IMPORT OF FOREIGN GOODS (Relaxation of quotas)

Mr Lee Teck Him asked the Minister for Finance if he will consider relaxing the quotas on the import of foreign goods where the local production of similar goods is insufficient to meet the local demand, as a relief to importers who are experiencing a decline in their trade because of quotas.

Dr Goh Keng Swee: Sir, where local production is inadequate to meet local demand for a particular commodity which is subject to quota licensing, a relaxation of quota restrictions is allowed. For instance, the quota on matches was immediately liberalised in December last year from one per cent of 1964 imports to 75 per cent when it was found that there was a shortage of this commodity in the market. There were many other occasions when similar action was taken. The quota on builders' hardware was completely removed in March this year when it became clear that the local factory was going to shut down because of various difficulties. During the Middle East crisis some time this year, quota restrictions on a number of commodities, such as electrodes, cables, galvanised wire and calcium carbide, were immediately lifted to ensure that importers had sufficient stocks to meet demand.

Moreover, where there is evidence that a local manufacturer is trying to exploit consumers by either arbitrarily increasing prices or by deliberately reducing production to create an artificial shortage of a commodity, import restrictions have also been relaxed. Undergarments are a case in point. It was discovered that the price of imported garments had been increased, but the local factory did not increase its production. Similarly the quota on wire nails was increased from 10 per cent of 1963 imports to 50 per cent early this year when the two local factories arbitrarily increased their prices. The hon. Member is, of course, aware of Government's action in granting a licence to import 10,000 tons of cement, duty free, when a temporary shortage developed in September.

In issues such as these, the paramount consideration is the welfare of the consumer and not the earnings of importers. I have repeatedly informed our business community - and this includes importers - that where we can produce a commodity which we have previously imported, we shall do so. Importers who know the product and the local market are in a good position to enter into a manufacturing venture to produce the commodity. If they fail to do so and suffer a decline in income as a consequence, they have nobody but themselves to blame for not having taken seriously Government's declared policy on industrialisation.

Mr Lee Teck Him (Tiong Bahru): (In Mandarin): According to the Minister, of course, this is very good. But for the local factories which are not producing enough, I hope the quota system will be more liberalised in order to meet the demands of the consumers. Ours is a trading city and we should enable the traders to do their business under better conditions.

Dr Goh Keng Swee: Sir, that is precisely the point I was making.

Mr Tang See Chim: Does the Minister agree that there is always a time lag between the increase in price and the relaxation of quota restrictions during which the consuming public will suffer and the manufacturers will benefit? Will the Minister, in such circumstances, consider introducing more stringent regulations to penalise unscrupulous local manufacturers who take advantage of the special protection given to them by the Government to exploit the consuming public?

Dr Goh Keng Swee: Sir, I think it is possible to exaggerate the extent of this problem. There has been a very substantial increase in our domestic manufactures, and the number of instances where shortages developed is very small in proportion to our production. On the whole, I would say that our manufacturers have acted with great responsibility and it is only the odd persons, either deliberately or otherwise, who have caused a shortage of supply. There must be a time lag surely. Otherwise we would have acted before there is any increase in price and we could hardly justify our action under such circumstances.

Mr Ho See Beng: Will the Minister assure this House that if a time lag arises, he will do something to restrict local manufacturers from exploiting the consuming public? There has been a lot of talk that the public always has to pay double the prices of goods which we used to import in the past, but which are now being manufactured locally. And if this thing is not stopped, I think the public will have no confidence in Singapore manufactured goods.

Dr Goh Keng Swee: Sir, I am astounded that a leader of the trade union movement has expressed such sentiments. Is he not aware of the thousands of workers given employment in new industries, or does he want to see these compatriots of his thrown out of work? As for local products costing twice the imported products, I challenge the hon. Member to mention just one product and quote chapter and verse where the local product costs twice the imported product.