TRADE DEVELOPMENT BOARD BILL

Order for Second Reading read. 6.50 p.m.

The Minister for Finance (Mr Hon Sui Sen) (for the Minister for Trade and Industry): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

As a port happily situated at the junction of many international shipping routes, Singapore has traditionally relied on trade as a major source of economic activity. Whether channelling goods from one country to another, or exporting from its own manufacturing plants, Singapore has looked to the ready availability of overseas markets for its economic well-being. Seeking out these markets and developing them has been and must be the responsibility of Singapore traders. That is not to say that the Government has no role to play. But as well as having the drive to export, our traders must first know their overseas markets, have the products desired by such markets and ensure that they are of the right quality and price. Only then can the Government step in to help in export promotion.

Currently, it is the Department of Trade which looks after trade development activities and represents our interest where necessary in regional and international trade organizations. The Department also supervises domestic trade and provides trade documentation services. However, the development of our trade, that is, identifying and exploiting overseas export markets, is perhaps the most important concern of the Department.

In a world beset by economic uncertainties and changing market opportunities, the Trade Department, like our exporters, needs to continually adjust itself rapidly to changing circumstances in our export markets if its services are to be of value to our businessmen. That it has done so successfully in the past is evidenced by the fact that our exports at nearly twice our GNP in 1981 are among the highest in the world.

However, it has been suggested by many of our manufacturers and traders that to enable our trade programmes to be carried out with even greater flexibility there would be some advantage in establishing a Trade Development Board which could better assist our manufacturers, especially local manufacturers, in their search for overseas markets. This Bill accordingly seeks to establish the Board with wide powers. The move to establish the Board is timely in view of the current world recession that has adversely affected our markets abroad. The Board should help to maintain our place in the world trading community by strengthening our export drive in overseas markets.

The Board will be performing function similar to those of export promotion agencies in countries such as Japan, South Korea, Taiwan and Hong Kong. These agencies have had success in boosting the exports of manufacturers in their respective countries. It is hoped that our Board will be no less effective.

I would like now to describe briefly the more important sections of the Bill.

Part III of the Bill outlines the main functions and powers of the Board. These include the following:-

(a) To promote our exports of goods and services;

(b) To establish a network of trade offices overseas;

(c) To provide current trade and commercial information on prospective overseas markets;

(d) To organize export marketing courses to upgrade export skills in Singapore.

(e) To engage in commercial activities, to form companies or joint ventures and to buy and sell property if these are necessary to carry out its functions.

Apart from direct export promotion activities, Part Ill also empowers the Board to represent the Singapore Government on matters relating to trade such as:

(a) Negotiations on textiles and the Generalized System of Preferences (GSP);

(b) The development of shipping and related services; and

(c) Trade documentation requirements pertaining to the import and export of goods.

The Board will absorb the Timber Industry Board (TIB) and those units within the Department of Trade which are related to trade development activities. The TIB is being integrated with the Board as its task of promoting Singapore's exports of timber and timber products are similar in nature to that of the Board. With the establishment of the Board, the Department of Trade and the TIB will cease to exist and the Timber Industry (incorporation) Act, 1973 will be repealed, except for the provisions relating to licensing and registration of timber exporters.

Part V of the Bill embodies the financial procedures of the Board. The Board will be financed partially by the existing cess" on timber exports and fees for the processing of import and export permits and certificates of origin. Government will provide an annual grant to supplement the Board's income to meet any shortfall in finance required for the operations of the Board. A cess may also be levied on other export commodities which require specialized and sustained export promotion assistance from the Board.

The Trade Development Board is being set up to give new impetus to our export drive. It is my hope that manufacturers and traders will work closely with the Board to ensure its success for the benefit of all in Singapore.

Sir, I beg to move.

Question proposed. 7.02 p.m.

Mr Eric Cheong Yuen Chee (Toa Payoh): Mr Speaker, Sir, I rise in support of this Bill as it will ensure Singapore's continued economic development. But I would like to seek a point of clarification from the Hon. Minister, and that is on clause 6 (c) which provides the Board the power to engage in any commercial activity, etc. I wish to seek assurance from the Hon. Minister that should the Board decide to engage in any commercial activity, such activities do not impose an unfair advantage or competition over similar private enterprises.

Mr Tan Soo Khoon: Sir, I rise in support of the Bill. Amongst the functions of the proposed Trade Development Board is to represent Singapore internationally in respect of matters relating to trade.

One of the most gripping matters affecting trade today must surely be the problem of trade protectionism. The concept of global free trade remains an ideal far from reality as governments, battered by economic recession and beleaguered by unemployment, struggle for political survival by putting up trade barriers in order to protect their own industries. The recent General Agreement on Tariffs and Trade (GATT) Conference in Geneva concluded with only a vague written affirmation of free trade but, if anything, it looks as if the declaration was made only because the Conference went into extra time and the protagonists in Geneva were tired of all the oratory and paperwork. For no sooner had the dust settled down, after a long week of bickering when the nicety that accompanies the churning out of declarations at such conferences all but disappeared, when protectionistic reprisals started again. The December 1st issue of the Straits Times carried on the front page a story entitled "US and Western Europe closer to trade war". The following day, the same paper carried another story on its front page, this time entitled "Signs of trade war with Asia", a story highlighting another move by the European Economic Community to restrict imports of certain products from four East Asian countries.

Trade protectionism is not new to Singapore. Our textile and garment manufacturers face all kinds of quotas and tariffs; we have seen barriers put up against our television sets. We have seen how the Australian and British Governments, unable to run their own airlines efficiently, sought to exclude our own national airline from lucrative routes with their ICAP policy. More recently, we have seen how the West Germans stooped down to the most crass of methods when their civil aviation authorities resorted to harassing passengers of Singapore Airlines, and all because our own national airline could provide a better service at a lower price than theirs.

Perhaps the West Germans could take a cue from the Japanese in the art of conducting a trade war. Somewhere along the little grey area that borders between hypocrisy and what we now know as diplomacy, the Japanese have no shame in telling the world how open their market is to foreigners. The Japanese sell their products everywhere, but try selling something to the Japanese. Any businessman from Singapore to Timbuctoo will tell you that when you want to sell something in the Japanese market you come across all kinds of restrictions and regulations and a system of product distribution so complex that the foreign product is retailed at 10 times, or even more, its price in most other countries. The Japanese have devised in their own charming oriental way some fancy footwork around a myriad of complex regulations to exclude foreign products from their own domestic market. The Japanese sell their cars everywhere but when you try to sell a car to Japan you face all kinds of regulations that compel you to make so many modifications that even a Jaguar would become a Suzuki. And all this in the name of "Welcome to Japan". It is like putting a "welcome" sign on your front gate, but the path leading to the door of the house is so filled with booby traps that your visitor arrives mangled, battered, bruised and mutters "never again"!

But if the Japanese have succeeded in some imaginative tiptoeing around rules and regulations without tripping so far, the French must take the cake for crudeness in the conduct of their trade war. Three different forms of protectionistic action taken by the French in the past months have been so crude that I feel that they have become more dense in the head than ever.

The French deficiency in clear thinking started not long ago when they started to put quotas on imported low-priced watches from Hong Kong in order to protect its own watch industry. This strategy would have seemed less consequential had it not been for the fact that a large watch manufacturer in Hong Kong -larger than anything they have in France -used component parts imported from its subsidiary in France. Now this Hong Kong manufacturer, like all others, cannot sell their watches to France. The result is lower output of watches in Hong Kong, less import of parts from its own French subsidiary and lost jobs in France.

Then the French decided to take on video tape-recorders, and the next piece of drama unfolded in a little town called Poitiers in France. French importers of video tape-recorders learned last month that their Government had suddenly announced that all imports had to go through the customs post at Poitiers. Nobody thought much about it for a day or two until it was discovered that Poitiers was a little town, tucked some 350 kilometres away from the nearest port and the customs post there was manned by only one person, who had to face the prospect of processing the import of some 80,000 units of video tape-recorders a month. The result has been a slow-down in the imports of video tape-recorders and the French Government has scored one more in the art of devising a very blatant non-tariff trade barrier.

As if that was not enough, the French Government decided almost at the same time to make the French language compulsory in all business dealings with their country. And that means all documents have to be in French and all products sold to France have to be labelled in French. We all know the story of one of our manufacturers who had to laboriously unpack cartons of umbrellas and re-label all of them by hand, all because of a missing letter to suit the French requirements. And today anybody selling anything to France must provide all catalogues, contracts, order forms, delivery orders, invoices, banking documents, guarantee certificates and insurance certificates in French. I wonder how the French would feel if we tell them that in order to sell to us in future, they would have to spell Cartier, Christian Dior and Lanvin in Tamil. After all, Tamil is one of our official languages.

But, Sir, I know it is not in our style to retaliate in such a manner. The watch manufacturers in Hong Kong have organized a boycott of French brandy in protest, but unfortunately it is a tactic that cannot work too well considering that brandy happens to be the No. 1 drink of the Chinese. But the action of the French Government must lead one to question their sincerity in committing themselves to the principles of free trade. Only last May, the French Minister for External Trade visited us and he signed an Economic and Industrial Co-operation Agreement, which included a "most-favoured nation" clause. But I wonder if today, in the light of the latest French action and that Agreement notwithstanding, whether or not trade relations between France and Singapore have not deteriorated. And even while the 88 members of GATT were negotiating in Geneva, according to the International Herald Tribune, another French Minister threatened to conduct "a counter offensive in the economic war".

Sir, some politicians have a way of making dubious and illogical propositions in times of stress. To win votes, they say that it is better to pay more for cars built in your own country so that jobs can be kept. The saga of that little factory in France making watch components proves how wrong they can be. And if the French Government is now taking such delight at its own apparent ingenuity in devising so many non-tariff barriers, I am sure the 100 people who lost their jobs in this watch component factory are not finding it so funny.

It is that same ingenious thinking that has no doubt led to the inhibition of free enterprise, to the nationalization of large enterprises and banks, to 2.2 million unemployed and to a much devalued currency whose one unit cannot even buy a bottle of coca cola today.

When I was a student, my first lesson in economics was on the principles of comparative advantage and the division of labour. In simplistic terms, it means that one should specialize in what one does best and not to try to do everything. In that manner, everyone else would benefit, for each would then have a share of what the others were better at doing. Somehow, somewhere along the line, some people have forgotten the tragic lessons of the Great Depression and the War that eventually led to the thinking behind the formation of GATT, an organization whose very purpose is to prevent protectionist reprisals that would bring about the collapse of world trade.

The Trade Development Board that would be set up with the passage of this Bill would have the unenvious task of convincing many others to adhere to the principles of GATT and free trade, to which Singapore is so deeply committed.

Sir, I support the Bill.

Mr Speaker: May I indicate to hon. Members that the Moment of Interruption is at 8 o'clock, and we still have one Bill, two Motions and the Adjournment Motion to deal with. 7.12 p.m.

Mr Jeyaretnam: Mr Speaker, Sir, I shall attempt to be brief on this and may I assure the Minister that I am not opposing the Bill, although I do not suppose it would worry him very much even if I said I did.

I support the Bill in principle and the objects in the Bill. All I want to do is to draw attention of this House to one or two matters in this Bill. First of all, Mr Speaker, Sir, on clause 4 of the Bill which deals with the constitution of the Board and the First Schedule to the Act. Again, may I say that this is no reflection whatsoever on the Minister who is going to be in charge of this. But it seems to me that the whole power is vested in the Minister. He appoints the Chairman, the Deputy Chairman and all the other members. And if you look at the constitution in the First Schedule, the Minister is again given the power not only to appoint but to remove any member or the Chairman or the Deputy Chairman without assigning any reason therefor.

Mr Speaker, Sir, we do have in this country of ours Chambers of Commerce and other business houses. I wonder whether the Minister, in appointing members to this Board, will have consultation with these Chambers of Commerce. Does he not think that perhaps they should have some representation on the Board or should be consulted, because after all I am sure they are also interested in promoting trade overseas, and this Board which is to come into being is to help in this promotion of trade overseas. So I wonder whether the Minister would let this House know how he proposes to go about appointing the members to this Board.

The other thing is clause 6 (c). This deals with the powers of the Board, Sir, and the hon. Member for Moulmein has referred to clause 6 (c) and, that is, that the Board shall have power to engage in any commercial activity.

Mr Sia Khoon Seong: I did not say that.

Mr Jeyaretnam: You did not? Sorry, I beg your pardon, a Member of this House. I see by clause 13 of the Bill that Parliament shall provide moneys for the functions of the Board and the Minister will make grants-in-aid out of these moneys provided by Parliament. My observation is this: should not Parliament be asked first, before the Board commits taxpayers' moneys in any commercial activity embarked upon by the Board? I have proposed an amendment to this Bill and I shall at the appropriate time move that amendment.

The other provision is clause 11. Again, clause 11 gives the Board the power to impose "a levy on the export of such goods as may be specified in the order." Well, a levy is nonetheless a tax. Call it what you like - charge, levy, cess - it is a tax. Sir, it has long been recognized that it is for Parliament to levy any tax on its citizens, and it is only with Parliament's consent that any levy may be imposed on any citizens or companies in the country. I would ask the Minister to consider, when the Bill is in the Committee stage, whether he would accept the amendment that I have proposed which is, that the Board shall again seek the approval of Parliament before imposing any levy on goods.

Finally, Sir, on the question of the transfer of employees. It does say that those who are in the employment of the Department of Trade "shall be transferred to the service of the Board on terms not less favourable than those enjoyed by them immediately prior to their transfer." Then it goes on to say that, until such time as regulations are made by the Board, the regulations of the Government shall apply. Sir, you are probably aware that Government servants enjoy a protection under the Constitution as to their tenure of service. What I would like to know from the Minister is, will this tenure be protected for Government servants if they are transferred into the employment of the Trade Development Board? 7.21 p.m.

Mr Hon Sui Sen: Sir, I think there are quite a number of questions for me to answer.

First of all, the Member for Toa Payoh asked whether there will be any undue advantage or unfair competition in the question of commercial activity that is contemplated. I can really assure him that as the Trade Development Board has been set up at the instigation of manufacturers and traders, there will be no such undue advantage or unfair competition. I think the intention is that traders, manufacturers, shippers and so on, will be among those who will be appointed to the Board. There will be between five and nine members appointed by the Minister. So I think they will be heavily represented on the Board. I think we can be sure that they will not set up any commercial activity which will compete with the private trading companies which are already in existence.

A lot of the revenue which the Trade Development Board expects will come, I hope, from levies imposed on industries or exporters. For example, the Timber Industry Board is going to cease to exist and the levy which is now being imposed under the Timber Industry Board Act will, in future, be levied by the Trade Development Board. Therefore, I think those who are paying the levy will also, I am sure, insist upon the Trade Development Board not providing unfair competition to themselves.

The Member for Alexandra has a very long discourse on trade protectionism, and I enjoyed his very able speech on this. The Trade Development Board will have to ace the difficulties which international. protectionistic tendencies pose, and I hope hey will be successful in doing so. No doubt they will display more initiative and imagination than perhaps Government servants. I hope that it will not be long before there is a restoration of the economic principles of comparative advantage and international division of labour.

The Member for Anson has got quite a number of questions. He objected, first of all, to the Minister's powers. This is part of the general philosophy, I think, which is evident in all our statutory organizations. The Minister in charge of the Act is endowed with powers which are common to all these Acts. I think it would not be possible for changes to be made to this without going against the whole philosophy which has guided us in the drafting of the other Acts. This is perhaps in standard form. So I would suggest that this particular objection cannot be agreed to in this particular Bill without our having to consider its effect also on other statutory boards. So far as I am concerned, the Ministers have exercised their discretion under the various Acts which have constituted the statutory boards and they have performed their duties satisfactorily, and therefore I see no reason why we should make any change.

Then on the appointment of members which is made by the Minister, he asked whether the Chambers of Commerce will be consulted. I have explained in my Second Reading speech that the Board was, in fact, formed at the instigation of manufacturers and traders, and I certainly think that their interests will be considered. They will be very heavily represented among the nine members, or even among the three, the Chairman, the Deputy Chairman and the Chief Executive Officer. The purpose of the Board really is to ensure that it is effective, and I think we can make use of all available expertise in Singapore.

The Member for Anson has also touched on the commercial activity, under clause 6 (c). Such activity may perhaps be necessary when the Board operates its activities of expansion in overseas markets. For example, at a trade exhibition and so on, it may be that an exhibitor may want to show his goods in conjunction with other manufacturers and would want to authorize the Trade Development Board's repre- sentative there to sell his goods for him if there was any demand. In such cases the Board's representative will have to engage in some commercial activity. So I would assume that there should be some enabling power to allow him to do this.

Whether there is a need to form a company or enter into a joint venture is a matter which should be considered in each particular case, and I think a reference to Parliament would be inappropriate because it is really cumbersome. There is a need for flexibility in the operation of the Board, and the purpose of forming the Board is to make it more flexible than a Government department. So I feel that if there is a need to refer to Parliament, as he has suggested, then it might be better not to have a Trade Development Board and allow the Trade Department to carry on its activities.

He also asked the question whether Parliament should be asked before moneys are provided. The normal procedure is for grants and other provision to be made in the Budget every year, and since there is a debate during the Budget session which will touch upon whether the contribution or grant to the Trade Development Board will be appropriate, I feel there is no need for a specific application to be made. If there is a need for supplementary votes, that will also come up to Parliament.

The other question which he touched on is that since a levy is a tax, should it not also come to Parliament? Not all taxes come to Parliament. For example, the Minister's power, which of course he does not like but which the Minister still possesses, for taxing imports and exports can be exercised without coming to Parliament. I would suggest that in the case of a levy by the Trade Development Board, which is a levy on its own members (and which no doubt Members strenuously resisted), it will be fully considered by the Trade Development Board members, who are also manufacturers and traders, and therefore there is no need really for the matter to come up to Parliament. If, in fact, it does pass through the Trade Development Board, I doubt there would be very extravagant levies by the Board on its own members. I would assume that, if anything, the Minister will be asked to provide more moneys from the Government budget than we can expect to get from levies on the exporters or traders.

The final question he asked was whether, in the transfer of the Trade Department's employees to the Trade Development Board, they will be protected. The answer to this is that the procedure for transfer of staff to statutory boards is very well-known. They are usually given an option to transfer to the Board and on terms no less favourable than they enjoy in the civil service. If they do not consider these terms to be really as favourable, if their views differ from that of the Board, then they are at liberty not to transfer to the Board. They can be re-absorbed to other Government positions.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Hon Sui Sen].

Bill considered in Committee. 7.33 p.m.

[Mr Speaker in the Chair]

Clauses 1 to 5 inclusive ordered to stand part of the Bill.

Clause 6 -

Mr Jeyaretnam: Sir, I beg to move,

In page 4, line 24, at end, to add -

"(2) Before engaging in any commercial activity under the provisions of paragraph (c) of subsection (1), the Board shall obtain the approval of Parliament by resolution upon a motion presented to Parliament by the Minister setting out the commercial activity the Board intends to engage upon.".

Sir, I have, in my speech on the Second Reading of the Bill, set out why I think this is necessary. I am not merely referring to the organizing of exhibitions overseas but this amendment gives the Board power to commit funds in the formation and participation of companies and entering into joint ventures with others. It is in that function that the Board should come to Parliament first, and get its approval before it undertakes any business ventures.

Amendment negatived.

Clause 6 ordered to stand part of the Bill.

Clauses 7 to 10 inclusive ordered to stand part of the Bill.

Clause 11 -

Mr Jeyaretnam: Sir, I beg to move,

In page 6, lines 15 and 16, to leave out "the Minister" and insert "Parliament".

As I explained in my speech at the Second Reading of the Bill, it is for Parliament and not for any other body, whether it be the Minister or anyone else, to levy or impose taxes. I would ask that this right of Parliament alone be preserved in this Act.

Amendment negatived.

Clause 11 ordered to stand part of the Bill.

Clauses 12 to 36 inclusive ordered to stand part of the Bill.

First and Second Schedules ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.