HEAD V - MINISTRY OF TRADE AND INDUSTRY

Head V – Ministry of Trade and Industry (cont.)

Resumption of Debate on Question [6th February, 2009],

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"That the total sum to be allocated for Head V of the Estimates be reduced by $100." – [Mr Inderjit Singh].

Question again proposed.

The Chairman: Head V – Ministry of Trade and Industry. Mr Heng Chee How.

Proactive Defence of Demand

The Minister of State, Prime Minister's Office (Mr Heng Chee How): Sir, the greatest fear and difficulty confronting businesses in this crisis is the sharp drop in demand and the uncertainty over when the upturn may come. With all the major export markets down, economies and companies will be scrambling to grab what is remaining of the pie, until such time that growth returns.

Protectionist attitudes and measures may also become more visible and prevalent internationally. In the 12th January 2009 Wall Street Journal article entitle "Surge in Protectionism Threatens to Deepen World-Wide Crisis", the columnist Bob Davis said, "Industries are starting to line up in Beijing, Brussels and Washington for import protection. That has happened in past downturns, too, but this time the restrictions may bite harder because of the global nature of the problems." He further said, "The global turn to stimulus spending also may come wrapped in protection, as each country tries to ensure that its industries benefit. In the US, congressional Democrats and their allies in steel, textile and organised labor are pushing to include strong 'Buy America' provisions in a US stimulus program that would limit spending to firms in the US. Already European officials are crying foul." Similar worries were voiced at the recently concluded World Economic Forum (WEF) in Davos.

Sir, in the face of such a scenario, Singapore-based companies cannot be passive or risk losing even more of their

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demand through ever fiercer international competition for the remaining pie, and by direct or indirect protectionist measures. Saving costs will help companies last longer but will not enable companies to save their way out of a recession.

In my opinion, we cannot just rely on the Budget measures to work their magic through companies doing their sums and responding individually. Economic agencies, business chambers, industry bodies and companies must all step up their individual and collective efforts to compete and to defend their market share and demand.

I would like to know what specific measures will the Government be embarking on to catalyse this process of collective effort, to get chambers and industry bodies to do more. What investments, activities and events can Singapore target, in the current situation, to attract that leverage on our strengths of safety, connectivity, service quality and our season-proof weather in order to produce additional multiplier effects in the economy? What specific help can our network of Free Trade Agreements and bodies such as APEC give us in this time of heightened risk of protectionism and ever-intensifying competition?

Capability Development for Local Enterprises

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, in the words of a senior MTI officer, this economic downturn is the "sharpest, deepest and most protracted" recession we have ever experienced. Singapore is among the first countries in Asia to enter into recession, and so far, it is indeed a sharp, deep and protracted one for us, judging by the business climate survey in today's Business Times .

Can the Minister share his thoughts as to why we seem to be harder hit than many of the regional economies in this

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downturn and also amongst the first to enter into a recession? Is our economy destined to be always so volatile? While the key reason for the sharp drop in our manufacturing is due to the collapse of demand in our major export markets, some analysts have, however, pointed out that our lack of strong local industry anchors, especially in the manufacturing sector, is among the reasons why we are harder hit.

Our manufacturing industries consist mostly of foreign MNCs. Thanks to the hard work of our economic agencies like EDB, we have been able to attract global MNCs to invest in Singapore. The Government also offered attractive schemes and incentives to draw in foreign direct and R&D investments. These investments have added value to our economy and created jobs.

However, we have to be mindful and realistic that for some of these foreign companies, their business plans are drawn up by their head offices based outside Singapore. Their investments and business plans can change due to the challenges they faced in their home country or other regions they operate. Hence, while we should rightly continue to attract and draw in foreign direct investments, I hope the Government will also spend and commit equally significant funds and resources to help our local enterprises in their set- up and assist them in expanding their capabilities. We should spare no effort in continuing to nurture and grow our steady base of home-bred and locally anchored companies here.

I am glad to hear that in this Budget, $130 million will be spent to enhance our grants and training schemes to encourage enterprises across different sectors to refresh and develop new capabilities so as to capture growth opportunities when the economy starts to recover. I look forward to the announcement of further details as

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to how SPRING and IE Singapore can help local enterprises develop new capabilities and globalise.

One of the recommendations put up by the Economic Review Committee in 2002 is to assist our domestic enterprises break out of the low-cost, low-efficiency cycle and move into the innovation-driven cycle of growth. Our aim then was to nurture our domestic enterprises to become the future growth engine for the economy. I would like to ask the Minister how much progress we have made on this front so far.

New Market Development to Position for Future Growth

Ms Jessica Tan Soon Neo (East Coast): Mr Chairman, while we look at measures to support viable businesses in Singapore, to manage cost, enhance cash flow, build and retain capability, we cannot ignore the fact that unless there continues to be demand for services and products, businesses in Singapore, though more resilient, will not be able to survive for too long. Recognising that the economic challenges are global and that our growth and total demand have slowed over the last two consecutive quarters, how are we investing to build capability to create new markets and opportunities to address the demand for our services and products? I would like the Minister to share the initiatives and programmes in place to develop new markets and build capability to support growth for Singapore's economy in the near term. As it will be difficult to generally export demand, what is being done to look for new markets where demand still exists? Do we see the alternative energy sector as one that could support new demand for our services as companies look to improving their energy efficiency in the near term? Given the size of Singapore's local market, unlike other regional countries with large and growing domestic demand, our ability to create and grow local

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demand will be limited, what measures are there to encourage Singapore companies to look for new overseas markets? Does the Minister see intra-regional trade and investments as a potential market to drive demand? Or are other markets the focus to drive near term demand for Singapore's services products? How are our local enterprises involved in the development of these markets and capabilities? What about availability of skills locally to support these new sectors or markets?

Sir, can the Minister also share the status of existing and new foreign investments that have remained in Singapore in various industries, from manufacturing plants, facilities and financial services? Given the slowdown in demand and the economic challenges, what are the implications of these investments? Are they at risk? Will we see a shift of investments in Singapore?

In this crisis, while we look at ways to ensure that companies survive and weather the storm, we will still need to continue to ensure that we invest the engines for growth and capture opportunities. Although there will be pain until the US and the global economy recovers, this will help us stay viable and put us in a better position to live and participate in the recovery when it does happen.

US-Singapore Free Trade Agreement (Costs and Benefits)

Ms Sylvia Lim (Non-Constituency Member): Sir, in October last year, the Business Times reported that Singapore continued to suffer a twin trade deficit in the US in both goods and services. In respect of goods, since 2000, the US exported more goods to us that it imported and the surplus has been increasing year after year. According to US government data, the US trade surplus

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for the first eight months of 2008 was US$9.5 billion which puts Singapore among the top 10 countries with the largest trade deficit in goods with the US. As for services in favour of the Americans in 2006 and 2007, it was significantly higher than previous years', around US$3-4 plus billion. Is this an indication that the US-Singapore Free Trade Agreement, in its implementation, has favoured the Americans? Have we encountered difficulties penetrating American markets and can we expect the FTA to be in parallel, in view of the current US protectionist sentiments?

Cut Total Costs to Save Jobs

Mr Heng Chee How: Sir, companies are the receptacles for jobs. To save jobs, it is crucial to help keep companies afloat. Cutting costs enables companies to stretch their resources and thus last longer under any given circumstances. The National Wages Council (NWC) and tripartite partners have issued guidelines to tackle wage costs using the flexible wage system.

The Government has also stepped in a big way with the Jobs Credit Scheme to subsidise the payroll of companies, and this amounts to an equivalent 9% CPF cut to assist companies without causing pain to workers. This is on the wage side. But non-wage costs are equally important. Chief among them are rents and utilities, mainly energy and water.

The Government, through HDB, JTC and SLA, will be reducing rents by 15%. I would like to know how much this reduction would be equivalent to on average, in terms of cost reduction to companies. What percentage of businesses incur rents outside of HDB, JTC and SLA, and what steps, other than moral suasion, can be taken to see that the other items of Budget assistance, such as the rebate in property tax, are substantially passed through to them?

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Will surveys be conducted to ascertain the efficacy of such pass-through, so that Government will be in a better position to assess the effectiveness of such a channel, as it plans future moves?

While energy prices have come off the peak of 2008, they have also come off the trough. Energy and water costs are significant costs especially in the manufacturing sector, and companies must certainly do their part to improve efficiency and cut waste in their use of utilities. What additional help, in terms of pricing levels, stability of pricing of utilities may be possible to further help companies?

For the hotel sector, I have received specific feedback that they are worried about the additional levy that they would have to pay in connection with "F1" because they expect occupancy and pricing to be significantly poorer than last year. I think this was also reported in the media. Depending on their actual ability to raise rates and occupancy, the industry is concerned about how the additional levy will impact their cashflow and may even become a cost instead of a surplus revenue-split. In these difficult times, the industry hopes that the Government will seriously consider adjusting the formula to help them.

Green Technology

Er Edwin Khew Teck Fook (Nominated Member): Sir, the fledging solar installation industry appreciates the Solar Capability Scheme launched last May. Together with EDB's CERT Scheme and enhancements to the BCA's Green Mark Scheme, it has helped drive demand from practically zero to a level that is beginning to support a handful of businesses. I am sure that the construction sector also welcomes the additional business opportunities from solar to help to offset the decline in traditional projects.

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Solar PV has a potential to supply a double-digit percentage for Singapore's electricity demand by the year 2020. But we are still in an interim phase where solar power is not commercially viable without supported policies. We need support during this phase for Singapore-based companies to be ahead of the pack when falling cost opens up huge regional solar power markets. Solar installers are now hiring staff and training sub-contractors to meet rising demand in this emerging sector. Our concern is the lack of any clearly communicated long-term targets or policies to ensure that this promising start is not muted because of the lack of follow-through programmes and incentives. What happens after the $17 million CERT Scheme and the $20 million Solar Capability Scheme expire?

We must avoid mistakes made by some governments where start/stop policies stunted solar business growth in a country, after which it was difficult to pick up the momentum again. It would therefore be disastrous for Singapore's solar companies if business collapse next year for lack of follow-through of the recent positive initiatives. The same applies to students just starting courses in renewable energy at our polytechnics and universities. Without local demand for their engineering skills, upon graduation, we face an inevitable brain drain of local talent seeking better opportunities abroad.

From the news, we learn that the new Obama Administration is spending billions to develop green technologies and green jobs. Japan and South Korea are likewise investing US$30-US$50 billion in the three to four years in green technologies and generating some 960,000 and 1 million green jobs respectively. I would therefore like to request MTI to provide a medium to long-term plan for the clean energy sector so that the private sector, the Sustainable Energy Association Singapore (SEAS), the R&D institutions and the institutions of higher learning, can

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work in concert to fit into this plan and strategy for developing Singapore into a green energy hub with the right skill sets and trained Singaporeans to handle these green jobs.

12.15 pm

Tourism

Mr Low Thia Khiang (Hougang): Sir, Singapore's reputation as the best destination for tourists' retail experience is under threat. We hear cases of retail shops selling over-priced electronic goods, overcharging tourists, dealing in unfair retail practices, "bait and switch" or misrepresentation. Such poor service appears to be prevalent despite the introduction of Singapore Service Star by the Singapore Tourism Board which seeks to recognise, through accreditation, businesses that promote good service.

Tourists' confidence in Singapore's retail sector can be easily tarnished by a few black sheep and shops that chose to remain outside this scheme.

I would like to ask what is the Government's strategy to provide a uniquely Singapore tourists' retail experience in view of the present recalcitrant retail businesses that continuously dish out poor service and bad practices.

Next, rapid urbanisation and redevelopment of Singapore have eroded our heritage in the name of development. Take Chinatown, for instance. While it has been preserved for tourists, many of the original trades located in Chinatown have been replaced by touristy shops selling souvenirs and trinkets. Tourists are becoming more sophisticated. They will prefer the experience of the real cultural heritage of a place as opposed to a copy of it. Thus, our conservation strategy

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toward places for tourism should focus on retaining the original trades, businesses and attractions that are authentic to the place. A Straits Times Forum writer shared in his letter on 6th January 2009 that perhaps the real Chinatown is at Waterloo Street because Chinatown is becoming too touristy to the extent that tourists would want to give it a miss.

I would like to ask the Minister what is his strategy to conserve our heritage sites for tourism. How are we preserving our history to provide an authentic cultural and uniquely Singapore experience for tourists as well as for our children?

Ready Built Factories

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Chairman, Sir, ready-built factories (RBFs) have been an integral feature in Singapore's industrialisation programmes since the 1970s. We have been instrumental in our ability to attract foreign investments and represented a major competitive advantage for our nation in getting factories up and running at lightning speed.

Echoing the concern of the Singapore Manufacturers' Federation and my personal observation, it appears that the Jurong Town Corporation has stopped building such factories and are leaving it to private developers and market forces to meet factory space needs.

May I ask the Minister for Trade and Industry to clarify whether there is truth to this and also the Ministry's position on RBFs?

In this fast-moving world where decisions are made more quickly than ever in terms of investment and business tie-ups, I feel that reasonable costs of RBFs remain a key competitive advantage in foreign SME investment considerations as well as play an important part in meeting the needs of our local SMEs.

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Could the JTC consider reviving the construction of RBFs?

SMEs and Entrepreneurship

Mr Inderjit Singh (Ang Mo Kio): Sir, I would like to speak on survival and new growth opportunities.

Sir, we need to save companies which have viable businesses but are facing the liquidity crunch and unless the Government gets more involved, we will not succeed.

Sir, I have got feedback that since the Government implemented the SRI, some banks have undermined it by transferring their commercial loans to the SRI loans. This defeats the purpose of SRI to catalyse new loans and if all the banks start adopting this approach, we then would have a zero net gain. So while the Government might think that new loans are being created through the SRI, this may not be the case. We need to control this.

While we hope that the SRI will work, we need to do more. I want to suggest three things that we should do.

First of all, like in Canada and Taiwan, where the governments till today are still directly involved, we should therefore consider setting up a SME or development bank to do something like this so that in the future, when we are faced with a similar loss of confidence of the financial sector, we will be able to act much faster in getting liquidity going again into our markets and not be held ransom, waiting for the market to get organised again. Such a bank could be still a secondary source of funds while we rely primarily on the tested approach of lending through banks supported by the various Government schemes. To be realistic, it will take time for us to set up such a bank but I think we should think about one for the future. We, therefore, need to work

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within the current systems if we want to help companies fast.

Second, I suggest that we open up a new channel or front for lending where SPRING sets up an investment committee, consisting of bankers, entrepreneurs, consultants and SPRING officers to approve loan applications made direclty to SPRING. Upon approval, SPRING then directs the banks to lend. This may require a different risk-sharing profile for banks to want to participate. I therefore suggest a three-year-loan where the Government gives a 100% loan guarantee in the first year, 80% in the second year and 50% in the third year. This way we avoid the moral hazard of banks lending when it does not make sense because the Government takes 100% of the risk for the full duration of the loan period. If the Government does not want to guarantee 100% and still wants to stick to 80%, then I think this system of in-principle-approval by SPRING can still work if we allow the companies to put a 20% deposit with the banks as their share of the risk while the banks disbursed the other 80% through the SRI. I am sure that these initiatives will better facilitate the cash flow for companies.

Third, Sir, I have suggested the setting up of a Corporate Rescue Task Force, where we have the public and private sectors getting together rescuing companies that have capabilities that we may want to keep alive for Singapore in the long term. We should seriously consider this because there are many of these companies that are viable, have good models that could survive in the long term but need a lifeline in the short term.

Sir, JTC, like HDB and SLA, is still adjusting rentals upwards. I have seen a number of examples. This needs to stop. JTC should instead conduct a review of market rental rates to be accurate. The Inland Revenue Authority of Singapore (IRAS) is doing the same to review

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property tax because of the significant drop in properties prices in the last six months. Sir, JTC also recently instituted a new rule to restrict sub-leasing – I believe not more than 50% of space owned by or leased by a tenant can be sub-leased out. This is rational, but counter-intuitive. In this current environment, it will choke off more of the company's cashflow leaving too much of unutilised space if they cannot lease out. The implication of this is that we will have vacant space left and therefore drive up rentals.

Sir, start-ups will be the worst affected by the bank lending squeeze so we must try to help those which are innovative and have got the potential for high growth. I suggest that SPRING proactively extends further investments to all SEEDS invested companies. SEEDS should also be enhanced such that start-ups that find difficulties in finding third-party investors can go to the SEEDS Investment Committee to get an in-principle approval to invest first and then the SEEDS team can help them look for third-party investors. Currently the process is reversed, where the third-party investors need to be found first.

Sir, I also like to repeat my call for SPRING to set up a Growth Fund, which is a direct investment fund investing into growth companies. This fund can incentivise the entrepreneur to buy back the Government's share at a nominal return to the Government. This will help us build some local anchors capable of playing a big role in our economic development of the future.

Sir, I also see no harm in spurring micro enterprises. We should, perhaps, set up what I call an Opportunity Fund to support small or micro enterprises, targeted at helping people who are out of jobs but have some business ideas. Even

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if a few succeed, we can create a vibrant environment of many start-ups. SPRING could perhaps work with the various CDCs to co-fund this Opportunity Fund.

Finally, the need on creating demand for our SMEs. While SPRING is focused on growth locally, IE Singapore is focused on growing demand externally. I think IE Singapore has not been effective in bringing our SMEs overseas. SPRING, I think, can do a better job. At the same time, EDB is not interested in attracting foreign SMEs into Singapore and I think there is value in bringing some of them who are thinking of relocating. For this purpose, for gaps that are appearing, I suggest that we relook at how our economic agencies are organised to do this job more effectively.

Help for SMEs and Entrepreneurship

Mdm Ho Geok Choo (West Coast): Sir, SMEs employ the majority of workers in Singapore – six out of 10. They are also the most vulnerable in a prolonged downturn. To help SMEs improve their productivity during this time, perhaps the Government could offer a scheme that grants SMEs to carry out an organisational review of their processes and systems to better streamline for optimal manning. So an employer's SPUR can be launched which gives a grant for retaining external expertise service and the allocation of internal resources for such productivity and workflow streamlining exercise.

Sir, I commend the Government for the $5.8 billion to assist businesses and the SRI in assisting to keep these companies afloat. However, Sir, increasing the loan quantum coverage is a thoughtful measure as some SMEs have larger companies as customers and if these larger companies go bankrupt, the SMEs will soon follow suit. There are instances of healthy companies which cannot get loans simply because the banks are reluctant to lend. I think it is

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necessary to assess the efficacy of these measures by assessing loan activity on a regular basis. This can be carried out by SPRING Singapore.

Sir, in times of adversity there can be opportunity. This recession could be a good time to encourage entrepreneurship. Many PMETs are being laid off and this surplus executive-level human capital must be assisted. We can encourage these individuals to tap into their skills to offer services such as business consulting. Therefore, our aim should be to encourage entrepreneurship, flexibility, self-reliance and leveraging on current skills. In this way, we not only achieve our objective of developing the spirit of enterprise, we also help with gainful employment.

I would like to urge the Government to develop, one, a database of these consultants and entrepreneurs to facilitate businesses; and, two, a network hub of companies and PMETs to further facilitate job and business opportunities. SME-targeted schemes should be further publicised. Examples, Local Enterprise Finance Scheme, the Micro Loan Programme and the SEEDS Fund for employers with no more than 10 employees. Are there outreach programmes for these Schemes? What is the take-up rate? And I hope that the Government can actually give some publicity here.

Help for SMEs

Mr Seah Kian Peng (Marine Parade): Sir, I have been speaking with many SMEs and others in the corporate sector.

On the various financing schemes, my friends in the SMEs, they are either not aware of them or they insist that it is just as difficult to get loans. So, I ask the Minister to step up efforts to raise the level of awareness among SMEs of the various help schemes offered by the

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Government and to make the process as simple as possible.

Sir, I have five other suggestions for the Minister to consider.

First, Government rental rebates. The Government has given landlords some rebates on their rents. My question is whether these savings are passed on to the businesses who lease these properties?

One way to ensure more landlords do so is to allow those who pass the rebates on to tenants to claim 110%-125% of the amount rebated to tenants against the property tax to be paid.

In this way, landlords gain a tax benefit against their property tax while tenants benefit directly. Most landlords will then want to give the rebate to tenants. The scheme is easy to implement, highly accountable and will add to the cashflow of both tenants and developers.

Second, JTC recently announced that it would allow 50% of space in end-user factories to be sub-leased out to third parties. And for the balance 50%, they are imposing a levy. JTC should relax these rules and allow as much sub-leasing as tenants want and suspend the levy. SMEs need cashflow, and if they can get this by sub-leasing surplus space for short periods, then I see this as being a good thing overall. It will also help to lower business costs.

Third, many SMEs are having difficulties producing up-to-date accounts to substantiate their loan applications. SPRING can consider offering cash grants of, say, $10,000 over the next two years to help SMEs pay for their company accounts to be brought up to date. It will also help to lower borrowing costs and these data can be captured in a SME-type credit bureau to spur competition to lend

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among financial institutions. I see this as being similar to the sort of credit bureau being used by credit card companies now.

Fourth, rental deposits for investors. EDB/SPRING can assist to put up a 50%-75% share of banker's guarantee to landlords, as a means to co-fund investors or businesses trying to expand or consolidate their operations under one roof. This can be limited to a cap of, say, two months and on a gradually reducing scale over, say, three years, starting from 75% in Year 1 down to 50% in Year 3. Some potential tenants who are looking at leasing generally do not want their cashflow tied up via rental deposits. They may also have problems coming up with banker's guarantee in these times, especially SMEs who are starting up or expanding their businesses.

Finally, could the Government consider buying off some of the assets of banks? These are not bad debts but those on the margins. Perhaps the Government can buy over these assets on the condition that the banks will make the resulting capital available for renewed lending. Instead of waiting for deterioration on the loans portfolio, it is better for the buyout of such marginal assets when the banking system is still robust. The buyout is a concrete step to break the impasse especially for banks which are now forced to withdraw commitments or do not renew maturing loans.

Sir, in this current crisis, it is time we looked for unconventional and new methods for the future.

The Chairman: Miss Penny Low, you have two cuts.

SOS for SMEs

Miss Penny Low (Pasir Ris-Punggol): Sir, according to the Global Enabling Trade Report by the World Economic Forum,

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Singapore has been increasingly dependent on trade, especially since 2002. While this has boosted our GDP, it also makes us more vulnerable to the global economic climate.

In recent years, our SMEs have also been encouraged to venture abroad, adding to our exposure. Can the Minister explain whether there is a particular Government policy in terms of

our GDP versus trade ratio, the impact of this increasing dependency on our SMEs, and what measures might be in place, or not, to help SMEs with large trade exposure, cushion any global downturn?

12.30 pm

Sir, SMEs employ some 60% of the workforce and, therefore, keeping them afloat by smoothening their cash flow and credit lines are keys to job preservation. So in that light, I applaud the Government’s move in this Budget.

However, the devil is always in the details of the implementation. Can the Minister explain how will the well-intended policies be operationalised and translated into actual benefits on the ground? For example, is the form-filling process too onerous or is there still a lot of red-tape that could be cut? In cases where credit applications are rejected, how will SPRING reassess such cases? In fact, who has the authority to make these decisions? Will it be based on the number of employees that they have to save jobs or whether the business is in our economic thrust sector? Also, if the credit assessor is a civil servant with no business experience, would he have the wisdom to judge the viability of a business that is hit by the downturn? Some businesses may have a good track record during the boom time but is now hit by a demand drought.

Entrepreneurs are the engines of growth and innovation. These mavericks'

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job creation and game changing innovations may provide solutions to the present crisis. Hence, can the Minister update the house on its entrepreneurship push and what it intends to do in helping SMEs increase their demand, increase their risk capital pool and raise the bar for societal capital, which is the capacity for failures as norms? And, ultimately, it should not be the one-hit wonders but the pay-offs from persistent ongoing businesses.

On to my second cut, Sir, on social economy. Sir, the combined global social economy forms the fifth largest economy in the world. I am wondering how is MTI taking advantage of it. In recognition of the innovative value of those involved in the social economy, several OECD countries have launched a series of strategies to promote social enterprises and social economies and the results have been encouraging. In 2002, UK launched a strategy in their Department of Trade and Industry and even has a Minister for the Third Sector. In 2004, the Canadian government allocated CAN$132 million to support social and community academic development and they do it via three levels. One, financing at $100 million over five years; two, capacity building, CAN$17 million over two years; and, three, research, CAN$15 million over five years.

The budget is also committed to improving the access of social enterprises to programmes and services for SMEs. And the result? Today, just Quebec alone has 6,200 social economy enterprises that employ 65,000 people and generate annual sales in excess of $4 billion.

In contrast, our effort is dwarfed and, hence, the results are wanting. Can the Minister enlighten us on what and how much resources are set aside by MTI to take advantage of this global growth in social economy?

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Last year, EDB amended its Act to include NPOs and NGOs in its ambit, while SPRING Singapore has also become part of the inter-agency Social Economy Implementation Committee. That is laudable. However, due to its constitution, schemes under EDB has been mainly foreign-enterprise focused while SPRING’s schemes are largely targeted at for-profit enterprises. Therefore, its spirit is willing but its flesh is weak. While time is needed for our Government-led agency to study the landscape, the changing academic and demographics wait for no man. Like any businesses, social economy enterprises may face overnight demand and credit crunches. Therefore, urgent measures need to be rolled out to help social economy save jobs and create community-based solutions. In such a tumultuous time, a clear signal needs to be sent and I urge MTI not to miss a good opportunity to help build this sector that do good and do well.

Consumer Protection and Education

Mr Lim Biow Chuan (Marine Parade): Sir, let me first declare my interest in speaking on this topic as the Vice-President of CASE.

In August last year, Parliament passed the Amendment Bill to the Consumer Protection (Fair Trading) Act (CPFTA). The Amendment Bill contains several amendments which CASE has advocated for, namely, the extension of the CPFTA to include the sale of financial products, the increase in the jurisdiction of the Small Claims Tribunal to hear claims under the CPFTA up to $30,000 and the extension of the cooling-off period for resale in the timeshare industry. There were also four sets of subsidiary legislation proposed, one of which relates to the regulation of motor vehicles dealing with the refund of deposits. May I ask MTI when would the provisions of the amended CPFTA be implemented or

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effective? Similarly, when would the different sets of subsidiary legislation come into effect? The sooner the Amended Act and the subsidiary legislation take effect, the better it is as more protection would be accorded to consumers dealing with financial institutions and motor vehicle traders.

Sir, for the past few years, the Consumers' Association has received several feedback from consumers who have either parted with monies on false investment schemes, promising to pay large amounts of returns or have parted with monies to businesses, promising to resell timeshare products. Some of the tactics used by these businesses are tantamount to deceit and fraud, making promises to consumers which the businesses do not intend to fulfil or making promises which are not possible to fulfil. Some of these schemes are tantamount to Ponzi schemes where large numbers of consumers were deceived into parting with monetary deposits in exchange for promises of high returns.

While education may be the best way to stop people from falling into potential scams, the presence of a regulating body and legislation is equally important. Had there been a regulatory body in charge of such consumer frauds, then it could be possible that fewer consumers are conned and cheated of their monies. The Director of one such company currently faces prosecution by the Commercial Affairs Department (CAD). May I urge MTI to work hand-in-hand with CAD or other relevant authorities to set up an investment fraud division to investigate such fraudulent schemes and to take prosecution action wherever justifiable. Any delay in taking action will result in more consumers being taken for a ride and losing their hard-earned savings.

CASE would also request that MTI works with MAS to extend the scope of

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the MoneySENSE programme. We hope that MTI can fund more educational programmes to educate consumers about basic investment objectives and the risks of investment in the financial markets. Looking at the large numbers of consumers who have bought investment products like the Minibonds and other derivatives from the banks and other financial institutions without really understanding what these products are about and the kind of risks involved, it is of great concern. It also suggests that the MoneySENSE programme, or other educational programmes, can do more to reach out to the man-in-the-street to help them become more aware of investment risks. These programmes can reach out to more people through different avenues, such as regular radio broadcast, TV broadcast, newspapers and magazines as well as talks at Commuity Centres and Residents' Corner.

Finally, may I ask MTI when will the Ministry consider implementing a law to regulate timeshare operators? I recognise that there are legitimate timeshare companies which operate genuine holiday sharing schemes. But there are also many operators who sell their timeshare schemes with misleading and false claims. They exert undue pressure on consumers and do not abide by the five-day cooling-off period. It takes a long while for consumers to recover their payments from the timeshare companies. The lack of action from the Government has prompted many other industries to use similar strategies to sell their products. CASE has received many complaints about high pressure selling and coercion from consumers undergoing beauty treatments, massage, slimming treatments, joining a gymnasium and make-over photo shoots. There are complaints that such high pressure selling methods are used to persuade consumers to buy a beauty or slimming package whilst they are wearing a bath towel. These companies which rely on such tactics to increase their

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business, bring a bad reputation to the entire industry. Could MTI extend the provision on the five-day cooling-off period under the CPFTA to such industries?

Consumer Protection

Mr Yeo Guat Kwang (Aljunied): Sir, let me, first, declare my interest as CASE's President to speak on this cut.

Sir, in the last three years, after the Consumer Protection (Fair Trading) Act was introduced, the timeshare industry continues to top the CASE's complaints chart with complaint figures hovering above 200 cases per year. This shows that we need a new time share registration to provide our consumers with better protection.

In the UK and the United States, timeshare operators are required to make clear disclosures such as the description of the accommodation, the services and amenities available. In Malaysia, timeshare operators are also required to issue a prospectus before they can sell such interests. We need a similar legislation framework here to request timeshare companies to disclose material information. The information should also be subjected to stringent audit checks. The requirements should also apply to other timeshare-related businesses as they are also involved in the scam against helpless consumers.

In the UK, timeshare operators are also not allowed to collect money during the cooling-off period. Breach of this is a criminal offence. In Texas of the United States, any payment made during the cooling-off period is to be paid into a trust or escrow account. We should introduce such regulation here as well.

I would also like to request MTI to extend the current cooling-off period from

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three working days to five working days under the Consumer Protection (Fair Trading) Act. This is to give consumers more time to reconsider their purchase decision, particularly for timeshare as well. In addition, vendors should not be allowed to collect any deposit during the cooling-off period for timeshare.

Sir, the Consumers' Association of Singapore also has, for many years, lobbied for the lemon law to be introduced in Singapore. In 2006, there were 1,473 complaints of defective handphones, electrical and electronic products, computers, motorcars, airconditioners, and so on and so forth. In 2008, they increased to 1,670. I am happy that MTI has already set up a task force to look into the possibility of introducing lemon law in Singapore. I hope that we could expedite it and would like to enquire on the progress of the review of the lemon law here and when the law can be expected to come into effect in Singapore to provide better protection for our consumers.

The Minister for Trade and Industry (Mr Lim Hng Kiang): Mr Chairman, first, let me thank Members for their comments and suggestions.

Let me respond to the general questions on the economy and explain our strategies for the downturn, Senior Minister of State (SMS), Mr Iswaran, will deal with the questions on resource costs and tourism and then Minister of State (MOS), Mr Lee Yi Shyan, will respond on SMEs, entrepreneurship and consumer protection.

Mr Inderjit Singh and Mdm Ho Geok Choo asked about the global economic environment and the outlook for Singapore. Our GDP forecast of between -5% and -2% reflects a sober but realistic view of the economic prospects for Singapore for 2009. The critical uncertainty is the recovery of the G3

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economies, particularly the US economy. The higher end of our forecast range is premised on the G3 economies recovering, albeit weakly, in the second half of 2009. The lower end of our forecast range is based on the G3 economies not recovering until 2010.

There are many uncertainties in the global economy this year. But what is clear at this juncture are the following: One, the de-leveraging process will continue and credit would be tighter going forward. Two, the synchronised global recession would have a negative feedback loop on the financial sector. Three, the collapse in global demand means overcapacity in many sectors. This is very obvious in the auto and steel industries. Other sectors will face different degrees of overcapacity. There will, therefore, be consolidation and a shakeout. Four, the global imbalances have to be corrected and settled down to a new, more sustainable balance.

So, how do we deal with this extraordinary downturn and the expected changes in the global environment?

Our first priority has been to address our companies' cash flow issues, by introducing the Jobs Credit Scheme, facilitating credit and alleviating cost pressures.

On credit, Members are already very familiar with the Special Risk-Sharing Initiative (SRI) and the other enhanced credit schemes to stimulate bank lending. We introduced a new Bridging Loan Programme to assist companies in their working capital needs. We also introduced Trade Financing Schemes to facilitate trade finance and export credit.

As several Members pointed out, the key is in the implementation. Let me assure the House that MTI agencies will

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actively facilitate this. I have explained previously why it is unwise for MTI agencies to replace our banks in the credit evaluation process, but nevertheless we will work closely with the companies and the participating financial institutions to make sure that credit flows to viable businesses.

One outstanding issue is trade credit insurance. We have received feedback from companies that demand for trade credit insurance is growing. Exporters are now more wary of buyers' credit risks and, hence, want to get coverage to protect against the risk of buyers default. But insurers have also become more selective. Furthermore, the cost of insurance is rising.

To address this issue, with effect from 1st March 2009,

IE Singapore will introduce an Export Coverage Scheme (ECS) to provide better access to trade credit insurance cover for Singapore-based companies. ECS will protect our exporters and traders against the risk of default by their buyers. IE Singapore will, through the pooling of insurers and co-sharing of risk, increase the insurance coverage capacity of this programme. To help SMEs manage the rising costs of trade credit insurance, IE Singapore will subsidise 50% of the insurance premium for SMEs. The ECS is expected to support up to $4 billion worth of trade turnover and benefit around 1,000 Singapore-based companies. IE Singapore will separately provide more details of the ECS.

12.45 pm

On cost alleviation, the Budget has already provided various measures to help companies manage their costs in order to stay afloat, such as the Jobs Credit Scheme, property tax rebates and rental rebates. However, we should also bear in mind that many of the cost pressures we are facing have to be relieved primarily

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through market adjustments rather than through direct handouts from the Government. Senior Minister of State, Mr Iswaran, will elaborate on this later.

Credit financing and cost alleviation are immediate solutions we have put in place to help companies in this downturn. Members, such as Mr Zaqy Mohamad, Mr Heng Chee How, Ms Jessica Tan and Mr Liang Eng Hwa, have highlighted the importance of helping our companies source for demand by identifying opportunities where they still exist today. Our companies also need to build up their capabilities so that they can produce products and services to meet the opportunities of tomorrow.

Sir, as part of the Resilience Package, my Ministry will set aside $660 million over the next two years to assist companies to seek new markets and growth opportunities, and to build up their capabilities. IE Singapore, STB, SPRING and EDB will enhance their existing programmes in these areas and will also introduce a range of new initiatives.

IE Singapore will set aside $66 million to enhance its internationalisation and export-promotion activities to help companies seek new markets and growth opportunities. IE Singapore will launch the Exporter Development Programme to develop the export competencies of promising Singapore exporters, particularly our SMEs which have limited export experience. All in, the enhanced schemes under IE Singapore are expected to benefit almost 5,000 companies. The increased funding will allow IE Singapore to support our Trade Associations and our Chambers of Commerce to organise participation in
more than 340 international trade fairs and business missions, an increase of 55% from the 220 business missions that we conducted last year. These efforts will support companies to go into new or niche export markets where opportunities remain

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despite this downturn and where the Singapore brand is highly regarded.

Let me now turn to our strategies to building capabilities for the future, to be ready when the downturn ends. SPRING will enhance its capability development schemes under a new $200 million programme called Business Upgrading Initiatives for Long Term Development (BUILD). Minister of State, Mr Lee Yi Shyan, will elaborate on this later on.

EDB has earlier announced a $100 million programme called PREP-UP (PREParing for the UPturn). This programme will assist companies to preserve jobs and develop capabilities, particularly targeting professionals in the field of science and technology.

EDB will also set up a $200 million Living Lab Fund to make Singapore a "living lab" for companies and entrepreneurs to nurture new ideas, to test innovative solutions and to develop future global businesses.

Sir, I have explained our strategies for the downturn to facilitate credit, to alleviate costs, to boost demand and to build capabilities. This is what we term as improving the "horizontals". MTI agencies will complement this approach by working with our partners at the cluster level to develop appropriate sectoral responses; in other words, addressing the "verticals".

This is how we organise ourselves. We have about 160,000 SMEs and more than 1,000 large companies. MTI agencies engage our companies broadly through the SBF, our Chambers of Commerce, SMA, and ASME, etc. We have EDCs as touch points at these organisations. In addition, we have about 30-odd industry and trade associations representing the different sectoral clusters. MTI agencies work with the industry associations through the LEAD programme and other projects.

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Last year, I spoke of our growth strategy of developing clusters of industries, exploiting synergies across related activities. Mr Inderjit Singh asked about how this downturn has impacted manufacturing. Going forward, we can expect the consolidation process to affect the sectors differently. It will be a changed landscape. Some activities will lose relevance while others will become more important. We will need to be nimble in seeking new competitive positions. Let me illustrate by examining a few of our sectors.

In the petrochemical sector, we are experiencing a double hit - falling demand because of the global economic recession and oversupply because of significant new capacity coming up in the Middle East. But our major projects remain very much on track. Shell’s cracker plant will come on-stream in 2010 and ExxonMobil will have its Singapore Parallel Train ready in 2011. Other projects such as Mitsui's TAFMER plant are also scheduled to start up by 2010.

These various projects are expected to create approximately 1,000 jobs over the next few years. The prospects for our engineering SMEs which provide maintenance services are also very good.

In the petrochemical sector, our competitive strength lies in our efficiency, our integration of the various products and processes, our use of technology and our connectivity to the rest of the world. We will continue to invest in the Institute of Chemical and Engineering Sciences on Jurong Island to undertake more world-class research programmes so as to develop new processes and applications that can move our petrochemical industry up the value chain. We will also support our engineering service providers, members of the Association of Process

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Industry (ASPRI), to upgrade their capabilities in areas such as plant management, design engineering, machinery upgrading, and maintenance management, so that they can handle larger and more complex projects. In this way, both the big MNCs and our SMEs can leverage on each other to compete more effectively. I believe the business community in the petrochemical sector is quietly confident about their future.

Let me turn to the pharmaceutical industry. This sector is facing key challenges from the slowing global economy. But demand for effective medicines will continue to grow because people become more affluent and people age. Companies want to gear up to access the expanding market opportunities in Asia, and Singapore is well positioned to tap into this. In fact, this sector will be increasing its hiring by bringing in 900 jobs this year, with expansions by companies such as Wyeth, Abbott, GSK Bio, Schering Plough and Perkin Elmer.

Eleven of the world's top pharmaceutical and biotechnology companies have already invested in more than 25 commercial-scale manufacturing facilities in Singapore. Seven new plants are expected to open in Singapore in the next three years. We are confident that more will come to Singapore so that they can reach out to the Asian market more effectively.

We should also prepare for the upturn by anchoring ourselves in new niches. Within biomedical manufacturing, we need to continue to push into areas beyond small molecule pharmaceuticals, such as biologics and medical technology. Biologics manufacturing is expected to be a key growth driver for Singapore’s biomedical sciences industry. The global compounded annual growth rate for biologics is 13%, compared to just 0.9% for the traditional pharmaceutical market.

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We will also continue investing in infrastructure development in Biopolis and the Tuas Biomedical Park, and in our strong scientific foundation through R&D. Eli Lilly is one example of a leading company which is investing more in R&D despite this downturn, with their opening of the expanded Lilly Singapore Centre of Drug Discovery in October last year. This expansion, worth US$150 million, is slated to take place over the next five years.

We also encourage more companies to explore partnerships to tap on the growth opportunities that result from synergies between our R&D start-ups and mainstream firms based in Singapore. S*Bio, a homegrown oncology-focused drug discovery firm, recently made headlines with its partnership with Onyx Pharmaceuticals, pairing their complementary capabilities, intellectual properties and technologies in a winning combination.

We believe that more opportunities similar to that of S*Bio will arise during this global financial crisis. So in the pharmaceutical industry sector, we are facing competition from traditional areas like Puerto Rico and Ireland, and also new centres, but because our plants are new and more technologically advanced, we believe we can be competitive.

Let me now turn to the precision engineering (PE) sector, which is probably one of the most adversely affected by this downturn. As Members know, the demand for precision engineered parts and components across the manufacturing industries has declined sharply. However, this sector has been reinventing itself since the previous downturn and has diversified beyond electronics into medical technology, aerospace, oil and gas equipment and, more recently, clean energy.

Even within electronics, our PE companies have moved from producing

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parts for high-volume consumer disk drives to focusing on parts for higher end enterprise drives and disk media production. Nevertheless, given the fall in demand in all related sectors, our PE sector has to adjust in tandem. They have to shift their production to other sectors which are holding up better than others. They also have to focus on new skills in design, manufacturing technologies, supply chain and materials
processing. Already, the original equipment manufacturers (OEMs) are partnering our suppliers to co-design product and manufacturing processes beyond the traditional "build-to-print" model. The additional support that we have for internationalisation would enable our suppliers to develop access to new markets.

Our companies can also tap on the BUILD programme to work with the Precision Engineering Centre for Innovation, that we set up in SIMTech, so as to leverage on technologies for innovation and for growth. BUILD will also help our PE companies to deepen their capabilities and become more flexible and adaptable, and position them better for the upturn.

Sir, MTI agencies are engaged with each sectoral cluster to develop the appropriate response for this downturn. Time does not permit me to go into detail into the other sectors. However, SMS Mr Iswaran will be able to cover the Tourism sector to illustrate how this complementary "vertical" approach works.

Sir, to summarise, we recognise the tough challenges that lie ahead of us. But we are in a position of strength because we grew all our clusters and we anchored strategic capabilities here when the global economy was going strong. Singapore is small. We have no choice but to adopt an outward oriented strategy and to make the world our market. We will feel the pain of global market corrections more

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sharply because we are small and exposed. But because we are small, we are also nimble. This gives us an edge over others in good years as it allows us to take advantage of opportunities when they arise.

1.00 pm

Our growth strategy in the last five years has served us well. We managed to grow strongly yet enjoy low inflation. I have distributed a chart comparing Singapore’s growth and inflation record with both regional as well as advanced economies. It shows that we have grown faster than most economies in this region and certainly faster than any other economy with a comparable level of per capita income; while still enjoying lower inflation. While our growth has been more volatile, our average has been higher than in the other economies. This is not bad.

The reason why our economy has contracted more sharply than others has to do with our small size, our openness and our dependence on global markets. Other countries that grew at a more moderate pace in the past have also entered into recession. Some, like Taiwan and Ireland, are expected to contract just as sharply as Singapore this year. Others whose economies do not rely on exports as much as we do have also seen similar or even steeper declines in their exports than we have.

We are on the right track in pursuing strong economic growth. Growth has helped us to build up healthy balance sheets at the Government, corporate, and household levels. This has enhanced our resilience. Growth has helped us to build up valuable skills and capabilities in our industry sectors and in our workers. This has enhanced our competitiveness. Growth has made possible a strong

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investment pipeline that is helping to create jobs even through this recession.

Even during this downturn, we continue to think long-term. Over the long term, the Asian growth story is still intact. Asia is in a position to experience rapid recovery once the global economic situation improves. Therefore, we must not lose the capacity, the capabilities and the skills that we have built up over the years. This is why preserving jobs and keeping companies afloat are so important. We will continue to engage our companies and industry associations on a sectoral basis to tailor to the specific needs of each sector. Policies and measures will be reviewed and adjusted to meet new changes and challenges.

The world will eventually settle into a new balance, and we must be ready to capture the new opportunities that surface with the tides of change.

Mr Chairman, let me now address a couple of the specific issues raised by Members.

Ms Sylvia Lim asked whether the US-Singapore FTA has delivered the expected benefits to Singapore. Let me explain the changing nature of trade between Singapore and the US. Part of the reason why the trade deficit has grown over the years is because a large proportion of goods from Singapore is not exported directly to the US but through China. Because we have gone up the value chain, we are exporting the more value-added components to China; China finishes up the product and sends it to the US. So the trade is still growing but is not reflected in our trade statistics.

Traditionally, we have had a deficit in services but, over the years, I think the deficit has grown smaller because Singapore is also becoming more competitive in services. What has benefited us particularly with the US-

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Singapore FTA is foreign direct investments. The foreign direct investments (FDI) stock from the US has increased from S$37 billion as at end 2003 to S$49 billion as at end 2007. So the FTA has encouraged many more US companies to invest and to re-invest in Singapore.

Mr Heng Chee How raised a concern about protectionism, I think this is something that we are very concerned about. Our FTAs with our partners allow us to keep this issue alive. At the various forums, whether within ASEAN, APEC or WTO, we will continue to raise the voice against protectionism.

Mr Inderjit Singh asked about how we can engage with our companies and suggested the formation of a Corporate Rescue Task Force. As I mentioned just now, we are engaged very effectively with the companies at all levels. I mentioned that we have about 30-odd industry and trade associations. Each association has about 300 to 400 members. So we are plugged in with all the key members in every sector, and we know the status and the situation in all the clusters.

Both Mr Inderjit Singh and Mr Liang Eng Hwa asked about how we can anchor more local companies to complement our MNCs. I think this is what we have done effectively. As I mentioned, the petrochemical, with the MNCs, but our ASPRI members are SMEs and they are working very effectively. Similarly with the pharmaceutical and precision engineering industries. Another example is our Marine and Offshore Engineering industry, where in fact the 'queen bees' are our local shipyard companies, Keppel and SembCorp Marine, and supporting them are some 500 local SMEs with various capabilities. So we have taken a cluster approach rather than a divide between MNCs and local SMEs.

If I may borrow Deng Xiaopeng’s observation, that "it doesn’t really matter

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if it’s a black cat or a white cat". So, similarly for us, we look at a company and assess its value-add, its ability to generate jobs, its commitment to Singapore and its contribution to our economy. It does not really matter if it is an overseas MNC, an overseas SME or a local company. Of course, if it is a local company, we are even more cheered by the prospects of helping our own companies.

Now let me turn to ask Senior Minister of State Iswaran to continue on resource costs and on tourism.

The Senior Minister of State for Trade and Industry (Mr S Iswaran): I will supplement the Minister's response by addressing some specific questions raised by Members which pertain to three broad issues – managing resource costs, boosting demand and building capabilities for the future.

Managing the cost of resources is an important concern for businesses, especially so in a recession. Let me start with the cost of energy, which Mr Heng Chee How has raised. As we import virtually all our energy supplies, Singapore is vulnerable to volatility in global energy prices. Competition in our power sector has been a bulwark against rising energy prices. Competition motivates efficiency and exerts downward pressure on prices.

Our experience since 2001 when we began to liberalise the electricity market, vindicates this approach. While fuel oil prices have risen by 143%, tariffs have risen by only about 15%. More recently, household electricity tariffs fell by 25% in the first quarter of 2009 after peaking in the last quarter of last year. We can expect a further reduction in April for the second quarter, in tandem with global fuel oil prices.

EMA will continue to study measures to inject more competition into the

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market. One example is the Electricity Vending System (EVS) which would allow households to purchase electricity direct from competing providers. EMA has commenced a pilot of the system which, if successful, will lead to its eventual implementation on a national scale.

In the interim, EMA is considering other steps to bring more benefits of competition to small consumers and households. One idea is for the power generation companies to bid for a portion of the domestic electricity load on a competitive basis. EMA expects to complete a detailed study of this proposal by the end of the year.

In October last year, I informed the House of EMA’s plan to review the formula for setting household electricity tariffs. The current formula has served us well over the years by providing relative certainty and stability in an era of less volatile oil prices. The aim of the review was to enhance the formula given the greater volatility in global energy prices in recent times.

At present, fuel oil prices in the first month of the previous quarter are used to set the electricity tariff for the current quarter. Going forward, EMA intends to revise the formula by using the average of fuel oil prices in the preceding three months, to determine the tariff for the current quarter. For example, the new formula would have used average fuel oil price from October to December last year, rather than just October, to set the tariff for the first quarter of 2009. This change will entail material adjustments to the hedging operations and processes of industry players.

The new approach has two advantages. First, it will help to reduce the volatility of the electricity tariff by averaging fuel oil prices over a longer

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period. Second, with a three-month average, more recent fuel oil price data will be used to determine the tariff. This will allow the tariff to be more reflective of the prevailing market prices of fuel.

EMA will use the revised formula to set the electricity prices for the third quarter of 2009 and beyond, after consulting key stakeholders and industry players.

I will now move on to land-related costs. Several Members, including Mr Heng Chee How and Mr Seah Kian Peng, have asked the Government to ensure that the savings from the 40% property tax rebate are passed on to current tenants. Some private-sector landlords like CapitaLand, Lend Lease, Mapletree, City Developments and Frasers Centrepoint have committed to pass on the property tax rebate in full or in part to their tenants. This will exert competitive pressure in the market and I urge more landlords to follow their good example.

Government has taken the lead by providing a 15% rental rebate for HDB, JTC and SLA tenants. Mdm Ho Geok Choo asked if the Government can double the rental rebates to 30%. Mr Chairman, a 15% rental rebate is, in fact, quite significant. It is more than three times what other lessees and tenants would enjoy, even with a full passing through of the property tax rebate. This 15% rebate will provide savings of over $300 million to some 31,000 companies in 2009.

Besides the rebates given by the Government, businesses are likely to obtain additional relief as rentals ease from their peak in the past one to two quarters.

Dr Ahmad Mohd Magad has suggested that JTC revive the construction of Ready Built Facilities (RBF). The private sector is actually quite well equipped to provide multi-user space, including RBF. About

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80% of all new multi-user space is provided by a diverse group of players. They provide generic factory spaces of varying sizes in different localities and at competitive price points. Market projections indicate that the multi-user space to be released over the next two years will be more than adequate to meet the net increase in demand. JTC will continue to monitor this closely to ensure that there is sufficient supply, which is, I think, Dr Ahmad Magad’s concern.

I would like to assure Mr Inderjit Singh that JTC regularly reviews and benchmarks our industrial land costs against locations that compete with us. We stressed that our value proposition here is not just premised on cheap rental, but on the overall total system, cost and value. As a principle, JTC aims to lag the market for upward revisions and lead the market for downward adjustments. In fact, JTC proactively reduced its posted rents and prices by 5% to 10% in January this year. Combined with the rental rebates, all except 0.1% of JTC’s tenants, who are on very short-term tenancy agreements, will benefit from the lower rents in 2009.

Mr Inderjit Singh and Mr Seah Kian Peng asked if JTC could relax the rule that allows JTC lessees to sub-let only up to 50% of their built-up space. First to clarify, this is not a new rule as Mr Inderjit Singh said. In fact, in 2003, this rule is already pre-existing and JTC relaxed this policy and allowed lessees to sub-let their entire gross floor area (GFA) as a short-term measure to assist companies in financial difficulties because of the economic downturn. The policy was then reinstated in September 2008.

I think the rationale for the policy is self-evident. Mr Inderjit Singh identifies with it. JTC has to ensure that our limited industrial land is allocated and optimised to support our economy and its key industries. This is why majority-owner occupation must be the norm. At the

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same time, we want to give companies some flexibility: first, to put to productive use vacant space that may occasionally come about; and second, to facilitate co-location of related business activities where it makes economic sense. A 50% sub-letting cap enables JTC to achieve these twin objectives in a balanced manner.

However, I agree with Mr Singh and Mr Seah that in the current exceptional operating environment, the strain on a company’s cash flow will be exacerbated if it is unable to sub-let any unutilised space. For this reason, JTC will temporarily lift the 50% sub-letting cap until 31st December 2011 as a relief measure to help businesses ride out the current downturn.

1.15 pm

Mr Heng and other Members have highlighted the problems posed by the sudden fall in global demand. I would like to use the tourism industry to illustrate how Government agencies will partner the private sector to seek opportunities to boost demand where possible, a vertical approach which Minister talked about.

In 2009, the global tourism industry faces a difficult year. For Singapore, the Singapore Tourism Board (STB) forecasts total visitor arrivals to be in the range of $9-$9.5 million, a year-on-year decline of 6%-11%. The total tourism receipts generated are also expected to fall to a range of $12-$12.5 billion in 2009, that is around a 15%-18% decline.

Nevertheless, our tourism industry approaches this challenging period from a relative position of strength. Tourism projects secured in recent years will generate an estimated 3,000 new jobs this year. This is on top of the 9,000 jobs from the IRs in 2009, building up to 20,000 when the two IRs are completed. Our successful hosting of the world's first

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Formula One (F1) night race has captured the attention of the world and the international media with more than 110 million television viewers worldwide. The event also drew more than 40,000 overseas visitors and generated $168 million in incremental tourism receipts, which exceeded our initial estimate of $100 million. As expected, hotels across all tiers benefited substantially in terms of revenue per available room during the F1 race weekend. I would like to inform Mr Heng that the review for the plans for 2009, including the levy, is in its final stages and it will take into account this year's tourism outlook.

To secure demand for our tourism sector in the immediate to short term, and to build capabilities to capture the growth opportunities in the upturn, STB will roll out in a $90 million initiative. The acronym is BOOST which stands for Building On Opportunities to Strengthen Tourism.

In the near term, STB will partner stakeholders in a targeted marketing campaign with the theme "2009 Reasons to Enjoy Singapore" - which is a key initiative under BOOST. Travel patterns are expected to change in the current climate with a switch from long-haul to short-haul trips. The campaign will target this potential higher intra-regional traffic from our key regional markets. STB will also reach out to our resident population as a complementary strategy to generate additional demands for our tourism sector.

STB will also increase its support to strengthen bids to attract events to Singapore over the next two years. This will generate demand and yield spin-offs for the wider tourism sector, including our hotels and F&B businesses. STB will leverage on Singapore's reputation as a global business centre to target Meeting, Incentive, Convention and Exhibition

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(MICE) events that are aligned to Singapore's economic priorities, such as digital media and environmental technology. Some examples include the Anime Festival Asia and the inaugural Clean Energy Expo Asia which are expected to attract more than 11,000 visitors.

Let me also elaborate how we intend to build our capacity and capabilities in the tourism sector - in terms of human capital, infrastructure, new growth areas, and R&D.

As part of BOOST, STB will complement SPUR by providing more support for businesses to train and upgrade the skill of their employees under the TIP-iT Scheme which already exists.

STB also strives to foster a business culture in the tourism sector that prioritises service quality. Mr Low Thia Khiang raised a question on dishonest retail shops. This, I agree, can tarnish the image of Singapore and undermine visitors' confidence. STB works closely with CASE to address such issues. In the first instance, STB takes a preventive approach to warn tourists against such retailers by publishing a list of errant retailers on STB's website and other marketing material. Now, inevitably, some tourists will still fall prey to such errant retailers and STB investigates such complaints thoroughly and will also mediate on behalf of the tourist for refunds or exchanges and, if necessary, represent them at the Small Claims Tribunal. But I think if we can prevent it, it is far better.

STB also aims to rejuvenate our existing tourism infrastructure to enhance Singapore's attractiveness. Mr Low raised an example of Chinatown which highlights the balance that STB has to strike in developing tourism precincts – meeting the development and economic objectives on the one hand without losing the charm and character, and I suppose the inherent

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"messiness" of the place which many tourists and locals find quite attractive. STB actively engages key stakeholders in these precincts, both on the development of the infrastructure and also on the softer aspects like activities, to try and preserve that balance and keep it lively. In the case of Chinatown, they work closely with the Kreta Ayer Kim Seng Citizens Consultative Committee, and the celebrations they have for Chinese New Year is a good example of how this collaboration can be very successful.

Besides the IRs and Gardens by the Bay, there are also plans to develop new tourism projects to augment our infrastructure over the next two to three years. The new International Cruise Terminal will allow Singapore to tap opportunities in the Asia-Pacific region to grow our cruise sector. Wildlife Reserves Singapore will also be announcing a first-of-its-kind attraction in the Mandai precinct, which will re-create river habitats from around the world. It will complement the existing attractions and strengthen the draw of Mandai as a destination for families.

As Ms Jessica Tan has mentioned, we do need to build our capacity in new areas to support the future growth of Singapore's economy. Mr Edwin Khew has also enquired about our medium to long term plans to grow Singapore into a global CleanTech centre.

As Mr Khew noted, many countries have moved progressively into the CleanTech space, and this will mean greater competition in our bid to attract globally mobile CleanTech investments to Singapore. At the same time, the increased global focus on environmental sustainability will create an even larger market share which we can access.

Singapore is well-positioned to be a global leader in the CleanTech space. We are already recognised as a leader in the

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environment and water sectors. Our experienced and skilled manpower from existing clusters, particularly in electronics and precision engineering, have enabled Singapore to venture successfully into the clean energy space.

We have already attracted significant investments from major players like REC and Vestas. In addition, homegrown companies are also riding the CleanTech wave. One example is Alpha Biofuels. Formed by three entrepreneurs, Alpha Biofuels collects and converts waste vegetable oil into biodiesel. Since its formation in 2004, it has grown significantly and now partners more than 100 establishments to convert their waste cooking oil into biodiesel. Despite the current downturn, Alpha Biofuels has recently moved from their research facility in ITE College East into a bigger factory at Tanjong Penjuru and has plans to expand beyond its current three retail outlets.

Sir, I would like to assure Mr Khew that Government takes a long-term view of the clean energy sector. We have set ourselves an ambitious target to grow this sector to a $1.7 billion industry in Singapore by 2015. Our plan for the clean energy sector has three thrusts: First, to develop a cluster of strong local and foreign companies; second, to build strong technological and manpower capabilities; and third, to help Singapore based companies internationalise. In line with this, the Government will continue to invest heavily in R&D and test-bedding to better position Singapore to capture the enhanced business opportunities that will arise with technological progress.

Our strategies will evolve in tandem with the competition from around the world in this space. First, we will ensure our regulatory regime keeps pace with developments. This will ensure that new technologies can be easily integrated into our energy ecosystem. Second, we will position Singapore as a "living laboratory"

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for test-bedding CleanTech-based solutions applicable to urban settings. EDB will collaborate with Government agencies to develop platforms that the private sector can use to test-bed cutting-edge urban solutions. Solar test-bedding, which Mr Khew mentioned, is one such example and once proven feasible in Singapore's context, these solutions can be replicated on a commercial scale and exported to other cities.

Mr Chairman, I have highlighted some of the efforts we are undertaking with some key verticals and we are confident that our measures, which are targeted at these very specific sectors and their needs, will help our businesses manage both the immediate challenges and also position them well for the eventual upturn when it comes.

The Minister of State for Trade and Industry (Mr Lee Yi Shyan): Mr Chairman, I would like to add my thanks to the members who spoke passionately on the best ways to support our SMEs during this time of crisis. MTI remains firmly committed to helping our SMEs now and in future.

More so than in other countries, our SMEs are closely connected to the global economy. Many of our SMEs play an important role in our key manufacturing clusters like electronics, petrochemicals and precision engineering, supporting larger companies. Many export to overseas markets and some of them have grown to become small multinationals themselves with operations in the region and beyond.

Without a doubt, the slowdown is affecting many of our SMEs. In the manufacturing sector, many SME suppliers have seen sharp reductions in their order books. In the services sector, lower tourist arrivals and consumer spending

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mean slower businesses for hospitality, retail and the F&B business. Operating in an open economy like ours, our SMEs have not been immune to the severe shifts in the global market conditions.

Mr Inderjit Singh and Mdm Ho Geok Choo have asked what the Government would do to help our SMEs to ride out this crisis. We will do so through an enhanced SME strategy comprising four pillars. One, alleviate costs and facilitate credit; two, support internationalisation; three, develop capabilities and service excellence; and four, support entrepreneurship. Let me elaborate.

The Budget contains many measures that assist all companies, including SMEs, in managing costs and accessing finance.

In the area of managing costs, businesses will enjoy as much as $840 million in savings on property and transport related costs through the tax rebates announced. For companies that take advantage of the downturn to make capital investments in areas such as renovation and refurbishment, they will get accelerated write-downs. Most importantly, companies that retain their employees will get substantial relief in their wage costs through the Jobs Credit Scheme. For an SME employing 10 workers, this translates to potential savings of as much as $36,000 a year.

The Budget also contains enhanced measures to facilitate business financing. Let me emphasise that the main beneficiaries will be SMEs. Mr Seah Kian Peng has asked how SPRING will make known the availability of these credit schemes to SMEs. Since December 2008 SPRING has conducted 14 financial seminars and briefings to date, reaching out to nearly 2,000 participants. Members would have noticed too, SPRING’s advertisements in our local media publicising the many enhanced loan programmes.

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Miss Penny Low has expressed concerns with the processing of loan applications. To ensure efficient implementation, SPRING helps SMEs in two ways. First, it refers unsuccessful applicants to other participating financial institutions. Second, SPRING makes available experienced financial advisers to advise SMEs on writing up their loan applications and even on alternative financing options and this is for free. Since the launch of this Financial Facilitator Programme (FFP), 285 enquiries have been handled. Of course, I should add that these advisory initiatives are in addition to the many relationship managers from the 14 participating financial institutions, meeting SMEs daily on the ground.

But the role of Government can only be facilitative. Miss Penny Low is right that civil servants do not have the experience or the expertise to assess credit worthiness. Government officers seek to supplement, but not supplant the role of bank credit officers in loan credit assessments.

I must add, however, that even in this global economic downturn and with declining demand, there remain opportunities for SMEs, so long as they are quick to adapt and able to seize new opportunities. IE Singapore hopes to work through industry and trade associations to help SMEs from different industries to penetrate existing markets and tap new ones.

Mr Inderjit Singh has suggested that IE Singapore do more for SMEs which want to export and internationalise. Well, as a matter of fact, of the 35,000 companies supported by IE Singapore last year through its broad-based programmes, more than 80% were SMEs.

1.30 pm

As highlighted by Minister Lim, IE Singapore will introduce the Export

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Development Programme (EDP) to develop export competency of first-timer exporters, especially the SMEs. In addition, IE will be increasing the number of trade missions by more than 55% to 340, benefiting some 5,000 companies. It will step up its efforts to help companies secure trade credit insurance. In particular, IE will subsidise 50 per cent of insurance premiums for SMEs under its new Export Coverage Scheme (ECS) that facilitates access to trade credit. The ECS is expected to benefit 1,000 Singapore based companies and cover up to $4 billion worth of trade insured. As such, addressing Miss Penny Low’s query, we have indeed expanded our efforts in helping export-oriented SMEs.

Next, let me re-emphasise the need for SMEs to build new capability and capacity even in this period of downturn. This is, in our view, the best way to stay afloat and plan ahead.

SPRING offers a comprehensive range of capability development programmes, ranging from IT upgrading to design, branding and business management systems, process re-engineering and product development. Over the past year, these programmes have helped some 2,600 businesses to upgrade their capabilities. Many have become leaner and stronger. Others managed to increase sales with more effective design and branding.

Consider Tungsan Food Industries, a local manufacturer of sauces. With SPRING’s support, it has automated its sauce production process and increased production capacity by 150 per cent. The improved operational efficiency has enabled Tungsan Food Industries to sell more at a lower cost per unit.

To help our SMEs stay focused on the long-term capability building, SPRING will

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launch a new $200 million Business Upgrading Initiatives for Long-Term Development (BUILD) programme as mentioned by Minister Lim. BUILD has two important components.

For individual SMEs, SPRING will increase funding support from 50% to 70% under its capability development programmes. For example, with support from SPRING, Nanyang Optical has built up a strong in-house product development capability. As a result, it will be rolling out a new series of mid-range eyewear targeted at trendy and yet budget-conscious consumers. With increased funding levels under BUILD, SPRING hopes to help other SMEs to continue to upgrade their capabilities.

For industry-level projects, SPRING will raise funding support from 70 per cent to 80 per cent under the Local Enterprise and Association Development or LEAD programme. Several of our industry associations have been pro-active in responding to this crisis. For instance, the Singapore Furniture Industries Council (SFIC) launched the $1 million Member Assistance Scheme (MAS), which helps eligible members lower business costs and strengthen business capabilities. The funding can also be used to support missions to explore new business opportunities. We agree with Mr Heng Chee How that agencies and industry associations must work together for collective competitiveness. This enhancement to LEAD will allow associations to provide more customised services to their members.

Mr Chairman, a large number of our SMEs are in the services industry. The productivity of the service workers, their inclination and ability to serve with excellence, will have a direct impact on Singapore’s aspiration to be an

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international hub for business and tourism. In fact, as we prepare to welcome several world-class events, such as the F1, APEC meetings and the inaugural Youth Olympic Games, the task of raising our service sector productivity has become even more urgent.

To ensure that we are up to the challenge, SPRING, STB and WDA, NTUC and ISES (Institute of Service Excellence) of SMU (Singapore Management University) recently launched a $100 million GEMS-Plus programme to raise the service standard of our industries in some very fundamental ways. The agencies hope that through the funding, applied in three areas; namely, research on service standards and methodologies; two, capability development and adoption of best practices; and three, promotion and recognition of role models, would raise the service standard of our workers, and the productivity of our service firms to new and international levels.

Mr Chairman, Mr Inderjit Singh, Miss Penny Low and Mdm Ho Geok Choo have spoken on the importance of entrepreneurship even in this period of downturn. I agree wholeheartedly with them. Start-ups bring renewal and dynamism to our economy, and are the seeds of tomorrow’s large enterprises. Our efforts to promote entrepreneurship will not waver even in the downturn.

The Action Community for Entrepreneurship (ACE) is an important initiative in driving entrepreneurship. Over the years, ACE has reached out to 32,000 aspiring entrepreneurs. Together with other entrepreneurship groupings, ACE has created a strong fraternity, promoting a pro-enterprise culture and the sharing of best practices amongst them. More educated and young Singaporeans are now willing to consider entrepreneurial undertaking as so-called "career choices". Our recent survey suggests that 65% of startups’ founders are below 40

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years old. And more than one-third of our start-ups are
started by graduates.

We have created a conducive environment for start-ups. Our smaller companies and start-ups already enjoy the world’s lowest effective tax rates. It takes less than 15 minutes and $300 to register a company in Singapore. Singapore has been ranked by the World Bank as the world’s easiest place to do business for three years running.

But we are not contented. Recognising that start-ups too will be affected by this crisis, we have recently enhanced our support in three ways: Providing working capital and equity; encouraging further investments in innovation; providing greater opportunities for student entrepreneurs.

In the current economic climate, start-ups, like all enterprises, may be vulnerable to cash flow problems. Our Government loan schemes, especially the enhanced $100,000 micro-loan programme, will provide loan assistance to all small enterprises, including start-ups.

Recognising that equity capital may also be affected, SPRING recently enhanced the Start-up Enterprise Development Scheme, or SEEDS, in three ways. Funding ratio is now increased from 1:1 to 2:1. We would also allow follow-on funding after the initial investment. The funding cap has also been raised from $500,000 to $1 million per start-up. These enhancements will be available to both new and existing start-ups.

Beyond increasing funding options for start-ups, we are also helping nascent start-ups to commercialise their ideas. The Technology Enterprise Commercialisation Scheme (TECS) launched last year provides $50 million to help start-ups create their first prototypes for market trials and acceptance. So far, SPRING has supported 17 such technology

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projects, providing up to $500,000 for each start-up.

Recognising that the spirit of enterprise has to be inculcated from young, SPRING introduced The Young Entrepreneur Scheme or YES! in October last year, providing $4.5 million of funding to help schools develop entrepreneurship learning contents. Under YES!, we would also fund student ventures with a 4:1 matching ratio.

One example of a recent YES! start-up is Slow Loris, a manufacturer of designer bags catering to the increasingly environmentally conscious commuter. A recent graduate of the Singapore Management University (SMU), Miss Sarah Yip chanced upon the opportunity when she observed cyclists in Europe sporting stylish messenger bags as a lifestyle accessory. Such an ability to smell business opportunities and to convert an idea into a commercial proposition is what we would like to see more of amongst our youth.

Let me now turn to issues related to consumer protection raised by the Members.

Mr Lim Biow Chuan asked for an update on the amendments to the Consumer Protection (Fair Trading) Act (CPFTA). The CPFTA Amendment Bill was passed in Parliament in August last year. Since then, we have been working with agencies and stakeholders to finalise the supporting regulations, taking into account feedback received during the public consultation exercise. The finalised regulations will be published later this month and will come into operation thereafter in April.

Mr Lim also recommended that an Investment Fraud Division be set up to deal with fraudulent investment schemes. The Commercial Affairs Department (CAD) of the Singapore Police Force

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already has the responsibility and power to deal with such scams.

Mr Lim suggested that the MoneySENSE programme to deliver financial education be extended to more people through different avenues. MoneySENSE already does this. Besides the various channels mentioned by my Minister in his reply to Ms Penny Low last Thursday, MoneySENSE also partners with the media to arrange print and broadcast programmes. For instance, it had arranged radio programmes which have a total listener-ship exceeding one million.

Both Mr Lim and Mr Yeo Guat Kwang suggested introducing laws to regulate the timeshare industry. Based on the feedback from CASE, we are strengthening the CPFTA to give consumers even stronger protection with respect to timeshare contracts. The cooling-off period will be extended from three to five days, and will extend to businesses that claim to help consumers resell their rights under timeshare contracts. We are also stipulating a 60-day refund period for contracts that are cancelled within the cooling-off period. The Police will also investigate if there are allegations of cheating or other criminal
offences. We should let these new measures take effect and re-assess the needs for further tightening from there.

I must also reiterate the fundamental pillar of our consumer protection framework, which is one based on caveat emptor, free market principles in the provision of goods and services, and the sanctity of contracts. The best protection for consumers is still founded on their ability to discern the best deals for themselves, being vigilant to any unrealistic promises and to walk away from pressure selling with bath towel or otherwise.

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Mr Lim proposed to extend the cooling-off period to the beauty industry and related industries as well. Before introducing legislation to protect consumers against a particular industry, we will consider whether consumers need protection because (1) the product or service is complex and beyond the reasonable understanding of consumers, (2) the method of selling is complex, or (3) existing provisions are inadequate to protect the customers.

In the case of beauty-related products and services, many of the complaints are related to high pressure selling. Consumers victimised by high pressure selling already have clear recourse under the CPFTA against such unfair practices. Members of this committee would probably also agree that facial products and slimming treatments are neither complex nor hard to understand. Patrons of beauty-related industries would probably be better off if they develop a heightened sense of vigilance and self-defence, which would serve them well both shopping here and overseas.

We have also noted the increased number of complaints in the beauty care industry, but the numbers are still much smaller than the time-share industry. This is despite the fact that the beauty care industry is much larger and does not have a mandatory cooling-off period, unlike the timeshare industry. Thus, we believe that consumer education and industry-led accreditation are still the best way forward. In any
event, consumers victimised in high pressure selling already have clear recourse under the CPFTA against such unfair practices.

Lastly, Mr Yeo asked about the progress of the Lemon Law Taskforce. The Taskforce, co-chaired by CASE and MTI, and comprising representatives from the industries, has been deliberating on the issue. The Taskforce is nearing

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completion of its work and formal recommendations will be made shortly.

1.45 pm

The Chairman: We still have time for clarifications.

Mr Inderjit Singh: Sir, on the issue of financing, I would like a clarification from the Minister regarding a comment by SPRING Chairman, Mr Philip Yeo, which was reported in the Lianhe Zaobao. Let me quote Mr Philip Yeo said that, "If the Government were to provide enterprises with loans directly, all Members of Parliament would lobby the Government for loans for the enterprises within their constituencies, creating political suicide".

Sir, I would like to ask whether this is the Minister and the Ministry's view about all the requests that the MPs have been making. I am, in fact, disappointed that this came from the Chairman of SPRING who should be more sympathetic towards SMEs. His comments belittled the issues taken up by the Members of Parliament who have real concerns for SMEs and want to help solve liquidity problems. I wish that the SPRING Chairman was a bit more sympathetic. Can I ask the Minister whether he agrees with this view?

Mr Lim Hng Kiang: I think Mr Inderjit Singh knows that Mr Philip Yeo speaks his own mind. He does not echo the Minister. [ Laughter ]

Miss Penny Low: Can the Minister clarify the question that I asked earlier on – whether the Government has a specific policy regarding our GDP versus trade ratio? And also his comments on the growing social economy which, obviously, has the capacity to soak up any excess capacity from the private sector.

Mr Lim Hng Kiang: My apologies for not addressing that specific observation. Basically, our trade comprises several elements. One is, of course, domestic

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exports where it is obviously in our interest to be able to sell as much as we produce and to sell more.

The second part is re-exports, and this is a very important part of our role as a trading nation. When you look at our statistics and it shows that our trade is more than three times of our GDP, you must see it in this context – a big proportion of it is re-export. We do not see this big ratio as a disadvantage. In fact, we see this as a very big advantage of Singapore. In the world trading forums, Singapore clearly is seen as punching above its weight. The fact that a small country with 4.5 million people is ranked somewhere between 12th and 15th in the world trading league is really something to our credit.

Mr Liang Eng Hwa: Sir, the Senior Minister of State, Mr S Iswaran, talked about ensuring competition at our energy market sectors. Three of our major gencos are now under foreign ownership and they have paid a significant price for the assets. I would like to ask the Senior Minister of State whether there are sufficient safeguards to ensure that our utility rates for both households as well as businesses remain competitive or even more competitive? And how do we ensure that these foreign gencos will continue to invest in long-term capabilities?

Mr S Iswaran: Sir, I thank the Member for the question. I think, first and foremost, we have to recognise that the companies which invest in power generation are undertaking very substantial capital expenditure. These run into billions of dollars and, therefore, it is evidently and clearly in their vested interest to ensure that, one, they invest and continue to invest in technology and capability that keep them abreast of the competition, and two, they do not end up pricing themselves out, if there are multiple players in the market and the competitive tension is sufficient.

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So, our objective in the overall management of the electricity sector, has been to ensure that we have as many players as possible. EMA is on record, saying that when there are applications for new planting, they will be considered and be quite generous about it. I think the important thing, then, is to make sure that we create a level playing field where all players feel they can come in. There are no unfair barriers to entry, and once we have that capability, then, that together with the inherent competitive tension within the market, will take care of the concerns that the Member has raised – whether it is in terms of investment to maintain the capability of your infrastructure or in terms of pricing to ensure that it is fair and reasonable to households as well as businesses.

Mr Seah Kian Peng: Sir, with respect to the various financing schemes, I would like to ask whether SPRING is measured by how much it lends or how much is left of the total amount set aside for the various schemes. Likewise, what about the time taken to process the applications? I think these benchmarks are important. These KPIs are important because I believe that it will set the right framework which our public officers would embrace, adopt and, more importantly, ensure that the intended objectives of these various financial schemes are met.

I would also like to ask the Minister on the issue of cost of living and cost of doing business. Annually, there is a Cost of Living survey done by Mercer. It ranked Singapore as the 13th most expensive city in the world for 2008. In fact, it got worse, we were 14th and now, 13th. I would like to ask if the Ministry should set a target for us to get out of this top 20 most expensive cities survey by a certain timeline? I think this is important for businesses and all Singaporeans.

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Mr Lim Hng Kiang: Mr Chairman, let me assure the House that SPRING's role in facilitating credit applications is, as I have mentioned, they will take all efforts to make sure that viable and deserving businesses have access to the credit. The way they go about it is to work closely with the companies and the participating financial institutions. We are tracking the status. SPRING follows up when an applicant is not able to get approval from the bank, so that they try and understand from the credit officer, reasons for the rejection.

SPRING also facilitates the company to redirect the application to other banks. Sometimes, the bank does not grant the loan because banks adopt a portfolio approach towards bank loans. If a loan is within a certain sector that has reached the ceiling for that portfolio, then, the bank may not extend additional loans in that sector. But other banks may be underweighted in that sector and portfolio and, therefore, may be prepared to grant loans for that particular sector. So SPRING does this facilitation. SPRING also, as Minister of State Mr Lee Yi Shyan explained, provides assistance in the application process by tutoring and helping the companies to fill up the forms and put up its best case for the companies. So, we do not have a specific target but, clearly, the objective for SPRING is to facilitate and, I think, the senior management and the officers down the line, know their roles.

As for the cost of living in Singapore, I think this is a very complicated subject. I understand Mercer monitors this and does this assessment but, perhaps, it is targeted at expatriates living in Singapore. And in recent years, of course, the index has gone up because of cost of rental. But, as you know, this is just a cyclical phenomenon. I believe, some years ago, we were ranked probably number 30-something in the Mercer's survey. Many

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agencies in Government watch this carefully. And we want to make sure that, for Singapore to succeed as a global city, we have to have an attractive environment but at the same time, we should not be expensive environment.

Mr Yeo Guat Kwang: Can I seek a clarification from the Minister of State on my call for the Lemon Law - how long will the Ministry take? When can we see the light at the end of the tunnel?

Mr Lee Yi Shyan: Well, let me first thank CASE for being a part of the task force. It is a multi-agency task force that considers – similar legislations in other regimes that have such a law – not only having such a law, but how it is implemented, and its effectiveness.

We should expect the task force to finalise its report in the next four months or so.

The Chairman: Mr Inderjit Singh, are you withdrawing the amendment?

Mr Inderjit Singh: Sir, I would like to take the opportunity on behalf of the GPC (Finance, Trade and Industry) and all the Members to thank the Minister, Senior Minister of State and Minister of State for all their answers. We are very happy with the replies. I think they answered most of the queries that we have. We understand that this is a challenging environment so we wish MTI all the best in trying to tackle this on behalf of Singaporeans. You have our support.

I would also like to, before I withdraw my cut, offer one more acronym. The Minister has mentioned a few. I would like to suggest one more: Goal – "Government Offers Additional Lending". I hope that we can do this at the next announcement. Sir, I beg leave to withdraw my cut.

Amendment, by leave, withdraw.

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The sum of $740,357,600 for Head V ordered to stand part of the Main Estimates.

The sum of $8,691,512,200 for Head V ordered to stand part of the Development Estimates.

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