ANNUAL BUDGET STATEMENT

Debate resumed.

Question again proposed.

Mr Tan Cheng San (Paya Lebar): ( In Mandarin): Mr Speaker, Sir, I support the Budget statement presented by the Minister for Trade and Industry on behalf of the Minister for Finance on 5th March, 1980. In the context of a turbulent world economy, the Minister was able to grant tax concessions, incentives and withdrawal of tariff protection on tobacco and cigarettes. This is very encouraging. To build a strong nation, we must have strong people. This is an indelible aphorism from time immemorial. For the sake of the health of the people, we must not encourage smoking. Therefore, it is right that tariff protection on cigarettes and tobacco should be withdrawn.

With increasing affluence, the standard of living of the people has also risen. Their personal income has increased over the previous years. Therefore, more and more wage-earners will have to fulfil their duty as taxpayers. In order to encourage the people to work more diligently or to give greater scope to develop their talent and skill, it is right and proper that the tax rates for these people should be reduced so that a greater section of such taxpayers may benefit from the tax reduction. A taxpayer who is supporting a disabled sibling can also get a tax relief of $750. This is in keeping with traditional oriental virtue and is praiseworthy. Mr Speaker, Sir, the abolition of certain stamp duties will also go a step forward to strengthen and promote Singapore as a financial centre. There will be a more active financial market, thus stimulating a more rapid growth of our commerce and industry.

The 1980s will be a decade for economic restructuring, with policies for higher wages coupled with higher technology and more modern, sophisticated equipment. To ensure that our economic restructuring can be smoothly carried out, those manufacturers engaged in research and development will be given tax incentives and tax concessions on capital allowances for plant and machinery. This is a wise move and will further stimulate a more rapid growth of our manufacturing and service industries, so that our products can acquire an edge and so compete in the international market.

Sir, I support the Budget statement presented by the Minister. 5.00 p.m.

Dr Ang Kok Peng (Buona Vista): Mr Speaker, Sir, I rise to join my colleagues in paying compliments to the Minister for Trade and Industry for presenting a good Budget that has been received with popular acclaim by all and sundry, save those manufacturers who prospered under protective tariffs. The local industries should have realised that tariff protection would only last as long as was considered necessary. As early as 1968 Singapore stopped introducing now protective tariffs and from 1973 onwards protective tariffs have been progressively removed.

This year's Economic Survey of Singapore which preceded the Minister's Budget speech is a well prepared document; it includes a timely review of Singapore's economy in the 70's as well as references to our economic performance in the 60's. It permits us to reflect on our past achievements and plan for our future.

In reading this Survey, one cannot help but derive tremendous reassurance that our economic development has been guided by very competent hands with the full support of a people who responded well to the demands of changing circumstances. In the 70's, the world was beset with many woes - turbulence, recession, the 1973 oil crisis with its subsequent continuously rising oil prices, and protectionism in world trade.

Against this backdrop Singapore's economy grew by an average rate of 9.4%. and the standard of living of the people improved by leaps and bounds. Our per capita GNP of $8,232 in 1979 is almost three times that at the beginning of the decade. Such a performance is no mean achievement measured by any yard-stick. We have ended the decade with our economy having a more diversified structure and firmer foundation from which we can soar to greater heights of development.

1979 had been a difficult year. The Russian invasion of Afghanistan and the continuous Vietnamese aggression in Kampuchea presented a threat to world peace and stability. For the third successive year the world economy moved along sluggishly. The oil price went up to twice what it was a year ago. The problems of inflation and unemployment were still intractable. In this setting, the economy of the industrialised countries grew by 2 to 6% whereas the inflation rates varied from 3.3 to 14.8%

Our economic growth of 9.3% in real terms with a low inflation rate of 4% is, therefore, a highly commendable achievement. It speaks well for the foresight and careful planning of the Government and the industry of our people who have assiduously striven for higher skills. Our economic growth is also particularly satisfying in that all sectors of the economy expanded, and substantial investments went into plant and machinery. Heartening to note is that in 1979 alone investors committed a total of $943 million in new investments, reflecting the continuous confidence in Singapore and her economic strategy.

The Survey noted that productivity growth fell to 2.6% from 4% last year due to the low productivity of the financial and business services sector where there was an exceptionally high employment growth rate. Productivity change for one or two years does not have much meaning in itself. By its nature it has to be measured over a longer period of time.

When productivity is measured in terms of value added, this is highly susceptible to price fluctuation of raw materials and finished products. It also depends on the capital investment per worker, as investments in modern and efficient equipment may bring immediate increase in productivity. And in certain sectors where automation is not possible, increase in productivity becomes a difficult process.

Nevertheless, it is correct to pay heed to any indication of a less than satisfactory productivity performance in any sector for we must avoid the trend observed in most of the industrialised countries where productivity in the service sector has been lower than in other sectors. Apart from the high employment growth there may be other factors responsible for the low productivity growth. A careful monitoring of the situation is therefore necessary to see what remedial measures can be taken.

In the long run productivity growth does not depend on capital and machinery alone. Motivation and attitude of our new generation of workers are crucial.

Coming to the Budget itself. The world economic outlook for this year seems quite dismal. The developed countries would likely have only a zero to 1% growth rate in 1980. High inflation and unemployment will continue to plague these countries. Unrelenting trade protectionism will remain the order of the day. In the difficult world of to-day it was unusual to see a Minister smiling happily as he entered the House to deliver his Budget speech. His mood was right as he later presented in the House a very generous Budget which was hailed as a joy Budget, give-sway-Budget, painless Budget, etc. In many other countries, this is a period of belt-tightening rather than a time for tax liberalisation. Hence, the Budget before the House is an expression of great confidence.

According to the Budget Statement, if we succeed in achieving an 8-10% annual growth rate in the Eighties, we shall attain in 1990 a per capita income of $15,000 to $18,000 (at 1979 prices) which Japan has already achieved in 1978. What puzzles me here is that in 1978 Singapore attained a per capita GDP approaching that of Japan in 1972. Between 1973 and 1978, Japan's GNP grew by less than an average rate of 5%.

Perhaps the Minister may care to enlighten me here as to why we need 12 years to reach the 1978 per capita GNP of Japan if we assume such a high rate of growth of 8 - 10% for Singapore.

I welcome the Budget and fully endorse the various measures contained in its economic strategy. The across-the-board income tax reduction will encourage Singaporeans to give of their best. The fiscal and financial policies will provide the conditions for Singapore to strive towards the twin objectives of being a high-level technology manufacturing centre as well as an international financial centre.

Sir, let us hope that we can still see a smiling Minister delivering another go-getter Budget next year.

5.09 p.m.

Encik Sidek bin Saniff (Kolam Ayer): Mr Speaker, Sir, the Budget statement for FY 1980 presented by the Minister for Trade and Industry on 5th March 1980, by and large, gives a ray of comfort to the people, not all though, at the same time exhorting us to be on the watch for the ever-increasing uncertainties in the global scene. The global scene, for instance, has caused a higher price of oil to the Government, which also means an additional burden to consumers on their bills, especially the PUB bills. Still, we can consider ourselves lucky because inflation in our country is much lower compared to the rest of the world - the developing or even developed countries. The United States of America, the industrial superpower experienced just last Friday that her wholesale price statistics released showed an annual inflation of nearly 20%.

Simply put: it is a pragmatic Budget.

There is no doubt that if all goes well, the targeted growth of 7-9% GNP hoped for will be achieved. This means that we are assured of continued progress, thanks to a judicious policy and to the response of our hardworking people, which is indeed gratifying. I am confident that our toil and sweat and dedication can only bring in its train reward, except that we need to be vigilant and alert to our surroundings.

Meanwhile the decision of the OPEC countries certainly plays an important role on the question of stabilizing the world economy. It is a fact that any error in their decision will not only affect the world but also all 13 of them and dragging them into the morass of instability.

Mr Speaker, Sir, the situation mentioned above constitutes the latest trend in the world economy which we must be cautious against, mentally and physically. Nevertheless I think that there are already in existence aspects which are plus-factors as far as we are concerned. (1) The world's awareness of this reality and cooperation among them, like the countries in the EEC, ASEAN, etc. (2) The more and more evident emergence of a distinct nationality - The Singaporean - a society of "triers" and not "quitters".

With regard to the second factor, we should be grateful and proud that after 20 years of self-government and 14 years of independence we have advanced from a multi-racial, multi-religious and multi-cultural society to become a society which is more and more SINGAPOREAN - the society which we aspire to create.

We learnt a very bitter lesson in the early sixties and now, thanks to a fair and just government, the earnestness of leaders from all sectors and the high level of their leadership qualities, a broad-based education policy where all students from all walks of life share and mingle under the same roof and a common-type residence in the housing estates, integration and the emergence of the feeling of being Singaporean have been expedited. If what happens at football matches can be taken as an indication, then from this angle alone we can see the Singaporean spirit in matches against Malaysia, India, China or Iran. May I, Sir, at this juncture congratulate Jitta and his boys and others involved, for making this game reach a new height in the history of our nation.

Our policy of meritocracy has also played an important role. It has averted a situation in which to climb the ladder of success one has to depend on wealth, rank and position, connection and bribery. What we have to be careful about is an overplay of meritocracy to such an extent that it tends to create a society that worships success in terms of material or money. Everything is equated with money. If there is no monetary reward, nobody will work or nobody will help others. In short, "No money, no work, no help", so much so that money has become the standard value. This is dangerous, even if it were to happen to a small section of our society.

The spirit of love for work - any form of legitimate work - should be cultivated further in the hearts and minds of our people, especially the young. This is important because those who have reached the age of 40 years and above at present readily accept any kind of job offered to them, including manual jobs; but among those in the younger generation who are educated, this is not the case. They refuse manual jobs outright, or try them out for some time, and leave the jobs whenever they feel like it. So what attitude will reign supreme? They are well fed with affluence! This is where Moral Education mooted by the Education Ministry becomes very important and vital. There is also a need for the Use Your Hands campaign to be further intensified, and school children should be made to understand the philosophy behind the campaign.

Furthermore, considering that our workers are at present geared to the concept of the Second Industrial Revolution, we should aim to drastically reduce the number of manual jobs and upgrade them to the level of skilled workers. And ideally, there will be a time, after this crucial effort, when we will be able to form a diamond-shaped society (wherein there will be very few poor as well as very few rich amongst us) from the so-called pyramid-shaped society (wherein many are poor) which I would say at this juncture does not concern us.

All this depends on the kind of education they receive and the unique position of the society they inherit.

Let me now deal with the external problems.

In the year 1979 and the beginning of the 1980's man has shown a trend towards a return to the era of the Dark Ages where the law of the jungle reigned supreme. This marks the beginning of a monstrous decade, the monstrosity of which will prove fatal and bring about its destruction. Feuds between nations are rife in the world. However, this breach of the peace has no equal to what is happening in Kampuchea and Afghanistan. Particularly in respect of the latter, the aggression was perpetrated because of the arrogance of the aggressor. The reasons are easy for us to see.

1. Its influence is spreading rapidly in Ethiopia. The Horn of Africa, South Yemen and the South-Western tip of the Arabian Peninsula where it can control oil production and contain other countries, particularly the West, from securing the mineral.

2. Its ideological influence in Algeria, Libya, North Africa, Guinea, Zambia, Mozambique, Sub-Saharan Africa, French colonies, such as Benin and Madagascar.

3. Its relationship at government level with pacts signed with about 25 Black African countries.

4. The powerful relationship with Cuba and East European Surrogates is on the rise.

5. Has trained roughly 13,000 Africans who have already obtained diplomas from the aggressor country.

6. In possession of sophisticated weapons, e.g. such as the IL-38 aircraft which can fly across the Arabian Peninsula to Diego Garcia and return to Moscow without refuelling.

While all these are happening, the non-communist countries have failed to scrutinize or to sift the grand-design of the aggressor which is ingrained in their blood and is part and parcel of their policy. With a combination of all these factors they feel so strong that they have even ignored the resolution of the United Nations General Assembly and peace-loving countries like ASEAN. In fact, it is a slap in the face of countries which maintain relations with them, such as Iraq which has a Treaty of Friendship and Cooperation and which has condemned the invasion of Afghanistan. And, it is a castigation of the Marxist PLO which considered the invasion as reactionary. Further, 38 African countries opposed them in the UN General Assembly, with only four countries supporting, i.e. Yemen, Ethiopia, Angola and Mozambique.

The aggressor's attitude has shown a gross misinterpretation between MIGHT and RIGHT. Might without right is useless. It is hollow. With right, one will fight no matter how mighty the other party is; no matter what the sacrifice is.

Nevertheless, Afghanistan is a good lesson to the people of the world. And let us hope that while the leaders of the world understand the functions of politics, they must equally be aware of the final analysis of politics. To me, the final analysis of politics should be morally pegged with the development of mankind and humanity and not just the glorification of power or, even worse, the venal crowning of power for its own sake.

If they are conscious of this, and internally we make further significant progress, then the hopes and convictions of the Minister for Trade and Industry, which are also ours, will be realized.

Mr Speaker, Sir, on that note, I support the Motion in the name of the Minister for Trade and Industry. 5.20 p.m.

Dr Augustine H.H. Tan (Whampoa): Mr Speaker, Sir, I rise to join in the congratulations offered to the Hon. Minister for Trade and Industry. The Budget presented to us last week is a bold, imaginative and forward-looking one. It is difficult to improve upon, but perhaps the few comments I have to offer may help to clarify the issues we face.

Sir, by any reckoning, last year was a difficult one for the world economy. The US economy was on the brink of a recession. The OECD countries grew by only 3 1/4% compared to 3.9% the previous year. An inflation rate of 10% in the industrial countries was exacerbated by a number of factors. By the end of the year, the price of petroleum had risen by at least 70%. The prices of gold and other precious metals skyrocketed, even as inflation eroded confidence in paper currencies. Interest rates have broken historical records in America and elsewhere.

Against this international backdrop, our growth in GNP of 9.3% accompanied by an average inflation rate of 4% is quite remarkable. It was also a year of balanced and healthy growth with few distortions. Hon. Members can refer to the Economic Survey to read the account for themselves. I propose instead to highlight some problem areas.

The first is Productivity which the Member for Buona Vista made reference to earlier. The Minister pointed out in his Budget address that while employment increased by 6.6% last year, productivity growth was only 2.6% compared with 4% the previous year. However, he did not reveal which sectors were responsible for the poor productivity performance. He admitted that there was a significant inflow of foreign workers. My estimate is that there were probably 23,000 new work permits issued last year. Presumably these workers went into manufacturing and construction. Are these workers skilled or unskilled, blue-collar or white? Is not the new high wage policy designed to economise on labour and promote growth in productivity? Why then the big influx of foreign workers? Sir, the Economic Survey noted that 23,900 new jobs were created in the manufacturing sector and yet productivity in that sector rose by 5%, higher then in 1978 and the national average of 2.6%. Government itself increased employment last year by 4.5%, but no productivity indicator is available. Indeed, Sir, the important subject of productivity rated only three paragraphs in the entire Economic Survey. The national and sectoral figures on productivity appear to be too volatile from year to year. I would therefore recommend to the Hon. Minister that careful studies be made on productivity so as to give us an accurate picture of our economic performance. As he rightly pointed out, our people are our only rich resource. Hence our standard of living can only go up as we increase our productivity, properly measured.

The second problem that I wish to draw attention to, Sir, is the problem of energy. Apart from casual references to the energy crisis, the Minister seemed quite oblivious to the energy implications of his economic proposals. His formula for our growth in the 80's is to induce employers "to mechanise, automate and computerise." This will undoubtedly make our economy more energy-intensive. Sir, it is interesting to note, from figures supplied by the World Bank, that our energy consumption per dollar of GNP is already equal to the average for the industrial countries. In 1975/76, for which figures are available, we had a per capita GNP of US$2,700 and we consumed 2,151 kilograms of coal-equivalent energy, or 0.8 kilogram per dollar of GNP. The average energy consumption for the industrial countries is 0.81 kilogram per dollar of GNP, i.e. roughly the same. Among the industrial countries, however, energy consumption seems to vary enormously. At the lower end of the scale is Switzerland with 0.41 kilogram per dollar of GNP. At the higher end is the United States with 1.39 kilogram per dollar of GNP. Sir, the point is this. Can we learn something from the wide disparity in energy consumption in the industrial countries? In 1975/76 Switzerland had a higher per capita GNP of US$8,880 compared to the United States with US$7,890. Yet her energy consumption was less than 30% of the United States. I would suggest that we make a careful study of energy utilisation in relation to the type of industries in the advanced countries before we mortgage ourselves to an energy-intensive future. Maybe I worry too much, Sir, but I do worry every time I see a new shopping complex complete with central air-conditioning, escalators, high-speed lifts and artificial lightings. What is the Government's thinking on energy conservation? What fiscal incentives and disincentives can we devise to ensure conservation? Is it always a good thing "to mechanise, automate and computerise"? Is it always necessary to do so? Are we diversifying our sources of energy? Are we doing all we can to decentralise facilities and factories so as to minimise transportation? Or are we doing the reverse?

The third problem, Sir, is the problem of over-capitalisation. Related to the energy problem is the capital intensity of new industries. We are getting into a huge petro-chemical project, costing billions of dollars. The Mass Rapid Transit System is being studied and that will run into several billions of dollars as well. Sir, I would like to urge caution here and perhaps we can learn from the mistakes of others. South Korea has been pushing very ambitious schemes to establish more sophisticated industries, including petro-chemicals. I understand that recently she has run into some problems, not the least of which is over-capitalisation. Sir, ours is a small economy. A mistake in a project involving billions of dollars is a very costly one to bear and extremely difficult to correct. So far, Sir, our diversified economy has stood us in good stead. I would, therefore, hope that we do not get over-extended in any direction. In an increasingly uncertain world economy we need the flexibility, that agility, to shift our patterns of production if we are to survive and prosper. I would consider the Hon. Minister's goal of increasing the manufacturing sector's share of GDP from the present 22% to 31% by 1990 as ambitious. Similarly, his vision of developing Singapore into what he described as "a financial supermarket" needs to be somewhat more restrained and balanced. Do we have the financial sophistication to monitor financial institutions, such as the Asian Dollar Market has brought to Singapore? In the word of the 80's, Sir, one can expect financial turbulence reminiscent of the 1930's. Such conditions will be a far cry from the orderliness of a supermarket.

The fourth problem area, Sir, is protectionism. We are getting into an era of increasing protectionism. In this respect, Sir, the Hon. Minister is too sanguine about the favourable impact of the Multilateral Trade Negotiation on trade in the 80's.

Firstly, the fact that 25% of our global exports are covered by the Generalised System of Preferences concessions of the US, EEC and Japan renders those exports vulnerable should we be reclassified as a developed country and that day cannot be too far off if we are galloping along at the rates that he is planning.

Secondly, the lesson of the 1974-75 recession is that at the beginning of such a recession when inflation is a more serious problem than unemployment, protectionism is muted. However, when unemployment becomes a more serious problem than inflation, pressures will arise for erecting trade barriers. I would not be surprised, therefore, Sir, if protectionist sentiments rise after the middle of next year when unemployment will increase significantly in the industrial countries. Right now, the recession that was forecast has been postponed because of elections in America and in other countries in Europe and Canada. But the postponement means a higher price in terms of inflation and a subsequent recession promises to be deeper than would have been the case.

Thirdly, despite the Multilateral Trade Negotiation, non-tariff barriers, that is, barriers other than tariffs, are going to be more serious impediments to trade than tariffs per se and they are the more difficult ones to overcome.

Fourthly, we will have to contend with a world in which beggar-my-neighbour policies through manipulation of monetary and exchange rate changes are more difficult to identify and to offset.

The fifth problem area, Sir, is inflation. The Hon. Minister reported that on the average our cost of living went up by only 4% last year. However, we should note that most of the increase occurred in the latter half of the year. Between December 1978 and June 1979 the cost of living rose by less than 1% while between June and December last year it increased by 6.4%. Furthermore, between December 1978 and December 1979 the general wholesale price index rose by 23.8%. The latest reports also indicate that the US cost of living index rose by an annual rate of 18%, and the Member for Kolam Ayer referred to the US wholesale price index rising by 20% in the latest report. Sir, quite clearly we are in for much more severe inflation this year. In this connection, I would like to urge the Hon. Minister to look more closely at the construction of our GDP deflator. I shall be glad to supply suggestions for improvement.

The sixth problem area, Sir, is this question of removal of tariff protection for our industries in Singapore. The removal of such protection on a large number of items must have come as a shock to the firms involved. It is, however, a policy consistent with the export orientation of our economy. Nevertheless, Sir, the timing is a bit unfortunate as we face a world economy on the brink of economic recession. What could be done is to help firms affected to develop export markets and perhaps switch to other types of production. Undoubtedly, the Hon. Minister has some idea of the viability of the firms affected by the withdrawal d tariff protection. Most Ministers for Finance would regard the removal of tariff protection with considerable trepidation. It says something for a bright young Minister that he describes his policy as an act of confidence.

The seventh problem area is in regard to tax concessions. Few Ministers for Finance would be able to produce tax concessions at this time of economic uncertainty and certainly not as many as we have seen. Income tax is being reduced while taxes on expenditure are being increased. The objective is to reward enterprise and encourage maximum effort. Even as we welcome the tax concessions, we should be prepared to take the unpleasant medicines in the course of the year when rents, fees, charges and expenditure taxes are raised. I would hope, however, Sir, that Government will monitor carefully the regressive effects that expenditure taxes and charges may have on the lower income group to ensure that they do not suffer a decline in their already low standard of living.

Sir, with these few observations, I give my support to the motion standing in the name of the Hon. Minister for Trade and Industry.

5.38 p.m.

Mr Ho Kah Leong (Jurong): ( In Mandarin): Mr Speaker, Sir, the Budget statement presented by the Hon. Minister for Trade and Industry on 5th March, 1980, can be said to be a most welcomed Budget statement by the various people but for the earlier announcement of tax increases and increases in PUB tariffs as well as the announcement of the increase in medical fees by the Minister for Health on the same day.

Sir, in spits of the generous income tax reductions announced by the Minister to give real income increases to hard working people, the Government ministries and departments as well as statutory bodies have resorted to increase revenue just by the issue of an order, thereby giving the people the impression that the Government is taking back through various means whatever tax concessions that have been generously given or will be given. As a result, the benefits derived from such concessions have been eroded.

Our economic performance lost year registering a real growth rate of 9.3% is very encouraging and a source of pride. Singapore, Hong Kong, Taiwan and South Korea have been described as the "four tigers" in Asia. Of course, there is reason for such labelling. But we must not be complacent with the small economic achievements that we have made. At the same time, we must also pay attention to the other member-countries of ASEAN and share our economic fruit with them, whenever possible. Last year, we achieved outstanding growth in our manufacturing industry. We must thank the workers from foreign countries, especially Malaysian workers.

The Government's policy is "to match income with expenditure" whereas the policy of the people in general is "to match expenditure with income". Because of materialistic temptations and the influence of certain Government policies, the people of Singapore seem to have forgotten this maxim of frugal spending. Instead they are spending more then is necessary or have taken to living permanently on loons. For example, many people have bought motor cars not out of necessity but out of a fear of possible increase in car prices. The periodic hefty increase in road tax, registration fees, ARF, etc, have drawn the people into buying cars to avoid further increases. Furthermore, the Government-owned Development Bank of Singapore and the Ministry of Finance have also granted loans liberally for the purchase of cars thereby giving the people the wrong idea that if they do not buy cars now they may not ever be able to join the ranks of car-owners later. So the people stinge and save in order to be able to buy cars on loan. Thus, the people in Singapore are on the way to living on future savings, on hire-purchase, in the same way that Europeans and the Americans are doing. Whether this is healthy or not certainly needs a review.

Sir, the policy of encouraging more womenfolk to join the labour force so as to meet the labour shortage in Singapore is a good one. But what are the incentives? The Minister for Trade and Industry has not indicated what concrete measures there are to put this policy into effect. Our women choose to stay at home mainly because they are tied down to the children. Domestic help is not only difficult to come by but also very expensive to engage. The Government and those concerned should set up more creches to enable womenfolk to feel at ease to come out and work. There are also other measures to encourage the women to work, such as making them work for only half a day so that they have the other half of the day to attend to their household chores and their children. Of course certain tax concessions for women can also serve as a further incentive for the women to enter the labour market.

Mr Speaker, Sir, on the whole, the 1980/81 Budget statement is enlightening and encouraging. I would therefore give it my full support.

5.43 p.m.

Dr Lau Teik Soon (Serangoon Gardens): Mr Speaker, Sir, I would like to join my colleagues in congratulating the Hon. Minister for his go-getter budget. In his Budget statement he has given away a considerable number of tax concessions but, at the same time, he has given a word of warning to all those who benefit from these tax concessions, I would like to reiterate his point that the tax liberalization this year is to create greater opportunities for Singaporeans to exercise their enterprise to benefit themselves and Singapore. We need to build up more fat for the loon years ahead. He said that we should be ready to most what he called the "treacherous waters ahead". In elaboration of this, the Hon. Minister pointed to a number of international developments which have direct impact on our economic growth. These developments include the super-power rivalry, the destabilization of the region by external forces, the American Presidential elections, the Middle East situation and its impact on oil prices and oil supply. But these external events are beyond the control of Singapore. Nevertheless, we would do well to note the trends which these developments are taking and to adjust our policies accordingly in order to ensure our survival and continued growth.

Mr Speaker, Sir, I support the Budget statement almost entirely. However, I would like to seek the Hon. Minister's comments on two specific issues. Although the Budget statement has given considerable concessions, yet I am a little disappointed that the Hon. Minister has not seen fit to give a small slice of his cake to the retired men and women who had rendered valuable services to the Government and country in the past. I refer specifically to the pensioners. In the last Budget statement, the Hon. Minister gave a tax concession to the resident pensioners with chargeable incomes. He exempted them from payment of income tax on their monthly pensions. At that time the Hon. Member for Anson raised the issue of the category of resident pensioners who do not have chargeable incomes, namely, the lower category of pensioners who constitute the majority of pensioners. The reply of the Hon. Minister then was that he would review the situation concerning this category of pensioners if the Treasury could afford to do so. Well, with all the give-aways this year, I must say that the Treasury can certainly afford it. But the Hon. Minister has forgotten about this category of pensioners. I would suggest, therefore, that the Hon. Minister rectify his omission. He should review, for example, the ex-gratia allowances to pensioners receiving less than $650 per month. The last review was in March 1974 and despite the increases in the cost of living over the years, the ex-gratia allowances have not been reviewed since then. He should also consider an upward revision of the rates of pension with a view to incorporating the NWC recommendations over the years.

The second issue which I would like to seek the Hon. Minister's comment is related to ASEAN economic co-operation. I agree with his statement that Singapore cannot prosper independently of developments in ASEAN countries. But I fear that unless Singapore works together with the other ASEAN countries in the area of industrial cooperation, the other countries may work independently of development in Singapore. Hence, I would like to ask the Hon. Minister whether his Ministry has considered now proposals for a Singapore project since the former diesel engine project has been shelved. I am sure that the Ministry is in a position to conceive of a project which will be acceptable to the other ASEAN partners.

The Hon. Minister has mentioned that there is increasing recognition of ASEAN as a regional grouping, and he referred to the dialogues with the modern industrial states, the United States, the EEC and Japan. I would like to ask the Hon. Minister how these dialogues have benefited Singapore, particularly in the fields of trade, investment and technology transfer.

The last question concerning ASEAN economic cooperation is related to the Preferential Trading Arrangements. I would like to know what impact the PTA has on intra-ASEAN trade and if, as the Minister has stated, the rate of progress is still too slow, what he proposes to do about it to encourage our other ASEAN partners to go faster.

Mr Speaker, Sir, with these comments I support the motion standing in the name of the Minister. 5.52 p.m.

Haji Sha'ari bin Tadin (Bedok): Mr Speaker, Sir, I rise to join my colleagues in thanking the Minister for Trade and Industry for delivering the Budget Statement on behalf of the Government. This year's Budget, described as "Chok Tong's Joy Budget" by a leading newspaper, has brought joy to all taxpayers because of its across-the-board income tax cuts. However, to some manufacturers, the removal of protective duties has caused concern and worry because of its potential disruptive effect on the growth of local industries.

Sir, the Hon. Minister's explanation for the preference for across-the-board tax cuts over the granting of income tax reliefs was that.

The more citizens we have paying income tax, the more voters there are who understand that welfare programmes which sound such attractive giveaways from some magic cornucopia conjured up at election time, must mean an increase in their income tax.

'The rationale for this decision is the need to spread income tax to cover as many individuals as possible.'

Sir, all of us in this House and those members of the public who are paying income tax agree and fully support the tax cuts, but I feel very strongly that there is still a good case for a review of the various tax reliefs - personal relief, earned income relief, and relief for dependants - as these reliefs have not been revised for more then three decades. Arguments have time and again been put forward in the past for increases in tax reliefs. These are to relieve the financial burden of income taxpayers and to enable them to make adjustments for the ever-present inflationary trends and the increasingly high cost of living. It is very unrealistic for the present levels of income tax reliefs to remain unrevised. While I appreciate very much, Sir, the Government's aim to reduce the levels of personal income tax in the next two or three years, I hope that the Minister will, in the next Budget presentation, look into the question of increasing income tax reliefs as well.

Secondly, Sir, the Government's move to remove protective duties in stages has brought joy to all consumers as this means that Singaporeans will be paying cheaper locally-made goods, such as TV sets, air conditioners, refrigerators, etc. However, this move has caused some grave concern and worry in some manufacturing circles, as it is bound to have a disruptive effect on the growth of local industries. As the Minister rightly pointed out, we depend on world markets for large scale expansion of manufacturing activities and our products must be internationally competitive. This cannot be achieved with tariff protection. The action to remove protective duties is to ensure the pursuit of an open, competitive economy wedded to the world's fortunes. The Government's aim is to restructure the economy with a target of 8-10% annual growth in the 80's and a per capita income of $15,000 to $18.000 (at 1979 prices), to be attained in 1990. All this is very encouraging indeed. But with escalating oil prices, other inflationary trends, increasing high cost of living and very competitive life-styles, we have to provide some kind of safeguard to ensure that our people continue to enjoy a reasonably comfortable living. The targets set could be achieved if the development of industries like the manufacturing sector could meet the challenges that lie ahead, especially in their export drive and capacity. But, Sir, I con see the problems faced by these local manufacturers in competing against locally-based multi-national companies which are in a position to push their products through their established international distribution networks. Unless our manufacturers are able to organize themselves into a powerful group, combining all their manpower, resources, expertise and capital, rather than acting on an individual basis, I can see the kind of competition that our local manufacturers will be facing - tough, rough and an uphill task all the way.

In this respect, Sir, the Singapore Manufacturers Association, which coordinates the activities of the various local industries, should strive to form an organisation called, perhaps, "Singapore Incorporated" bringing all the export-oriented manufacturers into a single body and concentrating every effort to achieve their objectives. They should not rely too much on Government assistance, as in the past. Instead, they should plan their own strategy by importing expertise and by taking advantage of Research and Development to develop their know-how, skill, manpower and technology. Another strategy which the local manufacturers should aim at is to obtain home support and patronage for their locally-made products. Why do I say this, Sir? I observe that many of our people, especially the younger ones, prefer to buy imported goods to locally-manufactured products. Unless we con quickly convince our people that Singapore-made goods are as good as imported ones, our industries will continue to suffer. Only by imposing higher duties on imported goods and materials would the Government be able to discourage our people from buying these expensive imported items. But this step would be contrary to the Government's plan to create an open, free market competition. Sir, one departmental store recently held an annual sale during the period just before the Lunar New Year. This attracted thousands of our people. They flocked to this store to buy so-called better quality goods at cheaper prices. These were actually "dumped" imported goods. Does the Government allow the dumping of such goods which sell cheaper than locally-made goods? I know that Singaporeans are very brand-conscious, but why do they spend unnecessarily on goods that are imported rather than buy our Singapore-made goods? Perhaps something should be done to promote or to stop up the promotion of Singapore-made goods among our young workers who have developed a habit of going for expensive imported items.

Sir, on manpower development, the Hon. Minister mentioned that the crucial factor determining our economic performance in the 80's will be the availability and quality of our manpower. In this respect, Sir, the Ministry of Education's recent step to encourage students and teachers to take up higher studies, either locally or abroad, is in line with the Budget restructuring policy. It is heartening to hear that students who obtained more than one credit at the GCE 'O' level examinations are allowed to repeat their subjects in order to enable them to proceed to the Pre-U classes. The upgrading of teachers' qualifications, both in terms of educational and professional qualifications, is a very encouraging sign. And the spirit and the manner in which such opportunities are extended to those who have the necessary qualifications to pursue higher education have boosted the morale of teachers. Sir, I would like to see that similar opportunities be given to those officers who are doing administrative duties, such as school principals and vice-principals, to attend courses in educational administration leading to diplomas or degrees, to enable them to equip themselves with better knowledge and experience. In carrying out their professional duties, the additional qualifications will prove beneficial.

There is also unhappiness among some teachers and education officers who, after obtaining higher degrees overseas at their own expense, have not been emplaced in the right salary scale for some technical reason or another. This is most demoralising. It is bad for morale. Why the delay? I know a few such cases; they have taken their complaints to the Teachers Union which has not been able to do anything about it. I do not know, Sir, if any injustice has been done to these teachers, but I am sure it is our policy to encourage the upgrading of our teachers' skills and professionalism through professional development. Is it not our policy to reward people who put in that extra effort, that extra hard work, who possess that extra skill, who are that extra-enterprising?

Sir, the message which our Minister for Trade and Industry has tried to convey to our people in order to meet the country's need for restructured effort and the development of skilled manpower, is loud and clear - that every one should try to realise his full potential, by upgrading his skills in order to earn better income and attain better living standards. As our only resources are human resources on which our future economy depends, the development and realisation of the full potential of our population are very crucial. 6.00 p.m.

Mr Speaker: Order. It is 6.00 p.m. Debate to be resumed on what day, Mr Minister?

Mr Goh Chok Tong: Monday, 17th March, 1980, Sir.

Mr Speaker: So be it.