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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“The suggestion is accepted. TAX CREDIT ON OVERESTIMATED PUB BILLS 18. Dr Toh Chin Chye asked the Minister for Finance and Minister for Health whether Government tax on overestimated Public Utilities Board bills will be credited to consumer accounts.”
“Mr Deputy Speaker, Sir, a review of the Singapore Allowance is being finalized and an announcement will be made thereafter. I would like to reiterate that it is the Singapore Allowance which is being reviewed and not the pension terms. Pensions are payments for past services and are not subject to periodic review. The Singapore Allowance was introduced in 1974 as an ex-gratia payment to help pensioners adjust to the abnormally high inflation which followed the first oil shock in 1973. It was last revised in April 1982.”
“Mr Deputy Speaker, Sir, the present law allows Singapore Pools a wide discretion to introduce various forms of gambling devices. But naturally I do not believe that they would proceed without consulting the Government on this. As far as the law is concerned, we intend to take a look at the implications for the future. REVISION OF PENSIONS 17. Mr Ng Kah Ting asked the Minister for Finance and Minister for Health whether he is ready to announce the revision of the pensions of Government pensioners.”
“Sir, we would naturally accept the advice of Members of Parliament. However, I think it would have to be on the basis of the majority of Parliament.”
“Mr Deputy Speaker, Sir, the Singapore Pools would certainly take into account the wishes of the residents in any area. But it all depends on what the Member means by "the majority of residents". The intention is, in fact, to locate the terminals in the vicinity of booths which currently exist and which have been in place for some time and therefore should be near areas which are not socially disruptive and have, in fact, been accepted by the residents.”
“It only denies illegal profits. Mr Chng Hee Kok (Radin Mas): Mr Deputy Speaker, Sir, I have a question for the Hon. Minister. If the majority of residents in a general survey indicate that they are not in favour of betting agents being located in their constituencies, will the wishes of these residents be respected?”
“Mr Deputy Speaker, Sir, I do not believe that the introduction of an electronic terminal system adds to the vices, as the Member has said, to what it is now. It is merely a replacement of the existing system.”
“Mr Deputy Speaker, Sir, Singapore Pools plans to introduce an on-line computerized electronic terminal system which will eventually replace its current manual system. The on-line computerized system will be used initially for Toto only. At a later date, its use will be extended to include the 4-digit numbers game. This will take into account the need to prevent proliferation of betting systems. Operation of the computerized system is simple but requires the use of telephone lines. Singapore Pools therefore intends to locate the electronic terminals within the premises of shops located in the vicinity of its current sales booths and to have the terminals operated by agents on a part-time basis. This will allow the phasing out of the manual sales booths, Present plans are to install 150 terminals which will displace the existing 169 sales points. The decision to computerize the Toto and 4-digit games implies no significant change in Government's policy towards gambling. Government recognizes that the urge to have a flutter, whether it be Toto, 4-digit, or horse-racing, cannot be totally eliminated from human nature. Far better that some controlled legal outlets be provided than to allow the urge to be satisfied by illegal operators. The proposed 150 electronic terminals will allow adequate access for those who wish to play the games. Care will be exercised to ensure that the terminals are not located in areas frequented by children and the gaming facilities will not be actively promoted.”
“The first is the primary manufacture of the active ingredients, and the second is the processing of the active ingredients into the finished form such as tablets, capsules, mixtures, injections and ointments, etc. Primary manufacturing of active ingredients is both capital and technology intensive, and has a high value-added per worker. It requires a large investment capital to set up and for research and development. To be successful, a factory for the primary manufacture of active ingredients must have a market that is larger than what the Ministry of Health or Singapore can provide. On the other hand, secondary processing involves the formulation, compounding and packaging of generic productions into tablets, etc. It is less capital intensive and tends to be a local market orientated operation. The proposed manufacturing plant for the Ministry of Health is of the latter type and is meant to meet its own needs. It will therefore not in any way discourage research-oriented pharmaceutical companies from setting up manufacturing plants in Singapore. WOODBRIDGE HOSPITAL (Plans and programmes for discharged patients) 3. Mr S. Vasoo asked the Minister for Finance and Minister for Health (a) what is the progress in the development of Woodbridge Hospital; (b) what are the plans to strengthen day and community care programmes for discharged patients who have been treated for psychiatric illness; and (c) what efforts are being made to promote a mental health education programme.”
“The Ministry's actual drug bill was $15.5 million in 1984 and would have been well over $20 million if patented proprietary drugs had been used. The demand for drugs and pharmaceutical products by Government hospitals and OPDs has increased at the rate of 5-7% a year for the past 10 years. This demand has outgrown the production capacity of the existing factory. This factory is severely short of space for production and storage, is poorly laid out and uses antiquated, labour-intensive techniques. The Ministry has plans to construct a new, modern, automated factory in its place. The proposed new factory will not in any way contradict Government's policy to move away from private sector commercial activities. It replaces an existing facility and its products will be used mainly in Government hospitals and clinics. (b) The new factory, which is estimated to cost approximately $26.5 million will employ the latest techniques of drug manufacturing including automated systems of production. It will be less labour-intensive. This will reduce the cost of the product as manpower costs account for a significant portion of production cost. The factory will concentrate mainly on the production of high consumption items to achieve economies of scale to be cost effective. It is estimated that the factory will result in a saving in the drug bill of approximately $4.5 million annually. (c) During the period 1980-84, the total investment in Singapore by the pharmaceutical industry amounted to approximately $194 million. The Economic Development Board does not foresee any major pharmaceutical investments in Singapore in the near future. (d) There are two stages in the production process for pharmaceuticals.”
“The answer to the Member for Anson is no. PHARMACEUTICAL FACTORY (Investment in) 2. Mr S. Vasoo asked the Minister for Finance and Minister for Health (a) what is the rationale of developing a pharmaceutical factory costing S$20 million and whether such a move contradicts the Government's policy of moving away from commercial activities; (b) whether the investment in the pharmaceutical factory is cost effective; (c) whether other multinational research-based pharmaceutical companies have committed themselves to invest in Singapore; and (d) whether the Government's plan to build the pharmaceutical factory will discourage other more substantial research-based pharmaceutical investments in Singapore. The Minister of State for Health and Foreign Affairs (Mr Yeo Cheow Tong) (for the Minister for Finance and Minister for Health): Mr Deputy Speaker, Sir, I will answer on behalf of my Minister. The proposed pharmaceutical factory is intended to replace an old Government facility at Jalan Bukit Merah. Since 1950, the Ministry of Health has operated a pharmaceutical factory in an old converted warehouse at Jalan Bukit Merah. The factory is not engaged in the primary manufacture of active pharmaceutical ingredients but carries out the secondary pharmaceutical process of formulating, compounding and packaging of a wide range of generic or non-proprietary drugs into tablets, capsules, mixtures and injections, etc, for use within the Ministry's hospitals and outpatient dispensaries. This factory has provided our hospitals and dispensaries with a wide range of essential drugs at very economic prices. Without this facility, the Ministry would be obliged to purchase all its drug requirements in the form of proprietary drugs from commercial sources at substantially higher prices.”
“As I said, it is premature to discuss any of these measures until the taxi fare situation is settled.”
“Mr Deputy Speaker, Sir, it is premature for me at this stage to consider reviewing or withholding the imposition of a diesel tax on taxis. My colleague, the Minister for Communications and Information has already informed Members of the measures he is taking with regard to taxi fares. In my view, the diesel tax should be imposed in order to reduce the gross disparity in operating costs between petrol-powered motor cars and diesel-powered taxis. However, if in September the Minister for Communications should advise me that it would be desirable to have some flexibility as regards the imposition of the diesel tax, I shall, of course, give his views very serious consideration.”
“At the request of my predecessor, the Public Service Division of the Ministry of Finance is undertaking a review of the Singapore Allowance payable to pensioners. I have not received their report but have asked PSD to expedite their recommendations. HONGKONG AND MACAU WORKERS IN SINGAPORE 3. Mr J.B. Jeyaretnam asked the Acting Minister for Labour the reasons for the Government's plans to encourage workers from Hongkong and Macau to come and settle down in Singapore.”
“(a) As at 31st December 1984, the cost of Government investment in companies and their subsidiaries was $2,641 million. (b) As at 3lst December l984, the cost of investment in companies by statutory boards was $147 million. (c) The total profit of companies under (b) for 1984 was $33.1 million. The statutory boards' share of the profit was $19.5 million, as they did not hold a 100% stake in each of the companies. (d) The list of companies was circulated to the House on 6th March 1985. REVISION OF PENSIONS OF GOVERNMENT PENSIONERS (Particulars) 2. Mr Ng Kah Ting asked the Minister for Finance and Minister for Health (a) when he can announce the upward revision of the pensions of government pensioners as promised by him in Parliament on 22nd March, 1985; (b) how much the revision will cost the Government; and (c) how many pensioners who are presently drawing monthly pensions of (i) below $500; (ii) between $501 and $750; (iii) between $751 and $1,000; (iv) between $1,001 and $1,500; (v) between $1,501 and $2,000; and (vi) above $2,000 will benefit from this revision, giving separate figures for each category.”
“Mr Deputy Speaker, Sir, the decision to increase petrol tax was designed for a specific purpose of reducing the usage of cars. For that reason, I think it should remain. If the Member for Rochore considers that other measures are required to assist the economy, that is a different issue altogether. TAXI DRIVER'S LICENCES (Issue to Government and Statutory Board employees) 8.”
“No, no. I think he is, what you call, testing the parameters. And when you are a far-seeing political leader, you have to consider the possibility of something happening. So you prepare in anticipation. I think, by and large, there is a proportion of the younger population who may consume and spend all they saved. But by and large, when the time comes, firstly, even if he does spend, there will be adequate outlets for his expenditure if it takes place. So inflation will not take place. So I see, from the inflation point of view, no real need to be concerned. On the second point, perhaps the Minister for Labour should clarify.”
“Mr Speaker, Sir, on the point about the Prime Minister's concern, I think, understandably, the Prime Minister generally tries to see as far into the future as possible, and he is concerned that there may be a basic change in the habits of the Singaporean. I myself think it is probably unlikely, but he cannot discount this.”
“I think it is highly unlikely. Firstly, the other point which I forgot to mention is that Singapore operates a very open economy. I did mention yesterday, or the day before, that about 70% of our goods consumed in Singapore, are imported. Therefore, even if you pour $9 billion into the system, assuming there are no net savings, there will be some pressure on services possibly, but the great bulk of these consumption items would be available from a vast world market where, therefore, even $9 billion is a drop in the bucket and will create no problems whatsoever.”
“So again, the pool of funds in the economy for investment purposes or assets for investment would be very much larger, even discounting inflation. Thirdly, even if the facts as stated by the Member for Potong Pasir were correct, that a $9 billion flows into the system in 15-20 years' time, I think the Member is doing every Singaporean a disservice because every single Singaporean has proved to be a very prudent individual and is, in fact, an inveterate saver. In addition to the gross contributions of CPF in 1984, around $5 billion, he has also salted it away in the POSB about $7 billion. In addition, private account saving deposits in banks total another $4.5 billion. You can see, therefore, even if the entire amount of money were released to them, I think it is highly probable that a good proportion would be re-saved or invested in financial instruments by the year 2005, 2010 or 2015, at which time we would hope that the range of financial instruments available for investment would be vastly larger. So there is really no need to be worried or be concerned that the Government would be unwilling to release money when this falls due because the opportunities for investments are vast. In fact, in my day-to-day meetings with visiting foreigners, when we discuss about the CPF, they have invariably expressed the opinion that it is the greatest invention since the wheel, and they wished that their governments had the gumption or political ability to introduce similar schemes.”
“Mr Speaker, Sir, since we are talking about money matters, perhaps I should clarify on behalf of the MAS. I think the Member for Potong Pasir is unnecessarily worried about effects of net CPF releases causing inflation in the Singapore economy. His concern is understandable but it is totally misplaced. Let me cite. M1 is defined as a narrow money supply indicator and represents only cash in circulation plus coins in circulation and current account deposits. When you talk about total money supply in Singapore, you really should be talking about M3 which includes fixed deposits, certificates of deposits, savings accounts and deposits in non-financial institutions such as finance companies. When we talk about this, the total amount currently in Singapore is $36 billion. In addition there are also considerable other financial assets available for investment by Singaporeans because the total stock market capitalization, as at the end of 1984, was $68 billion, of which $28 billion was accounted for by Singapore registered companies and about $40 billion by Malaysian companies. So there is even now no shortage of financial instruments for the prudent Singaporean to invest in, if he could lay his hands on the money. So that is one point. Secondly, I think he has calculated that in about 15 years' time, net CPF withdrawals would be around $9 billion. I do not know how this is calculated. Our own calculations show that a net reversal or net outflow would take place probably by the year 2013, or roughly 18 to 20 years in the future. Now, by that time, one must realize that the Singapore economy, even assuming a conservative growth rate of 6% per annum, would have quadrupled in size.”
“Finally, Sir, I would like to talk about the question raised by the Member for Jalan Kayu, which is the suggestion that Government should encourage the development of venture capital, high technology companies, by providing tax concessions for individuals, like doctors and lawyers, who might have surplus capital and, instead of diverting this to the turf club, it might be useful if this could be pooled to provide venture capital. It is an interesting proposal which has already been looked at. There are, of course, tax implications which we will have to consider. It is something which has been used in other countries. So we are actively looking at this particular problem, including the possibility of allowing small companies, high-risk companies, to be listed in a separate board in the Stock Exchange, as is done in the United States, where these companies during the formative growth stages do not meet the criteria but could do with the infusion of risk capital. We are looking together with the MAS at the implications of allowing the OTC type operation to be done in Singapore.”
“In addition, there are other incentives to encourage technological transfers such as manufacturers are allowed to write off capital cost, acquiring approved know-how, patent rights over five years under the Income Tax Act. Manufacturers are also allowed double deduction on operating expenses for R&D activities under the Income Tax Act. I believe the Member for Radin Mas also asked for specific incentives to encourage exports where concession tax might be granted for companies which are prepared to export on the margin. This is an area which, I think, we will have some difficulty because it will be quite contrary to the GATT code. And we are already facing complaints from the developed countries. Special tax concessions sought violate the GATT code. So in order to help our exporters, we have to look to other means which are now promoted by the Trade Development Board, finding new markets, new products and new methods of marketing. 11.30 am I believe he also suggested that Government might wish to consider the privatiza- tion of statutory boards, including Telecoms. Although I cannot speak on behalf of the Ministry of Communications, I think it is not the Government's present intention to privatize the Telecoms because Telecoms is doing an excellent job. It is profitable, although it is considered to be a monopoly. I know there is some criticism on those grounds. But nevertheless, firstly, we do not need the money. In the case of UK and some other countries, they are privatizing because it is a source of Government funding. We do not need that. However, I am not saying that we might not do this in the future but there is no present intention.”
“For those companies where Government considers it does not need to retain majority control for strategic reasons, such as defence related companies, the degree of privatization or divestment of equity could be considerable. It could range from 100% divestment - by selling shares in the entire company to the public, leading to a change of management, or it could mean partial divestment in which the Government continues to retain a 51% control for example, in which case management will still be within the control of Government - to companies in which Government will merely divest an additional amount of equity but still retain a significant equity interest as a long-term investment. So there are many possibilities and permutations. We are not in a desperate hurry to accelerate this process because, compared to some other countries, we do not need the money. So we do not need to sell companies simply to raise funds. But where we want to issue equity, it will be when the timing is right, when the capacity of the Stock Exchange is able to absorb this release of equity and where it is considered beneficial to increase the shares in the market in order to add depth to the Stock Exchange. I will now turn to the question raised by, I think, the Member for Radin Mas on his request that local manufacturers need new technological infusion and will the Government provide further incentives more than what is now available through the PDAS scheme. We agree that technology transfer is vital for the development of local manufacturing capacity. The PDAS was set up for a very specific purpose of encouraging local companies to develop new products or to improve existing products.”
“In this environment, in the new technology areas, in service industries, new companies require new techniques. These companies generally are smaller, need less capital, far greater innovation. These new technologies also face very short-term life cycles, rapid obsolescence. In this environment, the Government sees that the conditions required for them to survive are better served by the private sector with its greater risk-taking capacity, its greater possibilities of innovation and entrepreneurship; and less possible for Government with its civil servants to participate in this area. Hence a requirement to change direction fairly rapidly. It is also necessary to relieve the heavy load now placed on senior civil servants who are running our major industries. I do not think Members are probably aware that handfuls of senior civil servants are doubling up as chairmen of major companies, in addition to discharging their normal responsibilities. This imposes an impossible load on individuals and I do not think long-term it is sustainable. Indeed, if it were not for their particular dedication and expertise, it would not have worked. Hence the need to change direction. Turning to the question of privatization, what is Government's policy? The Government has not completed its plans for the programme of privatization but the intent is clear. There are 100% Government-owned companies which are currently not listed on the Stock Exchange. It is possible that some of these may be listed if they meet the Stock Exchange listing requirements of profitability, size and other criteria.”
“In the early post-independence days, Government's priority was on job creation. And indeed in those days, without Government initiative and mobilization of capital into the areas of ship-building, shipyards, ship-repairing, encouragement of refineries, steel, I am fairly certain that the growth of the Singapore economy in the 60s and 70s could not possibly have been as fast as it did. We were facing a situation where the Singapore businessmen, traditionally engaged in trading, entrepot activities, and in servicing the British Army here, had no experience nor the ability to engage in industrialization and Government initiative was essential. The companies which were set up to do these jobs have done an excellent job. In fact, most of them have proved extremely profitable during the 60s and 70s. Why change direction now? That is because there is a fundamental transformation in the world economic development. Heavy industries, like shipyards, shipping or refineries and the others, are facing considerable difficulties and seeming long-term declines because of gross over-capacity, worldwide. And it will take some years of world economic growth for these industries to recover. Faced with this situation, we have to move forward very rapidly. Hence Government's move towards restructuring our economy because not only do we face declines in these primary industries which we were so successful with in the past, but we are also facing considerable competition from the lower wage countries in the region, including China and, potentially, India. Also, world technology is moving so rapidly into high-tech areas, into the service areas, which in the latter case is going twice as fast as conventional world trade.”
“The figures for the first quarter of this year will not be ready until towards the latter part of April. The second question raised by the Member for Clementi concerns the participation of Government companies in private sector activities. He wants to know whether this is going to be a continuing problem. The second part of his question was, what is Government's privatization policy? On the first question, the Finance Minister in his Budget statement has already made some general observations. But it may be useful if I repeated these for Members' information before moving on to the second question. In the Budget statement, the Minister for Finance said that Government has issued guidelines to Government companies which require them to confine their activities to their original mandate. Where they feel a need to depart from these guidelines, they would have to obtain the specific approval of a committee chaired by the Minister for Finance. This is to ensure that Government-owned companies do not stray into areas which compete directly with the private sector, and this is a clear-cut policy now accepted by the Government. On this point, perhaps I should elaborate a little on Government's philosophy between Government participation in the economy and its attitude towards the private sector. The First Deputy Prime Minister and the Minister for Finance have already enunciated on various occasions the wish that the private sector should participate more fully in the economic development of Singapore from now on for the next 10 years. The reason for this seeming change in direction is not that Government believes that its participation in the past in the economy was wrong, but because of the basic shift in the development of the world economy.”
“The brackets would be covering areas where we have two consecutive quarters of decline, not single. Because that is the definition for recession, which I have used.”
“But it does not mean that consumer demand is falling off completely. It is simply that there are too many shops catering for the same consumer demand. I hope that this puts into perspective more correctly the state of the Singapore economy. Preliminary figures for the first quarter of 1985 look fairly encouraging. So I think we see problems in particular sectors, but for the economy as a whole I would still be fairly sanguine.”
“This is primarily due to over-capacity and not lack of demand. Consumer demand for housing and for trade goods and for services has not declined. The problem arises because of gross over-capacity in both housing, offices, shopping centres, what have you. 11.15 am In the case of Singapore, the property market follows a cyclical pattern. The period between troughs is approximately 7-8 years. My recollection is that the last trough was around 1978. So we should be approaching a trough just about now. In the case of Singapore, this may be speculative but indeed the cycle is between seven, eight and nine years. In the case of Singapore, if we assume that the economy as a whole is going to continue to grow, property must recover because we have limited land. The question is: can companies survive the intervening period? This is the area which, I think, we ought to focus on, how we should help the companies get through the difficult period. Because fundamentally, that sector must recover, if we assume the economy as a whole is sound. The same applies to the retail sector where there is at the moment gross over-supply of retail activity. Again, it is not because consumer demand has declined. Tourist arrivals have remained fairly constant. In fact, it is rising. The purchasing of our local goods and services continues to be present. But everyone in the retail sector is suffering, simply because if consumption demand does not rise more than the 5%, 6% or 7% per annum and you double or quadruple capacity, everybody's profit margin suffers; and indeed this is what has happened. Sir, many companies which were caught with high rentals incurred during 1981 and 1982 are now facing severe cash flow problems. This is a problem we recognize.”
“So, indeed, that is the case. These are gross figures for the economy as a whole. It will be useful if you look at the development sectorally, which is shown in Table 2, where we have tabulated the economy broken down into six main sectors. I think the only relevant figures are the ones which are bracketted. Under Manufacturing, for example, you will see that the third and fourth quarters 1984, we had two quarters of consecutive decline. So you could say that, within the Manufacturing sector, there was indeed manifestation of a recession by the definition I have given you. On the other hand, Trade had a recessionary period during the first and second quarters of 1984 but appears to have recovered quite strongly in the second half. Transport and Communications has been growing throughout, without any interruption. The same applies for Financial Services and other buoyant sectors of our economy. Construction was also generally strong mainly because of public sector construction, although there was a decline within it of private sector construction. Others include, for this purpose, agriculture, quarrying, utilities and various miscellaneous items. You will see that it is in this sector where you can, indeed, say we have had recession for quite a long time, but a lot of this is due to the winding down of our pig industry, and also declines in some periods in the chicken and egg industry. So this gives you an illustration of the sectoral changes in our economy and the overall picture which, as you can see, is not as bad as some might get the impression. This is not to say that we do not recognize there are specific sectors which are in some difficulties, as I mentioned earlier, the developers are facing cash flow problems.”
“1791 - 1794) [Copies of Chart and Tables distributed to Members] - Gross Domestic Product at 1968 Factor Cost, Singapore's Economy as a Whole Gross Domestic Product at 1968 Factor Cost, Gross Domestic Product by Sector at 1968 Factor Cost (Cols. 1791 - 1794) The first sheet is a chart in which we have the GDP plotted against quarter-by-quarter performance over the last five years. You will see that it is represented by a jagged line which shows very marked seasonal effects in which the first quarter of each year's GDP shows a significant decline. Now, the explanation is fairly straight forward. In the first quarter, we have Chinese New Year during which large sectors of the economy simply grind to a halt. The fourth quarter in each year is a good quarter for export industries since our main export markets will be stocking up for the holiday sales. But, without exception, as you can see from the graph, the economy recovers for the rest of the year. There is a clear pattern of growth and decline. If you look at the year 1984, you will see that the curve starts to turn downwards. It means that the economy is slowing down, and that is what we are going through now, a slowing down of the economy, and I would state that it is not a recession by definition. If you turn to Table 1, we have tabulated over the last three years the actual comparison of GDP growth in Column A, the gross changes in each quarter over the same quarter in the preceding year in Column B, and the quarter-to-quarter changes in Column C. Now, you will see, other than the first-quarter declines, the reasons for which I have explained, that there is no case for a recession if you accept the definition that it means two consecutive quarters of decline. In 1984, you will see a slowing-down growth.”
“Mr Speaker, Sir, I will respond to questions raised yesterday afternoon by Members for Whampoa, Clementi, Radin Mas and Jalan Kayu, and my Minister of State will deal with the rest. On the question raised by the Member for Whampoa about the state of the Singapore economy and the various reports built in the local press and in foreign press which have left the general impression that our economy is sliding into a state of recession. It is important that we look at the problem in perspective so as not to leave an incorrect impression for the rest of the world. Undoubtedly, there are sectors of our economy which are facing some problems. These are well-known. For example, the developers are facing cash flow problems, so are the retail merchants, the shipyards, and our refineries are facing squeezes on the profit because of wide spread international competition and reduction in demand. However, one should look at the economy of Singapore as a whole, and see what we mean when we say "it is in a state of recession." Unfortunately, in the case of Singapore, we do not have a standard definition of recession that is accepted by all economists, I think partly because we have not seen a real recession ever since we became independent. The widely used definition of recession in the United States and in some parts of Europe is that if an economy suffers two consecutive quarters of GDP decline, then it is entering a state of recession. If we use this definition, let us examine some figures relating to the Singapore economy. Mr Speaker, Sir, with your permission, I would like to ask the Clerk to distribute one Chart and two Tables. [Copies of Chart and Tables distributed to Members]. (Cols.”
“" - [Dr Ang Kok Peng]. Question again proposed.”
“The other factor which is important is: we operate a free economy with practically no import duties or excise taxes on items other than petrol, liquor and tobacco. This means that we are able to import from everywhere around the world the cheapest and best goods. Of course, another important factor was the presence of the CPF which removes from immediate consumption some of the high wages introduced in the 1980-83 period. The second part of the question which was asked concerns whether the cost of housing, including the increase in Housing and Development Board purchase price, is taken into consideration in the computation of CPI. The answer is yes and no. No, because the purchase of houses is not considered as consumption. Therefore, the cost of houses is not factored directly into the CPI. However, the cost of housing is factored in two forms. Firstly, direct rentals, and the majority would be HDB rentals, would be included in the weighting for the CPI index. For owner-occupied flats or houses, the figure used would be the assessed value, ie, what the owner-occupier pays in the way of assessment or a rent imputed from that which is equivalent. Because the majority of our respondents in the survey actually occupy HDB type accommodation, the housing component of CPI is relatively small and, overall, it accounts for no more than 7% of the CPI weighting. MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR 1ST APRIL, 1985 TO 31 ST MARCH, 1986 Order read for resumed consideration in Comminee of Supply [7th Allotted Day]. [Mr Speaker in the Chair] Head M (con t.) - Resumption of Debate on Question [26th March, 1985, "That the sum to be allocated for Head M be reduced by $10 in respect of Subhead MA-01 Object Group 1210 of the Main Estimates.”
“Another example would be a family which in 1982-83 normally travelled by public transport and, in the intervening period, because of promotion of the head of the household, was able to buy a car. This is a significant change in the style of living which is not picked up in the CPI changes. So this is a rather important distinction which Members should recognize. A survey is carried out once in every five years simply because it is impractical and too expensive to do it more frequently because of the vast amount of work involved. In the majority of countries which have CPI indexes, surveys are carried out once in 10 years, particularly in large countries like the United States. It might be of interest to Members to know of the history of CPI changes for Singapore over the last 25 years. We have indeed a remarkably good record of inflation. In the last 25 years, in only two years did we have high inflation. We have, in 1973 and 1974, inflation in the range of 20% due to very high cost of imported fuel and food because of the first oil shock. In two years, in 1980 and 1981, inflation of CPI changes was in the range of 8%, partly due to the results of the second oil shock in 1979 and partly because of Government's policy of high wage which started in that year. In the remaining 21 years, 18 of these years have CPI changes or inflation changes of less than 5% and, in 12 of these 21 years, the inflation was indeed below 2%. Last year, the inflation was 2.6% and the preceding year 1.2%. This is indeed a remarkable record due partly to a number of factors which Members might be interested to know. One was the very strong Singapore dollar, and this is important because approximately 70% of what we consume is imported.”
“Mr Speaker, Sir, the Consumer Price Index is the most widely used indicator of inflation for consumption expenditure. It is a measure of average price changes for a fixed basket of goods and services commonly used by households in Singapore. This basket was derived from the household expenditure survey conducted between June 1982 and May 1983. It covered a range of household expenditures between $100 per month and $2,999 per month, and this is representative of approximately 91% of the households in Singapore. 4,573 households involving 22,000 individuals participated in the survey and the range of individual items of goods and services covered around 1,450 items. Hence, for the vast majority of households in Singapore, the CPI could be said to be fairly representative of the cost of living, with one important qualification - the CPI does not measure changes in consumption habits and patterns, because it measures price changes for a fixed basket of goods and services. What does this mean? This is why it is important to distinguish between the concept of cost of living changes and CPI changes. Perhaps the easiest way to explain this is to give an illustration. A household participated in the 1982-83 survey on an item of food consumption, for example. Let us assume the family went out to eat in 1982-83 once a week. This would be factored into the CPI base of weighting. In the intervening period, assuming the wife decided to go out to work, they had to change their style of living. They now ea out three or four times a week. This is a significant change in the style of living which affects the change in the cost o living but is not picked up by changes in the CPI.”
“It is something which I cannot really answer on behalf of the Minister for Finance. It is fair to say that whatever one grants to business people would not be sufficient because if I were a businessman I think it would be foolish for me to say that I have had enough. Inevitably, whatever is requested would be insufficient from somebody's point of view. But I think the Minister for Finance would take this into consideration in the light of the actual circumstances. MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR 1ST APRIL, 1985 TO 31 ST MARCH, 1986 Order read for resumed consideration in Committee of Supply [4th Allotted Day]. [Mr Speaker in the Chair] 11.18 am Head U (cont) -”
“I am not entirely clear on the question, ie, whether the incentives were sufficient or there is a request for more of them.”
“Mr Speaker, Sir, I am well aware of this. I did mention in my response during the debate on the President's Speech that one has to be cautious about looking at statistics because a large number of companies formed need not necessarily have such business. We do not keep a day-to-day check on the number of companies which have gone into operation. So I cannot give an immediate answer. But the statistics are readily available. If the Member wishes to have this, we will provide it to him.”
“Mr Speaker, Sir, the Annex relates to schemes developed and administered by the EDB. We have a separate organization, the Trade Development Board, which specializes in marketing and the hon. Member for Chong Boon is, in fact, the Chairman of the Trade Development Board. This was set up about two years ago as a result of requests from the business community. It has expanded tremendously in the last two years and one of the areas where they are concentrating on, in fact, is marketing.”
“Mr Speaker, Sir, the majority of these requests were in aid of local companies because, by and large, it is the smaller companies which are involved. The major multi-nationals normally do not require such assistance.”
“Mr Speaker, Sir, I am not suggesting that the press has been deliberately playing up the bad aspects of Singapore's economy. I appreciate that from the press reporter's point of view it is easier to gather reports on retrenchments and company failures than to gather information on company openings and new employment opportunities created by new companies. I would merely ask them to try and present a more balanced view so that the world at large can understand that Singapore is not going down the tubes.”
“Assistance schemes available to foreign companies are also available to local industries. They include tax incentives, Interest Grant for Mechanization Scheme and the Training Grant Scheme. The latter two schemes are funded by the Skills Development Fund. These schemes have benefited our local industries tremendously. Over the last three years, more than half the tax incentives, like pioneer status, investment allowances and export incentives granted, were awarded to wholly local-owned or local-foreign joint venture companies. As for the Interest Grant for Mechanization Scheme, 69% of all grants or $33.7 million had been given to local companies as at 31st December, 1984. Local companies are also the major beneficiaries of the Training Grant Scheme. Of the $216 million of grants committed between 1980 and 1984, 65% were for local industries. In addition there were specific schemes which are specially designed to help small and medium-sized local companies. For example, the Small Industries Finance Scheme, Special Grants for Critical Supporting Industries, Product Development Assistance Scheme, Small Industry Technical Assistance Scheme, Development Consultancy Scheme and the Preferential Release of Skilled Workers from the EDB-Joint Industrial Training Centres. Details are given in the Annex (Cols. 1341 - 1342) which the Clerk has already distributed to Members. Annex (Cols. 1341 - 1342) Mr Speaker, Sir, local industries are very important to our economic development. Their profits are retained in Singapore and accrued to our people. Hence, the Government has always been more generous in granting tax incentives and allocating specially-trained skilled workers to local industries. If need be, the Government will set up more incentive schemes to help local industries.”
“To put it into perspective, in Japan last year, 19,000 companies closed down. Amongst them were large steel mills, shipyards, oil refineries, because they were also going through a major restructuring process of upgrading themselves. I do not think anyone can claim that Japan's economy is in difficulties or that it is not a dynamic economy. As for retrenchments, the picture is also not as gloomy as the press may sometimes paint it. As at 15th March 1985, 7,062 workers have been retrenched. For the first quarter of 1985 as a whole, we expect the total retrenchments to number around 1,000. In the last five years, for the period 1980 to 1984, the average number of retrenched workers in the first quarter of each year was about 1,300 so that the number of retrenchments expected in this first quarter is not out of the ordinary. I would just like, Mr Speaker, Sir, to urge that perhaps occasionally the press might wish to consider printing some of the positive aspects of our economy rather than concentrate entirely on company closures and retrenchments. We could do with a bit of light relief from time to time. Mr Speaker, Sir, coming back to the question of the Member for Whampoa, I would like to add that the Government does not find it necessary or desirable to provide financial support to companies facing winding-up action. However, the EDB has intervened in some cases to try and persuade banks to be more flexible in recalling their loans. On the subject, Mr Speaker, Sir, of help for local industries, the EDB whilst actively promoting foreign investments places particular emphasis on helping local entrepreneurs. The Board's overseas and home-based officers work together to arrange joint ventures with foreign companies for sub-contracts for our local industries.”
“Mr Speaker, Sir, in 1984, 66 manufacturing companies were dissolved. All these 66 were local. 81 manufacturing companies went into liquidation. Only one of these was foreign. Sir, there were a total of 147 manufacturing companies which closed down in 1984, and this is equivalent to 29% of the total company closures of 505 during the year. However, this must be seen in the context of the total number of companies in Singapore which approximately now stand at 63,000. On the question of retrenchments, in 1984 3,487 workers in the manufacturing sector were retrenched, accounting for 75% of the total retrenchments in the country as a whole, 4,694. We do not believe that retrenchment is now a serious problem, as most of those retrenched workers have been able to find replacement jobs, as our labour market is still fairly tight. In fact, I would like to join my colleague, the Minister for Finance, in assuring the House that the economy is not in as bad a state as some Members and the press might think. While some companies have closed down, many more new companies have, in fact, been formed. In 1984, a total of 4,601 new companies were formed, against 505 closures. This includes the manufacturing and the non-manufacturing. Hence, there was a net increase of 4,096 new net company formations out of a total of 63,000 companies. This represents a growth in the company numbers rate of about 6.5%, which is in line with the growth of the economy. The birth and death of companies is part of the restructuring process and also the evolutionary process of a dynamic economy. It is something which, I think, we have to learn to accept. It is indeed painful for those which have to close down, but we must look at the net effect on the economy as a whole.”
“They have been in use in schools for more than 10 years. They are also being widely used in Singapore, such as in our Chinese newspapers, and our publishers are also publishing Chinese books in the simplified form. So if we now want to abolish the use of simplified Chinese and go back to the usage of the old complicated forms of Chinese writing, I think it is a retrogressive step and will create more confusion. So, I think we must accept the situation although it is a little inconvenient to us, the older generation. I hope all can sacrifice our smaller selves in the interest of the larger self, the society at large.”
“For the purposes of examinations and other important occasions, we have always allowed the students to write besides their Chinese characters their statutory names as well as in Hanyu Pinyin most clan associations, I believe have their own genealogical records to trace one's forefathers or family tree. So if one were to find one's family root, one can approach one's own clan association. The talk that Hanyu Pinyin will bury or cut off one's memory of one's roots or forefathers is therefore unfounded. As regards Hanyu Pinyin replacing old Chinese street names, we make use of Hanyu Pinyin only in respect of new towns and related names such as Hougang and Yishun replacing Au Kang and Nee Soon which were originally transliterated in dialect. When names are not of dialect origin, they are left intact, such as Tampines, Pasir Ris, and so on. As regards the Member's criticism about "Seletar" being changed to Shilida, I think it is due to misinformation. I consulted the HDB and I was told that HDB at the moment does not have a plan to develop Seletar Housing Estate. Even if the estate were to be developed in the future, it will still be called "Seletar" as before, because "Seletar" is not a dialect-transliterated name. Sir, I should stress that Hanyu Pinyin is only a very useful instrument to help us pronounce Chinese characters. Although in China, specialist reformers are studying and trying to use phonetic language to replace Chinese characters en bloc, we in Singapore do not intend to replace Chinese characters with Hanyu Pinyin or other phonetic language as yet. At present, Hanyu Pinyin and the simplified form have become part of our life. In schools, Hanyu Pinyin and the simplified form are used in order to help our pupils to learn and master Mandarin more effectively.”
“Therefore, after deliberation of the two systems, in November 1973 the Ministry of Education announced the use of Hanyu Pinyin which would help the pupils to learn character pronunciation better. As it might confuse the pupils in their learning of English, only from Primary 4 onwards were they required to learn the new Hanyu Pinyin system. Nowadays, both the teachers and pupils from Primary 4 upwards are quite familiar with this system. I have noticed that the present students pronounce Mandarin much better than my generation. It is due to the use of Hanyu Pinyin. On names in Hanyu Pinyin, Sir, I want to emphasise that we have not tried to change students' names by adopting Hanyu Pinyin. As a Chinese, one should have a name which is written in the Chinese characters. We have no right whatsoever to change the name of a Chinese written in the Chinese characters. What we are doing is just try to help pronounce the name by using Hanyu Pinyin instead of in dialect transliteration. For instance, the word Wang in Wang Bang Wen (Ong Pang Boon), the surname of the Member for Telok Ayer, is pronounced Ong or Wong or Heng or Wee, according to different dialects. In Hanyu Pinyin, it is Wang. There are other pronunciations to indicate the same character. Therefore, Hanyu Pinyin is to standardize all the different pronunciations in order to make it easier. To my knowledge, the Registry of Births and Deaths has not compelled Chinese parents to register new births in Hanyu Pinyin. But in our schools, in order to avoid the children being called by different pronunciations when they attend different classes, we have decided to standardize the pronunciation by using Hanyu Pinyin.”
“The full form of the word ching (a) consists of 15 strokes, whereas the simplified form ( ) consists only of seven strokes. The word feng consists of 18 strokes in the normal form ( ) whereas the simplified form ( ) consists only of four strokes. Therefore, the simplified writing has helped the pupils to learn Chinese with ease. The member claimed that the simplified form could not bring one to the olden classical literature. I wonder whether he has been to the book shops in Bras Basah Complex where he could find books printed in both forms, from Taiwan and also mainland China. Books from mainland China, including the classics are published in the simplified form of Chinese characters. In actual fact, Sir, among the 2,000-odd simplified Chinese characters, only about 500-odd differ very greatly from the original form. Let me now throw some light on Hanyu Pinyin, which is a system that provides the phonetic way to help one to pronounce the Chinese characters correctly. In February, 1958, China announced the Hanyu Pinyin system. At that time we were faced with the choice of either using Hanyu Pinyin or the Mandarin Phonetic Symbols. In my generation the system used was a set of phonetic symbols (be, pe, me, fe, ....) to indicate different sounds to help in pronouncing the characters. These are only symbols, phonetics. The learning of Chinese characters which are ideograms has to be done from memory which is already taxing to the pupils. To learn the pronunciation of the characters they have to memorise another set of symbols. This is definite an added burden to them. Whereas Hanyu Pinyin consists of romanized phonetic characters which the pupils are familiar with.”