NEGOTIATIONS FOR COMMON MARKET WITH FEDERATION OF MALAYA (Request for Statement)

Mr David Marshall asked the Minister for Finance whether he will make a statement on the subject of the negotiations for a Common Market with the Federation of Malaya and whether the Government will table a Report dealing with the said negotiations.

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, .Sir, I do not think it would be appropriate for me to make a statement on the details of the course along which negotiations between the Federation and Singapore Governments took place on the common market proposals. The reason is that negotiations, while they have been suspended temporarily, are expected to continue at the appropriate time in future. The two Governments have agreed to apply to the United Nations for a team of experts to make recommendations both on the specific proposals of a common market as well as on the general problem of co-ordination of economic policy and effort.

I think the Member for Anson is entitled to, and perhaps would be satisfied with, an analysis of the basic problems underlying the setting up of a pan-Malayan common market. I have informed the Assembly on a previous occasion the nature of the general proposals which we made to the Federation Government. To put the matter simply, we proposed that a list of goods be agreed upon between the two Governments which will have duty free movement between the two territories but will be liable to import duties if they come from abroad. This list of goods would include those which are produced in the two territories or which can be advantageously produced in them in the future. This will enable us to preserve substantially the free port status of Singapore while affording an impetus to industrial expansion through having for our manufacturers and potential manufacturers a large protected market in respect of a range of products.

From the point of view of the Federation, the proposals do not offer any compensating advantages -

Mr Speaker: Order. It appears that the statement is of some length. Am I correct?

Dr Goh Keng Swee: It is of some length.

Mr Speaker: In that event, two courses are open. If there is any state ment that is to be made which is of inordinate length, there are two courses open to the Minister. Either he can say that he would publish the statement in Hansard, our Official Report, or say that he would make a ministerial statement at the end of Question Time. The idea, of course, is to enable other questions to be dealt with as rapidly as possible. Perhaps the Minister would like to make a ministerial statement at the end of Question Time.

Dr Goh Keng Swee: If the Member for Anson is agreeable, Mr Speaker, Sir, perhaps I could give a written reply in Hansard.

Mr David Marshall: I am much obliged to the Finance Minister. A statement of that character should be quietly and carefully studied. I am grateful for the suggestion of the publication. But could I ask a supplementary question, Sir, on certain matters raised by the Minister?

Mr Speaker: Order. I do not think the hon. Member for Anson could have it both ways. I stopped the Minister for Finance - he said a few things. Once it has been decided that the whole statement - not only the part not delivered, but the whole statement - is to be published, that is the end of the matter.

Following is the statement by the Minister for Finance:

I do not think it would be appropriate for me to make a statement on the details of the course along which negotiations between the Federation and Singapore Governments took place on the common market proposals. The reason is that negotiations, while they have been suspended temporarily, are expected to continue at the appropriate time in future. The two Governments have agreed to apply to the United Nations for a team of experts to make recommendations both on the specific proposals of a common market as well as on the general problem of co-ordination of economic policy and effort.

I think the Member for Anson is entitled to, and perhaps would be satisfied with, an analysis of the basic problems underlying the setting up of a common market. I have informed the Assembly on a previous occasion the general proposals which we made to the Federation Government. To put the matter simply, we proposed that a list of goods be agreed upon between the two Governments which will have duty free movement between the two territories but will be liable to import duties if they come from abroad. This list of goods would include those which are produced in the two territories or which can be advantageously produced in them. This will enable us to preserve substantially the free port status of Singapore while affording an impetus to industrial expansion through a large protected market in respect of a range of products.

From the Federation's point of view, the proposal does not offer any compensating advantages to the Federation for the advantages that Singapore would derive from it. Goods produced in the Federation, except for hard soap, already enjoy duty free entry into Singapore. The proposed common market would confer upon their manufacturers little advantage beyond what they are already enjoying except perhaps that they would then in Singapore enjoy a protected market as well in the Federation. Of course, this argument holds true only if Singapore refrains from imposing import duties on goods we manufacture. There is also a loss of import duty to the Federation Government on Singapore produced goods entering the Federation. The Federation also feels that Singapore with its free port status, with its excellent harbour and its strategic position across ocean world's shipping lines, would obtain a preponderant advantage over the Federation. Further in the Federation import duties are levied on some materials entering manufacturing processes. The industries affected may be at a disadvantage in competing with similar industries based in Singapore.

It is because the Federation desired that some safeguards against the competitive power of Singapore industries should be introduced that difficult problems arose which could not be settled so far between the teams of officials discussing the problem. The Federation Government for itself would be happy to see a common market established which is based on a complete customs union. This would equalise once and for all the comparative production of goods between the two territories but for Singapore to accept the solution would mean the abandonment of a free port status, a measure which cannot be contemplated now. The foregoing gives the general background to the reasons why discussions between the officials of the two Governments have reached a state of temporary deadlock and the appointment of a team of international experts is a measure which the two Governments have agreed upon to break this deadlock. It is my belief that it is not beyond the ingenuity of that of men to resolve these difficult and complex problems. My belief also is that these problems can be solved if we regard the common market proposal from the broader perspective of a pan-Malayan outlook which can over-ride sectional interests. The long-term advantages are real and substantial to both territories and they far outweigh any trouble both territories may have to put up with in making the immediate adjustments.

Later -

Mr Speaker: May I perhaps make a further comment on what was said in regard to the statement on the common market? I think hon. Members would like to see that statement as soon as possible. Therefore, if the Minister will table that statement, it can be gestetnered, and copies can be made available for the use of Members as soon as possible.

Dr Goh Keng Swee: Yes.

Statement on common market handed in to the Clerk.