ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [5th March, 1979]

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1979 to 31st March, 1980.". - [Senior Minister of State for Finance].

Question again proposed. 2.50 p.m.

Mr Ho See Beng: Mr Speaker, Sir, I must congratulate the Minister for Finance and the Senior Minister of State for Finance for a painless budget which, instead of following the traditional pattern of introducing new taxes, has granted several concessions - concessions which are apparently possible without upsetting the Government's financial equilibrium.

It is obvious that these concessions, involving loss of revenue, have been made possible only because of the tough and pragmatic measures taken by our Government during the past few years to meet the consequences of crises in the world economy, the changing patterns of international trade and repercussions of economic nationalism.

It is gratifying to note, however, that although there was a 4.5% inflation in 1978, our economy grew by 8.6%. In terms of international economic competitiveness, even though the economic growths of Hong Kong, South Korea and Taiwan were better than that of Singapore, their inflation rates were higher, being 5.7%, 16.4% and 5.7% respectively.

In paying tribute to the Government for its success in keeping our rate of inflation below the figure of our economic growth, I am constrained to ask whether the Government is appreciative of the contribution of Labour in keeping this figure so low. I am prompted to ask this question because there are many factors which determine the rate of inflation. The role of labour should not be overlooked or disregarded. I am therefore astonished to find that the Minister's statement did not include a positive reference to the contribution made by the trade unions and workers of Singapore towards assisting the Government to maintain high economic growth, with a low inflation rate.

It is often bemoaned that the young workers of today take full employment and affluence for granted, as their birth right; but it seems to me that the Government is similarly guilty of such an attitude. Those of us who were in the Labour movement in the 1950s know the difficulties that confronted workers in those days. The contribution of workers to Singapore's development and economy should not be forgotten.

Briefly, in the 50's the workers sacrificed their personal freedom and employment in their struggle for independence, arm-in-arm with the nationalists who were seeking independence for Singapore. In the early 60's, the workers, grouped under the banner of the NTUC, helped the Government to defeat the communists in the trade union movement and ousted the stooges in the trade union movement who, acting on instructions of their principals in other countries, sought to disrupt Singapore's economy and overthrow the Government by violence. In the 70's organised labour began to play an important role as partners in economic development by ensuring social, economic and political stability so that our economy could grow and yet keeping it internationally competitive.

The House will recall that in 1968 when Singapore faced serious economic problems as a consequence of British withdrawal, the Government introduced the restrictive Employment Act which would in ordinary circumstances have created an uproar in any democratic country. But the workers of Singapore, having considered the circumstances and the grave problems facing our Republic, subordinated their own interests to the overall national interest by accepting many restrictions and impediments for the common good. And it cannot be denied that their responsible attitude has been a major contribution to the investment climate and Singapore's economic growth.

Having decided to be partners in economic development, the trade unions have resolved their problems by consultation and by exercising great restraint. They have joined in productivity schemes, they have worked hard, and have thus in no small way contributed to our economic growth of 8.6%; they have also contributed in keeping inflation down to 4.8%.

Mr Speaker, Sir, one has only got to look around to see what chaos trade unions can bring about if they choose to be trenchant, truculent, irresponsible and self-centred. One has only to look at the newspapers every day to see how national economies can be upset and disorganised by trade unions who do not concern themselves with their countries' state of development and economic progress. Britain, from whence came our basic trade union concepts, was, for example, thrown into utter confusion by a series of strikes which paralysed the country. This pattern of trade union manipulation and irresponsibility has manifested itself in several countries.

Mr Speaker, Sir, I am therefore extremely surprised that the Government has not deemed it necessary to publicly acknowledge the role of our National Trades Union Congress by giving it more tangible recognition in the form of some financial support to the Labour Foundation. When the Labour Foundation Bill was introduced, I was aghast at the statement in the explanatory note in the Bill saying that "the establishment of this Foundation would not involve the Government in any financial commitment". I would have thought that, in recognising the role played by organised labour through the National Trades Union Congress, the Government would be more than happy to make a substantial contribution year by year to show its appreciation of the contribution made by the trade union movement to Singapore's economic growth and lower inflation rate. But what do we observe from the present budget? To quote the words of Mr Harold Wilson, all we hear is "a deafening silence" as regards the role played by labour in support of Singapore's economic and social growth.

Mr Speaker, Sir, no rational person can deny that for the workers of Singapore, grouped under the banner of the Singapore National Trades Union Congress, the over-riding factor in industrial matters is our national interest.

Our trade unions and their leaders have made sacrifices and contributions to Singapore's development and it should be apparent to all that Singapore, without our National Trades Union Congress, would be like Rome without the Vatican. Without an organisation like the NTUC and the dedicated persons at the helm, Singapore's economy may well fall apart.

In the circumstances, Mr Speaker, Sir, may I suggest that Government acknowledges the role of the trade union movement of Singapore and demonstrates this acknowledgement in a tangible way by making a substantial annual grant to the Singapore Labour Foundation which has been set up at the request of the NTUC for the benefit of workers, both unionised and non-unionised. 3.00 p.m.

Dr Koh Lip Lin (Nee Soon): ( In Mandarin): Mr Speaker, Sir, firstly, I would like to congratulate the Senior Minister of State for Finance for presenting what has been unanimously accepted as a painless budget. Although the various tax concessions will not benefit every one, all are happy because there are no new tax measures. Last year, we maintained a fairly satisfactory rate of economic growth, together with a low unemployment rate and a small rise in the cost of living index. All these proved our success in 1978 which we hope to repeat this year.

The 1979 world economic preview is not good. The increased price of oil will cause a rise in the prices of other materials. In addition, the instability in the international scene and the gradual spread of protectionism will prove to be a detriment to our nation's development. However, I believe that in the coming year, local and foreign investments in our country will gradually increase and Singapore will not only develop into a service centre in this area but will also become one of the safest countries to invest in.

In the Budget statement, I am glad to learn that the Government will encourage industrial research and development (R and D). At present, most of our important industries depend on imported expertise and technical know-how. It is time we promoted and carried out our own industrial research and development, without which our industries will not last nor be able to compete with that of other countries. It is a wise decision to extend to new manufacturing companies the provision to deduct expenditure incurred on R and D for income tax purposes. Undoubtedly, this will help to attract more investments.

I am also glad to note that the Ministry of Finance is carrying out a long-term research and development project in conjunction with other departments concerned, such as the Ministry of Science and Technology, the Science Council and SISIR, to promote research and development and to train the personnel required. I hope the staff in our tertiary institutions will be given a chance to participate when this project is implemented. Please do not overlook the manpower resource and potentialities of these people.

I agree that we should not emphasise on the fundamental researches which only the Great Powers can afford. However, mastering and transmitting of fundamental knowledge in science and technology constitute the basis on which training of personnel in research and development is based. Therefore, our Government should give its fullest support to the future development of our science and technological faculties of our tertiary institutions. From the Budget, we can see that the sum allotted for R and D for the departments mentioned above is far too small. But I hope this is only the beginning, and the Government will in future give greater assistance to industrial research and development.

Our nation is at present marching towards industrialisation which has brought us, as everybody knows, economic benefit and employment opportunities. However, it has also brought about some undesirable consequences, one of which is pollution. Pollution is inevitable in industrial development. We cannot escape from it. We can only minimise it. The Ministry of the Environment has introduced certain laws and regulations against pollution. Its officials visit the factories regularly to ensure that the regulations are being followed. The Anti-Pollution Unit does check on the extent of pollution in the various districts. However, pollution caused by industrial activities is not easy to control. Sometimes pollution caused by industries, intentionally or unintentionally, was discovered to be very serious only when it was too late to remedy. This has happened in Japan, the United States and the West European countries. Singapore is a small island. We cannot permit any serious pollution. Recently, a certain pond in Changi was discovered to contain cyanide; and radioactive material was found in a steel mill. Fortunately, no serious damage was caused, but it suffices as a warning to us. The disposal of industrial effluent water and waste gases generally costs money. In order to economise, some manufacturers have found it expedient to let their factories emit large amounts of black smoke or odorous gases during the night or weekends when the officials from the Ministry of the Environment are not around. To the people in Jurong Town, this has become a common occurrence. I hope the Government department concerned would be more stringent in enforcing the law against industrial pollution. However, assistance should be given to the small-scale industries, particularly the indigenous industries, when the department tackles the problem of industrial pollution.

Now I would like to touch on some problems on education. Right now, bilingualism is one problem that is attracting the greatest concern from the people in Singapore. Over the last few years bilingual education has been vigorously implemented in our schools, but the result has been far from ideal. Hence, the Ministry of Education has made quite a number of adjustments in its education policy and its measures which are aimed at improving the quality of education in our schools. But members of the public are usually not aware of the background to and the objectives of these changes and they are therefore most dissatisfied with the so-called sudden and hasty changes introduced by the Ministry. Both parents and pupils are often bewildered by such sudden changes.

To the Singaporeans, next to making money, what preoccupies them most is their children's education and their future. Any policy or measure that prejudices their children's chance of getting into a good school, or getting a good grade in the examination, or getting into a university, is bound to spring a grouse.

Second language teaching in Singapore has not been very successful. Although we have produced students who have mastered two languages, they are in the minority. The general run of students is deficient in second language. Even undergraduates, who are within the best 5% of our student population in terms of intelligence or scholastic performance, are barely proficient in their first language and sadly deficient in their second language. It is inconceivable that these top 5%, having studied the second language continuously for 12 years, several hours a week, could attain only a low standard. The only conclusion we can arrive at is that something must have gone wrong somewhere in our education process. I do not intend to speculate as to where the flaw lies, whether it be the students, parents, teachers or the Ministry of Education. Nevertheless, the flaw exists and nobody can deny this. It is hoped that the Ministry will as soon as possible try to identify the root cause of the flaw and apply the necessary measures to rectify it.

While we do not deny the importance of learning and mastering two languages, we should not over-emphasise the acquisition of languages for that is not the main object of education. The main object of education is to bring up young people to become useful citizens. What we need are people with the necessary training and knowledge to maintain the prosperity and progress that we have achieved, a people imbued with a sense of national consciousness, high moral values and a fine cultural tradition. The cultivation of such qualities is more important than the studying of languages. It is hoped that, while reviewing the school curriculum and teaching methods, the Ministry will not lose sight of this objective.

Mr Speaker, Sir, there is a very apt saying in Chinese which goes: "it takes ten years to grow a tree, but it takes a hundred years to nurture a man." Education is a matter of vital and lasting importance in nation building. How we educate our next generation will decide whether we prosper or perish in future. The effects of any changes in education policy and system made today will not be seen in the next two or three years. Any improvement can only be felt in the next five or ten years. Similarly, the effects of any wrong measures can be detected only after a period of time. Hence, any important education reform should be carried out only after we have given it a very careful thought. Any hasty decision should be eschewed.

In this year's provision for education, there is an increase of 25% in development expenditure for primary and secondary schools and junior colleges. This is a heartening sign. At the same time, there is a decrease in the number of teaching staff but an increase in the number of administrative staff. This indicates that in the coming year emphasis will be on development and strengthening of educational administration. It is hoped that under the new policy and administration, our education system will become more perfect.

Finally, Mr Speaker, Sir, I would like to support the Budget and the Budget Statement. 3.11 p.m.

Mr Hwang Soo Jin (Jalan Kayu): Mr Speaker, Sir, before proceeding to deliver my speech, I think it is pertinent to mention that I have prepared my text before the televised discussion on the Budget on 12th March, in which the Senior Minister of State for Finance took part. it seems to me that in future this House will have to debate not only the Budget speech delivered in the House but also a supplementary one delivered outside the House. The televised discussion, which took place before Members could have an opportunity to debate on the Budget speech, gives the impression that the Senior Minister of State is perhaps more interested in the reactions from a handful of selected individuals than from the elected representatives of the people. I am sure this is not the case and maybe the Hon. Senior Minister of State would, in his reply later on wish to give the rationale behind his action. I will now proceed to deliver my speech.

Mr Speaker, Sir, to the majority of our working population the so-called painless Budget is neither pleasurable nor surprising. From past experience they know only too well that there is no absolute guarantee that in the course of the next few months some items of Government taxes, fees and charges may not go up. In the light of recent oil price increases and events in Iran, I do not think we can rule out completely the possibility of a hike in PUB charges. There are already indications that the self-imposed price restraint exercised by OPEC countries for the past few years might soon come to an end. This has led some observers to predict that now, as in 1973-74, the danger is, that rocketing oil prices will aggravate inflation, force governments around the world to fight back by clamping down on domestic growth and for the second time in a decade plunge the world economy into a slide. In his speech, the Hon. Senior Minister of State did express concern in this direction and his call for economising the use of oil and electricity should be taken most seriously. It is a pity that the euphoria generated by the so-called painless Budget has almost completely over-shadowed the real threat looming ahead. In view of the fact that the uncertainty over the price and the supply of oil is likely to become a permanent feature, I do like to know whether the Government has formulated a long-term energy policy with a view to reducing our dependence on oil.

Sir, to the average man-in-the-street the various concessions are quite meaningless. It is highly unlikely that many of our working population will ever reach the sort of income levels as to benefit by the increase from $4,000 to $5,000 in allowable tax deduction in respect of CPF contributions and other approved schemes. A more meaningful exercise from their point of view would be to raise the personal relief and earned income deduction from its present level of $3,000. Relatively few people are staying in houses in excess of $100,000 in value as to benefit by the revision in estate duty. Fewer still will benefit by the increased capital allowance for company-owned cars. All in all, the concessions can best be described as "bourgeoisie" in character, appealing to the minority of middle and upper-middle classes in our society. Be that as it may, it is equitable that the contributions of people in this category should not go unrecognised as they have for many years borne the brunt of the tax burden. One disappointment is that, except for the pensioners who are now granted the long overdue tax exemption which they rightly deserve, nothing has been proposed for the less fortunate amongst us. In saying so, I have in mind the financially distressed, the aged, the chronically sick, the widows and orphans who depend on public assistance for their livelihood. With all the apparent signs of an affluent society around us, it is only too easy to forget that there are still poverty-stricken people who need help. The fact that the have-nots constitute only a very small number among us is no consolation to them. If anything, by contrast their miseries are magnified and seem more acute.

According to the Social Welfare Department's report for the year 1977, there is still an average of well over 6,000 cases per month of people depending on public assistance. The existing rates of allowances are appallingly low. The scale is as follows: Maximum per household $100 per month For head of household $ 40 per month For the wife $ 26 per month For each dependant $ 17 per month

Sir, can you imagine a family of, say, three persons - a widowed mother with two school-going children - trying to make ends meet with a meagre sum of $74 per month? The means test applied by the Department is also extremely stringent. The recipient is not permitted to look for even a lowly paid part-time job to supplement the limited assistance extended. I do not know when the scale of allowances and the conditions of our public assistance scheme were last revised, but I strongly feel that the time has come for us to adopt a much more sympathetic approach. Whilst I agree that we ought to guard against abuse, I also believe that we should not lose our sense of compassion for those genuine hardship cases badly in need of assistance. The total sum expended by Government for the year 1978 amounted to $3.6 million and I see that the same amount is being budgeted for 1979. Surely we can afford to increase this amount to take into account the effect of inflation and the generally higher standard of living without unduly straining our financial resources.

Turning now to the various measures proposed to sustain or stimulate growth in the various sectors, I would now like to offer my observations.

(1) Industrial Development

It is interesting to note that the Ministry is drawing up plans to embark on research and development, albeit on a limited scale. From a long-term point of view, it will be useful to our industrial development if we could actively nurture a spirit of inventiveness among our people. Over the years. there have been a few isolated cases of local inventions reported. In one particular case involving a constituent of mine, I do know that he had had to go through untold frustrations and difficulties in order to get an invention of his evaluated for commercial viability. Perhaps the Government should consider giving encouragement and assistance to individuals with original ideas. We should not under-estimate the ingenuity of our own local talents. The marketability of the gold-plated orchids of SISIR has amply demonstrated the potentials and benefits of product related type of research.

Sir, the somewhat lukewarm response to the Product Development Assistance Scheme could well be the result of inadequate study of the needs coupled with inflexibility on the part of those responsible for the processing of applications. At the last Budget, this House was kept informed of the financial assistance scheme to small industries. This year there is a total silence on the subject. Has that scheme turned out to be a flop? Perhaps the Hon. Senior Minister of State would like to enlighten the House. Over the years there have been numerous incentive schemes introduced for the manufacturing sector. I am just wondering how thorough the problems and the needs are researched into prior to the implementation of a scheme, and how closely the effectiveness of each of such schemes is monitored.

The Government has time and again reiterated its support for local industries but to date development in this direction has remained slow. Whilst the Government is not entirely to blame. I do feel that the EDB should be directed, preferably in conjunction with the relevant bodies in the private sector, to carry out a comprehensive survey to identify the problem areas and to propose measures that will encourage greater local participation in industrial development. It is ironical that although we have been extremely successful in attracting foreign investments in this direction, we seem to have failed miserably in getting our own entrepreneurs to commit their capitals to industries.

(2) Trade Development

Here I would like to register my disappointment over the long delay in the formation of a Trade Development Council. Members will recall the idea was first mooted during the Budget Debate some two years ago. Reading between the lines, I gain the impression that the Government is only prepared to play a supporting role. Given the rather dim outlook of world trade for 1979, I would have thought that the Government would stop dragging its feet and, as a matter of urgency, take over the initiative in the formation and day-to-day running of the proposed Council.

(3) Services Development

In the area of tourist promotion, I think it will be to our advantage and indeed to the advantages of other member countries that we should increasingly think and act in terms of ASEAN.

There are sufficient attractions in all the five ASEAN countries. What is required is closer cooperation in the promotion. I have read the Annual Report of the Singapore Tourist Promotion Board for the year 1977/78 but I can find no evidence of efforts being made to bring about closer cooperation with our ASEAN partners.

Sir, the reduced taxation of 20% as an incentive to encourage the export of our professional and technical expertise seems to aim primarily at the construction industries. However, I have my doubts as to whether the preferential margin for local contractors of up to 5% with regard to government tenders for building projects will be sufficient to enable our own contractors to successfully compete against foreign contractors, particularly those from Japan, who have allegedly been "dumping" their services locally for the past several years. Far from being encouraging, some of our departments I gather are notoriously slow in making progress payments to our own contractors for jobs done. This has placed a great number of contractors in financial difficulties. To assist our local contractors to establish a reputation at home that will help penetrate into overseas markets, in-depth study needs to be conducted into their problems, particularly the organisation and capital structures and the standard of management of local construction firms. In our anxiousness to encourage the export of local expertise, it is important to bear in mind that conditions prevailing in other countries are bound to be different from our own and in some cases the differences can be so vast as to render our local expertise inadequate or totally irrelevant. There have been stories of local businessmen losing their pants in West Asian markets owing to ignorance of local conditions.

Sir, be it the export of service or commodity, market research is vital and it is in this area that extensive assistance should be extended by the Government to the private sector. There is need to upgrade the standard of commercial secretaries attached to our various overseas missions and to open up more trade representative offices. There should be better coordination among our various Government and quasi-Government bodies represented abroad in the collation and dissemination of commercial and industrial intelligence for the use of our own businessmen. It goes without saying that the ultimate success or failure will depend on the determination of our own businessmen to help themselves. In this regard they should be happy to note that, "to encourage more aggressive marketing overseas, the double tax deduction scheme will now also apply to expenses incurred in advertising and promotional campaigns overseas, the production of sales literature and brochures, and the undertaking of market surveys." Let us hope that full advantage will be taken of the incentive offered and in the process greater sophistication will be introduced in all promotional exercises abroad. 3.28 p.m.

Mr C.V. Devan Nair (Anson): Mr Speaker, Sir, I have some reservations on the Budget statement delivered by the Hon. Senior Minister of State for Finance. But, first, let me congratulate the Senior Minister of State on his presentation. He delivered the Budget address in terms that the public had come to expect from the Government - realistic, sober and hard-headedly cautious. His performance augurs well for the future.

My first observation relates not so much to the Budget address itself but to the public reactions to the statement. The press headlined it favourably as "a painless budget", "a mildly pleasurable budget", and so on. But the sombre undertones of the Senior Minister of State's address were not sufficiently underscored. I wish it had been otherwise, so that the public would not have been left with a mildly euphoric feeling, to the effect that "God is in His Heaven, and all is right with the world, including Singapore." Regrettably, God may be in His Heaven, but all is certainly not right with the world. The Minister bluntly told this House and I quote, "I am not optimistic about the outlook for world economic growth in 1979."

And he gave his reasons, which included an expected slow-down in the world economy, the proposed four-stage oil price increase totalling 14.5% in 1979 by OPEC, and the more sombre prospect of a world oil shortage following disruption of supply from Iran. So there is nothing to crow about in the fact that in 1978, 41,000 jobs were created, and unemployment fell to a record low of 3.6%. If things go dangerously wrong, in South East Asia, in Iran, and the Middle East, or elsewhere, it could be the other way round, and unemployment could hit a record high in the coming years, rather than a record low.

A morbid obsession by the doomsday syndrome does not help, and I certainly do not recommend it. But neither must we fail to remember that international political and economic forces and factors, over which we have no control, continuously impinge on our lives, for better or for worse. Singapore may be likened to a ship sailing through very stormy international waters, boosted or buffeted by every passing wind. And sometimes these winds blow violently. The only guarantees we have are that the captain and the crow of the Singapore ship are quietly efficient and do not panic, and that the ship itself is seaworthy. And to keep the Singapore ship seaworthy, it is of vital importance to preserve that national cohesion, sense of purpose and direction, and social and political stability, which continue to attract investments and technology to our shores. The capacity we have shown in the past for making rapid adjustments to challenge and change will call for constant renewal.

One cannot expect the shallow-brained smart Alecs, who take things for granted, and seem to believe that this small island-state of ours occupies the centre of the universe, to see this. Fortunately, the majority of Singaporeans possess that indispensable political sixth-sense, which perceives the possible dangers and pitfalls ahead, and which largely explains the results of the general elections in December 1976, and of the recent by-elections. I am not sorry for those who lost. The simple truth is that they deserved to lose.

I will only observe that any Singaporean who looks around at the Sino-Vietnamese-Soviet imbroglio in Indochina, at the developments in Iran, the Middle East, the Horn of Africa, Afghanistan, and at growing protectionism in the developed countries, and yet continues to believe that Singapore is situated right in the middle of Paradise, should have his head examined, free of charge, at Woodbridge. The Budget does not provide for this. I recommend that it does.

Now, for my reservations on the Budget. If there was one part of the Budget address in which the Minister gave the impression that he spoke, with tongue in cheek, as it were, it was when he announced the concession to pensioners. As I listened I did not think so. But later, I was told that this was so. And it is important that the Government should take heed of what the average man-in-the-street thinks.

One junior civil servant told me, "Look, this is a concession formulated by superscale civil servants for their own kind, who have retired." When asked why he thought so, he replied, "The exemption from income tax favours only those who receive pensions in the chargeable brackets. A large proportion of pensioners do not receive chargeable pensions. Take the retired postman, fireman, customs employee, and so on. They receive pensions of less than $400 per month. But nobody remembers them. And they get nothing from the so-called concession. These superscale follows sure know how to look after their own kind". Sir, these were the words, not my words, but the words I am quoting. I know our superscale civil servants, and I know that, by and large, they are beyond reproach. But this was the impression created in the mind of an honest man. Also implied in his remarks is the notion that our Cabinet Ministers are people who can be easily led by the nose by superscale civil servants, which again I know to be wrong.

The reaction of a recently retired junior public servant was the same. He told "i will get a pension of only $300 per month, and I have a wife and three children to look after. What is there in this concession for me? The Minister says he is not hard-hearted. But he is only soft-hearted to those better off than I am."

It is the occupational responsibility of a trade union leader to keep his ears as closely as possible to the ground. These were the reactions I encountered. And they were honest reactions.

I cannot believe that the Government has soft feelings only for the better-off pensioners, and not for the run-of-the-mill pensioners, who constitute the majority. It is a pity, therefore, that the Minister failed to state in his address what the Government had in mind for the pensioners who do not enjoy chargeable pensions.

Recognition of past services rendered to the nation (and these were the Senior Minister of State for Finance's own words) by pensioners, and the ravages of inflation, should not apply only to those with chargeable pensions, but also to the majority of pensioners who do not receive chargeable pensions. Even-handedness in the dispensation of social justice is a sine qua non for a government which values its credibility. I hope that the Minister will rectify this omission in the course of his reply to the debate.

Finally, some necessarily trenchant words on protectionism. The Minister had the governments of the developed countries in mind. The real culprits, however, seem to be the trade unions in the developed countries, and some international trade union organisations which they control.

With every passing day, I feel obliged to pose a bigger question mark against their professions of international labour solidarity Indeed, it sometimes seems to me that one of the biggest on-going humbuggeries in the modern world is this froth about "international labour solidarity".

Right now, a Singapore-registered ship is being held up in the port of Elat in Israel, despite the fact that the crew are covered by a collective agreement certified by our Industrial Arbitration Court. This ship is being held up at the behest of the International Transportworkers' Federation (ITF) with headquarters in London. The company which owns the ship is a German company registered in Singapore. They have a total of some 21 Singapore-registered ships, and they employ 700 Singapore crew and officers.

The aim of the ITF is blatantly protectionist. They intend to force every ship registered in developing countries, and employing crew recruited in these developing countries, to pay ITF rates of pay, which are West European rates of pay. The result, of course, is that seamen from the developing countries are priced out of their jobs. To date, thousands of seamen from countries like India, Pakistan, Philippines and Taiwan have been rendered jobless - thanks to such manifestations of "international labour solidarity".

Five of our trade unions in Singapore are affiliated to the ITF. I send two emissaries from the NTUC to London last week, to try and persuade the ITF, in the name of international labour solidarity, to drop their action against the Singapore-registered ship. My emissaries were rebuffed. They were bluntly told that this is only the beginning of ITF action against Singapore-registered ships. I must now inform the House that the German company concerned has been forced by the ITF to buckle in. They will now be obliged to deregister their 21 ships from Singapore, dismiss their Singapore-recruited crews and officers, and probably re-register in Germany. They will thereafter employ West European crew at West European rates of pay. This means that 700 locally-recruited seamen and officers will lose their jobs in the very near future. And 700 Singapore families will lose their means of livelihood. And as the ITF action against Singapore-registered ships gathers momentum, a few thousand Singapore seamen and officers will find themselves without jobs. So much for international labour solidarity, as practised by the ITF. A more damning indictment of international labour hypocrisy can hardly be imagined.

A couple of years ago, an Australian trade union refused to release a Singapore-registered ship unless the shipowners agreed to pay ITF rates of pay. Their bluff was easily called. I told the Australian trade union concerned that I would have no objection to our seamen being given Australian rates of pay, on condition that they were also offered Australian citizenship. This, of course, was unthinkable to my comrades in Australia. What happened was that the shipowner was finally forced to cough up, returned to Singapore, and promptly dismissed his locally-recruited crew. It is not concern for Singapore seamen which motivated the Australian trade union. That was only a smoke-screen behind which they effectively priced our seamen out of their jobs.

These, then, are the new imperialists. And it is an ironic twist of history that the new imperialists should be - not capitalists - but some trade unions in the developed countries. They are trying to achieve today, what the colonial powers tried to achieve in the past, through the infamous Navigation Acts, i.e. the monopoly of carrying cargo in their own ships, manned by their own crews to the detriment of merchant shipping in the developing countries.

There is little that trade unions in the developing countries in Asia can do against ITF protectionism. We have no leverage whatsoever to exert against them. The only thing we can do is to withdraw our affiliation to the ITF. After all, why pay affiliation fees to an organisation whose policies result in loss of jobs for our workers.

The protectionist character of the ITF is again exemplified by their attitude to the Australian International Civil Aviation Policy (ICAP). The aim of this Australian-British duopoly is to squeeze out the airlines of the developing countries which lie between Australia and Britain. If they succeed, apart from serious loss of tourist traffic, our airline workers also stand to lose their jobs. In fact, I have already told our airline workers that however much the Singapore girl may smile, Singapore Airlines may not fly.

But this suits the ITF fine! They therefore keep mum about the Australian-ASEAN dispute over ICAP. Australian trade union leaders were conspicuous by their absence during the recent Asian Labour Summit held in Singapore, although they are members of the Asian Regional Organisation of the ICFTU. I know why they did not show up. Because they knew very well that Asian trade union leaders would have given them a tongue-lashing over the Australian ICAP.

These are clearly people who have no sympathies whatsoever for our jobs, but they rush to arms over the question of trade union rights in developing countries. And this pretension of the ITF needs to be debunked for what it is - the most brazen and shameless cant and hypocrisy.

For we can ask: how is it that neither the ITF nor Australian trade unions nor West European trade unions make any noise or pass fierce resolutions when workers in developing countries lose their jobs by the thousands, as a result of policies like those pursued by the ITF? One would have thought that one of the most important trade union rights is the right to ensure, as far as is humanly possible, that workers keep their jobs. But this is precisely the right which is systematically and callously violated by protectionist trade union organisations like the ITF. And yet, these are precisely the same people who condemn violations of trade union rights in the developing countries, whether imaginary or real. Which is why I call them brazen humbugs.

ITF and Australian trade union concern for trade union rights in developing countries does not go with concern for the right of workers in these countries to keep their jobs. And of what use are trade union rights without the far more fundamental right to jobs? But there is a total absence of such concern on the part of the ITF, whether for Asian seamen or for air transport workers.

Which is why, Mr Speaker, Sir, I shall advise our own Singapore Air Transport-workers' Union, and all other Singapore trade unions affiliated to the ITF, at the appropriate time, to call on the ITF to show cause why our unions should not disaffiliate from that body.

May I repeat that the governments of the developing countries will sooner or later be compelled to develop common and effective counter-measures against the ITF brand of protectionism, if our sea and air transport workers are to keep their jobs.

Much obliged, Mr Speaker, Sir. 3.50 p.m.

Mr Teo Chong Tee (Changi): Mr Speaker, Sir, this year's Budget came as a pleasant surprise to most of us. For the past few years we had budgets which were described as "painless" and "no-shock". This year, rumours were rife that the Government would impose additional taxes as part of the economic planning and to cover the ever-increasing expenditure. However, the additional taxes did not come about, and instead we were given a few tax concessions. The budget presented by the Senior Minister of State for Finance was described not only as "painless" but also "mildly pleasurable".

Sir, in 1978, in spite of numerous economic problems confronting us, we had forecasted an economic growth rate of 6-8%. This was an optimistic forecast and to achieve it was not an easy task. However, we did better than what we expected. We managed an incredible growth rate of 8.6%. Of course, our growth rate is moderate when compared to that of Hong Kong, Taiwan and South Korea which managed 10-13% last year. Nevertheless, our economic growth can be considered a rare achievement in view of the numerous obstacles we had to overcome. Our 8.6% growth rate was achieved in spite of the slow-down of the economies of industrialised countries like the United States, Japan and the EEC countries. Other problems which we encountered include the rising oil price and protectionist policies of developed countries. The credit of our achievement should go to the Government for her good leadership, the manufacturers for their foresight, the trade unions for their cooperation with employers for their mutual benefit, and the workers who continued to strive hard.

Now that we have built up a sound economic and financial base, we should not take for granted that our continued progress is assured. Our present economic strength is achieved through years of hard work and sacrifices. Our future progress depends on how we tackle the economic and political problems as we plod along our way to economic prosperity. If we become complacent now, we would be swamped with economic problems and all our past achievements would go down the drain.

The economic prospects in 1979 are uncertain. Among the problems which will continue to plague our economic growth are slow growth in the economies of industrialised countries, hike in oil price, and protectionist policies of developed countries. The OPEC countries had announced a 14.5% increase in oil price this year. The economies of developed countries will be affected by this oil-price hike. As we are heavily dependent on the economies of developed countries, our economy will also be affected. Besides, with the hike in oil price, our oil bill will also be inflated and this will have an adverse effect on our economy. Another serious problem which we have to bear in mind is the intensifying of protectionist policies by developed countries. Formerly, these policies were restricted to trade. Now, they have been extended to the air by Australia. The end-to-end civil aviation policy initiated by Australia has been received favourably by some other developed countries, and there are signs that other developed countries will try out the new policy. If they do, all developing countries, including Singapore will be adversely affected.

Another problem we have to face is the unsettled conditions in Indochina. No one can predict what the communists will do when they have consolidated their position in the whole of Indochina. This uncertainty will deter capitalists from investing in Southeast Asia and thus slow down the economic growth of this region.

To ensure continued progress for our country, we must prepare ourselves to face these problems. The Government must continue to seek ways and means of encouraging the inflow of capital from advanced countries. The employers, trade unions and workers must continue to work hand-in-hand for their mutual interest. We must also bear in mind that some of the problems we face could only be tackled successfully when the ASEAN countries are united as a single block of nations. Thus we should work towards closer cooperation among ASEAN countries. To partly alleviate the effects of increasing oil price, we should also try our best to cut down our demand for energy. Both industries and households should play their part in preventing wastage of energy.

Sir, this year the Government has decided to introduce more concessions for manufacturers who invest on advertising and promotional campaigns overseas. Tax incentives are also introduced for new manufacturers who invest in research and development of their products. These measures will, to a certain extent, have a favourable effect on the current account of our balance of payment. The deficit in the current account had deteriorated in 1978. Fortunately, we did not face any balance of payment problem because of the heavy inflow of capital from overseas. This situation should not be allowed to go on forever.

The Government has therefore taken a step in the right direction in encouraging more aggressive marketing overseas. However, the concessions given are expected only to have a mild effect on our economy. We hope the Government will continue to review the situation and take further steps to keep our economy sound and healthy.

Turning now to the tax concessions, I should say that they will generally benefit only a certain percentage of the population. These tax concessions appeared to have been carefully selected to benefit certain sections of the population. The Government's policy is to reward effort, talent and skills at all levels so as to avoid disincentive to work hard. The tax concessions are geared towards achieving this objective. However, a closer look shows that only people in the higher income bracket will benefit from the tax concessions. Does this mean that the lower income group is at present adequately rewarded for their effort, or has the Government forgotten that they should also be rewarded or else their incentive to work harder will also diminish?

The Hon. Senior Minister of State for Finance has qualified the Budget as "even mildly pleasurable". At this juncture, perhaps our economy can absorb only a small concession in tax because of the uncertainties facing us in the years ahead. The tax concessions given this year are presumed to be the most crucial ones and the Government has granted them so as to provide a greater stimulant to our economy. However, we should not forget that the majority of our work force are in the lower income group and they have also played their part in building up our economy. Therefore, they should not be forgotten when more tax concessions are considered in the future. The personal income relief, in particular, has to be reviewed because it has remained unchanged for a long time. Due to inflation in past years, this relief has now become unrealistic and workers in the lower income bracket ire the ones who are affected most. In the past, personal income relief was not reviewed because the Government's aim was to widen the tax base. However, the Government should look into this again, and if an increase in the personal income relief will have only a minor effect on the tax base, it should be raised without delay. As we all know, the income tax issue has been a controversial one over the past years in this House. Year after year most of us, as Backbenchers, have voiced for increased relief for taxpayers. But this has not come about to benefit the ordinary man-in-the-street. We hope that the Hon. Senior Minister of State will take this into serious consideration in the future Budget.

Mr Speaker, Sir, on the whole, the Budget is a reasonable one, considering the uncertainties we have to face in the years ahead. It is better than what the majority of the people Have expected. Of course, we would like to have more tax concessions so that more people could benefit from them since we all have done well in the previous year.

Finally, I would like to join hon. Members of this House in congratulating the Senior Minister of State for Finance for presenting this Budget. 4.04 p.m.

Mr Eugene Yap Giau Cheng (Mountbatten): Mr Speaker, Sir, I rise to support the Motion standing in the name of the Senior Minister of State for Finance. For Singapore's economy to grow by 8.6% in the face of what the Hon. Senior Minister of State calls a "lackadaisical world economic performance in 1978" is indeed soul-stirring. What is even more impressive is that growth was achieved amidst relative price stability. This remarkable achievement of our country will continue to reflect to the whole world our unique and successful system of tripartism. Whilst others may have tried and have failed, we have been successful. That is something we ought to be proud of. We must therefore continue to pledge to work even harder and improve upon ourselves, for this is the hallmark of progress.

The Hon. Senior Minister of State has so adroitly informed the House of his plans to maintain a healthy economic growth for the next financial year, that there is not much one can disagree with except to raise a point of caution here and there to help the process along.

Sir, the Senior Minister of State has raised the question of indigenous research and development as further fuel to add to our industrialisation drive. This is a welcome idea and a very vital one too; vital because if we examine the structure of the manufacturing sector, we will find that after deducting the involvement of the multi-national companies we are left with an indigenous manufacturing sector that concentrates mainly on food products, plastics and textiles. In other words, we have no manufacturing base and also no technological base in the private sector. While it is true that organised research is being carried out in the Ministry of Defence and in organisations like SISIR, there is a need for greater efforts at national level where the Government, with all its machinery, coordinates and directs activities to create a technological base for Singapore.

For indigenous research and development to be meaningful and positive, the incentive and the encouragement together with the recognition accorded to those participating must be sufficiently attractive to get the idea off the ground. Admittedly, the Government has evolved many schemes aimed at encouraging research and development or product development among the manufacturing sector. I am concerned not with the rationale behind the schemes but more with their implementation. As an example, I would like to ask the Hon. Senior Minister of State how many companies have benefited from the Product Development Assistance Scheme which was established some two years ago. I know that local manufacturers have applied but, from what I gather from our manufacturers, the Scheme does not appear to meet with favourable response. Maybe the administrators of the Scheme are expecting too much; maybe the guidelines drawn up do not permit flexibility. Whatever the reasons, if the Scheme should prove to be a non-starter, we must then seriously examine further so that it could be revised accordingly. I believe that our highly efficient Civil Service, which is used to a system of justifying costs and getting quick returns for investment, may find it difficult to implement schemes where returns are intangible and hard to quantify. Science and technology, and for that matter research and development, should involve every Ministry and every department in Singapore. A national science and technology policy must therefore involve more than just one Ministry, and I would urge the Government to consider the establishment of a high-powered committee at national level to formulate an appropriate blue print for technology development in Singapore. A long-term plan with hardly any returns, except the promise that Singapore will develop indigenous research and technology, will be difficult to accept. Do we have a choice? The experiences of the developed countries tell us that we do not have any choice.

The Hon. Senior Minister of State has also announced that, and I quote:

'To further assist product development, we will be prepared to extend to new manufacturing companies the existing provision which currently permits only existing companies to deduct expenditure incurred on research and development for income tax purposes.'

I wonder how many manufacturers are really finding this scheme financially attractive. Sir, the Hon. Senior Minister of State might turn around later and rebut that at least it is a start to the whole process. But is this enough?

Bearing in mind the Hon. Senior Minister of State's future investment promotion and the various industries that are already in Singapore, do we really know which areas of the industry really require research and development? I suggest we concentrate on directing our efforts on product designs, inclusive of its functionality.

However, in order to achieve a successful research and development programme, we must carry out a thorough and reliable study (not of the type of manpower survey carried out by the Ministry of Science and Technology) on how and where we should concentrate our research and development efforts and how to extract maximum output from this exercise. I call this process 'intelligence' very nearly similar in meaning to the word used in the Ministry of Defence - to be more exact, the Army. Indeed, Sir, as we journey into the future the outlook of which is sombre as the Hon. Senior Minister of State so aptly puts it, we will be fighting so many economic wars that it is important to adopt from this day a more practical view of the importance of research and development, and to be a bit more generous in considering the allocation of funds for research and development efforts, just as they have done for the defence budget - a budget that is so vital in preserving our peace and security. Sir, I am not for one moment suggesting that funds for research and development must equal defence funds. It would be folly on my part. I am merely stressing that budgets for research and development must be practically sufficient. In case the Hon. Senior Minister of State decides to ask for figures, I must hasten to add that this process will require time, and figures take time to produce and some types of figures take a longer time to produce than others.

Sir, in order to fight a good war, we need good soldiers and, in the words of a once-upon-a-time honourable Member, "if you give them peanuts, you get monkeys." By the same token, in preparing ourselves to fight a successful international economic war we must have hardworking, dedicated, bright and intelligent soldiers, for whom we are prepared to pay to do the job. I am afraid we are living in a materialistic world. There is nothing very much we can do about it except, through a wisely-planned cultural and moral education, try to tone down the sins of materialism.

To attract people of good calibre, the department of research and development must be glamourised. Otherwise, those who are good and can contribute tend to gravitate towards more lucrative and prestigious positions. The effect of this is twofold. Firstly, the country loses the very people who are suitably trained for the work of research and development, and secondly, the amount of time, money and effort that have gone into training these people are wasted. Just as the Government has so carefully provided channels to cater for the academically-inclined and the technically-inclined, consideration ought to be given to harness the abilities of those who can execute the functions of research and development effectively. After all, this statement that we must not waste our human resource is fast becoming a cliche. Need I repeat it?

Sir, I venture to suggest that those involved in research and development in Singapore have so far been relegated to the backrooms eating humble pie, and perhaps gnashing their teeth in the process. The recent move by the Science Council of Singapore to award gold medals for outstanding achievements in applied research is indeed a move in the right direction.

In the Government's desire to promote research and development to accelerate the country's industrialisation drive, it would be worthwhile to ensure that just as it is undesirable to waste manpower, it is similarly undesirable to duplicate equipment. The various institutions involved ought to work on a kind of co-operation programme, especially in the use of extremely expensive equipment. Equipment must be stretched to maximum use for funds to be effectively utilised. Such a programme is bound to encourage a cross-fertilization of ideas in the inevitable intercourse that follows.

Sir, I am confident that with a carefully drawn out plan, together with a team of first-class scientists, the work of research and development can be accelerated. We must not be caught with our pants down. With the world's economic outlook looking very dull and unexciting; with rising unemployment in some major industrialised countries; with the spectre of inflation stalking over the major parts of the world; with the four-stage oil price increase and a possible world oil shortage; with itchy fingers messing around certain third world countries and causing proxy wars; and now the idea of protectionism as a rather easy and unimaginative method of solving a sick economy brought about by over-luxurious living, we must be prepared. Hon. Members will recall we almost lost the advantage of U.S. multinationals operating in Singapore. We also did not foresee Australia's ungentlemanly International Civil Aviation Policy and this behoves us to prepare ourselves always for the worst. Our research and development must therefore be at a level where our products can be made as reliable, as well-designed and, in fact, comparable to those from Japan and the other more industrialised countries of the world. Then only can we compete effectively and survive. We survived the oil-crisis, the British pullout, and if we prepare now we should be able to surmount any further economic frustration that is to come. Sir, we must be prepared, and I mean it seriously. I would therefore urge the Government to come up with a positive and clear plan for technology development in Singapore and to set aside funds as investment to develop this capability. I hope the Hon. Minister can provide an indication as to when such a plan can be expected.

Sir, the Hon. Minister's suggestion to increasingly develop Singapore as a resort destination point in the Pacific is an excellent idea. It is worth remembering that at the planning stage the proposed resort complex should be developed as a complement to the ASEAN chain of resorts. However, this resort of ours must have unique built-in features and facilities that must reflect a high level of professionalism that is second to none and hard to duplicate. In this area of professionalism, the Government can perhaps encourage our local scientists to participate in what the Hon. Minister calls "indigenous research and development." In this respect I suggest the animal world. Whilst we are developing our human resource to its utmost for our survival, I see no reason why the special features of local fauna should not be developed further and harnessed to promote our tourist trade. After all, the Americans have been very successful with their whales and dolphins; so why not we with our monkeys, apes and orang utans! There are, of course, other more representative animals. Sir, my main point here is to stress the importance of achieving a high level of professionalism coupled with originality rather than just the usual run of beaches and complementary facilities.

While we are working towards yet another phase of the tourist industry, we must not forget the already established shopping paradise in Singapore. The Consumers' Association of Singapore (CASE) and the Singapore Tourist Promotion Board have both been very successful in developing the image of Singapore as a reliable and generally trustworthy shopping paradise in this part of the world. CASE has also been working very closely with the Singapore Institute of Standards and Industrial Research to raise the quality of locally-made products. We must promote the sales of locally-made products side-by-side with the imported ones. This is very important and must be further encouraged. To create a greater demand for locally-made products, our indigenous research and development programmes must be bolder and more far-reaching and directed towards the Hon. Minister's idea of industrial products that are "small, high value-added, readily transportable, non-pollutive, and which use relatively less natural resources such as land, water and energy." 4.23 p.m.

Encik Sidek bin Saniff (Kolam Ayer): Mr Speaker, Sir, recognising the constantly challenging political climate with the stability of the world still far from ideal and compounded by a generally sluggish world economy resulting tom the oil price hike which had quadrupled, the Minister for Finance last year in his cautious optimism had predicted a GNP growth of between 6% and 8% for Singapore. And recently, on 5th March, 1979, we were informed that our GNP growth was 8.6%, i.e. 0.6% more than what the mind can gauge and analyse. We should be very grateful for this most encouraging achievement.

Mr Speaker, Sir, every year the people, with hearts throbbing, wait to hear the speech of the Minister for Finance when he presents the Government's financial policy. There are those whose respiratory organs get blocked up should their cigarette puff constrict their throats on learning of a tax hike on cigarettes. Similarly, for other items such as motorcars, liquor, or of measures like road tax, and income tax. How relieved they were to hear that none of these items was affected or the taxes increased. In fact I am confident that many people were somewhat surprised to hear that five tax concessions were given:

1. Deduction for CPF contributions increased from $4,000 to $5,000 per year, to take effect from the Year of Assessment 1980.

2. Tax exemption on the whole of the pension income with effect from this year.

3. Exemption from estate duty on a house raised from $100,000 to $200,000 commencing next month.

4. 10% special concessionary tax to income derived from general inward direct insurance business covering off-shore risks from Year of Assessment 1980.

5. Capital allowance for company-owned cars raised from the maximum of $15,000 to $25,000, with effect from next month.

It can be seen at a glance that the first, second and third concessions are intended especially for the individual citizen and his family, while the fourth and fifth concessions are designed for the businessmen and investors. Herein then lies the "beauty" of the policy of the concessions proposed by the Senior Minister of State for Finance.

Of the three concessions for the individual citizen and his family, I am most impressed when the Minister in charge extended the concession to the whole pension income of resident pensioners. This means that Government revenue will be $290,000 less per annum arising from this concession.

This is a very unique and positive attitude. Time and again Singapore has departed from the accepted universal practice. We know that, by and large, countries in the world impose a tax on their pensioners. And we are also aware that it is not immoral to tax pensioners. If at all, I describe it as morally pricking our conscience.

Our new stance and policy also characterise something original. Although it may be a universal trend to copy the policy of others, we have demonstrated that if we know very well that that policy is inconsistent, or that we ourselves have a better policy or an alternative to deal with the problem, we do not copy it. It is most important to acquire this ever forward-looking attitude in this fast- moving age - an era where it is not enough just to solve "today's problem", but that it must be solved "at this very moment."

There may be people who think that this concession is insignificant as it brings in its rain a revenue loss of only $290,000. It may be true that this sum is a drop in the ocean when compared to the estimated revenue of $3,885 million to be collected. But the good gesture demonstrated by the Government is of no small significance. It has a great significance particularly to the pensioners who have spent the best years of their lives in the service of the Government and the nation; those who have reached the last stage of their journey in life; those who can look back to the service they have rendered. And because life in itself means to give, not to take, therefore whatever they have given of themselves to the nation and whatever the Government or the nation gives them today forms an attitude that is positive and a praiseworthy one. Also, this attitude of giving is the pith of progress, to the extent that, I am fully confident that at a certain point of time in the future (let us hope not) if the nation is confronted with hardship or danger, these people who have been imbued with this quality of giving will not hesitate to give, whether it is material, moral or even their lives. Believe me! Because life is to learn as well as to share.

Touching on the fourth and fifth concessions, I am confident that traders and investors would show their appreciation towards the purpose and objective of these concessions. And in Singapore which practises an open economic system, in the face of fierce competition, particularly from countries in this part of the world such as South Korea, Hong Kong and Taiwan which have higher GNP than ours, it is hoped that these concessions will further stabilise our economic growth.

We hope that the setting up of the proposed Research and Development Division will attract more experts, particularly our own citizens who are now abroad. Likewise, the recommendations of the Trade Development Committee will evoke positive initiatives in their promotional efforts. Besides other factors, these two factors, namely Research and Development and Trade Development Committee, will provide an equilibrium as well as a new lease of life in the nation's economic machinery. And the "loss" of $22 million from the concessions discussed above will just be an ant bite.

Nevertheless it is imperative for us to be on our guard in respect of important issues which are whirling in the world around us, and which can affect and impede continued progress:

1 Discord that leads to war;

2 Spread of protectionist policy;

3 Energy Resources.

Indeed, there is every truth in the saying, "Beyond that dingy uniformity in the international fashion in dress, man remains what he has always been - a splendid fighting creature, a self-sacrificing hero and a blood-thirsty animal."

What is happening in Vietnam, Laos and Kampuchea, and what is happening in Afghanistan and Iran and other Middle East countries, conveys a certain significance, that is, men still continue to perpetrate acts which they recognise to be counter-productive. It seems to justify the cynical statement that men need not fear population growth or a population explosion on the ground that there are ways and means of stabilising the situation, such as family planning, etc, including stabilization through warfare which is inevitable at particular periods of men's lives.

The events in those countries should also serve as an important object lesson to all of us that a country, which itself at one time hated colonialism, could commit the same act that it abhors; that countries with the same ideology do not necessarily share the same objective or have identical tactics; that military might supersedes diplomatic power; that war is like an incurable cancer. It is an irony that this malady is infectious. One plain truth must be understood, and that is if countries of the same block can still be in discord, how much more then if the dissension is between countries of different blocks or ideologies; that a factor most disconcerting to sociologists is how to deal with a generation that has inherited decades of war atmosphere and to effect a change in their attitude of mind to a deep mentality of harmony, peace and brotherhood - generally to solve problems through the "bullet" and not the "ballot".

I consider that this should also be recognised by every country that practises democracy. So long as the power of the "ballot" remains in the hands of the people, it should be used to the best advantage. For if that power is substituted by the "bullet", then with it goes the power of the ordinary man to decide his future by awarding the confidence to those in whom they entrust the monumental task of looking after their needs and destiny. A power which is very important indeed. For this purpose, I reproduce an excerpt from Sir Winston Churchill's speech in the House of Commons on 31st October, 1944:

'At the bottom of all the tributes paid to democracy is the little man, walking into the little booth, with a little pencil, making a little cross on a little bit of paper - no amount of rhetoric or voluminous discussion can possibly diminish the overwhelming importance of the point.'

What has happened to our friends in the North - whether Vietnam and Kampuchea, China and Vietnam, Laos, Thailand - could not be settled by hope and prayer alone. A positive action has to be taken. We, the ASEAN nations, in conjunction with other friendly nations like Japan, should try to bring those who are at loggerheads to the conference table. Probably many will liken us to the unabashed suitor but, in the interest of peace and understanding, we should swallow such allegation with all sincerity and seriousness.

Possibly by inviting Australia as well in this noble effort, we will be giving a broader impression of our seriousness in this matter but unfortunately this 'friend' of ours (Australia) is presently pursuing a narrow policy - protectionism. Her ICAP policy will prevent at least 100,000 Europe-bound travellers from Australia to make a stop-over in Singapore. This will mean that our tourist industry will lose about $100 million per year. Efforts that should otherwise be devoted to other more important and urgent problems have to be channelled to the formation of some sort of defence pact to counter this narrow-minded policy.

This would mean that we should for the time being forget our 'friend' Australia until she learns that her policy does not pay. Meanwhile we have to look for friends who have the same aspirations as ourselves - that protectionism is not a policy that can help improve one's international economic life.

Mr Speaker, finally, permit me to congratulate the Senior Minister of State for Finance for urging the people to work harder and to economise on the use of oil and electricity, bearing in mind the sluggish growth of the economy in the coming years. So far we have proved that we are a rugged community and are prepared to work hard. We have inherited these qualities over the centuries, or over the years at least. Our workers, housewives and even children at schools should be instilled with these qualities. Although we have done all this, it has got to be sustained. Amongst these good qualities we should also include the habit of saving energy. Some sort of campaign to save energy should be mounted. This campaign should also involve school children who form about one-quarter of our population, apart from the commercial houses and the industries which consume more than half of our total consumption of energy. With this, we hope to instill alertness in the community and dispel the "couldn't-care-less" attitude amongst the populace. To realise how important this problem of energy is, it would be pertinent to turn the wheels of history and study the present-day realities and come to a conclusion.

Man inherited a modest and limited beginning. Wood and animal waste was his source of fuel for heating purposes. Then came power from the motor which employed manpower and animals to operate. He also obtained power from natural sources like wind and water. With the discovery of coal in the 12th century in England, it took another six centuries before coal was used to obtain power from the steam-engine which in turn brought about the Industrial Revolution - a new era in the life of the modern man and with it also came the exploitation of the worker or the ordinary man.

In the middle of the 19th century, oil was discovered from the oilfields of Pennsylvania. Oil became more and more useful. Its use increased in the 20th century. Experts in oil production predict that oil resources will be depleted by the year 2,000. What we should realise is the analysis made by a group of experts headed by Professor Carrol Wilson from the Massachusetts Institute of Technology, which states "that a serious imbalance between supply and demand of energy will come as early as 1981." That is two years from now.

Meanwhile we have read in the front page of a newspaper about the possible shortage and depletion of oil in the oilfields of the Middle East - a region that has been supplying world requirements of oil. Of the 160 countries in the world, very few have their own supply of oil. Most of them import their oil requirement, including the big industrial giants like Japan which imports 99% of its oil, Western Europe 96% before the discovery of the North Sea oilfields.

Rumania (The Ploestic Oil Fields) which at one time supplied the needs of its neighbours in Europe, can no longer supply its own oil requirements. The same with the giant, the United States. And if No. 13 is really an unlucky number, then there is the possibility that the 13 nations that form the OPEC countries which have raised their oil price by 14.5% may still increase the price further. And we have also heard that there are plans by Kuwait, Libya and Venezuela to unilaterally increase the price up to more than 20%. All this shows how serious is this question of energy and also how imperative that the "Campaign To Save Energy" be seriously taken up by us all.

We have not taken into account the possibility of another Iran-type of incident happening in the other oil-exporting countries. If that happens, it could be worse.

Meanwhile, hoping that such a situation would not arise, let us ponder on the words of an energy expert, Nathan Glick, who said:

"We have only a few decades to decide what alternative energy paths to take. The realistic choices seem to have narrowed down to nuclear power or solar energy OR some combination of these two potentially inexhaustible sources - with coal (more abundant but more dangerous than oil) as a transitional backdrop,"

Likewise I would like to inform the House the warning made by Professor Carrol Wilson together with other international experts recently:

"The world must drastically curtail the growth of energy use and move massively out of oil into other fuels with wartime urgency. Otherwise we face foreseeable catastrophe."

Mr Speaker, Sir, on this note, I support the financial policy speech of the Senior Minister of State for Finance. 4.45 p.m.

Mr Ch'ng Jit Koon (Tiong Bahru): ( In Mandarin): Mr Speaker, Sir, when the Senior Minister of State for Finance, on behalf of the Minister for Finance, delivered his Budget speech in this House last Monday, not only did he not introduce any new taxes nor increase the rates of existing taxes but announced instead five tax concessions such that the 1979 budget becomes a painless one. This is a congratulatory gesture. He said in his speech that to assist product development, the Government intends to extend to new manufacturing companies the provision to deduct expenditure on research and development, and that the double tax deduction scheme will also apply to all expenses incurred on advertising and promotional campaigns overseas, the production of sales literature and brochures and the undertaking of market surveys. This is a very enlightened move. With the continuous progress of our economy the focal point of our economy has already been shifted from one of trading to one of equal emphasis on both industry and commerce. Under these circumstances, only export-oriented trade in industrial products will further push our economy to reach a growth rate as planned. Promotional activities and market surveys are new marketing techniques which are usually employed by developed countries. Most of the manufacturers in Singapore are quite conservative in approach. They are parsimonious in investing their money in this field. Therefore, with the double tax deduction scheme, it will encourage the manufacturers to discard their conservatism and embark upon world market more positively and actively. This measure by the Government is both timely and proper.

The Government also extends its tax concessions to income derived from general inward direct insurance business covering offshore risks and raises the maximum allowable deduction for CPF contribution and life insurance premia for personal income tax purpose. Undoubtedly, these measures will give a boost to our insurance business which is an important part in our financial system. Another tax concession relates to a house-property to be exempted from estate duty up to $200,000. This will further stimulate our property market which has been quiet for quite some time.

Now, I would like to touch upon some matters which I think have not been given adequate attention. With the shift in the emphasis of our economy and the changes in trade policies of our neighbouring countries, our entrepot trade which hitherto has been the main-stay of our economy, has been on the decline. Although our neighbouring countries have been attempting to have direct trade with other countries, we can still play an important role in the entrepot trade in certain traditional produce such as rubber and pepper, because of our geographical location and our excellent infrastructures and our efficient international shipping services. However, the companies that deal in these entrepot trades have not been given any attention in the Budgets of the past two years. Perhaps the Government's contention could be that since these businesses have been well established all along or they are declining in importance relative to our industrial developments, there is no need to give them any assistance or encouragement. Of course we all agree that Singapore should step up her industrial development, especially in technology-intensive industries, but my view is that although entrepot trade has been declining in importance, we still have to give it some form of assistance so long as it continues to contribute to the growth of our economy.

Sir, in order to encourage and help our local building construction industry, the Government has decided to give a 5% margin of concession for Government tenders to our local building construction contractors. The motive is good. However, it is still not enough. Our economic policy is to welcome foreign investors including building contractors. As a result, foreign building contractors, particularly those from Japan, have already entered into our Singapore market. Singapore is developing rapidly in the field of building construction. Many big projects one after another, such as the Changi Airport and Pan-Island Expressway are either being implemented by stages or at the planning stage. These major projects, the implementation of which requires a high degree of technology and stringent management methods, are invariably awarded to foreign major companies which possess them. Once they have established their foothold in Singapore, they are also interested in small building projects. This poses a threat to our local building contractors as they have to face keen competition from them. In fact, from the buildings which our local building contractors have completed, such as the National Stadium, Paya Lebar Airport Passenger Terminals and some well-known commercial complexes, we can see that some big local contractors have already reached the levels of technology and management required for undertaking major projects. Quite recently, some of them had even formed a joint company to undertake overseas projects. In the face of keen competition from famous international construction consortiums, they were able to secure a major project in the Middle-East. This goes to show that our level of construction has met international standards. Government projects, if within the capacity and capability of our local building contractors to undertake, should be reserved for them. In cases where foreign expertise and knowledge are required, they should be encouraged to set up joint ventures with foreign companies so that they can learn in the process from foreign companies their advanced technology and management methods, and that in this way, they will be helped to grow from small into bigger enterprises to undertake more overseas projects.

Sir, while we are developing into a regional as well as an international financial centre, we should not neglect one of the weak links in our financial system, that is, the finance companies. In view of the Government's discouragement of private ownership of cars, the weak recovery of the property market and the keen competitions by POSB Credit and other commercial banks, the business of finance companies is dwindling. In this difficult situation, the finance companies will have to find other outlets and to diversify their activities. But, because of the stringent control of the Finance Companies Act 1967 which provides not only for the requirements of cash reserves, the ratio of asset liquidity and minimum capital but also the prohibition of their dealing in foreign exchange, finance companies are finding themselves constrained in ever-dwindling business. If the Government will accord them the kind of assistance and treatment as it has done to the insurance industry and will relax some provisions to strengthen their business capacity, I believe they will be able to play a more positive and active role in the financial field.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 5.25 p.m.

Sitting accordingly suspended at 4.54 p.m until 525 p.m Sitting resumed at 525 p.m