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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“However, the Act also introduces changes in the rules related to tax evasion and grants the IRAS certain additional powers. It is this signalling of the changes in our tax laws, the actual implementation, the potential lack of clarity and the potential high costs associated with it that is becoming an issue. What I am trying to bring up to this House is that it is not so simple. And here are some challenges to the financial industry and to businesses. One, the rising costs and uncertainty. It has been clarified that the Government will assist in the application of the FATCA requirement by the US Page: 69 government and other "Exchange of Information" (EOI) requests. Because of the criminalisation of tax crimes as an AML offence, and the various new tax requirements coming into play – FATCA/FATF and so on, all banks have stepped up their compliance and security processes. We have to ensure that everything is in place and that the client onboarding, KYC, AML, due diligence and surveillance are best-in-class. We have no choice. We will do it. But where do we draw the line? How far do we need to go in our tax due diligence? Let us take an example of a typical entrepreneur, say, a European passport holder living in Asia, owning a garment business in Indonesia that imports cotton from India and sells everything online. In all honesty, how do we ascertain that he has paid every single level of tax, from his business level, to his income level, capital gains or dividends? Chances are that the client himself may not even know. So, we tell the clients, go and get a tax expert, get proper advice. But when the tax accountant comes onboard and does his job, he then tells the banks he cannot reveal anything to them due to client-confidentiality laws.”
“Mdm Speaker, I would like to declare my pecuniary interest as a banker and a co-chair of the Private Banking Industry Group in Singapore, alongside the MAS. Mdm Speaker, two things in life are certain, death and taxes. It is not easy to craft an interesting speech about tax. We all pay it. In Singapore, we are lucky. The rules are clear and it is normally automatically deducted. But in the global arena, tax is not so simple. Some countries have global taxation, others do not. Some have double tax treaties, others do not. Some have inheritance tax, capital gains tax, dividend tax; the list goes on. As Singapore thrives on being an open economy with free trade and open financial markets, we have billions of inflows and outflows globally. How then do we ascertain that these dollars are tax-compliant? What this Bill does is that it clearly sets the bar high for Singapore. It says to the world, "Singapore is not interested in becoming a tax haven to anyone who wishes to avoid paying tax. Please do not come here to hide your money." In the long run, this is both good for our country and good for our financial industry in building a good, sustainable long-term business. After all, we want our financial industry and wealth management industry to be built on solid foundations based on sound practices and good governance. So, we all agree on one thing. This is the pill we need to swallow to make us stronger in the long term. And as we say in Chinese: 良药苦口利于病. The Bill covers a number of issues, including amendments and extension of the tax treatment of transactions of relevance to the banking industry. In general, the banking industry supports these changes.”
“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. Whatever this Bill tries to achieve, let us not forget the most important thing here is that a child is being born and this life is sacrosanct. Whatever the Bill tries to achieve, we should do our best to safeguard the well-being of this child. Allowing this child to grow up in a safe and healthy environment is key. Let this be the bedrock and foundation behind every decision we need to take going forward. 5.44 pm”
“So far, there has been no reported challenges regarding the status of such children, but if there were to be one, these children could be at risk of being the subject of a protracted legal battle. Point three. My final point is about elective egg-freezing, which is not allowed in Singapore. In fact, we use the term "social" egg-freezing here instead, which may wrongly imply that this is not a medical term. In other jurisdictions, age-related fertility decline is deemed to be a medical condition and, hence, elective egg-freezing is seen as "preventive medicine". It allows women to Page: 91 extend and protect their fertility. This is not allowed in Singapore unless the woman is already married, under 45 years old, or undergoing serious treatment like chemotherapy. In contrast, this procedure is available in neighbouring countries like Thailand and Malaysia. These differences in governance could lead to regional arbitrage as our citizens will be forced to go to more permissive environments to receive these medical treatments, leading to what is now termed "reproductive tourism". Our current laws are not yet adequately built to address these trends. In closing, I just want to say, I believe in the importance of a traditional family unit. I am well aware that the Government has to do a delicate balancing act in recognising and valuing the views of social conservatives alongside the reality of what is happening in society due to the advancement of medical science. This balance is not easy. Yet, often, progress means the reinvention of concepts and changing trends may mean a new understanding of what constitutes the meaning of what is a "traditional" family unit.”
“For this contingency, doctors tell me that more Singaporean women are availing themselves of the services of overseas IVF centres. Some single women, who have the means, may elect to freeze their eggs overseas as they are not allowed to do so in Singapore under our Licensing Terms and Conditions for Private Clinics. Whatever the reasons for their choice, the reality is elective egg-freezing overseas is a medical option open to Singaporean women. Often, these women choose this rather difficult option as they wish to have a child but have not found the right partner. If she does marry later, she and her husband then have the option to conceive a healthy baby using the frozen eggs. If she does not marry, she may still choose to have a child perhaps with the help of an anonymous sperm donor. The Bill, however, presumes either a "de factor partner" or a husband, but not an anonymous sperm donor. Contingency number two: how about in the case where the embryos are derived from a married couple where the husband unfortunately passes away during the process? Can such embryos which are in storage in Singapore be used? The third contingency is the use of a surrogate abroad. The growing trend of Singaporean couples resorting to surrogacy abroad. It would be ideal for the wife to be the gestational carrier of a child she wishes to have, but this may not always be the case. If a woman is not medically able to carry a pregnancy, the couple may choose to have a gestational surrogate overseas as surrogacy is not allowed here. The Bill in its current form leaves unclear the status of this child in relation to the Singaporean couple using a gestational carrier abroad. The outcome could be harsh for the couple if the child is, in fact, genetically the child of the Singaporean couple.”
“Which means it needs to be more comprehensive and to anticipate other contingencies resulting from the growing number of new techniques that couples in Singapore are adopting. Here, I will quote from some research done by an independent, non-profit research group called BELRIS or Bioethics Legal Group for Reproductive Issues in Singapore: [(proc text) BELRIS made a point that in relation to the welfare and best interest of a child, the "gestational test is arguably the most straight-forward approach" in defining who the "mother" is, as is the very broad definition of father in the Bill. They believe that a gestational-based definition of mother, as well as the broad definition of father, may solve some more straight-forward problems. However, in the long run this definition may be short-sighted in the context of the rapidly evolving field of assisted reproduction. (proc text)] And, perhaps, an intention-based concept of parenthood would not only be more forward thinking but is also necessary. An intention-based concept of parenthood places emphasis on the fact that at the point where agreement is reached, all parties involved intend that any child born of the arrangement is to be regarded as the child of the commissioning couple upon birth. Why? Because as I have said, more childless couples or unmarried parents are choosing these options to procreate. Allow me now to share some examples of this trend and discuss how this Bill may not be adequate to address such contingencies. Page: 90 Contingency number one: women who freeze their eggs overseas. The Minister mentioned rightly that some of these issues are to be addressed by MOH. I have to bring them up here as this Act does impact the definition of the father and the mother.”
“On point one, I am told by lawyers that this Bill has taken 16 years to be presented in Parliament in its current form. The idea of a statute to clarify the status of children born though artificial conception was first mooted in 1997 but it took the recent IVF case to get us to where we are today. Hence, there is urgency in updating our laws. The Bill recognises that there is the option and availability of such options here and this is because there is a growing trend of families choosing such options because women are marrying later, having children later and as a result having less children than they would like to have. In a recent survey done by NPTD, the Marriage and Parenthood Study 2012, 84% of married respondents said they wanted to have two or more children, but only 51% have two or more Page: 89 children. The statistics I mentioned that Singaporean women are marrying later and as they marry later, they have children later. And that the number of ever-married females remaining childless is growing. These childless numbers are rising and they may not necessarily be voluntary. Hence, it comes as no surprise that more couples and more women would turn to such technology. A recent report from Clearstate – Clearstate is part of the Economist Intelligence Unit – states that 71% of respondents to a recent survey they did here indicated they would consider IVF if the need arose. According to MOH, the number of women opting for ART treatments had increased from 1,933 to 3,271 between 2006 and 2009. The number should be even higher now. This number is quite a large percentage of our annual birth rate. On point two, I had asked that for this Bill to be relevant, it should not just be responsive but also forward looking.”
“Mr Deputy Speaker, since the first IVF baby was born, there has been tremendous development in the field of Assisted Reproduction Technology (ART). Societies around the world have Page: 88 embraced this new technology. Technological advancement must come hand in hand with social and legal advancement. The word "parent" may no longer mean the same thing as it did before the advent of reproductive technology. Hence, this Bill is an urgent and long-awaited response to acknowledge, clarify and protect the status of children born out of IVF technology. It is ironic that it took an IVF mix-up for this law to be amended, but as they say, better late than never. As I am neither a doctor nor a lawyer, please excuse me if my speech has more of a layman's approach. Allow me now to distill my speech into three broad points. The first point is to expound on why we need this Bill and to recognise that this is a response to the changing socio-economic, medical and family trends in Singapore. The second point is to state that for this Bill to be meaningful and relevant, it should not be solely reactive. It should be forward looking. This is because it will become the eventual framework supporting new areas in family law surrounding the family unit derived from medically assisted reproduction. Hence, it should cover some of the future contingencies that many Singaporeans are already considering or already carrying out. The third point is to consider offering egg-life extension options to more women as an extension of IVF. Whilst there has been tremendous advancement in the field of IVF technology, the one constant that has not changed is the ticking of a woman's biological clock. This puts time limits on our fertility window.”
“I am heartened to hear about the increased training and the emphasis on procurement standards being lifted. My question is around the use of technology and analytics to surface these issues before they become an issue. Has the Deputy Prime Minister looked at how technology or data analysis can be used to surface these control lapses before they become a control lapse? Page: 25”
“Should we work towards a harmonised system of holding company regulation without also first making changes in the direct regulation of financial intermediaries? Overall, this Bill adds to our regulatory arsenal. We should not be afraid of prudent and sensitive regulation given that there are many benefits for financial institutions operating in Singapore. I regard such regulation as being necessary if we are to ensure that our financial sector continues to inspire trust and confidence of all stakeholders. The Bill is, in my view, necessary to protect against anti-competitive harms and to ensure that there is systemic robustness in our financial institutions and financial system. Going forward, the ability of the MAS and other regulatory agencies to regulate with the right dose of prudence, firmness and integrity is vital. Madam, on that note, I support this Bill. 3.55 pm”
“In this connection, can I ask the Deputy Prime Minister what are the ballpark numbers on foreign and local FHCs that are likely to fall within the jurisdiction of the proposed law? I note that the law applies only to local FHCs. In the second area relating to organisation forms, it is conceivable that, besides the traditional holding company structure, alternative organisational forms for a FHC are possible and likely. This could be in the form of affiliations through downstream subsidiaries, or expanded activities conducted within a single regulated entity, otherwise known as the universal banking model. Each organisational form presents different regulatory pressure points and concerns. As such, I would like to ask: how does the proposed legislation deal with variations in organisational form of the FHCs? Can the proposed regulatory regime manage different types of organisational structures that FHCs are organised under? The third broad area of interest relates to the appropriate regulation of financial holding companies with controlling interests in diverse regulated entities, such as banking, insurance, and securities. Where a holding company controls different types of regulated entities, two overlapping and potentially inconsistent systems of holding company regulation may well apply. What legal rules should take precedence and apply in this context? Does our regulatory regime envisage differential treatment of say, a holding company with a single banking subsidiary vis-a-vis a firm with both banking and insurance subsidiaries? Page: 60 Questions of fairness and efficiency and effectiveness naturally present themselves in such situations.”
“If a holding company in country A acquires a regulated entity in Singapore, the logic of holding company regulation requires that regulatory authorities in country A concern themselves with the activities and conduct of the holding company in its home jurisdiction, country A. However, if Singapore's regulatory authorities apply our holding company laws to the said firm, the potential for overlapping and inconsistent regulatory structures arises. If Singapore defers to country A's regulatory system, the supervision of the holding company may then be inadequate and the supervisory policies of Singapore may be undermined. Even if the differences in supervisory regimes are not substantial, Singapore-based financial institutions may well, understandably so, object to a more lenient regulatory regime for foreign-based holding companies. So, I think here is a question of whether the law is over-inclusive or under-inclusive. Page: 59 Madam, I acknowledge that such a "regulatory gap", if it can be described as such, is unavoidable. Perhaps, with time, harmonised systems of holding company regulation may evolve. Nonetheless, I would like to ask the Deputy Prime Minister: how does the Monetary Authority of Singapore (MAS) intend to deal with such regulatory gaps? Notwithstanding the limitations, the legal, political and practical problems of maintaining an effective system of holding company regulation in a multi-national global economy bear close watch. We must be mindful that FHCs may engage in "regulatory arbitrage" whereby FHCs seek out and take advantage of loopholes and differences in regulatory systems to avoid certain types of regulation.”
“Indeed, we must assume that commonly Page: 58 controlled financial institutions will typically act in concert, with all the attendant challenges such as the need to preserve the solvency of the regulated entities, the need to prevent systemic disruptions through related entities acting in concert, and to prevent uncompetitive practices. My interest in the Bill is not so much on the technical aspects. The Bill strikes me as being well drafted and comprehensive in its scope and coverage. Rather, my interest relates more to the guiding principles on regulating FHCs. There are three areas of interest. The first revolves around the potential for regulatory gaps arising from overlapping or perhaps inconsistent regulatory structures as a consequence of FHCs having a presence in several jurisdictions. The second area coheres around how the proposed legislation would deal with variations in organisational form of FHCs. And the third area centres on the regulatory approach towards holding companies controlling different types of regulated entities. Let me deal with them in turn. We should not be surprised that FHCs, local or foreign, will expand across jurisdictions. A basic assumption of holding company legislation is that regulatory controls of some sort must extend beyond the boundaries of regulatory entities and reach their corporate affiliates. Yet, international comity and the lack of enforcement reach require that laws with extra-territorial jurisdiction should be the exception rather than the rule. Let me illustrate with an example.”
“These rating agencies or rules promulgated by other jurisdictions already set expectations on permitted leverage and liquidity management. These should perhaps provide a good starting point for the MAS and it is important that these rules set are not, from the perspective of the FHC, inconsistent with those of other constituents. Level-playing field considerations should also be taken into account. Mdm Speaker, the Financial Holding Companies Act was publicly consulted, allowing all constituents to provide feedback. May I ask that the same consultative approach should continue when the MAS formulates subsequent rules and directives pursuant to this Act? In conclusion, Singapore's value proposition as a premier international financial centre rests on our pillars of transparency, sustainability, stability and international competitiveness. This Act will serve to enhance this value proposition and hence I fully support it. 3.48 pm Asst Prof Tan Kheng Boon Eugene (Nominated Member): Mdm Speaker, I welcome this Bill. It is a timely piece of legislation to support the growth, integrity and robustness of our financial sector. The justifications for regulating financial holding companies (FHCs) derive from the same need and imperative to regulate financial intermediaries directly. The proposed legislation can provide for a more effective regulation of the financial sector, a vital part of our economy. Implicit in this Bill is the recognition that the regulation of banks and insurance companies as financial institutions is incomplete or inadequate.”
“I also applaud the regulator for having conducted two rounds of consultation prior to this reading. However, I do have some feedback and suggestions on some of the methodologies or details of the Bill so please allow me to make a few points briefly. Firstly, the issue of "smart regulation" versus "over-regulation". Here, allow me to refer to the keynote address made by Mr Ravi Menon, Managing Director of the MAS last month, at the IMAS conference. Mr Menon said that "a higher premium has been placed on well-regulated financial centres like Singapore, which sets high standards but implement them in a way that makes business sense. MAS pays close attention to the design of financial regulation to ensure they are risk-based and not more burdensome than necessary." This Bill is one such example. The powers to designate in this bill means the regulator has some flexibility to regulate at the right level and to concentrate regulatory Page: 57 resources only at entities which are systemically important to Singapore. Secondly, this theme on "Smart Regulation" should continue to guide the MAS as they prescribe prudential requirements to support the safety and soundness of the FHC group. These will include the requirements on minimum liquid assets as well as the extent of leverage assumed. Here, may I suggest less reliance on a "strait jacket" regulatory approach but a focus on risk-based supervision with regulatory methodologies that take into account, and are tailored to accommodate, the risk profile of the FHC under review. Thirdly, may I suggest that the Bill be cognisant of the fact that many FHCs operate under other jurisdictions, or they are already regulated. Many are also rated by international rating agencies.”
“Thank you, Madam. Allow me to declare my pecuniary interest as a banker. Mdm Speaker, following the Global Financial Crisis, the changes in the global financial landscape have been Page: 56 swift and active. In the West, many banks are deleveraging and shedding assets. In Asia, many banks are capitalising on domestic growth trends to grow their balance sheet. Though economic cycles may differ region to region, the potential international contagion arising from banks failing cannot be under-estimated. Hence, a well thought through regulatory framework that is cognisant of global trends and systemic risks and yet sensitive to the domestic needs of the industry is welcomed. Specifically for this Bill, as the financial industry evolves either through organic or inorganic growth, it has become common for financial groups to be organised under holding companies. Although these Financial Holding Companies (FHCs) do not, themselves, conduct banking or insurance businesses, growing recognition of the role of the FHC has prompted global regulators to include the FHC in their scope of group supervision. As the Deputy Prime Minister pointed out, other countries like the US, Australia and Canada have done so. In Singapore today, given that some financial groups are now organised under FHCs, I think it is timely that this Bill is proposed now. Apart from helping Singapore meet the international standards on group-wide supervision, this Bill will enable the MAS to strengthen prudential oversight of such FHCs here, and mitigate the risk of intra-group contagion. It will also provide greater clarity to the financial industry and other stakeholders on what standards should apply to FHCs here. Mdm Speaker, I support this Bill and what it is trying to achieve.”
“I thank the Second Minister for the reply. Madam, the CPI figure for February was 4.9% and that is going up from a very high base last year. My follow-up question is: is the Government or policy-makers differentiating between long-term structural issues such as a tighter wage market as well as higher rentals across the market versus the short-term tactical changes of lower COEs or lower prices caused by loan curbs? For example, just raising wages will not necessarily lead to productivity rises in the long term. If our structural labour policy leads to structural inflation, will this be a long-term sticky issue for Singapore and Singapore businesses?”
“Mr Lee Chuan Teck, assistant MD at the MAS, has rightly pointed out in a speech that regulatory changes in Asia are important "but they must not overwhelm the market so that it ceases to function effectively." Another challenge is that Asian market infrastructure remains relatively under-developed. Trading repositories, central counterparties are still not present in many markets in the region. So, we need to "build before we legislate". Four – and this is my last point – cross border challenges. FIs here trade in multiple products with multiple counterparties operating in multiple jurisdictions. There will be cross-border differences and these issues need to be resolved or the effectiveness of any reform can be weakened and this could lead to the risk of regulatory arbitrage. It can also increase the already high cost of compliance burden for the industry and for the regulators. Page: 122 Madam, whilst I have briefly detailed some of the issues faced by the industry players, I fully support the Bill. 4.17 pm”
“Many industry players are also concerned that the proposed resolution powers may affect the enforceability of such arrangements, as the proposed powers are broad and it appears that they may, in some instances, defeat Page: 121 existing contractual rights. If this leads, for example, to "cherry picking" of which transactions to close out, then this could lead to counterparty losses. Section 30A(am) may also give the MAS powers to override the institution's existing contractual obligations. If this is the case, FIs around the world will have to re-assess their exposure to Singapore FIs. And this would affect our status as a good "netting" jurisdiction and increase the cost of doing business here. We welcome subsidiary legislation to ensure bilateral netting arrangements will be carved out and ask that this be extended to cover the Banking Act and Insurance Act, too. Second, different resolution for clearing houses. With the general trend now towards encouraging trades to be centrally cleared by a central clearing house, it is the industry view that the failure of such clearing houses would pose a major systemic risk. Hence, the resolution regime may need to be enhanced to ensure that such risks are mitigated, for example, through clear segmentation of clients' monies. The suggestion is that the resolution powers should be consistent with the loss allocation mechanisms that apply now under the clearing's rules in the event of a member company's default, and they should not be exercised in a manner that increases the loss suffered by non-defaulting members. Thirdly, challenges faced by nascent Asian markets. The Asian markets are still developing. Whether it is in offshore RMB products, OTC derivatives or interest rate swaps, we are still in the early stages of growth.”
“At the time, industry players had massive amounts of OTC derivatives exposures that amounted to trillions of dollars. Nobody really knew how much exposure each had to whom. This was a major source of the contagion. Even the most sophisticated global regulators were not clear as to what was the right thing to do. One important consideration then was that financial institutions (FIs) at the time were reporting their exposures on a net basis, not a gross basis. Hence, the issues of counterparty risk exposures were not really accounted for. For many banks, if one had to use the gross exposures of these derivatives, just a small level of default would have triggered a wipe-out of many of these banks' net tangible equity. And that was precisely what happened when Lehman defaulted. The domino effect and the chaos that ensued caused many jobs and households' savings to disappear overnight. Hence, the benefit of a central clearing house and Trade repositories for all of these OTC contracts have been discussed globally and some have already been implementing this. Hence, this Bill is timely, welcomed and I hope that MAS would not have the need to use it anytime soon! However, there are a few issues that I wish to bring to the House and the Deputy Prime Minister's attention and I have summarised them below. First, enforceability of bilateral netting arrangements. I appreciate and thank the Deputy Prime Minister for bringing this up in a speech earlier and, as I had earlier mentioned about net and gross exposures, it is useful to point out – as he had rightly pointed out – that most industry players here use the ISDA Master Agreement to enforce bilateral netting arrangements.”
“Mdm Speaker, allow me to declare my pecuniary interest as a banker, and also to beg the pardon of the House for putting you through yet another speech after the COS. But I figured since I know a little bit about the financial industry, I should do my part. The MAS Amendment Bill has come about to strengthen the regulatory framework for the resolution of financial institutions in the light of global developments. It enables the MAS to exercise a wider range of options in dealing with a failed financial institution. I believe I speak for the industry in saying that we welcome the partial adoption of the Financial Stability Board's (FSB) "Key Attributes of Effective Resolution Regimes for Financial Institutions" and we also acknowledge the importance of cooperation between regulatory authorities to ensure that resolution plans can be agreed and enacted globally. We welcome the enhanced powers to the MAS to safeguard and strengthen Singapore's regulatory and legal framework. Page: 120 Many in the House will remember how widely felt the reverberations were from the Lehman crisis. Consumers, bankers, depositors, regulators, policymakers – all of us have learnt our lessons from what happened in 2008. I, for one, remembered it clearly because it happened on 16 September 2008. It happened to be my birthday and I was with an American institution then. We were all staying overnight in the bank, all of us in our pyjamas and slippers, and trying to figure out what was happening. I remember seeing large queues of worried investors outside some financial institutions. The contagion that came from that single failure is still being unwound till this day. On my part, I learnt the importance of knowing what we "do not know".”
“Well, let us hope that we are not walking too fast on this manpower tightrope and let us hope we do not fall off! Dependency Ratio Ceiling”
“Madam, the hikes in the foreign worker levies were first introduced in 2010. To date, despite four consecutive hikes, the numbers of foreign workers have continued to climb. The inflow of foreign workers has increased every year since the Global Financial Crisis. The net change rose from 33,000 in 2008/2009 to 85,000 in 2011/2012. In other words, even the pace of the acceleration has picked up over the last four years in spite of these hikes in levies. So, this begs the question – how effective are these policies or are they merely going to cause yet more wage-push inflation? It is also not easy for policy makers to accurately gauge what exactly is the inflationary impact of these hikes. It depends on several factors, as they hit different industries differently and depends on the dependency and the DRC. How much is then passed onto the consumer remains a business decision. But it is telling that our CPI figures remain relatively high. If we do not have the clarity on the inflationary impact of these hikes, what is the risk of policy overshoots? The other issue to address is policy uncertainty. Whilst it is clear that this Budget has made it not negotiable for companies to restructure, relocate and to be weaned off their reliance on cheap foreign labour, the pace of the change appears pretty fast. Whilst the need for stronger measures on manpower and productivity is acceptable to most, it is another thing to expect they will produce the right outcomes the Government wishes for. Assoc Prof Randolph Tan from SIM calls it "Singapore walking on a tightrope on foreign workers". This is not a bad analogy. He says there is no guarantee that too sharp a fall in reliance on foreign manpower will not impair a generation of jobs.”
“It is, hence, clear that property market declines, and likely COE declines, would affect our revenue base. Five, hollowing out of industries. Our corporate and income tax receipts are also at risk from the restructuring efforts as many companies end up closing down or relocating. According to ASME, 30% of SMEs are thinking of relocating. ACRA statistics suggest that the ratio of new firms coming in versus the ratio of firms shutting down has been dropping. Again, what are MOF's projections regarding the net loss of income from this? Six, ageing population. As our population ages, the need for more healthcare and social subsidies will also rise. Seven, expansion of our university cohort by 60%, coupled with significant education subsidies, means our education budget would also increase dramatically. 5.00 pm Madam, my point is that we cannot take our nation's fiscal sustainability for granted. I call on MOF to address all these issues and continue to ensure that Singapore progresses on a sound financial footing. If we are unable to reach our productivity or growth targets, then we will need to adjust to slower growth and trade-offs, which will impact our fiscal sustainability even further. Page: 130”
“Madam, we are an open economy with little control over external demand. Hence, our tightening policies are at risk of creating a downward spiral as they make us less competitive. If this causes GDP to slide, our productivity will slide too. At the same time, we are embarking on an ambitious fiscal spend, alongside a fast ageing population. This could take a toll on our fiscal health. Hence, Madam, I have longer term concerns about our fiscal sustainability, and this can be summarised in seven short points. One, ambitious spend on transport and public housing. In transport alone, the Government has committed to spending $60 billion by 2017. The building of more HDB flats also comes at a time when MOM has raised foreign worker levies for the fourth time. Will the continued hikes in levies result in higher infrastructural cost, or housing cost, which will ultimately be borne by Page: 129 Singaporeans? Two, higher cost of labour. Will the higher cost of labour lead to a wage spiral? Will the tighter labour policies affect our expansion plans? Some economists have predicted that our tight labour policy could cost us 1.3% of growth this year. This slower growth would also affect our tax receipts. Three, cost of higher inflation. As the cost of doing business rises, some of this is passed on to consumers. Hence, the Government has been giving handouts, subsidies and top-ups through welfare assistance schemes to meet this higher cost of living. But if the inflation we are creating becomes structural, how long more can we keep giving these handouts? Four, property market declines, and likely COE declines, causing a drop in stamp duty receipts. Stamp duty receipts, as well as car vehicle taxes, contributed 0.7% of 2012's budget surplus.”
“This inflation means workers may demand even higher wages to compensate for their loss in real income. This may bring about a situation where wage and inflation are chasing each other. Hence, it may be useful to sometimes press the pause button to see if we need to change course, change pace or take a step back. How do we know if the ultimate "survivors" of this restructuring will be the right industries? How do we better prepare Singaporeans to take leadership positions in these new industries? In this single-minded pursuit of restructuring, it is inevitable we may lose some good ideas or good businesses in the process. They say it is short-term pain, long-term gain. But let us hope it is not short-term pain and long-term pain, too!”
“We need to ensure all stakeholders understand the benefits. We also need to put in place the right infrastructure, incentives and safeguards so as to encourage continued innovation in this field. Lastly, is anyone exploring the possibility of Singapore being the first country to offer the driverless car? Inflation and Policy Efficiency Allow me now to move on to my next cut on inflation and policy efficiency. Some economists have argued that levies on foreign workers are like a tax on the import of services. It is against free trade and, therefore, bad for Singapore. Others say businesses that rely on cheap foreign labour receive an implicit subsidy from the Government. The low cost of labour discourages them from upgrading and innovation, and holds down wages for locals doing the same work. We know the Government does not want an over-reliance on cheap foreign labour. But there are some industries where locals will not fill the gap. These are in lower skilled non-PMET jobs that need to be filled, especially given our Page: 60 aggressive growth targets for building new public housing and transport. The National Population and Talent Division (NPTD) has reported that Singapore needs another 150,000 more foreign workers in healthcare, construction and domestic workers due to our ageing population. Budget 2013 raises foreign worker levies for the fourth time. Will this mean we have to suffer even higher structural inflation caused by rising wages? Wage growth has been higher than productivity growth. This means that higher business cost is either being absorbed by squeezing profit margins or reducing expenses like training budgets. Some may pass on this higher business cost to the consumer, creating yet more inflation.”
“For example, Government agencies gather big amounts of data but these are mainly in silos. If this data could be stored in a national registry, shared between agencies, whilst acknowledging our data protection laws, this could reduce the need for a lot of repeat work and drive operational efficiency. Government can use this data to segment our population, customise services based on the Page: 59 different segments. For example, we could pinpoint the segments most in need by collecting data on income, healthcare bills, delinquencies or late payments. Using big data can lead to big increases in public sector productivity. For example, the Vancouver police have used analytics to drive the crime rate down by 24%. Similarly, US healthcare experts forecast a $300 billion gain from more effective use of data to help patients make the right decisions for treatment. Big data can also help companies to create new products and services or help them enhance existing ones. It can also help identify new business models to invest in. For example, banks' payments systems now are being displaced by small start-ups in East London that are using data to link transactions more cheaply. Simply making big data more easily accessible to relevant stakeholders in a timely manner can create tremendous value. Sophisticated analytics can even replace human decision-making with automated algorithms. Many of us in the House would have heard of Watsons. Global data generated is projected to grow by 40% per annum versus 5% growth in global IT spending. Big data creates value in many ways and Singapore is small and nimble enough to take a leadership position in this. But to do so effectively, we need to address the shortage of analytical and managerial talent necessary to lead this.”
“Our tourism industry simply cannot compete with the best in Asia, if they are forced to survive on too thin a workforce. Two, productivity and innovation can be managed but it cannot be forced. Despite the many productivity schemes implemented, Singapore's labour productivity growth has been lacklustre since 2010. Some businesses have complained that they are so resource-constrained, they have little bandwidth to focus on productivity initiatives. Also, training workers, acquiring new technology and process streamlining takes time to take effect. Perhaps, to jumpstart these efforts, MTI could bring in various industry leaders who are examples of high productivity to share their expertise. For example, the Australians are often praised for their high standards of construction. Why not invite them here to share their best practice? I also cite Singapore Business Federation (SBF)'s suggestions to improve productivity through cluster and supply chain development across each industry. For example, retail chains can leverage on shared services from the logistics sector for transport and storage. Three, big data – the new frontier for innovation and productivity. Digital data is everywhere – in every country, economy, sector, government and organisation. According to a Mckinsey report, 60% of the world's population has mobile phones. Many of us are now using smartphones. As the growth of the Internet economy rises to 8%-10% of Singapore's GDP, it will mean a tremendous amount of data is being created at a scale never seen before. Mining and analysing these big data can open the doors to a new wave of innovation, accelerating productivity and economic growth. Big data will enable Government agencies to do more with less.”
“Mdm Chair, as the Deputy Prime Minister puts it, the next 10 years of our restructuring are crucial. Today, I would like to share with the House a few ideas where I believe Singapore can take the lead in our restructuring efforts. Firstly, I would like to suggest that we maintain a highly diversified industry approach with an emphasis on services. Secondly, I would like to argue that productivity takes time, effort and resources. It requires a change in mindset and education. Lastly, I will again talk a bit about big data and how this can be a game-changer for us. One, a diversified palate of new growth industries. Singapore's economy is powered by manufacturing, services and infrastructure supply services. I would argue that the future industries we should focus on should emphasise job creation rather than niche areas like animation or biotechnology. Hence, I would agree with the Budget's focus on advanced manufacturing, and I am also excited about JTC's initiative in Advance Re-manufacturing. Another growth area for us would be in urban services, whether port management, logistics or urban infrastructure. Singaporean SMEs and other infrastructure and service providers should follow Singbridge's example in expanding their businesses overseas, as other emerging markets upgrade their Page: 58 infrastructure. Lastly, we should continue to uphold our high service standards. Hence, I would caution against trying to achieve automated efficiency in everything. There are some things that a machine simply cannot replace. This could be a warm smile, a respectful greeting or a helpful hand. Singapore Airlines has the Singapore Girl who epitomises what it means to give the best in Asian service standards.”
“Madam, allow me to clarify. My question surrounding the negative real interest rates in monetary policy was really nuanced around the fact that Singapore's Singapore dollar deposits are now at over $500 billion, and by and large many Singaporeans like to hold cash as part of their nest-egg. Should we have persistent inflation, structural inflation, low-negative interest rates, would this really solve the rising property cycle? That is number one. And, number two, are we looking at our Singaporean savers to continue to save for their retirement? 5.30 pm”
“So, finding a right, risk adjusted way to save and invest this cash for the future is important. Yes, the Sing dollar bond Page: 115 market did grow by some $30 billion in the last year, but this market was dominated by institutions and high net worth individuals, not by middle- or lower-income groups. Hence, I have suggested, as I did in the past, that the Government could issue some inflation-linked bonds for the retail market. Another alternative would be to support initiatives to build a more robust retail bond market so that individual savers can invest in a broader, more liquid array of Sing dollar bonds. A Centre for Financial Education”
“Madam, I wish to declare my pecuniary interest as a banker. The Deputy Prime Minister has commented that our property market is at "near bubble" stage. The Government has introduced seven rounds of cooling measures to our property market. So, the question is – is real estate as an investment being targeted specifically by these policies? It is clear that some of the measures have been introduced to "de-risk" the financial system and to reduce household leverage. However if indeed, one of the objectives is to reduce hot money flows into this sector, how effective have these policies been? In 2012, developer sales of private residences set a record high of 22,000 units. The sales to foreigners did drop by 62%, so this would suggest that the bulk of sales went to Singaporeans, who are still investing in real estate, be it residential, industrial or commercial. I would say that much of this problem is tied to low interest rates and high inflation. With inflation to stay high, at between 3.5% and 4.5%, Singaporean savers will want to look for an asset that gives them a decent return and hedge against inflation. Real interest rates and real mortgage rates are negative. This encourages investors to leverage up to invest in property. This explains why the overall economy's exposure to the property market is now at a record high level of 43.5%. Unfortunately, other than the local equity market, which may be too volatile for some, there is a shortage of Sing dollar assets to soak up this liquidity. There is also a lack of low risk Sing dollars investments for household savings. According to a wealth report, cash remains a large part of Singaporeans' savings, retirement nest egg at 34%.”
“Reuters reported that 57% of 268 Singapore listed companies reported a drop in operating profit margins, the biggest drop on record. The Financial Times and ACRA numbers have all pointed towards firms moving out or closing down. Some economists call these closures "creative destruction". But I would caution against allowing too much of this "creative destruction" to erode at the core of what Singapore stands for, which is a country with policy stability and transparency. The above examples, I hope, highlight the point that our policies may be reactive and potentially drastic. This raises the risk of overshooting. Page: 95 Lastly, if I may be so bold as to suggest that perhaps some of our policy-makers or the Civil Service may benefit from getting some hands-on experience or exposures in the private or commercial sector. Perhaps, some secondments or attachments in order to test out first-hand the effectiveness of some of our policies.”
“But the tightening in the foreign labour policy could pose a challenge to fulfilling these plans. Perhaps MOM and MOT will have to better coordinate their efforts. One suggestion I have is to follow the Thai Model. Thailand has their train stations built longer than their trains, so as to allow them the flexibility to enlarge their capacity if required. Perhaps our planners can adopt this too. Three, labour policy. Perhaps we had an overtly liberal foreign labour policy in the past. Between 2007 and 2008, we had a net inflow of 300,000 foreign workers. This has created the current problems of low productivity and congestion. And now in our bid to unwind this past policy mistake, we have tightened foreign labour policy rapidly. This, again, looks like a sharp policy U-turn that risks flipping over. Indeed, the risk is that we may end up creating a new set of problems for ourselves going forward. These include a persistently high structural inflation, hollowing out of the SMEs and consequently an increase in structural unemployment, as well as the deterioration in competitiveness and its associated problems. Perhaps we need to slow down the speed of this tightening as we examine the long-term consequences? 4.15 pm Fourth, restructuring. The strong Sing Dollar, combined with high labour and rental costs, means we are becoming increasingly uncompetitive. As we tighten labour policies and incentivise companies to innovate or relocate, what is the risk of policy overshoots here? Will we wipe out some good home-grown companies as a result? And what sensors do policy-makers have to ensure that the casualties suffered now will not be regretted later?”
“Mdm Speaker, I would like to talk about the risks of policy overshoots, query the co-ordination of work between the Ministries, and also suggest that we add more diversity to the experience in our Civil Service team. I would like to suggest four areas where we have perhaps been in danger of policy overshoot or undershoot, and when perhaps some re-calibration or better coordination between the Ministries might be needed. One, housing. We seem to have gone from oversupply in early 2000s to undersupply now. Are we moving into oversupply again down the road? We are ramping up supply, from 25,000 per annum to 200,000 in the next four years. At the same time, we have introduced seven rounds of cooling measures. But as we attempt to rein in this demand, we need to be mindful of the risks ahead. Potentially higher interest rates could coincide with the peaking in supply to create a double whammy in the property market. The last thing we need is an overshoot in the cooling measures. The other question is if our labour and immigration policies are all in sync with the 200,000 supply target by 2016? Will we have enough foreign workers needed to keep up with this aggressive pace of construction? Two, transport. Perhaps the benchmark used in the past to determine the capacity of our public transport system was too conservative. Perhaps the policy-makers were being prudent and did not want to overbuild. But the population surge has caused bottlenecks. So, does this mean that perhaps our infrastructure and immigration departments could have been better Page: 94 coordinated? We are reacting now, but only after years of bad congestion. We now have the Land Use Plan, which doubles the rail length of our MRT system.”
“Page: 40 Mdm Speaker, a good democracy is not about populist policies. A good democracy is about good leadership. Hence, whilst we debate the three "I"s of immigration, inflation and inequality, let us also contemplate the three "I"s that we might aspire to be − inclusive, international and innovative. A Singapore that we can be and continue to be proud of! Mdm Speaker, I support the Budget. 1.38 pm”
“Big data can be a big opportunity for Singapore. We need to create a public, private partnership for this, and a national registry. We are small enough to achieve this and we will have a lot of productivity benefits. Inclusiveness. Let us talk about the "I" in inclusiveness. The bedrock of our culture is inclusiveness. We are a multi-racial population; our forefathers were all immigrants at some point. To succeed in innovation and productivity, we need to attract younger talents to improve our vibrancy and ecosystem. An SBF report cites studies from high income OECD countries that total factor productivity is much higher in a population with a median age of 35 and below. With our ageing population, if we wish to compete as a knowledge-based economy, and attract R&D, we need to keep our young talent and keep our doors open. International. Keeping Singapore international is crucial for us. At the end of the day, we are 700 sq km with no natural resources. Why are we relevant to the world? We have prospered by placing ourselves squarely in the middle of global and regional trade and capital flows. Let us not jeopardise this. It is easy to say we should let firms move out, including SMEs. But this is a risky slope. There are many more 700 sq km plots of land happy to challenge our position. Singapore has typically been seen as a safe and predictable base for companies to create a gateway for Asia. But if our policies start chopping and changing with many U-turns, we will lose that transparency and predictability that make us attractive. And with a home market that is one of the smallest in Asia, we have every chance of becoming irrelevant on the international arena one day. So, let us stay international!”
“Instead, why not we focus on the three "I"s that we are and can continue to be, which is innovative, inclusive, and international. Allow me to quickly touch on these three "I"s. Innovation. Silicon Valley success stories like Facebook or Google seem to be born out of a garage or a dormitory. Three success factors seem to be low costs of living and business, enough space to dream and experiment, and ability to accept failure. With our current high cost environment, we have no choice but to raise productivity. The PIC bonus, "Future of Manufacturing" plan and the Budget all suggest the Government is planning to make us a more innovative economy. But innovation cannot be manufactured. It is, by definition, experimental and prone to failure. We are not Silicon Valley. We are a sovereign nation that cannot afford to fail. So, rather than force innovation, why not leverage on our competitive advantages that already exist? Rather than focus on small niches Page: 39 like animation or satellite technology, why not focus on Big Data, on services, on advanced manufacturing where there is more job creation? I would focus on Data Analytics as I believe this is a game changer and a high growth area that Singapore is well positioned to take a lead in. To do so, allow me to suggest three things. Firstly, our education system needs to groom more talent as Data Scientists and Modellers. Secondly, the PIC scheme should be enlarged to support the building and use of new business models that use big data; for example, using new credit scoring companies versus old credit bureaus. Thirdly, the PACT scheme or the collaborative industry projects should encourage alliances between stakeholders to tackle the various problems faced by Singaporeans in the private and public sector.”
“Hence, the Budget's progressive wage tax is timely, as is the Wage Credit Scheme to help businesses raise wages for Singaporean workers, and I applaud the Page: 38 enhancement of the Workfare Income Supplement especially for older workers. Whilst much of our lowest paid work is in the cleaning and security industries, I believe more can be done to encourage innovation and productivity growth in these two sectors. I think the users of these cleaning and security services may need to be persuaded to reward contracts based not just on cost or number of workers used, but also be receptive to the application of new technologies. The Budget measures to improve social mobility, whether in areas like childhood education or healthcare, are correct. However, whilst we continue to review our healthcare financing, whether it is to top up MediFund, ElderCare or MediSave, let us remember to keep it simple for our elderly or needy patients. Finally, as a woman, I believe more can be done to encourage Singaporean women back into the workforce. There are plenty of well-educated women out there who would like to work on flexi time but cannot find the right jobs. SMEs who could hire these women do not seem to have the right SOPs in place to offer such flexi time. Perhaps, Workfare would be extended to cover flexi workers? This would boost household incomes, replace some of the foreigners that our businesses have grown to rely on. Whilst writing about the intertwining of these three "I"s, I contemplated the three "I"s that we do not want to be, and that is insular, irrelevant and inward-looking. But if we embark on a U-turn of our pro-business policies, we have every chance of becoming so one day.”
“Traditionally, we have used a strong exchange rate to fight off imported goods inflation. However, it is instructive that neither the US, nor Japan, nor Europe, in fact, none of our major trading partners, are suffering from inflation. Surely, we cannot be importing inflation from them on the trade account. Our inflation is driven by asset price increases from the capital account and this needs a different set of policy tools. Whilst the macro prudential tweaking is a targeted approach, it creates too much policy uncertainty which is risky to our image of consistency. I now come to the third "I" of inequality. This is a global phenomenon and will be the biggest issue facing the world in the coming decade. Increasing Gini coefficients are being exacerbated by a change in the nature of work because of automation. A high income gap could be potentially destabilising for our society. But we are better placed to address this than almost any other country. Why? First, we have husbanded our resources for just such a time; second, we have more reserves and surpluses that can be put to work; and third, we are more open and international, allowing us to benefit from global opportunities. We have saved for a rainy day. This is the rainy day, because how we handle the transition of the next 10 years will make or break us. Doing a little more with our surpluses to achieve a re-distributive agenda is not a bad thing. A progressive tax rate is appropriate, as are policies that encourage the private sector to participate in this effort. However, the main engine must be the Government through targeted programmes for health, transport and housing. The Budget addresses these, but more is needed with better packaging.”
“Hence, whilst it is healthy to slow down to rebuild, and to be selective in our immigration process, we need to tell the world that Singaporeans are not afraid to welcome good talent who can take us to the next stage of growth. Let us talk about inflation. The Government predicts inflation of 3.5% to 4.5% this year. This is high considering we are comparing with an already high base in 2012. High inflation is a double-edged sword. It raises asset prices which creates wealth for many. But it also increases the costs of doing business, costs of living, and it is also regressive. It erodes the incomes of the masses, who by and large, do not gain from asset inflation. Whilst the Budget tries to ease price pressures in the property and car markets, these price pressures caused by tighter worker policies could outweigh any correction in housing or COE prices. Many economists believe that the wage spiral we have created will continue to cause long-term structural inflation. This will continue to erode income growth. Page: 37 As an open economy, we are also subject to global monetary policies. Currently, the MAS has kept its monetary policy tight through a stronger SGD bias, but other countries in the region, like Japan, have a loose monetary policy that is now leading to a currency devaluation war. As global interest rates remain low, and the Sing dollar remains strong, this cash may find its way into our system, causing yet more asset inflation. Whilst the tax measures have dampened residential housing, this liquidity could move into industrial and commercial buildings. This again puts more pressures on office and commercial rentals, causing yet more cost-push inflation. At this juncture, it may be time to rethink our monetary policy approach.”
“This influx caused inflation and put pressure on our transport, housing and medical systems. Hence, the Government reacted and our national policies took a U-turn. The granting of PRs and new citizenships dropped sharply in the last two years. Foreign worker levies are Page: 36 going up, taxes on foreigners buying property has also gone up. All these points towards a policy shift the other way. It is natural for us not to want to see an erosion of the Singapore Core. But whilst we debate about what it means to be a Singaporean, we need to be mindful that the international community is watching. When the BBC and boards of international companies start asking if Singapore is becoming xenophobic, we need to ask why. So, whilst it may be that we were too open on the last 10 years, are we now going "cold turkey"? I suggest that an important consideration for the Budget is whether we are reaping the economies of scale of an enlarged population as we go forward, or if we need to beware of diseconomies of scale. Have issues around congestion, competition, transport and housing outweighed the economic benefits? So, the "I" in immigration hides another two "I"s, which are integration and infrastructure. We need to work on the underlying issues rather than just attack the symptom. An undue focus on the symptom risks the xenophobic tag and this is dangerous for Singapore. Whilst I agree with policies in the Budget to help the lower paid Singaporeans, I would caution against the continued measures to excessively curb the flow of talents. After all, we should be proud of our Singapore brand and our international reputation as a good place to live and work, and we should accept that as long as we keep this reputation, there will always be people who wish to join us.”
“Madam, 30 years ago, this country was poor. But we were united in purpose, we were driven, we were happy. Now, we are a rich country, but we are divided, we are unsatisfied, we are unhappy. Mdm Speaker, I think a lot of our present issues have been caused by immigration, inflation, and inequality. Hence, I have decided to focus my speech on these three "I"s, and I think that some of our issues can be resolved by more Innovation, Integration and Internationalisation – another set of three "I"s. It has often been said that Government policies over the last decade have been good for Singapore, but not so good for Singaporeans. Indeed, the Gallup Poll recently ranked Singapore as the unhappiest and the eighth most pessimistic in the world. We were actually behind Cambodia. Yet, we have a triple-A rating and according to the World Bank, we are the world's easiest place to do business. So, let us begin by examining immigration and how it has impacted us, particularly its relationship with our income inequality and inflation. Let us talk about immigration. Our forefathers built a strong foundation for Singapore: we are hence known as a country with transparency, credibility, integrity, policy stability and racial harmony. Perhaps we underestimated the power of these strong fundamentals to attract people to our city. Perhaps we "underpriced" ourselves to potential immigrants. We grew our population by over a million in the last 10 years without a White Paper. There were Singaporeans who benefited from this trend. The property, financial, healthcare, legal and hospitality industries benefited from this increased demand and employment rates – and incomes for some – stayed high. But we also became congested, crowded and indignant with this new invasion of our limited space.”
“Mdm Speaker, I thank the Minister for the reply. It worries me that MTI does not find it meaningful to track the number of industries or companies, foreign or otherwise, that are moving out. We have to be cognisant that there is a whole eco-system – whether MNCs or SMEs – that creates the virtual cycle of job creation. If we have SMEs and MNCs starting to move out, this virtual cycle can become a vicious cycle of job losses. My question is, how can we talk about improving productivity if all our big customers are moving out of Singapore. If we are indeed proactive, then may I ask the Minister what other forward-looking measures would the MTI take to attract these high-end industries that we want to attract here to ensure that globally we are still ahead of our game?”
“Had the Government focused first on the improvement in public infrastructure and the expansion in the capacity, before announcing the headline figure or population projection, we may have had a better outcome. In other words, the sequencing could have been better. And its focus and pitch should have been geared more towards what we are capable or will be capable of handling in 2030. A different pitch and focus could have made a big difference in how Singaporeans react to this White Paper and probably would have caused less angst and frustration. Finally, for the benefit of us Members of Parliament, for a Paper of such strategic long-term importance, surely we deserve more than just six days to review it? It is not easy to discuss a 20-year vision over a few days! In conclusion, Mdm Speaker, whether this White Paper is about a sustainable population for a dynamic Singapore or a Dynamic Population for a sustainable Singapore, let us not allow this to fragment the country and let us get everyone to understand and unite behind finding some long-term solutions to the many challenges that our country now faces. 3.01 pm Page: 59”
“Hence, we need to ask the question of how much effort do we need to throw behind raising the TFR and, ultimately, will it be that effective? Or should we be looking at better integration of the new migrants? So, this brings me to my last point, which is on integration. Singaporeans may not want too many foreigners in our midst. But if these foreigners behave Page: 58 less like foreigners and more like Singaporeans, will this mindset change? After all, it is said that National Service (NS) is the great leveller for male immigrants. For the immigrants who do not have to serve NS, can we offer them an alternative like volunteering in local community services or registered VWOs? Our current integration programme consists of a tour, a session with grassroots leaders, an online tutorial and quiz and a citizenship ceremony. Can we not add on local community service programmes to better ingrain them to our local communities so that they, too, can serve our nation and become more "Singaporean"? Finally, improving the pitch, focus and sequencing of the White Paper. The Population White Paper is a commendable and bold effort from the Government. It outlines the challenges of an ageing population, the number of foreigners needed to top up the shortfall, as well as the level of growth needed to generate meaningful jobs for Singaporeans. Unfortunately, the media and social networks focused on the headline 6.9 million figure and not many Singaporeans ended up appreciating the full extent of these challenges that we face in the long term. So, whilst the White Paper offered a balanced view, its delivery process could have been better thought out.”
“Even if we shift the lower to mid-end operations out, with these shifts, Singaporeans will lose out in the long term as the middle to top management jobs tend to be manned by Singaporeans. Let us talk about fertility. Firstly, I question if baby bonuses are effective. Secondly, I question if raising the TFR, will make much difference to the Singapore resident population. Let us talk about baby bonuses. Tax rebates and bonuses have not worked in the past 20 years. Do we really think it will work now? Rather, is it insufficient housing, insufficient affordable child care, and too much stress in our education system that is causing a drop in our TFR? AWARE did a study in 2004, where they concluded that it was the quality of life, adequate support structures, including flexi-work, gender equality and a less pressurised education system, that will help the TFR. As for housing, studies have shown a strong correlation between housing prices and fertility (lagging about two years) and a very weak correlation between baby bonuses and fertility. There is also evidence that crowded cities, with high levels of stress, lead to lower TFRs. Next, I want to raise a more fundamental question, which is whether a rise in TFR, even to 1.85, will make a sufficient difference. The Institute of Policy Studies (IPS) did a study in 2011. Here, it compared a TFR of 1.24 versus 1.85, with no net migration. In 2030, the difference in the Singapore citizen population, or the Singapore Core as we call it, was just 3%. However, if we allowed net migration, there would be a more important effect in increasing our overall population numbers, especially for the young and working age group.”
“At least, we would not cause another painful round of inflation that hurts many Singaporeans, particularly the lower-income ones. Secondly, an international perspective. Singapore is an open economy. Our success is built on open trade flows with the world. We are ranked competitively because our transparent framework, our educated workforce, our political stability and our racial harmony. This stability is important! If we allow politics or inflation to cause social divide, or the rest of the world starts to perceive us as unstable, we can expect capital and businesses to move out. If we put up more barriers to entry in our labour market, we will become more competitive at a time when other countries are competing for the same pool of talent. China also needs a younger population. With their one-child policy, their young population of 15- to 24-year-olds will drop by 27% in 2025. This means wages in China will continue to rise exponentially, so narrowing the income gap between them and us. So, rather than worrying about foreigners who want to Page: 57 come here to take our jobs, should we not be worrying about other countries offering better opportunities to our top talent? Rather than worry about immigration, should we not be worrying about migration? Migration of our young talent. Migration of our future employers. Yesterday's Business Times suggested that several companies were shifting their operations out as Singapore becomes too expensive. According to the SBF National Business Survey of 1,006 companies, 14% are contemplating moving out. For manufacturing, the figure is higher at 28%.”
“Our high cost of living has been caused by past Government policy mistakes of not providing enough public housing, healthcare and transportation as our population grew. Record low interest rates have also caused asset Page: 56 inflation. Inflation is an unequal tax. It hurts the poor more than the rich. Inflation hit the lowest 20% of households by 5.6% in 2012. Inflation is regressive. These issues have cropped up a lot in the National Conversation. Hence, announcing that we want to increase our population to 6.9 million can look insensitive at a time like this. There seems to be a dichotomy between the Government ramming through these long-term policies and citizens asking for an immediate fix to these issues. Yet, we cannot overlook the long-term risks ahead. With an ageing population, we cannot afford not to have labour mobility. Countries who face an ageing population who do not embrace labour mobility risk long-term deflation and low job prospects. Many in the House are aware that Japan, an economic power house in the 1980s, has not seen any real recovery since 1990. Japan has lost a record number of jobs in manufacturing. Does Singapore want to follow in the path of Japan? Is long-term deflation the answer to short-term inflation? I would argue no. Is using an appreciating Sing dollar to tackle inflation effective? I would argue no, too. Instead, we should focus on fiscal policies like increasing the supply of housing, transport and commercial space in order to reduce the cost-driven inflation that we all now suffer. If the Government's vision for 2030 can indeed cater for 6.9 million population, then whether or not we reach that level, at least we know we have built the infrastructure and capacity in the long term so we do not repeat the same mistakes again.”