COMMITTEE OF SUPPLY

Debate resumed.

Encik Abbas Abu Amin (Pasir Panjang): Mr Speaker, Sir, the importance of safety committee needs no further emphasis. When the Safety Committee Regulations were introduced in 1975, the intention then obviously was, and of course still is, to see a self-regulating enforcement system. It goes without saying that if a company has an effective safety committee in which both employers and the employees' representatives are knowledgeable, a high standard of safety could be achieved. Loss of time could be down, accident rate would be down and definitely compensation would also be down. I would like to know, Sir, what steps are taken by the Ministry to ensure that the companies which are required under the Factories Act to form safety committees do, in fact, comply with the regulations. I suspect, Sir, that there are still many companies which form safety committees just to comply with the basic law. Does the Ministry have sufficient staff or inspectors to carry out enforcement of the Act?

Sir, it is comforting to know that with effect from 1st September 1985, three more industrial diseases have been made notifiable in addition to the 22 diseases listed in the Second Schedule of the Work- men's Compensation Act. I must commend the Ministry for its efforts to review from time to time the list of occupational diseases. What is more important after identifying the diseases, is how to educate the workforce from contacting such diseases. I would urge the Ministry to continue to organize more courses, just like the unions, or organize health exhibitions on preventive measures, including the use of safety equipment. What is intended to achieve is to increase the degree of awareness. This is one of the surest ways to working smarter. Awareness will not solve all the health problems but it certainly helps to tackle the problem at source.

Mr Speaker, Sir, I would like the Ministry to ensure that the National Productivity Board conduct more courses for supervisors, junior managers on human relations so that their middle-management staff could understand and communicate effectively with their subordinates at their work places. These supervisors play a key link role in motivating the workers to work smarter and to be more productive in line with the national effort to upgrade the performance of our workers. I need the assurance from the Minister, Sir.

Mr S. Chandra Das (Chong Boon): Mr Speaker, Sir, I would like to place on record the sincere appreciation of a number of my constituents for the help given by the Job Placement Unit of the Ministry of Labour. Sir, not only were the success rates very high but the speed and the manner in which my constituents were treated, is something other Ministries, statutory boards and Government departments may want to emulate. Having said the above, I am a little concerned whether the department can carry on its good work. In fact, for the coming year, Sir, there is a slight reduction in the manpower cost but with the same level of manpower in the estimates.

For FY 86, I believe the services of this department will be utilized even greater. There will be more demand for its services in view of the current recession. I am sure most Members of this House will have noticed the increase in request for jobs in our meet-the-people sessions. In view of the increased demand for the services of this department, I hope that the quality of the service rendered by the Placement Unit will be maintained. And I am just wondering how this can be done with the present level of manpower. Maybe the Hon. Minister has some plans to redeploy some of the other members of the staff to this Unit. I hope the Minister will pay some attention to this request.

Sir, at the same time, I find that the manpower for the Work Permit Department is maintained at about the same level. In fact, there is a slight increase for FY 86 from $2.18 million to $2.2 million. I would have thought that with the recession we have in our hands, we will be very stringent and, in fact, issue less work permits. So if less work permit applications are being processed, I am questioning the need to maintain the same level of staff as for FY 85. Maybe the Minister can throw some light on this matter.

Dr Koh Lam Son (Telok Blangah): Mr Speaker, Sir, the Acting Minister for Labour has assured this House not long ago that the unemployment situation is not serious and he cited examples of many jobs which are still waiting for workers. These are, of course, the unpopular jobs. But the fact that these jobs are not taken does not mean that there are jobs for everybody. The question I want to ask the Acting Minister is that if the people can be encouraged not to be choosy, can we assure them that there will be jobs for everyone?

Sir, it is true that there are many among the unemployed who are still choosy and they think they can still afford to wait. I think they may live to regret the day that this so-called unpopular jobs may not be there any more. My advice to them is to take on this job now. It is better to have an unpopular job than to have to beg for a job later.

Mr Jeyaretnam: Would you like to take on the job?

Dr Koh Lam Son: And it is better to have some income than to have no income at all.

There was a report in the Sunday Times on 23rd March of a local hotel which organized a visit to 11 schools to recruit for 400 vacancies as room attendants, engineering trainees and trainee waiters. Only 40 responded. This is indeed a waste. I think our teachers should be in a position to advise and motivate our students to lower their expectations in times of recession and to take up jobs which are offered.

Sir, I also feel that the Employment Service should enlarge its role. During the full-employment situation, the assistance of the Employment Service is only sought when the unemployed are unable to find jobs themselves and the number was small. I am sure with the recession, the situation has changed. I am also concerned about the manpower, the staffing at the Employment Service, as pointed out by the Member for Chong Boon. Perhaps the Minister would like to confirm for us if there is an acute increase in the number of inquiries at his Ministry and whether the Employment Service is coping well with the demand for its service.

From what I gather, the Employment Service acts only as a job matching agency. It does not actively and systematically search for jobs for all those who approach the Service. In fact, I think it should also give career guidance and motivate those people who approach the service and motivate them to accept jobs that are offered. So can the Employment Service be enlarged to serve this function? To do that, I think it should be better manned and be more active in looking after the unemployed.

Dr Ho Tat Kin (Boon Teck): Sir, I just want to ask the Hon. Minister if there has been any change in the regulations regarding foreign workers who intend to marry Singaporeans. When a Singaporean applies to the Ministry of Labour, he or she is usually told that the work permit holder has to be working in Singapore for at least five years. I have come across many cases of Singaporeans who have waited patiently for more than five years, some 7-8 years, and yet no approval has been given. Will the Hon. Minister be able to advise us if there has been any change of policy? And under what conditions will Singaporeans be able to get approval to marry a foreign worker with work permit?

The Chairman: The guillotine time for this Head is 4.40 pm. Mr Chin.

The Senior Parliamentary Secretary to the Minister for Home Affairs (Mr Chin Harn Tong): Mr Speaker, Sir, with your permission, may I raise two points. The first point is with regard to the failure of employers to pay to the CPF Board the employee's CPF contributions. I agree with the views expressed by the Member for Kebun Baru and the Member for Yuhua on this matter. Quite a number of employees have found out when their companies were subsequently liquidated that their CPF contributions were not paid into their CPF accounts. These contributions were the employees' own contributions and had been deducted from their salaries by their employers. Apparently, the employers made use of these contributions instead of paying them to the CPF Board. What does the Minister intend to do to remedy this situation?

Another point I wish to raise is about notice pay or pay in lieu of notice when a company is wound up. Employees find out their notice pay, together with wage arrears and other benefits, are not entitled to preferential treatment, ie, to be paid in priority to other unsecured debts despite what the law states. The reason is that these benefits, particularly notice pay, are considered to have been incurred by the company after the commencement of winding up. When the liquidated company has insufficient assets, workers will be very unlikely to get their notice pay if it is not considered a preferential debt. Would the Minister take up with the relevant authority to rectify this unintended hole in our legislation?

The Acting Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, I would like to thank all the Members who have given constructive comments on my Ministry. With the time constraint, I will try and answer as fully as possible and explain all the queries that have been raised. Before I do so, I would like briefly to say a few words about what the Ministry is doing in reviewing the CPF: why there is a need for a fundamental review and what are some of the areas we are looking at.

As Members are aware, the CPF scheme was established in 1955. That was more than 30 years ago, and since then, there have been many changes. Therefore, there is a need to do a thorough and fundamental review of the CPF, to redefine and reconfirm the basic objectives and to avoid straying into extraneous areas.

In doing this review, Sir, we have to take a long-term view of the CPF scheme. About 66% of the active CPF members are below 35 years of age. Therefore, we are looking at their retirement 20-30 years from now. We are not so concerned about those aged 50-55 years and above because their number is small.

We are looking ahead and so we have to take a long-term view. Over the last one year, my Ministry has already announced various improvements to the CPF scheme to liberalize on the investment outlets and so forth. Further improvements will be made after the study has been completed.

In doing this CPF review, we have to look at various factors. One factor is that we think it is better for a younger worker to save up at a faster rate. He does not have dependants whom he must look after and he needs to save up quickly to buy his home and for various other uses. On the other hand, in the case of the older worker, his cash requirements are higher. He needs to send his children to university, for instance. So the thinking of the CPF review committee is that the CPF rate should be progressively reduced as the person gets older.

This reduction with age will also help to correct the problem of the seniority wage system where older workers under the wage scale system tend to be paid higher than young workers. So there will be some correction through the CPF mechanism.

The other factor to bear in mind is that the CPF is basically a savings scheme. That is an important point to bear in mind. In examining the fundamentals, we want to make sure that we agree on the basic objectives, for old age, for housing, for Medisave and so on, and then confine the CPF scheme as much as possible to those basic objectives. Otherwise, we will be building in a lot of new features. I think there is no point collecting too much CPF by having a very high rate and then getting a lot of pressure to release CPF for many uses, for education, for example. A better approach might be to reduce the rate, say, for older workers from age 40 and above. So they will have more savings of their own in their own banks. And it is up to them whether they want to use the CPF savings for education of their children, for businesses or for other uses.

The third factor we will be looking at is how to decide on the appropriate level of the CPF rate. In so doing, we will be looking at the objectives: housing, Medisave and so on. We will also have to decide how much the person needs after retirement in order to sustain him for the remainder of his life. As we know, the life expectancy has gone up over the years. So we have to decide whether we should peg the final savings such that it is enough perhaps to allow him to draw out on his own, manage on his own and use maybe up to 50% of his last-drawn pay. This is something we are looking at: what is the appropriate level. For example, in some countries where they have a pension scheme, the pension may be pegged to his last-drawn pay, at about 40%-50% or above. We will provide in the CPF scheme for amounts to be withdrawn for housing, for Medisave and so on. At the end, after he retires, how much does he need in real terms as a lump sum? And if he manages it properly, he will have enough to live on, say, at about 50% of his last-drawn pay.

I have already mentioned that life expectancy has gone up. In 1955, when the scheme was designed, the life expectancy was only about 63 years. When a person retired at 55 years, on average he would live for another eight years, some longer and some not so long. As of now, the life expectancy for a person aged 55 is that he will live for another 18 to 20 years. This is going to go up with improvements in medical science. For example, we have just had our first case of a heart transplant patient, Seah Chiang Nee. We would not have thought of this in 1955 or even one or two years ago. But it is now a reality. And this sort of prolonging of life can only be done at a very high cost. So I think it is a very good idea that every Singaporean should save up enough for his old age.

The fifth point is that the CPF scheme should support the move towards a flexible wage system. Personally I would have liked all these studies to have been completed by now so that I can give you the results. Unfortunately, it is a very complex issue. However, I am doing my best to get the committee to complete the studies and have it discussed before the end of the year.

As far as the withdrawal arrangement is concerned, I realize that members of the public are very anxious about this point. In the last Budget debate I did mention that the Ministry was looking at the various alternatives. One alternative that I have already explained in the last Budget is that we could hold back a minimum sum of, say, $30,000, including the value of a house. This $30,000 would be enough for a person to live at $150 per month for 20 years. So it is barely at subsistence level. It may seem a big sum now just in terms of numbers, but if you compare it to what a young worker is likely to save up, even a low-salaried worker at age 55, you will find that this is not a big portion of his savings. In any case, for the older workers we will phase the scheme in: beginning with smaller amounts initially, and increasing to $30,000 eventually. In designing this scheme, we will try to minimize the impact and not penalize the majority, just for the benefit of protecting a small group who may not be able to manage their savings. We realize that most members will be able to look after themselves when they retire.

I also mentioned last year that we had to look at various possibilities, for example, whether we should distinguish between old money and new money. Money saved up to a certain date may be considered old money and beyond that it should be new money. But all these are still ideas at this point, although our thinking has because more concrete, and before the end of the year we hope to give you the full story.

Before I go on to some other points on CPF, I would like to deal with the Member for Potong Pasir's point about whether the CPF is able to pay. This is a very important point. I have given my assurance repeatedly, and I think I have convinced the Member for Anson. Somehow the Member for Potong Pasir refuses to understand. He himself has quoted the figures; saying that we have reserves of over $33 billion. This clearly is more than the total CPF of about $24 billion. It is true we have invested the money carefully in overseas assets. A lot of these are Government bonds. There is no problem selling off those bonds to pay the CPF members. Our reserves position is such that even if today we have to pay off all the CPF members at once, there will be enough money to pay. Of course, such a situation will never happen because people reach 55 years at different times and so, when they do, there will be money for them to withdraw. I think it is important, if the Member wants to be a responsible Opposition Member, for him to understand the position. Philips and Drew has made a mistake. They have been to our MAS and they have got an explanation. If you ask them now, they can tell you what are the areas they have gone wrong. The fact is this. There is no need to go into a lot of accounting here. What CPF does is to collect the deposits from CPF members and lend them to the Government. Government then invests it overseas. And all these years we have been able to generate surpluses, so much so that now, effectively, all the CPF savings have been saved up and invested overseas.

One of the problems of the Member for Potong Pasir is that he has a tendency to go into numbers. Unfortunately, as we have seen in this House, he is not very good at numbers. I am sorry to say so. An understanding of this position requires some skill with numbers, like reading accounts and so on. He is under the impression that because, in some distant future, the withdrawals will exceed the amounts put into the CPF, therefore CPF will be unable to pay, as compared to the present, when we put in more than we draw out. Let me give him a simple example. You have a cash box and every month you put in some money. At the same time you also take out some money from the box. But each month you put in more money than you take out. What happens? The money in the box will build up. Subsequently, you decide to take out more money every month than you put in. Would you have enough money to take out from the box when the time comes?

The money has been kept there, carefully kept. I have already explained to the House and given the figures which he quoted. We have more than enough. The whole CPF money has been, as it were, put into a box.

Mr Chiam See Tong: Is this our national reserves?

Mr Lee Yock Suan: Eventually when the time comes we just unwind the process. The money is still there.

Mr Chiam See Tong: Is this our national reserves?

Mr Lee Yock Suan: The money is still there. The money is saved up and invested overseas. It is part of our national reserves.

Mr Chiam See Tong: Mr Speaker, Sir, this is an important question. Is this CPF money, in fact, our national reserves?

Mr Lee Yock Suan: Mr Speaker, Sir, I have been trying to answer his point. If he does not understand numbers, he should take some lessons.

Mr Chiam See Tong: Don't debate. Answer my question.

Mr Lee Yock Suan: Try and appreciate the point. I have given him a very simple example. Our CPF is like a savings bank. It is the largest savings bank that you can have in Singapore.

Mr Chiam See Tong: They are our money.

Mr Lee Yock Suan: Deposits are guaranteed. As of now, because our population is still young, they are putting in more money, as a whole and as a group, than they take out. But come 20 years' time, 30 years' time, when the population gets older, there will be more people withdrawing from that box than putting in. But so long as the amount of money in that box has not been tampered with, has been preserved, carefully invested, as shown in our accounts, (this Government has been very prudent), there is no question of inability to pay. Maybe the Member for Anson can convince him outside the House.

Mr Jeyaretnam: Are they part of our national reserves?

Mr Lee Yock Suan: They are savings from our people invested overseas. They collectively belong to all of us as Singaporeans, whether they are CPF savings or other kinds of savings.

The Member for Potong Pasir also made a big song and dance about our decision to cut the CPF rate on the employer's side. The position is this. When we first discussed this issue, most of the Ministers in Cabinet, including myself, were strongly against any cut in the employer's CPF because we know it is the pay of the workers, and we should not touch it except as a last resort. As the months passed by and the economic situation got worse and worse - this morning we heard that growth for the first quarter is -4% - we realized that we should not stick to that position. It is better for us to take a cut in the savings than sacrifice jobs.

Mr Chiam See Tong: You should have done it two years ago.

Mr Lee Yock Suan: So we had to do it. We were reluctant to do it initially because we wanted to explore all other possibilities.

Mr Chiam See Tong: You were wrong and we were right.

Mr Lee Yock Suan: And that we have done. We have explored all other possibilities. We have cut the tax rate, we have cut the tax on PUB bills, we have done so many things. We have exhausted all the possibilities and eventually we decided, "No, our wage cost is too high. We have to cut."

Mr Chiam See Tong: Why don't you admit you were wrong?

The Chairman: You keep on interrupting, Mr Chiam. When you were speaking, no one was interrupting you.

Mr Lee Yock Suan: The Minister for Education, who was then the Minister for Trade and Industry, said that this Government is pragmatic. If need be, we are prepared to say, "Look, maybe the first position we took was right at that time. Later on when the situation changes, we will change with it." That shows our flexibility. There is no point for the Government to carry on as if it is always right. When it makes a mistake, it admits it and corrects it. That is what a government should do.

Mr Chiam See Tong: You were wrong.

Mr Lee Yock Suan: In the light of the situation at that time, we tried our best to avoid cutting the CPF rate. As things got worse we had no choice. We did all we could. We had to cut. So we are prepared to stand by it now.

Whilst on the CPF issue, I would just like to touch briefly on the other points brought up by Members. Firstly, the Member for Kebun Baru who started off the debate by raising the question of late payment of CPF by employers. I have explained the last time that my Ministry is doing the best it can. We have tried to shorten the period before we bring the employers to court. We have also tried to get the Attorney-General's Chambers to expedite the approval for us to prosecute. We have also made arrangements with the courts to give early hearing dates for these cases. The problem now is that we are in the midst of a recession. Although some of the employers are late in their payment, the majority, about 90%, pay up within two months. Only about 10%, or less, have difficulty in paying. And if we now go and get the employers to tell their employees on the very day they slipped on their payment, I think we would unnecessarily be alarming the employees.

What my Ministry will do is to re-examine the situation. We are monitoring it. As of now, the situation is not too bad.

For example, last year we had about 77,000 employers on the CPF list. Eventually we had to prosecute about 6,200. That is about 8% of the employers. So most employees are all right. And of those employers prosecuted, the majority are still paying back the arrears by instalments. So under the present circumstances, I think we are doing the best we can. We do not want to alarm the employees. At the same time we do not want to push the employers too hard; otherwise they might just go over the brink and the employees will then lose all their jobs. That will be worse off for the workers. One problem is that much of the loans are secured by the company's assets. If we try and go after the assets, the bankers have the first claim. And if we push the employers to the brink, there may be nothing left for the workers.

The Member for Jalan Kayu again brought up the question of CPF for education. He added one more P this time to his three P's. I have briefly explained just now the thinking of my Ministry, and I hope this adequately answers his question. As far as education in Singapore is concerned, there is no problem at all. The Government's thinking is that education is so important, and therefore the fees are highly subsidized. Whoever is able to gain admission should have no problem going through the course. If need be, we should liberalize further on the interest-free loans, bursaries, and so on, so that there will be no need to touch the CPF savings. On the other hand if any member wants to send his children for overseas education, it may cost him in the region of $100,000. How many CPF members can afford that? But more fundamentally, should we have that feature in the CPF scheme? I think it is better to have a reduced rate with age. Otherwise once we open up a new scheme for use, there will be a lot of other requests. It is just like taxes. Everybody has some good idea about how to cut taxes or to make use of CPF.

The Member for Radin Mas has some reservations about allowing CPF members to invest in stocks and shares, in gold and so on. Actually, it is rather late in the day because the scheme is about to be implemented and we have thought about it very carefully. The key point is that this is really an optional scheme. There is no need for any member to use his CPF to buy shares or gold if he does not want to. But there are some CPF members who feel that they can get a better return from their own investment. So they are welcome to try. They can do it through properties, through shares, through gold, and as we liberalize there will be more and more avenues for them to try out. Those who are not sure of themselves and who do not want to take risks will be well advised to keep their money with CPF. The interest rate is now pegged to the market rates, and with the tax exemption feature, I think it is a very good deal for members. So they have a choice.

The Member for Boon Lay spoke about the problem of low income workers and whether we should increase the salary level below which no CPF is payable by the employee. I can understand his concern. We have been looking at this issue in the CPF Board. The fact is that, out of the number in the income group between $200 and $400 per month, only about 8% are actually older workers who may be sole breadwinners. This is the group who may be in financial difficulties. The vast majority are, in fact, single. They are mostly young, maybe below 25 but definitely below 30 and without dependants. So for this group of younger workers, we should really try and encourage them to save. As for the older workers, the better method may be to reduce their CPF rate with age. That way, this group will be helped because when we cut the CPF rate for the older workers who constitute 8%, they will then have more take-home pay for their daily expenses. By doing so, we do not cut the CPF of about 100,000 workers, ie, these younger members, just so this 8% will benefit. I hope the Member will agree with my position. I think I have covered most of the points on CPF.

I would like now to deal with the other questions concerning unemployment. The Member for Anson, in his usual style, has been throwing a lot of mud in my direction. Many members of the public who have been assisted by my Ministry realize the kind of efforts my officers have made in trying to help the people to find jobs and they can tell the Member that he has been spreading a wild lie. The fact is that my Ministry is doing its very best. We have deployed more people (I think about 14 more officers) from the Works Permit Department to the Employment Services Department. Last year, through our efforts, we have placed about 3,000 workers in jobs. The majority of the unemployed still decide to go on their own - to find their own work - which is good. But when they come to us, we do our best to help them find jobs. We do not ask them to wait for a job to come along. We refer them to job on the spot.

The Member for Anson has been spreading this rumour that we give the unemployed worker a card stamped "six months" and we ask him to wait.

Mr Jeyaretnam: Don't you?

Mr Lee Yock Suan: Of course, we stamp on it "six months" to remind the person that if, at the end of six months, despite our efforts he still has no job, come back to us. So the validity period is six months. On the other hand, when he comes to us, on the spot we refer him to a job. Now our intention is, on the spot we refer him to two jobs to give him a better chance of finding a suitable job. So get the facts straight first before coming here and confusing everybody.

Mr Jeyaretnam: The card is stamped six months ahead.

Mr Lee Yock Suan: There is a need for this card, Sir, because some members, for some reason, may want to have a specific job and they just keep waiting for the job to come up. Or there may be others who have got a job but refused to come back to us or failed to tell us they have got a job. In fact, we have to trace the records of the CPF to find out how many of those we have helped have, in fact, got jobs. Therefore, we must have a cut-off date. If they are still interested in our service, they should come back to us. But, as I have said, we refer them to a job on the spot.

Mr Jeyaretnam: You got the figures?

Mr Lee Yock Suan: He has also made a big song and dance about our not having figures. I have told the House before, in answer to one of the questions, that we have been closely monitoring the retrenchment situation. We have been writing letters offering them our assistance to find jobs. We also monitor these people, from CPF records, to see how many have found jobs. My Ministry also conducts quarterly surveys to find out the actual situation, because we are dealing with large numbers of people. We are dealing with the whole population of workers in Singapore. So it takes time for us, and every quarter, as soon as we can, we update our figures.

Mr Jeyaretnam: You got your figures for 1984 wrong.

Mr Lee Yock Suan: I do not know where the Member got the figures. We can check those figures.

Mr Jeyaretnam: They are here - Ministry of Labour, Research and Statistics Report.

Mr Lee Yock Suan: They are neither here nor there anyway. These figures are all estimates. I think if there is a difference in the two sources, it is within the margin of error.

Last year, there were about 96,000 jobs lost, and the majority were foreigners. Those figures are the correct figures, and they are the relevant ones. I think there is no point in bringing up 1984 figures. We had no unemployment then.

Mr Jeyaretnam: You gave the wrong figures last time.

Mr Lee Yock Suan: Since so many Members have shown concern and spoken about the unemployment situation, I think I should just spend a few minutes to put the matter in perspective.

As at December 1985, the unemployment rate was 4.9%. As of now, the rate may be closer to 6% because more school leavers have since entered the market. But we must remember that, even in the best of times, the unemployment rate was 3%. In fact, now we may be 2% or 3% above the the full employment level.

Mr Jeyaretnam: I thought there was no unemployment.

Mr Lee Yock Suan: This means that there are about 20,000 to 30,000 more Singaporeans looking for work who have yet to find suitable jobs. Compare this figure of 20,000 against the 100,000 foreign workers that we have. If Singaporeans were willing to accept the jobs that foreigners now do, there will be no unemployment problem. My Ministry can control the work permits. We can allocate more jobs. There will be fewer requests for work permits. There will be no unemployment.

Compare our situation now to the early sixties when the unemployment rate was 12% to 15%. With the Employment Services Department, as of now, there are about 10,000 people on our list. In 1973, the figures were at their peak, about 27,000 people looking for jobs with the Employment Services Department. Our position now is relatively not as bad as in those years. In those days, the workers were all clamouring round their MPs begging for jobs and willing to accept any job that came. Right now, I am compelled to let in more foreign workers because Singaporeans are unwilling to work in construction sites, in garment factories, in woodworking factories, and even in electronics firms, they are not willing to take on the third shift. That is the fact of the situation.

How can we help these unemployed people? The best way is to get them a job, and that is exactly what my Ministry is doing with the support of NTUC and others. Through our efforts many Singaporeans have found jobs.

Unfortunately, our experience with job-seekers so far has been disappointing. Many job-seekers who are referred to employers simply do not show up for the interview. I can give him many examples. In the case of NTUC Job Placement Unit (I have a whole list here if Members want to see them afterwards) - NTUC FairPrice, Job: Delivery Assistant. Number required: 20. Number sent: 10. How many turned up: 0. HDB, Post of Electrician. Salary: More than $700. Number of people sent: 20. Three were found suitable but none of them took up the offer because of shift work. This is a good job. $700 with HDB. They did not want to work. I can go down the list.

Foster Electric was another one. They wanted production operators. They were offering $400 per month. NTUC offered to send 155 workers. Very few showed up. Five applicants were found suitable. However, none turned up for interview.

Of course, the job market is bad. The economic situation is bad. When retrenched workers who are used to high salaries, and they had been paid high salaries because of seniority, now want to get another job, it is inevitable that the employers will just pay them the going rate. So they have a choice - either stay at home without a job and live on retrenchment benefits, live on family support, or take up a lower paid job and do an honest day's work.

I can give you another example. This is from my Ministry. A 57-year old Chinese male wanted a watchman's job, after he was retrenched. We made him 11 offers of a job. He turned them all down. We even offered him the job of watchman in a goldsmith's shop. He did not want it because he only wanted to work as watchman in a warehouse.

What are we talking about? Do we want to give unemployment benefits? Just look at what is happening in the developed countries? If we offer unemployment benefits, this situation that I have described will get worse, because people will then say, "Well, I will wait longer for my ideal job to come along. Why work?" In fact, studies have shown that in the developed countries as unemployment benefits go up the level of unemployment goes up. More people are unemployed for longer periods.

Mr Jeyaretnam: Nonsense.

Mr Lee Yock Suan: Unemployment benefits are like opium. First, you take a whiff, once you get hooked on it, you cannot get out of it. It is definitely not the solution for Singapore.

I think many of us have read of instances in developed countries. In USA, there are some families who have not known employment for several generations. Recently, in Australia, the Labour Party government of Bob Hawke is very concerned. Why? Because his young school leavers and other young Australians have not got used to work. They have got used to not working. And he is from the Labour Party - pro-workers. He is trying to do something about it.

I have explained in this House before that, from our statistics, if we put the number of jobs notified with us with the number of new applicants and we compare the two based on seven criteria for a perfect match, only about 30% would get a perfect match. What does this mean? It means that people will have to be willing to accept jobs which are less desirable and with lower pay. Employers also have to make adjustments. Some of them are offering wages which are below market rate. So my Employment Services Department tells them, "This is below market. Would you consider increasing it a bit?" And they have agreed. A lot of them only want to employ workers below 30 years old. A lot of people registered with us are above 30. Again, we tell the employers, "Would you consider an older worker?" They would. But of course in the present situation of unemployment, if the employer has several choices of applicants, he will naturally choose the one he thinks most suitable.

This process has got to work its way through but the fact is, and we heard it from the Minister for National Development this morning, that there are still plenty of jobs available in the construction industry. Any trainee from the Construction Industry Training Board has no problem getting a job. There is no reason why our able-bodied males from the shipyards who are used to working in the sun should not take up construction jobs. But are they doing it? I am not sure. Maybe some of them are. There is no reason why a girl from an electronics company should not work in a garment factory. You may have read from the papers on 18th March that the NTUC offered to bring 100 retrenched female workers to garment factories. Of the 14 who accepted, 8 turned up and they said, "No, we do not want this job because nobody is smiling." It is true. Everybody is working hard, trying to earn a higher pay.

Mr Jeyaretnam: Because of working conditions.

Mr Lee Yock Suan: It is not because of working conditions. Of course, there is pressure because it is piece-rate work. Everybody wants to earn as much as possible. Those who have mastered enough skills can earn maybe $1,000. How about the factory environment? We did a survey of 17 garment factories. Nine of them are air- conditioned. The surprising thing is that some of the girls do not want to work in air-conditioned factories. They say it is too cold and bad for their health. So we cannot please everybody. The working environment, in fact, has improved.

I think the problem with the garment factories is that the starting pay is too low. They have a basic pay, and if you want to earn more, you must produce more. It is quite a punishing system. Maybe the garment factories should examine this system and get the help of SDF or other means to help these workers overcome the initial training period. In the electronics factories, the starting pay may be $400-$450. In a garment factory, unless you are skilled, the initial pay may be only about $300 and it takes them perhaps a year to build up skills to a reasonable level. As a result of this problem, plus the bad image of the industry, many garment factories now are employing more than 50%, in some cases as high as 70%, foreign workers. So something has to be done to get the employers to offer more jobs to our older workers, to get them to change the system to attract more local workers.

Mr Jeyaretnam: What are you doing about it?

Mr Lee Yock Suan: We are talking to both sides. We counsel all the registrants who come to us. The Member for Telok Blangah was not correct when he said that we just do it passively. We have been reaching out to the employers. We have been discussing with the various employer groups. We also counsel the workers on the spot, to try and get them to change their expectations. In fact, I have got a report here which says, "Our officers in the ESD are really trying their best but some of these retrenched workers are understandably very upset", and so on. In fact, my officers have to take all kinds of abuse from them. In some cases the girls end up crying behind the counter. But they are still doing their best. And I think we heard from the Member of Chong Boon that many of his constituents have found jobs through the services of my Ministry.

The Member for Anson made a few wild allegations about the Workmen's Compensation Department. Let me just clarify the facts for him.

Mr Jeyaretnam: They are not wild. It is here in the Auditor-General's Report.

Mr Lee Yock Suan: I am coming to it. Between the years 1960 and 1979, the Workmen's Compensation Department recovered and distributed $96.5 million to 238,000 cases. The amount that is left undistributed over this long period is about $156,000 as reported in the Auditor-General's Report. This constitutes only 0.5% of the total amount collected and distributed. Now why has it not been disbursed? It is not because of lack of effort on the part of my officers. It is because a lot of this money is owing to foreign workers who have left and gone home � Malaysians, Indians and others. Many of the amounts involved are below $50 each. We have been trying our best to reach them. But we have not been able to do so. The Auditor-General now recommends to my Ministry that we should put some advertisements in public to everybody, "Here are the money. These are the people concerned. Please come and collect." We have been keeping the money for them for ages. If they do not collect within a certain time, we may have to transfer the money to our Treasury. That is all there is to it.

Mr Jeyaretnam: What about the $349,000?

Mr Lee Yock Suan: Most of this money have been accumulated through the years because of this lack of claims. There is one other factor. When this money is kept with the Workmen's Compensation Department, of course, the Department deposits them with various banks to earn interest, which varies from bank to bank, from deposit to deposit. In order to simplify administration, my Ministry pays the recipients a fixed interest rate; otherwise it is impossible to account for all these changes. So partly through this process, some of the money have also been accumulated. Eventually, this money will have to be transferred to the Treasury. So there is no incompetence on the part of my officers. If the Member for Anson knows of any person who has not collected his money, please tell him to come and collect. The money is waiting for him.

Again, the Member for Anson has asked why we do not supervise companies which retrenched workers? Why do we not have some laws to protect the workers from this retrenchment? I have tried to explain to him why it is unnecessary. Let me give him some facts.

Mr Jeyaretnam: Because the employers are good people.

Mr Lee Yock Suan: By and large, that is true.

Mr Jeyaretnam: Workers are bad.

Mr Lee Yock Suan: Workers are also good. It is only he who is saying that they are bad. He is trying to be their champion.

What is the situation on retrenchment? We have found from our studies that, in fact, employers generally retrench only as a last resort.

Mr Jeyaretnam: Do they?

Mr Lee Yock Suan: We have many examples. Companies like Texas Instruments, Hewlett Packard, were holding on to their workers until they could not hold on any longer. They resorted to lay offs, short weeks and so on. They only retrenched workers as a last resort, partly because they have a feeling for the workers. They are responsible. It is also partly because the unions are there - NTUC is watching over this matter. If there is any abuse, NTUC will be sure to bring this up to us. If the workers are non-unionized, they can write to me and I will look into the case and make sure that if it is dismissal without just cause or reason, the company will have to re-employ or compensate the workers.

Mr Jeyaretnam: That is for the unions. What are you going to do about it?

Mr Lee Yock Suan: There is no need to do anything like that. As a result of these companies holding back their workers, productivity last year went down from 6.4% in 1984 to 3.4%. There is no need for us to try and second- guess the management. Management is there to do the job. They know whether or not a job is necessary. They know whether a worker is productive, and which worker is not. What is the market situation? Can they have orders six months' time, 12 months' time? How can we, as officials, go and tell them, "Look, you must not retrench this fellow. You must not retrench that fellow." That will be the surest way to frighten away investors, at a time when we need more investments in order to create more jobs. The solution to our unemployment problem is not more hot air from the Member for Anson but serious marketing efforts - to go out and sell to foreign investors, convince them that Singapore is a good place to invest. This will create jobs. The solution to our unemployment problem is for our workers to accept the situation that there are jobs available, though less desirable jobs but still jobs that can enable them to earn a living. Make the adjustments and my Ministry will do our best to help them.

Since I have only a few minutes left, I am afraid I cannot answer all the points. As far as the maid's levy is concerned, I think the Member for Jalan Kayu is aware that people can employ maids from Sri Lanka for maybe $100 per month. You add $120 per month as a levy, and it is still much cheaper than employing a local maid.

The Chairman: Guillotine time.

Mr Lim Boon Heng: Sir, in view of the spirited defence of the Minister, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $30,042,910 for Head R ordered to stand part of the Main Estimates.

The sum of $21,158,000 for Head R ordered to stand part of the Development Estimates.

4.40 pm

[Mr Deputy Speaker in the Chair]

Mr Lim Boon Heng: Head V

Mr Eric Cheong Yuen Chee (Toa Payoh): Mr Speaker, Sir, I beg to move,

That the sum to be allocated for Head V be reduced by $10 in respect of Subhead VA-01 Object Group 1100 of the Main Estimates.

Sir, during the current recession, many long and well-estabished local trading and engineering companies have suffered substantial financial losses due to the loss of markets, both local and regional. These companies have to reduce the size of their operations as well as the size of their workforce. Concessions, like reductions in corporate tax and CPF contributions, though a welcome move, are not sufficient to help these companies tide over a difficult period. To do so, I would suggest that the MTI consider implementing a Buy Local policy. Such a policy should be temporary in nature and applied only to major construction projects, like the MRT and Changi Airport development, which are awarded to foreign contractors. Some of the engineering and construction equipment like cranes, earth-moving equipment, compressors, etc, brought in by these foreign contractors are readily available locally. The cost may be slightly higher but then we help to save jobs. Engineering and construction equipment purchased locally have a spin-off advantage. Engineers, managers, mechanics and other supporting staff are required to sell and service such equipment. Equipment brought in by foreign contractors are in many instances written-down stocks. After completion of these contracts, some of their equipment are sold off locally as used equipment, thus further depressing the market. Some of these long-established companies which I have mentioned have contributed to the economic development of Singapore for many, many years. They have also helped to develop engineering and managerial expertise in our workforce for a long period of time. Sir, I think the extra cost involved is worth spending if we can save jobs during this difficult period.

Mr Leong Horn Kee: Mr Speaker, Sir, our people are most concerned about the present economic downturn. Many people are asking when we could see the start of an upturn and what are the signs of economic recovery.

It has been said that economic recovery will depend on both internal and external factors. Internally, we have already introduced measures to make ourselves competitive again. Growth therefore will depend to a great extent on external factors. Externally, we are keen to look out for signs that good times could be coming. Sir, indeed there may be some faint signs of silver linings at the horizon. The positive signs are that world-wide interest rates are low, inflation is under control and commodity prices are falling. One of the most significant recent developments that may have a sharp impact on the world economic recovery is the sharp drop in crude oil prices. Spot oil prices have dropped from a peak of US$37 per barrel in 1980 to US$29 per barrel in 1983. In the last few months, it dropped to below US$12 per barrel. As the OPEC countries are encountering difficulty in reaching a consensus on oil production volume and prices, crude oil prices could remain low.

Sir, I would like to ask the Acting Minister for Trade and Industry what is his Ministry's assessment on the impact of falling oil prices on Singapore's economy. On the positive side, falling oil prices will lower domestic inflation. It will lower the cost of fuel oil and electricity and it will lower operating costs for Singapore companies. However, on the negative side, falling oil prices will adversely affect our oil producing neighbours such as Malaysia and Indonesia, which are our major trading partners.

Sir, a local newspaper recently reported that a renowned US economist has predicted that the US and the world economy will see a period of sustained economic growth with dropping oil prices. He is quoted as saying that the cheaper oil is singly the most positive event for the world economy. He believes that basically it reverses the oil shocks of the 1970s. He is optimistic that US growth offers hope for a better outlook next year and the following 18 months.

Sir, there is another report by a reputabble magazine called the Business Week International, February 10th issue, where the leading article was on "The new world of oil". May I read an extract from the article? It says:

'Cheaper oil means faster growth world-wide. Cheap oil means much more than cheap energy for the world. It is a double shot of vitamin B for the industrial countries, the biggest boost we have in more than a decade.

Growth forecasts are going up. Trade deficits and interest rates are heading down and inflation seems dead.'

Sir, these are some of the optimistic signs that I would like to look for, so as to inject more faith in ourselves, in our economy. I would like to ask the Minister, that from his Ministry's assessment, whether falling oil prices would have a net beneficial effect on Singapore.

Sir, moving on to a different topic, I would like to get some clarification from the Acting Minister on the Jurong Town Corporation. I would like to ask the Acting Minister if he could tell us the current total number of vacant flatted factories and standard factories that have been completed or will soon be completed. In comparison with this supply of vacant flatted factories and standard factories, what is the projected demand? If the surplus of vacant factories is high, I would like to ask the Acting Minister whether he would consider reducing the JTC lease or rental rates so that more of these vacant units could be taken up. Vacant factory units is a waste and there is a holding cost to JTC. As a step to help local companies to cut costs further, the Minister should look into the possibility of reducing JTC rental rates.

Sir, I would also like to suggest that the JTC should, in fact, take a lead role as a price leader on factory rental rates. Its role should be to keep the rates of factory rentals low instead of being merely a price follower. For comparison purposes, could I ask the Minister what are the rental rates of similar factories in the private sector in Singapore and the factory rental rates of our competitor countries such as Hong Kong and Taiwan?

Mr Chng Hee Kok: Mr Speaker, Sir, I have two amendments under this Head and I would like to speak on them together.

I have three points to make. The first relates to the implementation of Government policies. Although the business environment is necessarily dynamic and the Government has to react to changes, I think it is important that the Government must be careful when it comes to balancing the need to make policy changes against the dependence of companies who need the continuity of policies to plan and operate. Most investments take time to show a return and this is true of an investment by a multi-national corporation or that of an individual who invests in a restaurant in Singapore. Whether it is big or small, it needs time. Since time is the essence of every investment, the Government must take the utmost care to examine all aspects of a policy change before implementation. Whether it is pollution control, environmental control or work permit changes, due consideration of the impact on businesses must be studied. Even if a policy change is sometimes necessary, the changes should be phased in gradually. We have many instances whereby the changes are announced and they apply immediately and this makes it very difficult for businesses to react. As long as ample warning is given, businesses will then be in a position to make the necessary changes. I hope the Minister will work closely with other Ministries such as Labour, Home Affairs and Environment or all those Ministries whose policies will have an impact on businesses.

The second point, Sir, I would like to turn to the subject of control of statutory boards. The Government has stated that henceforth, statutory boards will not be motivated towards the maximization of profit. This is a timely move and it means that the pricing of a statutory board's services will be oriented towards cost recovery with a small margin. As already mentioned by the Minister for Finance, the previous pricing policies were necessary as surpluses were needed for development expenditure. However, with profit maximization by the statutory boards then, it meant that the statutory boards could work towards optimal efficiency, cost effectiveness and improved productivity.

With profit maximization motive now removed, how can we ensure that the statutory boards will continue to be efficiently run? Will there be the motivation to seek productivity improvements? Will they make sure that they will maintain their costs as low as possible?

I think some appropriate measurement criteria are necessary, especially for those boards which charge for their services. Will the Minister consider the introduction of some measures so that statutory boards' performance may be measured?

Finally, Sir, my other amendment is on the Product Development Assistance Scheme (PDAS). Last year, during a similar debate, I lamented on the inadequacy of the PDAS and I asked that this scheme be extended to include the payment for international licensing. Last year, 16 companies were granted a total of $1 million under the PDAS. I personally have my doubts as to its effectiveness and success. How do you measure the success of PDAS? The success must be measured by whether commercial sales are generated by the product which has been developed. To improve the chances of success, I think licensing is definitely more effective as a licence will enable the licensee, which is usually a small company, to manufacture commercially viable products. Since the Economic Committee has directed that the PDAS be liberalized to promote aggressively and more product development activities, I urge the Ministry to review this scheme to include licensing.

Encik Zulkifli Bin Mohammed (Eunos): Mr Speaker, Sir, I would like to touch on two points pertaining to the Public Utilities Board, namely, PUB tariffs and PUB reserves.

Presently, Singapore is totally dependent on imported oil for its energy needs. As much as 60% of the PUB's total operating expenses goes towards the financing of fuel oil imports and/or fuel oil stocks. I am aware, Sir, our fuel oil purchases are subjected to world-wide oil price fluctuations which are beyond our control. As already mentioned by the Member for Thomson, crude oil prices have dropped sharply to a new current low of around US$12 per barrel. The savings derived from the lower cost of importing fuel oil have indeed benefited consumers who not too long ago enjoyed lower PUB tariffs effective 1st November 1985 and 1st February 1986 respectively, with the next adjustment due on 1st May 1986 in line with the PUB's policy of a three-monthly price review.

With this current trend in oil prices, consumers are looking forward to further revisions down the road. Sir, this is because they are aware that to date, the PUB has accumulated a sum of $180 million in reserves which is indeed no small amount. At the same time, we know that the PUB is continuing its efforts to look for alternative sources of fuel in keeping with its objective to diversify energy sources to promote energy conservation and the efficient use of electricity.

Against the scenario I have just described, Sir, I would like to pose the following questions to the Acting Minister. In view of the decline in oil prices and the glut in oil supply, what is the scope for lowering PUB electricity tariffs in the immediate future? My second question is whether alternative sources of fuel which are cheaper or competitive with fuel oil are now available for use by the PUB. Finally, Sir, how does the PUB propose to utilize its reserves and what are its development plans?

Mr Lim Boon Heng: Mr Speaker, Sir, when we are in the midst of a recession, it is only natural that we are concerned with our own problems. We analyze our problems. We formulate measures to counteract the recession, to try to get out of the recession. But at the same time, other countries, like our nearest competitors, Hong Kong, South Korea and Taiwan, are also looking at their own situation and coming out with their own measures to maintain their share of the world market, and to compete effectively. So how we can get out of this recession would depend on how fast we can take measures to counteract the recession and get out of it, and on whether we are able to work faster than our competitors. While our nearest competitors may be Hong Kong, Taiwan and South Korea, other countries that have been similarly affected by the recession have also been doing their own analyses and coming out with arguments and conclusions which are all too familiar to us.

I came across a report in the Australian, 15th March 1986, and I would like to quote some passages from this report to show the similarity of their problems with ours. One of the measures which the Australian Government took a few years ago to help regain the competitiveness was to devalue the Australian dollar. Here in Singapore I think there have also been arguments for a devaluation of the Singapore dollar because there is added to our problems of price competitiveness. Here this report says:

'The devaluation of the dollar was meant to open a brave new era for Australian manufacturing. But the revival is slow in coming and some economists are arguing that manufacturing is in such a bad way that devaluation will have an overall negative effect.'

They have already devalued. Now they are finding that it is not working. Why? I quote again.

'Manufacturing imported such a heavy proportion of components for their products that the high cost balances out the competitiveness.'

So, again, an argument which we found very familiar in the last few months. I quote again.

'Suppliers abroad who can expect much greater productivity in their own work forces than is possible here [in Australia] and so can rely on out-competing Australian products within a couple of years.'

So economists in Australia have come to the conclusion (at least some of them have come to the conclusion) that at this rate we would need a devaluation every year to remain competitive. I think the lessons which the Australians have learnt are useful for us.

Another factor that has been identified as a problem for the Australians is:

'The system of wage indexation and centralized wage increases which builds unrealistic cost pressures into an apparently unbreakable cycle.'

We do not have indexation. We have the National Wages Council, and again the arguments of wage costs being built into the wage system are all too familiar.

A third factor which has been identified as a problem, and here I think we should take note very seriously, is:

'Low levels of investment in Australian manufacturing during the past 10 years which means plant and equipment are not in place to provide a regeneration of manufacturing either through import, replacement or producing new lines of export. Lack of confidence among investors about the likely returns on investment in manaufacturing and the increasing tendency for investors to look overseas for better returns.'

One of the Australian economists has said, "People are saying, where do we get the best return and moving overseas?" That is why the Australians have not attracted the investments that they want to regenerate a recovery in the manufacturing industry in Australia.

I think the lessons here are useful for us, as we face our own economic problems. We have got to take note of how others have analysed their own problems and the measures they are likely to take. What is critical for us at this stage is that we want to attract investments so that we can create jobs for those who are out of work and for those who are coming out to look for jobs. So we need to make this place a place where the returns are more favourable compared to our competitors, compared to even countries like Australia.

We have one advantage which we must exploit to the fullest, ie, our small size. Being small has its disadvantages, but it has also the advantage that we are able to move quicker, ie, if we have the will to move faster, to come to grips with our problems, to work together, Government with the people, workers with employers, to face the recession, to take whatever measures that we need, to counter the recession, to attract investments, to get out of it as quickly as possible. I think at this critical juncture it is necessary for us all, as Singaporeans, to look at ourselves, to look at where we stand, to acknowledge that we are all facing one common problem, and to respond as a people. We have to take advantage of our smallness, our ability to respond faster than other countries. If we are able to give the right signals to investors overseas, then we stand a far better chance of being the first to attract them to come to invest in Singapore and thereby safeguard our own interests, the interests of the people, the interests of the nation.

In this respect, we would have to take note also of one important factor which has been enunciated in the Economic Committee's Report, and that is, the educational level of our workforce. We have an inherent disadvantage at the moment. It is a problem we recognize and we have to overcome it as quickly as possible. The Government has announced a $3 billion extra expenditure on education. I think that while it is important that we invest in the new generation of workers from pre-primary to the University, we must pay equal attention to those who are in the workforce, many of whom are still young and require to get the skills so that we have a qualitative uplift in the quality of education of our workforce. In this respect, I think we should make full use of the Skills Development Fund to redirect our energies, the resources available in the Skills Development Fund towards the upgrading of our workforce. I hope that the Ministry of Trade and Industry will work closely together with the Education Ministry and the other appropriate Ministries to have together a coordinated plan for the qualitative upgrading of the present existing work force.

Mrs Yu-Foo Yee Shoon (Yuhua): Sir, the setting up of the Small Enterprises Bureau is definitely a timely move as our small industries have been in great need of Government assistance and support.

Currently about 30% or 270,000 of our workers are employed by the small and medium-sized industries. It is very important that the service and assistance provided by the SEB will also benefit this group of wage earners in enhancing their job security. Our small local industries are facing a lot of problems and I would like to highlight some of them here.

The first is that many of the small industries are facing temporary cash flow problems. Such problems will have a chain effect on other businesses, as many of them have established a close business relationship with one another. I have been told that hundreds of shop tenants and industrial tenants of statutory boards are not able to pay their rentals. If legal action is taken against them, many of them will go bust and our workers will lose their job. My view is that our statutory boards should not take the lead in forcing these firms out of business.

My second point concerns the Skills Development Fund and the Small Industries Finance Scheme. As the small local industries are not as professionally managed as their big multi-national counterparts, they may have difficulties in drawing up plans and submitting applications to the SDF for training grants. In this respect, I would like to urge the SDF to be more sympathetic and flexible with the local firm. They should conduct more direct discussions with the local businessmen to ascertain their training needs. I would also like to see a separate set of approval criteria for the local industries, so that the unique needs and special circumstances facing our local industries, can be taken into consideration. On the other hand, as the loans under the Small Industries Finance Scheme are not interest-free, I feel that the EDB should be more relaxed in granting loans to our local industries so that more local firms can be saved from going bust. The EDB should also help nurture local enterprises by entering into partnership within potential industries and withdraw from the business after the firms have been nurtured into public-listed companies.

Last but not least, our small local industries also face difficulties in looking for markets. I am pleased to note that the Trade Development Board and the SEB have been helping them in this area. But I feel that the Government being the biggest purchaser should consider buying more from local enterprises and try as far as possible not to compete with them. Although the philosophy of free competition is upheld, a minimum level of protection must be given to the local industries. I would like to point out that free economies like Japan and America also protect their own enterprises.

In conclusion, I would say that with the efforts of the people and the support of the Government, our Singapore label products will be able to attain a good reputation and popularity in the world market.

Dr Arthur Beng Kian Lam (Fengshan): Mr Deputy Speaker, Sir, I would like to speak a few words regarding the manpower problems of the hotel industry.

Sir, the hotel industry is a labour-intensive service-orientated industry. Even in this recession, new hotels which are reaching completion have no choice but to open their doors for business. So there will still be an increasing demand for more workers in the hotel industry overall, while in specific hotels retrenchments may be going on. In order to meet the needs of the industry, the manpower needs of the industry need further study. The needs are (1) upgrading of the present workforce; (2) the need to attract the better educated to join the industry; and (3) the need to further intensify supervising, training and education programmes.

Sir, the Singapoore Hotel Association in 1983 made a manpower study of 15 hotels. The results of this study show the urgent need to upgrade the workforce. (1) 38.2% of the workforce in the basic grades have only primary or no education at all. (2) 16.3% of the workforce in the supervisory grades have only primary or no education at all. (3) 5.5% of the workforce at the middle management level have only primary or no education at all, and 40.2% have only lower secondary education.

It is to the credit of our present workforce and the industry that, despite the lack of formal education through inhouse and vocational training, they have been able to provide a standard of service in our hotels that is second to none. Sir, today the training of the industry is provided for by inhouse training schemes and in the main by SHATEC (Singapore Hotel Association Training and Education Centre) which is jointly managed by the Singapore Hotel Association and the VITB. Sir, the cost of training in SHATEC is high, due to its specialized nature or function. Training in SHATEC is made possible only through sponsorship by the employers, ie, the hotels, together with the subsidy from the SDF. For example, the Diploma in hotel management course costs $21,000 payable over three years, that is $7,000 per annum. The SDF offers 70% subsidy of course fees and absentee payroll. For the 48-hour advanced food preparation course, the cost fee is $1,000 and SDF provides for 50% subsidy.

Sir, now that the industry is in troubled times, training and education may not receive priority by the hoteliers as the priority now is to cut cost and survive the current economic woes. It is within this context that it is suggested that the SDF can play a bigger role in supporting training. The SDF can do this by (1) increasing the quantum of SDF subsidy; (2) broadening the subsidy to trade unions and trade associations that seek to upgrade the skills of its members. I would like to ask the Minister to look into this problem.

Sir, if we are to achieve our aim of being a net exporter of hotel management and services, we must build a large pool of skilled workers at all levels in the industry. However, a school leaver, whether 'N', 'O' or 'A' levels, cannot now opt to enrol in SHATEC as he would in other institutions of higher learning, for example, the Polytechnic, Ngee Ann, VITB, NTI or NUS. This is because of the high course fees which I mentioned earlier.

Sir, a way must be found to overcome this problem. It has been suggested that to fulfil our manpower needs, a second hotel training school will be required to meet the demands of industry for skilled workers. Perhaps this second school should be managed along the same lines as the VITB institution so that the school leaver will find it affordable to enrol in it. The new hotel school should provide more broad-based basic training. SHATEC can then concentrate on the more specialized area of skills training. Only in this way can we hope to attract more talent into the industry.

Mr Philip Tan Tee Yong (Paya Lebar): Sir, foreign investments in Singapore have always been the backbone of our island state economy. In the process of providing jobs and sub-contract businesses for our workers and our local businessmen, they have substantially raised our level of technological skills. This has enhanced our international competitiveness. It is no accident that our Ministers gave top priority to the keeping of the multinationals here as long as possible and at the same time harnessing all efforts to attract more foreign investments into Singapore. These desires are not just mere words. Our Ministers will be going overseas shortly to meet potential investors. These potential investors in US and Europe are tough businessmen. They do their homework very thoroughly. For Singapore it is not going to be easy. We have to compete with Hong Kong, Taiwan and South Korea for a slice of investments. With the positive cooperation of our workers to make Singapore competitive, half the battle is won. The rest depends largely on follow-up action.

Sir, though it is true that our businessmen will have to be diligent and efficient in following up, I feel that the overseas outlets of the EDB and the TDB have become the crucial link to success. But, Sir, many of our outlets are manned by only one or two staff and in a big country the number of opportunities outnumbers the time the one or two staff can give. Much as we want to say that it is the qualitative time of the staff that matters, we cannot deny the working of the law of chances, which stipulates that the greater the number the greater the chances of success. I sincerely hope that the Acting Minister will review the combined EDB and TDB overseas outlets and increase the number of officers. It is then hoped that with more officers, more qualitative time can be expended.

Sir, in the consideration to increase the staff strength, some thoughts should be directed at the type of personnel. In most of these outlets, most of our officers are Singaporeans and in these vast countries, many times the size of Singapore, it will take too long to familiarize the business environment. Time is what we can least afford. I suggest that we employ the locals of the respective countries to supplement and complement our own staff. This will redeem our time and increase the depths of our coverage.

Sir, in the early days, the EDB and TDB started with very specific terms of reference. The EDB is to attract foreign investments and the TDB is to assist in exports of our goods. Today, many of the services overlap each other. For example, in the case of a possible joint venture, which body should attend? And if a local manufacturer is both a contract manufacturer as well as one who produces his own products for export, and if he is looking for a joint venture in Singapore, who should he approach? EDB or TDB or both? In some countries, the EDB office and the TDB office are next to each another. A potential investor is often unsure which office to call. I have come across potential investors calling on both EDB and TDB. Even our Singaporean businessmen call on both for assistance. I feel that this is time-consuming, unproductive and confusing. It will be a good idea to streamline the services and to present them as only one outlet. I hope the Acting Minister will comment on this.

Sir, I wish to move to the Market Assistance Scheme offered by the TDB. The Minister of State said that $680,000 has been granted to 83 companies since the scheme started last September. This works out to an average of $8,192 per company. As a scheme, this is definitely a good and right move but as to its effectiveness, I have my doubts because you cannot sustain a marketing programme with such a small sum unless the marketing programme is so well planned. I can only suspect that such a sum is for a once-off activity and this is not beneficial to our economy in the long run. Let us be bold in this area. Unless we support properly worked-out marketing programmes requiring substantial amounts of money, it may not be worthwhile offering such schemes. I suggest that the TDB assist local companies in mapping out a comprehensive marketing plan and then offer them the grant to meet it. In this way, the chances of some companies doing well in exports will be greater.

The Minister of State for Trade and Industry (Dr Lee Boon Yang): Sir, I shall take up some of the points mentioned by hon. Members. First, the Member for Toa Payoh spoke on the need to have a Buy Local policy, particularly for those large contracts which require a lot of engineering machinery and equipment. I agree that in the short run such a proposal will help to save jobs. It will keep some of our local companies, which are in the business of selling equipment, in business. However, in the long term, a policy to enforce local purchases will become regressive and lead to loss of economic efficiency. A Buy Local policy will be contrary to our free trade policy. It will offer protection of an exclusive group of traders here in Singapore who are already in the business.

Sir, if local agents and manufacturers are unable to compete with imports made directly from overseas manufacture by their end-users in Singapore, then any protection measure or any Buy Local policy can only be a temporary respite. A more permanent and effective remedy is for these agents and manufacturers to develop greater competitiveness, greater efficiency and productivity in their business and to be able to compete with successful tenderers who might be tempted to import their equipment directly.

A domestic market catering to the needs of only 2(r) million people cannot afford to be protectionistic. Restriction on imports must eventually lead to higher cost for local consumers and local taxpayers. Therefore, it is the Government's policy goal to develop Singapore as a free trade city. There will be, as far as possible, no tariffs and other barriers to trade. Trading will be expedited by a simpler system of trade documentation. There should be minimum custom hindrance to the inflow and outflow of goods.

The Member for Thomson sought the view of my Ministry on the effects of the decline in oil prices. As he himself has pointed out, the most obvious impact would be a reduction in cost to our industries. They will pay less for their energy needs. They will pay less for the raw materials which they import. To Singaporeans, it would also mean a reduction in cost of our essentials. In other words, we will be able to look forward to a lowering of our inflation.

But there is another side to the story which, as the Member for Thomson himself has pointed out, Singaporeans ought to remember. This feeling of elation that oil prices are tumbling should be tempered with an understanding of the full effect of a severe drop in oil prices. The drop in oil prices must have a negative effect on our neighbours' economy, some of which are so dependent on oil as their main export earner. It will hamper their growth, reduce their purchasing power and, in general, dampen regional trade. A deterioration in regional economy cannot be expected to be so remote from Singapore that we are protected from it. It is only natural that if such a reduction in regional trade takes place we, as a major trading nation here, will have to suffer the consequence. Overall, my Ministry views the drop in oil price and its full impact on our economy as being of an uncertain nature at this stage. We would not like to say that it is all positive. Yes, we can look forward to some advantages, both to consumers and to industries. But we have to be prepared for the backwash of the same drop in oil prices causing an effect on our neighbours' economy.

The other point taken up was on the PUB. Before moving on to the PUB, I would like to take on the point that the Member for Thomson has spoken regarding JTC. JTC's responsibility is to ensure a ready supply of prepared land sites and flatted factories or other standard factory buildings to meet the needs of investors, both local and foreign. At the same time, the Corporation has to ensure that it does not incur too high a holding cost which is the cost that the Corporation has to expend between developing the land and selling the land or renting out the factories. The ideal policy is to maintain only a sufficient stock for one year's need. However, it is difficult to ensure an accurate balance of supply and demand. Demand can change much more rapidly. Supply, on the other hand, has to take several years. Land has to be cleared and the infrastructural requirements have to be put in, roads have to be built, drains and sewers have to be put in, factories have to be built. In practice, JTC is then obliged to hold two to three years of anticipated demand in land sites. In the case of industrial buildings, JTC holds a one-year stock of requirement.

The Chairman: Order. It is 5.30 pm.

Thereupon Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House.

BG Lee Hsien Loong: Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Main and Development Estimates for the financial year 1st April, 1986 to 31st March, 1987 and ask leave to sit again tomorrow.

Mr Deputy Speaker: So be it.