DEBATE ON ANNUAL BUDGET STATEMENT (CONT'D)

Madam, while I understand the Government's policy stance on regulating street hawkers, I wonder whether the time has now come for the country to be more relaxed on our policy on the informal sector. Have strict hygiene requirements by all means, but go with the philosophy to facilitate rather than restrict if we truly want to help Singaporeans.

I raised the example of illegal street hawking to illustrate the point that the Government could perhaps do more to help nourish the entrepreneurial spirit of Singaporeans. I know that, at all levels, the Government is trying. At the CDC, for instance, there is seed money available for budding entrepreneurs to kick-start their business. There are also various programmes to train people in retail business and business management. However, the question is whether more can be done. The answer is yes, and I would like to suggest two approaches that I hope the Government will consider – enablement and facilitation.

First, enablement – while the Government has various schemes to train Singaporeans in running businesses, it should review the current programmes to see whether more training could be provided across constituencies to make it easier for people to sign up. Would the Government provide counselling sessions to help those interested to see if they are suitable for such undertakings or if they are taking excessive risks by going into business? Will there be advisors who can help interested entrepreneurs to undertake a thorough and rigorous analysis, including SWOT analysis of the business proposal, before embarking on the venture? I believe that much of the

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business risk will be mitigated if entrepreneurs are guided and are given the opportunity to go through thorough training, analysis and guidance.

Second, facilitation – business is about competition. To survive in a tough business environment, care and nurture must be given to start-ups to ensure its chances of survival. In this regard, more should perhaps be done to help start-ups. This could perhaps be extensive incubation zones across constituencies which are set aside for such undertakings. There could be the form of providing more rebates to start-ups to settle down or setting up of the physical infrastructure, such as pushcart shops at malls and MRT stations. Additionally, facilitation can also be provided by giving a more simplified set of rules on starting and running small enterprises, with limited compliance requirements to reduce costs, or in the case of street hawkers, to make more licences readily available and to reduce the impediment to doing business for them.

My third comment relates to the Government helping businesses to stay viable during this difficult period. Madam, this year's Budget seeks to help businesses by, among other things, reducing the cost of hiring local labour and easing up on the credit pipelines with the financial institutions, making it relatively easier to get access to credit, which is the main casualty of this credit crunch. This is an innovative approach in helping businesses during this time, save that it would at best provide short-term relief, rather than long-term solution to the current crisis.

There are two reasons for this. First, by providing relief on the first $2,500 in each worker's wages would help to provide relief in the short term. This addresses the supply-side of the equation, but not the demand-side. The question

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that confronts most businesses today is whether they will be able to sustain decent volumes in their order books to maintain the present level of staffing. If there are insufficient orders to sustain business hires, then no amount of subsidy will be sufficient to keep jobs in the longer term.

Secondly, in the initial melee following the financial crisis, keeping a healthy pipeline of credit is absolutely crucial to business. However, six months on, one must be clear in ascertaining what we want the loans for. The common complaint now is that the banks are still not lending. And there are valid reasons for this as, for instance, they may not be convinced that there is sufficient cash flow from underlying business to sustain the loan. The last thing we want to see happening is to commit the folly of lending to sustain businesses when the orders are just not there. What we are seeing now is a successive deflation of the world economy. We need to ensure that the stimulus packages across the world work to revive the economy. Until then, as an export-oriented economy, we may just have to hunker down and not expect too much until recovery comes round.

However, to the extent that businesses can justifiably use the credit to maintain and keep its business going, the Government should do all it can to ensure that the necessary credit is given. Here, I would like to urge MAS to play a more active role in monitoring and, perhaps, assuming the mediatory role in helping to resolve any issue that may arise in this regard. While I am not advocating that MAS should substitute its judgment for the financial institutions, we need to ensure that in this climate, all parties are treated equitably and that financial institutions are not using the economic crisis as an excuse rather than a reason for the withdrawal of credit.

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Which leads me to my final point about the small and medium enterprises (SMEs) in Singapore. SMEs come up regularly in this House for mention, not least because there are those among us in this House who strongly believe that the SMEs are the salt of the Singapore's earth, whose success and vibrancy are equally important to a successful and a vibrant Singapore economy. In this crisis, we see how vulnerable and important the SMEs are – vulnerable because a significant number of SMEs are export dependent. A contraction in export markets elsewhere would necessarily lead to the SMEs operation and revenue being affected, and importantly, because SMEs are homegrown and rooted in Singapore. I believe that in a crisis, the SMEs are not going to take flight. Where can they fly too? This is their home and the land which gave them the opportunity to succeed. The SMEs, being seen as Singaporeans, will be more likely than not, to fly the national flag by keeping as many jobs as possible.

The US is facing considerable pressure in this crisis when implementing the stimulus package to give preference to the local industries through a series of rather innovative and unconventional conditions such as imposing local content in the steel sector. In the same vein, we should examine whether more can be done to assist the SMEs during this difficult period. I believe we can. We can do better by persuading our people, whether they are doing business here or elsewhere to adopt the "Sourcing from Singapore" approach, if given a choice.

The House has heard of similar proposals before this, but have been turned down because of our policies favouring the lowest bidder, or FTA and WTO obligations. While all these are true, we must start somewhere, and be prepared to jettison old sacred cows

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regarding unfettered competitions and not giving preferences to SMEs in government purchases, if we want to develop a robust local economy. We want to be like the Japanese or the Koreans who are in the habit of bringing their SMEs along whenever they invest overseas.

Secondly, the Government could use this period to help our SMEs build capabilities by improving on their store of intellectual property through massive funding and support in research and development. I have always maintained, both in this House and outside it, that it is only through intellectual property that we, as a small country, can compete well in the global economy. With intellectual property that is commercially viable, our SMEs can be price-setters rather than price-takers. It will help to boost our exports and soften the impact of a global recession.

Thirdly, this crisis has renewed the call once again for the Government to seriously consider whether they should allow for the setting up an SME bank to avoid the effects of a credit crunch.

Madam, this global economic recession has been seen by many to be the worst that the world has seen since the Great Depression of the 1930s. In response, the Government has taken a counter-cyclical fiscal policy. This Budget has demonstrated the willingness of the Government to dip into reserves to fund a budget deficit. However, with an expansionary fiscal policy, one has to be careful in ensuring that the people will not be too dependent on public spending such that cutting back, when the economy improves, may pose major problems. For now, I believe the Government is keenly aware of the delicate balance that is required.

With that, Madam, I support our Government's financial policy for FY 2009.