ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [4th March, 1983],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1983 to 31st March, 1984.". - [Minister for Trade and Industry].

Question again proposed. 3.20 p.m.

Mr S. Chandra Das (Chong Boon): Mr Speaker, Sir, I wish to thank you for giving me this privilege to start off the debate on the Budget Statement.

The Hon. Minister for Trade and Industry has presented to us yet another painless budget for the financial year 83-84, and I sincerely hope that painful measures need not and will not be introduced in between the Budget.

The Minister's Budget Statement is political testimony to the success of the hard-headed economic policies of the PAP Government. The not-so-popular measures introduced some years ago have now put us in a strong position to weather the economic storms ahead. Had we in the earlier years opted for the economics of handouts, so zealously peddled by certain opposition parties, we would be in very serious trouble now.

Review of the World Today

Sir, the world economy appears to be trapped in an unsolvable economic mess. In 1982, the OECD countries ended up with an average growth rate of -0.5%. Among the OECD countries, only Japan, France and the United Kingdom registered some positive growth rates of 2.5%, 1.5% and 0.5% respectively. The world's largest economic locomotive, the USA, nose-dived and ended up with -1.75%. Negative or slow growth were soon translated into protectionist trade barriers hitting the export economies of many countries including Singapore. In spite of the above, we in Singapore put up a creditable performance of 6.3%.

Sir, protectionism was driven home to us in a most dramatic manner when our domestic exports fell for the first time since 1975. Other new forms of protectionism will continue to rear its ugly head. The French, as we all know, have introduced linguistic restrictions. The Americans have "graduated" certain export items from the Generalised System of Preferences. Other euphemisms include orderly marketing arrangements and voluntary export restraints. The latest form of protectionism but more harmful to the global trading community is competitive currency depreciation or devaluation. Such short-sighted policy basically "export" one's problems to one's trading partners. These beggar-thy-neighbour policies could trigger off a global economic collapse reminiscent of the time in the early 30's.

Sir, this trend will continue unless governments can muster the political will to solve the structural unemployment through a long-term restructuring of their sunset industries such as steel, textiles and auto industries.

Mr Speaker, Sir, apart from protectionism, our exports are also facing stiff competition from two other sources. On the one hand, our traditional export items such as cassette radios and TV sets have now to compete with low-cost and labour-abundant centres. On the other hand, our so-called sophisticated exports will now have to meet with intense competition from the newly industrializing countries such as South Korea, Hong Kong and Taiwan. The answer, Mr Speaker, Sir, is higher productivity coupled with better work attitudes among Singaporeans. To succeed, we have to keep trim and stay ahead.

In the meantime, unemployment continues to increase in the OECD countries and the United States. In the US and the EEC, the number of jobless people hit a record high of 12 million and 12.3 million respectively. But the recovery does not seem to be within sight. World trade has now shrunk by 1.5% for the first time since 1975. The oil glut accompanied by weakening commodity prices are threatening to destabilize the international financial system. Falling petrodollars and commodity earnings mean non-payment of the US$600 billion in Third World debt to the bankers and creditors in the West. Any mismanagement of this debt could trigger off a global economic collapse with profound political and social consequences.

Sir, domestically, Singaporeans continue to enjoy a higher standard of living although real income rose by 5.1% compared to 8.6% in 1981. However, 1983 is likely to be a very rough year. But we have gone through difficult times in the past, in the late 1960s when the British pulled out of Singapore and also in 1974 in the last economic recession. I am confident that when it comes to the crunch all Singaporeans will play their part and will tighten their belts and work harder to ensure our economic survival and prosperity. In this regard we, the political leadership - Members of Parliament, Parliamentary Secretaries, and Ministers - must be prepared to set the lead, even taking a pay cut if necessary. We must inspire Singaporeans by our example and show to the world that no matter what the obstacles are, we have the determination and the resolve to overcome them. The Minister has spelt out in no uncertain terms the grave state of the world economy and the dangers that are ahead for Singapore.

Mr Speaker, Sir, I fully subscribe to the Minister's analysis of the problem and the framework of solutions he has outlined in the Budget Statement.

Where do we go from here?

It would be futile to try to forecast the timing of a sustained recovery with any certainty. In the meantime, we must work out short-term economic policies to survive the recession as well as prepare certain long-term policies. The short-term policies to stimulate the economy include Government expenditure on social and economic infrastructure such as roads, housing, Changi Airport extension, the MRT and so on. In the longer-term, we will have to devise policies to ensure efficient allocation of resources in the private sector via the free market mechanism.

Access to New Technologies and Foreign Capital

Mr Speaker, Sir, the pace of our economic development, especially industrial, commercial and financial, hinges on the speed of our automation, robotization and computerization. It is heartening to note that we would gain access to new technologies from foreign investments. However, these new technologies have also reversed the international investment pattern. In short, with industrial automation, labour cost which used to be the rationale for multi-national corporations to transfer their operations to relatively low-cost centres like Singapore is no longer valid. This notwithstanding, new foreign investments in manufacturing stood at $1.7 billion. It is heartening to note that the sunrise industries account for 27% of the new total investment commitments in 1982. About 25% or $366 million were accounted for investment commitments in the manufacture of computer hardware and related equipment, electronic components and machinery. Another $132 million or 7.6% is taken up by investments in computer software and engineering services. It is encouraging to note that local industries accounted for about 30% or $540 million of the total investment commitments.

However, it would be useful if the Minister could inform this House whether such investments by local industrialists were in the new high technological industries. We cannot possibly hope to develop these technologies ourselves. A tried and proven method is to comb the high-tech centres like Silicon Valley in California and other Science Parks of the West and Japan to identify such joint venture possibilities. Such joint ventures will give us access to these frontier technologies. However, investments in these frontier or sunrise industries are fraught with uncertainties and very high failure rates.

Venture Capital

Mr Speaker, Sir, one possible vehicle is another American innovation called Venture Capital. In the past, Venture Capital used to be a popular tax shelter whereby the wealthy can siphon off their taxable income. Today, Venture Capital plays a dynamic and catalytic role in the development of new industries such as Genetech, a company which is pioneering the commercial applications of genetic engineering.

Venture Capital investments serve several short-term and long-term objectives. Firstly, the short-term effect would be to provide a fresh injection of activity and vitality into the economy. The second and long-term effect comes about only when such investments emerge with commercial breakthroughs. The third objective is to revitalize the salvageable sunset industries, such as textiles, with these new technologies. Computer Aided-Design (CAD), for example, could totally transform the competitive position of such industries.

Perhaps the Ministry of Trade and Industry or the Economic Development Board could encourage successful Singapore companies in banking, manufacturing or services to set aside a part of their profits for such venture capital investment. On a selective basis we could allow writing off unsuccessful venture capital against profits. I am also convinced that such a move would ensure that some form of genuine technological transfer to Singaporeans or Singapore companies would take place.

Manpower Training, Government Commitment to Sunrise Industries and Restructuring Exercise

The Minister in his Budget Speech also stressed that Singapore's industrial development in the years ahead would depend on the pace of automation and research and development. In fact, over 60 companies had invested in automatic manipulators or programmable robot systems for spray painting, welding, material handling and assembly work. The Minister also stated that the Skills Development Fund had approved over $10 million worth of interest grants for 245 applications under its Interest Grant for Mechanization Scheme. These grants in addition would generate investment of about $78 million in new automated equipment.

It would be useful if the Minister could enlighten this House on the number of local companies or joint venture companies with local participation which had applied to take advantage of the scheme to automate their operations. To support our drive towards industrial automation, the EDB had set up a CAD/CAM training unit, a robotics training centre, as well as the upgrading of the industrial training centres to include CNC machines. Perhaps the Minister might also want to inform us of the anticipated number of people who will have to be trained if our industrial automation programme is to be successful.

Manpower Training

The Minister also dealt at length on our computerization programme both at the industrial level and in the non-industrial enterprises, i.e. commercial offices. To date, the Government's efforts to encourage computer literacy and computer awareness have been fairly successful. As the Minister has stated in the Budget Statement, about 2,000 firms in Singapore use computers in their operations with another 1,800 in the pipeline. Computer Clubs too have proliferated in schools, community centres and the NTUC's workers centres.

In this respect, the National Computer Board, the NTUC and the Ministry of Education must be congratulated for their role in promoting computer education in Singapore. The upshot of their success is the purchase of expensive computer hardware especially microcomputers in the schools, community centres as well as the NTUC's several computer centres.

At this stage, it might be opportune for the Ministry of Education or the NCB to monitor and review on the state of our public computer education programme. In particular, the Ministry might want to look at the fundamental issues again, such as whether we are moving in the right direction and also at the right speed, what else could be done to speed up computer literacy especially among the relatively low-skilled white-collar workers. These are the very people whose productivity could be raised through office automation. The Minister might also wish to assure these people that computerization and office automation would mean better paying jobs and not loss of jobs.

Mr Speaker, Sir, computer familiarity and literacy is basically a personal skill. We cannot realize the full economic and productivity potential of the mighty micro until such time when every working Singaporean can work on his own personal computer.

In this respect, I would urge the Minister to consider some form of tax relief for expenditure on personal computers. This will bring the computer right into the homes of thousands. They will live with computers and develop a familiarity and appreciation of the strengths and failings of computers. Thousands will learn the basic computer operations in their leisure hours. It is a fact that people get fascinated with computers and we should be exploiting this curiosity and interest. Such a move would complement our manpower training programme to meet the shortage of computer personnel such as programmers and systems analysts. Moreover, the social and economic spin off arising from the widespread use of microcomputers in as many households as possible can be tremendous.

Higher Productivity Tax Write-Off for Expenditure on Computers and Office Automation

Mr Speaker, Sir, the Minister's proposal to allow non-industrial companies to depreciate their expenditure on computers and office automation will be a timely booster to the lack-lustre productivity growth in the service industry. In fact, productivity in the commercial sector which includes retail trade, restaurants and hotels, fell by 0.5% and 2% in 1981 and 1982 respectively. This disturbing trend must be arrested through greater automation in the service sector. At the same time, we must inculcate better work attitudes among our workers. What is needed is to make Quality Control Circles or Work Improvement Teams more relevant to the service industry.

Removing Distortions in the Free Market Mechanism

The private sector welcomes the Government's move to allow a company's expenditure on computers and office automation to be depreciated in one year. This move would go a long way to improve the productivity in the non-industrial sector. However, productivity in this sector, and for that matter in the market economy as a whole, could be hampered by certain Government legislation and levies. For example, the SDF contribution is a heavy cost burden, especially for small enterprises who could hardly benefit from the scheme. Recently the Hon. Minister for Finance informed this House that as at 31st December 1982, the SDF has disbursed only $27.5 million for skills training out of an accumulated total of $313.8 million.

In view of the recession, it might be timely for the Government to review the relevance and efficiency of the scheme.

Incentives to Work, Save and Invest

Our invisible earnings, especially from financial services, will continue to generate surpluses in our overall Balance of Payments. As a financial centre we want to encourage free flow and especially inflow of capital into Singapore. The latest tax concession to promote loan syndication in Singapore would improve our competitiveness vis-a-vis our immediate competitor, Hong Kong. As far as possible, our tax regime should be flexible enough to induce repatriation of offshore income without giving rise to rampant tax avoidance or evasion.

In this respect, the Minister might want to enlighten the House on any moves to review our laws which deter Singaporeans from bringing back their legitimate incomes from abroad. For example, it is generally reckoned that our laws on estate duty have also given rise to significant capital outflows. Estate duty and similar taxes on inherited wealth used to serve as social instruments to redistribute wealth. While this principle is valid, the reality is that such taxes have now degenerated into a taxation on honesty and good citizenship. Mr Speaker, Sir, the not so wealthy or the newly emerging small property owning citizens pay their taxes regularly and have no need to resort to professional advice on tax planning or whatever euphemisms one might choose to use. These are the real victims of estate duty, especially when they die unplanned. In the meantime, the really wealthy con- tinue to invest, legitimately, millions of dollars in tax shelters abroad to avoid paying estate duty. Sir, the loser is not the tax collector but the whole economy of Singapore. Mr Speaker, Sir, such legislation can be characterized as "a legislative success but policy failure". Our tax regime should not become a tax on initiative and hard work. More important, in a nation of young taxpayers, the tax system must be so structured as to encourage risk-taking and accumulation of wealth and savings and, having accumulated the wealth, to invest and to retain it in Singapore. Maybe it is now time for the Government to review its estate duty laws.

Enhanced Child Relief for Specially Qualified Married Women

Our over-full employment situation, an unusual phenomenon in a world gripped by recession, continues to constitute a major constraint to our economic growth and development. Filling the manpower gap from non-traditional sources poses several social strains. Some economists have suggested that we should tap the economically inactive persons within the employable age group, like the 15 to 60 years group. If one were to exclude the retired persons, we would end up with a potential pool of about half a million, of whom 78% are women. Thus, our planners have zeroed in on this potential pool of women power.

The Minister, in his Budget Speech, has now proposed an enhanced child relief to include 5% of the woman's annual earned income. This appears to be a policy instrument which could be characterized as "too little and too early". "Too little" because 5% is neither here nor there, and "too early" because, in a recessionary period, our priority would be to get existing employees to hold on to their jobs, not bringing in new entrants to the market.

Science Park

Sir, I now turn to the subject of Science Park referred to by the Minister in his Budget Statement. Mr Speaker, Sir, an intense concentration of brains and ambition in California's Silicon Valley has given birth to household names like the Apple and Atari, just to name two. Our Science Park, I believe, is inspired by Silicon Valley and other Science Parks in the West and Japan. The recession, however, appears to have deterred many companies from setting up their operations at the Park. Maybe the Minister might want to review and improve the incentive package such as capital grants, rental rates to induce more firms to move into the Park.

Housing

Mr Speaker, Sir, Public Housing is today a major issue with many Singaporeans still waiting for their flats or waiting to change to bigger flats. The HDB's accelerated building programme should defuse some of the frustrations among Singaporeans who have waited for what they felt to be unreasonably long periods of time.

However, there is compounded frustration because of the constant change of ground rules. The ground feeling appears to centre on uncertainty. For example, HUDC applicants are uncertain of their queue which could be prolonged without notice due to privileges extended to public servants, university lecturers and other expatriates. It should be noted, however, that Singaporeans generally do not begrudge housing facilities for these people even at subsidized rates. Their only complaint is that any such privileges should not disrupt their allocation. It might be worthwhile for the Government to seriously consider special and separate housing schemes for public servants in designated housing estates, similar to those in Neptune Court, rather than adopting this present practice of queue-jumping,

Energy and Water

On energy, I am glad to note that the Government will continue to pursue its policy of efficient energy usage. The current weakening of oil prices and glut conditions should not lead us to stray away from this policy. It is also heartening to note that the Government has entered into negotiations with the Governments of Malaysia and Indonesia for possible purchase of natural gas. This certainly will enhance ASEAN bilateral cooperation.

The Minister also stated that we will soon be able to formulate a package of incentives and disincentives to promote water conservation in commercial and industrial enterprises". This is most welcome. Since water consumption has dropped 12% because of the usage of thimbles, it is now time to legislate the use of thimbles and spring-lock or spring controlled taps in all buildings, especially those with public areas. This will definitely lead to less wastage. We have all sorts of legal requirements, from the size of the doors in buildings, surely the one for saving water should have top priority. The PUB and the Ministry of National Development should look into this aspect as a matter of urgency.

Conclusion

Sir, overall, the Budget sets out the policy parameters to ensure that we will be ready to take advantage of the recovery when it comes.

Firstly, our open-door policies will continue to give us access to new technologies such as micro-electronics, biotechnology and genetic engineering.

Secondly, the Budget sets out our manpower policies to ensure that we have the skilled management and labour to exploit these technologies. We must relentlessly push ahead with our manpower training, especially in CAD/CAM, robotics and CNC engineering. Here, regular dialogue and consultation with both management and labour are critical. The labour movement must be 100% convinced of their role in this social, economic and technological revolution. Manpower training, retraining, factory shutdowns and opening of new ones - all these can be very painful. In the West, this revolution has virtually been aborted by the trade unions.

Thirdly, we must have access to foreign sources of capital or a high savings rate or both.

Fourthly, our external debt must be kept within manageable proportions. At the end of 1982, our external debt is a mere $874 million or 4% of total Government debt.

Fifthly, we must restructure and upgrade our manufacturing sector or be prepared to abandon sunset industries.

And finally, political stability with a Government committed to development.

Mr Speaker, Sir, the Minister's Budget is our first spring board not just out of the recession but also our launching pad into the mid-1980s and beyond. I fully support the Budget Statement. 3.49 p.m.

Encik Abbas Abu Amin (Pasir Panjang): ( In Malay): Mr Speaker, Sir, I rise to congratulate the Hon. Minister for Trade and Industry for presenting a realistic and pragmatic budget. It is, in fact, a sequel to his Budget Statement in 1982. In utter earnestness, he forewarned this House that 1982 was going to be a grim year with disturbing trends in unemployment and protectionism in industrialized countries. True enough, the state of recession and consequent economic downswing in Western Europe as well as in the United States have affected the whole world.

Recession and its Effects

The effects of this recession which have been far worse than that of 1975 have rocked even nations that have been on firm and sound economic footing. I dare say, Sir, that Singapore, through the keen foresight and efficacious planning of its Government, has managed or, I should say, is managing to weather the storm though not without setbacks. While our productivity level has somewhat declined, the essential, potent features of our industrialization programme-full employment and the maintenance of international confidence in our economic politics and management - have been kept up.

Mr Speaker, Sir, it is indeed heartening to note that there are already hopeful signs that the United States is pulling itself out of the doldrums and this, I am sure, would have advantageous effects upon developing countries.

In the meantime, we have to take advantage of this lull period in the world economy and prepare ourselves for the future. We have to equip ourselves to face the changing trends in industrial situations. In particular, the surge towards automation, robotics and computerization is in vogue. Workers in the traditional industrial environment must avail themselves of the opportunities of the future and take definite steps to change attitudes, adjust, educate and retrain.

Sophisticated industrial environment

Working in the modern and sophisticated industrial environment - requires certain minimum standards of education and skills. Robots and computers, no doubt, will do given jobs faster, accurately and efficiently. But these must be programmed and handled by human power - human power that is skilled and knowledgeable from the lowest to the highest levels.

Talking about human power, Mr Speaker, Sir, it has been mentioned that more than half a million of our workers have less than primary six education. Despite this, they are vital to our manpower needs. We must not neglect this sector of our workforce. Upgrading their standards of literacy and numeracy should be the prime concern of all agencies concerned with manpower development.

Basic Education for Skills Training

The Skills Development Fund appears to have benefitted the upper echelon staff such as managers, supervisors as well as skilled workers. This is encouraging and in line with national objectives to upgrade performance and consequently increase productivity. On the contrary, those in the lower rung do not seem to have received the same impetus with regard to their enhancement in skills achievement and literacy level.

Nevertheless, steps are now being taken to rectify this sordid situation. The Basic Education for Skills Training (BEST) Programme conducted by the Vocational and Industrial Training Board involves about 5,000 workers from some 60 firms. Similar courses are being conducted to upgrade the level of literacy of some 1,000 National Servicemen. I would also like to mention here, Sir, that the serious nature of the situation has also been taken note of by the NTUC,which has initiated BEST classes for three intakes in July 1982, October 1982 and January 1983 involving more than 7,000 workers. I would like to further urge other employers to contribute positively by motivating the unskilled workers to take advantage of the various BEST classes and courses conducted by the employers at their work-places as well as those conducted by NTUC and VITB. I can assure the House, Sir, that the trade unions will continue to conduct such and similar courses for the benefit and well-being of the workers.

But, as a long-term measure, I would like to suggest that a proper study be made of this shortfall in the literacy level of those half a million workers so that the Government, statutory boards and the unions could work in unison to ensure that this lot of the workforce improve themselves and prepare themselves for the future.

Housing

Mr Speaker, Sir, it is heartening to note that positive steps are being taken to build more flats to meet increasing demands. Skilled workers from non-traditional sources are now available to expedite the building programme. However, efforts must be made to encourage local workers to become interested in construction work and to be more skilful in the long run. Efforts should also be made to inform and educate both potential construction workers and parents on the advantages of pursuing a career in the construction industry. Assurances must be made that careers in the construction industry are relatively safe, challenging and rewarding.

Tax incentives

Sir, the tax incentive announced by the Minister for retired persons and housewives is most welcome, and this would definitely spur them to continue contributing their wealth of experience and expertise to the nation. The imposition of tax on liquor and tobacco does not affect most of the people and the increase itself is too negligible to cause any concern to those who indulge in smoking and drinking.

Energy Conservation

Mr Speaker, Sir, finally I wish to touch briefly on energy conservation. I wish to support the Minister's call for energy conservation and his condemnation of energy wastage. His suggestion that energy conservation campaigns be continued from time to time is a timely reminder to the citizens not to be wasteful and to take things for granted.

Sir, I beg to support the motion. 3.58 p.m.

Mr Bernard Chen (Clementi): Mr Speaker, Sir, I would like to join the other hon. Members in supporting the financial policy outlined by the Minister for Trade and Industry for the coming fiscal year 1983-84. The Minister has, in his customary sober manner, painted a realistic picture, although somewhat less cheerful than we expected, of our economic performance in the past year. The world-wide recession has taken a very heavy toll on the economies of most countries, developed and developing, including Singapore. In particular, our manufacturing sector, which has been the mainstay of our economy for the past decade, was hard hit by falling external demand as well as increasing protectionism practised by developed countries which used to take large shares of our domestic exports and are now looking inward to source the supplies from their own manufacturers. Even tourism growth which has averaged more than 10% in the last 10 years or so had also fallen to 4.5%.

Our growth would have been much worse if not for the Government's efforts in stimulating construction in both the public and private sectors. The buoyant construction activities have demonstrated, once again, that the Government's economic diversification policy has paid handsome dividends. If not for our contribution by Construction, our economic growth would have been halved. The conse- quences of lower economic growth are not yet apparent to many Singaporeans, especially the younger ones. Lower growth would have meant less job creation and therefore higher unemployment, as the labour market is not able to absorb all the new entrants, as well as provide alternatives to all those who have been retrenched. This is now being experienced by most developed countries, some with an unemployment rate of as high as 10%. Even Japan, which has not experienced any unemployment to speak of, is now facing a so-called 'high' unemployment of 2.75%. If the Japanese worry, we had better start doing so ourselves. Lower economic growth would also mean lower income and, therefore, lower spending power. Our shopping complexes and eating houses would not have been as full as we have experienced in the past year. In other words, the multiplier effects of lower growth in our major economic sectors would have adversely affected all other sectors. All these were, however, mercifully avoided with our economy achieving a 6.3% growth rate. Everybody in Singapore has, in fact, been asking, "Where is the recession?" Our young workers therefore have yet to experience the painful problems of trying to secure jobs, because jobs are still abundant. Singaporeans in general still feel as prosperous and happy as in the year before.

One other favourable factor was the low rate of inflation brought about by lower oil prices as well as those of other major commodities. This was unlike 1974-75 when we were hit by both recession and high inflation. All in all, therefore, we have fared well by the Government's far-sighted economic policies and the ability of our people to react to rapidly changing circumstances.

One lesson we should perhaps learn is that, in the face of difficulties, we must become more efficient in order to survive. For example, we have been able to export most of our manufactured products over the years and remained competitive. However, with dropping external demand, buyers have become more selective and price conscious. Other producers have recognized this change and responded by improving their own products in both price and quality. Our manufacturing industries could have performed better than they did last year, even though world demand has dropped if they are more competitive and, in so doing, get a larger share of a shrinking world market. All this means that we must achieve higher productivity and produce goods cheaper and better than our major competitors. The Government's efforts in improving productivity by training our workforce and swinging to higher skilled industries are to be taken very seriously and not just as one of the campaigns that are staged every year. Our workers and employers must give their full support to realize this improvement in order to survive the future economic crises in the years to come. More important, to survive well, we must be fully committed to excel in all that we do, and do it better than others.

Coming back to the policy of accelerated construction as an anti-recession measure, let me make a few comments. As far as construction projects in the public sector are concerned, we are on firm ground because these projects involve mainly housing, infrastructure, such as roads and the Mass Rapid Transit, for which there is already an established demand. What is lacking is only sufficient supply. However, construction projects in the private sector which include offices, hotels, shopping complexes and private housing are being carried out without firm indications that there would be a demand for them. The demand for such additional facilities is not certain as it depends on both external and internal growth factors. Internally, income must continue to rise to enable Singaporeans to purchase new houses and apartments. Increases in income can only come from higher economic growth. Higher economic growth will also be necessary to generate sufficient activities to fill up our offices and shopping complexes. Externally, there must be world economic recovery to provide opportunities to bring business and tourists to Singapore to occupy our hotels. Unfortunately, our control on the world economy is nothing compared to what we can do to our own public sector. There is, therefore, a possibility that we may make the mistake of over-building. It is my hope that we will not repeat the glut in hotels, office complexes and private housing that we have experienced in the mid 1970's.

While much can be said about leaving the supply and demand of offices, hotels and housing to market forces, there should be closer consultation between Government and developers to try, as far as possible, to reduce the wide fluctuations between supply and demand which create situations of feast and famine with severe consequences of either spiralling or tumbling prices. The developers themselves should re-assess their building programme to bring it more in line with market demand. Moreover, they should go actively into securing more business instead of waiting for business to come to their doorsteps. I am reminded of the remarks made by a well-known hotelier. When asked what he would do with the empty rooms in his new hotel project because the hotel industry was facing a surplus capacity, he replied that the last thing he would do was to sit down and cry over the low occupancy rate. He would get up and go out to search for new business and bring in more guests.

Another longer term effect of our Construction policy is to create additional demand for workers in the services sector, such as those required by our offices, shopping areas, hotels and restaurants. This will be reinforced by the lower absorption of labour in our manufacturing industries as they struggle to recover growth and, at the same time, switch on to high skilled industries which require less workers. Our labour situation will likely remain tight if we do not arrest the higher growth of labour absorption for the services sector. There is a limit to automation and mechanization in providing services. Can we imagine that we would have robotic maids making our beds in hotel rooms in the morning or an iron lady serving a cool and refreshing cocktail at a bar and, as the Member for Chong Boon has suggested, to wind up the evening with a sumptuous dinner cooked by a computer. The answer will probably lie in adopting radically different operating and administrative systems which would require much less labour, helped by as much mechanization as possible, and yet providing similar quality service although not as personalized as one may wish. This has, in fact, been done in many hotels and offices in other countries. We must continue to pay great attention to the judicious allocation of labour in sectors which yield the highest returns and which would be commensurate with the skills that our workers are going to acquire.

We have been able to weather the storms of recession in the last year because, as a people, we have continued to work hard and, more important, are ready to change our work habits and adapt ourselves to new situations. We would have to continue to do this, and become even better if we hope to overcome the lean years ahead. To help us do this, the Government has provided a solid economic framework complete with the required infrastructure, especially in skills training and development. Given our determination, we and the Government, I am confident that we shall be able to pull through the coming year better than the last. 4.10 p.m.

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I rise to support the motion standing in the name of the Minister for Trade and Industry. We have heard at length the grim picture of the economy painted by the Minster in his Budget Statement and by the three previous speakers. The Minister has analysed the world economic scene and how it is going to affect us in the coming years. His call to improve productivity at our workplaces and to lower our expectations for wage increases in 1983 should be taken seriously by every Singaporean.

Mr Speaker, Sir, I fully support the Government's tax relief for the aged and the handicapped. This shows the Government's concern for the needs of these two groups of Singaporeans. I also support the Government's increased taxation on liquor and cigarettes, and I hope this will be an incentive for many to give up smoking and to reduce their consumption of alcohol. The generous depreciation allowances on computers and office automated equipment should assist our nation towards increased productivity and advancement up the technological ladder. I think the Member for Chong Boon's suggestion for home computer write-off should be seriously taken by the Minister. The benefits are tremendous.

There are also about 380,000 owners of private cars, goods vehicles, motorcycles and scooters who must have heaved a sigh of relief at being let off by the Minister - this time.

Mr Speaker, Sir, I would like to draw this House's attention to the enhanced child relief for the specially qualified women. While I feel that the specially qualified women deserve this incentive, the rest of the working women should also enjoy the same tax incentive because I am sure their need for this relief is greater than those specially qualified women.

The Minister has cited the cost of domestic help as the reason for granting this relief. However, I am sure the Minister is aware that for every mother who works, whether in the factory, office, school or hospital, some cost has to be paid towards the foster care of her children. This care could be in the form of a child-minder, day-care, nursery care, domestic help or foster care. Mr Speaker, Sir, our women have been encouraged to work, and there are a total of 394,980 women in the labour market, of whom 163,245 of 14.6% are married, widowed or divorced. The tertiary-educated women who form the bulk of these specially qualified women comprise less than 1% of the total workforce. Surely the Minister would want to encourage the majority of these married women to continue working by extending this tax incentive to them also.

With this note, Mr Speaker, Sir, I support the motion. 4.15 p.m.

Dr Ow Chin Hock (Leng Kee): ( In Mandarin): Mr Speaker, Sir, 1983 is a decisive year for the recovery of the world economy and our economy. Are all these signs pointing towards the oasis, or are they merely mirages? We shall know the answer later this year.

Last year, the world recession worsened - the unemployment rate kept increasing while growth rate declined. There are two obstacles to economic recovery: (1) the protectionism of the industrialized countries, and (2) the deepening debt of the developing countries. These will persist for a long time. Sir, when one advances in age, there will be less hair on the head; one will then lose fantasy and will lose what the Prime Minister described as wishful thinking. Therefore, I do not expect, or hope, the industrialized countries to pay the debt of developing countries which now totalled some US$700 billion.

The world faces yet another problem early this year - the declining oil price which brings about a confused oil market. A declining oil price should benefit the non-oil producing countries in the short term. A lower oil price will help both the developing countries and the industrialized countries to lighten the pressure on their international balance of payments and inflation and will also help stimulate their economic recovery. But the instability in the oil market resulting from competing price reductions will have adverse consequences. Declining oil prices will slow down oil exploration and the search for alternative sources of energy, Both factors are not favourable to Singapore's Asian Dollar Market and oil rig construction and related activities. Moreover, for Malaysia and Indonesia being oil producing countries, lower oil prices will mean a reduction in their income. As we have close economic relations with them, we will also be affected indirectly.

Ours is an open economy. Our total trade is 3.4 times that of our GDP. The world economic recession certainly affects adversely many of our sectors which depend on external demand. The growth rate of our largest sector Trade has declined in the past three years. The second largest sector Manufacturing where 60% of its products depend on external market has suffered an even greater blow. Its growth rate last year was -5.6%. Other sectors also had their setbacks. Only the Construction sector registered a growth rate (35.5%) higher than in 1981. However, as its relative importance to our GDP is small (6.6%), its rapid growth cannot offset the slowdown of the other sectors. Hence we have an overall 6.3% growth rate, the lowest in the last seven years.

However, compared with many countries, our performance in 1982 was indeed creditable and hard to beat. What is consoling is that the inflation rate has declined to 3.4%; unemployment rate was only 2.6%, with an increase in the number of jobs by some 1,800 compared with 1981. Besides, investments maintained at $926 million, although slightly lower than 1981, was the highest since 1972. National savings increased from $9.82 billion in 1981 to $11.7 billion. Average weekly earnings of employees increased by 15.3% over 1981 and the balance of payments had a surplus of $2.52 billion. All this fine performance will help our economy to weather the storm ahead and to meet the crisis of short-term economic depression.

Sir, during the present world-wide economic recession, all countries are looking towards the driving force of the American economic recovery for a breakthrough. Although many people are not optimistic about the economic prospects for this year, there are indications that the frigid winter of the American economy will soon pass and that the dawn of spring is round the corner. First, the rate of inflation and interest rates are decreasing, while the demand for motor vehicles, housing and other goods is increasing. All this will contribute to the recovery of the American economy. There are only two items that would cause concern: (1) excess productive capacity of the US economy; (2) the huge deficit of the US Federal Government budget. Last year, the US Government budget deficit reached US$110 billion while total interest on public debts reached US$111.7 billion, creating the highest record in her history. Should the deficit increase further to a great extent, it would cause a re-inflation of prices and the return of high interest rates. Therefore, 1983 is a critical and decisive year for the American and world economies.

Sir, we should not passively wait for dawn. In the course of adverse economic situation, we must dig in and make use of the recession to upgrade our workers' skill, renew equipment, raise productivity, improve the quality of our products, explore new markets and diversify the products. Singapore is like a small boat that is easy to manoeuvre at every turn. Being a small country, it is better for us to look for business activities that would be most advantageous to our development, such as the development of information software, precision engineering and medical consultancy, etc.

Productivity performance last year was disappointing, partly because of the unsuitable measurement of labour productivity in terms of the ratio between output and the number of workers. A better measure is to evaluate the ratio between value-added and man-hours. The Statistics Department should improve upon its measurement of productivity. Although capital-labour ratio and technology are important in raising labour productivity, human factors such as workers' work attitude, labour-management relations and team spirit are equally important. It is when we are well prepared now will we be able and ready to rise above and sail across the water when the tide rises at the right time, to enable us to move forward and even to climb another peak of high performance.

The Budget this year can be said to be well balanced, calm and tranquil. Other than tax on liquors, tobacco, and two petroleum byproducts, there is no tax increase. The few items of personal and company tax concessions are mainly of the nature of symbolic consolation prizes. Only the development expenditure of the Government can have any stimulating effect on the economy.

There are three tax concessions for individuals. There is an increase in earned income relief for individuals aged over 55 years old and for handicapped persons. Although the real benefit is not much, it will serve as an encouragement and as a reward. For the care of aged parents or grandparents, the concession is different from that of last year. Last year the concession was meant to encourage the younger generation to live together with the older generation under one roof. This year the concession is meant to encourage the aged persons to fortify themselves to continue to contribute to the economy of the nation.

Another tax concession is the enhanced child relief for specially qualified married women. This is, of course, welcomed by working professional women. But I doubt whether such a concession will encourage those who choose to stay home to come out and work, or persuade those who decide to quit to stay on their jobs. To such women "who enter the kitchen", child-care and its upbringing is of paramount concern. With the rapid advancement of science and technology, although there are various domestic gadgets to replace human labour, such as the microwave oven, washing machine and dish-washing machine, etc., up till now there is still no robot with human feeling and compassion to replace the child-caring function of the mother. Furthermore, in our present society in which some people claim it is male-chauvinist dominated, the income of such women is regarded as supplementing the family income. Therefore, I believe the effect of this concession as an encouragement will not be great.

With regard to company tax concessions, there is definite encouragement in the exemption of stamp duty on cheques and in tax exemption on income from Asian dollar loan syndication in order to develop Singapore into a financial centre. The greatest concession is by way of encouraging companies to purchase computers and automatic equipment, for which there will be 100% depreciation allowance within the first year. This is consistent with our policy of computetization and automation to increase productivity and to open up overseas markets.

It is welcoming to note that royalties for musicians and writers will be exempted from income tax. However, it is more urgent that we should encourage our people to read books and to take part in cultural activities. The Government should consider exempting entertainment tax on cultural activities and deducting tax on expenses incurred in buying books, especially books that are beneficial to our children and youths. There may be administrative difficulties, but we can start with our children buying extra-curricular readers from the schools. Perhaps when our Prime Minister goes on his rounds visiting the people, he will be able to see more books in their homes. Exempting entertainment tax on cultural activities will to a certain extent promote participation by the people in the various cultural activities. Such tax exemption should also prevent some cultural centres from degrading into the pitiable state of having to let their premises to banks.

Some people argue that in an economic recession Government should reduce the corporate profits tax. I do not think it is proper to do so. This tax concession will only benefit those companies that are making profits. Furthermore, there is the question whether such companies will reinvest the monies that have been saved from tax concession during the present economic recession. A more practical proposal would be to reduce the burden of costs for these manufacturers. The concession of depreciation allowance on the purchase of computers and office automation equipment this year and the Save Energy equipment last year are typical ways of reducing costs on specific items.

During the present recession, the Government should also consider reducing labour costs incurred by the firms and to use Payroll tax and Skills Development Fund levy and CPF rate as short-run economic stabilizers. The Payroll tax at present is only a part of ordinary taxation and has no specific use. The disbursements of the Skills Development Fund up to 1982 amount to $27.5 million, only 8.8% of a total collection of $314 million. Temporarily reducing the rates of the SDF and Payroll tax should not seriously affect the funds that have been allotted to upgrade the skills of our workers. Similarly, at this stage, it is not advisable to raise the rate of contributions to the CPF. To the employer, paying more CPF means that costs go up. To the employee, paying more CPF will reduce the growth of consumption expenditure, especially when the growth of income is slow. This will certainly have an adverse effect on promoting domestic demand.

The Budget has three main aims:-

(1) to increase the supply of technical and professional personnel.

(2) to promote infrastructural, industrial and commercial development.

(3) to meet the needs of our people for housing.

This year's Development expenditure will be as much as $7.789 billion, an increase of 14% over the last financial year. 40% of it will be used for building flats, 38% on developing our infrastructure, 7.4% on education and vocational training. These three items of expenditure will all promote the level of domestic demand and stimulate economy. The third item of expenditure on building of flats will further stimulate building activities. The first and second items of expenditure will increase the productive capacity of our nation's economic activities and help the restructuring of our nation's economy.

Our Budget deficit this year is $3,740 million, i.e. $680 million more than last year's $3,060 million. Some people are worried that this deficit will continually increase. However, we may note that this deficit has been over-estimated, the reason being that estimated expenditure is usually higher than actual expenditure, and estimated revenue is usually much lower than actual revenue.

On the other hand, the leakages in savings and imports may also soften the pressure of inflation caused by the increase in expenditure. However, we have to be careful not to over-stimulate the activity of a certain industry (for example, the construction sector) and thereby causing pressure of inflation caused by bottleneck situations.

The current recession may be a blessing in disguise to our nation. Firstly, the frequency of job-hopping has decreased. People are not so choosy in selecting their jobs and work attitude has improved. What is more important is that more people now understand that we must not take economic prosperity and better living standard for granted. Comfortable life does not come naturally. In the past decade or so, our nation's economy has developed so rapidly that it has incessantly raised the standard of living of the people, so much so that the people have a lower sense of responsibility. While enjoying a good life, many fuss over Government policies but when they are faced with difficulties, they expect the Government to solve their problems instantaneously, like performing magic. Actually, in difficult times, people should go hand in hand with the Government, employers together with employees, to cooperate to overcome the difficulties.

We can do nothing about the exogenous factors. However, we can try our best to improve ourselves to face the challenges of bad times courageously and ride the storm ahead. Every cloud has a silver lining. After the storm, we shall be able to see the bright sunshine again.

Mr Speaker, Sir, I support the motion moved by the Minister for Trade and Industry. 4.35 p.m.

Dr Ang Kok Peng (Buona Vista): Mr Speaker, Sir, the year 1982 has been a difficult year for all, both developed and developing countries. Most of the industrial countries have experienced economic stagnancy, resulting in high unemployment and mounting social pressures. Faced with serious economic problems, industrial countries resorted to more stringent protectionism bringing about a sharp decline in world trade.

Although many leaders in the industrial countries have acknowledged the potential danger of rising protectionism and its adverse effect on the world economic recovery, they have been singularly unable to match words with action and undertake measures to halt the unhealthy trends towards the disruption of free trade.

The economic environment for the developing countries has also deteriorated over the year. Even some large developing countries, endowed with abundant natural resources, were brought to the verge of bankruptcy because of their high debt burden and financial mismanagement, together with a decline in the prices of their primary products.

Viewed against this background, our economic growth of 6.3% is indeed a good performance reflecting the correct economic strategy that we have followed.

In the Budget debate last year, I envisaged that the buffering action of the domestic component of our economy would have to be relied upon even more to help sustain a satisfactory economic growth for 1982. This has turned out to be so as the domestic factors did become the prime stimulus to the economy in 1982 accounting for 56% of the sources of economic growth.

In a climate of continuing world recession, the external demand for products and services, until recently the main impetus to our economic expansion, is likely to slacken further. For 1983, therefore, the domestic component of our economy may well again have to provide the main stimulus for economic growth. Fortunately, and as a matter of great reassurance, our accumulated resources are able to help us tide over another difficult year ahead.

Recently there have been various indications in the industrial countries, particularly the United States, that the worst is about to be over and the world is at last on the road to recovery from recession. We all sincerely hope that the signs have been correctly interpreted.

Mr Speaker, Sir, permit me now to raise some general comments on the Budget. The response to the Budget Statement from the industrial and commercial quarters is generally favourable. However, to the average man in the street, it has caused hardly any excitement. To me, it is quite an unusual Budget in the context of the difficult world today. At a trying time like this, we are still able to propose a level of spending geared to development without placing additional burden on any specific group of people. Granted that smokers and drinkers have to cough out a bit more for their tobacco and liquor, but then these are non-essential items. In contrast, other countries, near and far, have to adopt 'austerity budgets' with large cutbacks on developmental expenditure and social spending. Their people would likely have to be content with no improvement in the standard of living for the coming year.

The Budget before the House is of the "supply side kind" aimed at stimulating growth consistent with our drive for higher productivity while keeping inflation in check.

The special tax holiday scheme to promote loan syndication activities is a timely step toward making Singapore a full-fledged financial centre. The tax concession on the purchase of computers and office automation equipment will no doubt serve as a fillip to our non-manufacturing enterprises in their efforts to automate and mechanize their operations.

The emphasis on education and manpower development is rightly placed as it will enable our people to become better equipped to face the challenges and difficult times ahead and also to be able to seize the opportunities that will come with the end of the world recession.

At this juncture may I refer to the provision for development expenditure for the Ministry of Education. Almost $300 million will be spent as capital grants to institutions for tertiary education. This is in line with our emphasis on manpower development which I fully endorse. However, I would have liked to see more provision for Government-aided primary and secondary schools than the amount of $3,019,600. This amount seems to be too meagre and inadequate to meet the requirement of these schools as some of them are in urgent need of modern facilities.

Like the Government schools, they are doing a good job educating our young who represent the input of the institutes for tertiary education. A more substantive grant to these schools would contribute to a more effective and balanced programme of manpower development. I hope the Minister for Finance would take note of this comment.

According to the Economic Survey of Singapore 1982, the rate of female participation in the labour force rose to 45.2%. This is 0.4% more than that of the previous year, representing a growth of about 1%. This shows that we have not been too successful in exhorting non-working women to join the labour force. What is required is a systematic study to identify the factors favourable to a greater female participation rate and follow this up with appropriate measures. Perhaps the Minister may wish to consider granting a tax concession as an incentive to housewives apart from those with high professional qualifications to take up part-time employment. With a greater female participation rate, our reliance on foreign workers may be reduced.

One more point I wish to touch on is the matter of Estate Duty. We should re-examine this item of revenue. For FY 83 an amount of $30 million or 12.3% less than the amount collected during FY 82 has been estimated. In FY 82 the amount collected was $34.209 million - a sum surprisingly tiny for a country of Singapore's affluence. So there are ways to minimize the estate duty payable.

I understand that the process of having the estate of a deceased assessed and duty settled could in certain cases be a cumbersome and time-consuming affair, not to mention the inconvenience to the beneficiary or beneficiaries. In view of this, should we not either abolish it or replace it with some other manner of taxation so that the estate of a deceased can be expeditiously settled in keeping with our national polity of high efficiency.

Having made these comments, it would be remiss of me not to congratulate the Minister for proposing a good Budget.

Mr Speaker, Sir, the world recession has caught up with us and the signs are that the worst is yet to be. With prudent management of resources and sound economic policy, I am confident that we shall be able to brave the economic storm and Singapore will emerge from it a more resilient country.

I fully support the Budget Statement. 4.44 p.m.

The Senior Parliamentary Secretary to the Minister for Home Affairs (Mr Chin Harn Tong): ( In Mandarin): Mr Speaker, Sir, the Budget for the coming financial year introduced by the Minister for Trade and Industry is very encouraging. Apart from increased taxation on luxuries like liquor and tobacco, there has been no tax increase. On the contrary, the Budget provides for tax incentives for office computerization and automation, exemption of income tax for revenues earned from loan syndication of Asian Dollars and the abolition of stamp duty, etc. This will go a long way to help promote productivity and efficiency and to tide us over the present period of economic recession.

Obviously, when the global economy is in a very bad shape and the US and European countries are in the thick of economic recession and surging waves of unemployment, it is only correct for us to put emphasis on our future task on economic development and developments in commerce, industries and finance, as recession and deterioration in our commerce, industries and finance will directly or indirectly have an adverse effect on various aspects of our economic and social development. However, I would like to stress that while giving due attention to the developments in our economy, commerce, industries and finance, we should not neglect to improve the quality of our thinking and to strengthen our-social cohesiveness.

Last year, several internationally known Confucian scholars came to Singapore. Some of these scholars stated that while the Western countries were plunged into economic recession, the economists in Western countries were amazed that countries or regions that adhered to Confucianism, such as Japan, South Korea, Taiwan, Hong Kong and Singapore, were able to maintain their economic growth. They were convinced that in economic development, in addition to better management and technology, other factors were involved. These were the quality of the Man, human relationships and social cohesiveness of our people. Singapore is an island country that lacks natural resources. Our important resources are human resources. Hence the quality of the Man, good human relationships and social cohesiveness of our people are of crucial importance.

In 1968, when the new Employment Act was introduced to cope with the economic difficulties that beset Singapore, our workers (the human factor) were able to place the national interest over personal interests and were able to sincerely rally together and cooperate with the Government and the employers to solve problems. In the last two years when all were putting great emphasis on the importance of raising productivity, it was the NTUC and the workers who took concrete measures to conscientiously upgrade their own skills through further training of skills - it was the human factor. It is obvious that if we want to tide over the difficult period of economic recession and to embark on further economic development and expansion of commerce, industries and finance, we must not forget the quality of man. In recognition of this fact, the NTUC has been energetically taking steps to conduct productivity seminars, training courses on trade union leadership and courses on basic education for skills training. Through such activities we hope to further raise the level of consciousness of our workers and strengthen their cohesiveness on the production lines.

On the other hand, we find that employers and the other organizations have not done enough in this respect. I sincerely hope that employers' associations and the mass media are aware of the importance of this problem and take concrete and effective measures to encourage our workers to undergo more comprehensive retraining and re-education so as to strengthen their thought and awareness, raise their level of consciousness, make them more dedicated to their duty to the society and to their work so that they may identify themselves with their company and the society. If our workforce is equipped with such qualities, we believe that we will have the strength and the will to solve the myriad problems that are or will be confronting us. And when the world economy turns for the better, our workforce, which has a high sense of responsibility, highly motivated and equipped with higher technology and capability, will be able to push our economic development towards a higher peak. 4.51 p.m.

Mr Lim Boon Heng (Kebun Baru): Mr Speaker, Sir, I rise to support the motion standing in the name of the Minister tor Trade and Industry.

In his detailed and comprehensive statement on the financial policy of the Government for the next financial year, the Minister for Trade and Industry has signalled that there would be changes in our economic structure in view of the structural changes that are taking place in the industrialized countries.

Firstly, while the manufacturing sector will continue to play an important role in the economy and provide a high percentage of jobs for our workers, the future growth of this sector will not be at the same pace as we have seen in the last 20 years. It is likely that the manufacturing industries in Singapore will shift to higher levels of skills and technology. With the adoption of mechanization, automation and robotization, job creation in this sector is unlikely to proceed at the same rate as in the past. On the other hand, it is likely that the services sector will provide us with the avenue of growth and job creation.

We can therefore conclude that for the 1980's our economy will go through a stage of transition. Manufacturing will slowly cease to be the leading edge of the Singapore economy, while the services sector will assume the role of the prime mover of the economy. This change will have a significant impact on jobs and job creation. Our local investors and workers will have to be prepared for this change.

Through the various measures taken by Government in the past few years, our local investors have become aware of the need to upgrade, or to invest in the new growth areas. Assistance from Government has been provided through various incentives such as the Small Industries Finance Scheme, the Small Industries Technical Assistance Scheme and the Interest Grant for Mechanization provided by the Skills Development Fund. While these financial incentive schemes are available, many small industries in Singapore have not been able to take advantage of these schemes. This is not because of a lack of interest but more likely from a lack of knowledge. While the larger companies and the multi-nationals are able to obtain access to the latest technical knowledge of the industrialized countries, our small investors are not in the same position. It is essential therefore for Government, through the Economic Development Board, to help our local small investors to obtain access to technical knowledge.

The Small Industries Technical Assistance Scheme, set up last year, is a step in the right direction. Its objective is to enable local supporting industries to acquire the technology necessary for developing a high degree of technical competence. How many local investors have taken advantage of this scheme? Why have the other small investors not taken advantage of the services of the scheme? Is it because they are unaware of it, or are the services provided inadequate?

I am sure that there is now sufficient experience from the operation of this scheme for the Minister to inform this House of the progress, and the steps planned to make sure that more local investors will avail themselves of the services provided. The dissemination of information will play a key role in determining our success. The Government must intensify its efforts in this area.

Mr Speaker, Sir, ever since the Government actively promoted the new economic policy of restructuring to higher technology and knowledge intensive industries and services, we have constantly been telling our workers that they must upgrade their skills. By and large, our Singapore workers are receptive to this message. They see the need and the importance of acquiring better or new skills. They want to ensure themselves of continued employment in a restructured economy. They do not wish to lose out in this process. However, many of them are wondering what jobs would be in demand in the future and whether the education and the training that they have so far received would allow them to fit into the industries and services of the 1980s.

Ample opportunities are being made available to school leavers by the expansion of places at the National University of Singapore, the Nanyang Technological Institute, the Singapore and Ngee Ann Polytechnics and the VITB. New entrants to the job market in the 1980s would therefore be adequately trained to enter the employment market of the restructured economy. However, training and retraining of existing workers have been left largely to their employers with assistance of grants from the Skills Development Fund. A number of employers have indeed been providing training and retraining for their workers. However, the larger number of existing workers have not been given opportunities of training or retraining. If we are to succeed in our economic restructuring process, we must take steps to ensure that the bulk of our existing workers acquire the skills to remain employable in the future.

We have taken one major step, that is, the setting up of the BEST programme. The BEST programme was initiated by the National Trades Union Congress and is now given full support by the Government. Providing a basic education for workers who lack the linguistic and numeracy skills is but one step in the whole process. Such workers must still be given opportunities to acquire skills. Presently, it is stated that those who pass the BEST course will qualify for VITB courses. We may therefore assume that places will be made available to them, and that there will be sufficient places.

This presupposes that they are aware of the skills that will be in demand. I am not sure that they do, and see a need for a career guidance service to be provided for the participants of the BEST programme.

Career guidance is equally important for existing workers who already possess the basic linguistic and numeracy skills. What are the specific new skills required? Are the courses open to them? Unless our workers are made aware of this, they will be at a loss as to how they are to upgrade their skills, when their employers do not make available to them retraining courses to meet the future needs of their enterprises.

Let me illustrate with an example. We may infer from the Minister's statement that the financial and business services sector will be an area of growth. Indeed, job creation in this sector rose from 23,100 places in 1970 to 89,800 places in 1982, an increase of almost four times. The Minister has given incentives to stimulate further growth in the financial services sector. We can thus expect that more jobs in this sector will be created. What are the specific jobs and specific skills required? How will our existing workers be able to acquire these skills?

Sir, the Ministry of Trade and Industry has the responsibility for manpower planning. Although this is on the macro-level, perhaps the Ministry can provide some enlightenment to our workers on the range and type of skills that will be in demand in the future. It is only then that our workers can prepare themselves for the future.

The cost of training and retraining of workers is very high. For example, the estimated cost of providing basic education to the 300,000 workers who need it through the BEST programme is over $240 million. The cost of providing our workers with skills will be much higher. As such, I beg to differ with the hon. Member for Chong Boon and the hon. Member for Leng Kee and request the Hon. Minister for Trade and Industry not to reduce the Skills Development levy. It is quite natural that when there is over $300 million lying in the Fund, there will be calls to reduce or to end the contributions to the Skills Development Fund. We will be making a grave mistake if we accede to such calls. The task of providing our workers with higher skills and knowledge is an awesome one. We must be resolute and single-minded in this objective and ignore the cries of pain from the employers whether they be real or imaginary. I say imaginary because corporate profits have increased last year as amply provided in figures from the Income Tax Department.

Sir, on that note, I support the motion.

Mr M.K.A. Jabbar (Radin Mas): ( In Tamil): Mr Speaker, Sir, the Minister for Trade and Industry has presented a Budget on which he has elaborated at length. I give my full support to it.

In general, in this period of a world recession, we have to resort to expeditious measures to weather the depression in the world economy. Some tax concessions have been given in the Budget. Although no government can govern without resorting to taxation, the public, nevertheless would have liked to have more tax concessions. They are unhappy to see a ceiling imposed on income tax relief and in the coming years they hope to see more concessions.

Mr Speaker, Sir, I wish to touch on the allocation of funds for Government departments and I wish to see certain changes. The nations of the world are increasing their defence expenditure. Even countries which advocate peace have been gradually increasing their defence expenditure. Ours is a very small nation. We have a need for modern equipment. At the same time, we have to improve the living conditions of our national servicemen. We have to increase their allowance so that they can enjoy a better life. More facilities should be made available to them, as this is the Government's duty. In order to achieve this, I hope that the allocation for the Defence Ministry will be increased. The reason is that national servicemen presently require a greater amount of allowances for themselves.

Mr Speaker, Sir, I wish to avail myself of this opportunity to speak on the Government's policy. There are some people who are out to smear the Government and the ruling Party regarding the policies adopted by certain officers in the Government departments. We must, therefore, adopt a cautious attitude as we have to keep the good name of our ruling Party and our Government.

I only wish to speak on certain points as the other Members have elaborated on the other points at length. In the commercial sector very small firms have been experiencing difficulties with regard to the granting of work permits for foreign workers. Foreign workers are granted work permits for two years to work in these small firms. At the end of the two-year period, they are not allowed to renew their work permits and the small companies are unable to do anything about it. They have, therefore, no way to turn to. The Government has to look after these small companies and help them to solve their problem. Although the companies realize the need to reduce foreign workers, they are not able to recruit local labour. The Minister has a commendable Budget and I fully support it.

Mr Speaker: I propose to take the Suspension now. I suspend the Sitting and will take the Chair again at 5.35 p.m.

Sitting accordingly suspended at 5.05 p.m. until 5.35 p.m. Sitting resumed at 5.35 p.m.