MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR 1ST APRIL, 1988 TO 31ST MARCH, 1989

Order read for consideration in Committee of Supply [8th Allotted Day].

[Mr Deputy Speaker in the Chair]

Head J (cont.) -

Resumption of Debate on Question [24th March, 1988],

"That the total sum to be allocated for Head J be reduced by $10 in respect of Code JJ 1000 of the Main Estimates." - [Mr Lau Ping Sum.]

Question again proposed.

The Minister of State for Community Development (Mr Ch'ng Jit Koon): ( In Mandarin): I am answering on behalf of my Minister.

Sir, yesterday before the House rose, the Member for Yio Chu Kang praised the efforts and contributions made by RC members and community leaders. He hoped that these volunteer workers would be awarded in some tangible way or be given some kind of concession like the rebate or concession given by NTUC supermarkets and some shopping centres to NTUC members. I thank him for praising and expressing concerning for these civic leaders. The CCCs, CCMCs and RCs are grassroots organisations playing an important role in cultivating social consciousness towards building a cohesive and harmonious multi-racial society. The success of these organisations depends largely on the voluntary spirits of their leaders and members who selflessly contribute their time and effort serve to the community. I certainly agree with the Member for Yio Chu Kang that due recognition should be given to their voluntary service even though they do not expect any tangible rewards from the Government. There are two ways in which the Government in giving recognition to these grassroots leaders. Firstly, the Government attaches great importance to the contributions of these grassroots leaders. For this reason, the Government Ministries and Statutory Boards take the views and feedback of these grassroots leaders very seriously in their decision making and policy implementation. As far as possible, they will seek the views and cooperation of the grassroots leaders before implementing any new measures and decisions affecting their constituencies. The staff of various Ministries and Statutory Boards have also been asked to extend their cooperation to the grassroots leaders and give prompt attention to their requests and suggestions in the course o their voluntary service. In addition, grassroots leaders are always invited as VIP guests to various state functions and major events organised by various Ministries and Statutory Boards. They are also given ample opportunities to take part in seminars, forums and civic-education tours and training courses to share their views, experiences and know-how in their service to the community.

Secondly, the Government has made it a policy to give various forms of awards to deserving grassroots leaders in recognition of their dedicated and meritorious service to the community. These include the long-service awards for those who have completed 5 years, 10 years and 20 years of dedicated service in the grassroots organisations, the annual meritorious awards to the Community Centres and Residents' Committees and the National Day Awards.

Apart from the recognition given by the Government, I believe that all in our society including both the corporate and individual citizens could also play a useful and important role in recognising and promoting the voluntary effort of the grassroots leaders. For example, they could give their recognition and encouragement to the grassroots leaders by sponsoring their projects or participating actively in them. The grassroots leaders will certainly feel a strong sense of satisfaction if they know that their voluntary efforts are not only recognised by the Government but also appreciated by all other in our society.

As regards the suggestion by the Member for Yio Chu Kang to give more tangible award to our grassroots leaders in order to show our appreciation, on this matter we should deal with it very carefully because I feel that these grassroots leaders' sacrifices, contributions and their valuable services to society cannot be recompensed in material or monetary terms. We should not give them a little pecuniary benefits thereby spoiling their lofty image. However, if NTUC cooperative supermarkets or other shopping centres will out of their own volition give them such discounts or concessions, it is a different matter. We shall welcome such gesture and be thankful to them.

Mr Lau Ping Sum (Yio Chu Kang): ( In Mandarin): Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. (11), Mrs Yu-Foo is not here. Amendment No. (12), Encik Ibrahim Othman.

Encik Ibrahim Othman (Tanah Merah): Sir, I beg to move,

That the sum to be allocated for Head J be reduced by $10 in respect of Code JL 3000 of the Main Estimates.

Sir, the Singapore Sports Council plays a very important role in the promotion of sports. I think their role is multi-faceted, such as promoting sports, competitions, physical recreation, coordinating sports competitions at all levels, planning and organizing coaching courses to achieve higher standards, planning, building and managing sports facilities and, finally, con- ducting research into sports, sports medicine and selected fields.

Sir, one really important element in our sports programme is the sportsmen and women who represent our country in regional and international competitions. Though our population base is very small, we are very fortunate enough to be able to produce sportsmen and women who are of world standards. They bring glory and honour to the country in the various competitions which they participated. We are very proud of them and we could say that they are part of our national asset.

I wish to ask the Minister a question: are we doing enough for our sportsmen and women to excel? In my view, we can do very much more. We have very good sports and recreational facilities for them and for the people. But I believe in order to encourage and motivate our sportsmen and women, we must give them material and non-material benefits so that they would perform outstandingly in all their competitions. Most important of all, Sir, we must give them recognition for their efforts.

Sir, apart from the generous scholarships and financial assistance to deserving sportsmen and women, I wish to suggest the following:

Firstly, try to find them suitable employment to earn a living either with our statutory boards or even make arrangements with commercial organizations to give them a job here so that they would not go to other countries for work. Secondly, to grant them generous leave and time-off to train and compete in all competitions. This is very important because if they work here the employers must be willing to allow them time-off to train either in the mornings or in the evenings and also grant leave for them to go overseas for their competitions. Thirdly, give them cash awards if they win major competitions. This has been done in a few countries and it will encourage more of our sporstmen to excel. Finally, Sir, to encourage the promotion of professionalism in sports. In this matter, the Government can look to the business houses and commercial organizations to sponsor teams in our local league.

On professionalism, Sir, I wish to mention, as an example, the success of the Football Association of Singapore in organizing the Premier League. They have managed to bring the crowd back to our local matches and I am sure that with the many football stars that we have in the various teams, interest in soccer will be revived. I think credit must go to the Chairman and members of the FAS. By the way, Sir, the Chairman is also the hon. Member for Changi while the Vice-Chairman is the hon. Member for Pasir Panjang.

Sir, our sportsmen and women are the rallying factor to get many more Singaporeans to be involved in sports activities. We are proud to produce champions like Wong Peng Soon who excelled in badminton so much so that many of our Members in this House are playing badminton now. Then we have Tan Howe Liang who excelled in weightlifting. Again, our young boys are taking up this sport. We have Junie Sng and Patricia Chan in swimming and we get parents sending their children very early in the morning before school to the swimming pool for training. In athletics, we have C. Kunalan, and in football everyone here will agree with me that we have Rahim Omar and now Fandi Ahmad to bring back the crowd.

In the final analysis, Sir, perhaps the Government could push ahead with this sports programme and consider setting up a Sports Academy to push through our goal of excellence in sports.

Finally, Sir, one point I wish to raise is with regard to the National Stadium loan. This matter has been brought up by many Members in this House before for many years but they were not successful. I am trying again this year. I wish to urge the Government to convert that loan into a grant so that the amount of money they pay for the interest every year could be used for the promotion of sports. I hope the Minister will give an answer.

Mr Chai Chong Yii (Bukit Batok): ( In Mandarin): Sir, just now the Member for Tanah Merah expressed his support for sports. I support his views in principle. The various satellite towns of our country have sport centres and swimming pool complexes. These facilities for sports have cost the Government a lot of money. They have definitely played an important role in maintaining the health of our people. Singapore now is going apace towards material development in the course of which sports has also become a commercial enterprise.

In a modern highly materialistic civilization, sports and health of course are also desired by people living in it, and this is nothing wrong. But, don't forget, one who has strong and healthy body may not necessarily have a healthy mind. Mental health is even more important. In a crowded city like Singapore, should a member of a family go wrong mentally, not really mentally deranged, then quite often the whole circle around the family, the community, will also be affected with unhappiness and trouble. There is quite a good number of such cases.

In view of the problems brought about by health hazards to the community and the importance of personal mental health in relation to the community, I hope the Ministry concerned will pay more attention to this aspect and do something about it. Recently I have read articles in the newspaper about SBC planning programmes regarding this aspect of family life. This is very good. I support this programme which may arouse the consciousness of the people on this question. According to our Eastern tradition, good human relationship first starts from the family and relatives and then spread to the whole society. If we should follow the western norm, big family concept will not be popular. You see instead small families everywhere and this will result in individualism, and disaster will surely befall our people.

Now, I would ask the Minister a question. In Bukit Batok new town we have a swimming pool which has been completed for nearly one year but has not been open for use. I wonder what is happening behind those closed doors. I hope the swimming pool will open its doors soon so that interested people can make use of it. I hope the Minister will help to make the pool open its doors speedily for the good of users. There is another beautiful sports centre which is nearly completed. It costs a lot of money. I hope this centre can also be open soon, so that our people can make use of the facilities to improve their health. Sporstmen and other people interested in sports and games can then improve their physical and mental health and be useful citizens.

The Minister for Community Development (Mr Wong Kan Seng): Sir, I thank the Members for their comments on the Singapore Sports Council and its activities and its efforts in promoting sports among our people, making them more physically active, healthy and more sports conscious. Indeed the Sports Council has played a major role in the last many years in bringing about this "Sports for All" policy for all Singaporeans so that they have the consciousness to remain fit.

On the question of whether the Sports Council has done enough or not, we will have to look at the results that they have produced as well as the various schemes that the Sports Council has come up with in promoting sports for all as well as sports excellence. Some of the steps that the Sports Council has taken in promoting sports excellence are, for example, giving free coaching under the various training schemes to selected youths in the areas of track and field, swimming, water polo, badminton and water-skiing. They have also provided a special weight training room in the National Stadium itself and this is available to all sportsmen and sportswomen who want to develop strength and power in their muscles.

Secondly, the Sports Council has also given awards and scholarships and every year the Sports Boy and Sports Girl of the Year Awards are given to the youths who have excelled in sports. Sports scholarships are also awarded annually to encourage sports excellence in sports and academics among youths in the junior colleges, polytechnics, the technical institutes and the university. Today, we know that about 184 young boys and girls have benefited from these scholarships.

Thirdly, the Sports Council also gives financial assistance in the form of a Sports Aid Fund which was established in 1982. This Sports Aid Fund gives assistance to sportsmen and sportswomen who have excelled in sports and individuals as well as teams who also qualify if they meet the standards. They are given money to train, to travel and to learn from others. They are also given money to buy specialized apparatus and equipment and, in some instances, even compensation for loss of pay that the Member also referred to earlier on. In addition to giving to individuals, this Sports Aid Fund is also given to national sports associations which have programmes to encourage and promote excellence in sports.

The fourth programme that the Sports Council has is in the form of a special training assistance programme called STAP and in consultation with the Singapore National Olympics Council, these funds are given to finance a special ad hoc training assistance programme to prepare the national contingent to the Southeast Asian Games, the Asian Games as well as the Olympics. There is also an annual subsidy to the National Sports Association of about $300,000 given to 52 national sports associations to meet their expenses to prepare their teams for international tournaments.

The sixth programme is a new one called the Sports Excellence Assistance Programme or SEAP. This was set up only last month to help raise sports standards of local sportsmen and sportswomen. Two categories of funds are available under the SEAP - one is for individual sportsman or woman who can receive up to a maximum of $7,000 a year; the second category is for the teams. The amount available for an internationally-ranked team varies from sport to sport depending on the size of the team.

There is also medical care given to the participants of the SEAP programme in the form of an insurance coverage. This includes the outpatient medical expenses insured at the Singapore Sports Council Sports Excellence Centre as well as other nominated centres. But we know that the provision of modern sports complexes and facilities alone will not be enough to produce sports champions. It requires indeed the dedication and the commitment of individual sportsman.

The Member for Tanah Merah also suggested that employers be encouraged to grant leave as well as to give the sportsmen time-off. I think the Sports Council has tried its best to encourage the companies and employers to grant such leave to these sportsmen and sportswomen. And I am happy to note that in many instances, these employers are very cooperative in granting leave. In the minority of cases, some employers do put their profitability before sports and as a result some may not be able to get leave from their employers. I would like to urge these employers to grant leave to these sportsmen and sportswomen, especially when they represent our country in international tournaments and international games.

The Member also noted the performance of the FAS under the leadership of the Member for Changi. I would also like in this House to register my appreciation for the services that he has performed for the FAS for the last six years.

With regard to the National Stadium loan, this is the problem that the Sports Council faces ever since it took the loan. And despite the repeated pleadings and appeals, the Ministry of Finance has not yielded in converting the loan into a grant. As a consolation, the Ministry has finally agreed that this loan would be an interest-free loan. That is good news. But the not-so-good news is that the accrued interest, about $845,000 must be paid. I think the appropriate time to raise this subject really is in the Ministry of Finance estimates. And with the support of the Members, I think one day we hope that it will succeed.

I agree with the comments made by the Member for Bukit Batok with regard to sports excellence as well as physical fitness. As to his anxiety about the swimming complex and the sports complex in Bukit Batok New Town, I have a bit of good news and a bit of not-so-good news. The good news is that the swimming complex in Bukit Batok will be opened to the public on 4th April. The not-so-good news is that the sports complex in Bukit Batok New Town is not ready yet. It is likely to be ready in the middle of next year. So the residents of Bukit Batok may have to wait a bit longer and, if necessary, go and use the school fields and some of the other facilities within the vicinity of Bukit Batok. But meanwhile, if you want to train, jump into the pool.

Encik Ibrahim Othman: Sir, may I make a point? Since the Minister for National Development is here, perhaps the Minister for Community Development can work closely with the Minister for National Development and when MPs or sports organizations ask for places in our constituencies for, say, open field for football, perhaps they would allow us to do so.

The Chairman: You have made your point. Do you want to withdraw your amendment?

Encik Ibrahim Othman: It is just to make my point. On that note, Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. (13). Encik Othman.

Encik Othman bin Haron Eusofe (Geylang Serai): ( In Malay): Sir, I beg to move,

That the sum to be allocated to Head J be reduced by $10 in respect of Code JM 3000 of the Main Estimates

Sir, first of all, I would like to commend the Majlis Ugama Islam Singapura (MUIS) for its good work and service to the Muslim community. However, much more can be done by MUIS to tackle the various problems faced by the Muslim community. MUIS' ability to shoulder this responsibility depends on, among other things, the competency of its staff as well as their ability to work closely with leaders and members of local Muslim organizations. In this connection, closer rapport between MUIS leaders and staff and officials of local Muslim organizations is necessary to help MUIS provide a more effective service. Many members of the MUIS council come from leading Muslim organizations and, with their guidance and advice, MUIS should not have any difficulty in developing a more positive and closer rapport with the leaders and the members of the local Muslim organizations.

The performance of MUIS staff depends on the training that they have received to enable them to carry out their jobs well, and also on the encouragement they receive to provide excellent service. Here, I would like to ask the Minister in-charge of Muslim affairs concerning the steps taken to provide the appropriate training either locally or overseas for MUIS staff. Are there plans to send capable officers for short courses in leading Muslim universities? Apart from this, are there any plans to send officials to visit Muslim organizations in neighbouring countries and in other Muslim countries to learn and observe how they perform their tasks and responsibilities. Apart from fostering cooperation and close ties, frequent discussions and exchange of ideas with officials of Muslim organizations in these countries will also be useful and beneficial to MUIS.

Not long ago, MUIS conducted an exercise to meet leaders of local Muslim organizations to exchange ideas and suggestions on how we can work together to improve the welfare and well-being of Muslims in Singapore. I believe various issues were discussed in a frank and cordial atmosphere and this has helped to develop a consensus on what need to be done urgently to help the Muslim community to upgrade itself. This exercise should continue and if MUIS has truly capable and competent staff, this work could be done more effectively. Through the discussions and exchange of ideas, MUIS could get the assistance of the leaders of the local Muslim organizations, the professionals and scholars and encourage them to come forward to volunteer their services and expertise to help MUIS.

Mr Chairman, finally, MUIS is presently headed by a President who has many other duties within and outside the country. And I think it is important that he be given a capable assistant or deputy. At present, the Executive Director post is still vacant. I would like to ask the Minister if he has any immediate plan to recruit a person to fill this key position. Thank you.

The Minister for the Environment (Dr Ahmad Mattar): ( In Malay): Mr Chairman, Sir, I am answering as the Minister in-charge of Muslim affairs.

Mr Chairman, the Member for Geylang Serai raised several questions, among them concerning opportunities for training and upgrading for MUIS staff. Sir, MUIS staff are regularly nominated to attend relevant training and upgrading courses conducted by the various training institutions in Singapore. In 1987 and up to March of this year, nine MUIS staff were sent to the Civil Service Institute, NPB and MENDAKI to attend different types of training course. A number of training requirements have been identified for 1988. The appropriate staff will be sent to attend the courses as and when they are conducted.

Mr Chairman, on the question by the Member for Geylang Serai whether MUIS has any plans to send its staff to visit Muslim organisations in neighbouring countries to study and to observe how they perform their tasks and responsibilities, the answer is yes there are. In fact these plans have been carried out. For instance, the President of MUIS himself headed a delegation which visited Indonesia, Malaysia and Negara Brunei Darussalam. The delegation's visit to Malaysia was to observe the administration of the Islamic Centre in Kuala Lumpur, while its visits to Brunei Darussalam and Indonesia were to study the administration of religious schools in these countries. Another MUIS mission also visited the Sultan Zainal Abidin College in Trengganu and the Islamic Academy of Nilam Puri in Kelantan to study their administrative systems. MUIS also visited the Pilgrimage Administration and Fund Board (LUTH) in Kuala Lumpur to observe how this organization carried out its tasks and responsibilities. And last Sunday, Sir, a MUIS delegation went to Johor Baru to study the Islamic Education system there.

Sir, the Member for Geylang Serai also asked about efforts made to fill the post of Executive Director of MUIS which is still vacant. As we all know, the activities and responsibilities undertaken out by MUIS have increased considerably. To properly plan and discharge these responsibilities, the management of MUIS must be strengthened. This fact is acknowledged. To this end, we have been making a search for suitable person to assist the President of MUIS in the discharge of his duties. For instance, in 1987, MUIS recruited a Technician and two Muslim graduates as Executive Officers to meet the mounting workload in MUIS.

The posts of Director and Assistant Director for the Religious Education Section are still vacant. MUIS is looking for suitably qualified candidates to fill these two important posts.

Concerning the post of MUIS Executive Director which is still vacant, I think it is more important that time be spent to search for the right candidate for the job than to have the position filled hastily. In the meantime, I am confident that with guidance from the President of MUIS, who can only hold the job on a part-time basis, the MUIS Secretariat staff will be able to shoulder their responsibilities ably. The MUIS Secretariat has recently been strengthened with the recruitment of two Muslim graduates and a new Secretary who has taken over from the incumbent who retired.

Encik Ibrahim Othman: ( In Malay): Mr Chairman, the Administration of Muslim Law Act (AMLA) was passed by Parliament in 1966. It is aimed at streamlining and providing for the administration of Muslim law among Muslims in Singapore. That Act enabled the establishment of the Singapore Muslim Religious Council of Singapore, which is empowered to decide on matters relating to the administration of Muslim law. MUIS is also empowered to issue "fatwas" on matters concerning the Muslims in Singapore.

Sir, I understand that this Act is being reviewed to make it more relevant to current conditions. This would, I think, necessitate some additions of several sections to give MUIS more power. I would like to ask the Minister in charge of Muslim Affairs whether consideration of the following matters could be made. Firstly, to provide MUIS full powers on all matters concerning Haj administration. I think it is required by the Southeast Asia Muassasah that MUIS handles this task. And where this is concerned, I urge MUIS to cooperate with certain parties in the annual administration of Haj affairs. Secondly, providing MUIS full powers to deal with the administration of Islamic education in all madrasahs. Thirdly, providing MUIS full powers to redevelop all wakaf lands under its jurisdiction.

In this connection, I would like to ask whether plans to redevelop the wakaf lands at Masjid Kassim, Duku Road and Gentle Road have been finalised. If the problem is due to the Rent Control Act, I would like to suggest that the houses or shophouses on these wakaf lands be exempted from the Rent Control Act.

Dr Ahmad Mattar: Sir, a comprehensive review of the Administration of Muslim Law Act (AMLA) has been conducted by an AMLA Review Committee of MUIS. Their recommendations, endorsed by the council, have been submitted to the Ministry for consideration. The changes recommended are many and substantial and will have to be given careful consideration. And these include suggestions made by the hon. Member for Tanah Merah. However, I cannot tell exactly when AMLA will be revised. However, I wish to assure the member for Tanah Merah that priority attention is being accorded to this.

I now move on to the question on the progress made in the development of the three wakaf lands. Sir, MUIS has been served notice to develop three wakaf lands, namely, Wakaf Abdul Hamid at Gentle Road, Wakaf Jabbar at Duku Road and Wakaf Kassim at Changi Road. MUIS has appointed a Wakaf Development Committee made up of professionals and learned Muslim to make recommendations on the development of the said wakaf lands. The Committee has recommended that Wakaf Jabbar be developed into a residential property comprising 4 units of terrace houses while Wakaf Kassim should be developed into a commercial complex comprising a multi-functional mosque, a medical centre, a school and commercial premises. As the land of Wakaf Abdul Hamid is small, the Committee has recommended that it be properly landscaped.

Sir, an architect has been appointed to prepare blueprints for the development projects. However, progress is slowas the three wakafs do not have their own sources of funds for development purposes. Of the three wakaf developments, that of Wakaf Kassim at Changi Road is the biggest. An architect has already been appointed to do the preliminary drawing and estimated project costs. A Finance Sub-committee consisting of Muslim professionals has also been set up to explore the sources of funds.

Encik Abbas Abu Amin: ( In Malay):Sir, I would like to know about the progress made in the construction of new mosques under Phase II. The question is: How many more modern mosques are being and will be constructed and when are they expected to be completed? What are the problems, if any, which might be impeding the smooth completion of the Phase II mosques?

The second issue I wish to get clarification on concerns the steps taken by the MUIS to coordinate the various missionary activities organized by the various local Muslim organizations like the JHDs, Jamiyah, block representative committees and other private organizations so that these missionary activities could be better organized. This will enable the Muslim community in Singapore to benefit and to give their wholehearted support towards such activities.

From the feedback that I have received, there are many similar activities conducted one after the other for several days at a time, drawing the attention of the local Muslim residents in each locality. It is better if these activities could be properly planned, organized, and scheduled in such a manner as to make effective use of time and energy for all concerned, the organisers as well as the residents in the area.

In addition, I would like to suggest that MUIS also coordinate other activities besides missionary activities to mobilize the whole Muslim population to combat anti-social activities, which appear to have strong influence on our youths in Singapore. One such activity is the effort against drug abuse. This is also in line with the suggestion by the President of Singapore, Mr Wee Kim Wee, at a recent celebration of the Prophet's Birthday, that MUIS plays a more important role to seek the support of all Muslim organizations for a joint effort in the activity I mentioned. What are the steps made towards this effort? I would like clarification on this point.

Dr Ahmad Mattar: ( In Malay): Sir, the Member for Pasir Panjang raised two questions. The first concerns the progress in the construction of mosques under Phase II.

Sir, since the implementation of Phase II of the Mosque Building Programme, four mosques have been completed; two are still under construction while three more are at advanced stages of planning. The four completed mosques are: Masjid En-Naeem at Hougang, Masjid Darul Aman at Kampong Ubi, Masjid Darul Makmur at Yishun and Masjid Al Mukminin at Jurong East. The two mosques under construction are: Masjid Darussalam at Clementi and Masjid Al-Amin at Telok Blangah/Radin Mas. Masjid Darussalam will be ready by the end of this year and Masjid Al-Amin, early next year.

The remaining three mosques are: Masjid Darul Ghufran at Tampines, Masjid Ar-Raudhah at Bukit Batok and Masjid Kampong Siglap at Jalan Sempadan. Piling work on Masjid Darul Ghufran has recently been completed and construction work is expected to commence soon. Tenders received for the construction of Masjid Ar-Raudhah are presently being evaluated by MUIS. The design for Masjid Kampong Siglap is being finalised.

Mr Chairman, the Member for Pasir Panjang's second question touches on MUIS' plans to coordinate dakwah activities with local Muslim organizations in Singapore. He also wants to know the possibility of these organizations carrying out social activities, such as anti-drug abuse counselling service.

Dakwah activities held at void decks, community halls and sports complexes are coordinated by the 24 District Missionary Committees or JHDs, spread throughout Singapore.

These District Committees coordinate all dakwah activities organized by Muslim organizations at local level. They are, in turn, coordinated by the Central Missionary Committee which now includes representatives of the Dakwah Committee of MUIS and mosques.

The Muslim Counselling Service-SANA (MCS-SANA), of which MUIS is actively involved, has appealed to mosques and local Muslim organizations for Voluntary Aftercare officers. To date, 27 Muslims have volunteered and are at present undergoing a Counselling Course at SANA.

Meanwhile,a Task Force to tackle the problem of drug addiction among Malay youths has been formed. This Task Force consisting of representatives from MUIS and nine other Muslim organizations is chaired by Encik Abdullah Tarmugi, the Member for Siglap. Details of this Task Force have already been announced by me on 5th March and the nine other Muslim organizations on this Task Force are: MENDAKI, the Central Council of Malay Cultural Organizations Singapore, the Singapore Malay Teachers Union, Malay Language Teachers Association, Young Women Muslim Association, PERTAPIS, MCS-Sana, Central Missionary Committee, and the Kampong Kembangan Anti-Drug Abuse Task Force.

Encik Wan Hussin bin Haji Zoohri (Kampong Ubi): ( In Malay): Mr Chairman, in discussing the role of the MUIS, I would like to draw the attention of the Minister to the Budget estimates for the Muslim Religious Council.

If we look at the revised FY 87 expenditure, it is stated that the Government allocation was $708,540, whereas for FY 88 the estimated budget is $631,400. This means a shortfall of about 10.9%. We have just heard the Minister when he replied to the Member for Geylang Serai that the functions of MUIS are expanding.This is reflected in the 1986 Annual Report of MUIS which says that between September and November 1986 MUIS held consultations or "syura" with several local organizations, leaders, scholars, to seek their views on how MUIS could draft its policies and new programmes. As a result of this we formed nine departments in MUIS and these nine departments have announced their operational plans. This shows a broadening of functions and an increasing amount of work for MUIS. This would, of course, also increase the expectations of the community of the functions and tasks of MUIS. But as we scrutinize the distribution of work in the MUIS secretariat, we would find a number of officers having to perform functions in more than one department. For example, there is one Executive Officer who has to perform functions in two departments, the administration and the missionary departments. And an Assistant Mufti has to deal with law and education. Certainly, this is an anomalous situation - so much work being done by such a limited number of officers. So I would appeal to the Minister to urge the Minister for Finance to rectify this anomaly - increased functions but reduced allocation of funds. I would like some explanation from the Minister.

Dr Ahmad Mattar: ( In Malay): Mr Chairman, in 1987 MUIS unveiled its three-year operational plans, which included inter-alia: the establishment of a Religious Education Unit to control and regulate Islamic religious institutions which are currently run independently; taking over the administration of pilgrimage affairs in response to the requirements of the Ministry of Pilgrimage and Endowments of Saudi Arabia; the implementation of programmes to strengthen relations with the Muslim community in Singapore; the stepping up of missionary activities; and improving MUIS' image by increased participation in international and regional conferences.

Mr Chairman, MUIS receives a grant from Government which, in the last five years, averaged $660,000 annually grant is not sufficient for MUIS to implement its programme fully and effectively and it has had to supplement will its own funds up to an annual average of about $990,000 in the last five years.

While MUIS can resort to using part of its Fitrah and Zakat Harta collections for religious education and dakwah activities and its General Wakaf Fund for its other programmes, these are limited by the amount that MUIS receives each year.

MUIS will strive to explore ways and means of increasing its own funds to carry out its activities and if these are still insufficient, it will then try to make a strong case to Government for its annual grant to be augmented.

Encik Othman bin Haron Eusofe: ( In Malay): On behalf of my colleagues who have spoken, I thank the Minister and I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $106,577,750 for Head J ordered to stand part of the Main Estimates.

The sum of $23,051,000 for Head J ordered to stand part of the Development Estimates.

Head U -

Mr Chiam See Tong: Mr Chairman, Sir, I do not propose to go on with the cut. Since the Prime Minister is here and in the past there is a precedent set, the House usually gives some latitude to the Prime Minister. I believe this topic of the Senior Minister has been thoroughly covered. I have looked through the Hansard and we have got half an hour. I wonder whether the Prime Minister is amenable to enlighten us on some very important points. Perhaps he could ---

The Chairman: Mr Chiam, you have filed an amendment and you have indicated the topic precisely, "Functions and Responsibilities of the Senior Minister". Do I get from you that you do not intend to proceed with this?

Mr Chiam See Tong: All right. I will just move,

That the sum to be allocated for Head U be reduced by $10 in respect of Code UA 1000 of the Main Estimates.

The Chairman: Mr Chiam, before you carry on, you have said that you do not wish to speak on this topic. Are you speaking on this or not? Because you cannot raise any issue other than what you have indicated.

Mr Chiam See Tong: Well, it is up to the Prime Minister whether he wants it or not.

The Chairman: No, it is not up to the Prime Minister. Under the rules, you have submitted for discussion a certain topic. You have to stick to this topic. If I under- stand you very clearly, you have stated that you do not wish to discuss this now.

Mr Chiam See Tong: Well, there are a lot of announcements made in the past few years and I think in 1984 ---

The Chairman: Mr Chiam, can I ask you, in moving this amendment, do you intend to speak on what you have indicated? Yes or No?

Mr Chiam See Tong: I will just go barely touch on it and then I go on to something else.

The Chairman: Mr Chiam, you can only discuss what you have submitted. Are you therefore speaking on what you have indicated you wished to speak on?

Mr Chiam See Tong: Not particularly.

The Chairman: Then in that case, I am afraid I cannot allow you to carry on. I take it that you are withdrawing your amendment. Is that right?

Mr Chiam See Tong: All right, I will withdraw it then. If the House so allows me, I will put two questions to the Prime Minister.

Some hon. Members: No.

The Chairman: Mr Chiam, do you know the procedure of debate in the Committee of Supply? I have a feeling you do not understand.

Mr Chiam See Tong: Well, I do. But if the House does not so allow me ---

The Chairman: This is not a question for the House to decide. Are you proceeding with your amendment as indicated or not?

Mr Chiam See Tong: I will withdraw then.

The Chairman: So you are not proceeding now.

Mr Chiam See Tong: Yes.

The Chairman: All right. Thank you.

The sum of $11,495,140 for Head U ordered to stand part of the Main Estimates.

The sum of $1,606,400 for Head U ordered to stand part of the Development Estimates.

Head V -

Dr Augustine H.H. Tan (Whampoa): Sir, I beg to move,

That the total sum to be allocated for Head V of the Main Estimates be reduced by $100.

I have raised a number of topics there but I propose to deal with the first one - economic stability and economic growth - first. During the Budget Statement presented in this House, the Minister for Finance indicated that we are facing a time of great uncertainty internationally. Certainly the October market crash has now led to expectations of a slowdown of the US economy unless Japan and West Germany and other OECD countries can supply the alternative locomotion needed for world economic growth. The world economy therefore is expected to grow more slowly. At the same time, international trade will also grow more slowly.

The basic problem of a huge payment imbalances between the major powers, the US, on the one hand, Japan, West Germany and other countries on the other, will mean continuing currency and trade instability. The pressures for greater protectionism are therefore increasing. We have seen in the last few months the US Presidential candidates trying to outdo each other to direct attention to the balance of payments surpluses not only of Japan but also of the newly industrializing countries, including Singapore. In the Senate and Congress of the United States, there are a number of Bills which seek to increase protectionism. One of them is the Omnibus Trade Bill which will require the US President to produce a list of unfair trading partners each year and to retaliate within 19 months.

Protectionism is not only increasing but it is now taking place on a bilateral basis and blatantly violates the laws of comparative advantage and multilateral trade. Protectionism cannot solve the basic problem of trade imbalances because the root of these imbalances is the imbalances between savings and investments. Unless and until the United States sets its own house in order by substantially reducing its budget deficits, there can be no real solution to trade imbalances.

We have also seen the withdrawal of the GSP for Singapore by the United States, again another sign of increasing protectionism. Sir, my GPC has publicly deplored this unilateral and unwarranted move by the United States. When a superpower takes on a minipower, it only belittles itself. More than that, it loses far more politically than it gains economically. It may be of interest to note some comments made by the World Bank in its latest World Development Report regarding the GSP. Firstly, it notes that as a result of the limitations adopted by most industrial countries, the developing countries have gained little from the GSP. Studies of the GSP in the EEC show that imports from non-beneficiaries were growing at a faster rate than those from countries covered by the GSP. Moreover, there is no long-term guarantee for the GSP benefits. They are unilaterally given and they are unilaterally withdrawn.

Product regulation has been taking place all the time. Exporters and investors in developing countries, like Singapore, have faced uncertainty for their export markets. On page 167 of the Report we have a very interesting comment by the World Bank and I quote:

'It has been suggested that by accepting special and differential treatest the developing countries have struck a Faustian bargain. In exchange for preferences, which brought them limited and risky gains, they have given up a voice in reciprocal trade negotiations and left themselves open to attack by protectionists in the industrial countries, who accuse them of unfair trade. The most mature developing countries, at least, should ask themselves whether this bargain still makes sense.'

Sir, what do all these add up to? I believe there are two implications for us in terms of our economic strategy. Firstly, there is the prospect of potential instability in the world economy, a possibility of prolonged economic recession, if not, an actual depression. How shall we cope in that eventuality? What contingency plans have we made? In the Great Depression of the 1930s, large numbers of Singaporeans emigrated back to India and to China. We can no longer do the same. We have built up most of our infrastructure. We cannot build substantially more. About the only thing left to us is our savings which hopefully would meet our minimum needs for the duration of the recession or depression.

But more than that, in the new international setting we need a new growth strategy. We need to identify new markets. Japan is a promising new market. But from recent reports, it would appear that the other newly industrializing countries have done far better than Singapore in Japan's markets. Are we doing something about it? Are we taking participation in the GATT negotiations seriously? As a free trading nation, we have much to contribute to the multilateral trade negotations. What further potential is there in regional cooperation, particularly with our closest neighbours, Indonesia and Malaysia? There were some reports from Johore that they would welcome more investments from Singapore, more tourism from Singapore. Can we benefit from joint projects with our close neighbours? Are they serious about these suggestions?

On investment abroad: among the new tax incentives, is one that would encourage more Singaporeans to invest abroad and among the criteria listed is one which requires such prospective investors to gain greater access to markets abroad. We can learn from the Japanese experience that whenever they make investments abroad they always make sure that their companies abroad buy from Japan. If our companies can do this, then this will be very helpful to our economy. In the recent Fortune magazine report of 28th March, a Singapore Government-owned company, Singapore Technology Incorporation, invested $5 million in Siera Semi-Conductors in California and this led to a subsequent joint venture in Singapore to the tune of $40 million. We certainly need to encourage more such investments.

The Minister for Trade and Industry (BG Lee Hsien Loong): Sir, the Member for Whampoa has raised a range of subjects concerning the management of the Singapore economy in times of uncertainty, and whether internationally growth will continue or protectionism will prevail. I will touch on a few of these points. Others will be picked up later on in the debate.

On protectionism, he asked about the progress of the trade Bills in the US. We watch developments in Congress the way meteorologists follow typhoons on satellite pictures. You can see it spinning around, but you can never know whether it is suddenly about to change direction and hit you some place quite unexpected. One thing we can say watching this typhoon is that recently it has been losing strength. You may have heard of Mr Gephardt and the Gephardt Amendment to the Trade Bill, which would have been extremely chilling on world trade. Mr Gephardt is a Presidential candidate. His boast was: I will move this amendment now and I will sign it next year as President Gephardt. The Japanese are much more concerned than we are because they have much more at stake. In Super Tuesday, Mr Gephardt did very badly. On Wednesday after that, I am told, the Japanese consumed a great deal of sake in celebration. We watch, we lobby, but all we can get is an early warning.

As for GSP, as I have explained, it has happened. We do not cry over spilt milk. It is a loss. We work hard to make good by being more competitive, by diversifying our markets, by moving into more sophisticated products, where the GSP makes less difference, because our competitors are not the countries still enjoying GSP, the development countries. I think we will survive.

Finally, how do we cope with instability in the world economy? I am a bit hesitant about answering this question because the ability of the Member for Whampoa to paint gloomy scenarios far exceeds my ability to invent instant solutions to them. But I think we are in a fairly well-prepared and secure position. We have got over the recession of 1985. We have built up our infrastructure. Which is in place. We have invested in our manufacturing capacity. We have diversified into services. We have got new markets, high volume of trade, large savings tucked away. What can be done has been done. An adverse wind cannot be wished away but we will see it through.

One thing we can do to minimize its effects is to pay a little more attention to regional cooperation. The Member asked about cooperation with our neighbours, Malysia and Indonesia, particularly Johor. It is a logical progression to our economic development because, as we grow and as we move more activities offshore, there will be many linkages which can be developed between our economy and our neighbouring economies, provided the will is there, which will be good for both.

Just take the example of Malaysia. The linkages between us are substantial. In terms of investment, we have invested $1.4 billion ringgits in Malaysia up to the end of 1986. Last year, we invested $135 million ringgit. This is according to Malaysian statistics. We are now one of the largest foreign investors in Malaysia. In fact, in the State of Johor we are the largest one. So we have already moved offshore. Likewise in trade the volume has gone up. Last year, it was $18 billion, up a whole quarter from the year before.

In tourism, Singaporeans need an outlet. They need a place to go and enjoy themselves. One and a third million Singaporeans visited Johor last year. We are the largest single source and a very major component of the Johor economy. That is just Singaporeans. In addition, many Singaporeans, foreigners who visit Singapore also make trips across the Causeway. Last year 350,000 tourists did that. So the links exist and they can be strengthened.

In terms of investments, I think there can be more investments in industries which are land/labour-intensive. We are short of land, whether it is to rear tropical fish or poultry, or whether it is to establish industries which need a large factory space. Johor has land available. If the environment and the mood is right, our factories can go there. The Malaysians know this and they actively promote Singapore investments in Malaysia. In fact, the Malaysian Trade and Industry Minister, Datin Rafidah, is here today speaking at an investment seminar on Malaysia's business prospects and investment opportunities. We are happy. We encourage that.

Similarly with trade. The volume is up, and the balance of trade is in Malaysia's favour. We buy much more from them than they buy from us. We do not mind. We are happy because it is business, and so long as they are happy, I think the volume can grow. For example, sand - a small item, but valuable. We buy sand from Johor. We need it for construction, for reclamation, for road works. On 1987, we imported $28 million of sand, stones and gravel from Peninsular Malaysia, mostly from Johor. This is nearly three quarters of our total import of sand. We can buy more. Our demand for sand is, as economists would say, "highly elastic". In other words, if it is cheaper, we can buy much more because we can use it - by expanding our reclamation projects, and bringing forward our plans. The quantities can expand many fold provided, of course, there is willing buyer, willing seller, and the price is right.

Similarly for tourism, the potential is there. We enjoy seafood. We enjoy beach resorts. Johor with its offshore islands - Tioman, the east coast islands - offers a lot more than Sentosa can possibly offer, despite all the things we are going to put into Sentosa, which we will tell you about later on. It can be a useful outlet for us. Similarly for tourists, if we can market Singapore with Johor together as one combined package, that means there is more reason for tourists to stay longer in this region, which means more nights in the hotels, more business for us, and more people coming, because visiting only Singapore means a limited range of interests can be catered for. And even if people visit Johor and stay a night in Johor instead of in Singapore, that still expands our market, so we do not mind. We have been cooperating with Johor in tourism promotion. For example, we have been advertising overseas, cost-sharing basis, in US, in Scandinavia. I think this will continue and more can be done.

But at the bottom of it, as I have said several times, it all depends on the political climate. The closer our ties are, the more smoothly projects can be launched and the more areas for cooperation will be uncovered. If the atmosphere is a troubled one, even good ideas may not be able to fly. I think the Malaysian government understands this, and certainly the Johor government also understands this.

There was a report in the Straits Times, 5th March - some speeches which were made in Johor during the Tanjong Puteri state by-election when Dr Mahathir came down to campaign and he said:

'Business would suffer and tourists would not come if there is tension in the country.'

And since tension has gone down and business has improved, tourists from Singapore are returning. So the connection is clear. Similarly, the Culture and Tourism Minister Datuk Sabbaruddin Chik, said 2 million Singapore tourists visited Malaysia last year, mostly by way of the Causeway, and the large number of visitors showed a close ties that existed between the two countries. And the warm reception given by Johor Baru residents to Singapore tourists would directly help to promote the tourist sector. Similarly, the Mentri Besar, Haji Muhyiddin, who said:

'Good bilateral relations with Singapore had helped the Johor economy. Singapore is the largest investor in Johor.'

So I am confident that we will make further progress in economic cooperation with Malaysia, particularly with Johor. It is not the only strategy we have for dealing with uncertainty and recession and a troubled world, but I think it is one worthwhile to remember from time to time.

Dr Augustine Tan: Mr Chairman, Sir, I hope the Minister's gushing optimism on regional cooperation is justified. Let us also hope that the Minister's reaction to a possible world recession is better than my ability to project scenarios, however dismal, or else we will all be dead ducks.

May I now move on to the other three subjects that I have raised under this Head. Firstly, co-ordination of trade policies. In his reply to a recent question, the Minister was reassuring that this co-ordination of various economic policies is being done at MTI and there is a Ministerial Economic Committee of the highest level dealing with it. There is also an index of competitiveness which his Ministry has devised. But, Sir, I would like to focus concern on the anxiety that the business community has expressed concerning the various con- cessions that were granted in order to fight the recent recession. Members would recall that a total of $3.2 billion were given by way of concessions, of which $1.5 billion represented the cuts in the CPF and in the Skills Development Fund, and $420 million were by way of cuts in the corporate taxes, the rest represented increased public sector spending.

Sir, we would have to watch the situation very carefully to make sure that what is injected into the economy is not suddenly withdrawn to the detriment of the economy, especially this year when we are expecting an economic slowdown. Furthermore, since the Finance Minister's announced intention is to limit the public sector's share of the GDP over the next five years, which I heartedly endorse, would not this mean that the withdrawal of the concessions would be quite unnecessary from the revenue standpoint? He should not hasten to add to the cost of doing business in Singapore at this time when we have barely recovered from the recession.

Next, may I deal with the subject of the Economic Committee and Sub-Committees. Members will recall that these were set up in 1985 and they made a commendable contribution by way of helpful diagnosis and prescriptions to overcome our economic recession. These Committees gave the private sector a sense of participation in decision-making. I believe the Government enhanced its image of openness, of accessibility and of receptivity to new ideas. And I believe, Sir, that the rapport which was built up was one intangible factor that contributed to the recovery. The problem now is that these Committees appear to be dormant, unutilized. I am told that businessmen are afraid to bring their problems to the Minister himself or to political leaders for fear of incurring the displeasure of bureaucrats. I would urge the Minister to look into such complaints and I would ask him, why not keep the Economic Committee and Sub-Committees as permanent avenues of dialogues for the business community? At the same time, my GPC is available as another channel to the private sector, and we already have a number of organizations approaching us for help.

Finally, Sir, may I deal with the subject of economic research. I notice from this year's Budget that there were only five staff listed under MTI who deal with economic research. I am told that MTI is losing the director in charge of research very shortly. Are these five people sufficient to undertake all the economic research necessary at MTI? Is it the reason why the Minister was so hesitant to tell me his possible reactions to a world depression or world recession? He has not even thought of the subject because he does not have the people?

Sir, recently the Policy Studies Institute was set up at the NUS, costing $4 million, to conduct political and social research. Why not establish an Economic Research Institute similar to the Korean Development Institute to undertake independent, medium and long-term studies of Singapore, of ASEAN, of the NICs and the major Pacific Basin countries? Such research will help us to identify emerging economic trends and problems and therefore to adopt the right strategies. We have spent hundreds of millions of dollars on new public offices and tens of millions of dollars in extravagant furnishing. Why can we not spend a few paltry million dollars on much needed economic research? Singapore is well placed to be a world class centre for economic research. We are a free trading nation, we are a commercial and transportation centre, we are a financial centre of global significance, we are a regional centre for ASEAN and we are on the rim of the burgeoning Pacific region. All these mean that if we put in the resources, we can have an internationally recognized economic research facility.

The Chairman: I think we can take the Suspension now.

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

Mr Deputy Speaker: Order. I suspend the Sitting and will take the Chair again at 2 o'clock.

Sitting accordingly suspended at 12.58 pm until 2.00 pm. Sitting resumed at 2.00 pm

[Mr Deputy Speaker in the Chair]

Debate in the Committee of Supply resumed.

[Mr Deputy Speaker in the Chair]

Head V (cont.) -

BG Lee Hsien Loong: Sir, before lunch, the Member for Whampoa asked me three questions. On coordination of our economic policies, he asked for an assurance that the cuts in business costs which were granted during the recession amounting to $3.2 billion a year would not be taken away suddenly. I can give him that reassurance.

The biggest chunk of this $3.2 billion of cost savings was the 15 percentage-point reduction alone accounted for more than a billion dollars. Then came the property tax rebate, about half a billion, then the reduction in corporate tax, about $400 million and so on. We have restored hardly any of these costs. All we have revised are the rebate on HDB commercial and industrial properties, the rebate on HDB land, and the removal of the discounts on JTC rentals and port charges, which add up to $95 million a year, 3% of the total amount of the cost reductions in the first place.

We are considering how much of the CPF contribution to restore this year. He can be assured that we are not going to put all 15% back. But just to get a sense of scale, every percentage point on the CPF is equivalent to $127 million of net withdrawal from the economy and cost increase. So when we decide how many percentage points to adjust, this will be foremost in our minds. The decision will be announced in good time.

As regards the Economic Committee and Sub-Committees, they were set up for a specific purpose. There was a task to be done. Policies had to be reviewed. Concentrated, sustained work was put in by the committee and sub-committees for a period of almost a year to produce a report. The report is now complete. We are implementing it. The economy is growing. I do not think it would be fair to use the Economic Committee members as a shadow economic ministry. Because they have got their own responsibilities in their own companies and their own jobs and this was a one time public service by them.

What is important is to continue to keep similar close, intimate, contacts with the private sector, so that any time the private sector feels that there is a problem to be raised, they can talk to the officials. Or if they feel the officials have not solved their problems, they can talk to the Ministers. In this spirit, MTI and our statutory boards have been having regular systematic meetings with the private sector. I personally have a regular series of lunches with different business groups, employers' federations, business councils, Japanese groups, German groups, manufacturers, local entrepreneurs, traders. The next session I am having, I think next week or the week after, will be with the service sector. We spend an hour over lunch. They tell me their concerns, where they think the Singapore Government can help and where they would like to be left alone. I find it useful. I think so do they.

Similarly, my Ministry holds more formal sessions with the SCCCI and other groups like the Textile and Garments Manufacturers' Associations. From time to time, we have problems rationing out textile quotas. We have to auction them and we discuss closely how it is to be done. Similarly, EDB and TDB also keep in touch. Each time we meet, our guests speak extremely frankly. I have never got the impression that they feared to raise any problems with me. In fact, they were only too eager to explain to me all the things which they would like the Government to do. I think that is good, and I am sure it will continue.

I hope the GPC will also, in its meetings with the private sector, have a similar open and flexible approach.

As for economic research, the Member for Whampoa asked why have only five people in MTI. We run a very small ship. It is a small team. We are looking for good economists, sound academic analytical training and sense of realism and some feel for the Singapore economy. Such people are not easy to find. They are scarce and they need to be groomed. Because if you go around just looking for people, you would not find anybody readily qualified. And if he is already qualified, quite likely he will have a job already somewhere else.

We established the ERU about a year and a half ago. I think they have done a fairly good job. There is some turnover. The director is going back to the University. We will find another director. At the same time, we will keep our links with the University. Because in the Economics Department in NUS, there are many economics researchers and it is good if we can tap their views and they can have access, through us, both to the Government's thinking and also to some of the data which the Government has available. The links have already been established. I hope, in time, they will grow.

MTI is not the only Government agency which keeps its pulse on the Singapore economy. The MAS also does that. They have a team, longer established. We compare notes with them to make sure that we do not have wildly divergent estimates.

As for the Institute of Policy Studies being a model for an economic research institute, I think the idea is a good one. The difficulty will be finding the researchers. It is not a matter of buying less furniture and more economists. The difficulty is to assemble a fairly strong team. I do not see that team readily available. I think we build it up in the University first, in the Faculty, and as the Faculty interest grows and an established corps is built, a body of work is put together, then we can make the next step and talk about an economic research institute.

Dr Ow Chin Hock (Leng Kee): Sir, the first issue I would like to raise is on the retail trade sector.

In 1985, the retail trade sector had a turnover of $9.46 billion and employed about 59,000 persons. These figures were lower than those in 1983. I quoted those figures in last year's debate. Could the Minister inform this House whether the sector's performance in 1987 was better? I do not have the figures because the latest Report on the Survey of Wholesale and Retail Trade, Restaurants and Hotels 1985 was released only in December 1987. May I ask the Minister whether this survey of the commerce sector could be carried out annually, just like in the case of industrial production?

Sir, the retail trade sector is characterized by a dual market structure. On one hand, there were only about 100-plus relatively large firms. On the other hand, there were thousands of small independent shops and retail outlets. Let me quote some figures here. Sir, I do not intend to distribute a table in case I am accused of overdoing it. I must emphasize that the figures I am going to quote are from the survey. They are actual figures. They are not estimates for illustration purposes. This is the distinction I must state because this distinction is something that the Minister of State for Education could not understand.

In 1985, there were only 137 relatively large supermarkets and departmental stores. But there were 3,758 general provision and sundry shops; 3,752 retailers selling textiles, apparels and personal effects; 1,577 selling furniture, furnishings and household equipments; and another 1,000 or so selling transport equipments. There is a great contrast between these two sub-sectors. For example, 82 out of the 137 supermarkets and departmental stores had an annual turnover of more than $5 million. But one-third or 30% of the 3,758 provision shops had a turnover of less than $100,000 per year. In terms of employment, the 137 supermarkets and departmental stores employed about 10,500 persons whereas the nearly 4,000 provision shops employed about the same number, 10,223 persons. Moreover, most of the persons engaged in the provision shops are working proprietors and partners and their unpaid family members. Expectedly, these small retailers have a very low productivity and efficiency.

The retail trade sector as a whole is facing three challenges:

(a) foreign competition;

(b) changing demand patterns and shopping habits, especially after the operation of the MRT; and

(c) the need to upgrade and modernize their operations.

On the question of foreign competition, the percentage share of foreign capital in the retail trade sector has increased from 13.8% in 1975 to 34% in 1983, quite a substantial increase. Last year, I asked the Minister whether we needed so many foreign departmental stores. I want to bring up this question again. His reply then was that our consumers and retailers stood to benefit. I agree with him to some extent. I might add that these foreign departmental stores help to attract tourists. However, we should also examine the social and economic costs of this so-called "open door policy" in the retail trade sector. What price should we pay for these benefits? Could our smaller retailers survive this competition, especially in view of the stagnant demand which I quoted just now and declining profit margin? I have done some calculations. Operating surplus to turnover ratio declined from about 7% in 1971 to 1.5% in 1985. Also, is it wise to reallocate labour from the manufacturing sector to these foreign departmental stores and chain stores, especially in view of our current labour shortage?

May I suggest to the Minister that the SME (Small-Medium sized Enterprise) development plan should evaluate objectively the social and economic costs and benefits of foreign competition in the retail trade sector. The Master Plan should also recommend ways and means to reorganize the retail trade sector so as to meet the changing demand pattern as a need to raise efficiency of these sectors. Special assistance must be given to provision shops and other retail outlets, as it will be very difficult for these shops to upgrade on their own.

The Chairman: Mr Chiam is not here. Dr Ow, do you want to continue with your next issue?

Dr Ow Chin Hock: The second issue I would like to discuss is the local entrepreneurs. We are an enterprising people. We do have entrepreneurs in banking, trading, hotels and real estate. Our development in the past 20-odd years has relied more on foreign capital and public enterprises. Local private entrepreneurs have played a very limited role compared to their counter-parts in other NICs. Why is this so? Many people have given many reasons. For example, the Economic Committee has listed eight reasons. I am not going to repeat these eight reasons here. I simply want to summarize three or four basic reasons.

(1) Crowding out effects by the public enterprises and NICs - Whether these crowding out effects are real or perceived.

(2) Mentality and attitude of our people. We have the so-called "kia soo" mentality. We also have low tolerance for failures. Hence, most of our graduates and talents prefer to opt for secure and well paid jobs in the public sector and MNCs.

(3) We have been too protective. We have provided too many safety nets as observed in the Economic Committee Report. One clear example is our Minister for Education. He is too worried that we will produce unemployed graduates when we increase our intake of university students. I wonder sometimes in the 1960's and 1970's how many former Nantah graduates have become entrepreneurs in Singapore and Malaysia as compared to the graduates from the University of Singapore during the same period.

(4) Our tax structure and CPF scheme have also tilted the risk reward balance against risk-taking business ventures. The CPF contributions increase the opportunity cost of becoming an entrepreneur while the tax structure is uneven or asymmetrical between profit and loss.

If our private sector is to become an engine of growth, we need to promote our local private entrepreneurs. As my colleague Dr Koh Ai Tee and Dr Lee (Tsao) Yuan, have written in an article published in the Straits Times on 9th March, the promotion of local entrepreneurship also brings about an additional benefit, that is, diversification of markets and products. Two separate studies by NUS economic students have rated difficulty of raising funds as the number one problem faced by our local enterprises and local entrepreneurs. The article by Dr Koh Ai Tee and Lee (Tsao) Yuan also mentioned that financial constraint is a very real one. So one way the Government can help to promote local private entrepreneurship is to increase the availability of capital for our local entrepreneurs. I note that the loans provided under the Small Industries Finance Scheme has increased to $296 million last year. This is a good start. But may I ask the Minister what are the criteria in approving these loans and whether these firms are mainly in the manufacturing sector or the service sector or other sectors and whether the sum of $296 million is sufficient. I noted that in 1987 the investment commitment was about $1.7 billion. These loans represented about 17% of the investment commitment.

Coming to the question of privatization which was suggested as one of the ways the Government can help to promote local entrepreneurship, I endorse Government's effort to privatize our Government-linked companies (GLCs). Privatization of GLCs will create investment opportunities for our local entrepreneurs in our local market. Privatization may not create new wealth and could be a mere transfer of ownership unless the private entrepreneurs pump in more capital, expand the activities of these enterprises which they take over and raise their efficiency. Moreover, our domestic market is limited. Local private entrepreneurs should therefore seek business opportunities overseas. Government have assisted in providing market development and technical assistance and, as the Minister for Finance has just announced in his Budget Statement this year, tax incentives for deduction of losses in overseas investment. But the Government should also consider taking a more active role in overseas investment. Could the Government divert the fund from the resources and fund released from privatization to set up joint ventures with local private entrepreneurs in new markets, especially in China, India and Southeast Asia? We have comparative advantages in building and managing ports, airports and other infrastructure, town planning, construction, hotels and tourist-related projects. We should take advantage of these, whether it is private or public sector. We have been called "Singapore Incorporated". Why do we not live up to the name?

Finally, not only tax schemes should be modified to achieve a better balance between risk and reward in favour of business ventures. Tax schemes should also be adjusted to discriminate against unproductive and speculative activities in, for example, stock market, foreign exchange market and real estate and in favour of investment of plant, factories, machinery and equipment, which expand our productive capacity.

Dr Wong Kwei Cheong (Cairnhill): According to page 696 of the Budget for Financial Year 1988/89, the total expenditure of the Ministry of Trade and Industry in FY 88 is projected to be $367.86 million, an increase of $116.78 million or 46.5% over the revised FY 87 expenditure. This is a tremendous increase and, according to the first paragraph of page 696, the increase is accounted for by higher outlays of about $230 million, under the Economic Development Board's Economic Development Assistance Scheme (EDAS).

Reading the Budget Analysis and Review of MTI, it appears that the EDAS is used by the EDB for its various industrial promotion and upgrading programmes. May I ask the Minister (a) if such programmes also include assistance programmes to develop local entrepreneurship, especially local entrepreneurs who have started small and medium enterprises, and (b) what percentage of the EDAS has been budgetted for the assistance of local entrepreneurs.

I understand that the Government, through the EDB, has developed a comprehensive plan to assist local small and medium enterprises. According to the 1986/87 Annual Report of the EDB, the plan identifies the problems and needs of SMEs, evaluates the adequacy of existing SME capabilities; and proposes new initiatives in business areas such as finance, management, technology, innovation and the availability of markets.

The EDB report, however, did not say how successfully this plan has been implemented or gave examples of local companies that have benefited from the plan. Perhaps the Minister can enlighten the House on these two points and also the role played by the Economic Development Assistance Scheme in this plan.

On speaking to some local entrepreneurs, one of the key problems lies in the shortage of workers. Very often, their application for work permits were rejected even though they were prepared to pay the foreign worker levy. Can the Minister inform this House the measures made by the Government to help local entrepreneurs resolve the labour shortage problem?

One final point, Mr Chairman, Sir. According to the

1985 Economic Report, the Government has set up a $100 million Venture Capital Fund to assist local entrepreneurs. May I ask the Minister how many local companies to date have benefitted from this Fund and how much have been spent in assisting such companies?

BG Lee Hsien Loong: Sir, the Members for Leng Kee and Cairnhill have raised a variety of issues related to local entrepreneurship and the retail sector. May I take this opportunity to give a general reply to explain how MTI sees the problem before taking up some of their individual points.

I agree with the Members that local entrepreneurship is important to us. It is symbolic. It is what made Singapore start to prosper in the first instance. It is now facing some difficulties and needs some assistance to upgrade and to do well. The question is what needs to be done. Listening to the speeches gives one a sense of deja vu, that means, it sounds like last year. Because it is the same problems, same issues, same questions raised. The impression might therefore be created that nothing has changed and nothing has been done. But fortunately that is not true.

The Government has devoted considerable attention to building up local businesses. We established a Small Enterprise Bureau in 1986. Now it is called the Small and Medium Enterprises Division of the EDB. But it is the same thing: a single agency to spearhead and to oversee assistance which is to be given to SMEs, which are mostly Singapore companies. The SME Division needs to work with other Government agencies, because it concentrates all the assistance given. So to further this, we set up two committees. One is at the working level, chaired by the Chairman of the EDB. It brings in EDB, NPB, Sisir and Tourist Promotion Board and TDB. I chair one at the policy level, which brings in the Permanent Secretaries of the relevant Ministries. In case there is any hold-up whatsoever at the bureaucracy level, a policy decision can be made. In fact, the bureaucracy is not a problem because the SME Division has received full cooperation from the other agencies, including those which belong to Ministries other than MTI. For example, National Development is involved in drawing up the SME Retailer Master Plan in Housing Estates, Finance is involved in the Government Procurement Scheme, or Labour or Environment. At the same time the SME Division also works closely with the private sector to get some inputs and feedbacks for its work.

The Member for Cairnhill asked whether SMEs are benefiting from Government initiatives. I think they are, in different ways. They are benefiting from the many schemes we have, the acronyms which you are very familiar with: SIFS (the Small Industries Finance Scheme), SITAS (the Technical Assistance Scheme), LIAS (the Liberalized Investment Allowance Scheme), and so on. These are comprehensive schemes designed to help SMEs gain access to financing, to fixed capital investment, to technology, to know-how. For example, SIFS overcomes one of the basic problems which the Member for Leng Kee mentioned, ie, lack of financing. In 1984 we gave $112 million of SIFS loans. It was then the highest to-date. 1985, the number went down because of the recession. 1986, as we were recovering from a recession; we set up the Small Enterprise Bureau. The loans doubled to $250 million. Last year, it went up even further to $297 million. Up to-date, cumulatively, more than $1 billion of loans have been made. These are loans jointly made by participating financial institutions, banks and other institutions and the EDB at a discounted interest rate. They are good loans because the default rate is low. They have helped companies both in the manufacturing and in the service sectors to invest in capital equipment, sometimes to get some operating capital, and I think it is successful. Otherwise the amount would not have grown.

Similarly the LIAS - Liberalized Investment Allowance Scheme - addresses a basic problem, namely, under-investment in fixed capital. It was one of the recommendations of the Economic Committee which was implemented. The first year we made $5 million of investment allowances. Last year, it went up to $25 million. Likewise with the upgrade programme. The LIUP helps small companies in the supporting industries to upgrade themselves and to do so with the help of multi-nationals. So far, 10 multi-nationals are participating. 41 suppliers have taken part to try and improve their quality, their product reliability. We want to bring in five more multi-nationals a year. We think by 1990 we will have 350 local companies participating. The scheme will raise their efficiency and help them become internationally competitive. They can then become models for many other companies to do likewise.

Then we set up Sesdaq. It is not a loan or grant scheme. It is one important institution which is needed to help small companies to grow big. They need capital. They cannot get it from the big board, the main stock exchange, so they get it from Sesdaq. So far, about 10 companies have been listed on Sesdaq. Two of them have enjoyed assistance from the EDB. More will be listed in due course.

The conclusion is that a lot is happening. Work is being done and there are some visible results. We do not talk about it very loudly but we do it. Apart from the Sesdaq companies, others are also doing well. For example, among supporting industries which supply the multi-national corporations, we now have quite a stable of mould-making, moulding, precision-tooling factories. They are small, $1 million each, turnover a few million dollars a year, but they have established a reputation for quality. They have won overseas markets and I think they will form a very fertile base in which multi-nationals can come and take root. So please do not under-rate our local entrepreneurs.

The Member for Leng Kee mentioned the retail sector. Yes, it has some special problems. It is a dual sector - a few big companies, and many small ones. The small ones have great difficulty. The Member, I think, referred to an article - or if he did not refer, I will refer to it - in the Business Times on 10th March ---

Dr Ow Chin Hock: I did.

BG Lee Hsien Loong: --- which was entitled "Small retailers pessimistic about future". This was a study by the NUS School of Management which concluded that small retailers are cautious, conservative and pessimistic. They are slow to change even though they recognize the need for new business methods. They are labour-intensive, low on productivity but still when it comes to training people they are only willing to train their staff in customer services and salesmanship, and give low priority to the core skills - training in merchandizing, display, purchasing,stock controls and store management. In other words, they have gone for PR training instead of management and operations training. It is not for lack of courses because SRMA (Singapore Retail Merchants Association) has a training centre running 10 different courses. But the participants are from the big companies. The small ones do not come. It all sounds so discouraging, does it not? So what do we do? More to the point, what does the Government do?

The Government can help those who help themselves. If some retailers see the problem but are not willing to pull themselves up, I am not sure the Government should force them to do so. We can extend the hand. Yes, we will not give up hope. Explain, encourage, persuade and - almost - force them to grasp the hand which has been extended. I have made many speeches to this effect. If some other MPs would like to join me in doing so, MTI would be most grateful.

But I do not think it is completely hopeless because I am not sure how representative the NUS survey was of the retail sector. Certainly we know of some companies which are doing well. The SME Division has clients who are local retailers, members of NTUC Fairprice, members of the Singapore Provision Shops Friendly Association, Econ minimart, other retail groupings. They have quite a number of schemes going. They receive financing from SIFS. Some are computerizing their operations. They managed to get a technical assistance loan with help from EDB and NCB. Some are attending training courses funded by the SDF. Others have gone on a study trip overseas, funded by bysiness development schemes to look at the experience of Japan and Taiwan, and having come back they have set up their own bulk purchasing and common advertising network. They have moved, and those who have moved have done well, to the best of our knowledge, which means there is hope.

Competition - I have always thought competition is a good thing because competition is the way to spur innovation and progress. If there is no competition, the pressure, the goad to move is not there. Change slows down and stagnation sets in. The Government is not really in a position to decide how many local retailers we should have in Singapore or, for that matter, what proportion of the retail trade should be local and what proportion should be foreign. That is for the market to decide. For us to determine the number independent of the market is really to protect the retail sector. We can do that but we would have to pay a price. Singaporeans would have to pay a price, not the Government, but Singaporeans, consumers. The price is higher consumer prices, probably poorer service, as is the case in Japan and Taiwan where the retail sector is protected, and retail prices are several times higher than they are in Singapore. It would do us no good. First of all, we would lose a lot of votes because many people are consumers in Singapore. Secondly, tourists will no longer come to shop here. Overall, the economy will be poorer off. We have got to balance the interests. We have to help the retailers, which we are doing, and will do more of. At the same time, we must make sure that the consumer's interests are not hurt. One way to help the retailers is to develop entrepreneurship.

The Member for Leng Kee mentioned an article by two academics - Dr Koh Ai Tee and Dr Lee (Tsao) Yuan printed in the Straits Times on 9th March. I think all MPs interested in this subject should read it. The two academics have done MTI's job for us. They have explained the problem very clearly. We have relatively fewer entrepreneurs than Taiwan or Korea or Hong Kong because, first, our talent pool is small. There are just fewer Singaporeans from whom to generate people who have that spark to be entrepreneurs. Secondly, what they call the risk reward trade-off. It is not attractive enough. To become an entrepreneur. In other words, it is too risky and not rewarding enough. It is too safe in Singapore so that being an entrepreneur does not yield any significant advantage. Better be a salaried employee in an MNC or be a Government servant in the public sector or join an established local company.

So they conclude to promote entrepreneurship, either increase the expected reward or lower the risks, or do both. Best of all, no risk, great reward. But if you go to that extreme, you do not need an entrepreneur - because the whole essence of entrepreneurship is that you take risks and earn the reward! But they want something done and I sympathize with them and with the MPs who want something done. I agree that it is something worthwhile in the long run. The question is: what more do we need?

There are some ideas in the article. One, shrink the size of the public sector, including the Government-owned companies. Privatize them, let the private individuals, management teams take over, make them grow. We are doing that. It will take some years. I think the Minister for Finance has explained our policy and reaffirmed it. But our problem there is not how quickly we are willing to privatize. It is how quickly the individuals in the private sector, the entrepreneurs, can come forth and be ready to take it over. If we had enough entrepreneurs in the private sector, we could privatize all our Government-linked companies almost overnight. But who is going to take them over and run them, who will provide the guiding genius to make them grow even bigger, to re-invest and move into new areas of business? There is nobody today. But we will privatize and that commitment on our part should be inducement enough for teams to emerge in the private sector.

Dr Koh and Dr Lee, have also suggested that the Government should solicit ideas from the private sector on how to assist local entrepreneurs. I think that is a good point. We are doing that. Last year in February, the Small Enterprise Bureau launched a multi-agency effort to formulate the development plan for the small and medium enterprises. It is meant not as a Government effort but as a combined public and private sector effort to identify the roles for SMEs in the Singapore economy, the needs and areas of development, the strategies which need to be adopted. They formed seven working groups which comprised both civil servants as well as private sector people to examine all the areas - finance, technology, business development, productivity, human resource management. I think this was the master plan which the Member for Cairnhill was referring to. It is still being worked on. The working groups will present their conclusions at the SME development plan workshop in May this year. At the workshop we plan to collect feedback from private sector organizations, local chambers of commerce and industry, industrial and trade associations, multi-nationals, consultancy firms and so on. We need their full support and commitment because the Government cannot do it alone. If we could, we would not need private entrepreneurs. But we need private sector organizations also to put in their part and help enterprise to grow. I am confident that at the workshop we will receive valuable feedback. It will be incorporated into a development plan, and that development will take us even further on the road to promoting entrepreneurship.

Now if I may take just a couple of the points raised by the Members. The Member for Leng Kee mentioned the tax structure being asymmetrical and being a disincentive to enterprise. In a way it is asymmetrical. If you make money, you pay tax; if you don't make money, you don't pay tax. But I do not know whether the Member was suggesting that if you do not make money, the Government should pay you some money back. I trust he does not. Some countries do that. But then there are a lot of companies which lose money and remain happily unprofitable for years on end because they found the way to tap it.

Where there are distortions in the tax system, we will iron them away. The best way to change our tax system to encourage enterprise is to bring down the corporate and individual tax rates as low as possible so that what a person earns he keeps. Then there will be an incentive to earn. We moved our rate to 33% two years ago. It was a big jump downwards. Since then, many other countries have moved their rates down. The Americans have come down to 33% too. The British have just brought theirs down to 40%. Let us look at the situation in a few years' time. Provided the Exchequer can afford it and the need is there, we may move it again. But I would prefer a generalized flat tax regime rather than individual special gimmicks to encourage particular enterprises.

Secondly, the Member for Cairnhill asked what we are doing about the shortage of workers and I think this is properly a question which should be directed to the Minister for Labour. From MTI's point of view, hiring foreign workers is not really the solution to the small enterprises' problems. The reason they need to hire foreign workers is that they are paying less and, therefore, Singaporeans do not want to work in Singapore-owned companies. They prefer to work with the multi-nationals who pay better. And the reason the multi-nationals pay better is that they are more productive, they earn more, they can afford to pay more. Our solution, therefore, for local companies is to upgrade their productivity, improve their performance, be able to pay more, and there will be far fewer difficulties getting workers.

Sir, I think I have dealt with most of the points raised.

Dr Augustine Tan: Sir, with your permission, I would like to take issue with the Minister on the question of competition in relation to entrepreneurship and the retail sector.

Sir, I do agree that some kinds of competition can be helpful in spurring innovation and spurring people to better efforts, but certain other kinds of competition can overwhelm. If the Minister were to wrestle with a man about his size, we can have even bets on the outcome. But would he like to wrestle with a Japanese Sumo wrestler? Sir, we are talking about the retail sector in Singapore. When you allow these Japanese retailing giants to come in, it is like allowing a Sumo wrestler to come in to fight the Minister. We have no doubt as to who will win.

The point is this, Sir, that although our economy is a small one, there are surely some sectors, however limited, that can preserved, helped in some regard so that local entrepreneurs would have a chance of emerging to be giants. We have the excellent example of the banking sector where there has been deliberate government policy to help promote the four major local banks. And I think we can be justifiably proud that these four banks have done so well. Why can we not do the same for the retail sector? Why must we bring in the Sumo wrestlers to overwhelm the Singaporeans? Why can we not promote our own retailers - give them all the technical assistance and financial assistance possible, so that eventually they can spread their wings and set up branches in other countries as well?

BG Lee Hsien Loong: When the Member for Whampoa speaks, the persuasiveness of his argument is not always related to the logic of his case. I do not indulge in Sumo wrestling for a very good reason. It is not a sport in which anyone of my build, much less the Member for Whampoa's build, is likely to survive. And therefore when I want to watch Sumo, I either turn on the television, or bring in real Sumo wrestlers from Japan. If we want to compete with them, they can indulge in Sumo wrestling but I will either race them, or swim or play tennis, anything, but never get into the ring with the Sumo wrestlers. I am happy and, I think, so are they.

Yes, some foreign retailers are Sumo-class, heavyweights. Therefore, do we want to be in the same business as them? If (to change the metaphor) there are people in the world 7 ft tall who play basketball, and there are, then do we, 5� ft tall, want to set up our own basketball team to compete with them? Surely not! Let them play, we will watch, and we will make our living in other ways. Similarly with the retail trade. If a Japanese retail chain store can come here and do what they ought to be doing in Japan but are not, which is to run extremely efficiently, offer very competitive prices and provide a very good service for Singaporeans, why should we not buy from them? And if they want to offer prices below market, below cost, thank you very much, so much the better. I am a consumer, I don't mind. And if you have deep pockets, well, I will come more often and tap your pockets more frequently. We will find a living in other areas. As the Member for Leng Kee said, why do you want to spend precious labour in retail trade when we need them in manufacturing and in other services, when we are short of labour and should put workers in jobs where we have a comparative advantage?

The Member for Whampoa also mentioned banks as a good example. I think the banks illustrate our dilemma. Despite our banking sector being not completely open, despite our best efforts to build up our local banks as much as we can so that they will have a fighting chance competing overseas, can we produce one Citicorp or Dai-Ichi Bank, given 100 years? We are too small! We have four banks. In Singapore terms, they are giants; in international terms, they are still peanuts. We have to recognize the realities. If in the banking sector, where there is good reason for wanting to keep a good portion of the sector under Singapore control, we have such difficulty building up a big Singapore bank, how much harder it will be in the retail sector where the arguments are weaker, the market is that much more open, because you can just go overseas and shop? To a Singaporean, there is no insult in saying I buy from whom - Sogo? Or from Yaohan? - I am sorry I never go to these places, so I cannot produce their names - Why not? I make a living, nobody pays me to cool my heels. I earn a living, whether working in a factory, producing micro-chips or computers, or whether working as a doctor or as a stenographer, and I will shop in Yaohan. Why must I own Yaohan and run it poorly? If that wereoffered me, I would turn it down straightaway.

Dr Augustine Tan: Sir, by his own admission, the Minister never goes shopping. So how does he know the problems of the retailers? And on my example of the Sumo wrestlers, I was not suggesting our going to Japan to wrestle with them. I was telling him not to bring them to Singapore to overwhelm our little guys, including himself. I hope he was not serious in regard to the local banks. I think we can be justifiably proud of these banks. I hope that he will not open the doors any wider to foreign competition.

I think there are certain things worthwhile preserving. If we can help our local guys, we give them a helping hand to grow bigger, even if a little bigger. We do not have to play in the big leagues; we can play in the little leagues.

BG Lee Hsien Loong: Sir, there is no such thing as a little league Sumo wrestler. It is a very strange feeling to argue as a non-economist against an economics professor and try and persuade him of the virtues of free trade. But I suppose I should try what the Chinese call Ban Men Nong Fu. At the door of the master, I will just make two simple tricks.

First of all, banks. When I said that there is a reason for protecting them, it is not to protect the banks per se. It is because we want to maintain control over our monetary system - interest rates, money supply - a key institution, a key mechanism for keeping the economy on an even keel. If we lose control of that, then inflation is out of hand, finances are out of hand, the whole economy grinds to a halt. There is a reason for it.

Secondly, it makes no difference whether you are Sumo wrestling in Japan or in Singapore. It is a service which is being provided, and we have found a niche in Singapore for making a living. Otherwise, we would not have had economic growth. If it is a niche which must involve no local retail traders on a big scale, so be it. We have other businesses. I think that is entirely satisfactory. If everybody knows these rules of the game, then calculations can be made, and we will build up in places where we can do well, and we have done well. We have big companies, not on an international scale, but companies which have done well - Times, some manufacturing companies, National Iron, our shipyards. They have not done well because we have protected them. They have done well because we have refused to protect them, because we have exposed them to competition, frightened them from time to time with threats of financial ruin when they are less successful. And, therefore, they have weathered the storms, grown more resilient and expanded their base. If we are going to do well in the retail sector, which cannot completely be ruled out, I think the same approach will have to work.

Dr Augustine Tan: One last word on that debate, Mr Chairman, with your indulgence. There is a fundamental difference between the Minister and myself. He thinks in terms of niches. I think in terms of bigger things. Two years ago, I told him, I warned him not to use that word "niche". When you think small, you will devise small plans. When you think big, you will have big plans.

BG Lee Hsien Loong: Sir, the difference between the Member and me is that he dreams dreams, and I have to carry them out.

Dr Ow Chin Hock: Sir, before I move on to the other issues, let me clarify a few points. Firstly, I did not say that nothing has happened between last year and this year. In fact, the various schemes mentioned by the Minister are all in the Economic Survey 1987, pages 26-30. I raised this because I wanted to give the Minister an opportunity to elaborate on the various schemes. Because I know many people do not read the Economic Survey in detail. For example, I asked him what were the criteria for loans under the Small Industries Finance Scheme. Secondly, on the retail trade sector, my GPC Chairman has got into a debate with the Minister regarding the benefit of an open door policy. I do believe in market forces. I do believe in the benefit of competition. But what I dislike is that our Government always uses double standards. When we want to merge companies and we always emphasize the benefits of economies of scale. When we do not want to support them, we talk about the benefits of competition. For example, we have merged bus companies. We have merged newspaper companies on the ground that it will create economies of scale.

On competition, I agree that there are some benefits. But to some extent, I think we have to pay attention to the costs which are created in terms of what I mentioned just now and whether our small guy will survive this competition.

Our Government has interfered in a big way with the factor markets. For example, in the labour market, we have tried to protect our local Singaporean workers by putting a levy and quantitative restrictions on foreign workers. I am asking whether we can, to some extent in the capital market, channel capital to a certain sector, say, more to manufacturing or service sector and leave the retail trade more to our small guys? What I am saying, in fact, is that in our master plan on SMEs whether we could include a very objective cost - benefit analysis of foreign competition in the retail trade. I am quite balanced on this. I do not take sides.

The third point is that the Minister has asked Members in this House to urge the small retailers to help themselves. I believe the Minister himself has done so. The Finance Minister has done so and I have also done so. I have spoken at the Econ-Minimart's function. When I spoke at that function, I wondered how many people would benefit. I believe there are only about 110 stores under Econ-Mini Mart. What about the other over 3,000 retailers? What are we going to do about them?

Finally, I did not suggest that we should have a negative tax scheme. I simply raised a point which I believe was raised in the Economic Committee's Report, whether the losses of a subsidiary can be written off in the tax returns of the parent company.

BG Lee Hsien Loong: I take the Member's points. I think I only need to respond to two of them. First, how do you get a loan? What are the criteria? Well, if you go to a bank and the bank thinks it is bankable, then we will support it. It is up to the bank to decide, which means that it must be a credit-worthy risk. It must be for a good purpose, either investment in machinery, fixed capital, or even for operating funds. If the bank thinks it is a good risk, then we will disburse the funds.

Similarly, on merger. I would agree that we have asked companies to merge in the name of efficiency, including bus companies. And I would even ask retail shops and provision shops to merge in the name of efficiency. Get together, get a critical mass, so you can have one management team who can advise you, who can purchase for you, who can run your inventories for you, who can lower your overhead costs.

Can we force people to merge? It is very hard. Do you want me to force people to merge? The Member does not.

Dr Ow Chin Hock: We should encourage.

BG Lee Hsien Loong: We can encourage. Is it easy for them to merge? I am not sure. Because many of them are private, small, family businesses, and each family has one head. No two heads can easily get together and set up one management team. That is the difficulty. But the economics of this is, unless you become big, unless you do have critical mass, you will not survive as a small retail shopkeeper in Singapore. It is just not economically possible to do what people used to do. Buy a mixed array of all kinds of things, stack them all over your shop, without quite knowing which thing is where, spilling onto the five-foot way. And when your customer comes and buys and asks you for something, you put your finger in your mouth and calculate what you think is the right price and then give him a 30% discount. That approach towards doing business can no longer satisfy even the needs of a family 30 years ago, much less their needs today. Because consumers no longer are attracted to such shops. They want to go to places where they have fresh stocks, competitive prices, big selection, quick run-through, check out, and out with their brown paper bags, everything they need. Unless our shops can transform themselves like that, they will have increasing difficulty.

I do not think the Member will disagree with that. How do we get them to transform themselves? Some can. The younger ones can. The older ones, I think with greater difficulty. But if they want to survive, they will have to try.

The Chairman: Mr Chiam is not here. Encik Othman is also not here. Dr Ow, would you like to speak on your next topic?

Dr Ow Chin Hock: Sir, the third issue I would like to raise is tourism. Our tourism sector performed well last year. The number of tourist arrivals grew by 15% to about 3.7 million. This is the first time, I believe, that we have a double-digit growth since 1981. This success was partly due to exogenous factors, eg, the international tourism grew by about 4% last year and partly due to the appreciation of the Japanese Yen, major European currencies and Taiwanese Sin Tai Bi. Partly, I would like to pay tribute to the STPB for their promotional efforts.

Here, I want to raise a less controversial issue. I simply would like to ask the Minister for an update on the progress made on the $1 billion Tourism Product Development Plan, including the Sentosa Development Project which he promised to tell us before the lunch break. And also the upgrading of Raffles Hotel which I raised last year.

My second question concerns the cooperation with other ASEAN countries in tourism. The Minister has elaborated at great length about our cooperation with Johor. Singapore has served as a gateway or an entry point for visitors to the ASEAN region. However, as our neighbouring countries start to develop their own tourist infrastructure and attractions, I wonder how fast our competitive advantages in terms of accommodation, communications, shopping, etc, have become eroded and what should be our response to this.

Another point, Sir, we have a competitive advantage as a convention and exhibition centre as well as in medical, dental and other professional services. We should make use of this competitive advantage in promoting Singapore as a convention and exhibition centre and also as a medical and professional services centre, so as to attract high yield tourists. How successful are we in this area? Are we prepared to build, say, resort hospitals?

Finally, Sir, may I raise two problems which probably are very close to your heart. Since you are sitting there, you cannot speak. One is counterfeiting which I raised last year. Second is touting which the Member for Cairnhill raised on 13th March 1988.

Selling of counterfeit goods such as fake watches, leather goods, perfumes, etc, to tourists have given us a bad name. Other countries, eg, Taiwan, Thailand, Hong Kong, have taken stern action against these culprits. But Singapore seems to have done very little about this and the penalties are rather weak. I believe the penalty is about $2,000 which is very little as compared to the profits that they can get from counterfeiting. With the wisdom of hindsight, probably we should have done something on counterfeiting rather than amending our copyright laws!

The Member for Cairnhill on 13th March in a Question for oral answer complained about touting in tourism. This has also given us a bad name. These people create problems, not only they harass the tourists but also create problems to hotel guests and management of hotels. The Minister for Home Affairs has given a very lengthy reply on this and let me quote his last sentence:

'We have to review the totality of the measure before we conclude. The solution lies in further deterrent fines and other penalties.'

It looks like we have two joint projects between the two Ministries, the Ministries of Trade and Industry and Home Affairs. Could the Minister comment on this?

Dr Wong Kwei Cheong: I am not speaking, Sir, as the Member for Leng Kee has already covered the points which I wanted to raise.

Dr Ow Chin Hock: Sorry about that.

The Senior Parliamentary Secretary to the Minister for Trade and Industry (Mr Eugene Yap Giau Cheng): Sir, the Member for Leng Kee has asked for the latest on the Tourism Product Development projects at Sentosa. First of all, the projects already completed are the new Ferry Terminal, the formal garden plaza and also the first phase of the Waterfront Promenade. There are projects which will be completed by 1989. This will include the $30 million upgrading of the beaches and lagoons on Sentosa. And, of course, when that is completed, Sentosa will have one of the best beaches in this part of the world. There is also the $8 million Sentosa Plaza which is a pedestrian walkway linking the Ferry Terminal to the beaches on the other side of the island.

Sir, two sites on Sentosa were recently awarded to private investors to develop a resort hotel and an underwater world attraction. Work is expected to commence this year and will probably be completed by 1990 and 1989 respectively.

Four projects have gone out to tender. They are the rehabilitation and re-use of colonial buildings, the upgrading of Fort Siloso and the Asian Cultural Village. There is a longer-term project, ie, the Causeway Link which is expected to be in place by 1992.

The Member has raised a question on the $1 billion Tourism Product Development Plan. I am glad to report to the Member that much progress has been made since the announcement of the $1 billion Tourism Product Development Fund. The projects completed so far are: restoration of Changi Chapel, the construction of the new Ferry Terminal on Sentosa, the first phase of the Sentosa Plaza, the first phase of the Sentosa Waterfront Promenade and boating activities along Singapore River.

There are projects that were likely to be completed within the first 1 and 1� years. These are the restoration of the Empress Place Building into a museum to stage international exhibitions, the restoration and conservation of Tanjong Pagar, the conversion of Alkaff Mansion into a venue for theme parties, redevelopment of Haw Par Villa into a Chinese Mythological Theme Park, restoration of Bugis Street, construction of an undersea world on Sentosa. There will be projects that are expected to be ready in the early part of the 1990's. This is the Causeway Link from the Mainland to Sentosa, the redevelopment of Fort Canning Park and the Singapore Entertainment Centre.

Sir, I wish to assure Members that all Government agencies responsible are aware of the need to implement theirrespective projects as soon as possible. There is in place a Tourism Product Development Working Committee to facilitate planning and coordination.

There are some other points which the Member has raised. Upgrading of Raffles Hotel. The latest on the Raffles Hotel project is as follows. First of all, the present owner has submitted restoration proposal to URA and Planning Department for comments and approval based on guidelines drawn up by the URA. The relevant authorities are now assessing the proposal and it is expected that the restoration plan will probably be completed by the end of 1990. Meanwhile the State land that is adjoining Raffles Hotel has also been put up for open tender by URA. Three bids were received on the closing date and URA is expected to award the development of the adjoining land by May 1988.

There is a question on counterfeiting and touting. Sir, appeals have been made to us. We are in the process of discussion with the Ministry of Law and Ministry of Home Affairs and I think the Member can expect an announcement in the near future.

Dr Ow Chin Hock: There are two other points which the Senior Parliamentary Secretary has not answered. One is about our cooperation or promotion of tourism with our Asean countries and the other point is about whether we are prepared to develop resort hospitals.

Mr Eugene Yap Giau Cheng: Sir, on the point on cooperation with Asean countries on tourism, this is an on-going project. I believe my Minister has covered that part on Johor earlier this morning. For the rest of ASEAN, all I would say is that as and when the regions around us develop their resorts and so on, we will in one way or another benefit from it. There will also be joint advertising campaigns, there will also be promotional efforts jointly in Europe and in America to encourage tour operators to plan their tours in such a way that Singapore will also be one of the stop-overs and we can then get the rub-off from these various benefits.

The other matter is the resort hospital. I am not in a position to comment on that. I do not know whether or not it will be more appropriate for the Minister for Health to answer.

Dr Augustine Tan: Sir, as I was looking at the average occupancy rate for hotels, it has gone up to 68.7%. It is no mean achievement, given the fact that the number of hotel rooms expanded so tremendously to 23,400. But on page 79 of the Economic Committee Report, it is stated there that "the performance of the tourism industry would have been better had there been no constraint on the supply of seats on some air routes to and from Singapore." May I know from the Senior Parliamentary Secretary what steps have been taken to increase the number of airline seats coming into Singapore?

Mr Eugene Yap Giau Cheng: Sir, I am not really au fait with this particular subject or as to what SIA or the airline authority has been doing. Perhaps if the Member would file a question for oral answer, I might be able to check up the details for him.

Dr Ow Chin Hock: Sir, a resort hospital is not really a hospital. When people go to a resort hospital, they are more like tourists, and they have medical check ups and so on. So it is under the purview of both the Ministry of Trade and Industry as well as the Ministry of Health.

Dr Augustine Tan: You mean glorified massage parlours?

Dr Ow Chin Hock: Whatever you want to term it. So I am urging the Ministry to take up with the Ministry of Health to look into this matter.

Mr Eugene Yap Giau Cheng: I must admit that this is the first time that I have heard of this particular proposal. We will certainly look into it and then come up with some kind of idea and proposal.

Mr Goh Chee Wee (Boon Lay): Sir, under this amendment I wish to speak on the image of Singapore made products.

Sir, we have an export oriented industry. We depend on exporting our products to the world to earn a living. And to succeed in exporting our goods, we must build up a good image of Singapore made products.

Sir, imagine an American consumer. When he picks up a radio set and sees that it is made in Singapore, what will be his immediate reaction? Will he have confidence in the quality of the product, or will he have doubts? Put it in another way. When an American consumer goes to a department store and finds on the shelves similar products made by different countries, say, Taiwan, Korea, Hong Kong and Singapore, would he have better confidence in Singapore made products than the products made by the other countries? Even if the product carries an internationally-known brand name, say, a Sanyo radio, would the consumer have the same degree of confidence in Singapore made Sanyo radio as the one made in Japan. I believe manufacturers in Singapore should be keen to find out where we stand in this regard.

Recently, the Newsweek carried out an opinion poll among the American consumers about the Asian countries and their exports. One of the questions posed to the consumer was: are products from the following Asian countries generally better, worse, or about as good as similar US products? The Asian countries named were Japan, China, South Korea, Taiwan, Singapore and Hong Kong.

With your permission, Sir, I will ask the Clerk of Parliament to distribute the survey findings and this appeared in the February 22nd issue of Newsweek. [Copies of document distributed to the Members.] Sir, let us look at the findings. This is actually the first question asked in the opinion poll. I repeat the question, "Are products from the following Asian countries generally better, worse or about as good as similar US products?" You will find that 40% of the people interviewed said that Japanese products are better than the US made products. 19% said "worse", and 35% said "as good". You can see the good image of Japanese products in America today. Most of the Americans interviewed believe that Japanese products are either as good or better than American products. This is, of course, in sharp contrast with the poor image of the Japanese products immediately after World War II. This is a complete turn-around, a complete reversal.

Now, how about products from China, South Korea and Hong Kong. About 8-9% of the respondents said products from these countries are better. About 30% said that they are as good. 40-50% of them said that they are worse. So a relatively small number of respondents felt that products from these countries are better than US products, but most of them thought that they are only as good, if not worse.

Now, let us look at Singapore. The poll result is disappointing. Only 3% of the respondents felt that Singapore made products are better. So we scored poorer than China.

This is, of course, not the complete story. If we add up the percentages attributable to each country, say, in the case of Japan. 94% of those interviewed gave comments. The rest, 6%, presumably either did not give an answer or gave an "I don't know" answer. In the case of China, 76% of the respondents gave comments. For Hong Kong, 84% commented, but in the case of Singapore, only 60% of the people interviewed gave comments. I think the remaining 40% either have never bought Singapore made products before or simply do not know where Singapore is. One of the reasons of their ignorance of Singapore made products could be that we do not export as large a volume of consumer goods to America in comparison with Hong Kong and Taiwan.

Sir, although the sample size of the opinion poll is small and cannot be taken to be absolutely conclusive, nevertheless, it gives us an indication of how the Ameri- can consumers view our products. There is no doubt that more efforts must be put in to project the image of Singapore made products. We have an internationally-known airline, the Singapore Airline. We have created an excellent image of the airline. We have created an excellent image of the Singapore Girl, a great way to fly. But obviously we have been less successful in creating a quality image for Singapore made products. We have to do a great deal of promotion. We have to tell the world that Singapore not only produce beautiful girls as advertised by SIA, but we also produce good quality TV sets, computers, garments, etc. This is where our Trade Development Board must focus its attention and it must step up the promotional drive.

Of course, the proof of the pudding is in the eating. There is no use promoting and advertising if the Singapore made products cannot live up to the quality image which we seek to project. To have consumers believe in the quality of Singapore made products, our manufacturers must build quality into the products. They must keep improving the quality and this is where the Singapore Institute of Standards and Industrial Research (SISIR) can play an important role. So does the National Productivity Board. There must be concerted efforts made by the manufacturers and the various statutory boards under MTI, including SISIR, NPB, TDB to improve quality and promote the image of Singapore made products. I would like to ask the Minister for Trade and Industry what efforts are being made by the Ministry and the various bodies under its charge to improve the quality and image of our products and whether we can look forward to a better rating for Singapore if a similar opinion poll is conducted in America, say, five years from now.

Before I end, let me draw the attention of the House again to the other findings of the Newsweek opinion poll. If you were to look at the second question: "Of those countries, which do you believe have fair or unfair trade policies with the United States?" 24% of the people interviewed said that Singapore practise fair trade, but 31% said that we have unfair trade practices.

So in spite of what we have said about Singapore, about ourselves - that we are a country which practices free trade and that we do not erect trade barriers against imports - many of the American public still believe that Singapore is no different from the other Asian countries which are engaged in unfair trade practices. So we must try our best to correct the wrong impression and we must try to influence the American public perception of Singapore.

BG Lee Hsien Loong: Sir, my conclusion from the survey which the Member for Boon Lay quoted is that the people who are surveyed are extremely ignorant about Singapore. Otherwise there is no explanation for, first, the low number of responses on the Singapore column. So many "don't knows." Secondly, the large number who said we practise unfair trade. It is not really surprising because many Americans think that Singapore is either in China or in Vietnam somewhere. That is our starting point. It is not promoting an image of a Singapore product. In the first place, we have to promote an image of Singapore.

With Singapore Girl, we have had some success. But remember, you are promoting to a more select audience. It is not just anybody in America but the business community - the people who fly, the people who have international links, and need to know about the world, who have heard about the Singapore Girl. They have heard about Singapore Airlines. It matters to SIA, because if people have not heard of Singapore Girl they may not want to fly SIA. But with goods, it is not quite the same. All these ignorant people who said Singapore products are no good probably have a large number of Singapore products in their homes which they do not know were made in Singapore. As long as we are able to sell to them and, at the same time, as long as our goods are, in fact, of high quality, I think we are all right. Half the goods which we sell to America are actually sold under other people's brand names. Either it is a Hewlett Packard's product or it is some component which goes into another multi-national's product before it is sold. Only if you look at the fine print will you see that it says, "Made in Singapore". That is all right, again, as long as it is a good product. I think we have established a very high reputation within the trade. Certainly in the electronics sector, our goods are second to none.

In our local export sector to America, that is a little bit more difficult because they are smaller companies which do not have the imprimatur, that chop, to identify it either as Motorola or Hewlett Packard or any of the other big household names in America. They have to build up their brand name recognition. We have got some programmes to help them. TDB is promoting a good industrial design, has introduced a design venture programme to subsidize designing cost, a national good design award so that within Singapore the importance of design is recognized. But the important thing is we must have something which is special to sell to America. If you ask whether today we already have something special and indigenous to sell and to promote in America? Perhaps some furniture and jewellery, but not so many other indigenous products. What we sell are multi-national products. That is the problem which we will gradually have to tackle and which we discussed earlier on under the SME subject.

Dr Augustine Tan: Sir, for all the limitations of this survey, I think what is important and pertinent is the comparison between the responses vis-a-vis Singapore products and Hong Kong products. Whereas only 60% of the people responded to the Singapore products, 84% responded in the case of Hong Kong. The question is why. Is it because Hong Kong has got more consumer products or is it because Hong Kong has done a better PR job in the United States? If it is a matter of PR job in making Singapore known, then I think we ought to be doing something about it. Furthermore, should we take this thing lying down? Why do we not go on a counter-offensive? In America, Sir, I understand it is quite all right to advertise against your competitors. MacDonalds can say, "We are better than Burger King" and so on and so forth. So we can put two products together - Singapore product and US product - and say we are better than the American product and show all the defects in the American product. Why do we not do so?

BG Lee Hsien Loong: We will take our time to consider, first, whether this poll is conclusive. Secondly, if it is accurate, how serious the problem is. Thirdly, if it is a serious problem, whether we need to look into it further to decide what needs to be done. If there is a problem, we attack it. But we have to be very careful not to go charging off, tilting at windmills.

Do we have a problem in America - selling, exporting, providing them with goods and services which meet their needs and which keep our reputation up? I think no. We are doing quite well. Should we embark on an advertising campaign? Do you know how much it costs to run a television advertising campaign in America? Millions and millions of dollars to say that, "Look. This is made in Singapore and this one is broken, that is made in America." I think we take our time about it. As I said earlier, it is the responsibility of the Minister to hear many ideas and we will pick a few of them for implementation.

Dr Augustine Tan: Sir, I urge the Minister not to take too long. We do not have to embark on an expensive advertising campaign immediately. One simple question to the Minister:has he or his officials written a letter to Newsweek to protest against this poll?

BG Lee Hsien Loong: Now that it has been pointed out to me, I will consider it. I would also urge the Backbenchers to write.

The Chairman: Mr Chng is not here. Dr Tan, would you like to withdraw your amendment?

Dr Augustine Tan: Yes, Sir. I withdraw my amendment in spite of some unsatisfactory replies.

Amendment, by leave, withdrawn.

Dr S. Vasoo (Bo Wen): Sir, I beg to move,

That the sum to be allocated for Head V be reduced by $10 in respect of Code VA 1000 of the Main Estimates.

Sir, water is a non-issue in the minds of many people. We are sometimes not very conscious about the importance of water because it is plentiful in Singapore and hence we tend to think that it will always be there.

Sir, over the last decade we have been having an adequate supply of water and we are fortunate that this supply has been continuous, without much disruption and water rationing. We hope that this will continue. But we can never say that this will be the case. Nature may work against us. We do not know. Therefore, I think we will have to look at this question of the adequacy of our water supply on a long-term.

Sir, PUB has two water agreements with the Johor Government to enable us to draw water for our needs for the next 60 years. However, these sources of water from the reservoirs in Gunong Pulai, Pontian, Tebrau, Scudai and Johore Rivers are not inexhaustible. New water sources have to be found and harnessed. I understand that we have had discussions with the Johor Government in trying to develop the Johor River for new water resources. I am wondering whether the Minister could inform the House of the progress and development in terms of discussion to harness water resources from the Johor River.

Sir, we seem to have exhausted all possibilities in the development of surface water sources in Singapore. It has been said that we have to look for water outside Singapore. Does it mean that we have no other alternatives to look for adequate supplies of water? What are our back-up plans in terms of water supply in the event of water shortage or crisis over the need for water itself.

Desalinization of sea-water is technically feasible but it has been said to be an extremely expensive process. For our long-term needs and in our long-term interests, are we re-studying this issue seriously? Are there plans to look into projects on water sufficiency in terms of our vision for the future? We are also close to some Indonesian islands and there could be water resources in these islands. I am wondering whether we have made attempts to explore the possibilities for tapping water sources from these areas.

Mr Eugene Yap Giau Cheng: Sir, I would like to thank the Member for Bo Wen for his concern for this precious resource of ours - water supply. Yes, I would say that the Government is doing all it can to study the various sources that are available, that can be tapped. The key criterion at the end of it all is cost. If the cost is affordable, then we can proceed. If the cost is too prohibitive, then we have to go for other sources of water. For instance, the Member has raised the point of desalination. We have indeed looked into desalination of sea-water but, as of now, the cost is still rather prohibitive. But I would think that with advances of technology in desalination, the day will come when desalination of sea-water may become a feasible proposal.

The Government's main criterion is to develop all the available water resources in Singapore, and this has been done. We are currently studying a secondary source of non-potable water, and that is, at Marina Bay. But it is only at the study stage. Nothing concrete has come out of it. But the important thing to note here is that this is a secondary source. It is not possible, at least as of now, to think that we will be able to get fresh drinking water out of it. It is only a secondary source of water.

The other point the Member raised is the joint study we are having with the Malaysian Government on Johor's water resources, and he wants to know the position we are in. All that I can say at this stage is that the study is on-going but I do not know the details as to which stage we are in. At the end of it all, the important thing is that, because it is likely that we will not be self-sufficient in water, we have to ensure that we educate our population to make sure that they understand this position we are in and that they do all that they can together with us to conserve water and to protect our precious water resources.

Mr Yeo Toon Chia (Ang Mo Kio): Sir, I would like to touch on the renewal of lease and sale of JTC factories. As the biggest industrial landlord managing 24 industrial estates with 6,300 hectares of land and more than 3,600 companies located on these industrial estates, any policy or measure taken by JTC has a direct impact on the cost of operating business in Singapore.

Sir, I would like to bring to the Minister's attention that there are many companies operating on JTC industrial estates with short-term leases of less than 30 years and which are due to expire before 1999. Will JTC keep these companies informed well in advance of their position when their leases expire? How will JTC revalue these factories and workshops which were built by the lessees? Is JTC going to base the valuation on the buildings on prevailing market price or at a rate to be fixed by JTC, with due consideration to the original cost of the buildings which were constructed by the lessees? Will concessions or rebates on the buildings be granted to them when the leasesare renewed or when JTC sells these properties to the existing lessees? What about the period of lease that JTC will grant? Will the lease be extended to the same period as in the original agreement upon renewal? These are some of the important questions that lessees on JTC industrial land would like to know.

Sir, I feel that JTC ought to give a clear-cut policy on this issue to all existing lessees so that they would be able to plan ahead in the expansion and development of their business.

Sir, besides the industrial lesses who are operating on their own factories on JTC land, there are also hundreds and thousands of companies operating on JTC rented flatted factories. These companies are paying rental year in year out. Will JTC consider whether it is feasible to sell these factories and workshops to the tenants instead of collecting rentals from them?

Sir, HDB is selling shophouses to shop owners, and this is in line with the Government's policy of privatization. It is right that JTC should consider doing likewise. By selling these flatted factories and other rented factories and workshops, JTC would be able to reduce the loans and interests and cut down on the total operation expenses. It would also benefit the tenants of having the opportunity of owning their own factory premises. I hope the Minister will request JTC to look into the matter.

Sir, we have succeeded in encouraging ownership of homes for our citizens. Towards Excellence 1999, we should also encourage our local companies to own their own shops and factories as well.

Mr Eugene Yap Giau Cheng: Sir, the Member brought up the point that we ought to give factory operators plenty of time to help them plan their business and the factory itself. I cannot agree with him more. Yes, there will be JTC industrial lands whose leases will very soon expire. But when this lease expires, the land together with the buildings and the improvements will revert to JTC in accordance with the terms of the lease. And JTC will renew the lease for a further term equivalent, of course, to the original term provided the lessee is engaged in an industry which is not undesirable or pollutive. Upon renewal, the land rent will be revised to the prevailing market rate. In addition, the lessee will have to pay a premium for the building. For leases that expire before the year 2000, the Government's approved policy is to levy a premium which takes into account the historical cost of the buildings rather than the open market value, as well as the length of the period for which the lease is further renewed.

The Member also raised the point of sales of JTC factories. JTC can consider selling an entire block of flatted factories to a single tenant. However, it will not sell individual units in a block of a multi-tenanted flatted factories because a combination of sold and rented factories within the same block will give rise to numerous management problems and will also make it difficult for tenants to expand their operations within the estate. And, finally, the JTC will probably be conceived to be in competition with owners of private flatted factories, factories which are predominantly built for sale.

Dr Augustine Tan: Sir, may I just ask the Senior Parliamentary Secretary whether he has any figures on the vacancies of JTC factories at this moment?

Mr Eugene Yap Giau Cheng: I do not have the exact figures but I can mention that these flatted factories are normally about 75-80% occupied.

Dr Augustine Tan: Does this represent a big improvement over the recession years?

Mr Eugene Yap Giau Cheng: Yes, of course.

Dr Augustine Tan: Since there is still considerable vacancy, why were the rentals increased?

Mr Eugene Yap Giau Cheng: Sir, in fact, JTC is embarking on a programme to build more factories because there is demand. And as long as there is demand, then of course the price will have to reflect the demand. Let me assure the Member that whatever rentals these people pay are in a way comparable to private flatted factories that are available today. If you want to see a graph of it, I can show it to you, not outside this House. We can always get it photostated and show it to you.

Dr Augustine Tan: What the Parliamentary Secretary said sounded ominous. There seems to be a prospective further increase in the rentals of JTC factories.

Mr Eugene Yap Giau Cheng: I did not suggest that, Sir.

The Chairman: Encik Yatiman is not here.

Mr Tang See Chim (Chua Chu Kang): Sir, may I join in?

The Chairman: Yes, Mr Tang.

Mr Tang See Chim: The Senior Parliamentary Secretary said that the rent demanded by the JTC is comparable to that for private premises outside. But I think the JTC has almost a monopoly on industrial property. I just do not see how the Senior Parliamentary Secretary could make such a comparison.

Mr Eugene Yap Giau Cheng: Sir, I am referring to flatted factories of which there are some private flatted factories. I am not talking about industrial land.

Mr Tang See Chim: He also said that when there is demand, the price will go up. JTC, being the largest landlord of industrial property, they would be taking the lead. In fact, the private sector simply follows.

Mr Eugene Yap Giau Cheng: Sir, I did not say that when there is demand the price will go up. I said that the price will reflect the demand. As of now, there is no indication that we will increase the rentals.

Mr Yeo Toon Chia: Last question, Sir. May I know from the Senior Parliamentary Secretary how they calculate the premium when the lease is going to be renewed?

Mr Eugene Yap Giau Cheng: Again, Mr Chairman, Sir, there is a formula I have here. But I do not know how I am going to do it, now that I should not be showing things outside this House. But if the Member would like, if he would have patience with me, I would just tell the House that the formula is based, very roughly, on current lease, renewed lease, economic lifespan of the building and actual construction cost incurred by the current lessee, and from there we work out the premium.

Mr Yeo Toon Chia: Sir, I hope the Ministry can give a clearer picture to the existing lessees so that they know how to calculate the premium. By doing that, they will be able to expand their business and know what is the position they are going to face.

Dr Augustine Tan: There seems to a hidden formula. Would the Senior Parliamentary Secretary release that formula to the press?

Mr Eugene Yap Giau Cheng: I will have to consult the JTC and come back.

BG Lee Hsien Loong: It is a very complicated bit of algebra which I do not want to confuse Members with. But basically the principle is, when you lease a piece of land for 30 years and build a factory building on it at the beginning of 30 years, when 30 years are up, the factory building reverts to the Government together with the land because the lease has expired. If you have a 30-year lease and 20 years have past, and you now build a factory building, in 10 years' time when the lease is up - technically and legally, we will be entitled to take the whole thing back, including the factory. But, of course, if we did that, 10 years before the end of the lease, nobody would build a factory building. The property will go to pot because they know it is all going to go back to the Government. Therefore, there is a pro-rated scale. The closer the end of a lease, you build, the greater the discount on the premium when you renew the lease. It is as simple as that. In fact, there has been no JTC rental revision upwards. Members seem to be greatly alarmed, but we did not do that. We removed the discount, yes. But the discount was due to expire after two years, in fact one year extended to two years, time is up. We took the opportunity to revise the rates to the market rate. In the process some came down, some went up.

I take the Member for Chua Chu Kang's point that it is a bit difficult to establish the market rate in Singapore because JTC owns such a big part of industrial property in Singapore. It is a question which has exercised the Ministry. We have tried to establish a parity by comparing our rates with rates in other NICs, in Hong Kong and Taiwan. For similar appointments, in other words, same distance from the city, same facilities provided, our comparisons show that it is competitive. We have not been charging unreasonably.

Dr Augustine Tan: Sir, the question of setting competitive rents would be easier when some of these JTC factories are sold, so that the private owners can then establish their own rates.

BG Lee Hsien Loong: I think it can be considered. It cannot be done in a hurry. But perhaps it may be possible for us to hive-off some industrial estates into industrial parks which can be run on a private basis. We will look into it.

The Chairman: Mr Tang. We have 1 minute left.

Mr Tang See Chim: Sir, the Minister said that he has not increased rent but he just revalued the value of the land. This is exactly the same as increasing rent. I mean you call a rose a rose. You increase the rent whether you call it the rent or call it the base value of the property. To the manufacturer, it is still the same. He still has got to pay out more money to the JTC. So what is the justification for that?

I would like also to ask the Minister on the question of increase of rents in respect of the timber industry at Kranji which I took up with him. I would like to know what is the position regarding that matter.

The Chairman: Order. Moment of Interruption.

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

Mr Wong Kan Seng: 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 1988/89, and ask leave to sit again on Monday, 28th March 1988.

Mr Deputy Speaker: So be it.