DEBATE ON ANNUAL BUDGET STATEMENT

ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [22nd February, 2010],

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"That Parliament approves the financial policy of the Government for the financial year 1st April, 2010 to 31st March, 2011." – [Minister for Finance].

Question again proposed.

Mr Chiam See Tong (Potong Pasir): Sir, some people say that this year's Budget is an election Budget, but I do not think so. As long as there is increase in GST and the GST is still intact, it is difficult to say that it is going to be an election Budget.

The increase in GST will hit hardest the lower income group as well as our increasingly marginalized middle income group even with the GST offset measures from the Government which is short term. I would suggest that the Government take a radical step by reducing the GST by 2% points to rein in inflation which has gone up too high. I believe that the Government can afford, given that the GST collected accounted for over $6.6 billion or 15% or more of the total revenue, plus additional revenue from the two casinos when they come on stream.

Tax credits only benefit big companies and have limited benefits to borderline companies like SMEs where growth is important and is a constraint to keep momentum going. Upfront cash or grants is more helpful for SMEs with cash flow problem for them to invest in skills and technology. The foreign workers' levy could be varied according to industries, like hospitals, old folks homes, hospices that rely a lot on foreign health caregivers which eventually leads to higher operating costs.

I would like to propose the creation of a skills shortage list for short-listing of foreign worker applications. Create a ranking of skills that have a shortage of labour in Singapore for example, nursing, coaching of certain sport, medical experts

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etc. With this list and a cap on the number of foreign workers allowed to enter Singapore, work permits will be issued in priority of the shortage in local labour available. Hence, ensuring that despite placing a cap on the number of foreign workers, industries that require foreign labour due to the shortage of certain skills in Singapore, will still be able to get the workers they need.

The Ministry of Education – I would like to suggest the Government to peg the increase in tuition fees for tertiary institutions such as polytechnics and universities to the inflation rate or the actual reported increase in operating costs. This aims to limit the ability of the institutions to raise the fees beyond what is acceptable based on reason.

Every increase in tuition fees should also be matched with increase in financial aid for needy students so that nobody is left out. Setting up of a "Work and Study" scheme in tertiary institutions – this scheme allows students to work on cared by the institution and Government. This helps students finance their education, while gaining useful work experience in a safe and convenient environment. The last suggestion I would like to make has already been made by Minister Khaw Boon Wan.

If each individual Singaporean is encouraged to take more personal ownership of their health and lifestyle, perhaps the Government can consider introducing an individual balance score card which the Government could use as a cost saving incentive. This will be given to individuals to offset expenses in the move to adopting a healthy lifestyle for example, gym membership, medical bills, purchase of exercise equipment, health checks and supplements as well as to redeem benefits such as better insurance

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payments such as the 'no-claim' bonus in the car industry.

Ms Audrey Wong Wai Yen (Nominated Member): Mr Speaker, Sir, I thank you for the opportunity to contribute to this debate. I would like to share a few observations on the topic of productivity, on quality of life for all Singaporeans, and to address the introduction of the foreign workers' levy.

I have no doubt that the issue of Singapore's productivity has to be addressed and have no argument with the need to be more creative and innovative in a changed global economic climate. Cheaper labour and business costs in other countries have already forced us to adopt new strategies to continue our economic growth.

However, what has not changed is that our key resource is our people. As such, it is heartening to see that older workers have been singled out for attention and support in this year's Budget as they have worked hard for our nation. We are hardworking people, but we also want to be fairly treated and attain a decent standard of living. To attain this decent standard of living, our productivity levels, competitiveness, and attractiveness as a place for business and investment, have to be addressed. But I believe that increasing productivity levels requires more than tax breaks and incentive grants. It will take more than financial rewards to inspire true innovation and change. More than these measures, what is essential is a mindset change. Employers, industry leaders, and workers themselves have to understand what productivity means – in real, practical terms – for themselves and their companies.

Take training, for example. How exactly does it help a worker's or company's productivity? This is something that a worker and the company have to look at. They need a clearer

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understanding of the need for training and the determination and support to make it happen. Simply attending a training course, or sending your workers for such a course, is not a magic pill for better wages and higher productivity. Many people are sent for training simply because the subsidies and grants are available. I have heard people complaining about being sent for training "yet again". Workers should want to be trained or re-trained and understand how this will help their job performance. At the same time, employers need the skills and smarts to harness the workers' newly acquired knowledge in their line of work. It can be frustrating for a worker to have attended training or re-skilling, and then return to the same old job without the opportunity to apply their learning.

Furthermore, Singaporeans are so used to having their training paid for by employers and the Government that perhaps we do not necessarily have the incentive to seek out training opportunities on our own. Hence there is less motivation to improve.

But we know there are exceptions to this as we have heard many stories of people who have gone for training and re-skilling and have better jobs even in the debates in this House in the last few days. Another disincentive to training is the long hours we already put in at the workplace, and in some companies the heavy workload per worker which leaves little time for additional training and even can lead to mental fatigue. If we take training for granted, if employer and worker attitudes do not change, then our productivity levels would not increase.

In this context, I would like to share some remarks that I read in the Business Times by Mr Kenny Yap, who is Executive Chairman of Qian Hu. Mr Yap said, "My experience tells me that the difference between Singaporeans and foreign workers is attitude. Most foreign workers are dead serious about working, whereas

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quite a few young Singaporeans force themselves to work. My gut feeling is, if we cannot find a way to change the working attitude, it is going to be a tall order." Mr Yap also commented that, "to raise the productivity of the whole team, we must upgrade all of the team members' skills. By this logic, only subsidising local workers training defeats the purpose of building a team. As far as the company is concerned, if you are good, you are good regardless of whether you are a Singaporean or foreigner."

Sir, Mr Yap's point is that, when we look at measures to increase overall productivity, there are other factors in the work environment and business landscape to consider. Mr Yap refers to something other Members of the House have already raised: the reluctance of Singaporeans to take on jobs that involve long hours, shift work or manual labour. The irony is that while we shun these jobs, we also worry about the influx of foreign workers whom employers have resorted to hiring. For instance, the bus companies having to hire foreigners to drive our public buses, as described by Mr Ong Ah Heng. Now, I personally believe that bus driving is an honourable profession as it provides a valuable public service – I am a regular bus commuter myself – and the unions have done much to beef up the training and professionalism of the job. I will elaborate on this point about upgrading the image of certain jobs a little later.

Mr Kenny Yap also makes the point that if Singaporean and foreign workers are needed to work on the same team, it is the entire work process that matters. If Singaporeans are re-trained to better standards, how can this be harnessed with their foreign colleagues' skill levels so that the entire team's work process becomes more efficient and productive? The implication here – and it is an important one – is that management and employers play a very important part in organising or innovating these work

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processes. Perhaps, management and employers also need further support in this area.

A further important factor in raising productivity is actually the human factor. A happy worker is a productive worker. Thus, it is crucial for companies to provide a happy work environment where workers look forward to going to work, morale is good, bosses are compassionate, interpersonal conflict is minimised, talent is recognised and rewarded, staff welfare is taken seriously, workers' suggestions are taken on board and, of course, providing a healthy work-life balance. Good management practices and leadership are essential.

Since the setting up of the Tripartite Committee on Work-Life Strategy in 2000, Singapore has made progress in encouraging companies to be family-friendly. The Ministry of Manpower's website has a section dedicated to Work-Life Balance, where it notes the business benefits that result from a successful work-life strategy – these have been found in other research. They include increased productivity; improved recruitment and retention which means also lower cost in terms of recruitment of staff as there is lower staff turnover; lower absenteeism rates; improved customer experience and a more motivated, satisfied and equitable workforce.

So what more can we do to encourage these "softer" aspects of enhancing productivity? In addition to work-life strategies, what other measures can we encourage employers to adopt in order to maintain a positive and productive work environment?

Having a good work-life balance certainly improves our quality of life. And when we talk about improving the quality of life for all Singaporeans, we cannot

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forget those among us who are likely to remain in low-skilled, low-wage jobs for a long time. I think we cannot escape the fact that these jobs will always be around. What quality of life can these workers expect in, say, five years from now? How much can, say, a cleaner expect to earn in five years' time? Can companies offer wages to the lowest-ranked workers in a way that keeps up with the inflation rate? Will they share their gains from productivity increases in an equitable manner with their employees?

Employers will have to anticipate that salaries will need to increase with inflation over time and find ways to harness improvements in productivity to covering these business costs. One way to do this is job redesign and, of course, investing in training and innovation. But, perhaps more importantly, it is not only about employers. It is about society as a whole. We need to re-value these jobs. It is time for us to change our attitudes towards these so-called "dirty jobs" – those that involve manual labour.

Instead of looking down on these jobs, we should appreciate that they are vital aspects of our economy and workers need to feel that they are respected for the work that they do. This kind of re-valuing demands a sea-change in our mindsets and attitudes. Singaporeans have often observed that in western countries, workers in lower-skilled jobs such as hospital cleaners have a different attitude and carry themselves differently – they see themselves as holding down a proper job, with proper pay and benefits, and more importantly able to raise a family. These are quality of life markers that matter to the ordinary citizen. But as we have heard in the past few days, there are still many families in need in Singapore and those stresses they face and we cannot discount them. In Singapore, we have some examples of how job redesign and training have contributed to changing the perceptions of certain jobs, for

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example, security guards. Training programmes driven by the WDA, unions and industry have led to better trained security guards and recognition as a profession, which leads to pride in their jobs and better salaries. I hope that WDA, the unions and employers will continue in this fashion and help more lower-wage workers attain a better quality of life.

Yesterday's Straits Times carried two interesting articles about two workers – a carpenter in Japan and a bricklayer in Australia – which showed how these "manual labour" jobs have attained societal respect. The article on the bricklayer had the headline "This job is an art and a career". The word "art" in this context is interesting but true. It takes training, expertise, attention to detail and care to lay the bricks in an even and straight line, and that is what we would call "quality finish". It all ends up in a beautifully-constructed building. In Singapore, on the other hand, one of the barriers we face in attracting people to such work is that we no longer have this appreciation for the work of the hands, for things like carpentry, woodworking, metal working and bricklaying. Even bus driving, it seems, falls into this category. The work of the hands is what we could call "craft", and is related to artistry. For instance, every handmade piece of furniture is unique and carries the mark of its maker. I would like to suggest that it is time we start to understand such craft again. Perhaps, in fact, we can even draw on the arts sector, on traditional and modern artisans and artists to build up this appreciation and enhance the image of jobs that require hardwork with the hands. Perhaps, they can help to educate the young on the value of handiwork. When our appreciation of manual labour rises, the standing of those who perform these jobs should rise too. So, perhaps, this is something that the Ministry of Education or policy makers could consider. Certainly, in my profession, I have met many people who fabricate things or

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do manual labour – carpenters, electricians, movers – and I respect what they do. They have specialised knowledge that I certainly do not possess, and without which the show cannot go on!

Another way that we could re-value jobs is to devise other ways of calculating their value, such as the social and community benefits created through particular jobs. I was just reading an interesting article on BBC news from December last year about a research from the New Economics Foundation in the UK, where various jobs were evaluated according to the total contribution they made to society, such as the impact on communities and the environment, and it was found that hospital cleaners created £10 of value for every £1 they are paid, whereas in this research bankers destroy £7 of value for every £1 they earn! I do not know how the numbers were calculated, but this was carried in a number of news reports. Perhaps, our policy makers could look into such an index for blue collar jobs to broaden our perspectives.

A final point about training is on contract and freelance workers. I think that should be easy avenues for them to pursue retraining and re-skilling as well.

For too long now, we have relied on foreign migrant labour to fill low-skilled and low-wage positions, and it is clear we cannot afford to continue with this assumption.

I would now like to raise concerns about the increased foreign workers' levy. Because I can imagine that the trigger response of some contractors who employ large numbers of foreign workers will be to seek the fastest solution to an increase in business cost. This could result in a few worst-case scenario responses by employers which will end up hurting the workers. For instance, the increased levy is passed on to workers

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which may be in the form of illegal kickbacks or salary deductions; labour agencies increase their fees for finding jobs for workers; employers cut corners by dismissing workers before their contracts are up; and cutting corners may also result in safety lapses – with fewer workers, they may have to work longer hours, or there may be less than the optimum number of workers to carry out a dangerous task, and that could result in injury or death.

Simply put, when it comes to money, unfortunately for a lot of human beings, we are willing to risk prosecution. The recent prosecutions of contractors who accepted kickbacks, which have been widely reported in the media, are testament to this. Those who provide welfare services to foreign migrant labour regularly report that there are many cases of illegal, exploitative and unsafe practices that go unreported for many reasons. So with the increase in foreign workers' levy, we might have some unintended consequences. Will the Ministry of Manpower have to work even harder to root out errant employers? I urge the Ministry of Manpower to pay close attention to the impact of the foreign workers' levy on companies that hire large numbers of foreign workers, and ensure that errant employers are brought to justice. I would also like to suggest that part of the increased foreign workers' levy could be channelled towards training, integration and welfare programmes for migrant workers who have also contributed to our development. It will be to Singapore's benefit for us to be more vigilant in ensuring that migrant labour is treated fairly and humanely.

While Singaporeans are understandably concerned about the pressures on space, transport and housing caused by the large population of foreigners, perhaps we also need to be more

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balanced in considering the issue. It is an emotive issue. I think we need to be careful not to go overboard in our complaints. After all, we are a society that is multi-cultural and diverse. Yes, PRs may have contributed to the rise in demand for flats leading to high housing prices, but do not forget that Singaporeans too sold their flats to PRs and therefore a number of Singaporeans have actually benefited from this, just as others have found themselves on the losing end.

Ultimately, what Singaporeans need to do is to shift our work culture attitudes where better productivity is not about working longer hours and where there is work-life balance and where human factors count.

Sir, the Budget and the recommendations of the ESC are a step towards dealing with some entrenched issues within our economy and workforce and I hope that Singaporeans will strive together for a better quality of life and inclusive growth for all. I will end by telling a story about Switzerland as that comparison has come up a few times during the debate. Two Swiss artists came to Singapore for an art project that I organised, they stayed in Singapore for three weeks, and they loved our country. What made a deep impression on them? Our multilingualism, multiculturalism and the fact that diverse races and religions co-exist in peace and harmony. They told me that they would not encounter such a rich diversity of cultures where they live, and said: "This is very important, it gives Singapore strength and uniqueness, don’t take it for granted".

Singapore has faced many challenges in the past and by uniting as a people, we have overcome difficulties and made the country what it is today. Perhaps, not quite Switzerland yet, but still, I think we have done pretty well. We cannot take our resilience and unity for granted and we certainly have to address gaps such as the growing income disparity. But what we have, I believe,

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stand us in good stead as we head into the future.

12.45 pm

Miss Penny Low (Pasir Ris-Punggol): Sir, in the past 40 years, simply put, our growth strategy was one of "more input, more output".

First, we mobilised our own land and labour resources and attracted foreign capital and entrepreneurs. Then, when we expanded land by building upwards and labour by importing more cheap workforce. Over the decades, labour force participation rate reached a high 80%, for ages 20-59 years old, quality of life improved and the cost of living escalated. But meanwhile, this same old method of increasing input to increase output seems to have reached a diminishing marginal return. So this year's Budget focused on increasing productivity, spearing global SMEs from Singapore and an inclusive growth.

But yet, feedback from the GPC Resource Panel, trade associations and businessmen pointed to the fact that change means uncertainties and uncertainties is not good for business. Many businessmen also said that they know how to maximise every factor of production so there is no need for the Government to interfere. Some in the hospitality and construction industries even criticised the Government for not being truly understanding to their operational limitations, and that the new levy rules would severely impact their business.

But, Sir, global tides are changing at real time, and we must avoid the frog-in-boiling water syndrome, waking up one day, only to ask "who moved my cheese?", when it is too little, too late.

European supermarkets offer us some lessons. Many have digital price display

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panels alongside barcode scanners that provides information about the goods on the well-stocked shelves. Since all products do come with barcodes, there is no longer a need to physically tag every item and change tags when there is a price change, greatly reducing the need for manual manpower. In Japan, all 7-Elevens have additional pictorial keys on their Point of Sales (POS) system. Once, a 65-year-old smiled as I self-scanned my purchase, while she pressed some pictorial buttons which indicated my age, gender and build. She was collecting shoppers' data so she can have an accurate picture of her clients' purchase habits, frequency and time of purchase so that she can better plan her cashflow and manpower needs. She also makes more money from selling the data to manufacturers, who will use it for better product launches specific to that locality.

In Singapore, the National Library is way ahead of the curve. With its bold and innovative use of technology, some regional libraries now have only one frontline staff.

One of my grassroots leader, Mr Jeffrey Low, from Meng Soon Paints and Hardware Trading Company, recently invested in a computerised pre-programme paint tinting machine. He said that it has increased efficiency of his business operations significantly because before that, when there were special paint colour orders, he would have to take it down to the paint supplier personally and wait for about three days before he got his order confirmed. And sometimes, because the quantity is too little, the order is turned down and he loses the business. But now, with this machine, he said that he can cut down on the supply chain for customised requests immediately thereby increasing efficiency, sales and of course, giving him a lot more free time to do and focus on growing his business.

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So indeed, improved productivity can spur economic growth, but we must remember that they are only a means to an end, and not the end in itself. So what is the end? Workers are not just a statistic on a business or Government chart. Every person deserves to be facilitated to become the best that they can be in whichever field that they choose.

Sir, Google recently won the accolade of having the highest value-add per worker at $450,000 at the second quarter of 2009. Not only that, it is said that they receive one million job applicants a year and denies some 99.5% of them. How did they do that? There is no time to elaborate here, but a complete redesign of the workplace and workflow, making Google Town the place to work, play and live in, while offering space and flexibility for workers to work on their dream technology seems to be the trick. In short, they kept morale and aspirations high, and drives employees to be the best they can be. The question is: can we do the same for Singapore and Singaporeans? Can the Government act as a facilitator and create an incentive framework that encourages everyone, every enterprise to be the best that we can be.

Yes, we can, and I think, in fact, we might have done so for the top half of the population, but I cannot say the same for the bottom half. I was heartened to read that an inclusive growth was the third thrust of this Budget. But upon closer examination, I was dismayed to see that it refers very narrowly, to increasing productivity and income of the low-wage workers. What about the no wage workers? What about the marginalised latent resources that could have been further disadvantaged because we had unknowingly built an environment that further isolates them? For example, without MND's recent effort in ensuring barrier-free access for all roads and buildings, the physically handicapped, the

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old, the weak and the heavily pregnant will find navigating roads difficult, and in another 20 years when the ageing population explodes, we will have a good proportion of the population sitting at home. But with the barrier-free access and low step buses, they can continue to be mobile and continue with gainful employment, contributing to growth with dignity.

Once, I was at the launch of a universal access website by a disabled people's association. At the welcome speech, the president said, "Imagine a world where the visually impaired can file their tax returns online". Just then, it hit me that I have been e-filing my taxes for years, but they had no access, even though universal web access is inexpensive and has been around for sometime. Then it occurred to me that they did not need it any way, because to start with, they have no income to file. Yet, like savants who have been found to have super-human abilities because their brains block out some other functions, the blind has a profound sense of hearing and touch beyond that of a normal being. The same can be said of many other marginalised groups, be it the autistic, hearing impaired, depressed, elderly or lowly educated. Can policy makers design incentive frameworks that encourage the deepening and employment of such super skill sets? It will up productivity if a square peg is fitted in a square hole. Now, by giving wage subsidy to companies to employ any disabled is not only a handout approach, but one that does not incentivise people nor company to operate at their best.

Another example, Mr Dennis Kweh, an National Library Board (NLB) staff, suffered from a rare genetic disorder called Morquio-Brailsford Disease, Spinal Sclerosis and blinded on one eye due to glaucoma. He started Adventure 200, a 200-kilometre wheelchair marathon over three days, to raise $200,000 for the

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Spastic Children's Association of Singapore. I wheelchaired alongside Dennis at the start and end of the marathon and saw how he toiled every distance, stopping only for a doctor to check that he is fit to carry on. Yet, the event was not very well supported because Dennis is not an Olympian nor a super star, and there is certainly no big prize money at the end of it for him when he completes the trip. However, his effort is no less than that of an Olympian. How can we support his effort? How can ordinary Singaporeans support his effort to be a net contributor to society, despite his own very difficult conditions?

For too long, while in a rat race, the world has accepted a widening bell curve approach to development, rising Gini coefficient was acceptable, and economic growth does not have to account for externalities. Perhaps that was necessary to get majority up to speed in the shortest possible time. But history is a mirror, and externalities, be it social or environment, will boomerang in our face, if we refuse to heed the lessons of the global recession.

Sir, we are not all responsible for the past, but we are all responsible for the future, and for the world we leave for our children. I repeat my Budget call last year, when Iceland and the Artic Ice melted together that the right question to ask is not "when the downturn will be over", but "how would we want to emerge from this storm – as a person, as a corporation, and as a nation"? The right lessons must be learnt. We need to re-value our goals, which cannot be just a pure GDP race. We need to redesign the policy incentive framework to be truly inclusive, and rebuild the KPIs and institutions to support them. What gets measured, gets done. It is not an issue for the economists to worry about. It concerns all of us. So I have three wishes for this Budget, in building an inclusive growth.

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Wish number one – I hope that the National Productivity and Continuing Education Council will involve not only the union, the public and the business sector, but also the people or the non-profit-organisation sector, who also needs a leg up.

Wish number two – making of what I call, a WikiMe. I understand that the Government promotes mass collaboration between multiple Government agencies and businesses. The impending One Map is one example, where Government agencies and businesses can make their facilities and services available through a map interface. I propose the we create another map, which I call 'WikiMe', meaning Wikipedia and me where the Government creates the infrastructure like how we created Wireless@SG, and templates, while people upload their own content, offering information about themselves, exchange triumphs and tribulations, and even offering a hand for free or for a fee. If done properly, this could be the largest and single most effective way of self-help and neighbourhood bonding mechanism that could inform the neighbours of who are around them, who is available to be a babysitter, run an errand or be a handy man. Productivity will rise, as latent resources like homemakers and elderly who may not want to work long hours and only want to work on jobs to home, can now be meaningfully employed.

My final wish is that for the Youth Olympics Games (YOG). This is an inaugural event in the world, and one that Singapore will possibly host once for a long time to come. August is only five months away, and yet, there does not seem to be very much buzz in the air. In contrast, Glasgow won the bid to host the Commonwealth Games 2014. Yet, when I visited it last November, people were excited about it. Why? The answer is found in the search results page. When you google the YOG page, that is the

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YOG site, the search results turned up words like "volunteer", "sports", "YOG", "events". But the Glasgow Commonwealth Games, abbreviated GCG, turned up words like "getting involved", "our people", "what Games mean to Glasgow", and so on.

Sir, a language reflects the dominant thought of the organiser. While both Glasgow and Singapore rallied the people to support the Games, Glasgow made the game relevant to the people. First, I understand from the Mayor he had to go to the Chambers to ask for taxpayers' money to bid for the Games. When he won the bid, he set up multiple feedback and suggestion portals, to understand how the Scotts would like to spend that money. As it turns out, seemingly unrelated wishes like improving public transport, more low-cost housing and so on topped the list. The GCG website states that, "One of the benefits of hosting the Commonwealth Games is to leave the host city with a lasting legacy of improved infrastructure that is both positive and sustainable. Glasgow will be rolling up its sleeves to ensure that everyone involved with the Games has a fantastic time. But the Commonwealth Games means so much more – it is the once-in-a-generation opportunity to regenerate a derelict part of the city and tackle some of the issues of health and deprivation that have blighted Glasgow." It went on to say that, "Members of Glasgow City Council and the Scottish Government are working on plans to ensure the Games leave a positive legacy on our communities."

Amongst others, Glasgow is working on a comprehensive transport system that covers the city and extends to the expressways that connects the country, while the Commonwealth Game Village will be built and converted to 300 low-cost social housing units and a 120-bed

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care home. This is relevant and real connection with the people and responsible use of taxpayers' money. This is also why while Glasgow is cheering while the Games are four years away, our streets are still quiet while the clock is ticking away. If people welcome the Games, they will embrace the athletes with open arms and genuine smiles. People need to understand what the Games mean to them, we need to involve everyone in this historical event. We still have five months so it is still not too late. I urge the organisers to make this event the Singapore moment where everyone counts. I also urge that everyone, individuals or enterprise rally around the YOG and stand up for Singapore.

In conclusion, Sir, during the downturn, many global MNCs suddenly discovered that they have a nationality. Similarly, many people discovered they have a welfare pass via their passport. Only in our own homeland, are we first class citizens. While, we need to return the economy to the service of its people, people too, need to return to the country the dignity of being the best and the spirit of self reliance, and people need to return to each other, the humanity that binds us all. Sir, in the spirit of taking this opportunity to re-value, redesign and rebuild our society, let us strive towards a more inclusive, sustainable and better future, ming tian hui gen hao (明天会更好).

The Minister for Manpower (Mr Gan Kim Yong): Yesterday, Deputy Prime Minister Teo talked about the National Productivity and Continuity Education Council and our strategy on raising productivity to achieve sustainable and inclusive economic growth. I will talk more about Ministry of Manpower's strategy during the COS. But let me just focus on one particular area this afternoon. To make the strategic shift, we are making adjustments to the foreign worker levy to encourage employers to use their foreign workers more efficiently and to motivate them to

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invest in productivity improvements. I think it is useful to share with Members the thinking behind the levy changes and respond to some Members' concerns about these changes. First, let me thank Members for their comments and support of the changes.

We have taken a calibrated approach in adjusting the levy, so as to maintain a balance between supporting economic growth and ensuring that we do not become over-reliant on foreign manpower. As Ms Jessica Tan has pointed out, we must ensure that Singapore remains as an attractive place for businesses so that we can continue to create jobs for our workers. That is why we have not reduced the top line Dependency Ratio so that growth companies can have access to foreign workers they critically need to support their operation and expansion. This will also allow us to attract high value new investments that will raise our productivity, spur our growth and create good jobs for Singaporeans.

However, we cannot continue to grow our foreign workforce at the same pace we did in recent years. We need to moderate the overall inflow of foreign workers and motivate companies to invest in productivity improvements. To achieve this, starting from 1st July 2010, we will increase levies across the board and adjust the levy tiers. Let me explain how this works. The levy tiers are structured such that the higher a company's dependency on foreign workers, the higher the levy rate and the bigger the levy bill it will have to bear. For example, a services company with 10 local workers may employ up to 10 Work Permit holders because the Dependency Ratio is 50% – 10 locals for 10 foreign workers. Let us assume that the foreign workers are all skilled workers to simplify the example. The first Work Permit holder it employs will be subject to a levy of $160 from 1st July 2010. It will pay $160 levy for each of the Work Permit holder it employs up

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to a total of five. That is the first tier. However, the sixth Work Permit holder it employs will be subject to a levy of $300, and the ninth Work Permit holder will be subject to a levy of $450. That is the second tier and the third tier. We will further tighten the levy tiers over the next three years. This way, companies will have a strong incentive to reduce their dependence on foreign workers.

A number of Members, including Mr Liang Eng Hwa, Mr Teo Siong Seng, Mr Sin Boon Ann, Mdm Ho Geok Choo, Dr Amy Khor and Mr Michael Palmer, have expressed concern about the impact of foreign levy changes on businesses, especially the SMEs. Let me stress that the levy changes should not be viewed in isolation. They should be seen in the light of the various initiatives and measures announced by Finance Minister Tharman to help companies, especially SMEs, to improve productivity. As Deputy Prime Minister Teo mentioned yesterday, productivity is not just about cost reduction and efficiency, it is also about how businesses can create value. I will not elaborate further as the Ministry of Trade and Industry will address how it intends to assist SMEs at a later stage.

Ms Jessica Tan and Dr Ahmad Magad have also cautioned that some companies may not be able to implement productivity improvements immediately. Mr Michael Palmer has also asked if we could align the pace of the levy changes to the 10-year productivity target. We understand that companies will need time to adjust. This is why the levy changes will be implemented in steps over three years. The first increase in levy rates on 1st July 2010 will be a modest one, ranging between $10 and $30 for most Work Permit holders. This represents an average of less than half a percent of the overall wage bill. But we need to get companies to start thinking about improving the productivity and take steps to reduce their dependency on foreign manpower now,

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so that they have enough time to realise productivity gains. The longer we delay, the more painful the adjustment will be later.

Several Members, such as Mr Teo Siong Seng, Ms Irene Ng, Dr Ahmad Magad, Mr Ong Ah Heng, Mr Sin Boon Ann, Mdm Ho Geok Choo, Dr Amy Khor and Mr Zainul Abidin Rasheed are also concerned that some jobs may be shunned by locals and companies may have difficulties in recruiting enough locals to replace the foreign workers. Let me clarify of the aim of the levy changes is to motivate companies to increase their productivity and deliver higher value-added products and services with fewer foreign workers. The increase in levies alone will not necessarily lead to productivity improvements if companies merely replace foreign workers with locals and employ the same number of workers. Let me borrow a phrase from a colleague, Mr Lim Swee Say, "with same-same input and same-same output, productivity will remain same-same, with no real improvements". Companies should consider how they can streamline business processes, improve their products and services, explore new markets with higher value and upgrade the skills of their workforce. This way, they will see real productivity gains.

Mr Low Thia Khiang has suggested that we remove the foreign worker levy completely and use Dependency Ratios instead as the sole lever to control the foreign worker numbers. Let me explain why we need the two levers – Dependency Ratios and foreign worker levy – to work in tandem to moderate demand for foreign workers and allocate them efficiently. If we use Dependency Ratio alone to regulate demand for foreign workers, we will need to reduce it significantly. I have earlier explained why this could impact high value growth

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companies and new investments that may require foreign workers. The challenge is how we can support these high growth companies and new investments without increasing the total number of foreign workers here. The issue is therefore one of allocation. We want to encourage companies which can operate with fewer foreign workers to reduce their dependence, while those who need more will have to pay a higher levy rate but still keeping within the overall Dependency Ratio requirement. I have illustrated earlier how the levy works to achieve this. If we only have Dependency Ratio system with no levy, it would not make much of a difference to a company, like the example I gave just now, whether it hires one foreign worker or 10 foreign workers. In the end, most companies may well decide to hire as many foreign workers as they can, right up to the limit of their Dependency Ratios. This will be contrary to our objective to moderate demand and facilitate efficient allocation of foreign manpower resources.

Therefore as Mrs Josephine Teo has pointed out the Dependency Ratio system requires an accompanying pricing mechanism to allocate foreign workers. Mr Low has initially suggested adjusting the Dependency Ratio by industries to achieve this. The question is how can the Government be in a position to decide which industries are more deserving of foreign workers? For example, how do we determine whether the pharmaceutical industry requires more or fewer foreign workers than say, the food industry? Even within the same industry, food and beverage, for example – how do we decide whether a coffee shop requires more or fewer foreign workers than, say, a French restaurant? So instead of the Government making decisions on the number of foreign workers in each industry, each business and each company, we should leave it to market forces to do that through a pricing mechanism. In fact, Mr Low conceded as

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much when he subsequently suggested a "COE" system to allocate foreign workers, which, in fact, is another form of pricing mechanism. However a "COE" allocation system for foreign workers is fraught with many difficulties. For one, it creates uncertainty for employers, in terms of price and availability of foreign workers. The "COE" system would be no simpler than the levy system and could end up creating other problems.

Sir, the foreign worker levy is a pricing mechanism that works in tandem with the Dependency Ratio. Together, the system gives flexibility to companies so that they can have access to foreign workers but they have to hire locals to meet the Dependency Ratio requirement. They have to pay higher levy rates if the ratio of foreign to local workers is high. This way, we allow market forces to operate so that we can efficiently allocate foreign manpower resources, give enterprises some flexibility while motivating them to improve productivity and minimise reliance on foreign workers. It is not a perfect system, but it is a practical system.

Mr Michael Palmer has asked why we are increasing that S Pass levy by a higher amount than the Work Permit levy increases. Sir, since the introduction of the S Pass in 2004, the number of S Pass holders has grown more rapidly than any other work pass groups. Although S Pass holders are considered mid-skilled workers, they are still part of the foreign worker landscape. The S Pass levy has remained at $50 since 2004, and is currently significantly lower than the Work Permit levy. We will need to increase it to moderate demand. I should also point out that S Pass holders are expected to receive higher wages to qualify for S Pass. The new levy rate is still in relatively smaller proportion of the S Pass holders' wages compared to that of the Work Permit holders.

Ms Irene Ng, Ms Audrey Wong and Dr Amy Khor have raised the concern that

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errant employers may exploit their foreign workers by passing the levy increases on to them. Sir, current Work Permit and S Pass conditions explicitly prohibit employers from recovering levies and other employment-related costs from their workers. The Ministry of Manpower will continue to monitor and take enforcement actions against employers who attempt to do so through salary deductions and kickbacks.

Sir, let me reiterate that the levy changes should not be seen as a standalone measure to moderate the growth of foreign manpower, as Mr Inderjit Singh has pointed out. Instead, it is part of the overall coordinated efforts by the Government to strive for productivity-driven growth. As Mr Heng Chee How has mentioned, companies will need to change their mindsets on the way they use their foreign workers and drive productivity improvements.

Sir, let me end by sharing a short story. One day, a teacher went into a classroom with a big jar. First, he put some rocks into the jar and asked the students, "Is the jar full?" So, when the rocks were piled up, the students said, "Yes, it is full." The teacher then picked up a box of pebbles and put the pebbles into the jar, and asked the students, "Is the jar full?" The students said, "Well, I think it is now really full." But to the surprise of the students, the teacher now took up a box of sand and poured it all into the jar. Then, the teacher asked the students again, "So what do you say? Is the jar full?" The students now became very hesitant, but after a while, they conceded, "I think it is quite full." Now finally, the teacher took up a cup of tea and poured it into the jar. And now, when the teacher asked the students, "Is the jar really full?" There was dead silence.

Sir, when I talk to companies on the need to moderate demand for foreign

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workers and raise productivity, some claim that it is not possible to improve their productivity any further. They say, "My jar is full." Those who always think the jar is full will not make efforts to fill it. But they are surprised every time when others manage to fill it up further.

Sir, of course, productivity improvement is much more challenging than filling a jar. We should not underestimate the challenges of productivity improvement, but neither should we underestimate its potential. Sir, let us stay focused and work together to find more ways to fill the jar further.

1.17 pm

Dr Fatimah Lateef (Marine Parade): ( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, the changing economy and competing market demands need workers possessing the latest skills that are relevant and can add value at work. Hence, workers must take steps to upgrade their skills in order to get better income. If they do not do so, they will be left behind.

In the current situation, workers must not just be contented doing low-skilled jobs or odd jobs, because it only provides low wages that are also irregular at times, while the cost of living keeps rising, times change and technology is getting more advanced.

The time has come for us to also further understand the concept of productivity and innovation, and try to practise it. However, as we learn something new, we must avoid falling into problems like spending beyond our means, being in debt and so on.

I would like to suggest that the Government explain clearly the concept of

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productivity and how it can be implemented under our strategic transformation of our economy in various sectors, especially in industries with many low-wage workers.

This is because there might be misconceptions and a lack of understanding on what productivity means. Some might think that it means working for longer hours; some might think that it brings higher income for the same amount of work, and some might also assume that it is a process where automation will do all the work so that workers do not have to work as hard.

I would also like to call on the Malay bodies and grassroots organisations like the Malay Activity Executive Committee (MAEC) to engage the Malay community to explain the correct concept of productivity.

Finally, Mr Speaker – skills, positive energy, productivity, motivation and lifelong learning – these are the buzzwords that will be on Singaporeans’ lips from now on.

( In English ): Sir, in our early years, with the vision, strategies and mindset of our leaders, Singapore grew rapidly. Growth of 8% to 10% was not uncommon. We have moved on – from third world to first world status. When we have achieved so much, further growth may not be as fast and the growth curve, not as steep. There are new challenges, what with our open economy. Thus, to adapt to these rapidly changing domestic and global situation, it calls for a transformation in the way we think, the way we work, and the way we act. No more stereotyping. Our tagline would have to include words like ideas, innovation, invention, inspiration and information technology.

Things do not change. We have to change. We have to be the agents of

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change. A country’s budget reflects the vision and the performance of the government. Over the years, notice how it is customised and tailored to meet our evolving needs and challenges, whether local or global.

This year’s Budget is yet another creative one. I would personally call it the people’s Budget, and how appropriate,because people are our major resource in this land scarce tiny little red dot. Thus, the focus on manpower, skills, training, talent capital and development. Talent retention is a necessary shift for organisations not already having plans on doing this. Continuous upgrading, learning, unlearning and relearning is crucial.

In medicine, we have compulsory continuing education for doctors. If you do not meet the minimum requirement for the year, the practising certificate will not be renewed and therefore you will not be allowed to practise. There is a reason why this is essential – new developments, new ideas, evidence-based practices and changes are happening daily. With the characteristics of the doctor in me, when I came to Geylang Serai, my constituency, grassroots professionalisation and continuous learning and upgrading became part and parcel of their lives. Now, I am proud to say that they are a very motivated lot and nearly 70% have been for at least two or more self-improvement courses in the last two years. However, this is not good enough. We have to go further. So we have set a target – 100% trained by the end of 2010. Now, my grassroots leaders practise what they have learned and apply the knowledge and skills in events organisation and residents' outreach.

Our workers too need to move up and move forward because in today’s globalised but small world, when you apply for a job, you are not just competing with foreign workers and local applicants. You are competing with the

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same level workers in Russia, India, Malaysia, China, etc. That is why the Government will allocate $5.5 billion over the next five years to help enterprises and workers enhance productivity.

Mr Low Thia Khiang, Member for Hougang, claimed in his speech that "low-wage workers do not have enough incentives to go for training." I would strongly urge him to review that comment in view of the Jobs Credit scheme, the WIS and now Enhanced WIS (Work Income Supplement), the WTS (Work Training Supplement), which can subsidise 90% to 95% of absentee payroll and course fee for training, the Post Secondary Education Account and many others which may be specific to the company and the profession. Are these not incentives for training and upskilling? I would say then, the only thing lacking would be their internal drive and motivation of the workers and the employers.

To complement investments in productivity, there is also a move to increase foreign worker levies, which we have just heard. I would like to urge that this again be done very very gradually as foreign workers make up over one-third of our workforce and, of course, they represent an essential component in our growth. Certainly, the suggested tiered system in certain industries may work but I have concerns that it may have some backfire effects in certain other industries and may even lead to higher labour cost. Therefore, I am assured by the Minister's speech earlier where he said that MOM will be monitoring this very closely.

Let me now share a very positive example. The Management Development Institute of Singapore (MDIS) has campuses here and also one in Tashkent, in Uzbekistan, which I visited – a wonderful and state-of-the-art campus. The Minister for Higher Education there

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has stated that students in all undergraduate and graduate courses in Management must go through MDIS in Uzbekistan. MDIS is also expanding to be the management institute in the Central Asian market and later they are planning to extend to Malaysia and India as well.

What is in this for MDIS and for Singapore? One, revenue for MDIS. Two, enlarging and strengthening our Singapore brand name on the global stage. Three, exposure of students to emersion in culture, understanding and building bonds, in other words, international relations, an example for all companies to try to emulate.

Developing an inquiring mind and inculcating the research culture, which is a basis, is also crucial in our next phase of development and growth. If we always do what we have always done, we will always get what we have always got. "You must do things you think you cannot do", so said Eleanor Roosevelt.

I can say that many innovative instincts may have been killed because of lack of funds, lack of expertise to write up and package the proposals, uncertainty about where to get advice and assistance on the research projects. Perhaps out of every 10 applications, eight may end up being rejected. Can Singapore consider setting up an inventor-friendly and approachable Innovation and Invention Advisory Committee, accessible to anyone who needs advice on their research projects. Sure, we have the BMRC, NMRC, NRF, etc , but these may be beyond many of the applicants with simpler and smaller projects, and these may well be the projects which eventually make it big.

In mental health, for example, we often face the challenge of monitoring whether these patients take their drugs

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diligently in order to control their symptoms, especially when they are out in the community. I learnt recently that there is a technology using a chip which can be used to monitor from afar if the patient really swallowed his tablets for that day. Is that not wonderful because we can also cut down on manpower, on volunteers, on ambulatory care nurses and counsellors doing the monitoring!

Perhaps with the bed crunch situation we face ever so often in our restructured hospitals, remote care through teleconferencing provided at an area and facility outside the hospital may become common practice in time to come.

With all the focus on productivity and bottomlines, please do not forget the human factors, and I agree with Ms Audrey Wong on this because, eventually, it boils down to us dealing with people. Let me give Members an example:

HSR, Realtors with a Heart, is a company that towers over its competitors. It has received more than 20 awards and recognition recently and it is also rated No. 1 in a productivity campaign under the HSR property group. It is the fastest growing real estate company in Singapore. My encounter with the company was slightly different, because I was there to receive a donation on behalf of Mercy Relief, raised by the HSR staff in response to the Sumatran earthquake. The moment I stepped into the organisation, there was positive energy – a very strong positive energy. A warm and caring atmosphere exuded as I moved from place to place in their facility. The "Attractor Factor" was very powerful. Their staff, multi-racial with foreign workers as well, were genuinely happy, and they were just looking and feeling great. This was consistent with all the employees I met that evening. Indeed, we can certainly combine hardware and software to come up with the best results in Singapore companies.

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In this Budget, Sir, there is more relief for the handicapped. This is indeed great news. However, the definition of the word "handicapped" is still rather nebulous. Does it comprise seniors in the various stages of Alzheimers' disease, dementia and also the mentally infirm? I would like to suggest a review of the current guide using the ability to perform six sets of activities of daily living certified by a practitioner. Perhaps both MCYS and MOH can collaborate to refine the definition and conduct more publicity and public education related to this to enhance understanding.

Mr Speaker, we have come a long way for a small, young nation. From nowhere, we are now somewhere, I have to say. From the days when letters to Singapore were sent to China, our brand name is now not uncommonly on the lips of people globally. This did not come easy and it will continue to be challenging as well. Our work ethics, our mindset, growth, productivity and everything else need to be strengthened continuously. We cannot look back. We cannot procrastinate. In the end, it is all about attitude. No limits, no excuses, no ifs and no buts. It is just our attitude. If we have been afraid and we have had butterflies in our stomach, then now is the time to make that change – align and make all those butterflies fly in formation. The world is indeed as large as the lens through which we view it.

With that, Mr Speaker, as the 50th MP to speak on the Budget, I support it.

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*Cols. 3015-3016.

1.29 pm

Mr Ang Mong Seng (Hong Kah): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, last year's economic crisis was the most severe the world has ever seen. Our Government responded swiftly by providing a $20.5 billion Resilient Package

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and tapping into our past reserves for the first time. The Jobs Credit Scheme has helped to keep workers' jobs and companies to operate smoothly. With the support from our tripartite partners and our people, we managed to overcome the most severe economic downturn and have started embarking on the recovery journey.
In 2004, our per capita GDP was $23,700, ranking No. 2 among the four Asian Tigers. Hong Kong was No. 1, Taiwan No. 3 and Korea No. 4. Five years later, we surpassed Hong Kong with a per capita GDP of $50,300 whereas Hong Kong is only $42,700, so we have become the "head of the dragon". Singapore is now No. 1. We are ahead of everybody else. To maintain our leadership position and advantage, we must formulate new plans and strategies to improve our competitiveness. Everyone is striving for new breakthrough. No progress means regress.

The Finance Minister announced in this year's Budget a series of measures to restructure Singapore's economy in the next five years. A total of $5.5 billion will be invested in companies and individuals to improve their productivity and to increase productivity growth from the current 1% to 2%-3% and to improve Singaporeans' real income by one-third in 10 years. To achieve this target, we must formulate new strategies and development plans to boost economic growth. A key strategy is to increase productivity, reduce our dependency on foreign workers by gradually increasing foreign worker levy and to create better jobs, better income and better life for Singaporeans.

Such a policy helps to ensure our long-term growth. However, for industries that are not popular with Singapore such as construction and maritime industries, foreign workers are still needed to man their operations. If we reduce foreign

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workers substantially in a short period without getting sufficient local workers to fill in the gap, then two problems will arise. Firstly, over 90% of construction workers are currently foreigners, that is about 245,000 workers. Reduced manpower will slow down, even delay ongoing projects. Secondly, increased levy will add to construction costs which, in turn, will push up housing prices. The consequences will be dire.

Government encourages automation and mechanisation to increase productivity. I believe most companies will support this. However, this requires a lot of resources and skilled technicians. Time is needed to get everything ready so as to generate more output with less input. This is very much like a marathon runner who must warm up before his run to achieve best result. I believe our marathon runner, Mr Teo Ser Luck, would agree with this.

Another good example is the recent car recall incident involving Toyota, Hyundai and General Motors. This has created huge losses for the industry. As you know, car manufacturing is a high-tech and highly automated industry. By going for quantity, these car markers have overlooked quality. This has not only affected sales but also greatly tarnished the companies' image; they might even have to retrench workers now. We must be aware not to commit the same mistake.

Improving productivity is nation-wide movement. All Government agencies and companies must give their full support. I suggest: First, set up a cross-agency committee to train all civil servants on the productivity mindset. Second, fund training expenses for the companies. Third, provide interest-free loans or cash grants to companies to improve their

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productivity. Fourth, reward staff who contribute to the company's productivity and share the company's gains with staff.

Mr Speaker, Sir, the Minister also announced setting up a National Productivity and Continuing Education Council chaired by Deputy Prime Minister Teo. The mission of the Council is to train people to innovate and to increase productivity. This is a good policy for the young and educated. However, some old and less educated Singaporeans may not be able to get training and end up losing out. This kind of structural unemployment will create social problems. I know structural unemployment rate in developed countries is 5%, in France is 6% to 7%. Currently, the European welfare system provides a social safety network for the unemployed. Singapore does not have such a welfare system. I would like to ask if the Council has any solutions for structural unemployment.

This year's Budget did not hand out hongbao like the previous years, but it drew up future plans for Singapore. Topping up the Medisave Account for people over 50 years old will benefit 1.02 million people, which will cost the Government $310 million. The Government is also setting aside $200 million for Medifund to help needy Singapore and another $200 million for the Eldercare Fund. In total, direct transfer to Singaporeans amount to $1.4 billion and it will be $1.8 billion if we include WIS. Many helping measures in previous Budget are extended to this year, so, in a way, we are still getting hongbao . For example, utilities, S&CC, rental and GST rebates. So, we are still getting all these but many HDB dwellers do not understand this. When I went to the community’s Chinese New Year parties, many residents asked me this question. So, to put their minds at ease, I urge the Minister to make it clear again to Singaporeans that Singaporeans can still enjoy the above rebates.

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An article in 23rd February Zaobao impressed me very much with its very simple explanation on the Budget. So, all the details of the Budget are clear and easily understood; you can take in the details of the Budget in a single glance. So, I hope the Ministry of Finance can consider adopting the same method when delivering the message. I am laying this newspaper on my table for my residents to see it.

On this note, I support this Budget.

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*Cols. 3017-3022.

1.40 pm

Dr Ong Seh Hong (Marine Parade): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, I am very honoured to be the concluding speaker in the debate on this year's Budget Statement and I have more people in the audience.

In 2007, when the Government announced its intention to amend the Constitution to empower the Government to make use of the net investment return (NIR) of the national reserves, I expressed my concern. I was worried that we were beginning to eat into our capital, making use of " ah gong's " money and, thereby, depleting our reserves.

In 2008, I again urged the Government, the Ministers, MPs and members of public, not to treat the annual Budget as a time for the Government to distribute angpows . I was worried that people would begin to have unrealistic expectation on the Budget, thinking that the Government will be distributing angpows whether in good time or in bad time. Last year, I told a story of an old man who spent $2.50 on a bowl of fishball noodles while his grandson went and enjoyed a bowl of abalone noodle costing $42. I am concerned because our young people seem to be using their grandfather's money freely, and taking it for granted.

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This year, I am very happy because the Finance Minister actually gave me a big angpow , in the form of not distributing any angpow to the people. This year, the big angpow is that the Government is focusing on how to prepare for Singapore's economic development in the next 10 years, with emphasis on raising our long-term competitiveness. Only then can we continue to compete in this highly competitive global economy and to have a share of the pie so that our people can enjoy a better standard of living.

Mr Speaker, Sir, raising productivity may be important, but I hope that the Government will not neglect another even more important strength – that is, creativity in our economy. We need to have creativity to push productivity. In today's new economy, if we depend on the traditional production methods of "doing more, doing better", it is not enough. It is not enough to push the economic development of Singapore because if we were to raise productivity on our existing industries, we could only achieve very minimal and very gradual progress. In order that Singapore would continue to develop and be prosperous, the Government should ensure that the policy we promote would be one that leads to a Creative Economy. Only through a creative economy can we achieve a quantum leap in our development. With a creative economy, we will be able to create value and to create high-value jobs.

Coca-cola is a century-old company established in 1886. Its market value now is US$122 billion. Google has a history of less than 15 years. It is a company emerged from the information technology, and its market value is already US$172 billion. Another company, the Apple Inc., from its origin as a personal computer manufacturer, progressed over the years with innovations and all sorts of new inventions, such as Mac, iPod, iPhone. In

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less than 30 years, its market value has grown to US$189 billion.

To enable Singapore to develop into a creative economy, creative thinking, creative concept and creative spirit should be extended to all trades and all industries, and not to be confined to the creative industries like media, advertising, design, etc. Every Singaporean must be creative. He should make full use of imagination, have new ideas and better processes, so as to provide better services and products.

Take a look at the handphone. Thirty years ago, when the handphone was first introduced, it was as big and as heavy as a piece of brick, and its function was only limited to voice communication. Today, the handphone is very tiny, but it is so versatile that it can be used for communication, sending SMS, sending images, surfing the Net, and even sending emails, for GPS and for playing games. Although the first round of dot-com bubble had caused thousands of start-up companies to go bankrupt, today's Internet has enabled companies like Yahoo!, Amazon, Google, eBay, Facebook, Twitter, etc, to provide all sorts of services, create new needs, open new markets and thereby creating trillions of market value.

Mr Speaker, Sir, in order that our creative economy may succeed, we must continue to encourage and promote the creative culture and the creative spirit among our schools, the Government departments, private sectors and the people. Our people should be given more space for creativity. The Government should minimise interference and maximise encouragement. The Government departments should also make corresponding adjustments so that the private sectors could have more space to make full play of their creativity. For

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example, in tender exercises, can we not be less rigid so that the bidding companies can submit different but creative proposals that may be even more effective? At the same time, the Government should also be willing to undertake risks to test out new proposals, and not be too rigid and afraid of making mistakes. They should not be too conservative and stick to the same old models and follow the old rules.

Last night, Senior Minister Goh Chok Tong and the MPs for Marine Parade GRC had a dialogue session with our grassroots leaders on the 2010 Budget. One grassroots leader, who is in the construction industry, gave an example. He said that Housing Board's Lift Upgrading Project is still using the "Bored Micropile System", although a few years ago he had suggested to HDB to make use of another method known as the "Driven Micropile System". According to him, this new method is four times faster and 30% cheaper. It is only 70% of the cost of the conventional method. But the HDB rejected his suggestion on the ground that this new system was a "Percussion Method". I sincerely hope that the Government departments could be more flexible and allow our enterprises to be more creative.

As for the SMEs, how are we going to help them? We often hear proprietors of SMEs saying that business is getting more and more difficult to operate. A very famous business man, Hu Xueyan, from the Qing dynasty in China said, "Business may be more and more difficult, but the more difficult it is, the more opportunities there will be." The key is on our foresight. Yes, our businessmen should look further ahead. If your vision is confined to only one city, you can only do one city's business. If you look at one country, you will do only one country's business. But if you look at the whole world, you will have global business. Globalisation and

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Internet have brought us a lot of global competition, but they have also opened up a sea of global opportunities.

The CEO of Alibaba, Ma Yun, is full of confidence for the SMEs. He said the 21st century is not a century for the big enterprises and the big scale. The big dreams of small enterprises should be typical of the 21st century. Therefore, to succeed we must look at how we are able to establish new relations with our workers, customers and the environment. In the past, businessmen depended on how to exploit others in order to make money from the remaining value, but today's enterprises depend on creating value. He encourages the enterprises not to be complaining all the time. He said, "This world does not lack complaints, what it lacks is the means to settle these complaints." "To succeed you must work hard! The market does not come with research. You must fight all the way to open it." In order to realise the dreams, we must put our ideas into action. So long as our people from all walks of life can work in one heart and one mind, dare to innovate, dare to try out new things, we will be able to realise our dreams.

I support the Budget Statement.

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*Cols. 3023-3028.