CUSTOMS (AMENDMENT NO. 3) BILL

10.47 a.m.

Order for Second Reading read.

The Minister for Commerce and Industry (Mr J. M. Jumabhoy): Mr Speaker, Sir, I have His Excellency the Governor's consent and, therefore, beg to move, "That the Bill be now read a Second time."

Sir, on the 13th of August I made a statement in this House on Government's acceptance of the policy for protection to needy industries - protection on a very selective basis. I quote, Sir, part of my statement from the Hansard of the meeting on 13th August, col.566:

"...Government will therefore commence taking immediately all such steps as are necessary for this policy to be implemented."

Sir, to a question asked by the hon. Member for Tanglin after I made this statement, I answered that there are two forms of protection; one is by quantitative restrictions and the other is by tariffs.

Sir, 3½ months had elapsed before I was able to introduce a Bill to implement the policy as announced by me on the 13th August. Trade circles knew full well, and so did industrial circles, that the Government's policy had been declared for selective protection to needy industries and that the Minister had in this House committed the Government to taking such actions as were necessary to implement the policy of the Government. The implementation of such policy would entail getting the necessary powers to impose protective duties, because I had indicated, in my reply to the hon. Member for Tanglin, that protection was a two-fold measure, either by quantitative restrictions or by tariffs. And yet, Sir, over the three and a half months that elapsed between my announcement on 13th August and 3rd December, when I introduced the Bill and its subsequent publication, there was no hue and cry from the Chambers of Commerce. Neither were tears shed in this House. Neither was a motion moved in this House against the Government's policy of selective protection. Nor even did any hon. Member in this House care to raise the matter on the adjournment. In December, when I moved the First Reading of the Bill to acquire the necessary powers, and when the Bill was published, suddenly we found protests and agitation. These protests and agitation were based on two types of opposition. The first type of opposition was from those who agreed on the principle of selective protection for needy industries, but who were afraid of the manner in which the Bill was drafted, which gave the Government (not the Minister as was suggested) absolute powers, unconditional and unfettered. The second type of objection was from those who were against the principle of protection as such, because they feared that the free port statues would be killed and that Singapore would lose its free trade.

Sir, I will deal with the first objection. I sympathise with their viewpoint that the Government should not, under a democratic system, be always allowed to have unfettered powers. I am not a dictator, Sir, neither have I a desire to be one.

Mr Lee Kuan Yew: Nor the Opposition!

Mr J. M. Jumabhoy: Sir, if the hon. Member for Tanjong Pagar had the opportunity - I am sure he is a budding dictator - he would set himself up to be one. However, I am only interested in achieving my objects, as announced by me on the 13th August, for the benefit of Singapore, and my objects are (I am quoting again from the Hansard of 13th August):

"Government recognises that entrepot trade will always continue to play a major part in our economy and is therefore determined that the operation of protection should be carried out with the minimum possible damage to, or dislocation of, the entrepot trade. I wish to make it very clear therefore that the operation of protection is envisaged on a strictly selective basis: that is, only where the benefit accruing to Singapore through the industry concerned outweighs any possible harm to the entrepot trade. Under no circumstances will the operation of protection be allowed to interfere in any way with the entrepot trade in produce, processed produce and textiles or raw materials."

Now, Sir, when these objections were raised, I saw that if it could be possible to give these exact safeguards as were announced in my policy statement, perhaps the objectors who were objecting to the undefined powers of the Government might then reconsider their stand. Therefore, I announced in the newspapers that I was going to move such amendments and those amendments are before the House today, and I shall move them in Committee stage.

The second type of objections, Sir, are from those who are afraid that the free port status of Singapore will cease and that we will lose free trade. Sir, free port status is not a "paper" status. It is not a legal status defined under any law of the Colony. It is a factual status, a status obtained through the flow of trade, through Government administrative actions of minimising restrictions, and so on. But there is no legal "paper" free port status as such. There might be people who might say that the Customs Ordinance is a revenue Ordinance, and therefore that safeguards the free port status. I would say that is wrong, Sir, If you really have a free port, you have the unfettered right to trade in any item without duty, without quantitative restrictions on the import or the export of any goods, without restriction on currency remittance and so on. Now, what have we got? We have the Customs Ordinance which provides for duties on three items - tobacco, liquor and petroleum. Therefore, there is no unfettered law in the Customs Ordinance which says that no duty shall be imposed because Singapore is a free port. It does not recognise that as a free port. Once you have impinged upon the free port status by imposing duty on any one type of goods, then your free port status is gone, the "paper" status of the free port is gone. Then beyond that, we have the import and export restrictions. The Control of Imports and Exports law allows prohibitions or restrictions to be placed on the import or export of any goods. That again is an impingement on the supposedly legal "paper" status of a free port. Further, we have the Foreign Exchange Regulations. Sir, I think the real fear they have is that free trade may be killed. I admit that if any government tries to play about with any of such laws, as I stated, it could kill the entrepot trade of Singapore.

I have, Sir, given an assurance in my statement on 13th August that it was not the intention of this Government to tamper with the entrepot trade and that protection would be given on a strictly selective basis. I have shouted this from my room in the Ministry to the Press, and in this House to the Chambers of Commerce many a time. If there are those who do not wish to accept it, I cannot help it. But I do warn that a future government could, by administrative action, kill the entrepot trade, if it wished. Therefore, it is up to the people to choose their government rightly.

Coming to the point of free trade, Sir, even now we do not have free trade, really free trade. I have here lists running into 19 pages-

Mr Lee Kuan Yew: Spare us a copy!

Mr J. M. Jumabhoy: -(these are published, and any Member can buy them at any time he likes) of hundreds of items which are prohibited or restricted for export to the Soviet bloc, China, North Korea, North Vietnam, Tibet, and so on. That is the reason why these restrictions are imposed by the Cocom - one of the groups that got together in Paris to safeguard the trade of the free countries. Sir, this list is operative even today and is a relaxation of the previous list which was more formidable. Where is the free trade?

Then we have dollar controls. There are hundreds of items today which we cannot import from the dollar area, the Philippines, the United States and Canada. And now these restrictions are imposed, not with a view to what is beneficial to Singapore, as what they said when they agitated for the lifting of the embargo on export of rubber to China - export of rubber to China was prohibited until 1956; that was not for the benefit of this country - but for the benefit of groups outside this country. And that was accepted by the people of Singapore without a murmur when impositions were made on them for restriction of trade in hundreds and hundreds of items. But when I stand up and say, "I want to impose duties for half a dozen factories that are dying here for the benefit of this country", the Chambers of Commerce go up in arms against me and say, "I am trying to kill the free port trade of Singapore." Shame!

Mr Lim Cher Kheng: On a point of information, Sir.

Mr Speaker: Will the Minister give way?

Mr J. M. Jumabhoy: Certainly, Sir.

Mr Lim Cher Kheng: Will the Minister say why nobody raised objections to the embargo on export of rubber to China? Is the Minister aware that the Special Branch is keeping a close watch on anyone who raises such objections and that he will be suspected as a Communist supporter?

Mr J. M. Jumabhoy: Sir if that is so, then I am a Communist supporter today, because I have announced the lifting of the embargo on import of textiles from Communist China; and so would many Members of the British Parliament, who today advocate trade with China, be Communist supporters. It is absurd to say that anybody who advocates trade with China is a Communist or should be labelled as a Communist.

Besides all these formidable restrictions which are in existence today, we had the following. From 1945 to 1954, watches from Switzerland were under quotas. Foodstuffs from various countries were under quotas and restriction from 1950 to 1953. Textiles and cement from Japan were under restriction from 1950 to 1955. Construction steel, building machinery and various foodstuffs also from Japan were under restriction from 1950 to 1951. Clocks, watches, radios, toys, refrigerators and so on from non-sterling and non-dollar countries were also under restriction.

All these restrictions are for the benefit of Singapore or for the benefit of other countries. Today we have the position where Commonwealth cars are accorded a preferential rate of registration fee. The small man who wants to buy a small non-Commonwealth car has to pay a 25 per cent registration fee. The rich man who wants to buy a Rolls Royce pays only 10 per cent. That is in accordance with our understanding with the United Kingdom as part of the Commonwealth to accord a preferential rate of duty to Commonwealth countries. We cannot remove it unless we get out of the Commonwealth and get out of G.A.T.T. and various other international obligations to which we are committed. I do not say that it is beneficial for us to get out. Perhaps it is beneficial for us to remain, because, in return, we might get some benefit. But what I-

Mr Lee Kuan Yew: On a point of information, Sir, Is the Minister advocating that we should get out or that we should stay? We are all getting confused! We know that he wants to build up a formidable case for something. But we are wondering what that formidable case is about.

Mr J. M. Jumabhoy: If the hon. Member will exercise a bit of patience, he will discover what that formidable case which is being built up is all about. However, I am not advocating whether we should get out of our international obligations or not. I am just stating factually what the present situation and conditions are, and for whose benefit.

Sir, the entrepot trade can suffer, I admit, if the items that enter the entrepot trade stream in major quantities were tampered with, but so long as the protection is selective and carefully balanced and judged, I do not see why the entrepot trade should suffer.

Sir, we are today not in a position to work by rule of thumb and say that there should be no duties levied. We are in such an economic plight today that we have to consider each and every case on its merits. If we can assist one factory to employ ten more persons, we should do our very best to do so, provided the benefit, as I have said, accruing to Singapore is greater than the loss. Sir, I have already quoted my statement on 13th August in which I said that it was not the intention of the Government to tamper with the entrepot trade as far as possible.

Then there is another fear expressed - that the duties could be imposed on the people, especially the merchants, without previous warning, and that the Government can impose these duties as and when it pleases. Sir, perhaps the persons who make this criticism are not aware of my Press statement on 27th August. 1958. I do not control the Press, Sir, and, therefore, I cannot guarantee whether this statement was published in 1010 factually or whether it was published in part, and therefore gave a wrong impression. But here it is for what it is worth - this is public property. I quote, Sir, from a Singapore Government Press statement, INFS. AU. 98/58 CKL dated 27th August:

"At a Press conference this afternoon, Mr Jumabhoy said two persons would be drawn from the Panel to consider each application for protection. They will form that Committee for that particular case.

Mr Jumabhoy said that as soon as an application has been received, a Committee will be set up. The gist of the application would then be gazetted so that interested parties could make representations either for or against, to the Committee."

A perfectly democratic procedure. Therefore those who fear that duties may be suddenly imposed on them need have no such fear, because it is not my intention arbitrarily to decide on duties. As I have made it very clear, I have set up a Protection Advisory Committee and every application for protection will go to that Committee and will be gazetted, and representations will be called by that Committee, written and oral. People who are interested will be heard by the Committee. The Committee will then make their recommendation to me and I will then take it to the Cabinet.

Mr Lee Kuan Yew: There is no Cabinet yet.

Mr J. M. Jumabhoy: I am sorry, I mean the Council of Ministers. I hope to take it to the Cabinet after the elections.

There are also the fears that inefficient industries will be encouraged and that the cost of living will go up because of protection. Again, Sir, I wish to reiterate what I have said in my statement. I shall read it out.

"Under no circumstances will the operation of protection be allowed to interfere in any way with the entrepot trade in produce, processed produce and textiles or raw materials.

Government will also have to be satisfied that any protection granted will not be abused and that the undertaking concerned is operating or is expected to operate in an efficient manner and that protection would not result in the continued marketing of goods of inferior quality at excessive prices by comparison with the standards and prices of similar imported goods."

Sir, if that is not clear, I do not know how clearer it could be made. I am no master of the English language, as the Member for Tanjong Pagar is when he says that if only you will use Malay as the national language then the Malays will feel closer to you. He is a master in the English language. I hope the Englishman feels closer to him because he knows English well!

Sir, we come to the basic question why protection is necessary. I have often said that the entrepot trade cannot expand to the extent where it could provide employment for a fast increasing population. Colonel Lyle, the expert we have from Canada under the Colombo Plan, has something to say about this in his Report. I shall quote the relevant portions of the Report which is tabled in this Assembly and which has already been published in the Press.

On the need for industrialisation, he says:

"Industrialization is necessary for two major reasons:-

(i) to meet the present and future unemployment problem;

(ii) to increase or endeavour to hold the present standard of living by manufacturing instead of importing."

Then he goes on to say-

"Those in public life who ignore it or who emphasize lesser issues", -

that is the growing population issue-

"represent a real danger to this community, in my opinion."

And then he goes on to say:

"To those who declare that Singapore's economic future can, as in the past, rest safely in the entrepot activities of its free port, I ask, 'What would have happened in Hong Kong if its people had been content to rely solely on that philosophy when the refugees were pouring in by hundreds of thousands?'"

At page 25 of the Report, Sir:

"A brief comment on the impact of the Government's new Protection Policy on the Entrepot Trade of Singapore appears to be called for. The general alarm which seems to generate is not warranted, in my opinion."

Then at page 31 he says:

"The unrestricted Free Port Era appears to be ended. If, however, the natural economic pattern of Malaya can be restored and Singapore can retain its well earned place as its cultural, commercial, industrial and financial centre, there is no reason why the second chapter in its history cannot be even brighter than the first."

Then, Sir, he says at page 5 on the increasing population:

"This complete disruption of the evolutionary pattern will have drastic consequences on Singapore with 50 per cent of its population under 21 years of age and with a 4 per cent annual population increase. All these young people must be assimilated in some way (approximately 100 per day.)"

And on the need for industrialisation to overcome this problem he says at page 14:

"I believe that the tables, in themselves,"-

The population table-

"clearly point out the necessity of industrialisation. They point out that out of 472,000 employed in Singapore only 185,000 are productive workers; that the remaining 287,000 are non-productive workers."

The field for agricultural productive employment is limited by the small amount of land available. I have said this very often here. Industrialisation, therefore, appears to be the only hope for the vast majority of these young people. And at page 15 he says:

"The experience of all Western countries in the past twenty-five years has proven that the modern 'Welfare State' can be maintained in no other way than through a high standard of productivity in its people." and so on. That report is enlightening.

Sir, I will quote certain up-to-date trade figures which show the other danger as regards the trading deficits. The visible trading deficit - the invisible factor would presumably be constant every year, so we need not worry about that - for 1955 was $83.6 million; 1956, $365.4 million; 1957, $504.3 million; 1958 up to November, $559.7 million. The gap is increasing.

Yet, the pundits who advocate a free port and free trade will not see the light. I have nothing against free trade. I support it. I will fight if anybody tries to damage the entrepot trade. It is not my intention to do that. But whilst safeguarding the entrepot trade, I want to open up a second base for our economy through industries. There was a suggestion in this morning's Straits Times editorial that it is possible we might wrap up the industry in cotton wool. Those are not the exact words. But it forgets what I have said already that efficiency will be looked for, and that inefficiency will not be tolerated in the protection policy. I do not know what the next government will do, but if I were returned again in the next government, I certainly would not operate this law haphazardly.

There is a certain section of the trading population which advocates that a Commission should be set up to investigate Singapore's economy and to report on what is to be done and so on and so forth. They go back to the International Bank Report which says that Singapore must retain its free port status.

First, Singapore is not a completely free port. I have made that clear. Anyhow, these are delaying tactics. A Commission composed of outsiders would not know as much as the people here would know.

Secondly, even the International Bank Mission Report was based on one basic foundation, and that is Malaya as one economic unit. If you take that foundation away, the whole structure of the recommendations of that Report collapses, because the presumption is that Malaya will remain as one economic unit. If that is so, we need not have any protection because the surplus population here can be sent to Malaya to settle down on the land, and that is the end of our problems.

It is necessary to give a guaranteed market to a budding industry even if the market is small, because if the investor knows that he can depend on a certain amount of the market for his products, then he can build on that foundation and cater for an export market. But if he has no basic market, even however small it is, he dare not invest any money here. It is now a well-known fact that there is quite a lot of local capital available and that foreign capital is not going to be easy to attract what with the past history of political and labour unrest which, of course, the hon. Member for Tanjong Pagar will disown and will hate to see a recurrence of. It is also because of the other attractions that are being offered in other capital importing countries. Therefore, we have to build first on our local capital, and local capital is predominantly trading capital. The local people are not well versed in industry, and therefore, unless they can get something upon which to base their industry, they will not dare to venture into new fields.

The other point that was raised this morning in the papers by the Secretary-General of the Liberal-Socialist Party was that we have no mandate. Sir, when I was returned on the Labour Front ticket, our programme to the people was this:

'The Labour Front will encourage the local people to enter into such secondary industries and small trades by giving them state protection. The Labour Front will emphasize the development of these industries and trades for the export market."

This was presented to the people before the elections, and it is quite clear that state protection was mentioned and that the Labour Front would provide protection. That is the mandate.

Mr Lee Kuan Yew: There was no mandate to change your name.

Mr J. M. Jumabhoy: Sir, I am not competent to enter into a political argument with the Member for Tanjong Pagar, because he is very clever in the use of the English language and also in shifting from one point to another, shifting his ground as frequently as a chameleon changes its colour. However, coming back to the point in hand. Recently in the Straits Times, there appeared a cartoon in which I was depicted as standing on a pedestal which Sir Stamford Raffles occupies in front of the Town Hall controlled by the present City Council. Sir, I cannot aspire to that honour, nor do I have any desire to stand on the pedestal of a master builder of the British colonial empire, as Sir Stamford Raffles was. But one cannot deny that Sir Stamford Raffles was a man of vision, even though the Member for Tanjong Pagar may like to deny it. He saw in this, tiny swampy island a central place to serve a vast hinterland, not only the hinterland of the Federation of Malaya but also the hinterland of the rich spice islands of what is now known as Indonesia and of silks in the vast subcontinent of China and of the other surrounding countries. He also saw, in those days when shipping was not developed to the extent as it is now, that the flow of commerce could be expedited and smoothened if there was a City port which could act as the outlet for the rich spices and silks of these rich countries. These could then enrich the chests of the European merchants. Therefore, as a result of this vision. Singapore was developed into a vast port which served a vast hinterland. But I submit that no race and no era has a monopoly of men of vision. Even today, we have the hon. Member for Tanjong Pagar who has a vision of building up a P.A.P. empire in this tiny island to replace the British Colonial Empire!

Mr Speaker: Order. I do not know what all this anticipation, as to what the Member for Tanjong Pagar is going to do, has anything to do with this Bill. Let us try and be relevant.

Mr J. M. Jumabhoy: Sir, when he starts winking at me a little, I feel like responding - on a friendly basis!

However, one must admit, Sir, that however far-sighted a man is, his vision is perforce limited by the horizon. Therefore, anything that goes beyond the horizon is mere conjecture. Now. Raffles saw in this tiny swampy island a central place to serve the hinterland of Indonesia, China, Malaya, and so on. When he thought that merchants from all over these areas could converge and engage in commerce, that vision built up a very big port here. But Raffles could not visualise that the alien people, from Indonesia, India, China and even as far away as Arabia, would one day settle down here and then demand the right to govern themselves, while his own race remained alien to the island. Just as he could not visualise that happening, he could not visualise that this vast hinterland, for which this port served as the outlet would one day dwindle away, and would become independent countries, with independent economic policies, and therefore the port would be left without a hinterland. Any child - you need not be an expert in economic affairs - can understand that a hinterland is necessary for a port. Without a hinterland, a port is useless.

Now, we cannot blame these surrounding countries for drifting away from us, because it is inherent in independence. I do not blame the Federation. It is inherent in political sovereignty to look after one's own interests first, and not the interests of others; and if the Federation, by exercising that inherent right, looks after its own interest, we cannot blame it.

It is we who are finding ourselves in an unfortunate position, that though in the past we have been of service, our services are not required to the same extent today and will not be required to the same extent in future. Neither could Sir Stamford Raffles visualise that this island and this port, which was built to serve commerce, would one day become the habitat of a vast population that could grow to the extent that commerce could not provide for them. Neither could he visualise that this island, which was to serve commerce, could one day become a political entity and that commerce should serve the island and not just the island serve commerce.

I wish the people of Singapore would realise the danger they are facing. I do not know whether I could divulge them, Sir, but various actions are proposed by the surrounding governments to cut Singapore away bit by bit. Today they impose duty on one thing and tomorrow duty on another - all for their own interests. We cannot blame them for that.

Unfortunately, all these are supposed to be secrets. I do not really see why they should be secrets. We have inherited the British administrative system which we are carrying on at this moment, and which we hope will not carry over after the new Constitution comes in - that a lot of things which are treated as secret need not be secret.

But I wish the people will take my word for it, that I am aware of what is happening, and that is, the economic future of Singapore is going to be worse and worse if we are not going to do something about it. I have no love for restrictions of any sort. I am a merchant. I love free enterprise. But when other countries take actions which have the effect of refusing us their markets but keeping our market open to them, then comes the time when one has got to take counter acticn.

At the E.C.A.F.E. conference in Kuala Lumpur early last year, I put up this proposal and I reiterated this again in Seattle, Washington, when I was there - spending public funds, as the Member for Telok Ayer will always wish to bring home to me - but doing useful work, I contend. I put this suggestion strongly as I had no prepared speech. I was really furious at the way the discussion was going on, with no real effort being made by any of the nations to come to any solution of the issue. They just refused to recognise the issue and laid it aside. I hit out, Sir, and the looked and nodded at me. I do not know whether he liked me to hit out or not. But the general impression was that this puny man from a tiny island which is not even an independent country, has dared to tell them something. But afterwards, I received a lot of congratulations. I am going to read a part of what I said, and I think it will be interesting, though it will not probably be so to the Member for Tanjong Pagar.

Mr Lee Kuan Yew rose-

Mr Speaker: If the Minister will give way.

Mr Lee Kuan Yew: Is the Minister aware-

Mr Speaker: Order. The hon. Member must not commence speaking until the Member speaking sits down.

Mr J. M. Jumabhoy resumed his seat.

Mr Speaker: Mr Lee Kuan Yew.

Mr Lee Kuan Yew: Is the Minister for Commerce and Industry aware that words of wisdom once having been spoken, become words of wisdom when they are quoted by somebody else? The words quoted by oneself merely show that they impressed no one the first time they were said.

Mr J. M. Jumabhoy: Mr Speaker, Sir, that could be applied to the hon. Member for Tanjong Pagar as well. However, this speech was made in Seattle and I believe, it was not quoted in the local Press.

Mr Lim Cher Kheng: On a point of order, Sir.

Mr Speaker: On a point of order?

Mr Lim Cher Kheng: While the Minister for Commerce and Industry was making his speech, would you allow the Member for Tanjong Pagar to giggle and disturb the peace of this House?

Mr Speaker: I was not aware that the behaviour of the Member for Tanjong Pagar amounted to giggling and that it was disturbing the peace of the House. If, in fact, any Member disturbs the peace of the House, I think the hon. Member for Changi must know that I would intervene immediately.

Mr Lim Cher Kheng: Thank you,. Sir.

Mr J. M. Jumabhoy: I hope the hon. Member for Tanjong Pagar might tell us what his stand is on selective protection rather than on sidetracking the issue. However, I wish to proceed with the reading. This is pertinent to the question we are discussing.

"The tendency now is to increase national production in every industrial field and to export to other countries, but to keep out the industrial production of other countries, a policy which is good for the particular nation perhaps which adopted it, but which is bad when considered on a regional basis and the repercussions that could follow.

Sir, at the E.C.A.F.E. meeting which was mentioned by the distinguished representative of New Zealand, Mr Walter Nash, in Kuala Lumpur early this year. I put up a strong plea for some sort of machinery to be set up by the E.C.A.F.E. Committee to consider the possibility of learning the lessons of the European Free Trade area and trying to do something along those lines for the South and South-East Asian regions. I am sorry that my plea fell down and. Singapore not being a full member, I was not able to put up a motion. I was hoping that some other nation would do so but that hope did not materialise.

What has happened is that the countries are driven to come to this co-operation when they find conditions are getting worse and worse. But there is no voluntary effort to do something about it before conditions get bad.

I, Sir, do put up a plea that we should realise that the world has become too small a place for a nation to stand by itself politically or economically. I feel that if we could realise that well enough, we might be able to avert disasters which might follow because of economic disbalance and disparities between countries. After all, wars have been fought in many cases because of economic disparities. I may be pardoned for speaking out my mind frankly on this subject, but I feel rather strongly on this. I feel there is no use shadow boxing on this subject. We have got to recognise this and come to some sort of understanding about it. Consultations do not cut across political sovereignty and E.C.A.F.E. might be able to develop some machinery for regional consultations in the economic development field without infringing upon political sovereignty. Just consultations and voluntary acceptance or non-acceptance of the result. It might be a good way out. And yet there will be something to assist."

Sir, after making this impassionate plea - which was not recorded on paper until after I had made the speech - what happened? No country was prepared to talk about any consultation in the economic field. All they were after was, "I will do what suits me best", and that was their decision. In the Assembly last month, I stated this is a cold hard competitive world and we have got to fight to survive. It is no use the hon. Member for Tanjong Pagar and his Party's economic pundits writing various articles in their magazine and in the newspapers, crying loud to convince the public, because they feel they can get power next year, and saying, "We shall have no political disturbances, no labour disturbances. Foreign capitalism is not so bad after all." Two years ago the Member for Tanjong Pagar turned round to Mr Sutherland and said: "You wait!" They were the ones who were against the capitalists. "Foreign capital is not so bad after all. We must try to induce foreign capital to come." I have got the quotations here. They dare to challenge me! I shall give a reply to all these quotations - that we must encourage and induce foreign capital to come in and, in fact, we must go down on our knees to foreign capital. In fact, that is what Petir says. He might like-

Mr Lee Kuan Yew: Will the Hon. Minister quote the whole chapter as well, Sir?

Mr J. M. Jumabhoy: Oh yes, it is all there. I have got it. Since I do not wish to prolong this debate - here it is. The Petir souvenir issue - the P.A.P. souvenir issue-

Mr Speaker: Order. I do not think we should at this stage debate the economic policy of the P.A.P.

Mr J. M. Jumabhoy: Unfortunately, Sir, newspapers report a lot of other things. If only newspapers could get this sort of debate in full in two or three pages, the people will find out then, but they cannot find out now. Anyhow, Sir, time is creeping up on us. I do not wish to prolong the debate. I think I have stated my case sufficiently clear and in detail.

Sir, I beg to move.

Question proposed.

11.34 a.m.

Mr Lee Kuan Yew: Mr Speaker, Sir, the Minister for Commerce and Industry strikes me as a man who is crying out for recognition of the great talent that he has, which unfortunately the community has as yet not recognised.

We acknowledge that he is, in his way, an extremely clever and intelligent man, who thinks out some very clever schemes. But what is important in a Minister is not being clever and intelligent, but being wise and sound and practical.

He said no one bothered to oppose his policy statement which he made in August last year, when he announced his policy of protection. Probably it was because nobody took the Minister seriously, because, having seen his past performance, they doubted very much, first, whether he would ever get on with it, secondly, whether he ever had the time to get on with it.

Sir, we have passed two major Bills this morning and this is the third major one. There is hardly time or opportunity for the Minister and his Government to bring into fruition any of the plans which these three Bills have sought to embody. The curious feature about this Government is that, unlike other socialist governments which come out with a spate of legislation after their first year of office, they come out with a spate of legislation in their last few weeks of office, knowing full well that they are no more than just talking points; knowing full well that no businessman, no merchant and no industrialist will base their actions on the basis of pious protestations and legislation of a government which is on its way out. If he wants to know why nobody pays the slightest attention to him, it is because everybody knows that what he says does not count.

Sir, what is the P.A.P. stand on the free port status? Briefly it is this: that whilst we recognise the changing facets of our economy and the economy of the surrounding territories, primarily Indonesia and the Federation of Malaya, we do not think it is either wise or prudent to have any sudden switches in economic policy. Whilst we do not oppose what the Minister has termed "selective protection" of industries, we recognise quite clearly and bluntly that the Singapore market consists of one and a half million souls and cannot provide that attraction to big industrial capital. We can give protection to 1.5 million. The Federation can give protection to 7 million. Therefore, if our industry is to flourish, it must be on the basis of higher skills, low costs and intense competitive effort. Whilst it may be necessary to give protection in the initial stages, ultimately whether or not an industrialised Singapore will come into being will depend upon the basis of the skills and techniques of its workers and its managerial class.

Sir, the Minister deplored the outcry against him. He could have saved himself all this trouble if, instead of having to quote Press statements to which nobody bothered to pay any attention, he had from the very beginning indicated his intention on the subject matters on which he considered protection feasible. He knew full well that, in the course of the Select Committee hearings on the Control of Manufacture Bill, there were very few industries indeed which could profit by such protection. And by introducing a Bill which could have been and was, in fact, construed as an attempt to give blanket protection for all commodities, because of the draftsmanship of the Bill, he was just inviting trouble upon himself.

Sir, there is one feature which the Minister has not touched upon, and that is the rapidity with which he recoils in the face of criticism. The trouble, as I understand it, is that too many clever things are thought out in haste, spoken out even before, as he said, they are put down on paper, get accurately quoted, and properly sloshed up, and then a quick retraction and withdrawal is made. If from the very beginning he had stated quite clearly that what he wanted to do was what he now says he is going to do, with the amendment which he seeks to introduce, a lot of unnecessary debate both in the Press and in this Assembly would have been saved.

11.40 a.m.

Mr A. R. Lazarous (Farrer Park): Mr Speaker, Sir, as the Minister for Commerce and Industry has quoted various sections of Mr Lyle's report, I will make my observations in quoting a paragraph from the same report.

Sir, before quoting, I should say that this is an excellent piece of document - very revealing and, at the same time very frightening. I quote the first page:

"That the Colony and the Federation enter into an economic partnership in which both would enjoy the same common market and the same tariff protection, that granting the same inducements to new industry and the same incentives for the expansion of existing industry they could, together, achieve an outstanding measure of industrial development."

Apart from this, I will quote what our Hon. Minister for Commerce and Industry has just said:

"Various governments supported various measures to cut Singapore out of existence."

Secondly, "the economic future of Singapore is going to be worse and worse."

And in another place he said: "A port like this must have a hinterland to depend on."

In another place Mr Jumabhoy quoted -

Mr Speaker: Order.

Mr Lazarous: I am sorry. The Hon. Minister for Commerce and Industry said, "The Federation's imposition of restrictions on Singapore goods is making things very difficult for Singapore. We cannot blame the Federation Government because they are looking after their country."

Sir, now I make my own observations. The Minister has brought out this Customs (Amendment No. 3) Bill mainly in order to counteract the measures taken by the Federation Government to attract the established industries of Singapore, which are moving across the Causeway, and also to attract new investments thereat the expense of Singapore. This is indeed a very tragic situation. We all realise that in partnership, if not in union, we can achieve a greater measure of industrial progress than in separation or in rivalry. It is therefore very strange that the Federation Government, instead of pursuing a policy of friendship, could embark on a policy to counteract, and if Singapore brings out a measure to counteract this policy it will be the complete destruction of the economic future of both countries.

Sir, in the history of the world, we cannot recall any case where a country has so adamantly refused to join or accept another country which is economically and financially well off.

We have seen many countries which went to war - very expensive wars - for the sake of a few acres of land. I do not understand why the Federation refuse to accept Singapore. Sir, we cannot explain this as a pacific attitude of the Federation, because they are really entering into very damaging economic warfare against Singapore. It could not be that they are frightened of the Chinese population, so that if they joined with Singapore, their economic future would be involved and greatly damaged?

Sir, if that is the case, both countries could keep their political identities and form only an economic union, whereby Federation can keep its economy and, at the same time, have a trade agreement with Singapore.

The only possible explanation, as I can see it, is that there are some powers behind this move. Probably some S.E.A.T.O. power has given directions or instructions to the Federation Government to have nothing to do with Singapore, because they are afraid that is Singapore and the Federation come to a union or a merger, it is possible that both will join together and have a strong foreign policy. Out of this foreign policy there will possibly come industrial development, and they might ask the S.E.A.T.O. powers to take the military base from Singapore and the Federation. So it is in the interests of those S.E.A.T.O. powers to make Singapore and the Federation weaker and weaker. To do this, they want Singapore and the Federation to be apart. They must have no union at all.

Sir, we do not know what secret agreement the Federation had when they were granted their independence. It might be that one condition was that they should object to any merger with Singapore. I cannot see any other reason for Singapore and the Federation not joining together. The Federation Government also realise, as does the Government of Singapore, that by separation and rivalry, both countries' economy is going to be ruined. I do not know why the Federation are so adamant that a union must not be allowed.

Sir, as the Hon. Minister for Commerce and Industry has said, Singapore cannot exist without depending upon a hinterland for its trade. But we have seen the Federation Government refusing to take us in spite of all the pleas and all the discussions.

The only alternative for us to exist is to join with some other country. I mean Indonesia. Sir, Indonesia is our next neighbour with which we have been carrying on a substantial volume of trade for many decades. It is a country with a population of 19 million people and has enormous natural resources. By merging with Indonesia our trade would expand very greatly and Singapore industries would, instead of moving across the Causeway to supply a population of 6 million people, remain here and enlarge production to supply a market of 90 million people.

Therefore, let us not worry too much over the fact that our existence is entirely at the mercy of the Federation Government and, consequently, our salvation depends entirely on waging a tariff war with the Federation.

11.50 a.m.

Mr William Tan: Mr Speaker, Sir, the Minister just now said that it was not the intention of the Labour Front Government to damage the free trade status of Singapore and he went on to show the hon. Members in this House a Labour Front election platform to provide trade protection. It is very strange that it is after nearly four years that the Government saw fit to introduce such legislation.

Sir, in my opinion, the introduction of these monopolies or tariffs will benefit only a few but it will cripple the free port status of this country. The Minister went on to elaborate on the free port status of Singapore by informing us why the Government formerly introduced quotas and restrictions. It is his duty to find ways and means to abolish that system. Quotas can be bought locally. Everyone knows that. People who do things legitimately never benefit from these quotas. Sir, Government should find ways and means to protect the people here. They say, "We want to protect a few industries." I am not against the protection of industries if they provide employment for our people, but do not put tariffs on any goods. I want to find out whether the tariffs will also apply to goods coming from the Federation. I am not against the protection of industries. But Government should, in the first place, encourage local industries; provide them with machinery and technical men, rather than put tariffs on the goods they manufacture. What will happen? If a merchant wants to import goods from other countries and you have these tariffs, the Government will have to provide go-downs to store these goods for export to other countries. That will involve money and will encourage corruption and smuggling.

Sir, I can bring any of the cigarette vendors in Singapore today to this House to confirm this - you have imposed a tariff and a duty on cigarettes and yet you find cigarettes with the chop "For Export Only" (which means for export and kept in bond) being sold back to our people all over Singapore. I am very unhappy about this. Only after four years have the Labour Front Government shown that it will enforce trade protection.

The Hon. Minister went on to say that a small island like Singapore must have a hinterland. I do not quarrel with the Federation. We must co-operate economically. Even the report of Mr Lyle says that you must co-operate - "joint economic co-operation".

Look at Hongkong. We have a big country like China next to Hongkong and yet Hongkong manufacture cheaper goods than China.

Hongkong today have 3,300 factories. They have no hinterland. Their goods are exported not only to China, but also to Malaya, Singapore, Borneo and Indonesia. Why cannot the Government do that instead of imposing tariffs and talking about quotas? Regarding quotas, may I point out to the Minister that I was formerly a Government servant? Quotas were imposed on the instructions of Whitehall. Even motor-cars, which have a preferential duty, are protected. These instructions all come from Whitehall, in spite of the fact that Singapore earns more dollars than any other country in the Commonwealth. It is up to us to take it up with the authorities in Whitehall.

Sir, last year we approved a big sum of money to be provided for tourism. It is the Government's duty to encourage tourism. Tourists come to this country because we have a free port status. They want to come and buy cheap goods rather than dear goods. They also want to buy those goods which they cannot get in other countries. Now by introducing tariffs, you are encouraging smuggling and corruption.

Mr J. M. Jumabhoy rose-

Mr Speaker: Point of order?

Mr J. M. Jumabhoy: Point of order Sir, are you introducing tariffs and encouraging corruption?

Mr Speaker: Not to my knowledge, Mr Minister!

Mr William Tan: I was saying that with tariffs, you encourage corruption. Sir, we should encourage free enterprise. Let the people compete with one another. It is toy opinion that if Government wants 10 protect industries it should help these people rather than put tariffs on goods coming into Singapore.

11.55 a.m.

Mr R. Jumabhoy: Mr Speaker, Sir, if one gives a razor to a monkey, he will cut his own throat by imitating! The elected Labour Front Ministers are in the same position today.

Mr Speaker: Order. The hon. Member knows full well that I have in fact over-ruled comparisons of that nature and yet he deliberately - deliberately, I say - brings out the same comparison at this sitting. I ask him to apologise to the House and withdraw that statement.

Mr R. Jumabhoy: Sir, I am sorry I cannot remember that you have overruled such comparisons. If you have, then I want to withdraw the comparison.

Mr Speaker: The hon. Member should offer an apology too.

Mr R. Jumabhoy: Yes, Sir. Sir, this is a most dangerous Bill which changes the whole policy of free trade which has existed since over a century. Sir, no one in Singapore will object to giving protection to industries or some selected industries in order to provide employment for our people. But there are ways and means to do so, and not all of a sudden bring about a complete change of economic policy in Singapore.

Sir, the Minister said that he had announced this in August 1958, but Singapore knows very well that the present Government is going out and that no attention will be paid to what they say now. Sir, the Minister presented to the House this morning a Labour Front pamphlet stating their policy before or after the elections. May I ask, Sir, are they members of the same Party to whom the voters gave their votes and got them into this Assembly? Definitely they are not! They have betrayed their voters by leaving their Party, and the Party was elected to power by the voters. In other words, the Liberal-Socialists were right when they said that this Government have no mandate from the people. Sir, they have deserted their Party or changed their Party or left their Party. Now they are out to kill Singapore itself - employers and employees - by this Bill. They have been in power for over 3½ years. Where were their ideas all this time? Could they not have thought about this, say, after one year or two years in office that this is needed and that is needed?

Sir, Singapore has developed - I emphasise the word "developed" - from a fishing village to the present prosperous city because of its free trade policy. Singapore's position is quite unique and one cannot compare it with any other country. It is a city with one and a half million people only. You cannot compare it with India, Pakistan or any other country. In many respects, Hongkong differs from Singapore. Hong-Kong sells its manufactured goods to the hinterland and re-exports goods to other places. It gets raw materials from the hinterland or from elsewhere. Its chief feature is cheap labour. So one cannot compare Singapore with Hongkong or with any other places. Singapore is in a unique position by itself. It is strategically situated. Its geographical position has contributed to its importance as an entrepot trading centre.

Sir, the argument was put forward that our population is increasing. Of course, population is also increasing in the surrounding countries. The Minister quoted only the 1955, 1956 and 1957 trade figures. What about earlier figures? The volume of trade has increased since 1936-1938, but that does not mean that we should not encourage our local industries. But there are ways of going, about it.

Sir, I wonder whether the Government have ever studied the Singapore Trade Commission Report, 1932-34. The Commission sat for two years almost every day. It went through all the aspects of trade concerning the Straits Settlements. Singapore is in no different position today. Have they given any thought to that Report? All of a sudden, they come out with a Bill changing the whole policy of free trade in Singapore.

Sir, Singapore has not got any hinterland. That is a fact. Yet another fact is that it has no natural resources or raw materials. How are our industries going to exist then? We have to import raw materials. The only thing we have is labour - at a high cost. Then what are we to do? We must create efficiency in industry. Sir, suppose a tariff is imposed on pencils and they are sold at ten cents each, and other countries are selling the pencils at eight cents each. In other words, the 1½ million people of Singapore will have to buy pencils at a higher price. That means we are increasing the cost of living. Everything should be done with a view to the overall economic benefit of Singapore. That is very important.

Sir, by imposing tariffs or by restricting these goods from entering Singapore, you are penalising the whole population to buy goods at a higher rate. That in itself is a drawback. It injures the entrepot trade. After all, our industries will be providing for only 1½ million people. Can we re-export goods to other countries at competitive rates? If we can, we should bring our industries to that level. Then tariffs are not necessary at all.

Sir, in any case, this Bill should not be passed for the reasons given by me. The life of the Government is very short. They have only two months to go. Nothing can be implemented at present by them and nothing should be done in haste. The Government have not stated whether this Bill is to be referred to Select Committee or a Committee of the whole House. This is an important Bill. To change a policy existing for 140 years in a rush will bring nothing but harm to the country.

Sir, I wonder whether there is anyone on the Government side with trade or industrial experience. If so, I will be happy to hear the length of time, the line of business and the volume of trade in which he deals. Sir, the Chambers of Commerce and the Manufacturers' Association have been built by those who have done hard work to establish trade and industry in this country. These organisations have existed for years and years and their experience, guidance and advice should be sought first. Have they been consulted on the proposed change in the economic policy of Singapore? Even a man with experience in trade will certainly not go against these bodies as they represent the whole trade of Singapore. I do not know whether this Bill is to be committed to a Select Committee where public opinion can be sought or whether it is to be rushed through. No statement on this has so far been made, but if it is to be rushed through, it will be suicidal for Singapore. That will be a sad state of affairs. Of course, the voters did not realise that they were electing the wrong people to the Assembly who just want to throttle trade. Here assurances are given that certain commodities will not be interfered with. What guarantee is there that commodities will not be interfered with one by one? Are we to take it for granted. Sir? That reminds me of my Budget speech. The previous Government handed over $200 million to the present Government and only $83 million is now left. We had very little taxation then. Petrol and tobacco prices have now gone up by 40, 50 and 60 per cent. Who has to foot the bill? The taxpayers! That is a sad state of affairs and I hope the people of Singapore realise that they should have a Government which is at least interested in their welfare.

Sir, we have got Mr Lyle's Report. This has been quoted in the Assembly. I have a copy here with me. One may not agree with all the recommendations, but it is a very important Report. In summing up, he says on page 32:

"I believe that the formation of a Joint Industrial Development Council, guided and supported by the Consulting Services of a world known firm like Arthur D. Little Inc., could prove to be the rallying point around which economic union could be achieved."

Sir, this is a very important suggestion. Of course, Mr Lyle has mentioned throughout his Report that Singapore cannot stand alone industrially and that there should be a joint economic policy with the Federation of Malaya. All means should be explored to ensure the possibility of coming to terms with the Federation of Malaya in the interest of both Singapore and the Federation of Malaya. After all, Singapore geographically was and still is part of the Federation of Malaya. I have seldom said anything about the Federation in this Assembly, because it is an independent country. We axe a Colony now and even under the new constitution Singapore will still be a Colony. A lot of people talk about merger. My opinion about the merger is that it will come about when the British are compelled by the surrounding Asian nations to give up Singapore. Then the Federation of Malaya will accept us. There is no harm if the Federation accepts us as a tenth or twelfth State with a limited number of seats possible on the Federal Council. That stage might come about much later because the countries surrounding us are now too busy with their own affairs. I would not say that political merger is possible at present, but I would say that economic merger is a possibility. So all means should be explored to bring about the formation of a Joint Industrial Development Council. If that is not possible, then I suggest we can have our own Board. We can try that out.

Sir, if we fail after doing all these things, then there is no other alternative but to impose tariffs. If a few selected industries want protection by tariff, we can grant them tax holidays instead. Why can that not be done instead of changing the whole economic policy of Singapore? There are also other means besides the imposition of tariffs, for example, reliefs from electric power, water, and so on. The Government might say that that is not in their hands but in the City Council's hands. You can always bring in an Ordinance to that effect to help the people. Have all these means been explored? You want to change the policy all of a sudden and you want to do that when the life of the Government is about to end.

Sir, a lot of research work is necessary.

Mr Speaker: Will the hon. Member be taking some time?

Mr R. Jumabhoy: Yes.

Mr Speaker: I think it is a convenient time to suspend. I suspend this Assembly. I will take the Chair again at half-past two.

Sitting accordingly suspended at 12.15 p.m. until 2.30 p.m. Sitting resumed at 2.30 p.m.