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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“Mr Deputy 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 145 and Clause 2 of Article 147 of the Constitution of Singapore for additional expenditure in excess of the provision authorized by the Supply Act, 1986. The additional sum has been scheduled as a Supplementary Main Estimates which has been considered and approved by the House as Command Paper No. 3 of 1987. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“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 Supply 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, 1987 to 31st March, 1988. 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 Estimates of Expenditure for the financial year 1st April, 1987 to 31st March, 1988, and appear on page 27 of Command Paper No. 5 of 1987. 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”
“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 - Question, "That the sum of $7,207,276,580 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, 1987 to 31st March, 1988, contained in Paper Cmd. 5 of 1987." Second Resolution reported - Question, "That the sum of $12,738,179,400 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, 1987 to 31st March, 1988, contained in Paper Cmd. 5 of 1987."”
“On balance, therefore, the recommendation was made that this scheme should be withdrawn. Since this general policy decision was made, it was decided that it would be anomalous if certain departments which had carried out these procedures in the past would remain different. So in the interest of uniformity, the general ruling was sent out that even those departments which had previously practised this scheme should now cease this practice. I recognize, however, that this has created some degree of unhappiness and the Ministry of Finance is prepared to consider an appeal against this if it can be shown that the retention of this system by particular departments will not lower, firstly, productivity and will not create undue disruption of work and therefore be a detriment to public services.”
“Sometime ago, the Public Services Division of the Finance Ministry sought the views of all Permanent Secretaries on the proposal to introduce an alternate 5-day week system throughout the civil service. The majority of the Permanent Secretaries felt that the introduction of such a system would not be feasible in certain departments. However, a number of departments were allowed to carry out trials. Subsequently, the Management Services Department of the Ministry of Finance was asked to do a review of the whole exercise. Their conclusion was that the implementation of an alternate 5-day week system carried with it a certain risk of deterioration of public services because of the undermanning of offices on Saturdays. The risk will be particularly high for those departments which have a large interface with the public. The study also indicated that service-wide implementation will not be possible because of different work requirements and other considerations particular for individual departments or work units. The Management Services Report was considered by the Permanent Secretaries and there was no consensus on the desirability of this scheme. Some Permanent Secretaries felt that departments which had dealings with the public should consider opening during the evenings with staff starting later in the morning. Their main concern was however that a change in working hours should not affect the productivity of the department as a whole. There was also concern that since Singapore was facing a severe economic downturn, it would seem inopportune to reduce the average work week or even introduce a modification in the form of alternate 5-day week although the total numbers are not changed.”
“Mr Chairman, Sir, the Member for Pasir Panjang has raised two issues. First, on the upgrading opportunities for lower level staff including the daily-rated. At the present time, upgrading opportunities are available to staff of these two categories. But the limitation is to a certain extent restricted by the availability of positions within the organization in which they can be promoted. At the junior staff level, courses are available under the basic education programme or BEST programme. Under this programme, officers including daily-rated employees can be sponsored for studies up to the GCE 'N' level and the course fees are borne by Government. From March 1987, the Civil Service Institute will also be implementing a new training programme called Core Skills for Effectiveness and Change (COSEC). The programme is aimed at providing junior officers with a set of core skills to help them adapt to changes and to increasing work demands. The CSI intends to train about 2,650 participants per module per year. These two courses are subsidized by the Skills Development Fund. In addition to the above, individual Ministries can also send their staff to courses conducted at the Civil Service Institute or local organizations like the Vocational Institute and Training Board, the training institutions of the Economic Development Board, National Youth Leadership Training Institute and the National Productivity Board. The Member for Pasir Panjang can rest assured that Government will do all it can to upgrade the staff in this level and try to find adequate redeployment opportunities. His second question is on the issue of the 5 1/2-day week. I am aware that this is a contentious issue. I think some background may be useful.”
“The Member for Thomson said that I did not reply to his question during the budget debate. I also intend to avoid answering his question now, because financial incentives, its timing and other alternative measures are parts of a wider policy to stimulate procreation. So in consultation with my colleague, the Acting Minister for Health, we have agreed that he will respond.”
“I do not think we can be rigid in every case. I think statutory boards use a combination of both. In principle, statutory boards should avoid increasing their tariffs in order to get surpluses for investment purposes. They should strike a balance between the public purpose of keeping their charges as low as possible and the need to finance part of their development requirements through tariff with the balance coming from borrowings. I think the PUB is a good example of a statutory board which has struck a very reasonable balance. It borrows from the World Bank and from other multi-lateral institutions for their development needs. I do not think there is a single solution. But we would try and encourage statutory boards to recognize, by the nature of their activity, to try and keep their tariffs down. Telecoms is an example of a statutory board which has steadily brought its tariffs down. They have been persuaded to do so because of international competition, but their inter- nal telephone and telecommunication rates have also been brought down in order to support the development of Singapore as a communications centre. So they do exercise their judgment.”
“Sir, in 1985 and 1986 Government had, as part of its policy of stimulating the economy, accelerated and brought forward a large number of public sector infrastructural development projects. I think the total numbered about 220 with an aggregate value of about $4 billion. The Member should realize that these funds will have to be spent over a period of time. By the nature of these infrastructural projects, some of them have fairly long gestation periods. So it is difficult to ensure that the sums allocated each year will all be spent, but the intention is there. The second part of the Member's question was whether local Singaporean companies had benefited from these infrastructural projects. I think the answer on a general basis must be yes. The Ministry of National Development and other Ministries have been careful in allocating funds primarily to projects which have the highest possible local content. We could easily spend vast sums of money simply by importing equipment and show a financial flow. It looks good but that is not the intention. This is one of the reasons why some of the expenditures have been slower than we would have liked. We want to ensure that money spent on stimulating the economy will be of long-term value to the economy. I believe, as far as local contractors are concerned, between 80% and 90% of the projects were successfully won by local contractors for the period up to the middle of 1986.”
“We have never had a significant balance of payments surplus with the United States except until 1985/1986 and the amount of surplus is relatively small compared to the enormous figures run up by the Koreans and the Taiwanese. Secondly, we have no import controls whatsoever. We have no tariff barriers to dismantle. These are the essential differences between ourselves and Taiwan and Korea. I believe that the US Government is aware of these differences and although they tend to include us in generalized statements about the NICs I think we merit separate treatment.”
“I thank the Member for Whampoa for raising the subject of exchange rates which I had overlooked. What the Member for Whampoa says is true in general terms - that the exchange rate is now not always determined by real economy but by financial flows. This is absolutely true with countries like the United States which has a large international non-domestic holdings of their financial assets. The US has billions of dollars held by foreigners. So the movement of foreigners in and out of their financial markets can produce swings which totally overwhelm real economic developments. But this is not possible in the case of Singapore because we have always discouraged the use of the Singapore dollar as an international currency. That is why we have resisted this in the past. There are no substantial Singapore dollar denominated financial assets floating around the world. Therefore, large financial flows of this type which tend to negate real economic developments are not possible in Singapore. Large movements in financial flows in the case of Singapore are essentially speculative. And it is this which the MAS will resist. I think that answers his question about the need to impose additional capital constraints. I do not think we want to do that because in an open economy like ours, where we are inviting foreign investments, constraints on capital movements would be a retrograde step. The Member has asked how we have responded to pressure from the United States about our currency being too weak and being lumped together with the other NIC's like Taiwan and Korea. We have spoken to the relevant authority in the United States and explained our circumstances. I think our situation is quite different and we cannot be compared with Korea or Taiwan.”
“In the case of the two companies where he has said that there was an unfair distribution - RDC and SNP - I think the first point to note is that both these share issues were very small and, because they were very small, they were grossly oversubscribed. In a situation like that, it is rather difficult to make a distribution of shares which will satisfy everyone. We could issue small lots of one hundred shares, but I think that these odd lots will be very difficult to sell subsequently. Therefore, I am not sure it is such a good thing. In the case of RDC, CPF holders were allowed to use their funds because RDC is a trustee stock, and therefore, falls within the CPF usage guidelines. SNP is not a trustee stock, therefore it is disallowed. That was the reason. However, having made that general statement, I will take the Member's comments into consideraton and will commend to Temasek that the Member's views should be duly recognized in any future diversification flotations. The Member for Kampong Kembangan asked whether the Venture Capital Incentive Scheme has been successful. We do not know, which is a good thing because the scheme is only applicable when ventures fail and the investor needs to write it off against their other profits. The fact that we have not heard anything is probably a good sign. I think that covers all the points.”
“The Member for Ayer Rajah has asked whether adequate funds will be available for the new schools which my colleague, the Minister for Education, has indicated would be needed. I can assure the Member that I am fully in favour of expenditure for education and where the Ministry of Education can put together a good case, funds will be made available. The amount is very substantial - $750 million for 150 to 200 schools or thereabouts but phased over a 10-year period. We can afford it and if it is necessary we will spend it. The Member for Jalan Kayu has raised some of his usual questions which I will attempt to answer. He has said that generally the Government's policy on divestment does not seem to favour the small investor in Singapore or Singapore citizens and tends to favour the foreigner. That is not true. It may appear so on the surface but I will explain why. In the floating of shares, like the large capitalization shares of SIA, a certain proportion has to be reserved for foreign institutions as the nature of SIA's business is international. Therefore, it is important that foreign investors do have a stake in it as they will then tend, I hope, to support the airline. And equally important, they are price establishers. In other words, their participation in the flotation would tend to support the price which is good for the Singaporean who has the other shares. It would be wrong to make the categoric statement that all shares should always be initially offered only to Singaporeans with the residue distributed internationally because I do not think that necessarily is in the interest of the Singapore investor. Each case will have to be looked at on its merits.”
“A number of statutory boards, like the MRT, have their foreign exchange requirements entirely managed by the MAS. The PUB also works with the MAS on foreign exchange transactions. Some statutory boards prefer to do it themselves but so far as I am aware they have not got themselves into serious difficulties. The MAS is always available to give advice. The Member for Boon Lay has raised the question of consumption tax. He has suggested that no new taxes should be introduced during a period of wage restraint. This is agreed to by Government. That is why we have not introduced any new taxes in this budget. I would make a general statement now because there seems to be a great deal of misunderstanding over the intent of Government as far as consumption taxes are concerned. There seems to be a belief that the tax will be imposed on top of taxes we already have. For some perverse reason, Government is thought likely to do this. I have said that consumption taxes will only be introduced if it proves necessary and when we are convinced that there will be a permanent budget deficit direct taxes have been reduced to a level where revenue does not cover recurrent and other essential expenditures. To do otherwise would be silly, I thought. Also, if we should decide to introduce consumption tax, I can give the assurance that it will not be introduced in a way which will unfairly increase the burden on particular sectors, particularly the lower-income groups. Sufficient offsets will be found to ensure that the present distribution of tax is not unfairly shifted. I cannot give any specific assurances other than the general statement that whatever we do we will take into account the regressive effects.”
“I emphasize the word "gradual" for a number of reasons. First, too rapid a privatization process will create indigestion in the stock market and will withdraw too much liquidity from the market leading to a depression of the economy. We certainly do not intend to do that. Secondly, perhaps of equal if not of greater importance, is the need to ensure an orderly transfer of management control so that companies which are divested do not collapse because of over-rapid removal of supporting management. By and large, therefore, we would prefer the route of partial privatization or privatization in stages to allow sufficient time for the transition to take place gradually. The GLCs, by and large, are run by full-time employees of the companies and I can see that when these are fully privatized the staff will simply be part of the new companies under private management. The Member has also asked what is the money going to be used for. Government has many uses for money. It could go into the Consolidated Fund to avoid the possibility of increasing taxes elsewhere! It could be used as seed money for new investment ventures which the private sector is unwilling or unable to enter into, for example, in the biotechnical field. In between, it will be invested wisely. There are many options available to Government and I can assure the Member that it will not be squandered. He has also asked a question on statutory boards; whether they will be allowed to retain sufficient surpluses for development. This will indeed be permitted and the Ministry of Finance will get together with statutory boards to determine their investment requirements over the long-term. Finally, he has raised a question on the management of foreign exchange by MAS. This indeed is happening.”
“You will note that up to the end of 1984, whilst our economy was growing strongly and Government policies were contractionary amd running consistent surpluses, our currency was very strong. This is consistent with the fundamentals. Since the end of 1984, the Singapore dollar, has depreciated steadily against a basket of currencies of our main trading partners, principally the countries of the EEC and Japan by about 30-40%. It has maintained its rough parity with the US dollar largely because the bulk of our trade, as the Member for Whampoa has quite correctly pointed out, is transacted in US dollars and also because the US is our largest trading partner. Therefore, the US dollar weighting on our exchange rate is very significant. Hence, the Singapore dollar tends to track the US dollar. It has strengthened a bit against the US dollar but I believe not sufficiently to affect our competitiveness. I understand the Member for Whampoa's concern but I think our biggest policeman in this respect is the Ministry of Trade and Industry who are constantly watching the exchange rate and have not been hesitant in making their views known to the MAS. At the moment, our currency is approximately at the right level and should respond to basic changes in our fundamentals. The Member for Leng Kee had asked questions on Government's participation in the economy and privatization. He has questioned whether, after divestment, Government- linked Companies (GLCs) will continue to be as efficient as they are now and on issues of management control. Indeed, these are matters of major concern to Government. I would like to restate the Government's privatization policy which is to withdraw gradually from involvement in private sector business.”
“So long as Singapore maintains its competitiveness in terms of infrastructural facilities and telecommunications and we maintain our efficiency of operations, I think we will have a continuing role as a financial centre in the region. Also, we have to ensure that our fiscal regime is more hospitable than in either Tokyo or Australia, which is indeed the case. So I am not pessimistic about our continued role as a financial centre. Secondly, he has asked about the exchange rate of the Singapore dollar and its effect on the competitiveness of our exports. Exchange rate is not a simple problem. Ultimately, the exchange rate of a country's currency depends on a number of fundamental factors which include the political stability in the country, its balance of payments position, the growth of its economy, its inflation performance, the state of its fiscal balance, whether it runs a deficit or surplus, government's fiscal policy, whether it is contractionary or expansionary, the size of its foreign reserves, whether it needs to borrow money and therefore the debt burden, and so on. In a situation like Singapore where we do not have restraints on capital movements or foreign exchange controls, I believe the exchange rate is determined by the real economy, ie, by demand for our currency. The policy of the MAS in this respect is confined to managing the fluctuations of the Singapore dollar so that it does not fluctuate wildly and therefore undermining the growth of the economy and also to ensure that the inflationary effects of currency changes do not impact on the economy. I do not believe it is possible for a small country like Singapore, without any controls on financial flows, to be able to manipulate its currency effectively against fundamentals.”
“Sir, I would first deal with the questions raised by the Member for Whampoa about the role of Singapore as a financial centre. Undoubtedly, the development of Tokyo and Australia will impact on Singapore because we are in the same time zone and in the same region. But there are pluses and minuses. On the one hand, Tokyo, being a large industrial state with a large capital pool, is likely to attract a number of banks to set up in Tokyo as their regional centre and this might pose serious competitive alternatives to Singapore. Undoubtedly that is a possibility. Also, the increase in the number of foreign banks now operating in Tokyo since their liberalization will attract talent away from Singapore. These are two clear negatives which work against us. Set against this, it is also true to say that there are some positive advantages to be gained from the growth of Tokyo as a financial centre in bringing more international business into our time zone. We have seen this spill-over effect in the very substantial increase in foreign exchange transactions in Singapore, particularly in Yen/US$ transactions. Currently, this amounts to some US$22 billion per day making us about half the size of New York and about the size of Tokyo, and one-quarter the size of London which is the largest. At the same time, there has been a substantial increase in the ACU markets as a result of activities of the Japanese banks and companies in Singapore. With the rising value of the Japanese yen, a number of Japanese companies are now moving overseas and locating in Singapore, and this brings with it banking activity.”
“I would certainly urge the PSC to exert every effort to recruit a scholar.”
“For example, a large number of teaching awards are given to facilitate recruitment of good graduates into the Education service. With our small population, our talent pool is limited. Our Scholarship programme thus aims to nurture a good proportion of this talent pool to meet national needs. Candidates for scholarship and bursaries are selected on the following criteria: Good and consistent academic performance. Good extra-curricular activities. For male students, satisfactory national service record. Sound character and leadership qualities and, finally, an interest in a career in the Civil Service.”
“Mr Deputy Speaker, Sir, I will reply on behalf of the Public Service Commission. The proposed provision for subhead HA-03-3310 for FY 1987/88 is $8,856,300 as compared to the revised estimate of $7,194,700 for FY 86/87. The increase in the provision for this subhead is primarily due to the increase in the cost of overseas and local awards. There is no provision for an increase in the number of overseas and local awards. The increase in the cost of overseas awards is due to the following: (1) Increase in the Australian Overseas Students Charge from A$3,500 to A$4,666 each. (2) Increase in the number of self-funded awards to Australia. The Australian Government has not provided funds for new Colombo Plan Awards for 1987, as the Colombo Plan allocation for Singapore will be entirely taken up to renew on-going awards. (3) Appreciation of some currencies against the Singapore Dollar. For example, the Sterling is now S$3.30 compared to 1 equalling S$2.80 a year ago. French Francs, German Marks and Japanese Yens have all appreciated against the Singapore Dollar. We have to partially fund donated scholarships from France, Germany, Japan and self-fund awards to the United Kingdom, United States and additional awards to Japan. More provision has been made for free tuition grants for Malay students, as the number of Malay students who qualify for admission to the National University of Singapore and the NTI and the Polytechnics is increasing. No provision, however, has been made for the substantial increase in fees at the NUS, the NTI, and supplementary provision is likely to be necessary. Scholarships are allocated on the following basis. Firstly, to groom talents. Secondly, to meet the manpower needs for the Civil Service.”
“21 50,001 - 75,000 3,984,051.82 75,001 - 100,000 2,643,975.81 100,001 - 150,000 3,048,266.64 150,001 - 200,000 1,892,111.24 200,001 - 400,000 3,414,899.47 400,001 - 750,000 1,054,433.54 750,001 & Above 1,119,177.81 Total $30,578,569.23 *Statistics are incomplete as not all assessments for Y/A 86 have been finalised. Committee of Supply - MAIN AND DEVELOPMENT ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1987 TO 31ST MARCH, 1988 (Cols. 339 - 342)”
“Annexes 1, 2 and 3 (Cols. 335 - 338) show the amount of tax assessed on interest income of Singapore resident individuals by "Chargeable Income" groups for the Years of Assessment 1984, 1985 and 1986. The Inland Revenue Department is unable to provide statistics for earlier years because of the time constraint. Annex 1 TAX ON INTEREST INCOME OF SINGAPORE RESIDENT INDIVIDUALS FOR Y/A 84 Chargeable Income Group Total Tax Assessed Below 5,000 647,160.76 5,001 - 7,500 615,461.94 7,501 - 10,000 781,949.28 10,001 - 15,000 1,882,020.69 15,001 - 20,000 1,945,503.41 20,001 - 25,000 1,880,641.66 25,001 - 35,000 3,641,109.86 35,001 - 50,000 4,414,501.66 50,001 - 75,000 4,856,193.85 75,001 - 100,000 3,157,314.51 100,001 - 150,000 4,051,998.76 150,001 - 200,000 2,317,891.73 200,001 - 400,000 4,089,008.78 400,001 - 750,000 1,710,675.03 750,001 & Above 2,221,028.19 Total $38,212,460.11 Annex 2 TAX ON INTEREST INCOME OF SINGAPORE RESIDENT INDIVIDUALS FOR Y/A 85 Chargeable Income Group Total Tax Assessed Below 5,000 690,237.31 5,001 - 7,500 677,228.78 7,501 - 10,000 844,705.54 10,001 - 15,000 1,924,714.39 15,001 - 20,000 1,914,070.08 20,001 - 25,000 1,972,774.07 25,001 - 35,000 3,809,942.41 35,001 - 50,000 4,358,444.55 50,001 - 75,000 4,971,836.12 75,001 - 100,000 3,325,725.53 100,001 - 150,000 3,926,128.24 150,001 - 200,000 2,501,361.76 200,001 - 400,000 4,968,264.42 400,001 - 750,000 2,607,127.66 750,001 & Above 1,973,975.78 Total $40,466,536.64 Annex 3 TAX ON INTEREST INCOME OF SINGAPORE RESIDENT INDIVIDUALS FOR Y/A 86* Chargeable Income Group Total Tax Assessed* Below 5,000 549,479.04 5,001 - 7,500 536,321.90 7,501 - 10,000 690,383.29 10,001 - 15,000 1,461,334.66 15,001 - 20,000 1,570,064.63 20,001 - 25,000 1,644,742.51 25,001 - 35,000 3,196,564.66 35,001 - 50,000 3,772,762.”
“Mr Heng Chiang Meng asked the Minister for National Development if he will give the name, size, location, commencement date of construction and the estimated date of completion of the proposed New Town in the vicinity of Jalan Kayu.”
“To sum up, I believe that the Government would not have had the moral authority to ask our workers to accept wage restraint last year and again this year and our workers and the union leaders would not have responded as they did if Government had not had the courage to encourage substantial wage rises at the time when the economy was growing strongly as it did in 1979. Finally, Mr Deputy Speaker, Sir, I would say that few would dispute that we are in the throes of a recovery. However, we must not be complacent. Our recovery is still patchy and lopsided and much depends on the world economic outlook. In this Budget I have maintained the same broad policy principles and guidelines which have been adopted in previous budgets. Cost-competitiveness, a trim government and the private sector as an engine of growth are the Government's basic philosophy. In addition, we have taken steps to solve the long-term problem and that of a declining birth rate. I am confident that if we all work together, we should be able to ride the tide of recession and emerge a stronger and trimmer nation. As a parting note, I would say that the Government has done its part. It now leaves me to ask the private sector to avail itself of the opportunities which have been created to do their part. [Applause]. Question put, and agreed to. Resolved, That Parliament approves the financial policy of the Government for the financial year 1st April, 1987 to 31st March, 1988. ADJOURNMENT Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Twenty-four minutes past Five o'clock pm. WRITTEN ANSWERS TO QUESTIONS PROPOSED NEW TOWN IN JALAN KAYU AREA 1.”
“Firstly, it was felt that after nearly 20 years of double-digit growth during much of which wage increases had been kept low in order to promote growth and jobs, the economy was sufficiently strong in 1979 to absorb significant wage increases which would allow workers to enjoy some of the accumulated fruits of their labour. The high wage policy was to be phased over three years from 1979, 1980 and 1981 through mandated NWC recommendations. Secondly, it was seen that Singapore with a small population base could not possibly compete with its neighbours and emerging countries, such as China, for industries which required low-cost labour. Singapore had to upgrade its industries or perish. It was hoped that rising wages coupled with fiscal incentives would accelerate the process of industrial upgrading. I have no doubt that the upgrading process was necessary and had borne fruit. But what could not be foreseen was a strong export demand in the early eighties which led to labour demand and wage increases well beyond NWC recommendations and ultimately brought about our loss of export competitiveness. Let us also not forget that the severity of the 1985 recession was also a result of the slump in the shipyard, oil-rig, shipping, oil-refining business, and a major decline in our trade with Malaysia and Indonesia due to decline in regional commodity prices and finally due to the collapse of the construction market.”
“The three-day suspension was needed to agree financing terms with their bankers. In retrospect, the SES decision was a correct one as orderly refinancing was achieved and the SES managed to turn around in less than one year. Secondly, the release of CPF funds for share purchases on 2nd May 1986 had very little, if any, effect on the recovery of the stock market. In the 10 months, between May 1986 when the liberalization of CPF funds was allowed and February 1987, a total of just under $230 million of CPF funds were used for share purchases. This is a miniscule amount compared to the sums which are flooded into the stock market since the ST industrial index bottomed at 563 on 28th April 1986. The index stands today at around 1,040-odd and this represents a $38 billion increase in market capitalization from the bottom which took place on 28th April 1986. Government takes no credit for this increase. I agree with the Member for Rochore, however, that the stock market has reached dizzy heights and investors should therefore exercise caution. But the strong recovery can probably be attributed to a return of investors confidence coupled with low interest rates, high liquidity and a shortage of investment alternatives and a strong dose of euphoria thrown in. Mr Deputy Speaker, Sir, I cannot let pass the extraordinary attack that the Member for Potong Pasir has made on two Government policies. I shall not touch on the population issue as this has been dealt with by the Acting Minister for Health. But I feel obliged to express amazement at his attack on the wage increase policy instituted by Government in 1979. For someone who professes to champion the workers, I find his criticism uncomprehensible. In 1979, the high wage policy was introduced with two objectives in mind.”
“As custodian of the peoples' assets, Government's primary consideration must be to secure the best possible price for the sale of the shareholdings and also to ensure that the shares are sold to companies which can provide strong management. In this connection, I do not agree with the contention of the Members for Rochore and Chong Boon that the sale of Government shareholdings to the Development Bank of Singapore is not privatization at all. Privatization can take place in stages and the sale of assets by the 100% Government-owned Temasek Holdings to DBS Bank which is more than 50% owned by the public represents a substantial privatization step. The Member for Rochore has also criticized the Government for excessive interference in the stock market. First, by suspending the Stock Exchange of Singapore for three days in December 1985 which, by implication, then led to the collapse of the stock market and thereafter, in attempting to revive the stock market, by allowing the use of CPF funds for share purchases. Both allegations are not only factually incorrect but are extremely naive in their assumptions. The facts are, first, the SES was suspended for three days between 2nd and 4th December 1985 by the SES Committee and not by the MAS. Although the MAS is the supervisory authority for financial institutions, including the SES, it does not run the SES and did not order the suspen- sion. This important fact is continuously and, I believe, deliberately misunderstood by critics of the MAS. The SES Committee decided to suspend the Exchange and sought MAS's concurrence primarily because many of its broking members were in financial difficulties when the forward contract bubble burst after the collapse of Pan-Electric in November 1985.”
“Before responding to the specific questions raised, I would like to make a general statement on Government's response to the Report of the Public Sector Divestment Committee which Members would have received. The PSDC was commissioned in January 1986 to undertake a comprehensive review of Government-linked companies in Singapore and to make recommendations for the systematic and orderly reduction of Government in non-strategic businesses. The PSDC operated within very broad terms of reference and its recommendations therefore reflect the private views of the members of the Committee and are not necessarily those of Government. However, the PSDC Report is accepted in principle by Government as its thrust is in line with Government's stated intention of reducing its role in business. The detailed recommendations are being studied and specific decisions on the next steps in the divestment process would be announced as soon as possible. The timing, pace and order of divestment will be determined by the specific circumstances of each company. The preferred route will be the widest possible participation to listing in the Stock Exchange. Needless to say, public participation will only be invited from companies which are financially sound. Turning now to the specific questions raised. The Member for Chong Boon has expressed unhappiness over the manner in which Government shareholdings in UIC and in the National Iron (NISM) were sold. I would like to point out that it is unlikely that whatever method is chosen to dispose of shares will satisfy everyone.”
“My Ministry is presently studying this recommendation. Some of the problems which have surfaced are that the statutory boards keep their accounts on a calendar year basis like many companies while Government accounts are on a financial year basis. Moreover, the majority of statutory boards prepare their budgets and maintain their accounts on an accrual basis while Government's budget is on a cash basis. These differences make it difficult to consolidate Government accounts with those of the statutory boards. Notwithstanding this, the Budget document will be continually improved upon. As I have mentioned earlier, the basis for computation of the Government budget balance has been modified in the 1987 Budget document. The revised basis is in line with International Monetary Fund classification conventions which provide a clearer picture of the bottom line impact of Government expenditure and revenue transactions. A number of questions have also been raised regarding particular budget allocations and particular policies of Ministries. These, I think, would be more appropriately dealt with in the forthcoming debate in the Committee of Supply. This afternoon the Member for Boon Lay has suggested that there is presently little control over the spending and the borrowing powers of statutory boards. I would like to assure him that this is not true - that the boards are now under the supervision of their respective Ministers and of their Boards and they are ultimately responsible to the Cabinet. Privatization of Government companies. Members have raised issues concerned with Government's privatization policies.”
“Only surpluses in excess of long term development requirements will be channelled back to Government. Statutory boards will not therefore need to raise charges to compensate for the transfer of surplus funds to Government. In fact, statutory boards will make every attempt to lower their charges. I am pleased to note that the Member for Punggol has commended statutory boards providing a high level of service to the public for being very efficiently run. I share his sentiments. The fact that the major statutory boards have been able to meet their objectives without Government subsidies is clear evidence that their Boards have managed their finances prudently. It should, however, be stressed that not all statutory boards run up surpluses. The HDB as well as the educational institutions and other statutory boards have received and will continue to receive financial assistance from the Government. Mr Deputy Speaker, Sir, the Government's budgetting and accounting system has also come under considerable scrutiny from Members. The Members for Boon Lay and Kaki Bukit have remarked on the extent of parliamentary scrutiny of statutory board's budgets. In particular, they have expressed the view that Parliament would be in a better position to oversee the management of public sector finances if Government's budget documents included information on the revenues and expenditures of major statutory boards. In fact, the current Budget document does provide these details in respect of Government-funded statutory boards. Data on self-funded statutory boards are, however, not included. The Estimates Committee has recently recommended that the Budget document presented to Parliament should contain budgetary data of all statutory boards.”
“The two Ministries have therefore decided that instead of the proposed 10% tax concession the Trade Development Board through the Ministry of Trade and Industry will consider the possibility of granting pioneer status to companies whose activities relate to international trade. Further details will be elaborated once the finer points have been worked out. The National Productivity Board has recently completed its study of companies stock option plans in Singapore. A copy of its report was extended to my Ministry for further study. A decision on the feasibility of providing tax concessions for such a scheme would be made shortly. Finally, I note that the Member for Jalan Kayu has blamed the lack of success of many local businesses on excessive Government rules and regulations. Whilst a reduction in Government rules and regulations is undoubtedly desirable and we will continue to reduce them, I find that the Member has found a novel and new approach to explain away business failures, in which he blames it entirely on Government rather than on the lack of enterprise or poor business judgment of the businessmen. I do not think this is either realistic or fair. Mr Deputy Speaker, Sir, I will now touch on issues concerning statutory boards. Some Members have commented on the surpluses of statutory boards and the Government's decision to transfer part of these surpluses to the Consolidated Fund. While welcoming the decision Members have also expressed concern that it might result in statutory boards not having sufficient funds for their development programmes and needing to raise charges to finance such development. I would like to reassure Members that statutory boards will be allowed to retain part of their accumulated surpluses to fund development programmes.”
“In addition, the Small Enterprise Bureau also administers the interest grant for mechanisation scheme which provides grants to help defray interest cost incurred in the purchase of new equipment, machinery and the liberalized investment allowance scheme which grants 30% investment allowances for the purchase of productive equipment. Members of the House will no doubt note that the formation of Sesdaq will also help facilitate access to equity capital for small companies. I would also agree with the Member for Chong Boon's proposal that there should be a liaison agency to help local businessmen, especially the small and medium-sized local companies. The Small Enterprise Bureau (SEB) has, in fact, been established as a one-stop agency to assist local small and medium-sized enterprises (SME). The SEB is conscious of the need to avoid duplication of incentives. The various incentives available for local SMEs are targetted at meeting the specific needs of local SMEs. I would therefore want to assure the Member for Chong Boon that all the separate schemes administered by the various agencies are part of an integrated framework coordinated by the SEB to assist the SMEs. The Member for Chong Boon has also asked for the present status of the Economic Committee's recommendations pertaining to the 10% tax concession for third country trade and the employee share option scheme. Discussions were held between my Ministry, the Ministry of Trade and Industry and the relevant agencies to consider the Economic Committee's recommendations on the 10% tax concession for third country trade. A number of problems or objections were raised and there was a consensus of opinion that the incentive in its original form may not be particularly effective nor economically desirable.”
“They are seen to be unwieldy, regressive and bad for tourism. If, however, the need should ever rise to introduce a broad based consumption tax, then every effort will be made to ensure that its less desirable side-effects are mitigated. The Member for Queenstown has made an eloquent condemnation of consumption tax. But he misunderstands the issues. I have said that consumption tax will only have to be introduced at a time when we are compelled by international competition to reduce direct taxes to the point where compensatory consumption taxes will have to be introduced. If we were forced to the position where indirect taxes had to be introduced, perhaps the Member for Queenstown could suggest what other sources of tax might be available if he dislikes consumption tax so much. In the Singapore context where we do not have natural resource of any form, we cannot turn on the tap to produce oil or gas. Every cent or dollar of tax has to come from you or your neighbour's pocket. We have no alternative. I now touch on other economic issues. Members have provided valuable suggestions on ways to help the small and medium industries. I would think that the small and medium industries in Singapore require assistance from Government mainly in the area of access to capital. The Small Industries Finance Scheme (SIFS) was first introduced in 1976 and has helped to provide low-cost financing to small local enterprises. There are now 20 financial institutions participating in the SIFS.”
“The Member has also suggested exempting from income tax all interest earnings on bank deposits as this would encourage the repatriation of funds currently held abroad. However, I would consider that it would not be equitable to exempt interest income without at the same time exempting other forms of income such as wages, rentals, dividends and royalties from tax. Furthermore, the tax collection on interest income is significant. If interest income were to be exempted from tax, a shortfall in revenue would have to be made up through higher taxes on other forms of income or on consumption. Members have also raised some questions on the use of CPF funds and the tax planning which this provides. I will not touch on this today but I suggest it should be taken together with other questions on CPF during the Committee of Supply. Consumption tax issues. Concern has been expressed by Members of the House on the need to introduce a consumption based tax. Amongst other things, the negative impact of such a tax system on domestic consumption and the tourist industry has been highlighted. As I have mentioned earlier in my budget statement, a broad-based consumption tax will only be introduced if the revenue shortfall is substantial and a permanent deficit is inevitable. As a start, the Government has decided to adopt an item-by-item approach to meet any temporary shortfalls in revenue which could not be funded by other more traditional methods. Every alternative revenue source will be considered. The Member for Whampoa has suggested utilizing the surpluses of statutory boards to fund any shortfall. This has been done and will continue to do so. But we must be careful not to overdo it. I am well aware that consumption taxes are unpopular.”
“Secondly, we in Singapore allow generous depreciation allowances of between one and three years which help to reduce the companies' taxable profits. Additionally, investment allowances may also be granted on a selective basis. In comparison, most other countries including Taiwan and South Korea depreciate their capital equipment over much longer periods. We have also various incentive schemes which make certain sectors very competitive tax-wise. For example, the 10-year pioneer exemption for manufacturing and service industries, tax exemption for shipping profits and the 10% ACU tax for banks and financial institutions. In these areas, Singapore offers tax advantages that rival or better than our competitors including Hong Kong. Singapore also has a wide network of 25 double taxation conventions which confer certain in-built tax advantages to promote trade, investment and technology flows. Taiwan, for example, has far fewer treaties. Hong Kong has none. I believe that our present income tax structure is therefore sufficiently competitive. But I would like to assure Members that the situation will be continually monitored. I should point out that a low tax rate in itself should not be the overriding concern. It is equally if not more important to ensure that other elements of business costs are kept at competitive levels. And this we will do. The Member for Jalan Kayu has asked for statistics with respect to tax on interest earnings which are accrued from deposits with banks in Singapore. Based on statistics for the years of assessment 1984 to 1986, between $30 million and $40 million worth of tax were collected annually on interest income of Singapore resident individuals.”
“Excluding HDB's recurrent outlays, the recurrent expenditure to GDP ratio for Singapore in 1984 was only about 15% as compared to 18% for Taiwan. These figures suggest that our public sector is not overly large, given the functions and services that it has to provide. By the end of this decade, the bulk of our infrastructural development would have been completed. Public sector development outlays will then be much lower. Measures to economize on public sector manpower usage, including privatization and contracting out of activities, would have been implemented. These would help reduce the size of the public sector. The private sector by then would be the dominant source of economic growth. I will now touch on corporate income tax issues. The Member for Whampoa has asked why we grew by only 1.9% last year whereas the other NICs grew at a faster pace. The implication I assume is that perhaps our corporate taxes are still too high in comparison with the other NICs. I would like to assure the hon. Member that our corporate tax rate is competitive for the following reasons. Singapore employs a full imputation tax system where corporate profits are taxed only once, either at the company level on distribution or at shareholders' hands. A credit is given if the company tax withheld exceeds the shareholder's rate. In comparison, countries like Taiwan and South Korea have a two-tier system where corporate profits are taxed twice, first, at the company level and subsequently upon distribution by the individual shareholder with no offsetting credits. In a two-tier or separate entity tax system, the tax load on the economy is always substantially higher than in the imputation system.”
“In response to requests by Members for a clearer and more comprehensive presentation of the budget, my Ministry has adopted the budget classification conventions recommended by the International Monetary Fund in preparing the FY 87 budget. If due allowance is given to the differences in classification conventions and the deferment to 1987 of the interest burden resulting from the conversion of CPF advance deposits to domestic loans, then it will be seen that the original budget estimates are fairly close to the mark. The size of the public sector has also excited interest. Its size and impact on Government's operations have been commented on by several Members. I have distributed to Members earlier a Table giving comparative data on public sector expenditure to GDP ratios for Singapore, OECD, other ASEAN countries and the NICs. The data, however, have to be interpreted with caution. The range of functions and services provided by the public sector varies from country to country. For example, very few countries have a public housing programme of the same magnitude as in Singapore. The data show the trends up to 1984 and unfortunately more recent comparative data are not available. But I do not think the pattern has changed significantly since 1984. You will see that our total public sector expenditure as a proportion of GDP was about 45% in 1984 and was comparable to the average for OECD countries but much higher than that in the NICs. However, if HDB's expenditures are excluded, the ratio for Singapore would only be 25%, or lower than the 27% in the case of Taiwan. The recurrent expenditure to GDP ratios are even more revealing.”
“When savings are in surplus of what our own economy can receive in investments, either because we have been saturated by foreign investments or because our people have not yet got the know-how to bring in technology which is profitable and can use the investments, then the investments should go abroad. Like the Swiss, we must build up as much investments yielding dividends abroad as we can to augment our GDP and increase our GNP. This is exactly what the Swiss are doing, the Americans and the British have done in the past, and the Japanese are also doing right at this moment. The Member for Thomson expressed concern over the projected deficit of $3.75 billion for FY 87. He pointed out that this represented a sizable percentage of our total reserves. The large deficit of $3.75 billion arises because it takes into account net lending of $2.67 billion to statutory boards and public enterprises. These loans will be repaid with interest in due course and will not therefore affect Government's long-term reserve position. Excluding net lending, the overall budget deficit is a less alarming figure of $1.08 billion which will be financed from local borrowings. The Member for Jalan Kayu also commented on the poor fiscal marksmanship of the Finance Ministry. A projected deficit of $3.2 billion for FY 86 might now turn out to be a small surplus of $500 million or so. I am afraid that these two figures cannot, in fact, be directly compared as they were prepared on different bases altogether. The original estimate of $3.2 billion deficit was based on traditional Government budget classification conventions and excluded certain revenue items.”
“Members that their concerns are totally unfounded. A close study of the Budget document will show that the overall surplus of $1.4 billion arose solely from a substantial rise in income and capital gains realized from overseas investments. Foreign equity and bond markets were exceptionally buoyant in 1986 and we were able to realize substantial capital gains from certain investments made in the past. Such profits from overseas investments amounted to some $2.2 billion in 1986. Without this extraordinary income, the public sector would have, in fact, registered a deficit of $800 million in 1986. Looked at in another way, if investment income and capital receipts had not increased substantially in 1986, the operating account of Government would have shown a deficit of $2 billion, a deterioration of $1.4 billion over the $600 million deficit in 1985. I should also point out that the profit stream from overseas is entirely in foreign currencies and has therefore no effect on the Singapore dollar exchange rate. In fact, as pointed out in the Economic Survey, the Singapore dollar eased against major OECD currencies in 1986 as a direct result of our weakened economy, and this has helped to improve our export competitiveness. I would also like to stress that capital gains from investments are generally unpredictable and cannot be relied on as a permanent source of Government finance. It will not be prudent to reduce tax rates on account of these one-off increases in revenue. Tax revenues have sharply declined in recent years and with the lowering of the corporate tax rate with effect from FY 87, the tax revenues will further deteriorate. The Member for Whampoa has also raised the issue of excessive savings. As I see it, there is no such thing as excessive savings.”
“Mr Deputy Speaker, Sir, over the two days allotted for the Budget debate, Members of the House have raised so many questions that I hope I can do justice to all of them in the time allotted. Sir, I propose to sum up the issues raised along the following areas: issues on the Budget and the public sector, issues on the corporate income tax matters, consumption tax matters, economic issues, other economic issues, issues concerned with the statutory boards, and finally, privatization. I will not touch on procreation incentives as this has already been dealt with at length by the Acting Minister for Health, and the Minister for Labour has just touched on the levy issue. But before doing so, I would like to make some general observations about the Budget. The Budget is the centrepiece of Government's fiscal policy and is designed to support growth in the economy. Since 1985 and 1986 Government has injected some $2.2 billion into the economy through tax cuts and reductions in Government charges. And the amount will be further augmented when fiscal year 1987 corporate tax cuts come into effect. Therefore, there is no no question whatsoever that both the 1986 and 1987 budgets are stimulatory. The Members for Whampoa and Jalan Kayu have expressed concern that the 1986 Budget may have, in fact, been contractionary because the public sector accounts registered an overall surplus of $1.4 billion in 1986 and that a surplus of this magnitude in a recessionary year would exacerbate the recession and slowdown the recovery process. The Member for Whampoa was also concerned that such a surplus would lead to a strengthening of the Singapore dollar, thus adversely affecting the competitiveness of our exports. I would like to reassure the hon.”
“But it has been a crucial source of capital goods, industrial materials and foreign investments. Japanese investments in Singapore increase our exports to the rest of the world, which helps us to pay for the imports we need, including imports from Japan. Nevertheless, the Government is always seeking ways to increase exports of domestic manufactured products to Japan. It is encouraging Japanese manufacturing companies located here to export more goods back to Japan, and Japanese retail stores here to promote our products in their outlets in Japan. As a result of Singapore government lobbying, SISIR has been granted the authority to inspect goods on behalf of MITI for use of the JIS mark. This should help local companies wanting to sell in the Japanese market. Last year because of the appreciation of the Yen and our greater export competitiveness, our domestic non-oil exports to Japan were 11% higher than the year before. If as a result of international pressure the Japanese economy becomes more open to foreign products, our exporters can expect to gain even more. Table - UNSOLD HDB FLATS AS AT 31 JANUARY 87 (Cols. 103 - 104) answer - LITTERING, SPITTING AND ILLEGAL DUMPING (Cols. 105 - 106) Annex - 1986 RECURRENT EXPENDITURE AND ENROLMENT (Cols. 107 - 108) Annex II - NATIONAL UNIVERSITY OF SINGAPORE AND NANYANG TECHNOLOGICAL INSTITUTE TUITION FEES AND LOANS FOR ACADEMIC YEAR 1987/88 (Cols. 109 - 110) charts - UNIT LABOUR COST OF SELECTED COUNTRIES, RELATIVE UNIT LABOUR COST AGAINST THE THREE NICs, 1980-1986 (Cols. 111 - 114) Appendix 1 - DUTIES ON CIGARETTES AND TOBACCO (Cols. 115 - 116) Appendix II - DUTIES ON LIQUORS (Cols. 117 - 122)”
“Friday, 13th March, 1987. Mr Speaker: So be it. ADJOURNMENT Resolved, "That Parliament do now adjourn to Friday, 13th March, 1987." - [Mr Wong Kan Seng]. Adjourned accordingly at Two minutes to Five o'clock pm to Friday, 13th March, 1987. WRITTEN ANSWERS TO QUESTIONS JAPANESE INVESTMENT COMMITMENTS IN 1986 1. Mr Chiam See Tong asked the Minister for Trade and Industry how much of the total manufacturing investment commitments from Japan of $490 million in 1986 have actually been invested in Singapore to date. BG Lee Hsien Loong: A project is booked as an investment commitment when a company takes definite steps to implement the project, such as taking a lease on a piece of land or ordering equipment. In the last few years, over 90% of the projects committed have resulted in actual investments. This generally takes place within 12 to 18 months. We would therefore expect that a high proportion, 75% to 80%, of the $490 million of Japanese investments committed in 1986 will actually come into Singapore this year and next year. TRADE DEFICIT WITH JAPAN 2. Mr Chiam See Tong asked the Minister for Trade and Industry what steps the Government has taken or is taking to reduce the large trade deficit with Japan. BG Lee Hsien Loong: It is more meaningful to look at Singapore's trade balance with the rest of the world as a whole, rather than to try to achieve a balance with each individual trading partner. Part of the deficit in our trade balance with Japan in fact consists of goods which Singapore buys from Japan, but subsequently re-exports to other countries, just as many of our exports to Japan are in fact re-exported products which originated elsewhere. Japan traditionally has not been an important market for Singapore.”
“I am, therefore, confident that for as long as we continue to work together as a cohesive people, we will surmount the recession and be in a stronger and better position to see us through the 1990s and beyond. Mr Speaker, Sir, I beg to move. [Applause].”
“The levy for foreign workers in all other sectors will be $140 per month. It will have to be raised if the demand for foreign workers becomes excessive as a result of either strong economic recovery or due to the conversion to the Levy Scheme. Work permit holders who acquire permanent residence will be placed on the CPF Scheme. Conclusion In conclusion, Mr Speaker, Sir, the past few years have been particularly turbulent for us. We have not been spared from the chill of recession. However, unlike a ship floundering in the high sea without a clear direction, we have taken swift actions to steer our economy out of the rough waters. There are signs to show that the various fiscal measures taken by Government have yielded positive results. However, as I stated earlier, the recovery is not across the board. There are still hazards along the path to full recovery and they may throw us into disarray again if we are not vigilant. Therefore, we must not relent in our efforts to ensure a sustained recovery. The Government has made fundamental changes to its economic policies in general and fiscal policies in particular. It is necessary to give the economy time for the changes to be fully effective. I will regard this year, therefore, as a year of consolidation. We have the necessary conditions to enable us to overcome the current recession. Our infrastructure is first rate and our financial resources more than adequate. More important, we have a pragmatic and hardworking people and a healthy industrial environment. When faced with a crisis, the Government has not flinched from taking unpopular but necessary decisions to ensure the long term survival of the nation. Our people are willing to upgrade themselves and to adapt to changes.”
“I have reviewed the position. The suspension will remain for the time being. Tax on Public Utilities The 10% tax on electricity and gas was suspended for two years beginning from 1st November 1985 and would expire on 31st October 1987. I have decided to extend the suspension until 31st March 1988, at which time the position will be reviewed again. Foreign Workers Policy and the Levy Scheme Government has also reviewed the foreign workers policy. As recommended by the Economic Committee, the Government has decided to allow a controlled revolving pool of foreign workers on short term work permits to remain even beyond 1992. Recruitment of foreign workers will continue to be allowed in the manufacturing, hotel, construction and domestic service sectors, and they will form the revolving pool. Government has also decided to extend the Levy Scheme, instead of CPF, eventually to all work permit holders who are not Singapore permanent residents. Our long term goal is still to reduce our dependence on foreign workers through economic restructuring. The foreign workforce will be controlled and the levy will be the main control mechanism for this purpose. Unskilled foreign workers from non-traditional sources will continue to be allowed only in the construction and shipyard industries and for domestic services. With effect from 1st April 1987, all new foreign workers who are not Singapore permanent residents will be placed on the Levy Scheme. Neither they nor their employers will have to contribute to CPF. However, existing Malaysian workers who are on the CPF Scheme will remain on this Scheme so long as they continue to work for their current employers. There will be no change in the levy for the construction workers and foreign maids.”
“Duties on still wine will be standardized at $85 per decalitre irrespective of the proof strength, while duties on other liquors such as grape must and brandy, whisky, etc in other form will be standardized at $360 per proof decalitre. Details of the increases are set out in Appendix II (Cols. 117 - 122) which has also been tabled. Appendix II - DUTIES ON LIQUORS (Cols. 117 - 122) Total revenue yield is estimated at $19.5 million. Surpluses of Statutory Boards Members of the House will recall that the Public Accounts Committee had recommended in its 1985 Report that surplus funds of Statutory Boards in excess of their long-term development needs should be returned to Government. The Ministry of Finance had since reviewed the financial position of the Statutory Boards. It has been decided that while the Statutory Boards would be allowed to retain the surplus funds to finance their future development needs, the accumulation of such funds well in excess of justifiable needs is to be discouraged. Legislation will be introduced in Parliament to authorize the Minister for Finance to require Statutory Boards to transfer their accumulated liquid reserves to the Consolidated Revenue Account. In FY 87, as I have said earlier, I propose to transfer $1.5 billion from the accumulated reserves of the Statutory Boards to the Consolidated Fund. In addition, with effect from Year of Assessment 1988, Statutory Boards will be required to pay into the Consolidated Fund an amount equivalent to what the Statutory Boards would have paid if their annual operating surpluses had been taxed at the corporate tax rate of 33%. Tax on Telephone Services In April 1985, Government suspended the 20% tax on domestic telephone services and trunk call services to West Malaysia indefinitely.”
“The National Smoking Control Programme has got off to a good start in educating the public to stop smoking. In support of the effort to turn Singapore into a nation of non-smokers, I propose to raise both the import and excise duties on cigarettes and tobacco by $10 per kilogram - from the present $60 per kilogram to $70 per kilogram. With your permission, Mr Speaker, Sir, I would like to table Appendix 1 (Cols. 115 - 116) which sets out the changes. Appendix 1 - DUTIES ON CIGARETTES AND TOBACCO (Cols. 115 - 116) The increase in duties will take effect from today and the yield in revenue is estimated at $26.3 million. Duties on Liquors Duties on liquors, together with duties on cigarettes and tobacco, are traditionally a good source of revenue for Government. Revision in these duties is usually prompted as much by the need to raise revenue as by the need to achieve certain necessary and desirable social objectives. In the same manner as I have decided to increase the duties on cigarettes and tobacco, there will also be a general increase in the duties on liquors. With effect from today, the import and excise duties on hard liquors in bottles will be increased by $60, - from $210 per decalitre to $270 per decalitre. The import and excise duties on beer and stout will be increased by $3 per decalitre. The import duty on cider and perry will be increased by $8 from $22 per decalitre to $30 per decalitre, while the import duty on sake will be increased by $25 from $130 per proof decalitre to $155 per proof decalitre, bringing it in line with the duty on samsoo.”