DEBATE ON ANNUAL BUDGET STATEMENT

ANNUAL BUDGET STATEMENT: Order read for Resumption of Debate on Question [15th February, 2008],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2008 to 31st March, 2009.”. – (Minister for Finance).

Question again proposed.

Mr Zaqy Mohamad (Hong Kah): Mr Speaker, Sir, I rise in support of the motion.

Sir, sitting in this Chamber for the past two days, I have heard impassioned speeches asking the Government to do more and give more, whether it is about curbing the rising costs of living, taking care of the needy and elderly, helping the disabled, dysfunctional families or single mothers. In spite of greater assistance measures, such as the increased Public Assistance (PA) and ComCare funding, we still ask, "Can the Government do more?", "Can the Government give more?"

I do not doubt the need for the Government to provide the necessary safety nets and measures for the disadvantaged and I do not deny as well

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that those who are disadvantaged do need the assistance that we should provide. However, I cannot help but ask if we have lost our sense of responsibility as a community to care for our own. What has happened to social responsibility? Have we lost our social capital that the disadvantaged, ie, the needy, elderly and disabled, are now solely the Government’s responsibility?

I am not certain what message we are taking to the people. Let us leave our poor, elderly, disabled, sandwiched and sick in the care of the Government? Over the past week, the media has covered the plight of the disadvantaged during this Budget debate. It would have been nice to have Singaporeans coming together, stepping forward to ask the Government how they can help. Throughout the debates, there were many in the gallery who listened to the plight of residents who have visited our MPS, and I wonder if there is a little voice in them telling them to be more compassionate and to step forward.

I fear the degradation of our values and our social capital, if we continue to expect the Government to take sole ownership of our social inequalities. We are already seeing this shift in responsibility today with regard to how some of us treat our families, parents, siblings, ex-spouses, children, neighbours and so forth.

It would be nice if we can get the same fervent support for this noble cause as we did for the Youth Olympic Games (YOG) – the community, the youth, the people and corporate sectors all coming together with the same great enthusiasm. It would be nice if MCYS this time can rally the community to provide the same enthusiastic support for this noble cause to help lift our disadvantaged, above the Government's social safety nets. This is the Singapore that I would like to associate myself with, a Singapore that

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takes responsibility for our own social issues and inequalities, a Singapore ready with its helping hands.

Mr Speaker, Sir, allow me to continue my speech in Malay.

( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, this year's Budget takes a holistic approach. It not only helps the people to face the rising costs of living, but it also contains investments for the future, especially for the low and middle-income.

I see this Budget as killing two birds with one stone. At one level, it deals with the current situation. At another level, it takes into account long-term needs. However, in doing so, we have to make sure that the generous and meaningful handouts, like the educational financial assistance and the Workfare Income Supplement (WIS) scheme, do not make Singaporeans feel that it is their right to receive them. If not, such handouts will always be expected in the future.

I suggest that we look at how these handouts can become more than just an incentive for youths to upgrade their education. For example, the education assistance scheme can be linked to social contributions, ie, youths who want to participate in this scheme can be encouraged to contribute to society. Handouts using this more meaningful approach will help form and instil a culture of a united people for Singapore. It is better than if the Government just gives assistance that only helps to overcome the problem of rising education costs.

This year's Budget also gives assistance in the form of bursaries for university and polytechnic education. It is a correct and timely move, and helps to encourage low-income students to continue their studies to post-secondary

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level. I applaud the Government's move in introducing this scheme by taking into the account the long-term solution to help the needy.

So, I encourage the Malay community to take advantage of these opportunities to increase their children's education level so that we can see many more of our students at least reaching post-secondary level. Any assistance scheme introduced is wasted if it is not used. It is even worse if the target group does not realise the existence of such schemes.

In this aspect, we must have more efforts to increase awareness so that it can reach as many people as possible. Some of the needy and low-income themselves may not follow developments or even read information spread by the mass media. Every one, including the Government, organisations and schools, must help in the effort to spread this information.

By doing so, we can widen the social assistance net and reach the objective to help the poor escape the poverty trap.

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*Cols. 1115-1118.

( In English ): Mr Speaker, Sir, much has been said about the concerns of the business community with regard to surging business costs following the significant increases in salaries and higher rentals. However, our attractiveness as a business hub depends on our ability to manage the cost of doing business here and not let the current rises in cost become a permanent fixture in our economy. Many of the cost increases today will take time to correct themselves. For example, leases will generally stand for three years or more, and higher salaries are certainly difficult to unwind. Many employers I spoke to complain that business revenues and workforce productivity have not increased as much as the costs have risen.

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We know the impact of high business costs, particularly rentals and higher salaries, especially when we correlate them to business productivity. We assume that our free market ensures competitive pricing and choice, but a small market and geography like Singapore may result in only few strong players surviving the high costs and barriers of doing business, resulting in uncompetitive prices and fewer choices.

If I take the retail sector as an example, there are only a few large developers who are able to afford to set up malls in town and in the heartlands. Within those few developers, you would find that their malls may look different, but the shop mix is pretty much the same. One can walk into almost any mall in Singapore and predict the tenants, the same few large, mass market players, whether you are in the city or in the heartlands.

The smaller players find it hard to survive and set up. Even the large luxury boutiques find it expensive because there is a limit to how much they can grow their top line due to our small market size and yet still cope with high rentals. Consumers then have less choice on the products available and on the costs of goods being offered in the marketplace. This is how many currently describe our retail and shopping scene – a standard template across all our malls – few players, not enough variety, and prices are not very competitive.

Today, one does not need to head to Hong Kong or even Japan for good retail therapy. Our neighbouring cities are providing much more across the luxury, mass market and budget brands. If I compare the scenario to the commercial sector, the situation is somewhat similar. Our smaller businesses also compete with the big boys in terms of office space and

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industrial parks outside of town, leaving many with little choice but to relocate overseas, while those who cannot put up with the high costs of doing business exit the market.

Some of our rising costs today are avoidable, if the Government machinery is working better. For example, when PM announced his vision of a global city for Singapore some years back, MND could have started to release sites so that we could have an adequate supply of office buildings now instead of waiting for two more years for real supply to come on line. I think our marksmanship in this space could be better.

On the effects of cost of living on the workforce, we should be at the forefront of a low tax rate and higher disposable income regime in Asia, if we are to attract top talents. We should not play catch-up with the likes of Hong Kong, but be at the front. If we include the cost of living in Singapore, in terms of cost of homes, cars, transportation and education, versus some of our competitors like Hong Kong, I do not think our executives and workers actually bring in much more. The impression we received, when the inflation index was at 6.6%, the highest in decades, was as though the Government was caught off-guard. Perhaps, using only monetary policy to control inflation is not working so well and our policies could have been adjusted better because I am certain the scenario of us reaching oil prices of US$100 a barrel was something we would have considered and, as a whole of Government, I think we could have planned better.

Sir, we need to be more proactive and strengthen the whole of Government machinery in managing our supply and demand requirements because, if we allow these cost increases, such as office rents and salaries, to creep in and become a structural part of the economy, the high

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cost of doing business will hamper innovation and choice in our consumer and commercial markets in the long run.

My final point is that I welcome the Minister's speech that sustainable development remains a key priority for this year's Budget. I urge that when we speak of sustainable development, we should also look at quality growth in GDP and employment, not just in terms of quantity and absolute numbers. A major challenge is how we face up to the competition in the region, and the competition that our workers face against foreign talent at various levels from the low-skill jobs all the way to management positions.

Look at the corporate scene today. We are not the only ones facing competition from our neighbours. There is stiff competition for talent worldwide. Even the top multinational corporations (MNCs) in the US are competing for global talent, too. So, even in the US today, they now have top foreign talents running their homegrown corporations, such as Indra Nooyi in PepsiCo, Virkam Pandit who runs Citigroup as CEO globally, both of whom were born in India.

So, the challenge is here at our doorstep. Today, China's large MNCs are led by high flying CEOs with an average age of 47. We are seeing many from their next tier of talents taking up regional positions with our local and multinational corporations. Young, capable and having plenty of drive. Our talent pool is not only small, but the average age of our workforce talents is not getting younger either. So we need to create a win-win situation, developing the right resources and getting the right talent to ensure our survivability.

In my opinion, the issues of the war for talent, innovation and creating high-quality businesses in Singapore are no longer about budget marksmanship,

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business costs or tax concessions but an issue of our survival as a country and as an economy.

The tax rebates on innovation and R&D are a good start to move our companies in the right direction as it is increasingly difficult to compete at the low-end. But we need to ask: is the Government doing enough to accelerate the capability of our workforce up the value chain? Clearly, we need to leverage on our high quality education system and skilled workforce, by creating more high-value jobs. In the short term, we still need to continue to attract MNCs, or even faster, to attract them to set up leading edge R&D centres here. I have to leave nationalistic sentiment of growing national icons and hubs aside because the window of opportunity may not wait for our research hubs to mature into an established state. But these MNCs and leading R&D centres also need to be supported by a whole industry of innovative growth companies producing higher value-added services. Therefore, the SME sector also needs to play a more important role to produce high-value growth and jobs to make the ecosystem more attractive.

If I could take the engineering and infocommunications sector in Israel as an example, I do not think many companies would find it enticing to set up a high-value business or R&D centre in the middle of a war zone. Despite the instability and security concerns, the country still produces many innovative companies in the engineering and infocommunications sectors. And they have large MNCs, such as IBM and Microsoft, to set up R&D centres because these companies are not only attracted by the wealth of high-quality engineering talent that is available, but also a host of innovative SMEs with the capability and talent to support and provide them with a range of leading edge intellectual properties (IP) and technologies. Yes, we

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may have some success stories here, but I believe Singapore needs to do more in providing more cutting edge contributors that can make an impact on the global marketplace to make us more relevant.

The issue I see is that many of our local businesses in the SME segment lack the understanding and capability to exploit the tax schemes and programmes to promote R&D and innovation. I think the Government tries hard within the MTI family. However, they are only able, given their limited manpower resources, to focus on growth companies to enable them to become strong regional and global companies. But, in reality, the majority of our businesses are not even there yet. It takes hard work and resources, otherwise the amount of money spent on grants and growth programmes will not yield the returns on investments that we expect. It will take a lot of hard work on the ground, but I think the Government needs to do it, nonetheless, by providing sufficient manpower and resources to handhold these businesses to help them innovate and exploit the Government’s tax rebates and market supply policies.

To ensure the long-term and sustainable development of our economy,

and the long-term employment prospects of Singaporeans, I believe that we will have to keep a close watch and measure our performance in terms of high-value economic growth and the quality of the jobs that we create.

Therefore, as the Government pursues its strategies of ensuring Singapore's sustained development, I also hope that it measures its progress with as much focus on quality – the quality of GDP growth and the quality of jobs created – as we do on quantity.

Mr Speaker, Sir, I support the Budget.