% of total loans in the industry. The financial condition of the industry is sound. The companies have a liquidity ratio of 14.6%, well above the legal requirement of 10%. Their capital adequacy ratio is over 15%, much higher than even for the banks. With the recovery in the economy and the property market, the quality of their assets has also improved and the industry's 1987 pretax profits of $113 million was over 200% higher than the figure for 1986. Stockbroking industry. The stockbroking industry was completely restructured in 1986 following the failure of a number of stockbroking companies in the aftermath of the Pan Electric collapse. New legislation was introduced in August 1986 in the form of Securities Industry Act 1986 and the Securities Industry Regulation 1986.”
“Mr Deputy Speaker, Sir, I beg to report that the Com- mittee of Supply has made further progress on the Main and Development Estimates for the financial year 1988/89, and ask leave to sit again tomorrow.”
“Although only 22 foreign banks hold full banking licences, all 123 of them are allowed to operate in the domestic Singapore Dollar system, and they account for some 40% or the sum amount involving S$49 billion of the domestic banking system's non-bank deposits and 58% or equivalent of $22 billion of Singapore dollar loans. They handle well over 90% of the offshore ACU market which has an asset size, as I mentioned earlier, exceeding US$200 billion. As the foreign banks' operations in Singapore account for less than 10% of the global operation of the parent banks, the financial soundness of these banks is more appropriately and more accurately assessed on a consolidated basis at the Head Office of parent bank level. Because the foreign banks' parent companies operate outside Singapore's jurisdiction, control of quality can only be exercised by setting high admission requirements. The MAS has strict entry criteria for foreign banks that wish to establish branches or merchant banks in Singapore. Among the factors considered are financial soundness, international ranking and ability to contribute to develop Singapore as a financial centre. All the applicants must be properly supervised in their home countries and the Home Supervisory Authority's views are sought on the banks' financial condition and quality of manage- ment. The entry criteria applied so far have ensured that no foreign banks which were allowed to open branches in Singapore or merchant banks have collapsed with loss of depositor funds. However, two large foreign banks with branches in Singapore did encounter financial difficulties at the parent company level but they were rescued by their governments.”
“The best testimony to the soundness of the local banking sector is that there is no record of a local banking failing in Singapore's banking history. Over the years, however, a number of mergers and acquisitions have taken place, with the stronger banks absorbing or taking over the weaker institutions. At the present time, there are 13 banks owned and controlled by Singaporeans. They have total assets of some S$51 billion as at the end of 1987. All these banks meet the 26% liquidity ratio required by law; and as a group they have capital/asset ratios exceeding 13% which is substantially higher than the 6% ratio common to banks in the United States. They are also all profitable. The quality of the local banks loan books is satisfactory with adequate provision of loan-loss reserves. There is negligible exposure to the problem of LDC debt overseas and adequate provision has been made for the little that exists. The October stock market crash had no significant effect on the local banks, as they practised conservative investment policies. Overall, I am satisfied with the health of our local banks. Secondly, foreign banks. Foreign banks in Singapore operate either as branches or merchant bank subsidiaries of the parent banks. Currently, there are 123 foreign bank branches and 64 merchant bank subsidiaries operating in Singapore. The majority of the foreign banks in Singapore operate Asian Currency Units, 116 of them, within the offshore banking system which deals in currencies other than the Singapore Dollar. The size of the ACU market currently exceeds US$200 billion.”
“Sir, the Member for Whampoa has asked questions concerning the financial stability of Singapore's financial system and what steps can be taken to ensure that the system stays together in the event of an international crisis. Because this subject is of importance, I intend to respond at some length, as it may be of interest not only to the Member but also to the public at large. As a general statement, I can say that I am satisfied that the financial system in Singapore at the present time is fundamentally sound. The important components of the financial system which I will touch on include local banks, the branches or subsidiaries of foreign banks, finance companies and securities companies trading on the Stock Exchange of Singapore and the Singapore International Monetary Exchange. I will not deal with insurance companies as they are not deposit-taking entities nor with the Post Office Savings Bank as it is a Government institution. But before doing so, I will describe briefly the supervisory system we have in Singapore which controls the financial system. The Monetary Authority of Singapore is the body responsible for the supervision and control of all financial institutions in Singapore. Its powers are exercised through a number of investor protection acts or laws, all of which were introduced or amended within the last five years to take into account the many recent changes in financial practices and the inter-linking of financial institutions worldwide. These include the Banking Act, the Monetary Authority of Singapore Act, the Finance Companies Act, the Securities Industry Act and the Futures Trading Act. I will now describe briefly the main components of our financial system. Firstly, local banks.”
“I am confident that if we continue to work together as a team, we will do just as well, if not better, in the years ahead. [Applause.] Question put, and agreed to. Resolved, That Parliament approves the financial policy of the Government for the financial year 1st April, 1988 to 31st March, 1989. ADJOURNMENT Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Fifteen Minutes to One o'clock pm. Committee of Supply - MAIN AND DEVELOPMENT ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1988 TO 31ST MARCH, 1989 (Cols. 777 - 782)”
“May I suggest that it is he who is engaging in blatant electioneering. I have something to say regarding the Member for Potong Pasir's statements on the but will not flog the issue again as the Minister for Labour has already dealt with it. The Member says that the reduction in development expenditure for education is inconsistent with Government's excellence in education objectives. He seems to have forgotten that a massive school rebuilding programme is nearing completion and that the Ministry will have other programmes in its pipeline. I believe that this and other related education issues will be dealt with by the Minister for Education. Finally, I would strongly support the call by the Member for Cairnhill for more Singapore investments in Johore. In our quest for overseas markets, we should not overlook our immediate neighbour Johore where there are excellent opportunities for investment. I would also support the Member for Jurong's call for Singaporeans to learn Malay as this will help us in our dealings with our neighbours. Conclusion. Mr Deputy Speaker, Sir, we have done well in 1987 in achieving a broad based growth of 8.8%. However, against an international environment of increasing protectionism and an expected slowdown in economic growth in the next six months, we must be ever alert and willing to adapt. Government's philosophy has centred on flexibility, cost competitiveness and a trim and efficient public sector. We have also taken steps to upgrade our labour force, help local businesses and promote the service and financial sectors. Our economy has demonstrated resilience in recovering from the recession. Our people have proven their mettle and their willingness to adapt.”
“It is only the rates for 1989 that are under review and this will be done in the second half of this year in conjunction with an overall review of our property tax structure to ascertain whether our existing rates are competitive with property tax structures in other countries, particularly those with whom we compete with in export markets. Some Members have voiced concern that the decision to defer a review of the SDF levy and CPF rates, until after the first quarter economic results are known, will make businessmen 'nervous'. Whilst Members' anxiety over this matter is understandable, I wish also to assure the House that Government will take a prudent approach and not make hasty decisions. The availability of an uncommitted reserve fund of $300 million will also provide assurance that immediate or near-term changes are not contemplated. Members have also touched on other issues such as child care centres, wage reform, measures to help the poor and land use policies. These will be more appropriately dealt with by the respective Ministries in the Committee of Supply. I now turn to the statement by the Member for Potong Pasir that he does not support the budget. That he does not support the budget is no surprise as it seems de rigueur for the Opposition to oppose anything and everything put up by Government. What surprises me is the convoluted logic underlying his opposition. He says that the budget is no good because it is an election budget, for apart from the increase in tobacco duties, it hardly touches the man-in-the-street. I am amazed at this statement. Is he suggesting that he is disappointed because taxes were not increased? I would suggest that he reads the Budget document carefully as he will see that an essentially balanced budget is forecast for FY 88.”
“Statutory boards, while part of the public sector, are distinct accounting entities and transactions between them and Government must be reflected in the Budget. Legal constraints aside, my Ministry is looking into the feasibility of including relevant information on statutory boards in the Budget document. There are, however, a number of technical issues to be resolved including differences in accounting periods and classification conventions. The Estimates Committee of Parliament has been briefed on the progress in this exercise. I would also point out that we have introduced in this year's Budget for the first time the concept of a primary surplus or deficit into Government's accounts. This is the Budget position before debt servicing and is a critical measure of the health of the budget. A continuing deficit in the 'primary' balance will lead to structural budget deficits requiring tax changes. Members will note that we have always had primary surpluses and that there is a forecast primary surplus of $719 million for FY 88. Foreign Worker Levy. As Minister for Labour has already spoken at length on this subject, I will confine myself to saying that the levy was not introduced for revenue reasons. Property tax, CPF rates and SDF levy. The Member for Punggol has suggested that the property tax rebate be maintained until the economy has fully recovered. I wish to assure the House that the 50% rebate on property tax is effective until 31st December 1988.”
“Several Members have touched on the question of statutory charges and their impact on Singapore's competitiveness. In particular, the Member for Geylang Serai has spoken of the need to exercise caution when statutory boards' fees and charges are revised. I agree with him. Indeed, as I have said earlier, we are monitoring our cost competitiveness very closely. Our policy is not to burden the private sector with excessive statutory costs. Any revision in the statutory board's fees and charges which have a significant impact on the population and business are cleared with my Ministry. Adjustments to such fees and charges, where necessary, are implemented with caution to ensure that our international competitiveness is not eroded. Public sector accounts. The Member for Jalan Kayu commented that the inclusion of certain intra-public sector financial transactions in the budget gave a misleading picture of the Government's financial position. He cited in particular the purchase by Government of the URA and JTC landbanks and the payment of interest on domestic borrowings. The Member is of the view that as such outlays involve transactions between Government and statutory boards, they are not true expenditures but more in the nature of intra-public sector transfers. He has also suggested that statutory board accounts should be consolidated with those of Government and the overall public sector position reflected in the budget. I do not agree with the Member's views. Existing legislation requires that all transactions involving the Consolidated and Development funds be reflected in the budget. Moreover, the Budget has to be prepared from the perspective of Government as an accounting entity.”
“At the same time it can be noted that net contributions to CPF have also fallen substantially over the last few years, from $2.6 billion in 1985 to some $150 million in 1987. This is a result of reduced CPF rates as well as increase in withdrawals. Duty on cigarettes. The Members for Leng Kee and Telok Blangah have commented that the present rate of duty on cigarettes is not sufficiently high to discourage smoking and should be raised substantially. Customs' records show that the annual consumption of cigarettes and tobacco products has fallen over the last few years, from 6.6 million kilograms in 1982 to 4.8 million kilograms last year. Experience has also shown that a gradual and continuing increase in duties is more effective in countering the rise in smuggling, usually associated with large duty increases of easily smuggled goods. Statutory and government charges. Charges for interdepartment services. The Member for Bo Wen has asked if the introduction of charges for services rendered between Government departments might result in a steep rise in fees, especially in the areas of health, education and public housing. I should like to assure the Member that this would not be the case. The objective of inter-departmental charging is to make Ministries more cost conscious and curb excessive demand on services by user departments. This should result in economies and help keep down costs of services to the public. It should also be noted that the charges for services in areas such as public housing, health and education are heavily subsidized and are not based solely on costs. Indeed, the fees charged for these services will also take into account affordability and other social considerations. Statutory charges.”
“To resolve these problems, the Government has begun negotiating a comprehensive tax treaty with the United States. Public sector savings and current account surpluses. The Member for Whampoa commented if would not be appropriate in view of the current surpluses achieved in 1986 and 1987, to place a dampener on our savings rate. It is important to remember that our high savings rate has over the years stood us in good stead, as it has allowed us to maintain an extraordinarily high rate of investment without having to resort to borrowings. This has led to higher income growth and subsequently higher living standards. With the exception of 1986 and 1987, investments in Singapore have always exceeded savings, resulting in a persistent current account deficit. The current account surpluses achieved in 1986 and 1987 are small, amounting to less than 3% of GDP. These current account surpluses have largely arisen from a sharp but temporary downturn in investments in the construction sector, downturn, resulting in reduced imports of raw materials and labour for construction work. I do not think we can conclude from the experience of these two years that we have reached the stage of a permanent or structural surplus in the current account. On the question of public sector savings depriving the private sector of funds, I would think it is hardly the case judging from the fact that interest rates in 1986 and 1987 were lower than any time in the 1980s. Public sector savings have been used to finance public infrastructure, and as shown in Table 5.1 of the Annual Economic Survey, if debt service is excluded, the primary balance of the public sector only registered a small surplus of some $800 million in 1987.”
“Some Members have expressed concern over the tax uncertainty for unit trusts and investment holding companies. The proposal to allow unit trusts and investment holding companies the choice of having their profits taxed according to the prescribed holding period is to remove tax uncertainty. This is to promote a more vibrant domestic fund management industry. The proposed scheme will allow fund managers to choose the tax system best suited to their operating style and thereby provide them with greater flexibility. I believe the concerns have come mainly from unit trust managers who consider the profits from funds which they manage as not liable to tax because of their current mode of operations. Such unit trusts would obviously be better off if they elect to remain with the existing system of taxation. But they should recognize that there will always be an element of uncertainty in their tax liability, especially if they should choose to change their mode of operations significantly. Unit trusts which intend to manage their stocks and shares actively and want certainty in their tax liabilities can elect to choose the new system of taxation in which the tax rate varies with holding time. At this juncture I would like to deal with other points raised by Members. First, I would like to thank the Member for Whampoa for his suggestion to conduct cost benefit appraisals of past tax incentives. My Ministry will certainly take note of this. The Member for Fengshan spoke about the impact of the 1986 US Tax Reform Act on the shipping industry. The Government is aware of the adverse consequences imposed by the US Tax Reforms on the shipping industry. The Member should also take note that other industries are equally badly affected, if not worse.”
“The The existing scheme whereby losses incurred from the sale of shares in approved technology projects can be set off totally against an investor's other taxable income, is in my view, sufficient. The concession is designed so as to provide a buffer for those investors who had invested in risky projects overseas from losing all their capital should the project turn sour. Companies will invest overseas even if such incentives are not available so long as a project is viable. Double deduction for overseas promotion. The Member for Jalan Kayu has suggested granting some form of double deduction for local manufacturers who incur expenses in the overseas promotion of their products. The Member would be happy to know that double deduction is allowed for expenses incurred by a manufacturer or trader in respect of approved trade fairs, exhibitions and trade missions aimed at promoting Singapore manufactured exports. Likewise, export market development expenditure which is principally for promoting Singapore manufactured exports is allowed double deduction. Deductibility of overseas business expense. The Member for Potong Pasir has maintained that overseas business expenses are not automatically deductible and that IRD requires proof that contracts are secured before a deduction is allowed. I would like to inform the Member that documentary proof of contract is not a prerequisite as he mentioned. Rather, deduction is allowed automatically if two basic conditions can be satisfied: (a) that the expenses are incurred solely and directly for the production of income which is subject to Singapore tax; and (b) that the expenses are revenue in nature and not capital. Unit trusts and investment holding companies.”
“This pertains largely to the extent of benefits they generate for Singapore. I would like to assure the Member for Punggol that the EDB will, in consultation with my Ministry and the Ministry of Trade and Industry, consider granting pioneer status to the agrotechnology sector if it is necessary and if the benefits to Singapore is substantial. Incentive to encourage overseas investment. The Member for Kaki Bukit has raised the issue of more Singaporeans having to work overseas as part of the move to encourage local companies to invest overseas. Government has encouraged investment overseas as it recognizes that there is a limit to the extent of new activities which our small economy can absorb. Incentives have therefore been geared to actively encourage overseas investment which would result in the transfer of technologies to Singapore, increased overseas marketing channels for Singapore products and services, and the expansion of activities and extension of the scope of operationsof local companies. At the initial stages of our drive to encourage overseas investments, the need for Singaporeans to work overseas is not an overriding concern. The objective I have just mentioned can be achieved without large numbers of Singaporeans having to live and work abroad. In many cases, com- panies overseas also find it more advantageous to employ locals. Venture capital incentive scheme. To better encourage overseas investments, the Member for Jalan Kayu has also suggested that the venture capital incentive scheme be modified to allow tax deductions at the point of investment rather than after the loss, as is presently the case. I do not think this is necessary.”
“In comparison, most other countries, including Hong Kong, depreciate their capital equipment over long periods. (b) Various incentive schemes which make certain sectors very competitive taxwise. For example, the 10-year pioneer exemption for manufacturing and service industries; tax exemption for shipping profits, the 10% ACU tax for banks; and the tax exemption schemes for syndication and fund management activities. In all these areas, Singapore offers tax advantages which Hong Kong does not. (c) A wide network of 25 double taxation conventions which confer certain in-built tax advantages to promote trade, investment and technology flows. Hong Kong has no tax treaties. We must be careful that we do not lower our rates so much that we run the danger of being labelled a tax haven with its attendant pitfalls. In summary then, it would appear that our present income tax structure is sufficiently competitive. The situation will, however, continue to be monitored. The low tax rate in Singapore in itself should not be overriding concern. It is equally important to ensure that other elements of business costs are kept at competitive levels. Corporate tax issues. Members have made various suggestions on the use of corporate tax incentives to promotes specific objectives. Incentives to promote agrotechnology. Specifically, the Member for Potong Pasir suggested granting incentives to promote the agrotechnology industry. In my Budget speech, I extend the industrial building allowance and double deduction of R & D expenses to the agrotechnology industry. This is in line with our policy to develop the service sector. The agrotechnology sector is also eligible for pioneer incentive provided they satisfy EDB's guidelines.”
“To begin with, I would like to thank the Member for Potong Pasir who has kindly enlightened this House that Hong Kong had reduced their corporate and personal tax rates by a percentage point or around 6-7% and that we should be mindful of what Hong Kong is doing. I would in turn remind him that he seems to have forgotten that our corporate and personal tax rates were cut by 7 percentage points or around 7% i 1986. Our tax cuts since 1985/86 have injected something like S$3 billion into the economy compared to the HK$2.7 billion, he claims, for Hong Kong. In making this comparison, the Member should perhaps be reminded of the fact that Hong Kong's fiscal objectives and economic fundamentals are quite different from ours. Hong Kong registered an inflation rate of 5.5% in 1987 in comparison with our rather low and stable 0.5% for 1987. The per capita indigenous GNP for the two countries are of the same order. There is therefore no pressing need for us to make adjustments against inflation. Our personal tax system is well positioned against that of Hong Kong's. As I have mentioned in my Budget speech, a large number of individuals earning assessable incomes of up to S$150,000 pay less taxes than their counterparts in Hong Kong. I would like to inform the Member for Potong Pasir that Singapore corporate competitiveness vis-a-vis the other NICs, including Hong Kong, are carefully monitored continuously. Our effective corporate tax rates are lower than Hong Kong in many instances because of the following: (a) Generous depreciation allowances of one to three years which reduce a company's taxable profits. Additionally, investment allowances of up to 50% may also be granted on a selective basis.”
“But before I go into these matters, I would like to make a general statement on the Government's past and present fiscal policies. During the early stages of Singapore's economic development, Government's fiscal policy was designed to yield consistent budget surpluses in order to fund a large and continuing programme of infrastructural development expenditures and to build up a reservoir of foreign reserves. All this has been accomplished and we have accumulated a very comfortable level of reserves. And the fruits of the development programme can be seen all around you. That all this has been achieved in less than 30 years in a small over-populated country devoid of natural resources is a permanent tribute to the people of Singapore, its Government and to prudent past Ministers for Finance. Today, our priority in fiscal policy needed no longer be the generation of budget surpluses, although we will continue to do so in good years. We can now luxuriate in looking forward to balance budgets. Our concern now is to ensure that the hard-earned reserves are not frittered away but are preserved as a permanent reservoir, only to be drawn on to tide us over temporary economic reversals due to factors outside our control. It is against this background that Government's tax policy for the future should be viewed. Where revenues and expenditure are in balance, there should be no need for tax changes except when tax cuts in one area not offset by expenditure reductions or revenue gains elsewhere will require compensatory increases in other area, or where measures are introduced to achieve specific social purposes (eg tobacco tax). I will now turn to the specific issues raised: Tax competitiveness.”
“Mr Deputy Speaker, Sir, the Budget debate this year has taken less time than in previous years largely because there are no significant tax changes available to excite the imagination and rhetoric of Members. Although fire and brimstone was generally absent, nonetheless a large number of issues have been raised, many of which can be better dealt with by the relevant Ministries during the debate on the Recurrent and Development Expenditure Estimates. This morning, I will therefore confine myself to responding on issues in seven main areas. But before doing so, I would like to thank all the Members who have, with one exception, generally supported the Budget proposal. Some have even been effusive in their commendations, for which I thank them. However, I believe that much of this commendation should be directed at the permanent staff of my Ministry who have laboured long and hard to formulate and recommend much of the policy and structural changes you have seen over the past several years. I refer, in particular, to the officers in the divisions responsible for the Budget, Public Service and Revenue. The quality of their work is such that the public can be assured that the management of Singapore's finances is in good hands. In this connection, I have often thought that Japanese system in which Civil Service officers are obliged to respond to questions in Parliment on behalf of Ministers may be worth adopting! Mr Deputy Speaker, Sir, the issues I will touch on are tax competitiveness, corporate tax issues, public sector savings and current account surpluses, duty on cigarettes, statutory and Government charges, public sector accounts, property tax, CPF rates and SDF levy.”
“On Monday, 14th March, 1988, Sir. Mr Deputy Speaker: So be it. ADJOURNMENT Resolved, "That Parliament do now adjourn to Monday, 14th March, 1988." - [Mr Wong Kan Seng]. Adjourned accordingly at Forty- two minutes past Four o'clock pm to Monday, 14th March, 1988 Appendix I - TAX TREATMENT OF UNIT TRUSTS AND INVESTMENT HOLDING COMPANIES (Cols. 647 - 648) Appendix II - DUTIES ON CIGARETTES AND TOBACCO (Cols. 649 - 650)”
“In the short term, we will continue to rely on a pool of foreign workers for the fluctuating labour requirements. The Government will constantly monitor its tax package and statutory charges to ensure that the private sector remains competitive internationally. At the same time, the public sector will also play its part by reducing its utilisation of national resources as well as enhancing its productivity. Second, we are actively promoting our service sector in the light of increasing competition and protectionism in export markets for manufactured goods. The EDB has already embarked on a substantial programme to develop the service sector whilst the TDB has also stepped up its efforts to promote the export of services. In addition, the Government has also introduced several tax incentives in this Budget to assist service industries. In conclusion, Mr Deputy Speaker, Sir, I would like to reiterate the fact that the Government will do its utmost in responding to the uncertainties in the economic situation for the coming year. The recent recession has given both our leaders and our people useful experience in overcoming future setbacks. We have proven that we are willing to adapt to changing circumstances and that we can work together as a cohesive people. At the same time, we have not lost sight of our long term goal of becoming a developed nation by the 1990s. I am confident that, with the support of our people, our vision will turn into reality. Mr Deputy Speaker, Sir, I beg to move.”
“In the last three months, manufacturing companies have been recruiting about 2,500 foreign workers each month. The Government has therefore decided to increase the levy for foreign workers from $140 to $170 per month with effect from 1st April 1988. The levies for foreign construction workers and domestic servants will, however, remain unchanged at $200 and $120 per month respectively. The increase in levy will not affect Singaporean workers and permanent residents. Those foreign workers recruited before 1st April 1987 and who are on the CPF scheme will also not be affected unless they change jobs. As the foreign workers affected by these levy changes constitute less than 3% of the total workforce in Singapore, the impact of the levy increase on our economy should be minimal. The Government will continue to monitor the demand for foreign workers vis-a-vis the economic situation. As a pricing mechanism, the levy will be adjusted according to the demand for foreign workers or to changes in economic conditions. If the demand continues to rise rapidly, the levy will have to be further increased. CONCLUSION Mr Deputy Speaker, Sir, much as I would like to end this Budget Speech on a cheerful note, I feel compelled to remind ourselves of the reality of an expected slowdown in the economy in the later half of the year and the distinct possibility of an increase in trade protectionism. While these outcomes may be beyond our control, the Government has taken definite steps to face the uncertainties. First, we have rightly focused on our competitiveness. Over the long term, we are upgrading our workforce by investing more in training as well as advocating a system of flexible wage payments.”
“From the same date, the quotas on imported airconditioners will also be lifted. Duty on Cigarettes The present import and excise duties on cigarettes are $70 per kilogram and $34 per kilogram respectively. As part of the continuing national effort to discourage smoking, I have decided to increase the import duty on cigarettes by $5 per kilogram to $75 per kilogram. The excise duty on cigarettes will also be increased by $2 per kilogram to $36 per kilogram. With your permission, Sir, may I table Appendix II (Cols. 649 - 650) showing the details of the increases. These increases will take effect from today. The yield in revenue is estimated at $12 million. Appendix II - DUTIES ON CIGARETTES AND TOBACCO (Cols. 649 - 650) OTHER TAX CHANGES Property Tax The present 50% rebate on property tax is due to expire on 31st December 1988. Because the outlook for the economy next year is uncertain, property tax rates for 1989 will be reviewed during the second half of this year. Suspension of Taxes on Public Utilities and Telephone Services The 10% tax on electricity and gas was suspended for the period 1st November, 1985 to 31st March 1988. The 20% tax on domestic telephone services and trunk call services to West Malaysia was suspended since 1st April 1985. I have decided that these taxes be further suspended until 31st March 1989. Foreign Workers Levy In the last Budget Statement, I announced that the Government had decided to allow a controlled revolving pool of foreign workers on short-term work permits to remain beyond 1992 in the manufacturing, hotel and construction sectors and as domestic servants. The demand for foreign workers has been increasing rapidly. More than half of the 48,000 jobs created in the manufacturing sector last year were filled by foreign workers.”