CUSTOMS (AMENDMENT NO. 3) BILL

[Mr Speaker in the Chair]

Resumption of debate on Question, "That the Bill be now read a Second time."

Question again proposed.

2.31 p.m.

Mr R. Jumabhoy: Mr Speaker, Sir, this morning I was on the Lyle Report and its recommendation, and I said that the first step should be to endeavour to have this Joint Board on Pan Malayan Industrial Planning, and if that fails, then Singapore goes on its own. In other words, a lot of research is necessary before jumping to this Bill, thus ruining the established economic policy which has done so much good to Singapore, that is, the free trade policy. Sir, the Report has also suggested that representatives of the Government and experts should sit on this Board - an expert means not a dummy but one who knows his job - and not political friends or people with no experience of the particular type of industry or any industry.

The Minister for Commerce and Industry suggested this morning that there are Import and Export Control Regulations, Foreign Exchange Control Regulations, duties on cars, and so on. If those regulations exist, why should this Bill not be passed and entrusted to the care of the Government? Sir, these are flimsy excuses. Just because these controls exist, this Bill should therefore be passed and the whole trade policy should be changed. One should not forget the Legislative Councillors in the postwar period - some were necessities after the war; some were necessities during the Korean war. The main thing, until the Rendel Constitution came in, is that no elected or nominated Member was in charge of a portfolio, and that also, as a whole, they were in a minority. The business of running the government was conducted by the officials. But the Labour Front Government had a chance to scrap this if they thought this was a colonial regulation. But they have not done it, and they have not done it because they want something more on the same lines. It is disgusting!

Sir, something was mentioned about the free countries and their policies. As I said before, we are just a Colony. We will still remain a Colony, and there is no comparison between Singapore and any other country or any other city in the world. We should compare our peculiar position with that of other countries and adjust it; but on the other hand - I may just make a passing remark - where are the free countries of the world, and how many? Does he mean non-Communist countries or otherwise? Most of the countries in South-East Asia are controlled or influenced by American dollars, and I do not see that they are free countries. We have been influenced by one or the other, but nevertheless we will be free to govern our internal affairs under the new Constitution, and then the government should plan what is wanted by the people of Singapore and for their benefit.

Sir, mention was made about Sir Stamford Raffles and his vision. I wonder whether it was necessary. The free trade policy laid down by him has subsequently succeeded. Whether he had visualised what would happen and how the population would increase or not is another matter, but I think the same principle still remains good. And if it is good, whatever is established, let it continue till the real representatives of the people are elected in the Assembly and they will then plan what they think is best.

Sir, my colleague the hon. Member for Tiong Bahru mentioned corruption. It has been admitted by the Minister for Commerce and Industry at the last Budget sitting that corruption exists in his own department on the stockpiling of rice. He also mentioned how cigarettes were being sold, and four new industries wanting duties, bonded warehouses, establishment of departments, and so on. No doubt there will be some corruption. Why go to all this trouble? What for? Unless you have exhausted all your resources, then there is no other way. But ways have not been tried at all. It is a Bill brought before this House in a hurry, and the Government want it to be passed in a hurry. Sir, if the Government wanted to help the small man, instead of wasting the taxpayers' money in travelling, they could have paid more attention at least to small-scale and cottage industries from the very beginning because these could give employment, but they have neglected their duty throughout.

Sir, if the Government have any particular industry in mind to help - by modern machinery, expert knowledge, and other necessities - and if such means still fail, then try other means but not till then. The free trade policy should be considered on the economic basis of Singapore and not in the interests of a few industries. You will be increasing the cost of living of the whole population instead of lowering it. It is a vicious circle.

In conclusion, I might say that this is a Bill of great importance. The very existence of Singapore depends on it and it should not be rushed through. It should be scrapped like the Luxury Tax Bill. There are three reasons, Sir, and they are these. Firstly, the present Government have no mandate from the people, because they are not the elected representatives of the Labour Front, especially the four or five elected Ministers of the Labour Front Government. They have no business to bring about this Bill without a mandate from the people. Secondly, they cannot implement it even if they pass it, because in only two months' time they will not be there anymore; they should not represent the interests of the people of Singapore. Thirdly, if at all these novices insist on getting this Bill through, it is advisable, Sir, that it should be committed to a Select Committee where advice and guidance could be sought from the Chambers of Commerce which have worked for a hundred years now in this Colony. What they have to say may help these small industries, which the Minister might have in mind; but to rush the Bill through is nothing but madness.

2.42 p.m.

The Minister for Communications and Works (Mr Francis Thomas): Mr Speaker, Sir, I rise to express my support for the principle of this Bill which is, of course, bound to come under attack from some people in Singapore.

There is a stone outside the Treasury building, Mr Speaker, on a patch of grass just across the river from Fullerton Building - a handsome obelisk erected in 1850 in commemoration of the visit of the Governor-General of India, Lord Dalhousie - and many a keen free trader in this Assembly will, I am sure, spend a luncheon adjournment in studying the fairly lengthy essay carved on the sides of that in four languages-the first multi-lingualism a hundred years ago - Chinese, Malay, English and Tamil, I think. That inscription records the profound conviction of the traders of Singapore that Singapore lives by free trade. It was erected in the brief interval between the first and second Opium Wars - the first Opium War of 1839-40 and the Second Opium War of 1855-56 - I forgot the exact date. That represents what you might call the long tradition of Singapore.

But times change, the world changes. Then free trade was the free trade of Western industries seeking new markets throughout the world. Now, industries are developing world-wide and, to some extent, the countries newly developing have an advantage over the countries which did their developing earlier and are committed to a lot of out-of-date equipment very often. That pattern of free trade is not wholly an appropriate one today. I give no support to the economic nationalism which does so much harm in the world, almost as much harm as military nationalism. These nationalisms are out-of-date. A man should be loyal to his own country, the place where he lives and has his home and his work. But he should also recognise that all countries form part of the world pattern, and I most fully support what my colleague and friend, the Minister for Commerce and Industry, said at Seattle, I think it was, about the need for countries to stop thinking in terms of their own backyards and to start thinking of the world pattern.

Free trade traditionally means, in effect, that the trader wants to be free of unwanted government action. Traders do not resent the government doing what they want. They run to the government very vigorously and loudly say, "Why have you not done this?" when they want something done that suits them; but they do not like having things done which might limit their profits or interfere with their decisions. That is very natural and proper. But it is a problem of social organisation. I am no trader; I could hardly be mistaken for a merchant; but it appears to me that trade is essentially the most primitive of the social functions today. The functions of production are rationalised and highly developed. The function of distribution of goods is still in a very primitive stage. However, I will not take up the time of the Assembly with that.

The point I wish to make is that this power for selective protection forms only a part of the general pattern of policy, and I would like to refer, if I may, to the same Labour Front booklet of 1954 from which my colleague quoted, in which we set out not only our Four-Year Programme but also our Principles and Aims. Principle No. 11 says:

"The Labour Front regards the exchange of goods and services between nations as the basis of international peace and internal prosperity. It recognises the great importance of integrating Japan and the People's Republic of China in the Asian trade structure, and aims ultimately at a complementary economic system for Asia on the basis of mutual aid according to ability and need."

Mr Lee Kuan Yew: Sir, on a point of information.

Mr Speaker: If the Minister will give way.

Mr Francis Thomas resumed his seat.

Mr Lee Kuan Yew: Does that document bind the present Government, or is the present Government guided by that document in any way?

Mr Francis Thomas: This is a piece of information, Sir, which I have not included in my notes. I presume it does. The point I am making is that that was one of the guiding principles from which our Four-Year Programme was developed, and on which point 7 of the programme - the one about State protection to small industry - was made. We recognise also that while there would be an appropriate field for protection within Singapore, nevertheless, Singapore's economic functions and services to the world - the services by which we earn our living and survive - are in the complementary economic system by which goods and services are exchanged and which would mean, of course, the use of Singapore as a centre of exchange, or if you prefer, an entrepot. I just wish to make these points, Mr Speaker, because there appears to me to be some confusion in the use of the phrase "free trade", which itself is a confusing phrase and nobody has yet been able to define exactly what they mean by free trade. I do not suppose you can have trade made free in the sense of being free from money costs. You cannot deal with this problem in these very simple categories. You will have to have a major objective, and then within that you have to construct detailed policies which meet the immediate facts and also serve the long-term future.

2.50 p.m.

Sir Ewen Fergusson (Nominated): Mr Speaker, Sir, of course, everyone wants Singapore to be a hive of industry with new factories opening every year, but I feel that there must be many who are sorry that the Government has come to the conclusion that these can be encouraged to open and expand only by artificial measures and by far-reaching controls, the effects of which cannot be judged for a long time to come.

The Minister has mentioned Hong Kong as an example to Singapore, but I know of no tariffs which have been introduced there to encourage the very substantial growth which has taken place since the war; and the present measures which are put forward may or may not help us to increase the wealth of Singapore. They may indeed not be effective. One feels that there is a policy of desperation in the speed with which these measures are being put forward, and there is no doubt that the population growth in Singapore is probably one of the most frightening problems which must face us. If increase of industry is the aim, it is my opinion that it should be encouraged in every way and tariffs avoided in so far as that is possible. And it is not as if Singapore is only a trading centre. It has had very large and growing factories for many years, and, indeed, it has a very thriving Manufacturers' Association. Many industries have been very successful, though others have failed, but it is a moot question whether we will really benefit from a process of selective protection or that it will really solve the problem of our growing population, or indeed even alleviate it.

Sir, I recall that in the year 1945, when we came back after the Japanese Occupation, there was a policy paper from the British Military Administration which I happened to see. In that paper it was stated that the entrepot trade of Singapore was finished, and that Singapore was a dying place. Those of us who had a sight of this paper or document criticised it very, very much indeed. I think the evidence of the years since 1945, including the figures which were quoted by the Hon. the Minister this morning, shows that, if anything, Singapore has grown as a trading centre and that its entrepot trade is vastly greater than it was before.

The entrepot trade must continue to be encouraged and, in fact, it is very little use manufacturing unless the goods which it produces are able to be sold. Manufacturing can only, in a place like Singapore, be complementary to and party to the entrepot trade. It certainly can in no way be a substitute for it. I am sure that it is not the intention of this Government, or any other Government, to do anything which would restrict our trading ability, because without the overseas trade which we have got, there will be fewer people able to buy the products of the manufacturers and the factories which we hope will come steadily to Singapore over the next few years. But the contention of the Government is that, by artificially guarding some industries, they will be increasing prosperity for Singapore. Only time will tell. What in fact, I think, we really need here is a greatly expanding economy but a greatly reducing population.

The original amendment to the Customs Ordinance meant an overwhelming change in the general structure of Singapore's economy. I am not convinced by the Minister's argument of what constitutes a free trading area. All I can say is that the fewer the restrictions and the restraints, the better, and thus the less opportunity there should be for the Government to create these artificialities.

But I conclude by saying that I consider tariffs a bad way to encourage local industries.

2.57 p.m.

Mr Lim Cher Kheng: Mr Speaker, Sir, I am sure the House will join with me in welcoming the new Member, Sir Ewen Fergusson, to this House. I would like to point out that this House will, in general, regret the speech just delivered by him. He is, of course, an experienced businessman, and we must also consider him a loyal citizen, as a result of which he has been nominated a Member of this House.

Today, we come to debate on this important point of industrialisation. Sir Ewen Fergusson, I think, is mistaken in his suggestion that the only solution to our problem is to expand our economy but to reduce the population. I wonder whether Sir Ewen Fergusson has found time to read through Col. Lyle's Report on industrial development. If he had, Sir, he would not have delivered his speech, especially as, I am sure, with his experience and knowledge he should be able to contribute more constructive suggestions to this House.

Sir, I too wonder whether the Lyle Report has been officially reported as Government policy. If it is, then there is something in the second last paragraph at page 25, under the title "Entrepot Trade", which most of our merchants here - Europeans and Chinese alike - are very much worried about. This is a factor which might kill our entrepot trade. It says:

"The Government's declared Policy is that Protection will not be granted if the Entrepot Trade in the item concerned will be seriously affected."

And it continues:

"Therefore, the people involved in Entrepot Trade in the item concerned should have ample time to prepare and organize whatever new procedure and facilities might be required."

Sir, I wonder if it is clearly the Government's policy that we have to pay special consideration to the entrepot trade, particularly from Europe.

I just want to go a little bit further on the question of reducing the population of this island. I think the only way is to invite the world powers to drop an atomic bomb! Indeed this is the fastest and most effective way of reducing the population. We spoke quite enough in the debate on the Family Planning Association. We must have confidence in ourselves to face the future, and not be so pessimistic as to think that, by reducing the population, we can solve all our problems. Sir, that will not solve our problems at all.

Let us now digest the lengthy and learned statement given by the Minister for Commerce and Industry this morning. We can confine ourselves to a few points.

(1) The Minister assures us that Singapore is not, after all, a free port. This is the first time that he has made it clear that Singapore is not a free port, as what other people generally think. But I am quite certain that in certain Government publications, it is stated that Singapore is a free port.

(2) In last year's Budget debate, the Minister admitted that Singapore's entrepot trade was dying. But today he has said that it is not so, and that it is still going strong, or at least it is not dying.

(3) The Minister for Commerce and Industry has promised that he will do all he can to safeguard our entrepot trade.

(4) We cannot trace anything at all in connection with the Federation of Malaya. I think the main point in Col. Lyle's Report is that, for the benefit of both territories, Singapore and Malaya, they must have a Pan-Malayan economic plan. But we cannot find any indication of this in the Minister's statement today.

Sir, this is one answer to our difficult problems - how to solve unemployment, raise the standard of living of the people and strengthen our economic potentialities. There is always one answer - wait until a merger with the Federation and then we can solve everything. But why not mention in the Minister's report today the confidence that the Minister has for carrying out a one-sided industrial policy, which is a vital change? Even the P.A.P.'s great leader, the Member for Tanjong Pagar, has to declare his change of approach towards our economic problem. He says that if the Federation of Malaya's and Indonesia's economies remain the same as today, he will not support any vital changes in our economic policy. What confidence have the Singapore People's Alliance-UMNO Coalition Government in carrying out a one-sided economic policy?

The Minister has even criticised the P.A.P. for always changing its policy. They can oppose the P.P.S.O. (Preservation of Public Security Ordinance) and say, "When we are in power we will support the P.P.S.O." Now they oppose the capitalists and cry out, "Down with the capitalists!" But when you are in power, you will need capital because Tunku Abdul Rahman needs capita! and Indonesia needs foreign investment. But what confidence do the present Alliance Coalition Government have in carrying out such a policy? Sir, this may save a lot of time.

Before I sit down, I want to put two questions. Will the Government fully accept Col. Lyle's Report as a basic policy of Singapore's industrial development programme? Secondly, have they made any approach or have they had any consultations with the Federation of Malaya in connection with this Customs (Amendment No. 3) Bill?

3.05 p.m.

Mr Lim Koon Teck (Paya Lebar): Mr Speaker, Sir, three months ago when the Hon. Minister for Commerce and Industry brought up the subject of having to protect local industries, thereby infringing upon the free port status of Singapore, I was extremely unhappy, and I had very grave doubts as to whether such measures should be made. But on being assured that the free port status will be maintained as far as possible, particularly where our entrepot trade is concerned, and that such restrictions would be confined only to local industries which require help and protection, I have changed my mind.

Mr Lee Kuan Yew: And joined the S.P.A.!

Mr Lim Koon Teck: Sir, the growing population and the increasing unemployment in Singapore must force us to change our views and accept measures which up to the present moment have not been acceptable to us. We are now coming to a stage where we have to take in each other's washings. We cannot afford to live just by trading alone. Because of the number of people unemployed, we have to supply ourselves with some of the basic and vital goods which we require for our everyday needs, and that is the very purpose of the protection which is asked for today. We have been asked why we do not follow the example of Hongkong where no protection is required. But then Hong-Kong presents an entirely different picture. There you have a standard of living among the working people which is very much below that which has been attained by our workers in this country today. I am sure none of us would want any of our workers to work and live on a bare wage of about two or three dollars a day which the workman gets in Hongkong now.

Whatever we do, Sir, we must look for employment. We must find employment. I am sure the safeguards provided for under clause 3 of this Bill whereby if any of the products which are protected meets with the disapproval of the people of this country, a resolution in this House will take that away. I am sure that safeguard is adequate and, for that reason, I do support this Bill.

3.10 p.m.

Mr R. C. H. Lim (Nominated): Mr Speaker, Sir I should like to answer some of the points raised by Sir Ewen Fergusson in support of his opposition to this Bill. The first point is this: In 1945, the political set-up in Malaya was entirely different from the political set-up today. In 1945, Sir, Malaya was divided into the Straits Settlements, the Federated Malay States and the Unfederated Malay States. And they together, Sir, formed one economic unit. There was not in existence at that time the Federation of Malaya which has now imposed tariffs on soap imported into the Federation from Singapore.

The second point, Sir, he mentioned Hongkong. He asked why Hongkong could prosper without tariffs. The answer is obvious. In Hongkong, labour is so cheap, as the Member for Paya Lebar has said, that the standard of living of certain human beings there is so low that we in Singapore would be ashamed to see in Hongkong the way they live. Labour is so cheap that Hongkong is able to produce consumer goods below the price of any similar consumer goods imported into Hongkong. That, Sir, is the reason why Hongkong has no tariffs.

Now, Sir Ewen's other point, which seems to have been shared by some Members who oppose this Bill, is that this Bill, if passed, would disturb our entrepot trade. Why should that be so, Sir? The Minister concerned has given us his assurance that no tariff will be introduced to protect any goods manufactured in Singapore if such tariffs will in any way have any adverse effect on the entrepot trade.

Now, Sir, let us see the advantage of having tariffs for certain selective goods manufactured in Singapore. The advantage is, firstly, that this will encourage the expansion of existing industries and attract capital, not only from abroad, but also from local people. In my mind. Sir, we have sufficient local capital for investment in Singapore. This capital locally will come to be used and invested in industries, once the Government protect industries.

I refer again to the soap industry, Sir. Many of the soap industries in Singapore have closed down and moved to the Federation of Malaya. What does that mean? A flight of capital from Singapore to the Federation of Malaya.

Secondly, Sir, employment - so many people were thrown out of jobs because of the removal of these soap factories. Sir, if the trade unions in Singapore realise this fully, I am sure they will give strong support to this Bill. For what I have said, Sir, I strongly support this Bill.

3.13 p.m.

Mr Lim Choon Mong (Serangoon): Mr Speaker, Sir, this morning I expected to hear from the leader of the People's Action Party big plans on how to help Singapore, greater plans to help give employment to the people of Singapore, and also how action can be taken to raise the standard of living of the people. But in fact, I heard an absolutely different tale.

Sir, he said: "Why do you want to bring up the Bill at this time? The time is too short to implement it. It is neither a wise nor a prudent step to make a change in economic policy at this time of the day." May I ask, in such circumstances, what must we do? What does the Member for Tanjong Pagar suggest? Fold our arms and do nothing? Let things drift; let unemployment increase; and let the people go hungry? No, Sir, I think the leaders of Singapore must stop thinking about how to connect everything with political propaganda. They should sit down and consider sanely what would be best for the people; whether they should come into office or whether they should not even be elected to this Assembly. I always think, Sir, that if there is a problem, there must be a solution. The solution may not be as good as we want it to be. But as we go along, we may improve on it and we may finally solve the problem.

Let me give an instance, Sir. Today there is the problem of children not being able to get into schools. Did we adopt the attitude of the Member for Tanjong Pagar that just because of the short period before the general elections, we should fold our arms? No, Sir, we never did that. We sat down and thought about it and we solved it - at least partially - by opening new schools.

In the same way, Sir, we know that the entrepot trade is not keeping pace with the increase in population and we have to think of other ways and means to help ourselves. Today we know that all our people cannot be employed in business houses and that we must protect our workers. I say that this Bill is only part of a scheme to help Singapore to earn a little bit more money and to create more employment opportunities. I was surprised, Sir, to hear from the Member for Tanjong Pagar that things should be left as they are. He said that if we want to manufacture, then we have three points to think about. First, the cost should be low; second, we must have more mechanisation; and, third, we should be very competitive. I agree with all of them.

Mr Lee Kuan Yew: On a point of clarification.

Mr Speaker: If the Member will give way.

Mr Lim Choon Mong resumed his seat.

Mr Lee Kuan Yew: My recollection is that I never enumerated the three points in that order, nor did I enumerate the three points at all. What I said this morning was this: if we protect an industry in order to give it a start, it may be justifiable, but in the long run, whether we have an industrialised Singapore or not depends upon the competition to which your industry can face up. If you want an efficient industry, you must have efficient workers with the necessary degree of technical skill to compete with the cheap labour in Hongkong and China, and sufficient managerial talent to make sure that your costing is down to bottom.

Mr Lim Choon Mong: Very well, we will just talk about low labour costs. It is really surprising that for the last four years until yesterday, the cry was always against exploitation of labour. Now, we are faced with the problem of earning more money and competition from other countries. We know that we cannot sell our goods if we compare the prices and the quality of our goods with those of Hongkong, Japan and China. What then can we do to help our trade to stand up to competition from these countries, except to obtain cheap labour? How does that cry fit in now?

Mr Lee Kuan Yew: Sir, may I clarify that?

Mr Speaker: If the Member will give way.

Mr Lim Choon Mong: No, Sir.

Mr Lee Kuan Yew: Well, so be it.

Mr Speaker: Order. If the hon. Member for Tanjong Pagar thinks he has been misunderstood, he will be given an opportunity after the hon. Member's speech to explain.

Mr Lee Kuan Yew: I am much obliged, Sir.

Mr Lim Choon Mong: Sir, I now find it difficult to reconcile his conception of things now with what he had said or what he had intended to do or what he had intended not to do. People will go without work; industries will have to fold up; workers will have to go hungry and will have to tighten their belts because there will probably be no more strikes in Singapore. If we come to that stage, Sir, it will be a very sorrowful day for us.

Stranger still, Sir, was the suggestion that the Minister for Commerce and Industry was a weak man. "He recoiled at the attack by the various Chambers of Commerce and he has watered down his Bill. So today we have it in a modified form." But I say, Sir, we are indeed very glad to have Ministers who still listen to the voices of the people of Singapore. We still have Ministers who will take into consideration the view of the citizens. If one day the Government says that certain things should be done and the people resent that, but the Government just goes ahead with what is to be done, then I say, "That is the day democracy has lost its battle and it will be a form of dictatorship." I hope the day will never come and Singapore will always remain under democratic rule.

Mr Lee Kuan Yew: May I help to explain to a schoolmaster why, in the first place, our workers enjoy a standard of living far higher than that of Hong Kong, and in the second place-

Mr Speaker: Order. I would draw the attention of hon. Members to the relevant Standing Order which reads:

"A Member who has spoken to a question may again be heard to offer explanation of some material part of his speech which has been misunderstood; but he shall not introduce new matter."

Mr Lee Kuan Yew: That was exactly my intention, Sir. What I wanted to explain to the schoolmaster was this. We can still sustain the higher standard of living of our workers as against Hong Kong workers, by higher technical skill and efficiency to justify the higher standard of living. It is as simple as that.

Mr Goh Tong Liang (Bukit Panjang): Mr Speaker, Sir, if I do not like a person, I naturally do not have a good word for him. Further I shall be blinded to all reasons by my feeling of malevolence against him. From the various speakers opposite who spoke on the Bill this morning, to my mind no one has proved how this Bill when it becomes au Ordinance will be a dangerous thing. It is not gentlemanly, Sir, just to be acrimonious. Whether the Bill is brought in so late in the day, or during the last few weeks of the life of the Government, or two years ago, is immaterial. What matters is whether it will act adversely on the entrepot trade of Singapore. The various speakers did not convince the House of that danger.

3.25 p.m.

Mr Tan Siak Kew (Nominated): Mr Speaker, Sir, I am afraid I know very little about politics but when the Hon. the Minister for Commerce and Industry tries to justify this Bill by saying that it is in accordance with the Labour Front's platform, I should hope that such matters as the overall economic benefit to Singapore should be treated as above politics.

The Minister said that since his statement on 13th August last year - when he mentioned that in order to protect industry, there were two ways of doing it, one is by quantitative control and the other by tariff - nobody has raised any objection to it. Perhaps I think the Minister had overlooked my speech on the Control of Manufacture Bill during its Second Reading. I then pointed out the dangers of quantitative and tariff controls and how it would affect the entrepot trade of Singapore. I can safely say that nobody is opposing the Minister for introducing measures of protection for industry, because we all know that industry must somehow be encouraged or protected in order to supplement our entrepot trade. We are all agreed that industry should be encouraged and helped, but it is the method of protection which is being introduced that Members here and a lot of people outside are not convinced of. Those who have criticised these measures are not necessarily selfish people or traders. In fact, most of them are manufacturers or are interested in industries. Although I am a businessman, Sir, I myself am interested in the manufacture of products. I am interested in rubber and latex factories. I am also interested in many other manufactures. But the point is that when we talk of these things, we have to have the overall picture of Singapore before us and not just talk of the benefit to one section of industry. It should not be a question of manufacture versus trading, or manufacturers versus the merchants, or the Chambers of Commerce versus the Manufacturers' Association. This should not be so. What we are concerned with is the method of protection that is being introduced and whether that method will, in fact, bring about the result that the Minister envisages in his Bill.

Now, first of all, Sir, let us examine what industries we can protect. I have said that I am interested in rubber factories and some of them are going out of business. If I can get protection from the Minister, I will certainly be pestering him, but I realise at once that the rubber milling industry cannot be protected because the raw materials come from elsewhere; it is not produced here. If there are more factories in Indonesia than we have here, then naturally they will mill the rubber themselves and they will not send over their rubber for us to mill. In our coconut oil industry, for instance, we get copra from elsewhere. We do not produce copra here. And if they had coconut oil industries in their own lands, they would certainly like to mill the copra themselves and not send their copra to be milled here. I know that not so long ago copra millers were after the Minister for protection and they were trying to influence him to say that whatever copra imported here should be allocated to the coconut mills, and not be re-exported. I think I must give credit to the Minister who, I think, is cleverer than what these people think. Of course, he refused to introduce such a policy because, if he tried to do that, then no copra at all would be coming into Singapore. The question is simply this: are our industries world competitive or not? If not, then we cannot get even the raw materials.

Another thing is this - whatever industries we hope to be able to protect would be very small industries, industries for home consumption; and protection is by tariffs and quantitative controls. As has been pointed out by everybody, including the Lyle Report, our home market is very small. If we shut out all the soap coming in, thus allowing the local soap factories to manufacture purely for local consumption, I wonder whether such a protection could enable the soap factories to survive without any outside competition, if they are wholly dependent on the home market. The important thing is to weigh the advantages the industry derives from these measures and the resultant harm done to the entrepot trade by trying to give this small advantage to the manufacturer.

Take cigarettes, for instance. You try to establish a cigarette factory here and shut out all the cigarettes that come in. By doing that - in order to encourage a factory here to employ a few hundred people - not only would you lose your $40 million in revenue, but you would also be penalising a lot of people who are trading in cigarettes - perhaps many thousands - in order to benefit a few hundred. Should not the interests of the majority be considered? In fact, if you have a picture of those people interested in cigarettes - not counting only the wholesalers, retailers, hawkers - how many would you deprive of employment if you were to shut out the import of this item in order to preserve your local cigarette factory? And, as I said, there is no assurance that people will smoke your cigarettes. From what I gather, the dearer type of cigarettes imported have, in fact, a larger market than the cheaper cigarettes. It shows that consumers have got their tastes and their preference. No doubt protection does some good to the small industry, but is it worthwhile? That is why we are not convinced that this is the best way to do it. We have advocated that these industries could be helped in other ways, instead of tampering with the entrepot trade.

The position, as I see it, is like this. We liken Singapore to a big family. This family has subsisted on its own business - a big and prosperous business - and the whole family has worked in the business. But now the family grows with the coming of children and grandchildren, and you see that the family business alone cannot offer sufficient employment to all the children and grandchildren. Now, the thing you are trying to do is to open up another business in order to absorb these growing-up children. Well and good. But if, by opening up a new business, you say to the old business, "In order to keep me on my feet, you must sacrifice a few lines for me. You must not buy this; you must not buy that. You must not maintain your own business. You have got to give up a few lines for me, so that my new business can thrive, and I can stand on my feet." Would that be advisable? If we open up another business, it is with the object of absorbing the up-and-coming children. That business must be independent. It must have nothing to do with the old business, which must be maintained at all costs. The old business must not be sacrificed in any way in order to put that new business on its own feet. The new business could be made self-sufficient by providing it with capital, but certainly not by asking the old firm to sacrifice some lines of its business.

Just now an hon. Member said that nobody has explained why a free port is important and why it could be hurt if customs duties were levied. I will say this-much of the value of a free port lies in the confidence of traders both inside and outside it; the confidence that they can trade and plan in advance without let or hindrance. And much of this planning is invisible; it is not everything that catches the eye. At one time the Minister said that Singapore is not a free port, because it still levies taxes on liquor, petroleum and cigarettes. A free port is just like a club. I think small places which encourage activities will have some of these vices. For instance, at one time there was a monopoly on opium and there was a tax on opium. Such places thrive on the nature of their business. Monte Carlo and Las Vegas cannot scrap gambling. Without gambling there would be no activity. They would not attract, because they have nothing else to attract. In our case, I think, petroleum, liquor and cigarettes are in the category where people have to pay tax. One point is that these imports could be very conveniently kept in bonded warehouses and taxed where it is for local consumption. There is no room where you can delineate as a free port area. You do not have enough godowns, or storage space. To go beyond these three needs, the goods have to be put on show before they could be sold. They could not just be conveniently kept in the bonded warehouses and all you say is, "I want so many '555' cigarettes," and the people are supposed to know what they are.

There are things, Sir, which a free port does - things which we cannot understand. It is only the man on the job who knows what is going on. I would like to quote some of the activities here, the significance of which will quite mystify hon. Members. Sometime ago Saigon bought a certain amount of pepper from Singapore and it was shipped from Singapore to Saigon. We know that Saigon does not consume pepper to that extent and we were quite right - because, after it went to Saigon, it went to Marseilles, France - and that manner of trade continued. And then we got orders from Hongkong for pepper and Singapore shipped it to Hongkong. Hongkong then sent that pepper to Saigon, and Saigon in turn sent that pepper to Marseilles! What is going on? Why should we not be sending pepper to Marseilles direct? It is not possible because the French had committed themselves to buying their colonial produce, and there was the duty to be paid for others. Before the war there was a stock of pepper in Vietnam, so the French claimed that pepper, which was exported by us, as Vietnam pepper and it went to France, duty free. Similarly, there are a lot of American cigarettes in which Singapore dealers have been dealing, and no Singaporean knows the brands, because it goes to Borneo where it is bartered for Philippine produce. The trade then was only done by small craft, but as soon as it became profitable both ways, bigger craft were engaged. The trade expanded. Now that the surplus to the Philippines is bigger the money does not just go back to the Philippines. It goes to Hongkong, or to Singapore, and thence to Hongkong, and then back again to Manila, because by that process, they gain more Manila dollars than if they were just to remit that from Borneo to Manila at the official rate. Of course, there are the official and the unofficial rates of exchange.

It is surprising to see that there are so many things happening which we do not know about in a free port. A free port gives confidence to the traders. They know they can do anything without let or hindrance. This confidence encourages a lot of activity, and these activities are all for the good of Singapore.

I do not say that this protection does not do any good to industries, but the point is whether that good will outweigh this good. In fact, to my mind, it is just like trying to remove a mountain to release a mouse! It outweighs the advantage likely to be gained. The advantage is, in fact, very small compared with the harm that I can see.

Now, hon. Members have dwelt on Hongkong manufactures. Of course, that is a different thing. Hongkong prospers not because of its home market, but because it is able to export and compete with the outside world. In fact, they have competed so well that there have been complaints from Lancashire and the United States and they are now trying to limit Hongkong exports to their place, because U.K. textiles cannot compete in their own market with Hong-Kong, and American textiles cannot compete with Hongkong in the United States also. It is the outside bigger market that builds a worthwhile industry. Industries thrive not because of their home market. I should say that even the Hongkong home market would be too small for some of their industries, except perhaps a small industry.

That is why I will say this: since the reading of Mr Lyle's report about joint industrial development, I say that the only sensible thing to do, if only because it does not make one work against the other, is to have the two territories with a population which can constitute a joint economic unit for something to be done. The tyre factory, for instance, which was quoted. We should go to the Federation and reason out that this is the sensible policy to follow. In fact, even if we are not politically merged, we can be economically merged. Then we would be in this position: that after we have introduced a customs tax - take an article like soap, for instance - soap coming from the Federation would then be taxed when passing the Causeway into Singapore, because the Federation is taxing our soap. We have got to tax their soap in order to protect our industry. That would make us equal. But still the Federation market is a bigger market. It has a population of seven million against our one and a half million. Industries that go to the Federation are not necessarily attracted because of this or that protection, but because of their bigger market. So if we go on like this, we are bound to get retaliation when the Federation resent our imposing tax on their soap. They might say, for instance, "All right, let no pineapples go to Singapore to feed the Singapore factories. All the pineapples must go to the Federation factories. They cannot go to Singapore." Then where do we stand? It is not just retaliation on one item. When that happens, then it breeds ill-feeling, and politically - as I read the phrase in Mr Lyle's Report - we may come to the point of no return. You retaliate and counter retaliate. That is no good at all.

To my mind, the only sensible thing would be to reason out with the Federation Government and have a Pan Malayan economic policy. For instance, there was talk of the City and its hinterland. If Singapore is in a chaotic condition, it can do no good to the Federation at all. If conditions in Singapore were rotten, it would automatically affect the Federation. If Singapore has thriving industries, it could in fact benefit the Federation because, on balance, we still have a few thousand people coming down here from the Federation every year to seek employment. If industries are thriving in the Federation, it could only do good, and there would be no harm done to Singapore. We should not be competing with each other, because our people also can go to the Federation, as a last resort, and find employment there.

The hon. Member for Changi has always harped on the point of a Pan Malayan economic policy. He has always tried to induce the Hon. Minister for Commerce and Industry to look into that point. I really support him in that direction. If the Federation are still not ready to do that, the only thing to do is to continue to urge them to accept this view arid let them see the sense in this policy, instead of trying to fight back, in which case the advantage to be gained will be outweighed by the harm that could be caused. As I have said, I have tried my best to see the Minister's viewpoint and I quite agree with him that industries should be encouraged and helped as much as possible. But I would really counsel him to see whether there are ways of doing so other than this quantitative and tariff control.

3.56 p.m.

Mr J. M. Jumabhoy rose-

Mr Speaker: Mr Jumabhoy, in reply?

Mr J. M. Jumabhoy: In reply, Sir, I have exactly four minutes before the moment of interruption, and I do not propose to take a snap vote on this without replying to all the points, because even though the newspapers and the public may not fully grasp the reply which I am going to make, it is still important and should go down on record, because there are a lot of mis-statements made in this House on this matter, and the record should show my replies to them.

Firstly, Sir, I will refer to the hon. Member for Tanjong Pagar. When the mind is confused because one is taken unawares, then the obvious way out is to try and belittle any effort that is being made by the Government, and that is the line which the hon. Member for Tanjong Pagar has taken this morning in his opening remarks. I am glad to know - and I am sure the public will make a note of his remarks - that though the P.A.P. are interested in capturing power in the next elections, they are not interested in changing the economic policy of this country. They are not interested in trying to solve the problem of growing unemployment because of increasing population. They are only interested in capturing power.

Sir, I will come back to the hon. Member for Telok Ayer tomorrow when he is in the House, because I do not like to talk when the hon. Member is away. But the important point raised by -

Mr Speaker: Order. I think the hon. Member for Telok Ayer is in the House as large as life!

Mr J. M. Jumabhoy: I am sorry, Sir.

Mr R. Jumabhoy rose -

Mr Speaker: Point of order.

Mr R. Jumabhoy: Point of explanation, Sir. I might possibly be absent when he is talking!

Mr J. M. Jumabhoy: If he is as large as life, I wish him continued life and good health, for obvious reasons! I meant to refer to the hon. Member for Tanjong Pagar, Sir.

The hon. Mr Tan Siak Kew raised a point just at the end of his speech, and this was referred to earlier by the hon. Member for Changi-that the obvious solution is to approach the Federation to see reason. I have mentioned in this House, Sir, not only last month but previously, I think, that we have approached the Federation, and we have entreated them to accept a Pan-Malayan economic unit concept. But so far we have not been able to succeed. Therefore, it is time that the Government open up other avenues so that when our economic conditions deteriorate we will not be caught napping but we will have something else to fall upon.

There is no question of retaliation by the Government, in the imposition of tariffs, against the Federation. In fact, tariffs will be imposed on commodities coming from any country. It is not a question of retaliating against the Federation as such. It is possible that sometimes it might hurt some countries more than others but that is just a matter of trade. If we could get this Pan Malayan economic unit concept accepted by the Federation of Malaya, then all these measures would not be necessary. I have said this earlier in my speech when moving this Bill. These are measures to counter difficulties that might arise because of a loss of our natural hinterland, that is, the Federation of Malaya and the surrounding countries of Indonesia which are now increasingly trading direct.

Evidently, Sir, Members do not realise the gravity of the situation staring us in the face. Some Members live in the past. They are what the British call "diehards" who will not progress with the times. This is unfortunate. Some Members, though they realise the gravity of the situation, refuse, for political reasons, to accept it. That, I think, is bad. The people should realise it because politics should not go above economics.

4.00 p.m.

Mr Speaker: Order. Moment of interruption. Further consideration, what day?

Mr J. M. Jumabhoy: Tomorrow, Sir.

Mr Speaker: Tomorrow it will be.