Tan Su Shan
Singapore
“And because actual individuals could be punished as a result of their company's transgressions, any person holding a management position, who may not be the key decision maker, could be made a Page: 43 scapegoat. This raises the issue of fairness. The other issue is the question of legislative over-reach.”
“Why not continue this practice and do more work to encourage students to take more proactive steps in playing their part to make our society a better place. Give our students a shared vision, a mission of what we want Singapore to do; and where we want to go; and what we can achieve if we are a connected society.”
“Our fundamentals remain sound: a balance of payments surplus, sound public finances, stable banking sector and a credible exchange rate system. These are advantages most countries do not have.”
“Mdm Speaker, I would like to ask the Minister this: the MOE Paper on Principal Rotation states that the process of systematically appointing and rotating principals enables experienced principals to share best practices in support of "Every School a Good School". Would that principle, therefore, apply to teachers as well?”
“Hopefully, Singapore can start to set these standards rather than just follow them, and, hopefully, we can gain more credibility in the long term by showing that whilst we remain open for business, we are serious about setting and executing on only the highest international standards.”
“This Bill may be a late start, Sir, but it is an important start in how we recognise our changing demographic trends and how we address the prickly parenthood issues that may arise from the increasing use of ART.”
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“The Minister talks about making errant companies accountable. But what if the errant parties are not companies and lots of individuals?”
“And because actual individuals could be punished as a result of their company's transgressions, any person holding a management position, who may not be the key decision maker, could be made a Page: 43 scapegoat. This raises the issue of fairness. The other issue is the question of legislative over-reach. Will the negative reach of this Bill have the potential to discourage companies from setting up a holding company here or to prevent good companies from listing here on our stock exchange? Mdm Speaker, even if we implement this Bill, there is no full-proof guarantee that the issue of the haze will be resolved. And we would certainly not want this Bill to create any friction or misunderstanding with our neighbours or, worse still, cause them to adopt retaliatory measures against us. Hence, it is important that we continue to engage and work with these countries to resolve some of the root causes of the issues first. Madam, I support the Bill. 3.12 pm”
“Overlapping can be an issue and this results from the same land being given to more than one party. Hence, the wrong party here may be targeted and this could put a heavy burden of proof on them to prove that they were not responsible. We may need to be mindful of the perception that the main culprits behind the haze last year are just large companies. This may not necessarily be the case. For example, Riau is fairly well developed in terms of logging and plantation concessions. These logging areas and plantations are planted usually for the long term – some 25 years or so, in the case of palm trees. In view of the substantial investment by HTI/HGU holders in their planted areas, fire is actually a threat to their investment. Therefore, it is necessary for a thorough investigation to be carried out before pointing fingers at these companies as they may, in fact, themselves be victims of the annual slash-and-burn carried out by the small farmers. The third issue is the enforceability of the Singapore laws outside of Singapore. So, whilst we can take comfort in the news report that incoming President Joko Widodo is backing Singapore's plan to levy heftier fines against overseas polluters, it is no surprise that they are also asking for detailed protocols to "guarantee the sovereignty of Indonesians". This Bill also allows for judicial presumptions. This means that the accused is assumed guilty, until proven otherwise. The fear here is whether this will open the door to an avalanche of frivolous or unfair accusations. The other issue is that the Bill now places an obligation under public international law on private entities. It seeks to punish entities that do not even have a presence in Singapore by seeking to punish executives personally whenever they set foot here.”
“Hence, as it is not illegal for smaller farmers to burn their land, how would this Bill then be compatible to what is currently permissible in our neighbouring countries? If it is not illegal under their law to burn their customary land for land preparation, Singapore cannot make it illegal. So, whilst some larger companies now clear land using mechanical means in view of strict rules in Indonesia, smaller farmers are unable to afford Page: 42 such mechanical means to clear land and so, they resort to slash-and-burn. We do not know how many of such small farmers are out there but the numbers could add up to potentially millions. It will not be easy or practical to try to stop them or even prosecute them. Neither will it solve the issue in the long term. Perhaps, a better solution here is to provide education and direct help to these farmers and to help them to adopt better methods to clear land. My second point raises the issue of how to ensure the right party responsible is prosecuted. Under the Bill, one of the ways to identify the party responsible is based on "satellite information, wind velocity and direction and other meteorological information". This means that the HGU/HPH/HTI holders are made liable for the occurrence within their boundary based on maps and satellite information, even though they may not have full control of all the areas in their concession areas. Complications arise when the small farms I talked about overlap with industrial scale development within the boundaries of such licence holders. Not all big concession owners own or have control over the small farms around them. Hence, they cannot be held responsible for the action of these small farmers.”
“Mdm Speaker, I fully support this Bill and the efforts of the Ministry in tackling the haze problem that Singapore faces. This Bill is an important step in targeting the culprits behind the haze. And it addresses the urgent need to hold such culprits accountable. I fully agree with the Minister that Singapore and this Parliament want to send a strong signal that we will not tolerate the actions of errant companies who put the health of our citizens at risk. But, as the Minister himself points out, the actual implementation of the Bill can be challenging. For this Bill to be truly effective in protecting Singaporeans from haze pollution, there are other facets to the problem that we may need to take into consideration. Firstly, we need to better understand the background behind why these fires are started in the first place. Secondly, we need to ascertain how to clearly identify the perpetrators and bring the right parties to justice. Thirdly, there are the obvious issues of how to enforce Singapore's territorial laws against entities outside of Singapore. Finally, whilst we all agree with the principles enunciated in the Bill, we may need to be mindful of legislative over-reach. Let us begin by understanding the background behind how these fires are caused. Some are caused by natural causes, others by annual slash-and-burn carried out by small farmers for land preparation. These small farmers usually hold so-called "customary rights" to the land. I believe there are clear guidelines in Indonesia governing burning. Small farmers are actually allowed to burn up to two hectares of land. However, it is illegal to burn on larger industrial scale land that is zoned for logging, these are the so-called HPH/HTI holders and plantation, HGU holders.”
“Is it via Intelligence units, INTERPOL, individuals, companies or the financial institutions themselves? Also, on average, how many such cases are there currently in Singapore? Secondly, will there be any difference in the management and handling of these cases if they involve individuals, compared to when they implicate groups, associations or companies? Will the penalties meted out also vary accordingly? Thirdly, pertaining to the amendments that state, I quote, "it will allow the courts to order the confiscation of any other property of an equivalent value belonging to an offender, if he disposes such instruments of crime", can I confirm if there will be a specific timeframe Page: 105 within which this can be or should be conducted? Fourthly, as there are currently no internationally accepted standardised regulations for legislation that cuts across all countries and jurisdictions, we may still risk running into queries and uncertainties when handling cases. What will then be the best course of rapid action in such cases? And this should be available 24 hours, I assume. Finally, with our open borders and economy, as well as our good standing as one of the important financial centres in the region and globally, everyone, especially our financial institutions, must remain vigilant at all times. 6.15 pm”
“The increasing use of such virtual currencies, for example, the bitcoin, would create a whole new payment system that could potentially offer more Page: 104 anonymity, perhaps, than traditional forms of transactions and payment systems today. Finally, the Bill addresses the need for additional powers to be bestowed on the Suspicious Transactions Reporting Office (STRO). I am supportive of this move but will suggest that STRO be as transparent as it can possibly be about its role and where data may go or be used. A lack of clarity may cause undue concern for those filing reports. Hence, an open relationship between the FIs and STRO and perhaps an ability for FIs to engage STRO to obtain some guidance or pre-clearance on selected cases would be useful and will ensure the filing of high quality STRs. Similar set-ups abroad, called Financial Intelligence Units, already exist in other countries and we can learn more about them – of the difficulties they have faced. Sir, this Bill does help Singapore safeguard our nation's reputation and sets high standards for governance and, hence, I support the Bill. 6.13 pm Assoc Prof Fatimah Lateef (Marine Parade): Mr Deputy Speaker, I stand in support of this Bill, especially in the current globalised, high technology and high travel climate. The enhancement of the maximum penalty for money laundering of up to 10 years of imprisonment will, hopefully, serve as a strong deterrent factor. Also importantly, as we are debating this Bill, it is a call to financial institutions to continually review and monitor their processes and checking mechanisms, to prevent serious tax crimes. I have a few queries to raise. Firstly, pertaining to "transnational crime and money laundering" activities, how are we most often alerted to these?”
“The Bill, as such, does fit in well with the increased global focus on BEPS – the 15-point action plan sponsored by the G20 and supported by OECD. Whilst we have yet to see the full extent of this plan, no doubt, more will emerge. Global firms like Google, Starbucks, Apple have come under scrutiny for having complex tax structures that helped them save millions on their tax bills. These structures were perfectly legal but this perceived tax avoidance has now become a moral issue. Again, here, more clarity on such cases will be needed. The fifth issue is the movement of tax illicit funds into non-banks. Whilst banks and financial institutions are tightly regulated by a clear set of industry standard protocol, other industries that deal in payments and transactions may not be governed by the same stringent criteria, for example, telcos and online payment companies that deal with money flows that bypass the banking system daily. Money launderers have wised up to the fact that banks cannot hide them from the law and some may find other avenues to hide their wealth, for example, in high-end properties, precious metals, gold bars, diamonds and so on. How will such money flows be monitored? Lastly, the digital economy and the rise of the virtual currency. With the onset of the digital revolution and the increasing popularity of virtual currencies as a store of value and a means of online transactions, the Bill may need to look at the potential risk of how convertible virtual currencies that are exchanged for real money can become vulnerable to tax evasion or money laundering.”
“Another specific practical concern arises with the requirement to file an STR when foreign tax laws may have been violated, even if the same act was not considered tax evasion here in Singapore. Whilst a global bank with branches in every country may have the ability to make such assessments at some cost and resource, smaller regional banks or local banks may not. Hence, some care must be taken when enforcing this principle. Secondly, there is the potential issue of over-reporting. Over reporting is not "cost-free" or risk-free for a bank as its clients could be wrongly singled out and get requests via IRAS. Hence, FIs are caught in a situation where STR filing too little could be non-compliant but Page: 103 reporting too frequently would lead to loss of competitiveness. This can only be dealt with via a more rigorous onboarding and Know Your Customer process which could also be expensive and difficult to implement. The third challenge lies in the rising costs of compliance for smaller industry players. There is also the cost of training to raise staff awareness of tax crimes. FIs have to hire more transaction monitoring and AML/Compliance staff. These costs all add up. Whilst bigger global or local banks are able to provide adequate resources for this, many smaller FIs may not be able to. Hence, allow me to offer two suggestions at this juncture. The first is to allow, perhaps, the setting up of a common facility or shared resource for these smaller players. The second is made in the context of Singapore being a global financial centre – for us to leverage off big data analytics globally and to work with other such centres to better track the illegal movement of funds across borders. Fourthly is the issue of Base Erosion and Profit Shifting (BEPS).”
“The MAS has been proactive and adopted a consultative approach to guide the industry along a suitable path for the long term. Under this guidance, financial institutions have undertaken comprehensive reviews of their customer accounts for tax illicit monies. But we must be able to strike a balance if we are to be successful. The country, in a need to uphold its solid reputation, cannot threaten the individual's rights to safeguard his or her assets. As global pressure mounts to clamp down on supposed tax cheats and countries feel compelled to cooperate internationally, there also need to be safeguards in place to prevent abuse. At the same time, Singapore must ensure its banking industry is not disadvantaged. Whilst the Bill is clear in its concepts, the implementation may give rise to some concerns. This is where correct interpretation or enforcement comes into play. So, what are the challenges? Firstly, there lies the issue of clarity in understanding what constitutes tax evasion. Financial institutions are required to file an STR when it is "uncertain" if an act of evasion is committed. In practice, it is a matter of judgement if something amounts to "tax planning", "tax avoidance" or "tax evasion". Only the last is reportable. Hence, more guidance is needed here in terms of the distinction between tax avoidance and tax planning. MAS must, therefore, in practice, ensure it allows an avenue for banks to ask generic questions about whether a case pattern is a reportable event. There may be instances, too, where a supposed tax crime filing may be politically motivated by a government going after whom they may deem to be their political foes.”
“Allow me to declare my interest as a banker and also the co-chair of the private banking industry group alongside the MAS. I will focus on the issues in this Bill pertaining to tax crimes and the implications for the Singapore financial sector as well as other parts of our economy. I will also focus on some of the implementation challenges arising from this Bill. The proposed amendments to this Bill in relation to tax make important clarifications to Singapore's framework to combat tax evasion. I support the timeliness, relevance and importance of this Bill. It comes at a time when many jurisdictions around the world are focused on strengthening their tax evasion laws, enforcing anti-money laundering legislation and discussing international cooperation on tax and exchange of information. This Bill enables certain types of foreign tax offences to be treated as serious offences, whether or not the foreign tax concerned is a type that is imposed in Singapore. This means any suspicion of tax illicit funds should be reported without having to worry about what specific type of taxes have been evaded. This Bill, if implemented correctly, will promote Singapore as a financial centre with a strong legal framework. It will also help counter concerns that Singapore is a "tax haven" and avoid the reputational damage suffered by some other financial centres. Page: 102 Let us not forget that Singapore has worked hard to build our financial hub. We are, today, a successful financial centre precisely because of our strong governance structure and legal framework. Many international customers choose to bank here because it is a safe place to bank. In recent years, both the regulator here and the financial industry have taken steps to combat tax evasion.”
“Lastly, to build a sustainable future for all Singaporeans, we will need to address the climate crisis upon us. Al Gore talks about the 90 million tonnes of carbon emissions being released each day and likens it to 400 Hiroshima bombs exploding daily. For the sake of our children and our grandchildren, the onus is upon us to look at this agenda seriously. It is already right at our doorstep, with the impending haze. Policymakers cannot continue to just kick the can down the road – this is a global phenomenon – or the issues surrounding water, food and energy security will worsen, especially as the emerging markets develop and the world's population continues to grow. We may need to change the way we assess the true cost of our precious natural resource. GDP growth alone cannot be the sole measure of success of a country as it does not include negative or positive externalities like the impact on the environment, for example, or income inequality. In conclusion, I would like to agree with the President that Singapore is not just a marketplace. We are not just a great city to live in, with good governance, low taxes, transparent policies and clean air. We are also a home for all Singaporeans. We have a soul, we are proud of our identity. As a Singaporean, I am proud of what our country has achieved in the last 50 years and in the next 50 years, I hope we can continue to build this home to be a strong, sustainable home, with a nation bonded by family, friendship, trust and shared values as one united people. 4.07 pm Page: 54”
“Singapore is not alone in the appreciation of the connection between education and economic success. As countries with lower cost structures than Singapore build up their education system at a rapid pace, they will provide a source of highly skilled young talents at a much lower rate than developed markets. The current high graduate unemployment rate in the West and even in China should serve as a warning that investing solely in education does not guarantee a high value job. Our education system will need to evolve if we are to rely on it to continue to drive our social mobility agenda. Also, our youth are growing up in a fundamentally different environment. They will be driving their own agenda and that agenda will define their generation. Page: 53 A typical student today has so many cognitive influences. They are accustomed to the rich interactions of social media, online games and instant information from the Internet. Our President rightly commented that "Knowledge is obsolete". Hence, our curriculum needs to change from one based on fact learning to teaching the skills necessary to evaluate information, discern larger patterns and develop critical thinking skills. It is good that many of our local schools are teaching codes these days and I hope we continue to emphasise the need to groom our students to become not just bilingual but also "tech-lingual". I look forward to seeing what recommendations the ASPIRE Committee set up by MOE will come up with in this big debate over the linkage between education, knowledge, skills and careers. To stay relevant in the digital age, schools and educators can play bigger roles to encourage our youth to learn to collaborate, to stay open to lifelong learning, to stay humble and not be afraid of failure.”
“Singapore is well-known for being the best rig builder in the world. Guess what? Today, they are going to China and getting equally good, if not better quality rigs. As other Members in the House have mentioned as well, our Asian rivals are competing now not just in low-skilled manufacturing but also in high-tech value-added services and products. This is why Singapore needs to push ahead faster with reforms to extend education and skills training for all. In this global skills race, there is no limit to the aspirations for upward mobility. But skills training alone may not be sufficient. We will need a culture and mindset shift now, including one where our workers are more open to change and innovation, even open to criticism and failure. So, as it is often said, how do we "Think big, start small and scale fast"? This may mean more proactive encouragement for our Small and Medium Enterprises (SMEs) to send their staff for skills upgrading or learning new skills. It may mean more global exposure for our middle managers and business leaders to new disruptive technologies. It may mean further extensions and flexibility of implementation of our various Productivity and Innovation Credit (PIC) and innovation schemes. As we are a small, wired city state, we have the right ingredients to create a smart digital city of the future. But what we will need to compete with other mega cities sprouting around us is not just with hardware but also software in the form of an enabled workforce who are prepared to try new things and constantly learn new skills and even be prepared to disrupt their own businesses. As the President said, "Give all the opportunities to learn and keep the pathways open to all Singaporeans". Lastly, preparing our youth for a sustainable future.”
“As for the retirees who have had to take on manual jobs as they cannot afford to retire, I hope more can be done to re-deploy them into jobs that will not entail hard labour like cleaning toilets or sweeping roads. As a compassionate society, we owe it to our pioneer generation who do not have enough to retire on, to help re-deploy them in less physically taxing work. My second point is about keeping the Singapore economy and Singaporean workers competitive. With rising costs and a strong Singapore dollar, our current account surplus to Gross Domestic Product (GDP) ratio has been falling. This figure has been falling for the last three years and cannot be attributed to weak external demand alone. Our export competitiveness has been eroded by an appreciation of the Singapore dollar, real effective exchange rate (REER) and domestic cost pressures due to our tight labour market. The restructuring of our labour markets has not fully resulted yet in the necessary productivity gains we need. Whilst productivity improvements take time, we will need to rein in costs or Singapore may "price itself out of the market". Whilst we can dispute the validity of many economists' report on Singapore being one of the costliest cities in the region, the fact is, as a First World City, we are no longer cheap. Do we have enough to stay ahead as our costs escalate? Our labour force may be competent and even above average, but we may need to build more depth, more creativity and innovation to stay ahead. The digital revolution is creating a borderless world where good quality workers can reside anywhere. Are our workers Page: 52 prepared for the knowledge war of the future? Just recently, I met somebody from the West and they normally come to Singapore to have their rigs built.”
“In light of the current low global rates, this is not ungenerous. But the inflation rate in Singapore has averaged 4.1% over the last three years since our economic restructuring started. This is double the historic average inflation rate of about 2% and will erode the value of our CPF savings. Hence, in calculating retirement adequacy, we may have to factor in a higher rate of inflation and it will be useful if the Government could give us a medium-term projection of our inflation rate. Since MAS has chosen to maintain a strong, stable Singapore dollar, we can surmise that most of our inflation cost may come from domestic cost pressures. So, being Page: 51 able to project the growth rate of our cost of living expenses will help us make the right choices outside of parking our surplus funds in cash deposits. I had previously mooted the idea of Government-issued inflation-linked bonds to be purchased by lower income Singaporeans. Since we cannot seem to do this, then perhaps more and cheaper access to a diversified pool of higher interest bearing instruments should be made available to the public. This can be made available in the form of regular savings plans with listed bond ETFs or fixed income unit trusts that pay a regular dividend. Actually, some of these instruments are already available but due to the lack of knowledge, many Singaporeans have not availed themselves of these savings instruments. Even the Supplementary Retirement Scheme (SRS) represents less than 1% of CPF balances and 35% of that is still in cash. The President said, "We will enhance retirement adequacy to give greater assurance and peace of mind to all Singaporeans". I think we need to do more from the ground up to engage and educate more Singaporeans to take ownership and to start early.”
“Firstly, on the specific topic of retirement, there is good news and there is bad news. The good news is, according to an Oliver Wyman study in July last year, the average Singaporean working in full-time employment can expect an income replacement ratio of around 68%. This is well within the OECD recommended range. But the bad news is Singaporeans have some way to go in terms of knowledge and readiness for retirement planning and many do not seem to meet the Minimum Sum. Just looking at the huge amount of online media surrounding CPF now, some of them are very negative, it is clear we need to do more to educate CPF members. According to the MAS financial literacy report, less than one in three Singaporeans are aware of how much CPF they have. Many are also unaware of the need for some financial planning or asset allocation choices needed to beat the rate of inflation. According to another survey which is done by HSBC, 41% of their respondents said they could not save for retirement due to cost of day-to-day living. So, can we do better with what we have in our savings or in our CPF balances? According to the same Oliver Wyman report, the average asset allocation of CPF balances is heavily skewed towards deposits on the one hand and property on the other. As of third quarter 2012, 51% of CPF balances, or $196 billion, are in fixed deposits; 41% or $156 billion are withdrawn for property purchases. Seventy percent of the balances that are eligible for investment remains allocated to deposits, earning the default interest rate. In the Addendum to the President's speech, it was announced that CPF members will continue to enjoy a risk-free rate of 2.5% in their Ordinary Account (OA) savings. An extra 1% per annum will also be paid on the first $60,000 in combined balances.”
“Mdm Speaker, allow me to declare my interest as a banker. Our President talked about "constructive politics which puts the people first". Though this is understood, it is not easy when we have to balance the immediate needs and interests of people on the ground, and yet make the right, sometimes painful decisions to prepare us for a world that is changing and at an unprecedented pace. I liken this to having one eye on a telescope and one eye on a microscope. The telescope looks outwards and afar, at big mega trends happening globally and how Singapore needs to adapt to stay ahead. These global mega trends include the digital revolution, the rise of the Asian middle-class consumer and the rapid urbanisation trends happening around us. It also includes the pressing issue of sustainability of our environment and the real costs of mother nature's resources, including food and water. The microscope looks at issues closer to home, whether to do with rising costs, transport, housing, education or healthcare. Both lenses are important and I hope that this House will always maintain robust debate that balances the need to look outside in and Page: 50 inside out. For my speech today, I want to talk about preparing Singaporeans for the future. Firstly, with the silver tsunami upon us, are Singaporeans ready for retirement? Secondly, with the digital age changing the nature of jobs, are working age Singaporeans prepared and flexible enough to adapt to these changes? Also, with the rapid trend of urbanisation in Asia, and the growth of new urban cities elsewhere, is Singapore equipped to remain competitive as other cities compete for talent, resources and capital? Thirdly, are our environment and our education system equipping our youth for a good and sustainable future here?”
“Why not continue this practice and do more work to encourage students to take more proactive steps in playing their part to make our society a better place. Give our students a shared vision, a mission of what we want Singapore to do; and where we want to go; and what we can achieve if we are a connected society. That way, we can perhaps turn a generation of potential online complainers into a generation of active crusaders for the common good. Mdm Chair, while I am a big admirer of the Singapore education system, I think it is time for us to take stock, rethink some of our old principles and turn our schools into greater enablers for a better Singapore. Page: 133 Enhanced Bursaries for Institutes of Higher Learning (IHLs)”
“Inculcating this desire to continue to learn or experiment will come in handy Page: 132 in life and at work as innovation and digitalisation will continue to change the way we live, work and we need to evolve to stay ahead. Third, encouraging collaboration and connectivity at the Primary school level. In my Budget speech in 2012, I introduced to the House the collage method of teaching which is piloted at Nanyang Primary School. It is about collaborative teaching and the learning and intertwining of different disciplines to demonstrate to children the relevance of what they are learning. The key here is to encourage innovative thinking and collaborative skills at a young age. More importantly, the kids develop a love for lifelong learning. At the University level, we could consider how to accelerate our Universities' transformation from teaching to research universities. Basically, we should consider how our Universities can help us grow our own state of research-intensive SMEs and outsource research labs. The Government may have to play a more active role in getting more cooperation between Universities and businesses or Statutory Boards. For example, NUS has a formalised programme for students to work with firms on consulting projects. Other tertiary institutes can encourage more of such apprenticeships or collaborations. Last, but not least, values, a higher purpose. Imbuing in our students a desire and the ability to create value for others, or a greater good, will help us achieve a higher purpose in our society. For example, during Total Defence Day, we used to teach our students the importance of frugality, prudence and discipline, when we had food rationing in schools.”
“First, encourage a positive mindset and learning the importance of failure. Stanford University psychologist Carol Dwight believes in the value of creating the right mindset. I quote: "Fixed mindset is belief that success and failure are genetically programmed into us, so the child believes himself to be unintelligent who will never be able to succeed academically. Worse still, teachers with a fixed mindset will transfer their own pre-conception onto the students. In contrast, a growth mindset allows us to believe our intelligence is a fluid entity and we have great controls over our abilities. Those with a growth mindset use failure as a temporary stop on the way to success." Bloomberg, too, had an article which said, "go ahead, let your kids fail". Why? Kids who have failed before understand how to learn from failures or their mistakes. The new economy we live in needs more people with intellectual humility. Google, for example, does not care about hiring top college graduates because they have never experienced failure. Instead, the Head of People Operations looks for the ability to step back and embrace other people's ideas when they are better. This is intellectual humility. Without humility, you are unable to learn. Failure has its benefits – psychologists have talked about it – how it can engender compassion, humility, wisdom and courage. Second, creativity and flexibility. More can be done at schools to encourage students to try new things. This can either come at CCA level or within the curriculum. Currently, many of our schools place too much emphasis on winning school medals and less on allowing all students to try out new sports, new musical instruments or new creative activities, even if you are not good at it.”
“Mdm Chair, I applaud the various measures announced in the Budget to give students from all backgrounds a chance to advance through education. My speech today, however, will evolve around the ethos and philosophy by which we think about our education system. Social mobility can be achieved but not just by the right educational qualifications. Why? The world has evolved to such a point today – you do not need to have a degree to succeed in life because digitalisation and Internet has become the great social leveller. Anyone with a laptop or a smartphone has access to education and information outside of physical schools and universities. Some top universities are even conducting free courses online. Hence, to take Singapore to the next stage of evolution, we may need to rethink and refresh our principles behind what constitutes a successful education system. Recent changes announced by MOE are all moves in the right direction, reducing the emphasis on exam grades, changing the admission to top schools Page: 131 and so on are all progressive. But the point to make here is, you can still get a great education without going to school. So, then, how do we keep our schools relevant in creating this social mobility? Mdm Chair, I believe more needs to be done at schools to make our students more curious, more collaborative, more flexible and, sometimes, more humble. With so much education available, schools need to play a part to encourage students to take ownership of their own education to be intellectually curious and open to lifelong learning. Education will, therefore, be less about memorising facts and figures, all of which are available on the Internet, and more about becoming a person of right values, the desire to be a value to society. Here are four suggestions.”
“6% in 2012, but, as we all know, our measurement on productivity, which is defined by value-add of GDP per worker, is subject to global economic cycles and has little to do with efficiency of our workforce. One suggestion is to focus more on Total Factor Productivity. This is the part of output growth not accounted for by an increase in the input of capital or labour. This is where innovation and competitiveness are key. Unfortunately, this figure, too, has been low in Singapore, accounting for only 15.2% of growth here from 2000 to 2010. Another example which I am happy to hear is that we are working now on a more sector-based approach to measuring productivity. Here, I think the Page: 172 industry groups could take the lead in developing their own productivity measures, perhaps, with some support from SBF, ACE or SPRING. Each sector can then strive to improve productivity relative to a sector-specific indicator with innovation. In ending, Sir, I wish to commend Budget 2014 for giving out more carrots than sticks to businesses. Overall, as the Deputy Prime Minister says, "The Scheme favours the more dynamic and efficient players." But we should remember that many dynamic and successful enterprises began life as start-ups or SMEs. In this age of digital Darwinism, let us not forget that there are no businesses that are too big to fail or too small to succeed. Reserves”
“It is interesting to note that while Singapore as a country is an overall global leader in adopting ICT, business usage of ICT is still weak. In the Network Readiness Index 2013, our lowest score was in the sub-index for business usage, with Singapore doing badly in the indicator for business-consumer Internet use, at number 13 in the world. Here is an insight on why, and I have checked with A*STAR. According to a recent study, one in five Singapore SMEs have no current plans to adopt big data technologies. The big obstacles cited were budget and corporate culture. This tells us smaller firms need a better eco-system. On the cost front, the reality is that tools are available on cloud platforms. However, the analytical tools are not very easy to use unless one is an experienced data scientist. Thus, one solution is to provide SMEs access to a managed service resource where they can lease expertise to use these tools and access common industry insights, thereby removing any upfront costs in investing in such infrastructure. Whilst the Budget's proposal to subsidise broadband subscription will help, business sector-specific infocomm solutions could be even more transformational. Put simply, some SMEs were just not aware of the plethora of good schemes available. For example, 40% said they were not aware of SPRING's intra-industry collaboration schemes to help SMEs grow, nor were they aware of A*STAR's programmes. Lastly, as discussed, perhaps we should look at a better measurement for productivity gains. The headline news we read on productivity gains have not looked promising. According to the Department of Statistics, labour productivity shrank by 2.”
“Hence, in order to encourage some take-up of these R&D schemes, an independent expert body can be set up to evaluate and approve such projects in a timely and efficient manner whilst acknowledging that, in many cases, it will be a bit of a bet. It is important to allow for an environment where decision-makers feel it is okay to make the wrong bets sometimes as long as it is not fraud. After all, when it comes to R&D, we have to make a few mistakes to get to where we want to get to. Fourth, cost-cutting versus game-changing innovation. As most of the PIC claims so far were in training and computer acquisition or replacement, this may not lead to long-term productivity gains the way innovation does. A recent KPMG survey revealed that while 65% of businesses said these schemes did help, many or more than half said measures had no impact on innovation. So, where is the "I" or the "innovation" agenda in our PIC scheme? The fact is that most SMEs have gone for a low-hanging fruit of just getting help for cost-cutting. While the good news is that many SMEs are learning to rely less on foreign labour, the bad news is that most of them are not optimistic about growth. According to DP Information, nearly half expect no discernible growth. In another survey by KPMG, local firms were lamenting that the speed of restructuring was too fast. So, the question here is: are businesses still too preoccupied with survivability in the short term to think about long-term growth Page: 171 opportunities? According to SBF, we had the least number of growing companies amongst SMEs last year, and the credit-worthiness of these companies has gone towards the high risk side. More access to education might help.”
“Some companies have found these claims too onerous and did not use it. One suggestion is to simplify the process, have an independent expert body set up to decide what claims can qualify. Meanwhile, on the flipside, there is some evidence of abuse and cheating relating to inflating and falsification of such claims. IRAS has singled out consultants and vendors as culprits behind these fraudulent claims. One suggestion here is to have a list of accredited consultants, similar to a list maintained by SPRING Singapore, that can help SMEs make these claims in an Page: 170 honest and efficient manner. Businesses also welcome the move to extend deduction on qualifying R&D expenditure for another 10 years. However, we must have some clarity on how many companies and in what sectors have benefited from such schemes. A*STAR's yearly survey reveals that growth in business expenditure on R&D remains low at 1.33% in 2012. IRAS' statistics also showed that such R&D tax claims accounted for less than 3% of such PIC claims last year. Again, the experience of some companies in claiming these benefits has been less than satisfactory. Anecdotal feedback is that the qualification processes of such projects seem to be fairly opaque as are the approval processes. Indeed, it is not easy to verify if a new R&D project has novelty value or can become commercial. It is also difficult to understand fully the technical risks involved. The outcome is never certain and some may fail, but if we do not try and we do not encourage them to try, we will never know.”
“Thank you, Sir. Singapore embarked on a restructuring path since 2010. Our Deputy Prime Minister rightly called this a multi-year task. Many likened it to a marathon rather than a sprint. Without a doubt, the extension of the PIC schemes was welcomed, but allow me to comment on the take-up rate, the type of firms that benefited, the potential for abuse and the trade-offs between short-term cost-cutting versus long-term innovation. I will end with some suggestions on ways to relook the real measurements of productivity gains. 7.15 pm First, the take-up rate. Surveys done by SBF showed that 89% of respondents were aware of the PIC schemes; 68% used it. That is quite a high figure. Amongst the over 1,000 respondents, the largest part of these claims was on automating processes and staff training, though some companies found the claims onerous and did not use it. Second, size matters. The size of the companies matters. The take-up rate for the PIC for smaller companies is low, compared to bigger ones. In 2012, the take-up rate for companies with a turnover of less than $1 million was 24%, those between $1 million and $10 million was 59%, and those above $100 million was 81%. But it is precisely these smaller companies, with fewer resources, that need the most help. Third, administration of these claims. Some 44,000 SMEs tapped the PIC scheme. That is up 21% year-on-year. Most of these claims were for purchases of IT equipment and since IRAS depended on the checklist approach for some of these claims, these were quite easily approved. But claims for investments in mechanical automation are based on a case-by-case basis. These claims need to be wrapped up by a rather onerous set of information to prove that the new machinery does improve productivity.”
“I would like to ask the Minister, given that our GDP is subject to global cycles, would he consider a more relevant measurement of productivity, perhaps, a sector-based one or Total Factor Productivity (TFP)?”
“Our fundamentals remain sound: a balance of payments surplus, sound public finances, stable banking sector and a credible exchange rate system. These are advantages most countries do not have. As our underlying economic and financial conditions evolve, external situation evolves, the Government will continue to adjust its policy measures as necessary to ensure overall macroeconomic and financial stability.”
“And where laws or regulations have been breached, MAS has taken appropriate disciplinary actions. These include issuing reprimands, imposing composition fines, and prohibiting persons who have committed serious offences from working in the industry for a specified period. In recent years, MAS has continued to strengthen regulatory requirements in the financial advisory industry to better safeguard the interests of consumers and this process will continue. Let me cite a few examples. Mdm Chair, let me wrap up by going back to the broader picture. Looking ahead, we are prepared for a scenario of higher global interest rates, which is a scenario that Ms Tan also highlighted. Should there be a tightening of monetary policies abroad, this will be commensurate with the restoration of a more "normal" state of the world economy. As global growth returns to trend and inflation pressures gradually pick up, interest rates abroad and in Singapore will eventually rise. And in some way, this is not necessarily a bad outcome for Singapore. What is critical is how the US Federal Reserve does its tapering of asset purchases. Last year, uncertainty over the timing and pace of tapering resulted in sharp corrections in financial markets. Since then, financial markets have been more discriminating and capital outflows have largely been from emerging economies with weak macroeconomic fundamentals. Nevertheless, we must be prepared for further bouts of financial market volatility and capital outflows from emerging economies. I would like to assure Members that MAS and the relevant Government agencies are closely monitoring the impact of changes in global monetary conditions on the Page: 90 Singapore economy and property market. Overall, Singapore is well-placed to weather external shocks.”
“This is why MAS has been working closely with MinLaw to align the rules governing the grant of credit by financial institutions as well as moneylenders. For example, for housing loans, the Total Debt Servicing Ratio (TDSR) framework already takes into account all credit facilities extended by both financial institutions as well as moneylenders. And going forward, MinLaw is looking to put in place a mechanism to limit the total amount that individuals can borrow across all moneylenders. MAS and MinLaw are also exploring how relevant data can be captured in the credit bureaus. The Government will study the data and monitor the effects of the recent measures to assess the need for further measures. Let me now turn to a point that Ms Lina Chiam highlighted on the role of financial advisers and the need for regulatory oversight. Financial advisers do play an important role in helping Singaporeans plan and meet their insurance Page: 89 and financial planning needs. The industry is regulated under the Financial Advisers Act and I would like to assure the Member that MAS does keep a close watch over the business conduct standards of financial advisory (FA) firms and their representatives, and that includes representatives in the banks. MAS uses various tools to supervise the financial advisory industry. It carries out regular risk assessments of financial advisory firms. It conducts onsite inspections to assess the adequacy of their risk management systems and the level of compliance with regulatory standards and industry guidelines. It also commissions periodic mystery shopping exercises to assess the quality of advice and the adequacy of information disclosure provided by FA firms and their representatives.”
“Over the last few years, from 2008 to 2012, there were about 6,000 Page: 88 individuals who were counselled by Credit Counselling Singapore who had debts exceeding their annual income. Such individuals will be given additional time – till 2019 – before the aggregate limit takes effect. Furthermore, they will not be forced to make immediate repayment of their existing loans, as the limit is designed to prevent accumulation of additional debt. I should also clarify that the lending limits do not extend to education and business loans, which are not consumption-based. I agree with Ms Foo that individuals may need help to restructure and bring their debts down over time. So, MAS has been working with industry partners, such as financial institutions, Credit Counselling Singapore, MoneySENSE and the credit bureaus, to facilitate this transition. MAS has also adjusted the relevant rules to facilitate the transfer of a borrower's debt from one financial institution to another to enable re-financing and re-structuring across financial institutions. And this was something that Ms Foo also suggested. To encourage responsible lending, the Association of Banks in Singapore has issued Codes of Practice relating to credit cards and unsecured lending on the relevant information that should be communicated to their customers. In addition, MoneySENSE will continue to step up its education efforts through a variety of media channels. 3.45 pm Ms Foo also asked about borrowing from moneylenders and having a common centralised Credit Bureau. I agree with her that information on non-bank credit channels is useful in having a more complete assessment of an individual's borrowing capacity.”
“What MAS has chosen to do is to rein in the demand for property and mitigate the risks posed by low interest rates through a series of macro-prudential measures, while keeping our exchange rate-centred monetary policy focused on anchoring inflation expectations. The effects of these measures have been encouraging. The property market is stabilising. Private residential property prices increased by just over 1% last year and, in fact, recorded a small sequential decline in the fourth quarter. There has been a clear moderation in transaction volumes. Mortgage loan growth slowed to 8.6% in January 2014, down from 16.2% a year earlier. On the whole, household balance sheets are sound, although some over-stretched households may come under pressure when interest rates rise. And that is a point that Ms Foo Mee Har highlighted, which is why besides property purchases, to encourage financial prudence, MAS has recently enhanced the rules for credit cards and unsecured credit, as Ms Foo also highlighted. In designing these rules, MAS has been very conscious of the need to facilitate orderly deleveraging so as not to cause a hard landing or credit crunch and drive borrowers to unlicensed sources of credit. This is why the aggregate limit on unsecured borrowing from financial institutions has been set at a fairly generous level of 12 months and it will take effect from June 2015. In fact, this rule was announced with an 18-month lead time. And all this should provide sufficient transition time and also flexibility for most borrowers. For those who have already exceeded the borrowing limit, Ms Foo was worried about a sudden credit crush in June next year. I would like to assure her that MAS has anticipated this and put in place measures to avoid such a situation.”
“And as Ms Tan has highlighted, such low interest rates are, indeed, one of the factors supporting the growth of domestic credit, including to the property sector. Given this environment, Ms Tan asked whether we ought to review and even change our monetary policy approach, to move away from our exchange rate-centred framework and switch to interest rates. In fact, this is something that MAS has studied very carefully. MAS regularly reviews its monetary policy approach, and it does not take the status quo, what it does today, as a given. And MAS' studies show that our current system has been effective and, more importantly, that a switch to a regime of managing interest rates can be highly destabilising. And there are several reasons for this. First, the exchange rate continues to play an important role in household and business decisions, as Singapore's high degree of openness has not diminished. In fact, the policy of keeping the Sing dollar on an appreciation path Page: 87 since April 2010 has dampened consumer inflation by an average of 2.3 percentage points per year over the past four years. Taking a specific example, the stronger Sing dollar has actually kept food inflation at an average of 2.3% over the same period, which is significantly lower than the 5.2% in the ASEAN-4 and 3.7% in the NIE-3 economies. So, that is one reason. Second, given our open economy, setting domestic interest rates above global rates will attract even more capital inflows to Singapore, especially with our strong macro-economic fundamentals. This could inadvertently fuel asset price inflation. There are also potentially unpredictable costs associated with a shift in the monetary policy framework, which would affect the domestic financial system and the broader economy.”
“Hence, there is a need for heightened vigilance by the authorities to pre-empt the risks ahead and to ensure timely Page: 86 unwinding of these macro-prudential policies to address any downside risks. These adjustments will have to incorporate structural developments and also account for any adjustments to China's monetary policy stance so that we can set right macro-prudential policies for Singapore. The Acting Minister for Culture, Community and Youth (Mr Lawrence Wong): Mdm Chair, let me first address the macro-issues that were just raised by Ms Tan Su Shan. I agree with her that there are strong external forces that can impact our economy and we have to stay very vigilant. Given the current uncertainties and volatile environment, it is very difficult to predict how the external environment will change. I think if you ask the economists what the future would be like, you will get different views. Ms Tan cited forecast from a Bain and Co report of a world flushed with money till 2020. But there are also many economists who predict that the days of low interest rates and cheap capital are over. Economists are well-known for their inability to agree on many things. But one thing that economists do agree upon is that in a world of open capital flows, a country can either choose to manage its exchange rate or interest rate but not both. In Singapore, because of our small and open economy, we have chosen to focus on the exchange rate as the monetary policy tool to keep inflation in check. And this exchange rate-centred framework has served Singapore very well over the three decades since we started. The consequence is that our domestic interest rates will move in tandem with global rates.”
“Is it time to relook at our policy of controlling FX instead of interest rates? In the past, many economists have said that due to the openness of our economy, using FX as a lever is more potent than using interest rates. But what if rates remain low? Rates in the West may remain low for a while longer. Bain and Co published a piece of research saying that the world has too much money and rates will remain low till 2020. There are 10 times more capital than GDP in the world today. That is $600 trillion versus $63 trillion in global GDP. That means a lot of capital chasing not a lot of growth. If low interest rates persist, we will have to rely on more ad hoc macro-prudential policies to rein in excess loan growth and, if we do, the risk is, money here may drain off to find better returns elsewhere. This trend may lead to the real cost of money rising, despite the low official interest rates. If a liquidity premium were to arise, then the real cost of borrowing for all will be affected. This makes doing business here unpredictable and costly. More importantly, it is the magnitude of interest rate changes that pose a greater risk. These elements are out of our control. For example, the Fed hiked interest rates by a massive 425 basis points in two years, between 2004 and 2006. Rapid increases in interest rates give little time to homeowners and businesses to adjust. The macro-prudential measures introduced may then become a double whammy for all. The issue at hand is that the withdrawal of liquidity and the concurrent higher costs of capital in Singapore will adversely affect important areas of the economy. The property market, stock market, auto dealership and domestic retail are amongst the most vulnerable.”
“Madam, allow me to declare my pecuniary interest as a banker. The Government's finances are in good shape and I hope they remain in good shape even as and when revenue falls short of expenditure. The debt at the household level though remains high. As Ms Foo Mee Har said, household debt remains high. And Forbes magazine carried an article accusing us of having an unsustainably high household debt level. This is due to high home ownership for Singaporeans, especially in HDB homes. Whilst it is true that household debt has increased, and it is now 77% of GDP, the good thing is household net worth and household savings have been rising, too. MAS has had to rely on macro-prudential policies, like the TDSR and ABSD, to control loan growth and this serves as a form of tightening. But the question I want to ask is: are our monetary policy and low interest rates responsible? After all, our interest rates followed that of western economies where unemployment is high and they have loose monetary policies. Page: 85 Yet, we live in Asia where central banks are tightening and liquidity is being drained. China is particularly relevant, especially now, with their increased financial deregulation and a more open financial market. China has recently changed their foreign exchange (FX) forward slope as well. So, China is a mega economy that has tightened monetary policy and increased cross-border trade settlement funded through Asia. Singapore, as a leading financial centre, plays a key role in such flows. And these flows are here to stay. Capital flows to such size exerts strong pressure on liquidity and interest rates. This collision of low interest rate policy in the West and higher ones in the East are at our doorstep.”
“So, let us work together to set our hearts right, to set our policies right, to build a stronger, smarter, kinder nation bonded by family, friendship, trust, to build a better Singapore for all. Mdm Speaker, I support the Budget. 1.47 pm”
“For example, Switzerland recently set new immigration rules and many question if this big shift in policy is a major error that will hamper long-term growth. Perhaps, there is a lesson there for us. So, how do we address these rising tensions head on? The Straits Times' Managing Editor, Mr Han Fook Kwang, recently commented that Singapore has a serious shortage of social capital. This means people living here do not feel they belong to the community. This results in a lack of community ties and a lack of trust in society. But digitalisation can, in fact, be a tool to improve social mobility and mobilise more social behaviour. Digitalisation should not divide, it should unite. So, let us reach out to these bloggers who complain online and let us ask them to give solutions and let us get them to help out. It is easy to criticise online but, honestly, but how about turning these negative comments into affirmative action instead? We need to get more Singaporeans motivated to work towards a common purpose – which is to make our country a better place for all. We need to find Page: 50 this higher purpose that unites us all. This higher purpose can come in the form of social or philanthropic work, to help build worthwhile and long-term community ties. It can come in showing people they have a viable future in this country. It is about providing opportunities for citizens to achieve their aspirations. It is about providing people with a purpose that is bigger than they are. Confucius said that, "To put the nation in order, we first need to put the family in order; to put the family in order, we first need to cultivate our personal life; we first need to set our hearts right".”
“We have become a society where restaurants have to provide "unplug" boxes to encourage families and friends to speak to each other instead of play with their devices at meal times. I know I am guilty myself. So, whilst the Budget has been helpful in allowing businesses access to cheaper broadband and other ICT services, our person-to-person connectivity Page: 49 is just not that great. Some experts have described the state of online conduct in Singapore as "troubling" and potentially destabilising. The tendency to over-react, the inclination to spread mis-truths or just plain bad bullying behaviour online is a worrying trend which could lead to social discord. Therefore, it is important for us to bridge the social divide that seems to be rising between the rich and poor, and between the local and foreign populations here. This is crucial especially now when globalisation means Singaporean families and social structures are no longer that simple. Forty percent of resident births here are to couples with one migrant parent. The recent population growth due to the rise in migrant population has caused some Singaporeans to feel marginalised or squeezed out. In fact, a recent IPS survey revealed that "32.1% of Singaporeans felt that prejudice based on nationality has become more widespread now than five years ago". This is not healthy. Thus, we would not only need to forge a public consensus on our manpower policies but also clarify what role foreigners can play in our country, particularly as many of these new migrants still congregate with their own communities and are not sure how to start integrating better with locals. Well, we are not alone in these struggles.”
“So, whilst the Deputy Prime Minister may be encouraging more supermarkets to adopt self check-out tills, the longer term implications of our policies now are that we will be encouraging some of these middle income jobs to become obsolete, like cashiers. Not everyone can become a data analyst or an online game animator. Whilst I fully support and applaud the ICT initiatives, the truth is, these new initiatives in themselves will not create that many new jobs for Singaporeans. They will create the much needed productivity gains but at the expense of their employees. So, we may have to intervene to prevent a formation of a permanent underclass of unemployable middle class whose jobs have been lost in this productivity quest. Perhaps it also requires us to remain open to keeping the ecosystem of high service ratios in sectors that need it, like the service industry. Digitalisation may sound a bit daunting to some, but let us not forget that technology alone does not change the world – people do. Thus, as part of a longer-term nation-building strategy, Singapore should recraft the education system and the rewards system to transform the labour force that becomes the new middle class. Tweaking the education system for youths is not enough. We need solutions that facilitate opportunities for workers to learn new skills at different stages of their working lives. The goal should be to turn our greatest resource, which is our people, into a valuable asset that the new global economy wants and will pay for. Lastly, disconnectedness. All this digital connectivity is making us smarter but not connecting us any better as a society.”
“The second solution means a change in social norms and workplace culture where workplace flexibility is accepted and mature workers are allowed to learn new skills. Digitalisation. The digitalisation of the world has and will bring about profound changes in the way we do business, the way we interact with each other, and the way governments lead. It is like, if you lose your wallet on the MRT, it would take you some time before you might notice it, but if you lose your smartphone, you probably notice it immediately. The social network is the new production line where decisions are made. Everything is transparent and instant. There will be privacy and security issues. There will be more collaboration between society, Government and enterprise. We will need to create trust between these different constituencies. While Singapore has the right ecosystem to thrive in a digital economy, we are a small, wired, smart city with an educated workforce. We can be nimble, we can train our people and enterprise will become smarter. But one of the long-term consequences of digitalisation is the loss of many middle income jobs. Another is the increase in income inequality. The Atlantic Page: 48 magazine suggested the Internet has become the "greatest legal facilitator of inequality in human history". Not only have low paying jobs been outsourced to developing countries, so too have skilled jobs, especially the "middle-man" jobs. For example, in the past, we probably used to book our travel through travel agents. Today, many of us use Tripadvisor.com.”
“It will go some way to ease their burden. For them, it is too late to start saving again and many have to survive on low pensions that have not been inflation adjusted. These retirees, and there are also retirees who are asset rich but cash poor, who may require some help if they are unable to cash in on their properties. However, given our low fertility rate compounded by an ageing population, maybe the questions to ask are: one, are Singaporeans planning Page: 47 adequately for their retirement and if not, what more can be done? Two, if we continue to raise CPF contributions by employers for elderly workers, will it affect their overall employability, especially when many now have to work for longer? And three, do we need to change the concept of work and encourage more flexibility for employers and employees? Many Singaporeans are finding out, upon reaching 55 years old, that their CPF savings are just not enough to retire on. So, the CPF hike this year will go some way to help ease the cost of retirement. But let us not forget that the self-employed, like hawkers and taxi drivers, will not benefit from this group. We may have to do more to help them. Whilst the workforce participation for the elderly has gone up because they need to work, the worrying statistic is the actual unemployment for those aged 50 and above has been rising in the last three years. In short, elderly Singaporeans find the need to work later in life but they are finding it harder to find a job. So, how do we improve the employability of these seniors? One solution, obviously, is to improve their productivity. The other maybe is to redefine the concept of work especially for the elderly and those who are retired and thinking of a new career.”
“Thank you, Madam. Our Prime Minister said it well. Singapore is at a turning point of its history. Asia's upcoming transformation will be dramatic. Today, there are 500 million middle class households in Asia. By 2020, this figure will be closer to 1.7 billion. The digital revolution is upon us and transforming Asia dramatically. The numbers speak for themselves. In the last five years, the number of Internet users in Asia has doubled to 1.2 billion. Smartphone users are up nine times to 738 million and social network users have quintupled to 800 million. To help us navigate through this changing world, we need a leadership that can crystallise what is ultimately important to us Singaporeans in the long term. Mdm Speaker, we live in a world full of contradictions. We are digitally connected, yet as a society, we remain somewhat disconnected. We have one of the highest income per capita, yet our household debt is one of the highest. We are a meritocracy, yet there is a prevailing sense of inequity in our society. Mdm Speaker, I would like to bring my discussion today around the 3Ds, that is Demographics, Digitalisation and Disconnectedness. Demographics. Our population is ageing fast. Yet, instead of enjoying their golden years, many retirees are out cleaning our buildings, our streets and our toilets. Indeed, MOM statistics suggests that the number of Singaporeans participating in the workforce beyond the age of 65 has doubled from 19.5% to 40% in the last 10 years. Just last week, I met an elderly lady in her 70s cleaning the toilet in an auditor's office. She was so old and so tired she had to carry a low stool around with her the whole time. I was very sad to see this. As a compassionate society, I applaud the medical packages for the Pioneer Generation.”
“Mdm Speaker, given that moneylenders are in the business of lending money, are there plans to have them regulated by the MAS?”
“Mdm Speaker, I would like to ask the Minister this: the MOE Paper on Principal Rotation states that the process of systematically appointing and rotating principals enables experienced principals to share best practices in support of "Every School a Good School". Would that principle, therefore, apply to teachers as well?”
“Hopefully, Singapore can start to set these standards rather than just follow them, and, hopefully, we can gain more credibility in the long term by showing that whilst we remain open for business, we are serious about setting and executing on only the highest international standards. Doing this can only add to our reputation, our economy and, of course, better job opportunities for Singaporeans. Mdm Speaker, I support the Bill. 4.37 pm”
“From Paypal to Amazon, from Alipay to Tencent, many online companies can set up online payment platforms that Page: 71 bypass banks. If they do not have the same regulatory regime, they will be able to receive payments without the level of due diligence done by banks. Tax avoiders will wise up to this, if not already, and may use this as a way to move their illicit funds around. Lastly, the rise of the digital economy. The rise of the digital economy has posed many challenges about tax collection. The new ways of doing business online make it more difficult to ascertain where value creation sits and where income should be taxed. The question is, are our tax frameworks able to adapt to the changing economic challenges caused by such online businesses? I have detailed a few examples of the practical challenges we face in a more complex world of inter-connected activities, different tax laws and different motivations. Holding the high ground on tax is all very good, but being aware of the challenges and being able to face up to them will be key. And whilst we face up to these challenges and show the international community that we will be responsible in this fight against tax crimes, let us also balance the need for banking confidentiality against the request for information from the IRAS. In this respect, I suggest that the Government establishes clearer guidelines in the manner in which the IRAS can collect information from banks. In the long term, we may need more sustainable solutions globally. Countries need to strengthen their tax administrations to deal with an ever-changing globalised and digitalised economy, and more needs to be done on client education.”
“The bottom line is to be clear about the difference between a high-risk country and a high-risk tax country. Three, global companies have global complex structures. It is debatable if there is a fine line between tax evasion, tax avoidance and tax planning. What could be classified as a tax crime in one jurisdiction could be perfectly legal in another. Recently, global firms like Apple, Starbucks, Google and Amazon have come under fire for having complicated tax structures that have helped them to save billions on tax payments. For example, Amazon in the UK had sales of over £3 billion and a tax expense of only £1.8 million because they booked their profits elsewhere. These structures were perfectly legal but this tax avoidance has now become a moral issue. And the tide of public opinion is turning due to the public naming and shaming of these companies on social media. This has led to the OECD terming this "Base Erosion and Profit Shifting" (BEPS), which refers to this interaction of different tax rules that can lead to double non-taxation or taxes that are even lower than single tax. The proposed actions to counter this are wide and have far-reaching consequences. Four, funds can be transferred in and out without using the actual banking system: (a) Money coming in to buy properties, for example, do not go through the same tax compliance or KYC checks. Money launderers or tax avoiders may also use other means like buying gold bars, diamonds or precious metals and so on. (b) The rise of the non-bank payment agent. Banks are no longer the only institutions that receive funds and pay out funds. Telcos and online companies are fast becoming payment agents.”
“So, this does not solve our dilemma. Sometimes, it is also a matter of not knowing what we do not know. Though the client may be honest in all his business dealings, he may not know that there are other levels of tax he needs to pay. Often, even tax accountants tell us they do not know everything, too. Industry practitioners are telling us that the costs of compliance keep getting higher. Some have considered shutting down or selling their businesses, which may mean the loss of jobs for Singaporeans. The overarching concern is not stricter rules or extended IRAS powers. In fact, our industry leaders met with the IRAS and we know that they are an effective gatekeeper. The concern is with the uncertainty of the extent and application of the rules and the powers granted to IRAS. At risk is whether clients who are not trying to evade tax may decide not to bank here as they become more concerned about what may happen to their personal information. This would not be in the interest of Singapore and may not, in fact, help the overall cause of avoiding tax evasion. This is why timely clarity of the rules and practical enforcement is practical. Two, difficult to ensure full compliance even if the right processes are in place. We may need to understand the motivation behind some of these tax Page: 70 enquiries. Why? Some supposed tax "crimes" may be politically and not economically motivated. There are countries with high taxes and clean jurisdictions; there are also countries that have lower taxes and corrupt jurisdictions. With the EOI standards, we have to ensure that this "Exchange of Information" does not lead to abuse. Sometimes, it may also depend on how much budget deficit the country in question has, to see how motivated they are to increase their tax coffers.”