ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1994 TO 31ST MARCH, 1995

Order read for consideration in Committee of Supply [2nd Allotted Day].

[Mr Speaker in the Chair]

Head O -

Mr Bernard Chen (Brickworks GRC): Sir, I beg to move,

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

Sir, in the past two years, the Government has actively promoted the concept of regionalisation to create a second wing to the Singapore economy. Judged by the numerous reports in the newspapers, it appears that most of the efforts have been directed at China and, early this year, India. Some foreign presses have related this emphasis to the ethnic background of Singapore and concluded that it is natural for Chinese businessmen to look to China and the same goes for Singapore Indian businessmen when they look to India. As a businessman myself, I would say that a businessman would normally go to places where he can get good returns for his investments. If these moves can be facilitated by the ease in communication through common languages, they are pluses that should not be ignored.

A lesser known fact is that Singapore companies and businessmen have in fact continued to invest in the traditional areas where businesses have been going on for years, for example, Singapore is amongst the prominent investor in the ASEAN countries, Malaysia, Indonesia and even Thailand. In order to dispel the misconception that may be harboured by those in our neighbouring countries, it will be useful for the Minister to clarify our Government's position on regionalisation and restate the Government's objectives in terms of priorities and emphasis. One would imagine that the Government can facilitate but does not decide where the investments go. Ultimately, investments must go to places where they yield the maximum returns.

On another subject, as a businessman, I have participated in some of the business missions to China, India and just lately Vietnam. My observation during these trips is that we cannot really separate the economic and the political programmes. They are closely linked in many aspects. A good understanding between the political leaders will facilitate the drive for trade and investment. In some countries, in fact, it is essential that we develop a political consensus first before we can facilitate the flow of trade and investments.

The Prime Minister and Senior Minister have been working very hard in their travels to establish and consolidate these political linkages. At the operating level, the various economic agencies, such as the EDB and TDB, have also been actively providing the support to both the political leaders and businessmen in the mission in their drive for regionalisation.

The Ministry of Foreign Affairs, with the Ambassadors and missions in these countries, is also playing a key role in not only providing the support to build the political bridges, but also together with the economic agencies help the businessmen to realise their trade and investment objectives. In many of these missions and travels to the countries, inevitably because of the shortage of time and the number of agencies involved in helping out to chart the programmes, in arranging to meet the relevant people and so on, a greater amount of coordination would be useful.

Would the Minister comment on the on-going cooperation between his Ministry and the various economic agencies and whether such cooperation has been well received by the businessmen themselves and the host countries where they operate?

Mr Robert Chua Teck Chew (Nominated Member): Sir, the Prime Minister, Mr Goh Chok Tong, and Senior Minister, Mr Lee Kuan Yew, supported by their Cabinet colleagues, have devoted a great deal of their time to strengthening their ties with the political leaders of the region. In addition, they have been actively involved in promoting Singapore's regionalisation programmes by personally leading several official and business missions to the regional countries, including China, Vietnam, India and the other ASEAN countries. Having enjoyed the privilege of accompanying them on some of their missions as a businessman, I strongly feel that Singaporeans should feel proud of and be grateful for their leadership. Although ours is a small nation, our leaders have been accorded the highest honour by the leaders and people of many other nations.

As a nation, we should continue to develop our ties with all the regional countries at all levels of society, from the President, Prime Minister, Senior Minister, right through to the ordinary citizens of our country. We should encourage our people to interact more with their counterparts in the region, whether they are politicians, civil servants, businessmen, professionals, sportsmen, artistes, union leaders, students or youths, through exchange programmes, seminars, workshops and other sports and recreational activities. Such interaction will go a long way towards fostering better understanding, tolerance and cooperation with our neighbours for peaceful and friendly development of our society.

I would like to give two examples of what we may be able to do, ideas which were mooted recently. One is an exchange programme. We should try and encourage more exchanges even at the family and youth level. For example, Singapore families should be encouraged to try and spend some time in some of the rural areas of our neighbouring countries, perhaps even in the long house of Sarawak, to try and understand that people do live in a different environment. In exchange, we should invite some of the rural people to maybe stay in our HDB flats or condominiums or even bungalows here in a city state. This way, we will get to understand each other better.

Another idea mooted is to build a youth camp in one of the neighbouring countries where the young people of different countries in the region can come together and we should promote recreational and sports activities or even seminars and workshops. I urge the Government to take the lead in formulating more concrete programmes to further strengthen our existing ties with the regional countries. I hope the Minister will enumerate some of the Government-initiated programmes for achieving such cohesion and networking with our neighbours at all strata of society.

Dr Lau Teik Soon (Thomson GRC): Sir, since the end of the Cambodian conflict, the Asia-Pacific region has been fortunate in experiencing peace, unlike other places like Bosnia-Herzegovina or in the Israeli occupied territories. A peaceful environment is so vital for trade and commerce, for flow of investment and technology, so that the dynamic economies of the region, including Singapore, can continue to grow. But, Sir, there are certain issues which have implications for peace and which, if unchecked, can destabilise the Asia-Pacific region. Let me state some of these issues.

Firstly, the power balance in the region, especially the relationship between the United States and Japan, between US and China and between Japan and Russia. If the relationships are cordial, then of course it will be good for the region, if not, problems can arise for peace and security in the region.

Secondly, there are a number of potentially dangerous situations which can escalate into serious conflicts, for example, the Korean Peninsula where the North and South relationships continue to be tense. The nuclear development programme of North Korea is also a problem. Then there are the territorial disputes, the most serious of which, in my view, is in the South China Sea. There are overlapping claims. China continues to be a more powerful and military power and it continues to adhere to its position that the issue of sovereignty cannot be negotiated. In the view of some observers, South China Sea is likely to be the next trouble spot in the Asia-Pacific. Sir, these are some of the troubling issues in the Asia-Pacific.

It is clear that there are these potential problems and the time to discuss the prospect for settlement is now, during peace time, rather than wait for conflict to fall upon us. Hence, it is necessary for Singapore and other countries in the region to get together to discuss these issues. They cannot be swept under the carpet.

Many countries would favour the bilateral or sub-regional approach, that is, between two parties involved in the conflict or among states in the sub-region. Such efforts should be implemented by multilateral negotiations embracing countries on a wider basis in the Asia-Pacific. The rationale is that no state can be immune from the negative effects of any conflict in the region. For example, the conflict in the Korean Peninsula, if escalated, would affect the sea lanes of communication and, in turn, the livelihood of many countries dependent on international trade, commerce and investment.

In this regard, Sir, I commend the Ministry's effort in initiating the ASEAN Regional Forum (ARF). In my view, this is a brilliant forum. Among other things, it combines the concerns of small states and the responsibilities of the major powers in the Asia-Pacific. If the ARF can make progress and becomes an effective forum, then in time it will be the multilateral forum or become even a conference for peace and security in the Asia-Pacific. 1.45 pm

Sir, I would like to ask the Minister to inform the House the state of the ARF and, in particular, the preparation, the agenda, the issues that are likely to be discussed at the meeting in July. There is a report of the Officials' Meeting in the Straits Times of today, but I hope the Minister will nevertheless elaborate on some of those items reported in the paper.

A related question, Sir, is what other multilateral forums exist to facilitate discussions among the countries in the area and especially the Ministry's participation in these various forums.

Dr Ho Tat Kin (Toa Payoh GRC): Sir, last November was a proud moment for Singapore, according to some Singaporeans that I spoke to. They say that Singapore stands as tall as the most powerful nation on earth. Sir, they were talking about the APEC meeting in Seattle, USA, last year. The national pride was aroused by the picture of the gathering of the various Heads of Government. The interest was especially focused on Prime Minister Goh Chok Tong standing next to President Bill Clinton. They say that among the various Heads of Government from Asia, only PM Goh is as tall as President Clinton. If that makes them proud and happy, I say good for them.

However, I believe the Prime Minister's participation in the Asia-Pacific Economic Cooperation Forum is more than a symbolism that makes these people proud. Far from it, I believe there are significant reasons for our presence there. In a nutshell, and risking over-simplification, the variables governing international relationship have changed dramatically since the end of the Cold War and the collapse of Communism. I believe what drives nations to cooperate or to conflict is due to very different reasons than was before. Nations' behaviour is now less driven by the quest for survival of its territorial frontier than its economic viability. With more competitive actors coming on to the international arena competing for a slice of the economic pie, traditional friends, such as the United States and Japan, are threatening to become rivals. Old scores which have hitherto been suppressed, because of common interests of survival, are threatening to brew over. The need to make more friends around the world has just grown more urgent. This, I believe, Sir, is the most important pillar of Singapore's foreign policy.

Sir, what I have just said is very well and fine to the informed and those in the business of international relations. Without being snobbish or condescending, I believe the former will be able to appreciate Singapore's participation in international cooperation such as APEC, ASEAN, ARF, etc. rather than to the average man-in-the-street. It is all right to feel proud to see our Prime Minister standing tall amongst the various Heads of Government. The fact that the average Singaporean does not know about the various international organisations that Singapore is part of or affiliated to underlines the problem. Not enough information is shared on our participation in international cooperation for Singaporeans to appreciate the good work done by the Foreign Ministry and its very capable officers. Hence, the Foreign Ministry needs to tell the people in simple layman's terms the rationale for our participation in international organisations. But more to the point, what does Singapore stand to gain from all this participation, be they APEC, ASEAN, ARF and all the other meetings?

The Minister for Foreign Affairs (Prof. S. Jayakumar): Sir, from the diversity of topics which have been raised just by the speakers, one thing is very clear: that the Ministry of Foreign Affairs is obviously not a single-issue Ministry. Mr Bernard Chen raised the question of regionalisation; Mr Robert Chua raised the question of how close relations can be forged at various levels; Dr Lau Teik Soon raised the question of forums to discuss common security issues, and Dr Ho Tat Kin asked about benefits which will accrue from membership in APEC. So I think we have to bear in mind that one backdrop to the discussion of these issues is that the Ministry of Foreign Affairs' work is actually multi-faceted.

If you look at the Budget book, its Mission Statement states: "To manage Singapore's external interests in both the political and economic fields." But in that sentence a considerable amount can be amplified. Because the work of the Foreign Ministry is really to protect and advance Singapore's interest in all the totality of Singapore's national interests in Singapore's interactions in the external arena, in bilateral relations and multilateral forums. It may be economic interests, it may be communications and air services, it may be defence cooperation, every aspect of Singapore's national interests has to be advanced by the Ministry of Foreign Affairs. I think just the four speakers alone touching on the various topics have demonstrated that.

Sir, before I took office as Minister for Foreign Affairs, my last substantive involvement in foreign affairs was some 22 years ago when I was the Permanent Representative to the United Nations and concurrently High Commissioner to Canada. That is more than two decades ago. But at that time, when it was six or seven years after Singapore's independence, it became very clear to me, and a deep impression was made on me, through the three years in the United Nations, that for Singapore, being a small country, it was absolutely essential to have a Foreign Ministry and to have missions which can respond quickly and nimbly to fast moving changes on the international scene. During these three years when I was in the United Nations, major events took place. The People's Republic of China took up a seat in the United Nations, there was a conflict on the Indian Sub-Continent leading to the creation of Bangladesh, and in 1973 there was the Middle-East conflict. But if that was true 22 years ago, it is even more true today. Of course, in Singapore, every Ministry has to adapt to changing circumstances. But the Ministry of Foreign Affairs, in some ways, faces special challenges because it has to adapt to external circumstances, external changes, which are beyond our control. Indeed, now, we are entering a period of unprecedented and rather unique challenges and opportunities.

On the question of challenges, the Asia-Pacific region is experiencing a most unusual fluid political and security situation, as mentioned by Dr Lau Teik Soon. Relations amongst major powers are undergoing major transitions, for example, United States/China, United States/Japan. History has shown that when relations amongst major powers undergo change, the small countries, like Singapore, have to remain agile to ensure that our interests are protected and advanced in these circumstances. Although the situation is fluid, the Asia-Pacific region also presents tremendous economic opportunities for Singapore. The Prime Minister has spoken on how Singapore can use the region's economic dynamism to lift us to a new phase of economic development. As Mr Bernard Chen pointed out, the Prime Minister has personally visited Vietnam, India and China to make this possible. These economic opportunities can only be tapped ultimately by the private sector and the businessmen. But it is the Government's responsibility to build bridges and links with other governments which will open doors and which will facilitate economic and trade links. This is the backdrop.

Now, to come to Mr Bernard Chen's comments on regionalisation, I do not think I need to restate the detailed rationale and arguments for regionalisation. This has been stated quite adequately on many occasions. I think we all know that the global competition for investment funds and export markets is becoming keener. There are new economic players, like India, China and Vietnam, who have joined the race. For us to stay ahead, we need to build this external economic link. We need to invest our expertise, capabilities and savings in new growth areas which are complementary to ours. By doing so, we expand our natural economic zone and raise our standard of living higher.

Mr Bernard Chen asked whether the focus is mainly on China. I think he knows that this is not so. The Prime Minister has just returned from Vietnam. Mr Bernard Chen was in the business delegation. Of course, because of China's opening up, it is attractive to our businessmen. There is a huge labour supply, vast tracts of land and a large domestic market. The purchasing power of its citizens is also growing rapidly. But at the same time, China cannot be the only target. We cannot ignore business opportunities in other emerging economies like India, Vietnam, Cambodia and Myanmar.

I think Mr Bernard Chen was also in the business delegation which accompanied the Prime Minister to India and he would have realised that there is an abundant labour supply in India and a large domestic market as well. India also has committed itself to making the necessary economic reforms. Vietnam too offers tremendous potential. It has vast hydrocarbon and mineral resources which are largely untapped. It has a diligent and educated workforce and wage levels in Vietnam are lower than China's. The lifting of the US trade embargo creates added opportunities there. Myanmar and Cambodia are also opening up. As the Minister for Trade and Industry said, Singaporeans need to go there before others do.

Apart from China and the Indochinese countries, I should also say that we continue to be involved with our ASEAN neighbours. Singapore was the largest investor in Indonesia in 1993. This is based from figures from the Investment Coordination Board of Indonesia. The total approved investment was US$1.33 billion. We were the fourth largest investor in Malaysia in 1993. Furthermore, the Growth Triangle concept remains an integral part of our regionalisation strategy. Sir, we must continue to harness the competitive advantages of our three economies to strengthen our global competitiveness. As we seek out new business opportunities in the region, we will at the same time consolidate our economic ties with our neighbours. I have also just recently returned from the Philippines and we agreed there that we should launch the Singapore-Philippine Business Council soon. Last year, the then Senior Minister of State, Mr Lim Boon Heng, led a delegation there, and I have invited them to send a follow-up delegation to Singapore. 2.00 pm

Mr Bernard Chen also referred to press criticisms about Singaporeans who are investing in China and the aspect of ethnicity. Yes, I am aware of this. But the truth is that if Singaporeans invest in China, they are guided by none other than the motive of seizing on good business opportunities, because business decisions must be weighed on the basis of potential returns on investments. Therefore, this criticism in some quarters about ethnicity is totally misplaced, because if there were poor returns on investments in China, Singaporeans will simply not go. Likewise, if India continues to open up, I have no doubt that Singaporean Indian businessmen and others will also go there. But does this mean that it is the "Indian-ness" of the Singapore Indian businessmen which makes them go there? I do not think so. From the contacts that I have had with Singaporean businessmen, they are pretty hard-nosed chaps and they are not likely to part with their money on some sentimental links with the land of their ancestry.

I would say that those who know Singapore and Singaporeans well should know by now that we may be 75% made up of ethnic Chinese, but we are a multi-racial society with our own destiny, with our own aspirations. Our Chinese are different from those in the PRC, different from Taiwan, different from Hong Kong, just like our Indians are different from Indians from the Indian subcontinent.

Mr Bernard Chen also asked about the role of the Ministry of Foreign Affairs. The Ministry of Foreign Affairs has a critical role, and that is why I started off by talking about the multi-faceted role. Regionalisation is a new dimension and a new responsibility which MFA has undertaken. We will have to work very closely with other agencies. In fact, one of the first things that Mr Yeo Cheow Tong, my colleague, Minister for Trade and Industry, and I did after assuming our new portfolios was to meet with each other and we also met with our key officials to underline the fact that regionalisation requires the joining of hands and close coordination between the Ministry of Foreign Affairs, Ministry of Trade and Industry and related bodies, overseas missions, overseas representatives of TDB and EDB. I am glad to say that officials of both Ministries will meet regularly to oversee and coordinate this. So I can give him the assurance in that respect.

Mr Robert Chua's point essentially was that we must encourage contact between Singaporeans and other countries at various levels and wanted to know how this can be done.

First of all, I would like to say that from the Government's point of view, we encourage ties both at the bilateral level and at the multilateral level. At the multilateral level, we have various forums. We have ASEAN, we have APEC. And within ASEAN, there is a whole host of meetings and organisations - the Ministry of Foreign Affairs has the Senior Officials' Meetings; the Ministry of Trade and Industry, the Ministers meet; ASEAN Finance Ministers meet, and so do the officials. And over the years, this has had a very beneficial effect in that right from the top, the Ministers, to the level of the officials, they have got to know each other very well. And, of course, there will always be issues, there will be disagreements, sometimes there may be disputes on specific matters. But the advantage of having worked within these multilateral forums is that we are able to manage the areas of disagreements in a very comfortable way. The fact that the officials know each other - in fact, almost all of them know each other on a first name basis; the Ministers too know each other on a first name basis - they feel comfortable with each other. It is not unusual for them to pick up the phone and speak to each other. This helps in smoothening of problems and cementing of close relations in the multilateral setting.

In the bilateral setting, there is also a considerable amount of ties at the official level. Members are aware of frequent visits at Ministers' level, Prime Minister's level to various countries. Likewise, we also have visits being made to Singapore by Ministers and other delegations. One of the first things that I did as Foreign Minister was to follow the ASEAN tradition of calling on my counterpart Foreign Ministers which has helped, because you have made a courtesy call, you renew your acquaintanceship, you meet with the senior officials and this breaks down the barriers of officialdom and cuts through unnecessary red tape and bureaucracy.

Recently, we have the privilege to receive visits from the Malaysian Deputy Prime Minister, the Vietnamese Communist Party General Secretary, Indonesian Minister of State for Research and Technology, Dr Habibie, Cambodian First Prime Minister, Prince Ranariddh, and Second Prime Minister, Hun Sen, and so on. So at the bilateral level too, there has been considerable exchange of visits, exchange of views, and this helps to promote goodwill and cement ties.

But he is right to say that the Government can do its part to promote, through these multilateral and bilateral visits, a conducive climate for a close relation between our countries. But I do not think we should take the view that the fostering of close relations between countries in the region is a job of the Government only, of the MFA and the other Ministries. I think others have a role to play. In fact, they have a key role to play because they are not constrained by protocol and the rigidities of ceremony and formalities. I think a great role can be played by the private sector, business sector, Chambers of Commerce and professional groups. I have always encouraged, for instance, lawyers to make goodwill visits to other countries in the region, particularly where our legal systems are different, to promote greater understanding of each other's circumstances, laws and positions. Cultural groups also have a role to play.

The Prime Minister took business delegations along with him on some of his trips. But I do not think we should leave it there. I think the business delegations should then follow up on their own separately. So people-to-people contacts, in my view, have been an on-going affair and the Ministry of Foreign Affairs strongly encourages it and, where necessary, and where the help of the Ministry of Foreign Affairs is needed, we will not hesitate to facilitate, to give advice. In this regard, Mr Robert Chua may want to know that the People's Association, for example, has had various exchanges with countries in the region. There are also academic student exchanges. The National University of Singapore also actively participates in inter-varsity games, and cultural exchanges have also taken place. Members may or may not be aware that the different Ministries also have contacts at the unofficial level through the inter-Ministry games. Our uniform services, for example, have excellent cooperation and contacts. I know from my years in the Ministry of Home Affairs that the Police Force has excellent relations with the Police Force in Malaysia. And this results in a situation where it encourages very close cooperation between them in law enforcement.

So we should continue to take the approach of utilising both Government as well as non-Government initiatives in cementing these ties. I will strongly support his call for a total approach in people-to-people contacts to supplement government-to-government contacts.

If I may go on to Dr Lau Teik Soon's point on ASEAN Regional Forum. For the benefit of Members who may not be familiar, I should say that recently we have seen two rather significant developments within ASEAN, two important initiatives in the areas highlighted by Dr Lau Teik Soon. One is the Special Senior Officials' Meeting of ASEAN and the other is the ARF.

Let me first touch on the Special Senior Officials' Meeting (SOM).

Senior officials of ASEAN of course have always been meeting and there have been other forums like the ASEAN Ministerial Meetings and Post-Ministerial Conferences which enable Ministers as well as senior officials to meet. From time to time, yes, they may discuss matters concerning security issues. But usually these discussions do not involve the people from our defence or security establishments who are the key decision-makers in defence policies. But recently it was decided to have a Special Senior Officials' Meeting which would include people from the defence and security agencies. I have just heard from our delegation which returned from Bangkok that this Special SOM was a success. That is one important initiative. The other is the ASEAN Regional Forum. I say these are significant because it shows that ASEAN has developed into a point and has reached a level of maturity where we feel comfortable about discussing security related issues.

The ASEAN Regional Forum (ARF) was announced in Singapore in July 1993 at the 26th ASEAN Ministerial Meeting (AMM). Its objective is to promote dialogue and consultation, contributing to a sense of community. This will add to the effort to create a regional network of bilateral and multilateral linkages in the Asia-Pacific. It will help to manage the strains and tensions that come with rapid growth and change. I would say the ARF is unique because unlike comparable discussions on security matters, the ARF is not the result of any conflict situation which has taken place. It is not conceived in the context of any special multilateral security treaty or management and it is also not in response to any specific enemy or perceived threat. As Dr Lau Teik Soon said, the best time to discuss these issues is now when the relations are peaceful and cordial.

On the specific agenda or topics to be discussed, our view is that we need to build the ARF over the years. We do not see the coming ARF this year as an end in itself. Therefore, we should not be over-ambitious and ARF this year should ideally be so structured that it will be conducive for participants to begin to talk freely and to feel that the ARF is a useful mechanism. The precise topics have not been settled because Thailand which will be Chairman will be consulting the other ASEAN members and the officials will also have to sit down and discuss these before the ARF is held.

Singapore's view is that we should start on areas which are not too contentious and to ensure that future ARFs are successful and that future ARFs can begin to discuss in greater depth, this first ARF probably should avoid bringing in the controversial bilateral issues which may exist among the participants. For the reasons which I have said, and for the reasons really which Dr Lau Teik Soon has mentioned, this ARF is an initiative which Singapore strongly supports and I think it will be a major development in our part of the world to enable confidence building among the countries in the region on security-related issues. 2.15 pm

Dr Ho Tat Kin asked about APEC and what are the benefits. The answer to that is there are several benefits. Firstly, as a grouping of developed countries, NIEs and developing countries, APEC gives Singapore greater economic space because there is considerable potential to increase intra-APEC trade through elimination of trade barriers. Singapore and other ASEAN countries are aware that to continue to grow, we cannot be inward-looking.

Secondly, apart from our direct economic interests, APEC can also act as a counter-weight to curb protectionist sentiments in Europe and North America. By keeping NAFTA outward-looking, APEC prevents the Pacific from being split down the middle between an Asian Pacific and an American Pacific divide.

Thirdly, Sir, over the longer term, APEC also serves our key interest in engaging the United States and other major powers in the region. APEC will encourage the United States to focus on the region, particularly when it is preoccupied with its domestic problems.

Finally, APEC is also a framework to help manage what Dr Lau Teik Soon referred to as a triangular relationship among the US, Japan and China. Therefore, for these reasons, Singapore is fully committed to APEC and its development. As he knows, Indonesia is now Chairman of APEC and will host the next leaders' meeting.

Recently, when I met my Indonesian counterpart in Jakarta, I said that Singapore will give its fullest support to Indonesia because a successful leaders' meeting this year in Indonesia will help maintain the momentum of the APEC process.

Mr Bernard Chen: Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Mr S. Chandra Das (Cheng San GRC): Sir, I beg to move,

That the sum to be allocated for Head O of the Main Estimates be reduced by $10 in respect of Code OA 1500.

Sir, in view of our regionalisation efforts and to build an external economy, I strongly believe that our overseas missions have an added role to play. The Prime Minister in his speeches and travels has identified China, Vietnam, Myanmar and India as four countries that we should concentrate on. Also, the Government will carefully invest a portion of our reserves in these countries.

Sir, the business community certainly welcomes the Government's move and will not be found lacking. In connection with the above, I would like to ask the Minister for Foreign Affairs what plans his Ministry has to strengthen and widen our representation in these countries.

Prof. Jayakumar: Sir, when responding to Mr Bernard Chen's comments on regionalisation, I already alluded to the fact that regionalisation was an added dimension and new responsibility of the Ministry of Foreign Affairs, and it follows therefore that we would have to adapt and gear ourselves to cope with this additional responsibility. Clearly, we need to strengthen our missions and consulates in Vietnam, Myanmar, China and elsewhere. I mentioned earlier that it was some 22 years ago that I was the Permanent Representative in the United Nations, and at that time, I recalled the number of overseas missions we had was a handful.

In 1980, the number of overseas missions that the Ministry of Foreign Affairs had was 20. Now, we have 30 overseas missions. But it is wrong to believe that each of our overseas mission is fully staffed with a huge army of people who are capable of doing everything. In fact, we run a very lean outfit and actually I wish to pay tribute to all our staff in our overseas missions who, together with our staff here, have to work sometimes at considerable sacrifice to themselves in coping with this additional workload in recent times.

So it is not just regionalisation, it is also the changes which I mentioned when I painted the backdrop, the new dimensions, the changes in the world, post-Cold War era that require our missions to cope with these changes, increasing number of visits and increasing number of projects. Also, we are now playing a much bigger role than we did many years ago at many of the international forums, United Nations, APEC, and so on. So the additional Foreign Service officers whom we recruited in recent years, in my view, would not be enough. We are now, therefore, reviewing our staffing position and forecasting our likely manpower needs for the next five years and I wish to assure Mr Chandra Das that this is uppermost in my mind.

But I want to repeat the point, which I mentioned earlier, that in the context of regionalisation, my Ministry's view is that it requires a combined effort. And I am glad to say that, in the visits that I have made abroad, MFA officials abroad work closely with other officers - TDB, EDB, Tourist Promotion Board - because we are really all part of the same family and pursuing the same national interest of our country.

Mr Chandra Das: I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $99,201,100 for Head O ordered to stand part of the Main Estimates.

The sum of $51,359,300 for Head O ordered to stand part of the Development Estimates.

Head N -

The Chairman: Head N - Ministry of Finance. Amendment No. (1), Dr Ow Chin Hock.

Dr Ow Chin Hock (Leng Kee): Sir, I beg to move,

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

Sir, under this amendment, I wish to raise several issues concerning the implementation of the Goods and Services Tax.

First, the Government machinery. The IRAS and the Customs and Excise Department (CED) are responsible for the collection and enforcement of GST. The Estimates Committee, under the Chairmanship of Mr Chew Heng Ching, met the officers from IRAS, CED and Ministry of Trade and Industry on 28th September 1993. The Committee was told that 296 additional staff would be required by IRAS and 86 additional staff would be required by CED to discharge their responsibilities in collecting GST. Out of this total of 382 additional staff required, 105 could be obtained from internal sources, ie, by internal transfer and re-deployment. The remaining 277 staff would have to be recruited. I remember at that time I asked the officers, given the labour shortage, whether IRAS and CED would be able to recruit the new staff.

The Minister announced in this year's Budget Statement that "the operating framework for GST is now in place". May I take it that IRAS and CED have recruited all their additional manpower required? And if so, are these additional staff new entrants to the labour market, for example, `A' level and Polytechnic Diploma holders, or are they poached from the private sector? Is the manpower cost within the budgeted manpower cost of $6.3 million?

Another major item is the development of a computer system. May I ask the Minister whether the computer system developed for GST collection is ready for operation now and what is its cost? And the last question is: how many businesses have registered for GST so far?

The second issue is compliance cost incurred by businesses. I reported to the House last Monday that some businessmen who participated in the dialogue session felt that, as the Government's collection agents, they should be compensated for their costs in collecting GST. The Minister replied that the tax saving from the 3 percentage point cut of corporate tax is meant to offset the GST compliance cost. I agree with him. But this applies to companies or businesses that make profit. In any case, to the extent that compliance costs are not fully offset, the compliance costs will be passed on to the consumers. This will raise the GST-induced inflation rate to beyond 3%, even without profiteering. Nonetheless, I welcome the Minister's announcement that IRAS will conduct a survey on cost of collecting GST one year after its implementation.

The third point is that the UK and New Zealand experiences have been quoted again and again. The experiences of these two countries show that compliance cost, as a percentage of turnover, declines as turnover increases. I believe this is due to the economies of scale. Apart from the economies of scale, businesses with large turnover in cash may also collect interest income from the GST collected. On the other hand, smaller businesses will not enjoy these benefits, ie, benefits from the economies of scale and collection of interest income. So as an incentive, may I ask the Minister whether smaller businesses can submit their return six monthly instead of quarterly so as to lower their compliance cost? This was also a request by the Estimates Committee.

Finally, Sir, our GPC met representatives of one Chamber of Commerce. One interesting point was raised: this concerns the $3.4 billion investments in the petrochemical industry. Most of the $3.4 billion investments in the industry will be spent on imports of machinery, equipment and facilities, 95% of the industry's output will be exported, and the gestation period will be long. How will GST be treated in this case, and has IRAS resolved the problem with the petrochemical industry?

Mr Chew Heng Ching (Eunos GRC): Sir, GST will be implemented in three weeks' time. Despite the massive publicity and public education programmes launched by the Inland Revenue Authority of Singapore since the release of the White Paper on the GST in February last year, we still hear of complaints by traders and consumers that they are confused and are not ready to implement the GST.

Sir, in the Report to Parliament by the Estimates Committee in November last year, of which I am the Chairman, we examined the implementation of GST, the potential problems and we made various observations to the Finance Ministry. I think a number of observations have been highlighted by Dr Ow Chin Hock just now. In our deliberations, the Committee was satisfied that sufficient efforts have been made by IRAS to reach out and to educate consumers and businesses on GST prior to its implementation. The Committee was, however, concerned that despite the publicity programmes, the implementation of GST would create confusion and tension initially. Based on recent developments and feedback, this observation may turn out to be true. Our Committee then advised the IRAS to ensure that they are fully equipped to handle the situation, in terms of having sufficient suitably qualified manpower to attend to queries and complaints and in terms of having a new computer system for collection of GST in place well ahead of time.

May I therefore ask the Minister how well prepared is IRAS today to implement GST? Is the IRAS equipped to handle initial teething problems and hiccups? And will traders and companies be penalised if they default come 1st April? Will a grace period be given before penalties are imposed? Will the Minister respond to these clarifications? 2.30 pm

Mr Koo Tsai Kee (Tanjong Pagar GRC): Sir, GST will be introduced on 1st April. I understand that preparations are well in hand and that there should be no major problems on 1st April.

For consumers, CASE is monitoring the movement of prices of essential groceries in wet markets before and after GST. We are confident that with the price watch, these key essential items will be well stocked and their prices will be kept low. For your information, Sir, all the items on CASE price watch basket are listed on SBC INTV 8.

I am also pleased to report from my price watch team that many establishments are absorbing the 3% GST. This means effectively that these companies are squeezing their profit margin by 3%. They are doing it partly because of goodwill to their customers and some MPs, but mostly they are doing it for themselves. Inevitably, as Dr Ow and Mr Chew have pointed out, some businesses are having problems implementing GST. Some, I understand, have not registered. Some do not know how to register. I also understand that small businesses are serviced last by the tax consultants because they are unable to pay the kind of fees that major accounting firms are asking.

Sir, I hope that Singapore and Singapore-based companies will support the GST. CASE supports the GST because our calculations show that post-GST consumers will have more disposable income in their pockets. In 10-15 years' time, hopefully, GST could graduate into a full expenditure tax, GST being an indirect form of taxation. By then, I should think that more countries would have tried out the system. GST is perhaps a necessary step from direct taxation to the expenditure tax.

Sir, like any taxation system, Singaporeans are naturally confused and still worried. I hope IRAS will consider these very natural human reactions and allow a grace period for GST defaulters, especially small businesses.

I would like to ask the IRAS for a status report on the preparations for the GST thus far and what kind of help IRAS is offering to small business people to get their system ready for GST day.

Encik Othman bin Haron Eusofe (Marine Parade GRC): Sir, some of the issues which I wanted to raise have been raised by Members who have spoken previously. Although there has been extensive publicity on GST, I still get feedback that many people do not quite understand it. Some people complain that there will be a cascading effect. In other words, it is likely to be more than 3% at the point of sale.

In fact, the other day, when I was at a departmental store, I overheard this conversation. A sales person was trying to interest a customer into buying a TV set. The customer asked the sales person how much it costs now and what will be the price after 1st April. Is it going to be 3% more or will it be more? To my surprise, the sales person told the customer that it is going to cost more than 3%, because he said that there will be charges at every stage of the transaction, from the factory to the warehouse, and to the store. I was surprised. So I had to explain that it is only going to be 3%. I think there is this fear as to what actually is GST, particularly among consumers. We have to give greater publicity and explain that it is only going to be only 3% at the point of sale.

There are obviously a lot of pre-GST sales now. They are trying to convince people to buy now, saying that it will be much more expensive after GST. So I think there ought to be a greater amount of publicity and I hope that IRAS will do a survey to find out actually how much is the level of understanding among the consumers.

Another point is whether the GST of 3% will be raised in the future. I hope the Minister will assure that this rate of 3% will stay for a long time. Unless there is a great need to raise more revenue, it will stay at 3%.

Mr Lau Ping Sum (Ang Mo Kio GRC): Sir, the implementation of GST has resulted in a great deal of work to be carried out by all the companies in Singapore, and a great deal of work remains to be done. In line with the national objective to use information technology, I think we should, as far as possible, automate the processes. For example, some companies would like to enquire which companies have been registered for GST and which have not. The record format of the computer files concerned should be given to the companies or banks concerned so that easy access for downloading can be carried out without duplicating the process of updating records in all these companies. I hope IRAS will consider sympathetically such request and make such information available earlier.

My second point, as a matter of interest, is on the long-term distribution of direct taxation and indirect taxation in Singapore. What is our long-term goal? For example, in Hong Kong, in the recent budget announced by the Financial Secretary on 2nd March, the distribution is something like 48/52. There are some comments by management consultants that perhaps in the long-run, Hong Kong should also have consumption tax in order to cater for fluctuations in the economic performance. What is our long-term goal in terms of direct and indirect taxation? And will such information be made available to us?

Mr Peh Chin Hua (Jalan Besar GRC): ( In Mandarin): Sir, I wish to speak on the subject of income tax and property tax of clan associations. The main activities of clan associations in Singapore are to promote Chinese culture, language and traditional values. They also play an important role in helping the less fortunate people in our society. Everyone responsible for the running of these associations is aware that the Government has given a lot of moral support to these associations. But they are puzzled as to why these associations which are non-profit making organisations cannot enjoy tax rebates on interest earned from their fixed deposits, despite the fact that these organisations are not commercial organisations and the funds raised are through donations from the public.

Furthermore, with the recent revaluation of the properties they own, these clan associations have to pay higher property tax. The premises of these associations are actually used for cultural and social activities and not for profit. So with higher property tax, these associations will have to bear a heavier financial burden, much to their dismay.

I understand that the Ministry of Finance had turned down their appeal because their activities are confined to members only. Therefore, the Government cannot relax its rules. The problem is that these clan associations are formed on the basis of blood relationship, of common ancestral home and surnames, for mutual-aid among members of the same community. As such, the membership cannot be open freely to everyone. Otherwise, the association will lose its unique identity. For example, a Teochew cannot become a member of the Singapore Hokkien Huay Kuan. And the Chan Association would not allow those who carry other surnames to be admitted as its members.

It has been the established practice of these associations to allow non-members to participate in their activities. For example, my brother-in-law who is a Teochew has been regularly sending his children to the Hokkien Huay Kuan for art classes every Sunday.

I hope that the Ministry of Finance could consider the following suggestions: firstly, interest earned from fixed deposits of clan associations be allowed to enjoy tax concession, so long as it is used for scholarships and bursaries for the children of their members and welfare funds for the poor. Secondly, as long as the premises of clan associations are owner-occupied and not sub-let to others, they should be entitled to property tax rebates. However, when these properties are sold for profit, then the Government may recover the tax rebates previously granted to the association to offset the higher property tax which they may have to pay upon revaluation of the premises.

Mr Leong Horn Kee (Thomson GRC): Sir, in Singapore, the new personal income tax rate is at a maximum of 30%. In contrast, the new corporate tax rate is 27%. Since there is a difference of 3% between these two rates, I would like to ask the Minister whether he has plans to eventually cut the maximum personal income tax rate to 27%, and also to maintain it at the same level as the future corporate tax rate.

I feel it is only fair that individuals who have worked hard and contributed to the economic growth of the country should be rewarded equally as compared to corporations, for their enterprise and hard work by having to pay the same tax rates. In any case, as there is a 3% difference between corporate tax and income tax, I presume that some individuals can form companies to enjoy the lower corporate tax rate.

Sir, I would also like to ask the Minister what are his intentions with regard to the longer term tax rates for both individuals and corporations. With the introduction of indirect tax via GST, there will be more flexibility for the Ministry to review personal income tax rate and corporate tax rate. Singapore needs to have a tax regime that is competitive versus our main rivals such as Hong Kong.

I understand that in Hong Kong, the top personal income tax rate is 25%. And it is even stipulated that the total salary tax payable by individuals should not exceed 15% of the total assessable income before deduction of any allowances. In addition, the corporate tax rate in Hong Kong was reduced this year by 1%, from 17 1/2% to 16 1/2%.

I can understand that different countries have different tax rates as conditions vary from country to country. Countries also have different sources of income. For example, in Hong Kong, land sales form a major part of the authority's total revenue every year. But I feel that Singapore will have to be mindful to be competitive in both personal income tax and corporate tax rates so as to be comparable with our competitors, so that we can attract professionals to work here and corporations to invest here. In addition, since we have healthy budget surpluses, I feel that we should also reward our locals and local corporations for their enterprise and hard work by taxing them less, if we can afford to. 2.45 pm

Dr Ow Chin Hock: Sir, I agree with the Teo Chee Hean Committee's Interim Report that "To develop an external economy, we will need to give more emphasis on our tax system to outward expansion. We need to make overseas investments as attractive as those in Singapore." This is a quotation from the Interim Report on page 23.

Sir, tax measures and fiscal incentives for venturing abroad should aim at two objectives, namely, (1) to encourage Singapore entrepreneurs and enterprises to go regional; and (2) to facilitate the repatriation of factor income earned overseas back to Singapore. In last year's Budget Statement, the Minister for Finance announced seven incentives to promote the external economy. These incentives include unilateral tax credit for dividend income and service income from specific countries, and double tax deduction for approved expenses incurred in project development and other specific activities. I welcome these specific tax incentives, but I observe that these incentives are more geared towards the second objective, and benefit the successful ventures.

Participants at the Feedback Unit's dialogues with SMEs and local business leaders felt that a more comprehensive tax package is needed to encourage Singapore enterprises to go regional. One constant request is that losses of overseas companies be allowed to offset against domestic income. I have pointed out that the Teo Chee Hean's Committee has rejected the suggestion on the ground that our domestic tax base should not be allowed to subsidise overseas venture. Nonetheless, the participants still hope that the Minister for Finance will reconsider allowing the offsets, at least for the initial two to three years when the projects are subject to greater risks.

Finally, Sir, contrary to what the Minister has said about what I said, I did not say that "partnership with GLCs is a hindrance", and I still believe that one non-tax incentive for SMEs to venture overseas is partnership with GLCs. Why do I believe this? Because at least in China, the Singapore Government is much respected. Anything that has to do with the Singapore Government is considered good. So the partnership will be seen as an indirect endorsement by the Singapore Government and hence add value to the investment projects. However, there are misgivings and mistrust among SMEs about entering into a partnership with GLCs. I have given the details about these misgivings and mistrusts last Monday. But, as I said last Monday, and I repeat it now for the benefit of the Minister, "Nonetheless, I still believe that the Government can narrow the gap between GLCs and the private sector. GLCs and the private sector should be complementary to each other. At the same time, the Government, through its statutory boards and GLCs, should play a catalytic role in promoting overseas ventures."

Mr Robert Chua Teck Chew (Nominated Member): Sir, in the last two years, the Government has given a series of tax and other incentives to encourage and help companies to venture abroad and build an external wing to our economy. I wish to take this opportunity to commend and thank the Finance Minister and his Government colleagues and the various Government agencies for initiating such incentives. The EDB and TDB, along with other Government departments and statutory boards, have been actively promoting a host of assistance programmes. Businessmen planning to venture abroad would do well to familiarise themselves with these programmes before taking their first flight out of Singapore to explore the region.

However, I observe that most of the incentives tend to benefit the larger companies more than they do the small and medium-sized enterprises, which usually do not have the organisational capability or financial muscles to venture abroad on their own. However, to survive the enormous competition from their competitors in the less developed and lower cost economies, sooner or later, our SMEs will be forced to look at re-distributing their operations into the region to reduce their operating cost and exploit the fast growing and large potential markets. I urge the Minister for Finance to lead the Government agencies and work with the various business groups to formulate some special incentives and assistance programmes to help these small and medium-sized enterprises meet the challenges and exploit the business opportunities in the region.

Earlier, I have suggested the setting up of a development bank for financing such local enterprises. Other possibilities include giving special tax allowance and depreciation benefits to financial institutions to encourage them to finance the machineries and working capital needs of these enterprises which often lack the track record overseas to obtain standard bank loans from the overseas banks. Another possibility is for the Government to give special grants to business associations and chambers to set up overseas offices in the region to promote networking and joint ventures and at the same time provide vital information, useful contacts and other services to these local enterprises venturing into those countries. These business group officers could work hand-in-hand with other Government agencies such as the TDB and EDB to complement their official and business networks overseas.

Mr Chew Heng Ching: Sir, the Government has a plan to privatise the Government-linked companies and even some of the statutory boards over a period of time. This was a consequence of a decision taken following the Divestment Committee Study in 1986 to privatise the GLCs and the statutory boards, when it was argued then that the private sector should be the engine of growth and that the Government should just concentrate on governing the country and stay away from business. However, Sir, with a change in economic strategy in recent years to create an external wing for our economy, would the Government review its plans to privatise or divest its shares in GLCs? The reason I ask this is that it seems, and this point has been amplified by Dr Ow Chin Hock a moment ago, that the GLCs, because of its linkages and connections with the Government, have a comparative advantage over our private sector companies in securing investments and businesses overseas, especially in Asian countries like China. Should we not use these linkages to the maximum advantage to benefit our domestic economy? If so, how will this approach modify or change the Government's plan to privatise or divest its investment in the GLCs? Will the Government slow down its investment plan to allow the external wing to take roots and grow first? Will the Minister enlighten the House on this subject?

The Chairman: I want to inform Members that "guillotine" time on this amendment is 3.40 pm. We still have five more speeches before the reply. Mr Leong Horn Kee.

Mr Leong Horn Kee: Sir, like Mr Chew Heng Ching, I would like to ask the Minister what are his Ministry's plans to privatise and list on the Stock Exchange of Singapore some Government-linked companies and statutory boards in the next two years. The Minister has said that the next major privatisation exercise will be in two years' time. I assume he is referring to the proposed privatisation of PUB. May I ask the Minister whether there are also plans to privatise other statutory boards such as the PSA, SBC and SMRT? In addition, whether there are also plans to privatise and list more GLCs this year and next year.

On the privatisation of statutory boards, I would like to ask the Minister how would he ensure that there will be adequate competition and market forces in play so that the privatised statutory boards would remain effective and not continue to function as monopolies. More specifically, I would like to ask how would the Ministry ensure that new competitors can be encouraged to enter the field to compete effectively against the huge organisations such as the PUB, PSA, SBC or SMRT after they are privatised. Because without competition, these bodies may continue to function like monopolies and there may not be adequate checks to ensure that they are run efficiently.

Mr Chia Shi Teck (Nominated Member): Sir, each year, near Budget time, expectations, anxiety and tension run high. For nine years now, Singaporeans and corporate citizens have been at the mercy or generosity of Uncle Richard or probably Santa Hu. Expectations ran high this year as our economy performed way above expectations and also because come April Fool's Day, we will have to live with GST. After the announcement of this year's Budget, we hear of some disappointments and some negativism.

To avoid all kinds of reactions to motivate Singaporeans and corporations, I think it is time now for the Government to announce a formula on how we would like to share the harvest. Singaporeans are smart enough to understand that at the end of the day it cannot be the generosity of the Government. It must be that the economy has done well and that we have a good harvest. Along with the good fortunes, sometimes come the bad years. So the Singaporean will understand that we cannot be looking forward to goodies all the time.

Our long term growth projection is 4-6%. Government aims for a balanced budget ultimately and meanwhile the projection has always been for a small surplus. The long term productivity improvement is targeted at 4%. Could we say that once we have achieved these numbers, all of us in Singapore can expect a dividend in a pre-set formula? The Finance Minister has said that all the incentive schemes are already in place and that it would be more a case of fine-tuning. Can we have a formula as to how much would go into the reserves from the surpluses over and above our budget? The reserves, I agree, are important. So over and above that, how would the balance be shared among the various incentive schemes? Everybody will benefit - the rich, the poor, the not-so-rich, the sick and so on. A transparent formula is good in both ways. As I said earlier, Singaporeans know that if a year is no good, they will have to dig deep into their pockets. However, on the other side, Singaporeans can rest assured that for as long as we work hard and meet our targets, GST never need to be increased.

Encik Othman bin Haron Eusofe: Sir, I would like to turn to the much debated subject of the civil service medical benefits scheme. Since the scheme was announced late last year many changes have been introduced as a result of the efforts made by the NTUC and the public sector unions. This is a very emotional issue. It has generated a lot of unhappiness and has affected the morale of the civil servants. I am happy that the Ministry of Finance has accepted some of the suggestions made by the NTUC and in our discussions we have managed to solve a number of issues. There are still some outstanding issues. Some of the subjects have been taken up during the Budget debate. These include the question of female civil servants enjoying the benefits of their spouses and the question of outpatient billing for civil servants who attend outpatient clinics. Today's Straits Times has a report on civil servants who have pre-existing illnesses. They have been asked to register themselves with the Ministry of Finance so that consideration can be given to their cases. I hope that in considering their applications, the Ministry of Finance will take a very sympathetic view. I think most civil servants are concerned about the high medical costs now that they have to pay 15% of the hospital bill for themselves and 40% for their dependants. 3.00 pm

The other point which we have always taken up is whether these figures of 15% and 40% will be maintained, and for how long. We want to be sure that when they opt for the new scheme, or take one of the options, they will be able to afford, with future adjustments to the medical cost. And in this connection, if there are going to be other changes, I hope that the Ministry of Finance will consult the unions early, keep them informed of what the proposals are, and I think this is very necessary for the development of good labour-management relationship in the civil service.

Mr R. Sinnakaruppan (Kampong Glam GRC): Sir, as Mr Othman has just pointed out, the medical benefits scheme has been the talking point of many civil servants and unionists the last three months. Much has been done since. The Prime Minister has taken a personal interest to allay the fears of civil servants. In fact, the Prime Minister met key civil service union leaders, not once but on two occasions, to clear workers' apprehensions on the scheme and to see if some of the unions' proposals on improving the scheme can be implemented. The labour movement is indeed very grateful to the Prime Minister for his sincerity and concern on an issue that is very close to the hearts of unionists and civil servants.

Sir, I would like the Minister's response on two specific issues. One is that civil servants receiving treatment in OPDs have to pay the full amount of the bill, instead of the 15% co-payment amount. This has particularly caused tremendous unhappiness amongst the Division IV and the DRE employees, as many of them face difficulties in having to pay upfront the total bill amount. Besides, it is unfair to expect them to pay the full amount and be reimbursed at a later date. I would like to ask the Minister if this arrangement has been reviewed as it is an unnecessary burden on the lower income workers.

The second point is that for five types of treatment which include cardiothoracic and paediatric surgery as well as interventional cardiology, Class C ward is presently not available. As a result, for such treatments, Division IV officers and DREs who are eligible for Class C ward are admitted to Class B2 instead and they are made to pay the 15% co-payment on Class B2 charges. In such wards, for example, for the treatment of burns, it can last for a prolonged period of several weeks or months. It will be inappropriate to expect lower income workers, including civil servants, to meet the differential cost of co-payment as it is not by their choice that they have to be warded in a higher class. Before the Minister dismisses this appeal by saying that hardship cases can actually apply for Medifund, I would urge the Minister to consider the waiver of the additional cost of these treatments in B2 for at least the civil servants, if not the entire public, on the basis that Government is their employer and on the basis of their ward eligibility entitlement.

Mr K. Shanmugam (Sembawang GRC): Sir, in Singapore, given our size and the narrow parameters within which civic existence is possible, the civil service is all pervasive in the lives of ordinary citizens. It is the cutting edge of the Government, the face of the Government that people most often see. The ordinary man's perception is often more influenced by his frequent dealings with the civil service than by his perception of the Ministers or MPs. One cannot therefore overstate the importance of the civil service - to the Government, its popularity and, in the longer term, its durability.

There is another related perspective to this point. Ideologically, the civil service has to be attuned to the aims of the Government to galvanise the people. Otherwise the Government cannot succeed. This Government recognised that point when it took over from the colonial administration. Civil servants were asked to re-orientate their mindsets and were taught to do so. Some 35 years on, we are at the crossroads. We are moving on to the next phase where Singapore can only succeed by always keeping ahead of competition. There is very little scope for sitting back and saying that we have arrived. The civil service is an important tool, perhaps the most important tool, that the Government has in forging a partnership with the people for the Government to achieve its aims for the society for the next 20 or 30 years.

The question is: Is the civil service up to that task? It is undoubtedly efficient. It has striven towards and probably has achieved a large measure of systematic perfection. It works well. It is clean. People generally agree that it is an excellent civil service. It compares favourably with that of other countries. However, the praise is never unstinting or unqualified. There is always an undercurrent whenever the civil service is commented upon. The undercurrent, the qualification, is the perception that the civil service, while efficient, is uncaring, inflexible and, more seriously, does not always apply its rules fairly. I do not think it is very profitable to engage in a debate as to whether this perception is justified. The point is - the perception is there.

The perception has to be tackled because the civil service has to interact with an increasingly sophisticated society. If the citizen is dissatisfied with the civil service, he will be dissatisfied with the Government. If he feels that he has not been fairly treated, his faith in the Government and the system will dissipate. We are still a young society. It is easy for people to be transient in their faith.

It is in this context that we have to look at the undercurrent of negative perception. The SIUs, Feedback Unit, the Straits Times Forum page are all fine. But they alone are inadequate. Some way must be found to reverse the negative perception. The focus must be to ensure that the system itself is geared ideologically for a pro-active, sympathetic, service-oriented approach - rather than a predominantly "application of rules" approach.

It could be said that this is a motherhood statement. The whole idea is qualitative. And it can be asked what are the aspects of this positive approach. What improvements can be made? It could be said that the SIUs were set up precisely for that purpose. I agree that my comment is qualitative. However, I would suggest that at least two ideas could be looked into.

The first relates to the administrator's decision-making process and the perception of unfairness. This House would have noticed the trend of legislation nowadays. The Act itself will contain the main provisions. Much of the bite will, however, be in the regulations which can be decreed by the Minister. The regulations will cover a wide area and confer a substantial discretion to the administrators - to forfeit, to grant licences, to impose fines, and so on.

In a modern society, this may be unavoidable. However, the trend becomes worrying when coupled with another trend - that of administrators generally not giving reasons for their decisions. All of us are familiar with the two-sentence letter that we often receive which will say, "Your appeal has been carefully considered. However, we regret that it cannot be acceded to." As MPs, we seldom accept that. We ask the Ministers for the reasons and the Ministers always oblige. However, my point is, in the first place, the system should be geared to give reasons to the citizen without his having to see the MP. The person on the receiving end must know why his appeal is being turned down, or his licence is not being renewed. This applies to Government departments and statutory boards. Exception to this rule should only be made when national security issues are involved or when international relations could be damaged.

The reluctance to give reasons, I suspect, arises from a fear of being pinned down. That, however, cannot be a legitimate fear. The system must be transparent. Rules and guidelines must be clear. Discretion must be exercised according to those rules, for all to see. This is an important aspect of inculcating and maintaining faith in the system. Our Constitution provides for equal treatment. That is an important aspect of the rule of law. Those two related concepts are fundamental to the way our society is structured and functioned. Where substantial discretion is conferred on the administrator and he has the right not to disclose reasons for exercise of that discretion, then I think we begin to qualify the notion of rule of law. Such an atmosphere will not encourage faith in the system. It will only encourage sycophancy. The person whose application is turned down without reasons will not believe that he has been fairly treated. That feeling of unfairness will be strengthened when he sees others in an apparently similar position succeeding in their applications. We should try and move away from that.

There is another very good reason to require that reasons be given for decisions. When the decision maker has to give reasons, immediately he will start giving greater attention to the rationality of the decision. That is more effective than any number of guidelines.

Sir, I will give a real example which would in many ways be straight out from "Yes, Minister". There is a seven hectare park in Sembawang. When the Town Council was formed, the Ministry concerned wanted the Town Council to take it over. It was costly to maintain and the Ministry wanted us to have the pleasure of tackling that problem. For the same reason, of course, we did not want to take it over. We were told that we had to take it over. A helpful Parliamentary Secretary told us that the policy was that if it was more than five hectares, then the Town Council need not take it over. We said that to the Ministry. At first, they denied it, and then they asked us to provide a copy of the internal policy guideline. And subsequently they accepted our position. But the matter did not end there. Guess what happened? The next week we were told that we have two parks. The seven-hectare park has been divided into two parks - one four-hectare and the other three-hectare. And could we please take them over now that both parks are under five hectares? Well, the matter was resolved to our satisfaction because of a very helpful Minister of State and the fact that we threatened to bring it up in Parliament. But I think this example illustrates how tenacious one has to be at times to ensure that the correct decision is reached and I wonder how many other such examples there are. If this happens to MPs, what about the man-in-the-street?

The Chairman: Mr Shanmugam, would you like to allow time for a reply?

Mr Shanmugam: One more minute, Sir, and I will finish.

The Chairman: Okay.

Mr Shanmugam: Much obliged, Sir.

Sir, the second aspect of this positive approach that I suggest is the idea of an Ombudsman. It has been raised before and such concept may not have been suitable 30 years ago when things had to be done in a hurry. However, in the next phase, such an institution might actually help retain the confidence of the people in the system. The Minister may say that there are existing channels. However, the existing channels all, by and large, rely on the system itself to act correctly. The proportion of decisions brought to the MPs' attention and thereafter to the Minister's attention must be very small. In reviewing the appeal, the Minister will have to rely on the civil servants. We all know that the final decision can often be influenced by the way in which the facts are presented. Ministers' time must be too valuable for them to spend looking into every aspect of the facts on every appeal by every MP. It is therefore preferable to have an intermediate institution which can provide for a quick and effective remedy, and reserving the final appeal to the Minister for extreme cases. The Ombudsman should have the right to review the facts himself if he feels necessary. Sir, I trust that this will be looked into.

The Minister for Finance (Dr Richard Hu Tsu Tau): Sir, five Members have spoken on the GST implementation issues and I will take them together where they overlap.

Dr Ow has asked whether the IRAS has engaged sufficient staff and whether the numbers originally given to the Estimates Committee have been filled. At the present time, IRAS has recruited an additional 170 staff and this is considered sufficient. The original figures were estimates. The staff were not poached from private companies. They were mainly from the polytechnics and their qualifications are sufficient for the purpose of GST implementation.

As far as the computer system is concerned, the system is ready to handle GST. IRAS will be installing a more complex system later to integrate the GST collecting system together with the other tax systems, but this is a separate exercise. So for the present, IRAS is quite satisfied that it has all the systems and people ready to introduce GST.

As to the status of businesses and whether they are ready to implement GST, about 25,000 businesses have registered for GST and this is pretty near the total number which will be required to do so. There are of course a number of companies which still are in the process of registering for GST or have not started to do so. But these are in the minority. Unfortunately there are some companies, particularly the smaller ones, who tend to procrastinate in these matters. But IRAS is sending out its officers, and by phone and direct visits, to try and persuade them to get them registered before the target deadline. As of now, I am satisfied that the majority of companies will have prepared everything for GST. Of course, in a complex exercise like this, there are likely to be problems arising in the first few months of implementation and we are still receiving quite a large number of complaints from businesses about not understanding whether they should or should not register and how the tax itself is going to be implemented. Examples quoted are wrong information being sent out. But these are start-up problems and it is inevitable. The Ministry will ensure that IRAS will handle all mistakes with understanding and the intention is not to penalise people at least during the first three to six months of GST, perhaps even longer. But we cannot extend this grace period indefinitely, of course. But where there are genuine cases of misunderstanding, or inability to implement, it is not the intention to penalise people unnecessarily.

Mr Koo Tsai Kee has said that small businesses have problems because they tend to be serviced last by the accountants when they try to get their computer systems upgraded. Indeed, this is unfortunate because small customers tend to be at the end of the queue. But where such problems are identified, IRAS will try and help them as much as they can.

He has suggested that eventually the GST system will be transformed into, what he calls, a full scale expenditure tax system. The issue of expenditure tax has been raised in the past from time to time by Mr Heng Chiang Meng. What I can say is that it is theoretically a very attractive tax which achieves a good deal of the objective of GST without its regressiveness and that is its main advantage. However, only two countries have tried it and both have abandoned it. The reason is that it is practically impossible to introduce and administer effectively. It has been said that whilst the tax is theoretically sound, it is practically impossible to implement it.

A lot of the problems arise because, under the present income tax system, individuals are required to submit to the tax authorities a full list of their sources of income. Under the expenditure tax system, in addition to supplying information on their sources of income, they also have to supply information on their total savings. And many people resent this because it is a further invasion of privacy and where there is a dispute with the tax authorities under such a system, there will be massive enquiries into how an individual actually spends his money and individuals will have to provide details of every item of expenditure, including every item of savings. I think this is one of the reasons why it has not caught on because it means a wide extension of information which the individual has to provide to the tax authorities.

Mr Othman Haron Eusofe has asked what we are doing in explaining the reasons for GST, and how the public can be told of its implications. I think Members would already have noticed that in the newspapers of late, and on television, there has been a series of advertisements. This is only the beginning of a campaign. During the month of March, in the lead up to the GST on 1st April, there will be programmes both on television and in the media, posters on bus backs and in MRT stations explaining the reasons why GST is necessary and why it benefits the individual. The IRAS itself will still be going out to the companies which will have to actually implement GST and to explain individually, if necessary, the steps they have to take to introduce GST. So all that is necessary is in hand. Of course, this does not mean that there will be no hitches. All countries, when introducing GST, have encountered problems and we will simply have to solve them as they come along.

Mr Lau Ping Sum has said that in the introduction of GST, we should try and minimise the cost and we should use the electronic transfer system. And he suggests that the IRAS should allow electronic transfer information for companies registered for GST. This is an issue which I am not familiar with, but I will certainly enquire into it and see what can be done.

Mr Peh Chin Hua has asked two questions relating to taxation of clan associations. I think we have explained this in the past why it is not possible to give tax relief on interest income. Generally, interest on income is taxable and it will be difficult for us to give special privileges to particular groups even if these groups happen to be doing work of social significance because every other group will also ask for the same privilege which means that, in the end, practically all interest income will have to be declared tax free.

He has also asked for property tax relief for clan associations. We have also said, in the past, that this is not possible because clans do not cater to the public in general and tax relief is only allowed for cases where charitable associations are open to everybody, ie, the public at large. No matter how beneficial clan association may be to their own clan members, they do not meet this requirement.

Mr Leong Horn Kee has asked whether we can reduce the level of personal tax to equal company tax. There is a differential of 3%. For the time being, we are not proposing to do this. It is recognised, as I said in Parliament last week, that a group of people at the top income levels may incorporate themselves to take advantage of this, but not every individual can do so. Lawyers and accountants, for example, are not allowed to incorporate. The reasons for incorporation are to take advantage of the tax differential if your income is very high, or you may want to limit your liability in the form of a company. This is a tax loophole which we know exists but very few people currently enjoy. It is a situation which we will review from time to time and we may finally close the loophole.

He has also said that we should eventually match Hong Kong's tax rates which are currently significantly lower than ours. At the personal level, they have income tax rates of about 15 1/2%. I think he is aware that Hong Kong is not a nation. Therefore their operating budgets are significantly lower than ours because they spend practically nothing on defence and a large proportion of their development expenditure is financed from land sales. In our case, we have a significant defence budget and land sales are put into reserves and not made available for current expenditure. These factors make a big difference and allow Hong Kong to have a low rate of personal tax tax. Singapore's personal tax rate, although nominally higher at the margin, is, in fact, actually lower on average compared to Hong Kong. For example, although Hong Kong's individual income tax rates and relief structure appear to be more favourable, our average tax burden is, in fact, lower. Singapore's effective average tax rate, which is a measure of the total tax assessed over the total assessable income in Singapore, was 7% for the Year of Assessment 1991. The corresponding figure for Hong Kong was 8.9%. This means that the majority of Singaporeans pay less taxes than individuals in Hong Kong.

Dr Ow Chin Hock and Mr Robert Chua have asked for special incentives to support overseas investments, particularly for the smaller companies. I would like to assure them that we do give special help to the smaller companies. For example, the EDB provides direct financing assistance at attractive rates to the SMEs through the Local Enterprise Finance (Overseas) Scheme. This is a low cost fixed rate loan scheme, administered through our banks. The Government has also set up a venture capital fund, administered by EDB, to provide equity financing to local enterprises venturing overseas in order to promote the entrepreneurial spirit. So special treatment does exist and the TDB and EDB have extensive packages to help the smaller companies go overseas. I said on Tuesday that, for the time being, we are not considering an overseas development bank.

Mr Chew Heng Ching and Mr Leong have asked about Government's plans to privatise. We have said in the past, and I will repeat, that our intention is to privatise Government companies and the companies under consideration are Pidemco Land, which is a property company, SMRT, Singapore Broadcasting Corporation (when it is privatised, it will be split up into an operating company and a regulatory body) and PUB. The most immediate one is likely to be Pidemco Land in about two years' time. There will be, of course, repeat issues of equity by Telecom.

On the question of competition after privatisation, for PUB, it will be difficult to produce another competitor, but I assure Members that their rates will be sensible because they will be regulated by the Government even after privatisation. Telecom will have their monopoly removed in stages over a number of years. Already some parts of their operation are privatised and our intention is that they continue to do so. For SMRT, it will be difficult to find a replacement but their rates will be controlled or regulated. SBC will also be subject to competition.

Mr Chew has asked whether the GLCS which are privatised might not lose their advantages overseas. I can assure him that will not be the case because Government will retain a significant shareholding so that Government connections will be maintained.

Mr Chia Shi Teck has asked whether we could announce a fixed formula for the disposal of Government surpluses. Of course, we cannot. When the Government has budget surpluses, part of it could be returned to the public in the form of tax rebates. It could also be shared in the form of rebates on HDB S&C charges and rents. It could also be given away in the form of SOTUS or through grants to Edusave, Medifund and so forth. These are the various formulas which we have used. The most widely applicable one, of course, is tax reduction across-the-board. As regards other formulas, we can consider them in the future. But this will be broadly what we are thinking of.

As the remaining three items deal with medical benefits and the civil service, I will ask the Minister of State to respond because he has been familiarising himself with these particular matters.

The Minister of State for Finance (Cdre Teo Chee Hean): Sir, Encik Othman Haron Eusofe and Mr Sinnakaruppan raised several points on civil service medical benefits. I agree with the Member that this is an emotional issue. But now that civil servants have had their briefings and they have the booklet and the numbers before them, I hope that they will look at them carefully and make a reasoned and rational decision based on the facts before them.

I appreciate the concern expressed by those with pre-existing illnesses. The key criterion for those with pre-existing illnesses is whether or not they are insurable. If they are insurable, then they will be covered by insurance and that is really not a problem. It is only when they are not insurable and would be left to pick up the extra cost on their own that the Government will step in and pick up the extra cost related to their pre-existing illnesses if they select the new medical scheme. What the Government will do in such cases is to restore their medical benefits to their original situation as though they were still on the old scheme and this applies both to hospitalisation as well as to outpatient benefits.

Encik Othman has also rasied the question of whether female civil servants can opt for medical benefits of their spouses. This is something which we will look into.

Both Mr Sinnakaruppan and Encik Othman have raised the question of upfront payments at outpatient dispensaries. From 1st April 1994, civil servants will not be required to make cash payments upfront at outpatient dispensaries. The Ministry of Health will bill the officer's Ministry directly and the Ministry will recover the officer's share from his salary. I think that should address most of the problems there.

Mr Sinnakaruppan has also asked whether certain treatments which are not available in C wards and which are only available in B2 wards can be charged at C rates. There are only five specialities which are unique to SGH, for which Class C ward is not available. These are cardiothoracic surgery, interventional cardiology, plastic and reconstructive surgery, paediatric surgery and hand surgery. These are highly specialised areas. According to the Ministry of Health, there is a need to pool the limited resources, especially for pre- and post-operative care required for these patients. Hence, the lowest ward which a patient requiring such treatment can be admitted to is Class B2. And this applies not only to civil servants but to members of the public at large. Members of the public have to pay the full B2 class ward fees when they are admitted to Class B2 ward for such treatment. And they cannot insist on paying Class C ward charges on the ground that they would want to be warded in a Class C ward. However, a patient who is unable to afford Class B2 charges may apply to the Ministry of Health for remission of charges.

Civil servants are, therefore, treated in the same way as members of the public at large when they are admitted to such wards and it may be difficult to make a case that civil servants should be treated in a different way than members of the public at large. So a Division IV officer or a daily-rated employee is charged B2 class rates and his co-payment is at 15% of the Class B2 bill. In other words, Government regards him as eligible for Class B2 ward. So Government will pick up 85% of the B2 ward charges. If he cannot afford the co-payment, of course, Government will consider assistance on a case-by-case basis.

Encik Othman has asked for an assurance that Government will not increase the co-payment rates beyond what are currently offered. There are no plans to increase the co-payment rates.

I also take Encik Othman's point that if adjustments are to be made in the future to civil service benefits, then the unions should be consulted and as early as possible. My Ministry appreciates the positive role that the public sector unions have played in the latest adjustments. The vigorous and constructive representations by the unions have helped to address specific concerns of the civil servants and they have also helped my Ministry in achieving the objective of developing a fair and reasonable package for civil servants.

Mr Shanmugam has raised some points about the quality of service provided by the civil service. The Government is aware and fully supports the view expressed by Mr Shanmugam, that the civil service must ultimately be responsible and accountable to members of the public, and that the civil service must constantly strive to improve its standard of service. For this purpose, Mr Shanmugam has suggested the idea of an Ombudsman. We already have several feedback channels, the Feedback Unit and the Service Improvement Unit (SIU). And in extreme cases of abuse and corruption, there is the Corrupt Practices Investigation Bureau which carries out its duties without fear or favour.

Mr Shanmugam has called for a thorough and comprehensive review of the interface between the civil service and the public. The SIU is, in fact, already pursuing such a course. Since its formation in 1991, the SIU has improved the level of service to the public. The SIU does not just accept grievances and particular complaints from the public. It has gone beyond that to take a pro-active approach towards reviewing the quality of service that the civil service provides. It has, for example, upgraded the quality of counter services and reviewed rules and regulations. The SIU seeks to give members of the public a channel to suggest improvements and not just to make complaints. We should therefore continue to use SIU for now as an integral part of the Government machinery to achieve a more responsive public service.

I am not familiar with the specific example that Mr Shanmugam has brought up and I wish to take nothing away from the credit that is certainly due to Mr Shanmugam and his colleagues for the vigour, tenacity and resourcefulness with which they pursued the particular case that he has brought up. But the case demonstrates that there are indeed channels for redress and reviews, which members of the public and not just MPs regularly use, so that a fair and rational outcome is achieved. Any member of the public who feels that he is being given the run around by the civil service can appeal to the SIU, the Feedback Unit, to his MP, and they do that regularly, and to the Minister. So in a sense, there are many Ombudsmen, and not just one.

I would like to assure Members of this House that appeals and requests for review are seriously and carefully considered, not just by civil servants, but also by the Ministers and other political appointees in the Ministry. And that such cases, especially those brought up by Members of this House, are looked at very carefully.

Mr Shanmugam has commented on a particularly helpful Parliamentary Secretary and Minister of State. I can assure Mr Shanmugam that Ministers of State and Parliamentary Secretaries are helpful and I hope that his opinion is not formed merely on the basis that they have acceded to the request that he has made. Ultimately, each case has to be considered on its merits and resolved in a fair and reasonable manner.

Dr Toh Keng Kiat (Nominated Member): Sir, can I have a clarification from the Minister of State?

The Chairman: All right. You have one minute left.

Dr Toh Keng Kiat: When he was talking about outpatient clinics, was he referring to outpatient clinics in the Government hospitals and privatised hospitals? Or was he talking about polyclinics as well?

Cdre Teo Chee Hean: All of these clinics.

Dr John Chen Seow Phun (Hong Kah GRC): Sir, may I seek a clarification from the Minister of State? He mentioned that for civil servants with pre-existing illnesses who are not insurable, Government will restore their original medical benefits. Does he mean that if a civil servant chooses option B, the CCS scheme, and goes on the new salary, he will also at the same time enjoy the old medical benefits?

Mr Lau Ping Sum: Sir, just now the Minister mentioned that the average effective tax rate paid by a Singapore taxpayer is 7% compared with Hong Kong's average effective tax rate of 8.9%. In computing the Hong Kong figure, it was based on the 1993 income tax provisions. In the latest 1994 tax provisions, I think the Hong Kong Financial Secretary has increased the personal relief from HK$30,000 to over HK$70,000, and effectively excluding another 440,000 taxpayers from the tax net. Taking that into consideration, is the comparison still valid?

Cdre Teo Chee Hean: The restoration of medical benefits to their previous condition is only with regard to pre-existing illnesses which the civil servant already has, and not to all the illnesses which he may encounter in the future.

Dr John Chen Seow Phun: He gets his new salary.

Cdre Teo Chee Hean: That is correct. He gets the new salary. But only for the pre-existing illnesses will he have his medical benefits restored as before.

Dr Richard Hu Tsu Tau: In answer to Mr Lau, it does not include this year's change.

The Chairman: Dr Ow, would you like to withdraw your amendment?

Dr Ow Chin Hock: Sir, three questions have not been answered. First, whether small businesses will be allowed to submit their GST returns every six months. Secondly, whether losses incurred by overseas ventures will be allowed to be offset against domestic income during the initial years. Thirdly, the. treatment of GST on imports by the petrochemical industries.

Encik Othman bin Haron Eusofe: Sir, will the 3% GST rate be held for some time?

Dr Richard Hu Tsu Tau: In answer to Dr Ow's first two questions, it is no. On the question of the petrochemical indusstry, I think their problems have been sorted out directly with them.

The 3% GST will be held for at least five years and for as long as possible after that if we do not need the funds.

Dr Ow Chin Hock: Sir, the Minister said "he is improving", but I suggest to him that he needs further improvement in handling MPs' questions, reactions and feedback from the ground.

Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Mr Tong Kok Yeo (Nominated Member): Sir, I beg to move,

That the sum to be allocated for Head N of the Main Estimates be reduced by $10 in respect of Code NI 1500.

Sir, when public servants opted to convert to the CPF scheme in 1973 and 1986, they have their pensions due to them as at the time of their option converted into what is called a frozen sum. Their option to retire depending on the date they join the service and their sex remains unchanged. This frozen sum will only be paid to them when they retire from service. In addition to this category of public servants with frozen sum, there is another category of former public servants who are with the privatised Singapore Telecom, a former statutory board. In this regard, I wish to declare my pecuniary interest. 3.45 pm

Sir, with the legislation of the retirement age to 60, the option to retire before reaching the age of 60 for this category of employees appears to be rescinded. They cannot afford to resign because it would mean that their frozen sum will be forfeited. May I ask the Minister whether this category of employees can be allowed to retain their option to retire? I believe the Ministry is looking into the matter. I would like to ask the Minister on the status as it is also a matter of interest for employees in other statutory boards earmarked for corporatisation and privatisation.

Dr Kanwaljit Soin (Nominated Member): Sir, in this House in September 1992, Dr Lee Boon Yang promised to ask the Minister for Finance, under whose purview comes the Public Service Division, to look into the matter of allowing civil servants who are fathers to take sick child care leave when the mothers are unable to do so. I would like to ask the Minister for Finance what has come of this. This is the Year of the Family, as we all know, and this is a marvellous opportunity for the Government to reaffirm the importance of family ties, especially between parents and child. If the mother is out of the country, is sick herself or unable for some other reasons to take leave to look after the sick child, then the most logical and family-affirming action is to allow the other parent to carry out his parental duty and look after his sick child. In Japan, in April 1992, a new law covering child care leave for both men and women employees has been passed. 90% of eligible male teachers have availed themselves of the leave to look after the child. Let us take a leaf from Japan which has a traditional view of society and yet recognises the role of the man as the parent. By asking for sick child leave for fathers, I am not advocating a doctrinaire symmetry in the role of the two sexes. But what I am asking for will help family welfare and strengthen family unity.

Do you want me to go on to the next item, Sir?

The Chairman: Yes.

Dr Kanwaljit Soin: I would like to ask the Minister to consider the delivery expenses of married female civil servants who joined after January 1994 be paid by the Government. The Ministry of Health's record shows that on average men below 60 are hospitalised once every 10 years, but for women the rate is higher, largely because of maternity related causes. Therefore, during their child-bearing years, women will incur higher medical bills if they decide to have children. Married female civil servants who join after January 1994 will have to pay the hospital maternity bill themselves. Also, MediShield will not cover delivery expenses. The delivery cost in A Class in Kandang Kerbau Maternity Hospital is about $1,950. For B1, it is about $500 less. I am not including ante-natal and post-natal check-ups. Furthermore, if the woman needs a caesarian section or some other complications crop up, then the cost is going to go up even further. If the married female civil servant earns about $1,500 per month, then the total extra 1% Medisave per year will amount to $180, while her delivery expenses will be very much higher. On top of her maternity and delivery cost, the woman civil servant is as likely to get ill as her male counterpart.

On the one hand, Government is giving procreation tax incentives to mothers to have more children. On the other hand, married female civil servants are being denied the benefit of delivery expenses. What is being given with one hand is being taken away with the other. Also, by not covering delivery expenses of its married female officers, the civil service is sending the wrong signal to the private sector employers who may follow suit. Furthermore, non-payment of delivery expenses by Government may act as a disincentive to procreation and then this will be a case of being penny wise and pound foolish.

Cdre Teo Chee Hean: Sir, I will first take Mr Tong's point. With regard to Mr Tong's concern, I would like to inform him that the Public Service Division has submitted the Government's Pension Scheme for the approval of the Minister for Labour under paragraph 2M of the Retirement Age (Exemption) Notification 1993. Upon the approval of the scheme, all pensionable civil servants appointed before 1st July 1993, including ex-civil servants with frozen pension benefits, will be exempted from the Retirement Age Act and their retirement ages will be unaffected.

With regard to Dr Soin's question on sick child care leave, a similar suggestion was also made by Dr Aline Wong in 1988. Then it was stated that where a woman officer finds it impractical to take such leave when her child falls sick, PSD was prepared to let her spouse take the leave instead. Such requests would be considered on a case-by-case basic. So far, we have not received any request, but we do reaffirm that if there are such requests in the future, we will still consider them.

With regard to medical benefits and delivery charges, female civil servants appointed after January 1994 receive the same medical benefits as male civil servants with regard to hospitalisation. They receive an extra 1% for their Medisave. That is the position.

Mr Tong Kok Yeo: Sir, just a small clarification for the Minister. When is it most likely that the Minister for Labour will give the approval to PSD's application for the exemption which he has just told us?

The Minister for Labour (Dr Lee Boon Yang): Sir, with your permission, allow me to respond to that point. In fact, my Ministry is in the process of assessing all these applications, including some applications from the private sector employers, and they will be putting up the recommendation shortly. We should be able to give an answer quite soon.

Mr Tong Kok Yeo: Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Dr Kanwaljit Soin: Sir, I beg to move,

That the sum to be allocated for Head N of the Main Estimates be reduced by $10 in respect of Code NK 1500.

We have talked about family unity and cohesion and I am still on the same subject. As a gesture towards these objectives, I am yet making another plea, ie, I would like to suggest that for public attractions, like the Jurong Bird Park, Singapore Zoological Garden, we should have family rates of admission. Let me give you an example using the Jurong Bird Park. The entry fee for each adult is $9 and each child is $3. For a family of two adults and two children, the total would come to $24. We could have a family package of, let us say, $20, or maybe less, and this would allow two parents, with two or more children, to visit the Bird Park. With these special family rates, it would encourage families to visit the park or the zoo together and build up family ties. On the surface, this reduction in admission rates for families may not seem very important, but it is the cumulative effect of little messages that impinge on society's consciousness and, in this case, the message is family togetherness. So I do hope the Minister is going to consider this little suggestion favourably.

Cdre Teo Chee Hean: I will draw my examples from the Zoo and the Bird Park as these are the two attractions under the purview of the Ministry.

Both the Zoo and the Bird Park have special packages for various groups of people, social groups such as community centres and so forth. In fact, the Bird Park, I am told, has a family package where three children are admitted free for every two paying adults. In fact, both organisations have subscription schemes known as "Friends of the Zoo" at $60 per year, I am told, and "Friends of Birds" for $50 per year, which seem to sound very attractive compared to the calculation which Dr Soin has just made. Both these schemes allow subscribers free admission for a family of two adults and three children during the year. In fact, I would recommend this because I do that quite frequently myself.

Dr Kanwaljit Soin: Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. (4). Mr Chng Hee Kok is not here. Mr Chia Shi Teck.

Mr Chia Shi Teck: Sir, I beg to move,

That the sum to be allocated for Head N of the Main Estimates be reduced by $10 in respect of Code NN 1500.

(In Mandarin): Sir, in the Year of Assessment 1992, the Government's revenue from property tax amounted to $1.476 billion. Among that, $996 million was from private property and $480 million from the statutory boards.

In the Year of Assessment 1993, the Government's property tax revenue was estimated to be about $1.372 billion of which private property was estimated to take up $876 million, a decrease of $120 million. I understand that this included all the new properties as well as the 25% rebate granted by the Government on all industrial and commercial properties. Property tax from statutory boards was estimated to be $495 million, a slight increase from 1992. The above figures were estimates for Year of Assessment 1993.

Now, let me read the revised figures as contained in the financial report of 1993. This can be said to be the actual revenue for the Government. Private properties paid $1.11 billion, which is $234 million more than the estimated amount of $876 million, an increase of some 26-27%. On the other hand, for the statutory boards, it was $391 million, some $104 million lower than the estimated amount. Why is it so? What has happened to the 25% rebate? It looks as though only the statutory boards are getting the benefits. I have on many occasions said that if the assessed annual value is increased year after year, then the tax reduction of 23% to 16% and this year to 15% has no actual benefit to the property owner himself.

In this year's budget, it is estimated that the 1% reduction in property tax would cost the Government $80 million, and the statutory boards would increase by $80 million. Once again, I would reiterate that despite the 1% reduction in property tax, the private properties will eventually have to pay more in property tax. The Minister for Finance said that the rentals of industrial and commercial properties have gone down. But I am certain that the annual values of all the residential properties will go up. The selling price of HDB flats rose substantially this year. In fact, the resale prices of HDB flats in the last 12 to 18 months have gone up a peak. I would like the Minister to enlighten us on what is the formula for the valuation of properties. Many people are living in their own houses and they are paying only 4%. Unless the owner sells his property, the purchase and sale price is of no value to him at all. The annual value should not go up. I would like the Minister to recommend to the Chief Assessor to relax the revaluation of annual values. 4.00 pm

Dr Richard Hu Tsu Tau: Sir, Mr Chia has raised the subject from time to time. I think the response is going to be the same again.

The annual value of a property, as he well knows, is the estimated annual rental which a property can fetch if it were rented out. This theoretically should be done annually. Unfortunately, because of the large numbers of properties in Singapore, the Assessor cannot get around to doing this annually. He has plans to try and do this by 1995, in other words, arrange for annual valuations of all properties by the year 1995. Problems have arisen in the past because of the time lag between the valuations and market changes. There is a lead and lag problem. When property rentals are rising fast, property owners tend to benefit from the delay. When property values decline, as it is doing now for commercial properties, for example, then owners are at a disadvantage if the valuation is delayed. These problems arise because valuations do reflect the actual market conditions because of the delay in making the assessment.

Therefore, it is not a change of the system of valuation which is the problem but inability to carry out valuations annually.

Mr Chia Shi Teck: Can I raise a point, Sir? This time round I am talking about the residential properties where the sale price of the residential units has gone up tremendously over the last one to one-and-a-half years. In the case of residential properties, the rental rate is not representative of the whole big volume because you are just talking about a small number of units that are leased. Therefore, my request is that the valuation should not go up because whatever the price is, the people living in an HDB flat still live in the same old flat.

Dr Richard Hu Tsu Tau: You are talking about HDB flats specifically, or private houses in general?

Mr Chia Shi Teck: In total.

Dr Richard Hu Tsu Tau: All properties are reassessed from time to time and based on rentals in the neighbourhood. Where upgrading takes place, they would be probably revalued immediately to reflect their enhanced value. This is normally the procedure. Where the property has not been changed or upgraded, it will be revalued from time to time based on the rental values in the neighbourhood.

Mr Chia Shi Teck: Sir, my point has been missed, because an HDB flat especially is not representative. The few rented out units are not representative of the total number. Just by taking the few units in the neighbourhood, and uplift the total 700,000 units, I think that would not be a fair representation.

Dr Richard Hu Tsu Tau: You are referring to HDB flats in particular.

Mr Chia Shi Teck: Yes.

Dr Richard Hu Tsu Tau: In the case of HDB flats, the valuation process is different from that of ordinary housing because few HDB flats are rented out. So the valuation people use a different formula based on a neighbourhood basis.

Mr Chia Shi Teck: What is the formula?

Dr Richard Hu Tsu Tau: I will have to give him the details outside the House because it is a specialist activity and I am not a valuation expert.

Mr Chia Shi Teck: Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: Order. I propose to take the break now.

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

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 4.25 pm.

Sitting accordingly suspended at 4.05 pm to 4.25 pm. Sitting resumed at 4.25 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

Head N (cont.) -

Mr Tong Kok Yeo: Sir, I beg to move,

That the sum to be allocated for Head N of the Main Estimates be reduced by $10 in respect of Code NO 1500.

Sir, with the introduction of GST on 1st April this year, addressees of incoming time-sensitive mail articles from overseas will have to pay GST, just like any other imported goods that exceed a certain value. These mail articles will only be handed over to the addressees by the business couriers doing the delivery upon the addressees paying the GST. I believe this is the regulation of the Customs and Excise Department.

Sir, from what I have gathered, the payment of the said GST can be made in cash, cheque or by crediting into the addressee's account with the business courier company, if the addressee does have one. These forms of payment may unnecessarily inconvenience the addressee, particularly if the addressee is a non-business person, for example, a resident of HDB estate. Even if the addressee is a business entity, the addressee may not necessarily have an account with the business courier company. Payment by cheque is not a good means either, because getting the signatory to sign the cheque at the time when the delivery is made is impractical.

Sir, for the convenience of the addressees of such incoming time-sensitive mail articles from overseas, I ask the Minister whether a more convenient way to pay the GST can be looked into, for example, by way of billing the addressees, instead of collecting the GST by cash or cheque.

Dr Richard Hu Tsu Tau: Sir, the procedure for the payment of GST for time-sensitive courier parcels entering Singapore is that the courier company itself will pay the GST first before it is delivered to the customer. They will collect from the customer afterwards. The mechanics can be worked out between the recipient and the courier company. That is to facilitate the speedy delivery without hold-ups at the point of arrival.

Mr Tong Kok Yeo: Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $440,895,100 for Head N ordered to stand part of the Main Estimates.

The sum of $556,342,700 for Head N ordered to stand part of the Development Estimates.

Head X -

The Chairman: Head X - Pensions. Dr Ong

Dr Ong Chit Chung (Bukit Batok): Sir, I beg to move,

That the sum to be allocated for Head X of the Main Estimates be reduced by $10 in respect of Code 4110.

Sir, I wish to speak up for our pensioners who have served our nation and Government faithfully throughout all these years. In the early years, when we were struggling for survival, and when three months' bonuses were unheard of, they had to tighten their belts. They even took a pay cut when the PAP came into power in 1959.

Now, in the midst of prosperity, we should not forget those who stood by us through thick and thin. Inflation has indeed eroded the pension. We should give adequate adjustment to offset inflation.

We are not asking for welfare benefits, but due recognition and adjustment to match the reality of living in Singapore today. I know there is the Singapore Allowance, but it is perhaps too little and I hope it will not be too late. 4.30 pm

Dr Richard Hu Tsu Tau: Sir, pensions in Singapore are calculated on the last drawn salary at the time of retirement and the length of pensionable service as provided for under the Pensions Act and as such are not subject to change. However, since April 1974, as the Member has noted, the Government has been paying a top-up Allowance to those with low pensions. It was introduced at that time to account for the very high inflation which took place after the first oil shock. This Allowance, called the Singapore Allowance, has been revised four times since then, the most recent on 1st April 1993. For those who receive a pension of less than $900 they are now eligible for a Singapore Allowance of up to $130. As an additional measure to help pensioners, half of the pensions of pensioners residing in Singapore were exempted from tax for the Years of Assessment 1977 and 1978. Pensions of resident pensioners have been tax free since the Year of Assessment 1979.

The Member has suggested that we do something regularly. I assume that he is talking about some form of indexation. We have avoided doing this because indexation creates many pitfalls. Instead the Government's policy has always been to keep inflation low so as to protect the savings of all Singaporeans instead of just pensioners. This has been a very effective way of keeping costs down and therefore avoiding the problems incidental to indexation.

Over the past 20 years, for example, from 1974 to 1993, the average inflation was 3.7%. But this figure included three years of very high inflation induced by the two oil crises. In 1974, inflation was 22%. It was 8.5% in 1980 and 8% in 1981. If inflation rates in these three years were excluded, the average inflation of the other 17 years was just 2.1%. More recently, in the last 10 years, inflation has averaged 1.8% between 1984 and 1993.

Dr Ong Chit Chung: Sir, I think more could be done. But I accept the explanation and I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $62,990,140 for Head X ordered to stand part of the Main Estimates.

Head L -

The Chairman: Head L - Ministry of Education. Amendment No. (1), Mr Lew.

Mr Lew Syn Pau (Tanglin): Sir, I beg to move,

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

The problem of school dropouts was raised last year by the Prime Minister at the National Day Rally. It is estimated that there were about 3,000 dropouts in 1992, down from 5,000 early school leavers in 1988. Of the 1984 cohort, we were told that there were 620 dropouts at primary level and 970 at secondary level. The main reasons given for dropping out were disinterest in studies, attraction of readily available jobs and family problems. Although 3,000 dropouts are small compared to the 500,000 student population, it is 3,000 too many given our grave shortage of skilled labour in Singapore.

I would like to ask the Minister, since the problem has been highlighted, what measures have been taken to further reduce our school dropout rate. Making education compulsory has been suggested from time to time as a possible measure to alleviate the problem, especially in cases where children are victims of their parents' or guardians' ignorance or abuse. Compulsory education can save these children, however small their numbers, from a life time of regret for the learning opportunities lost. This proposal has been turned down before based on the reasoning that the children cannot be forced to go to school and that they cannot be forced to learn. Would the Minister reconsider this suggestion so that the Government can bring to task parents who wilfully deny their children of an opportunity to an equal start in life through proper education?

It has also been reported that the Ministry is working with several community self-help groups in an effort to cut further the dropout rate. May I ask the Minister regarding the progress of this collaborative effort so far?

Mr Umar Abdul Hamid (Ang Mo Kio GRC): Sir, like my colleague, I am very concerned about the school dropout rate. The Prime Minister last year was particularly more concerned with the relatively higher rate of Malay student dropouts vis-a-vis other races. It was 5.4% for Malays, as compared to 2.9% for Indians and 1% for Chinese. Though the Malay students have made considerable improvement in their PSLE results, if the present rate of dropout is allowed to perpetuate, the community may face great dilemma in having to tackle social problems which are usually related to those with a low level of education.

MENDAKI, along with other Malay organisations, has mobilised their scarce resources in attempting to reduce the dropout rate of Malay students at both the primary and secondary school levels. However, Sir, what these organisations can do are rather limited and I believe that schools should play both pro-active and reactive roles to ensure that pupils must remain in school until such age when they can join the workforce. May I ask the Minister what are the measures taken to reduce our school dropout rate and, in particular, the Malay students? And is there any indication that the number of Malay school dropouts will decrease in future?

The Chairman: Mr Lew, you can take your next three subjects together.

Mr Lew Syn Pau: Currently, only the top 10% of our pupils are permitted to take the second language at a higher level, that is, the Higher Chinese (HCL), Higher Malay (HML), or Higher Tamil (HTL). With the regionalisation drive overseas to the Asia Pacific region, Malaysia, Indonesia, China and India, a good command of a second language, like Malay, Chinese, or Tamil would become more important. Should we, therefore, not allow more of our good students who are able and interested to take HCL, HML, or HTL?

I would like to move on to the next question on O' and A' level examination scripts. Recently, many parents were very concerned about the loss of more than 200 examination scripts sent to Cambridge University for marking. Although we are told that this is the first time that this has happened, I think it is once too often. Imagine the inconvenience of the students concerned who have to study and re-sit these papers if they were not happy with their preliminary examination grades for those papers. I would like to ask the Minister what measures are being taken to ensure that this does not recur.

This leads me to a more fundamental question. Is there a need to continue to send our O' and A' level examination scripts to Cambridge for marking? The British gave us internal independence since 1959. In the early days of independence, it was necessary to retain our historical heritage and links as not many in the international arena knew about Singapore then, her people and her educational standards. Today, after more than 30 years, we have established ourselves as a centre for educational excellence in the region. Our students have gone to top universities in the world and have left their marks as men of substance. Even in the local universities, NUS and NTU, the examination scripts are marked by local lecturers. Recently, in the area of law, we have also just severed our links with the Privy Council in UK.

Is it therefore not time for us to review the need to send our O' and A' level examination scripts to UK for marking? I recognise that many parents still value the name or the brand name "Cambridge". We can get around this by having the scripts marked locally in Singapore but get an external examiner from Cambridge to check on the standards. I hope the Minister will consider my suggestion.

Moving on to the next cut on Edusave, first of all, I would like to commend the Government for contributing another $500 million to the Edusave fund for fiscal year 1993 and another $500 million for fiscal year 1994 in view of our healthy budget surplus. Although the amount is still quite small for students at $100 per year, I am sure it still helps those from the lower income to provide some enrichment programmes for their children. I would like to ask the Minister regarding the progress of the usage of Edusave funds in our schools. Are they being utilised and on what programmes? What about the Edusave grant of about $100,000 per year to the secondary schools? What are the schools spending the money on?

Finally, I would like to ask the Minister to reconsider extending the Edusave fund to the fourth and subsequent children. How much more would this cost if we were to do that? I strongly believe that every child should have the opportunity to start school on a level playing field. So why should a child be denied help from Edusave simply because he was born number fourth or later in a family through no fault of his own?

Mr Peh Chin Hua (Jalan Besar GRC): ( In Mandarin): Sir, the present educational system does not encourage retention of pupils in the same class. It is only confined to Primary 5 pupils with various restrictions to be observed by the school. This is very rigid and inexplicable. Maybe, as Mr Lew and Mr Umar have already said, our school dropouts have exceeded 3,000. I think this is due to the lack of a "repeat" system. In Singapore, many successful people have experienced retention in the same class in the early days of their school. And from there, they started to work hard and finally made the grade. So retention is not a shame, especially for young people. Some pupils are rather slow in learning, and coupled with their playful character, they normally treat studies very lightly especially when their parents are too busy and cannot guide them. With the inability to cope with their lessons and poor results, they tend to lose interest in their study. They fail in Primary 1, they are still promoted automatically to Primary 2. Lessons become harder and harder. With all the backlog accumulating, they find that they cannot cope with the lessons and become disinterested in their studies. As a result, they begin to have behavioral problems due to frustrations and they have no more interest to study. Even counselling does not help.

Therefore, I hope that the Ministry of Education would reconsider the retention system and give the principal and teachers the discretion to retain students as and when the need arises. The Ministry should not intervene in this. Especially in primary 1, they are too young and the lessons are quite simple. So it is easy to remedy. If they can be allowed to repeat their lessons, then those who are not doing well will be able to catch up. 4.45 pm

Mr Koo Tsai Kee: Sir, the modern abacus was invented in China some 1,800 years ago. I say "modern" because the earliest form of the first abacus was discovered some five millennia. The use of the abacus dates back for centuries in Asia, Arabia and Europe. Today, the use of the abacus is restricted only in some East Asian countries, mainly Japan, Korea and China. The primitive abacus is actually an analog computer. It has survived to this present day because basic concepts in mathematics are still best elucidated by the abacus. Its use and functions have not diminished to the present day.

Sir, in Japan, learning of abacus is encouraged at an early age. Almost every Japanese child has some expertise on it. Many students master the abacus very quickly. It was reported some years back in the Economist magazine that many educationists think that the typical high-school Japanese graduate has the same analytical skills as that of a university graduate in America. Many people attribute this to the analytical skills mastered through the use of the abacus.

A study completed some years back pitched the mathematical skills of first graders in the American state of Missouri with their counterparts in Hangchow in China. The study found that the Chinese students were far superior in their mathematics and the suspected secret weapon was the use of the abacus which forces memory and analysis.

Sir, on a recent trip to Malaysia, I was astounded to learn that Malaysia will be training 7,000 teachers, not 70, not 700, but 7,000 teachers in the use of the abacus. The primary purpose of this exercise is to get 7,000 teachers to teach primary students in all schools in Malaysia. If we assume a ratio of one teacher to 30 students, we are talking about close to a quarter million Malaysian students being able to use the abacus in one year.

Sir, I think Dr Mahathir is a very progressive man. He understands that in order for the nation to progress, its people must be good in science and mathematics and the English language. But Mathematics lies at the heart of science and technology and he has no qualms that Malaysians should learn the Asian art of using the abacus from the East Asians for a very modern purpose.

The empirical correlation between analytical skills and the mastery of the abacus is very strong. Because the abacus forces the mind to work, to remember patterns and to analyze, mathematical relationships are formed at a very early age. Conversely, the use of the calculator at an early age when the concepts between numbers are still unclear fosters laziness and blind faith.

A study in America suggests that young children trained on the use of calculators do not seem to understand the relationship between numbers. Calculators programmed to give wrong answers were given to students who happily accepted the results when some of the solutions were clearly exaggerated and grossly wrong.

When people ask me why I am promoting the cause of abacus when there are calculators in the market as cheap as maybe a bowl of laksa, I always tell them to look at the Japanese. Japan is one country which has made calculators so cheap that it is becoming a disposable item, the low-end ones. Yet, the Japanese have not forsaken the humble abacus. In fact, they have priced it even higher. It is because the abacus has made the Japanese smart.

Sir, the Minister of State for Education had earlier in the week replied that the use of the abacus in Singapore is on a pilot basis and that only a few schools will be involved. I am encouraged by the move. My only hope is that the Ministry of Education can promote the use of the abacus with the same enthusiasm as Malaysia. I think our promotion effort is still conservative. We should quickly popularise its use. And I think if we tell Singapore parents that there are distinct advantages in the use of the abacus, they will accept it.

Assoc. Prof. Walter Woon (Nominated Member): Sir, I declare my interest as a university lecturer.

For many countries, education is an export commodity. We, in Singapore, have an excellent educational system. But up to now, it has been concerned exclusively with the domestic market. I would like to ask the Minister whether he has any strategy for attracting foreign students to study in Singapore.

The primary benefit of this is not pecuniary. Many hon. Members have spent time abroad studying and no doubt they still have fond memories of those times. They have made friends, they have made contacts and I think many of them still retain links with their alumni associations. The alumni networks of prestigious universities like Oxbridge and Harvard are vastly influential all over the world.

We, in Singapore, can replicate this in a small way by encouraging promising students from ASEAN and from the region to study here. Because of our economic and social success, other countries look to us and we can capitalise on this goodwill in many ways, one of them by getting promising students to study in Singapore, not just at tertiary level but at all levels. If necessary, give them scholarships and bursaries if that is possible. Even if they do not stay or work here, hopefully, they will make friends, they will make contacts and they will remain well disposed to Singapore when they go back to their own countries. Think of it as a long-term investment in goodwill. A small country like Singapore needs as many friends as it can get.

Mr Leong Horn Kee: Sir, the promotion of bilingualism in schools has been a corner-stone of our education policy for many years. I would like to ask the Minister for a report on the various measures that have been taken in the schools to further promote bilingualism. In addition, I would like to know whether the Ministry has conducted regular surveys to check on the progress of this policy, ie, whether the Ministry has conducted surveys and collected data on the percentage of school children who are effectively bilingual; how often are they taught their mother tongues in schools; as well as how often are the mother tongues being used in the classroom and amongst students in the school.

Given our new effort to promote regional expansion and investing in the neighbouring countries such as China, India, Malaysia and Indonesia, I thought that it would be even more important that the mother tongues spoken by our different races such as Mandarin, Malay and Tamil be more actively and vigorously promoted.

Moreover, the teaching of the mother tongue is also an effective channel for the teaching and inculcation of moral values, such as the five shared values, and the recently promoted family values.

The Chairman: Madam Foo is not here. Dr Ow.

Dr Ow Chin Hock: ( In Mandarin): Sir, last year, when we were debating on the estimates for the Ministry of Education, I raised a question relating to Mr Ong Teng Cheong's Report. I wanted to know what was the progress of implementing the recommendations of the Report. At that time, I reminded the Minister that the Feedback Unit held two dialogue sessions on the Report and the notes of the dialogues were sent to the Ministry of Education but there was no response from the Ministry. The next day, Dr Ker Sin Tze replied on behalf of the Minister. He said that he had read the two notes and that the main complaint of the participants at the dialogue session was the question of the use of dictionary in the Chinese essay writing examinations. I think this reply was self-deception and tried to avoid the question. I spent more than six hours in two groups of dialogues with the teachers, parents, professionals and community leaders to discuss Mr Ong Teng Cheong's Report. Is it only to discuss on the use of the dictionary? At that time I did not pursue the matter further because Dr Ker promised me that he would be monitoring the implementation and he would ensure that MOE officials would not indulge in overt compliance and covert objection ( ).

Sir, I want to ask the same question about the progress of implementation: Over the past one year, what progress has been made? What is the effect? I like the Minister or the Minister of State to answer these questions in positive and concrete terms.

Secondly, bilingualism is the cornerstone of our education. There is nobody who questions about the learning of the English language, but there are some among the Chinese still feel that it is not necessary to learn Chinese as it is a great burden on their children. The learning of Chinese originally was because of its cultural function in transmission of culture, ethics and values. But in 1987, when the "Chinese schools" became a historical term, I also started using the economic values of Chinese language to convince some utilitarian parents to allow their children to learn Chinese. Now, with the economic take-off in China, the importance of the Chinese language has already been affirmed. The trend is there, and the Chinese educated Singaporeans have also been able to lift their heads high, to "see the clear moon after the dispersal of the clouds" ( ).

At the same time, there is a new problem. Some non-Chinese Singaporeans want their children to learn Chinese. Dr Soin mentioned on 12th October 1993 about the need for non-Chinese students to learn Chinese as second language. The Minister's reply was that they should learn their own mother tongue, but there may be exceptions which will be considered on their own merits.

The Feedback Unit has received two letters from a Malay parent asking for permission to allow his child to learn Chinese as a third language. According to him, the child has very good results and was within the top 10% of students in the PSLE examinations, and his English and Malay language standards are very high. I feel that this request is quite reasonable, so I wrote to the Minister of State. But the Permanent Secretary of the Ministry of Education said that "it is not the Ministry's policy to offer Chinese as a third language to non-Chinese pupils". I was not satisfied with this answer. So on 14th December, I wrote to the Minister for Education himself. The Minister gave me a long reply, but his main point was that there is the provision of MLE for Malay students or non-Malay students to learn as a third language. But because of the very high attrition rate in Secondary 1, every year only 10 students take this subject in Secondary 4 examination. So "we can extrapolate from this experience to predict if a similar CLE is offered to non-Chinese pupils who are among the top 10% in the PSLE, the candidature will be even smaller". So he does not consider it advisable at this time to channel resources into a new programme that would serve so few.

I think the problem is with this extrapolation. MLE is different from CLE. They are not necessarily the same. We cannot extrapolate on that basis. Furthermore, the Ministry of Education has also offered Japanese, French and German as a third language for pupils who have good results and are also good in two languages. But if MOE does not provide Chinese language for non-Chinese, I think this is very hard to justify, on both logical and emotional grounds. 5.00 pm

Finally, we should not only inculcate good cultural values through the mother tongue. I think the schools should also pay attention to discipline amongst students. Sometimes, discipline among students is lacking because of the defensive position and protective attitude of the parents. On 22nd February there was an article ny Zhuang Xin in the "All Directions" page of Lianhe Zaobao. She cited two true stories about this matter. In one story, the parents verbally threatened the teachers; in another story, the parent even slapped the teacher. I have also heard complaints from teachers about the poor discipline of students, and protective attitude of parents who like to complain to MOE about teachers who take disciplinary actions against their children. I hope the Ministry will pay attention to the question of discipline among the students and given the school more authority to maintain discipline.

I recall during my younger days, if one was beaten by the teacher, and if the parents came to know about it, there would be another round of beating. But time has changed. Now it is different. If a pupil is punished by the teacher, the parent would confront the teacher, complain to MOE, and even write to the press. If we do not handle the question of discipline among the students well, then our schools will only produce more young bullies ( ).

Mr Robert Chua Teck Chew: Sir, today we have more than half a million Singapore workers who have less than a primary education and are therefore facing enormous difficulties trying to acquire the skills and knowledge demanded by our modern high-technology and skill-intensive industries. They also face tremendous competition from the millions of better educated workers of the other NIEs and larger East Asian countries who are prepared to work much harder for lower wages. We must quickly devise some drastic measures to help this group of less educated and low skill workers upgrade themselves so that they would not be left behind and thus would be unable to share the fruits of our economic success.

I once said that for every worker in Singapore there are 720 workers in Asia threatening to take away his job from him. We have to ensure that this will never happen. Unfortunately, this group of over 500,000 workers did not have the opportunity to acquire a good basic education due to our limited resources in the past. I am happy to note that the Ministry of Education has revamped our basic education system to give every child in future at least nine to ten years of basic formal education to prepare them for skills training or higher education so that they will be well equipped to manage the technologies of the 21st century.

The full impact of any changes to our education system will be felt only 10 to 20 years later. Its success will be judged by whether our people by then would have acquired the correct and necessary knowledge and skills needed to carry out the task effectively and efficiently. I therefore hope that the Minister for Education will assure this House that our education system is being enhanced to prepare our people to meet such future needs and challenges successfully.

[Mr Deputy Speaker in the Chair]

5.02 pm

Mr Sinnakaruppan: Sir, during the past year, the GPC for Education and the resource panel visited a number of schools - primary, secondary, junior colleges, the NIE and the universities. In our formal and informal discussions with the school staff, the GPC found some common problems of the teaching service every time we meet these teachers. These included teachers' workload, the lack of sufficient recognition and reward for teachers and principals and the lure of other attractive jobs.

With increased birth rate trends since 1988 and the new policy to provide students with 10 years of general education, we need to attract more Singaporeans to the Education Service. But according to available figures on the intake of trainee teachers at NIE, there is a 25%-33% shortfall in the intake to the BA and BSc courses with a Diploma in Education and the Postgraduate Diploma in Education for secondary schools respectively. The problems become more acute with the increasing number of resignations of young teachers from the service. I believe that the present resignation rate is about 8% per year.

We read in the Straits Times on Tuesday that the Ministry is now recruiting expatriates in large numbers from abroad and hiring about 150 untrained graduates to meet this year's shortfall of teachers. The public, particularly the parents, have expressed their concern on employing untrained teachers and also having too many foreign teachers in our schools as their value system might be different from ours.

To address the acute problem of present and future shortages of teachers, the Ministry must adopt a two-pronged strategy. One, to make service terms competitive enough so as to retain those who are already in the service and, the other, to make the teaching profession more attractive to newcomers.

I would like to ask the Minister if the Education Ministry would look into the following suggestions:

(1) To retain our teachers in service, the Ministry could perhaps look into providing more promotional grades and frequent promotion exercises so that 20-30% of each cohort of teachers have the opportunity to become principals within 10 to 12 years of service.

(2) To look into providing opportunities for Senior Principals to be seconded to other Ministries, statutory boards, GLCs and so on, as training or personnel administrators so that this can be part of their career advancement, as it has been done in the SAF for top military officers.

(3) To attract more young Singaporeans into the service, the Ministry can institute prestigious overseas teaching scholarships, like the SAF scholarship, so as to attract some of the top students to the teaching service and thereby projecting a better image for the profession.

(4) The Ministry can also look into using role models of successful past and present teachers and principals at different forums to educate school leavers on the importance and value of the teaching profession to our society. In fact, there are many among the Members of this House who have spent a significant part of their careers in teaching.

I hope the Minister can look into these suggestions.

Mr Ling How Doong (Bukit Gombak): Sir, the award of scholarships in secondary schools, especially independent schools, should not be based on performance alone. One should seriously consider the financial position of the student. As can be seen, even in December last year, the fee for the independent schools has increased. One would expect the fee to continue to increase. Therefore, the poor and needy aspect of it should be considered. If the student wants recognition, honorary book prizes can always be awarded. Of course, in the case of university or postgraduate scholarships, it is a different proposition entirely. This is simply because if scholarships are being awarded for postgraduate studies they are automatically bonded. When they come back they must serve the Government. This is not in respect of the secondary school scholarship.

I would imagine that, more often than not, scholarships are awarded to secondary school students and some of them would not even later on get a scholarship or serve the country. Whereas the poorer students who have received scholarship from the secondary school, in all probability, would go on to accept a scholarship to go to tertiary education. Therefore, in this respect, I urge the Minister to reconsider whether this could be done to help the poor and needy.

Mr Chiam See Tong (Potong Pasir): Sir, the Singapore Government's approach to education is like that of a colonial one. It has not done everything within its powers to provide the maximum education for the people of Singapore. We have heard complaints in this House during the Budget debate that not enough university space has been made available to the GCE "A" level students who qualify for them. Something like 11,500 Singaporeans have to go to overseas universities to study because they cannot get entry into our local university. What about the lower end of the ladder in our education system? Is there also something lacking there? The answer is yes. Unlike other successful independent countries in the region, for example, South Korea, Taiwan and Japan, we still do not have compulsory education in the primary and secondary levels. It is not that the Government lacks facilities or is short of funds. We have been told that there was a surplus of $7 billion last year and an expected $2.2 billion surplus this year. The Government's coffers are overflowing with cash.

Therefore, the refusal to implement a compulsory education policy is only due to the Government not wanting to do so despite the Government's much publicised policy that its intention is to educate and develop every child in Singapore to its fullest potential. How can the Government do that when every year, from the Labour Force Survey of Singapore 1992 statistics, there are at least 2,700 children who do not attend school at all, or only lower primary level? There is no question that those 2,700 children who did not master the 3Rs can ever be expected to be developed to the fullest of their potential. Some people in the Ministry of Education may think that 2,700 children is a small number and is not worth the while to implement compulsory education in Singapore. I do not think that 2,700 children who do not attend school every year are a small number. The PAP has ruled Singapore for over 30 years. In 30 years, the number who did not attend school has swollen to about 81,000. In addition to the 81,000 Singaporeans in the workforce who are quite illiterate, there are at least 700,000 other workers who did not have secondary school education, according to the abovementioned Labour Survey Report in 1992.

Therefore, it is a pressing problem to implement immediately compulsory education in our schools by requiring all students to attend school, if not for a period of 10 years, at least for a period of eight years. This must be done with a view to upgrade the quality of the Singapore workforce to meet future world economic challenges. The upgrading of literacy and numeracy skills by requiring students to compulsorily remain in school is one aspect for having a compulsory education programme. The other equally important aspect for us to put in place a compulsory education system is to teach our children good behaviour, good social values, the cooperative spirit and the ability to work with each other. The Japanese have found that this aspect of education of their school children is of utmost importance to make Japan economically competitive in the world market. I call on the Government to implement compulsory education in our school system as soon as possible.

The Chairman: Dr Soin, you can take all your four subjects together.

Dr Kanwaljit Soin: Thank you. I would like to ask the Minister to consider taking under his Ministry's charge the two years of kindergarten education prior to starting primary one. The National Institute of Education researchers have found that many low achievers come from a low socio-economic background and that a better background is instrumental in promoting achievement among pupils. Thus, it is very important that economically disadvantaged children should have a headstart in education. All children, but particularly poor children, must be able to take part in high quality early childhood programmes that develop their strength. They need extra support to overcome their barriers to achievement. 5.15 pm

To achieve these objectives, the Ministry of Education should extend its area of responsibility to kindergarten education. By doing so, we will be able to (a) make sure that every child gets kindergarten education; (b) make sure that standards of teaching are high quality and uniform; and (c) make sure that the cost of kindergarten education is affordable for the parents of every child in Singapore.

I have already talked about the importance of good early childhood development programmes for increasing productivity and competitiveness of our nation in the Budget debate. Furthermore, there are problems with the present system of kindergarten education. According to a Straits Times' article, more than half the teachers in the Malay/Muslim pre-school establishments do not have formal qualifications to teach. Also, for the teaching of Tamil in kindergartens, there are logistics problems as only some kindergartens offer Tamil as a second language.

Without the Ministry of Education, there is no overall organisation to oversee the administration and work out these problems. The Ministry of Education has successfully solved these logistics problems in the primary schools and will therefore be able to extend its expertise to kindergarten education. Furthermore, schools must establish a system of communication between pre-schools and primary schools to ensure that students' strengths and weaknesses identified in pre-school continue to be nurtured or remedied in primary school. Thus, it is very important that the Ministry of Education should take under its purview the first two years of education before primary school so as to make the most of these two years and thus maximise the potential of our most important resource - our people.

I will now go on to funding for disabled children. The Finance Minister mentioned in his Budget Speech that the Government will inject another $500 million to the Edusave fund to increase the total fund to $1 billion. This contribution is good and reflects the Government's concern for a quality education for Singaporeans.

The Edusave fund benefits 352,000 children in the mainstream schools while about 3,000 disabled pupils from 14 schools of special education are not entitled to the fund. I wish to appeal to the Government to put aside 10% of the Edusave fund into a trust fund for disabled children. This trust fund should not be seen as a welfare ticket but rather as a carefully planned scheme to look after the immediate and future needs of disabled children with stringent conditions of eligibility.

The trust fund can have the following uses: to purchase essential appliances for children with special needs; to offer grants for special therapy sessions; to enable the disabled children to acquire skills necessary for future economic survival; to facilitate the integration of the disabled child into a normal school, if possible; and to ensure that there are some means for the maintenance of the disabled child if the parents are unable to do so or upon the death of the parents.

By having a trust fund for disabled children, we are making sure that there will be a certain degree of self-reliance for them, with less likelihood that the disabled will become a burden to society.

Now, Sir, I will go on to sex segregation in schools. I am now making an appeal to the Minister to consider segregating girls and boys into separate classes in mixed schools. This is important as being in a mixed class affects the performance of girls, especially in Mathematics and Science. Thus, if we wish to maximise the potential of girls, it is better to segregate the girls from the boys. The Members of the House may think this suggestion is airy-fairy, but I think the educators in this House will agree with me. Because numerous studies done in the educational field have confirmed that in classrooms with both girls and boys, teachers give more attention to the boys than girls and encourage boys more with words and gestures.

This gender bias has been proven to exist, although teachers are unaware of it and only realise what they are doing when they are shown video tapes of their teaching sessions. This gender bias undermines the girls' self-esteem. Studies have shown that a relationship exists between self-esteem and the enjoyment of Mathematics and Science.

There is some local research to substantiate this conclusion and it comes from the Ministry of Education itself. In 1988, there was a study done and it was found that for 1978 to 1987, over this 10-year period, girls performed better than boys at Primary Three level in Mathematics but at the PSLE, boys did better in Mathematics and Science. It is only about the age of 10 years that girls and boys develop a heightened sense of gender identity and thus, being in a mixed class, the girls' self-esteem is lowered, partly because, as I have said, teachers sub-consciously pay less attention to them and, secondly, girls begin to develop their secondary sex characteristics which make them more self-conscious. Therefore, I think it may have something to do with the lower self-esteem, and this is what studies abroad have shown, and the research of the MOE substantiates that girls do worse in Mathematics and Science in Primary Six.

So, in view of these facts and the MOE's study, would the Minister consider segregating girls and boys after Primary Three? The school can be mixed, but the girls and boys can be separated into different classrooms.

Now, I am going on to the last topic on the registration of private tutors.

Private tuition is a very big industry in Singapore and involves thousands of dollars and thousands of students. In fact, private tuition has become an established part of our educational culture. So far, the Ministry of Education has done no conclusive study that shows how much private tuition really helps the education system. Such a study would help to throw some light on the desirability or not of having private tuition. Until this is done, my concern is that we should optimise the benefits of private tuition and one way of doing this is to make sure of the quality of teaching of private tutors.

I would like to suggest that all private tutors be registered and they should be asked to participate in continuing education to upgrade their teaching skills and also to familiarise themselves with the contents of the necessary syllabus. If necessary, such registered private tuition teachers should be able to charge a minimum standard tuition rate per hour but that is not necessary. If the Minister wants to leave that to market forces, that is fine. What I am concerned about is the quality of teaching.

The advantage of registering private tuition teachers is that the Ministry of Education can exert quality control and it can enlist the efforts of the private tutors to further the objectives of its education system. If you cannot "lick" them, then make them join the system. It is better to have good trained private tutors who can help weak students to excel than to have anyone presenting himself or herself as a private tutor and in the process of well-meaning but misguided teaching do more harm than good to the poor child who is left confused, exasperated and, worse of all, may be put off from his or her studies permanently and may be the casualty - a drop-out.

The Chairman: Mr Lew, take your two subjects together.

Mr Lew Syn Pau: Sir, the Government has stated that the long-term target for admission to tertiary institutions for each cohort is as follows: 20% for universities and 40% for polytechnics. I believe that these planning norms were established before Singapore embarked on its regionalisation drive. With more and more Singapore industrial parks and joint-venture companies being set up overseas in China, India and, possibly, even Vietnam, more and more skilled workers and professionals will be required to spearhead our drive overseas. Hence, we will need more and more graduates from our tertiary institutions.

In view of this, firstly, will the targets of 20% for universities and 40% for polytechnics be reviewed? Secondly, will the increase in intake for the universities and polytechnics be expedited? I understand right now that the two universities only have places for about 15%. We have half of the 15,000 `A' school leavers who apply being turned away each year because of the limited number of places. Eventually, many of these rejected will go overseas to study and we have now about 11,000 such overseas students, enough to form a third university. This seems to be a drain on foreign exchange and perhaps even talent, as many educated overseas this way may not return home to Singapore.

Would the Minister consider increasing our intake to universities and polytechnics in order to meet the urgent demand for professionals in view of our regionalisation drive?

Sir, I would like to move on to the next cut on Open University Degree Programme (OUDP).

This subject is related to my earlier discussion on the shortage of graduates and professionals. In view of the very good response to the OUDP, will the Government consider increasing its grant to the Singapore Institute of Management so that it can increase its intake and even venture into other areas of study?

There is a backlog of potential applicants. And given their mature age and busy work schedules which will probably get busier as they become more senior in the company and as they grow older, we should create the opportunities to allow them to be educated to the highest potential as early as possible.

My second question is on the level of subsidy the Government should give. If this group of people have entered University directly from `A' levels, they would have enjoyed the same kind of subsidy, that is, about 80% that our University students now enjoy. Should the Government not also give this group of people the same subsidy, even though they do their tertiary studies later? The fact that they are working now and making money should not be relevant because they also pay taxes when they make money. So I hope the Minister will look into this.

Mr Leong Horn Kee: Sir, the Open University Programme has been launched recently. I would like to take this opportunity to ask the Minister what are the concrete plans and proposals that have been drawn up to encourage the expansion of the Open University Programme.

I am also interested to know what is the current enrolment of students for the Open University courses and whether there is a demand for more places that have not yet been satisfied.

I note from the Ministry of Education's budget that an allocation of only half a million dollars of capital grant (excluding the recurrent expenditure) has been made for the Open University Degree Programme. Compared to the total capital grant to the schools and various educational institutions of $717 million, the allocation for the Open University Programme is only a paltry 0.1%.

I also note that the total budget allocation for the Open University Programme for financial year 1994/1995 is only about $22.6 million. Again, this is a very, very small sum compared to the hundreds of millions being spent for the local universities.

I believe that there is a large number of our adult population who have missed out on the chance to attend university. They are very keen to improve themselves by studying for a degree under the Open University Programme. I hope that the Government can do more for those who wish to join this Programme since this is a very meaningful one.

I agree with Mr Lew Syn Pau that those who are fortunate enough to study in our local universities, they enjoy subsidized university education. Similarly, I feel that to be equitable to those who attend the Open University, more capital grant and recurrent expenditure grant can be allocated for this Programme. 5.30 pm

Mr Umar Abdul Hamid: Sir, the Open University started last year and it offered three bachelor degree programmes. The newspaper report stated that the response to these programmes was overwhelming and many of the applicants who applied for admission into the University met the minimum requirement. However, I was made to understand from the report that the number of applicants exceeded the number of students accepted into the Open University and, apparently, there were many applicants put on the waiting list. While the objective of the Open University is to accept any qualified applicant, may I ask the Minister what are the reasons or constraints for putting qualified applicants on the waiting list or, to a certain extent, rejecting them.

Sir, each year the polytechnics produce about 10,000 graduates. Only the students in the upper top 5% will be admitted to the NUS and NTU to further their studies. However, there are many polytechnic graduates who wish to upgrade themselves and have no other choice but to go overseas to further their studies. As you know, each year, the number of students going overseas for their studies increases and I strongly believe that the number will continue to rise. My question to the Minister is whether there is any plan for the Open University to offer engineering degree programme in future. If yes, when will it be introduced?

Mr Lau Ping Sum (Ang Mo Kio GRC): ( In Mandarin): Sir, the Open University is now offering courses in Mathematics and Science. I would like to ask the Minister whether he has any plan to conduct other courses for other people. For example, Language, History and Geography. I think we must have a balanced development in a society. We need a balanced supply of talents. Science and technology we need, but we should not overlook the need for the study of the humanities. I agree with Mr Leong that the budget allocation of $22.6 million is very very small. I believe Raffles Institution has more than $20 million. We are encouraging more Singaporeans to work and invest overseas, and this is very important. But, by comparison, the allocation of funds to the Open University is grossly inadequate.

Finally, I would like to ask the Minister whether there is any age limit for in-service teachers who are 40 or 45 years old to enrol into the Open University courses. Is there any restriction or limitation? I think we should encourage older teachers to enrol as well.

Mr Sinnakaruppan: Sir, first, I would like to declare my interest as a member of the NTU Council and the views that I express here are my own.

Sir, in the Budget debate earlier this week, I raised the point on the need to provide more opportunities for Singaproeans to pursue a university education locally, given the Government's stated objective of maximising the potential of every Singaporean. I believe that one of the impediments to increasing the enrolment of our local universities could be the high cost of providing a university education. The Government has announced that the long-term subsidy rate would be pegged to about 75% of the recurrent cost. The request by the Cost Review Committee to cap this subsidy rate at 79% has been turned down by the Government. With lower subsidy rates, the Government must not only look into increasing the university fees as the only means to meet cost but should also look into other ways of reducing cost.

Sir, I understand that the average recovery rate for both NUS and NTU is at about 30-32% level. However, the recovery rate for NTU is much higher, perhaps, about 7-8% higher than that of NUS, despite being a newer university.

Sir, I would like to propose that the Ministry look into the possibility of allowing each university to charge separate university fees so that the university fees can be lowered according to the individual university's efforts to increase the recovery rates. This would also allow for healthy competition between both universities to compete for students and, hence, they can strive harder to ensure that the university can be run more efficiently and also to introduce more innovative courses to attract students.

Sir, in view of the reluctance of the Government to increase the university subsidies to 79%, as proposed by the Cost Review Committee, the NUS Students' Union has set up a trust fund to raise funds to provide bursaries and book prizes for deserving and needy students. They plan to raise about $1.5 million and have requested the Government to give $2 for every $1 they raise. I would like to urge the Government to recognise the positive initiative of these undergraduates and, at least, look into the possibility of granting and matching the NUSSU trust fund's effort dollar for dollar.

Mr Koo Tsai Kee: Sir, everyday, the newspaper pages are splashed with advertisements of overseas correspondence programmes. Some of these offer bachelor programme, others offer masters and even doctorate programmes. Many Singaporeans are taking these courses for a variety of reasons. Some of them do so for enrichment purposes, but most, I think, do them for career advancement purposes.

With the proliferation of these overseas correspondence programmes, there come hope and disappointment. I say hope because many students are given a second chance to earn something they have lost the opportunity to do. But hope can also turn into despair and anguish when graduates from these programmes are unable to advance their career as planned.

I think we should put the work of these overseas programmes into perspective. It is one thing to get a degree but it is quite another, especially in this day and age, to expect the degree to open doors to an accelerated professional career. So long as Singaporeans who embark on these overseas programmes are realistic about the future, I think we should encourage these correspondence programmes to flourish in Singapore.

I know that some of these overseas programmes offer good value for money. But I must confess that I have no knowledge of all the programmes. But one thing I am sure is that many of these programmes do not come cheap. Many of these courses cost an arm and a leg to complete the programme. For the host countries, they no doubt see these programmes as an easy way of making money. Australia calls these programmes an export service in education and it has particularly targeted university courses for Malaysians and Singaporeans.

It is interesting to look at the reaction of how the Malaysian politicians respond to the invasion of these Australian universities in Malaysia and Singapore. Malaysia clearly welcomes the invasion of these programmes. The Malaysian government explicitly encourages twinning of the overseas programmes with local agencies. They believe that twinning serves two functions. One, it helps to expand the pool of trained manpower for their Wawasan 2020 (Vision 2020) without incurring cost from the Government. Two, the Malaysian government believes that these private programmes do not drain their financial coffers too much.

The philosophy there is that not all Malaysians can get admission into their local universities, and also because their local universities cannot train enough manpower for the 21st Century. Since it cannot do both these functions, it might as well ask overseas universities for a helping hand. At the same time, the Malaysian government recognises that, in any case, not all Malaysians want to study in the Malaysian universities. So if these Malaysians do not want to study in Malaysia, they will naturally go overseas. Going overseas will be a drain on the country's financial reserves. So the Malaysians have decided to ask these foreign universities to twin with their local agencies so that the time spent by Malaysians overseas will be halved. Typically, a Malaysian who wants to get an overseas degree will probably spend two years in Malaysia doing the correspondence course and probably spend the remaining one to two years in the host university overseas.

I would like to ask the Ministry of Education two questions. One, what is our philosophy with regard to the proliferation of overseas correspondence degree programmes in Singapore? And second, whether the Ministry intends to have an accredited list of universities for some of these approved programmes.

The Minister for Education (Mr Lee Yock Suan): Sir, I would first like to thank all Members who have spoken for their keen interest in the Ministry of Education. This keen interest shown by Members and also by the public augurs well for the future of Singapore because we all realise that education is really the key to the future.

I would like to try and answer some of the issues raised today but mainly to do with the school dropout problem, compulsory education, the O' and A' level examinations and some other issues to do with university education. My colleagues will have to help me out with some of the other issues, as there are so many being raised today.

Firstly, on this question of school dropouts, we have discussed this before in this Chamber and I think it is good that we are discussing this again today because it is an important issue and one which we should pay keen attention to. All of us are concerned with minimising the number of pupils who drop out from schools. So there is no disagreement on that. It is only a question of what methods to use in our context. Although we do not have compulsory education, our dropout rate is low. Let me give you some data. Under the old system, a pupil could take, in an extreme case, eight years to complete primary school and five years secondary school, making a total of 13 years. Most students do it in 10 years. The latest batch that has gone through this system entered Primary 1 in 1981. Out of the 42,000 children in this cohort, only 1,100, or 2.6%, did not complete primary school, mostly leaving school at P7 and P8. These were mostly the slower pupils, the monolinguals and the extended stream pupils. About 1,700, or 4.1%, did not complete secondary school, making a total of 2,800, or 6.7%, of the cohort who did not make it to `O' levels. This is for the 1981 cohort, ie, the children who entered P1 in 1981 and that is the latest batch that has gone through our system. 5.45 pm

If we look at subsequent cohorts after the P1 cohort of 1981, the drop-out rate at primary level has declined steadily, from 2.6% for the 1981 cohort to 1.7% for the 1985 cohort. There has been a decrease of about one percentage point, from 2.6% for the 1981 cohort to 1.7% for the 1985 cohort. Subsequent cohorts will take the modified PSLE and most of the pupils will be placed in secondary schools after six years in primary school.

From P1 to P6, the dropout rate has been very low and has improved further over the years. The P1 to P6 dropout rate was 0.8% or 340 pupils for the 1981 P1 cohort - I repeat, 340 pupils from P1 to P6. They did not complete the six years. This is for the 1981 batch. It has improved to 0.4% or 154 pupils for the

1988 P1 cohort. So we can see that with efforts being taken and with parents conscious as they are of the importance of education, the problem has been shrinking. It does not mean that we should be complacent. We should do more, but we must look at the problem in perspective.

With the modification of the school system, in fact, we should now be looking more at the secondary level, those who are going on to the Normal (Technical) stream. We should make sure that the course is relevant for them, interesting for them, and try our best to keep them in school for at least 10 years before they proceed to training with ITE and so forth.

Let us look at the secondary level. The cumulative dropout rate from Sec. 1 to Sec. 5 was 4.1% for the cohort that entered P1 in 1981. It is the same cohort I spoke about. For the previous six cohorts, the secondary level dropout rate was also about 4%, ie, it has stablised for the previous few batches. Subsequent batches are still in secondary school. Nevertheless, the data show that the dropout rates at lower secondary level have also improved steadily.

What about the latest figures for last year and the year before? For the first nine months of 1992, about 1,600 pupils dropped out of school from all levels, P1 to Sec. 5. This was for the period January-September 1992, 1,600 pupils. For the same period last year, the number was 1,100. So clearly, there has been an improvement. With increasing focus and attention, with the teachers doing their best, with the cooperation of the community self-help groups, we have been able to shrink the size of this problem.

My Ministry and the schools are taking a more pro-active approach to further reduce the dropout rate with the help of the community self-help groups. The measures taken include:

(1) Remedial lessons for the under-achievers and pastoral care for those with personal or family problems.

(2) Counselling of potential dropouts and their parents by teachers and principals.

(3) Training of education officers and community volunteers to improve their counselling skills.

(4) Special attention to schools with high dropout rates and lessons learnt are applied to other schools.

(5) Remission of fees and other assistance to needy pupils.

(6) Greater flexibility to allow dropouts to rejoin the school system.

(7) Introduction of a buddy system where the potential drop-outs are linked up with older pupils or with classmates to help them along. They could also be under the care of teachers.

All these measures and others I have mentioned are positive measures which are aimed at tackling the root causes of the drop-out problem. Pupils drop out of school for various reasons, such as inability to keep up with their studies, family problems, financial difficulties or job inducement without regard to long-term prospects. We should help the pupils to overcome these problems rather than depend on legislative enforcement to compel unwilling or unable pupils to remain in school against their will.

Parents in Singapore value education as the means to improve their children's livelihood. Our dropout rate among primary school pupils is already very low and compares well with countries with compulsory education. For example, in Germany, where education is compulsory, the proportion of grade 1 pupils who remain in grade 4 is 97%. The corresponding figure for Singapore is 98.6%. So even though we do not have compulsory education, the retention rate up to the P4 level is higher in Singapore than in Germany despite their compulsory education. Nevertheless, my Ministry is collaborating with community self-help groups to further reduce the dropout rate.

Making education compulsory will not necessarily reduce the dropout rate nor will it improve education. In the UK, where education is compulsory until children are 16 years old, schools still face the problem of high truancy and low pupil motivation. There is therefore no pressing need for us to make education compulsory in Singapore. We should concentrate on improving the quality of education and reducing the dropout rate further.

At this point, maybe I could just refer you to a recent article which I read in the Times Education Supplement of the UK. This is dated 19th November 1993. It is a very recent article. Before we plunge into compulsory education, we should look at what is happening in other countries. I think UK is a good example. It says here, "The Police fear growing tide of exclusions." They have a term there called "exclusion". Education is compulsory but the schools suspend the pupils or turf them out in some cases because they just cannot handle them any more, with crime and so on. So there is this term "exclusion" from schools.

My counterpart in the UK, Mr Patten, different from the one in Hong Kong, this is John Patten who is embroiled in a row over truancy. There is a picture here of a policewoman interviewing a truant who is smoking away and enjoying himself out of school. In the UK, the students themselves have a term for this. They call this "wagging" out. When they skip school whenever they like it, they call it "wagging", and it is on the rise, despite all these efforts of compulsory education, and despite deploying their Police Force to go running after these children.

As I said before, we can have legislation. We have legislation against littering but people still litter. In fact, we have to introduce the corrective work order to shame these people so that they will not litter. But I am sure if we go round the housing estates, we still find litter.

So let us not always depend on the law to solve our problems. We must go after the root causes - why are children dropping out - and tackle them at that level. In some ways, it is in fact more difficult than just passing the law. We can pass a law here very easily. But is it necessary?

The next question I want to answer concerns the recent loss of examination scripts in the UK postal service by the University of Cambridge Local Examinations Syndicate which I will call "Cambridge", for short. This was a very unfortunate incident. It is the first time it has happened after so many years of collaboration with Cambridge. As you know, Cambridge has awarded the 250 affected students moderated grades based on their performance in their school's preliminary examinations and other relevant information. Those who decide to retake the paper could do so in April and the better of the two grades will be taken as the final grade. This is the best that could be done for the students under the circumstances.

However, this isolated incident should not lead us to take precipitate action to cut our long-established links with Cambridge. I am confident that Cambridge will do its utmost to prevent such incidents from recurring in future.

There are certain advantages in maintaining our links with Cambridge. Firstly, the Cambridge GCE certificates are recognised world-wide. Secondly, there is less possibility of bias in having examiners outside Singapore to set the examinations and mark the scripts. Thirdly, Cambridge examiners have a wealth of expertise and experience in this field and the examination questions are usually original and of high quality. Fourthly, despite the recent incident, the security of the examinations has been generally very good.

There are also some practical considerations which we have to bear in mind, such as whether we have sufficient qualified manpower to take over the job and what measures we will need to take to minimize the risk of bias in the marking of scripts if we are to handle the examinations ourselves. On the other hand, setting the examinations ourselves will give us greater control and enable us to develop our own expertise. My Ministry has to study this issue carefully before a decision can be made.

Next, the question of attracting foreign students to Singapore. This was addressed by Prof. Walter Woon. I agree with him that we should continue to attract foreign students to Singapore and this is what we have been doing for so many years. As he should know himself, being a university lecturer, there are quite a few students from Malaysia and elsewhere in our universities. In fact, without removing places from our students who qualify, we try and provide up to 20% of the places in the universities for foreign students.

Besides this, we also have foreign students in our school system, all the way from primary 1 to JC level. At present, there are about 18,000 foreign students in our school system, representing about some 4% of our schooling population. Of course, whilst we want to attract these people, we must bear in mind also that it costs us money. That is why recently we had to revise the fees for the foreign students. But even with the revision, the subsidy for the school students from overseas is about 50% of the operating cost.

The Chairman: Order. It is 6.00 o'clock. Moment of interruption.

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

Mr Lee Yock Suan: Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Estimates for the financial year 1994/1995, and ask leave to sit again tomorrow.

Mr Deputy Speaker: So be it.