ANNUAL BUDGET STATEMENT

Debate resumed.

Assoc. Prof. Low Seow Chay (Chua Chu Kang): ( In Mandarin): Mr Speaker, Sir, this Budget can be said to be a very generous one. Apart from giving the taxpayers a 10% tax rebate, it also gives the residents of HDB flats rebates in rental and service and conservancy charges as well as CPF top-up amounting to $500 for each citizen of Singapore.

On the whole, both the higher and lower income people will benefit from this Budget. Those who live in 1-room and 2-room flats will receive the most benefit. This shows that the Government is very concerned with the lower-income group of people and has tried to give them greater assistance, and keep its promise to let the people share in the fruits of our economic success by enhancing their assets.

In his Budget Statement, the Finance Minister mentioned two challenges facing our people: (1) How to deal with the competition from other countries, particularly from within Asia, and (2) How to satisfy the rising aspirations of the middle-class people in Singapore.

I fully agree with the Minister that in the long-term, we have to raise our competitiveness through education and technical training for our workers.

The Minister also gave statistics to prove that presently 71% of each cohort of students will receive training at least in the Institute of Technical Education (ITE). This percentage will be raised to 85% within six years, that is, by the end of this century. From 71% to 85% is a big increase. Assuming that in the next six years, the quality of our students remains the same, then we will see a drop in standard of our students in all fields of education. Therefore, at this point of time, we have to make a choice. Either we lower the standard to increase enrolment or improve the efficiency of our education system and raise the quality of the students to enable more students in each cohort to be given the opportunity to receive a higher standard of education.

Recently, I read from the newspaper that the undergraduates today are not good at analytical thinking. On this subject, I tend to quite agree with them. Apart from the really good students, most undergraduates are somewhat weaker in critical thinking and analysis. At the same time, they are not psychologically prepared to face hard challenges. I believe this situation of our undergraduates today cannot be said to have nothing to do with our school education system. I feel that the Education Ministry should look squarely into this problem and rectify this defect in our education system, so as to generally improve the quality of our students to enable more students in each cohort to receive a higher level of education.

Talking about the training of talents, most people would focus their mind on technical training. From my point of view, whether graduates, skilled or unskilled workers, all of them equally require training. This is very important and necessary. On one hand, this is one of the necessary conditions for our economic reform to enhance our economic benefits. On the other hand, it would enable the people of Singapore to have the opportunity to move higher in life.

Over the years, I have been advocating that the National University of Singapore (NUS) and the Nanyang Technological University (NTU) open their doors to admit more graduates of the polytechnics, so that they further improve themselves. After waiting for a few years, I am glad to hear that the NUS will start a course, known as Bachelor of Technology, specially for polytechnic graduates. This is a good beginning and I hope that NUS will open more new courses so that even non-engineering students can benefit from the training. At the same time, I hope that the Polytechnics will also provide opportunities for ITE students to be admitted to some special courses to improve themselves.

Normally, when we talk about skill training, we often forget a large group of people in the lower-income group whose educational level is low. They can only do odd-jobs, sweepers, and coffee-shop assistants, etc. If we do not make some special arrangement for them to receive some form of technical or handicraft training, then even if they work their whole-life through, they will not be able to catch up with the pace of our economic development and enjoy the benefits of economic development.

If we can divert some of the Skills Development Fund allocation, such as the 15% used on the training of management staff, and use it on these low-skilled, low-income and lowly-educated workers, it will certainly benefit them. Because of their low education, the lack of mathematical and linguistic aptitude, these people may not be suitable for training under the conventional method. Perhaps, we may train them to take up some traditional vocations, such as drivers, barbers, tailors or flower arrangers, etc. This may not sound sensible, but if you think carefully about it, you may find that it makes sense and may do them real good to master a skill which may earn them better income. Many of such jobs are now undertaken by foreign workers. If we can provide our own people the opportunity to be trained in these skills, I think we would not only raise the quality of their work, but also their income. Then, all Singaporeans, those who are doing well and those who are less capable, will be able to catch up with the progress of economic development.

With the changes in our society and the emergence of a middle-class society, we will find that people's mental attitude has been changing too and they are aspiring for material comfort and spiritual needs. In the Budget, there is an emphasis on the demand for cars and private property by the middle-class. As for the aspiration to own cars, we realize that Singapore is a small country and the number of cars that we can accommodate will depend on how much we can enlarge our road network and how well we can manage our traffic, or to suffer less mobility on our roads. In any event, the rate of increase just cannot be too fast. From the long-term perspective, we must endeavour to make the upper-class and middle-class Singaporeans feel that even if they do not own a car, it would be just as convenient and comfortable for them to rely on public transport. Therefore, I feel that the authority should give the terms "convenience" and "comfort" new definitions. Under the new definitions, we shall review the present public transport systems, including MRT, buses and even taxis, Bus-Plus and the LRT, etc., to make them more efficient and effective in serving the middle-class and upper-class people. Then, the pressure from the demand to own a car may be lessened.

As for demand for private residential property, more and more people are aspiring to own private residential property, and the simple theory of demand and supply will inevitably bring the prices of private property up. At present, we are facing a very big problem. The gap between the private property prices and the prices of HDB apartments is very big. The Government sells its apartments at about $200 per square foot, whereas the private condominiums and apartments are being sold at $750 per square foot. The big gap in their prices has brought about a big problem. Because of this wide gap, the resale value of HDB flats has also gone up. Those who have the means to buy private property will find that the burden is getting heavier and heavier. Furthermore, with the resale prices of HDB flats getting higher and higher, the resale of HDB flats has become a speculative activity. More owners of HDB flats will apply to the Government to purchase bigger flats. As a result, young couples will have a longer wait before they can be allotted a flat from HDB.

Singapore is a country with limited land for use. The supply of landed property cannot be too much. But there should not be a problem as far as condominiums are concerned. The reason is, if our plot ratio remains unchanged or increased, then the sites originally used for HDB flats can be changed to private property development. Then we can set aside 20% of the land for use as private property development in line with the market demand. By so doing, we will be able to satisfy the people's demand for private condominium.

As for the wide gap between the prices of private property and public housing, I feel that the Government has got the responsibility to fill up this gap, because the gap between $200 and $750 is too wide. Perhaps, from the long-term perspective, we should encourage the introduction of medium cost condominium and high-cost condominium. Then the gap may be gradually narrowed.

Mr Speaker, Sir, if we are determined to look after the interest of the middle-class and their aspirations, I think we will find ways to meet their demand and satisfy their aspirations.

I support the motion standing in the name of the Finance Minister.

The Minister for Trade and Industry (Mr Yeo Cheow Tong): Mr Speaker, Sir, when the Prime Minister recently highlighted the water issue as an example of some of the key challenges facing Singapore, it struck a chord with the Singapore public.

Many members of the public and MPs have since spoken out in support of the increase of 5% points in the water conservation tax announced by Dr Richard Hu in his Budget Statement. Some have expressed concern over the availability of water supply to meet our long-term needs and suggested that the Government look into alternative supplies of water. Some proposed that recycled water from our sewerage treatment works be used for toilet flushing. Others have stressed the need to create greater awareness amongst the public on the need to save water and to make water conservation a way of life.

Today, Dr Ow Chin Hock and several MPs have also made various suggestions, as well as asked some questions about our water supply and usage. I would like to take this opportunity to give Members a clearer picture of the water situation, and respond to some of the points raised by the public and by Members.

Water Supply

First, let me explain to Members the maximum amount of water available to Singapore from the present sources and under the existing Water Agreements.

We have two agreements with Malaysia. The first agreement, the 1961 Water Agreement, gives us about 86 million gallons of water a day (or mgd), and will expire in the year 2011. The second agreement, the 1962 Water Agreement, entitles us to 250 mgd, and the Agreement will expire in the year 2061. So we have a maximum of 336 mgd until the year 2011, and after that, if the 1961 Agreement is not renewed, only about 250 mgd from the Johor sources.

The reservoirs and catchment areas in Singapore supply about 100 mgd, and after the year 2011, this means that all our present sources of water, both in Singapore and Johor, will only give us 350 mgd. And that is our limit.

Seriousness of our water situation

Next, what about our consumption trends? Our water consumption has been growing steadily over the last 10 years. From 1985 to 1990, consumption grew at about 3.3% per year. However, consumption grew rapidly after that, especially in the last four years, averaging about 5.2% per year. While such a rate is already not sustainable, what is even more worrying is that in 1994, we recorded a significant increase of 6.5% in our consumption rate.

In 1994, Singapore consumed 260 mgd. Sir, if we continue to use 6% more water each year, we will run short of water in six years' time, ie, by the year 2001. But let us suppose that through rigorous water conservation measures, we succeed in reducing the growth in water consumption to half, ie, to 3% per annum, which is half the rate in recent years. Our water consumption will still reach 350 mgd a day by the year 2009, ie, before the 1961 Water Agreement expires.

Sir, I was reassured to read the Mentri Besar of Johor saying recently that Johor will continue to supply water to Singapore as long as it can. But Singapore cannot afford to take chances with something as vital as water. We must do everything in our power to ensure that our limited water supply is used prudently and never wastefully. We therefore need to take immediate steps to reduce our water usage. Sir, I would like to request the Clerk of Parliament to hand out a Table (Cols. 241 - 242) which I have prepared. [Copies of table distributed to hon. Members.] Table - COMPARISON OF WATER PRICES (Cols. 241 - 242)

Sir, at the same time, the Government is also actively exploring alternative sources of water. However, I must warn Members that any possible new supplies will be many, many times more expensive than current sources, as heavy investments will be needed. Furthermore, by international standards, Singapore's water rates are still quite low. Members can refer to the Table which has just been given out. If you look at the explanation below, for the first block of water consumption, we are charging S$0.59 per cubic metre for the first 20 cubic metres of water used per month. That places us just above Norway and Canada, ie, we are the third lowest of all the developed countries. And even if we include the second block of another 20 cubic metres, that will place us at about S$0.74, which still places us fourth from the bottom. So for the quality of water that we are supplying, this price is very low. It is, therefore, inevitable that the Government's water conservation tax and PUB's water rates must go up substantially over the next few years.

The price of water in Singapore must reflect the true scarcity of this precious resource. The cost of water is not just the cost of collecting the rainwater from the sky in reservoirs, processing it, and piping it to the customers. It is the cost of getting additional water after rainwater runs short, when we must either pump water from long distances away in Indonesia, or desalinate sea water to get fresh water. This will cost five to eight times as much as rainwater.

Water Conservation Campaign

Sir, let me go on to touch on the measures which we are reviewing to restrain water consumption. The PUB will emphasize public education in order to encourage Singaporeans to conserve water. As Dr Ow Chin Hock had pointed out, the previous save water campaigns were able to restrain growth of water consumption. The PUB will launch a fresh series of annual Save Water campaigns, starting in June this year, to coincide with our drier months.

The campaign will focus primarily on domestic consumers, as domestic water consumption accounts for over half of our total water consumption. As part of the campaign, PUB will also hold neighbourhood water-rationing exercises. This will help drive home the message that if we do not make saving water a constant habit, water-rationing, with all its attendant inconveniences, may one day be a way of life. In addition, the PUB will hold exhibitions and other educational programmes on a regular basis throughout the year as and when an appropriate occasion presents itself.

The PUB will also be reaching out to the non-domestic water users, most of whom are in the manufacturing and commerce sectors. This will not be a new activity for PUB. PUB already routinely identifies major non-domestic water users, and helps them to reduce their water usage. The PUB also vets new projects that are significant water users, and ensures that they incorporate water conservation measures. I am glad that some major companies have already taken concrete steps to reduce their water usage. One good example is Shell, which has built its own desalination plant, and is now almost self-sufficient with regard to water.

As a result of PUB's on-going efforts, our overall non-domestic water consumption has been growing more slowly than our GDP for the past three years. In 1994, the manufacturing sector grew by almost 13% while its water usage increased by only 8.6%. The corresponding figures for the commerce sector are 9% and 3.7% respectively. This is encouraging but, nonetheless, we must improve further. Hence, the PUB will enlarge its outreach programme for non-domestic water users, and explore new ways to help them conserve water.

Water Conservation Tax

Sir, the water conservation tax is another key measure to encourage the prudent use of water. While the public education programme highlights the importance of saving water, the conservation tax links the message to the actual usage. It reminds Singaporeans every month when they receive their utilities bill that water is precious, and that there is a cost to its usage.

As announced by the Finance Minister, with effect from 1st April 1995, the water conservation tax will be increased by 5 percentage points to 15% for domestic consumers, and to 20% for non-domestic consumers. As the new water supplies will cost many times more, we will need to progressively increase the water conservation tax to better reflect the true scarcity value of water in Singapore.

Recycling Waste Water

Sir, there have been suggestions that we look into the use of industrial water for toilet flushing, which accounts for about 20% of our domestic water consumption. Industrial water, which is recycled water from the sewage treatment plants, can be a significant source of water for us, as a large proportion of the water we consume every day eventually is discharged into our sewers. Currently, the Ministry of the Environment recycles some of this water into industrial water, which is used by industries for cooling, washing and process applications. I would like to inform Members that the PUB is looking into the wider use of industrial water, including for the flushing of toilets.

Sir, while we try to curb the demand for water, the Government is also actively exploring the development of new and alternative water sources, to meet our future needs.

Limited Additional Local Sources

One possibility is to increase our local sources of water. We can build more reservoirs, for example, by damming up the sea between Singapore and Pulau Ubin, but the constraint is not reservoirs. The constraint is catchment areas. Already 50% of Singapore is catchment area. Besides catchment areas, like Mandai or the Western catchments, we also collect rainwater from the cleaner urban and less industrialised areas. This includes some of our housing areas. The rest of our land cannot be used as catchment areas, either because it is too built up, or too densely populated, or includes pollutive industrial activities.

Overseas Sources of Water

Another possibility is additional overseas sources. We signed an Umbrella Agreement with Indonesia in 1991 to jointly develop water resources in the Riaus for use by both Singapore and Indonesia. Under the Agreement, Singapore can draw up to 1,000 mgd of raw water from the Riau Province. However, individual projects have to be carefully evaluated, to make sure that they are technically feasible and commercially viable, because they will require massive investments - at least several hundred million dollars per project.

The first project is the development of catchment areas on Pulau Bintan. This is presently in its preliminary stages. There is also a long term possibility of drawing water from Kampar River in the Riau Mainland on Sumatra. The potential supply from Kampar is huge, but because of the long distances, by the time the water is brought to Singapore, the cost per cubic metre will be very high, perhaps five to eight times the current cost of PUB water.

Desalination

We are also looking into desalting - desalination or reverse osmosis to turn salt water into fresh water. Desalting is expensive, but from the technical point of view it is entirely feasible as a supplementary source of potable water. Being an energy intensive process, the cost of desalted water will go up if oil prices increase. Based on the current cost of about US$20 per barrel, the cost of desalinated water will be about seven to eight times the current cost of treated water.

The URA and the PUB have already reserved land for desalination plants in Singapore. A study team from the PUB and my Ministry will be visiting several countries with on-going large-scale desalination operations to study their experience. Depending on the conclusions of the study, PUB plans to build a pilot desalting plant in Singapore. This way, PUB will gain experience operating desalting plants, so that should the need arise, we will be able to fall back on this source of water.

Sir, let me now respond to some of the points raised by Members. Dr Ow Chin Hock expressed concerns about the impact of the increase in the water conservation tax on low-income households, particularly those with large families. About 80% of households living in HDB rental flats and 60% of 3-roomers use less than 20 cubic metres of water per month. The fact is that water charges are low. The bill for using 20 cubic metres of water is only $11.20. Families using double that amount, ie, 40 cubic metres of water, pay $28.80 a month. Their conservation tax will increase by 80 cents under the 5 percentage point increase announced by Dr Hu. Only about 3% of HDB rental households and 6% of 3-roomers consume more than 40 cubic metres of water a month.

The question is whether for low-income families with large families, could we have a threshold system based on a per capita basis. While such a system is possible, it would be costly and difficult to implement and to operate. Why? Because some of the problems would be that PUB must then keep track of the number of people residing at a particular address and update their records all the time. PUB will also need to keep track of births and deaths, marriages and movement of people in and out of each household. Implementing such a system will definitely be very expensive, and the costs will ultimately have to be paid by the consumers in the form of higher tariffs.

Logically, there is no reason to have a 20 cubic metre threshold. Since water is precious, in principle, the water conservation tax should apply to every drop of water that we use. This would also resolve the anomaly of big families being discriminated against on the 20 cubic metre threshold quantum. The Government will not change the system at the moment, but will keep the question of the appropriate threshold for the water conservation tax in mind when it reviews water rates and taxes every year.

There have been other suggestions, eg, the use of underground caverns to store water. I would like to assure this House that the PUB will be looking into all suggestions and exploring all possibilities for reducing water consumption and increasing the supply of water. We will consider again proposals which were not viable in the past but which may now be viable. We will explore possibilities which are not viable now, but which in future may be viable.

Sir, a secure water supply is a major long-term challenge for Singapore. Over the years, the Government and the PUB have taken decisive actions to develop domestic water sources to the limit, to meet the growing needs of the economy, and to promote water conservation. Through a combination of these measures, we have up to now been able to postpone the day when demand for water exceeds supply of water. But this approach is reaching its limits, because our traditional sources of water cannot increase much further to meet our needs, which continue to grow. In fact, in the year 2011, when the 1961 Water Agreement expires, the supply will shrink. This is why water is always a matter of utmost seriousness to us. Hence, the Government is developing alternative water sources in Indonesia, and is now actively exploring desalting as an important supplementary source of potable water.

There is no question that we will solve the water problem. Even if we have to desalt every drop of water that we drink or cook with, as countries do in the Middle East, we can do so. It will cost us a lot of money, but it will not bankrupt us. Fortunately, we do not have to do this, as we still have other sources available.

The Government needs the close cooperation of all Singaporeans to tackle this challenge. Every Singaporean must do his or her part to control water consumption. Water is a scarce resource. We must therefore make water conservation a way of life. By planning well ahead, by boldly taking the necessary tough decisions, we will ensure that all Singaporeans will have adequate water to maintain our quality of life for many years to come.

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I have listened to the Minister's suggestion that we should use industrial water for flushing of toilets. I thought that it would be fair for me to give the experience in Teban and Pandan on what actually happened when we used industrial water for the flushing of toilets. Teban and Pandan estates were used as experiments for the use of industrial water.

Mr Speaker: Order. Dr Tan, are you making a speech or do you intend to seek clarification?

Dr Tan Cheng Bock: Sir, I thought you would allow me to share this experience because ---

Mr Speaker: If it is going to be a very long point you are making, I suggest that you make it during the course of your speech. Are you seeking clarification?

Dr Tan Cheng Bock: No. I thought I could just say something.

Dr John Chen Seow Phun (Hong Kah GRC): Mr Speaker, Sir, we enjoy healthy surpluses and chalk up substantial national reserves year after year because of the financial prudence and the right social and economic policies of the Government. Singapore needs strong reserves because unlike big countries which have plenty of natural resources, our reserves are the only wealth we have got. They are extremely important to us when we face a major economic downturn. Strong reserves also give us a strong currency and thus better purchasing power and lower inflation for our people. The recent Mexican peso crisis and the weakening of the US dollar show us how persistent budget deficits can cause depreciation of their currencies and threaten them with high inflation.

[Mr Deputy Speaker in the Chair]

4.20 pm

Dr John Chen Seow Phun (Hong Kah GRC): But is there a negative side of high surpluses? The answer is yes, if they become a heavy burden on the economy or if we do not use the surplus enough to encourage private sector investments. Socially, it will also not be good if high surpluses become a heavy burden on the people.

Sir, while I agree with the Minister that Government burden on the economy as a whole is not high, I think not enough is done to encourage private sector investments, especially from the small and medium enterprises.

Our economic policies have been favouring the MNCs and big companies. They have done well. And our high economic growth can be attributed to the very high value-added per worker of these companies whose output constitutes a large part of our GDP. But the majority of our companies, which are the SMEs and which employ the majority of our workers, are not having such high value-added and growth. Workers from these companies can feel frustrated because, on the one hand, they were told that the GDP is growing so strongly but, on the other hand, they themselves are not experiencing a corresponding growth in income.

The result we see today is a narrowly based Singapore economy whose growth rate is highly dependent on relatively few companies. At the same time, the majority of our companies and workers are not moving up fast enough out of the lower value-added industry. They are facing the danger of losing their businesses and their jobs to the fast developing countries in the region.

The message is clear. The Government must tackle urgently this structural problem of the economy. Government must do more to help the SMEs to grow. It can help them in two ways: first, encouraging them to invest, retrain their workers and upgrade their operations; and, second, lowering their costs of doing business.

On the first point, I think investment allowance for the additional depreciation of capital investment should be given more generously to local SMEs. On this, may I ask the Minister whether he has statistics to show how much investment allowance has been given out and in what proportion between the big and the smaller companies.

SMEs can invest and upgrade their operations through a number of ways. They can upgrade through acquiring technology or know-how. For example, a furniture company can increase its value-added by going for better design. Incentives should therefore be given for companies to move up to the higher value part of the value-added chain.

Another way to help the smaller companies is to encourage a big company in the same industry to provide the leadership. The current Local Industry Upgrading Programme (LIUP) is mainly getting the MNCs to help upgrade their own supporting companies. It should be extended to getting big local companies to help upgrade smaller local companies. Left to themselves without a leader, smaller companies will never be able to agree on how they can cooperate in upgrading themselves. They will hardly want to upgrade the skills of their workers for fear of losing them to their competitors. But if there is a big company to be their leader, they will be able to benefit from the economy of scale, from better management and finance, and from training of workers. One example I can provide is the tying up between QAF and 16 smaller fruit wholesalers in building a large cold-storage warehousing for fruits.

Government should also help SMEs to lower their business costs. With the weakening of the US dollar, any cost increase will be compounded by the difference in exchange rates. This will cause our companies to be less competitive. Government should therefore relook at how industrial land costs are determined and see whether they have become too expensive for the SMEs.

Sir, the Minister has decided in the Budget to withdraw the property tax exemption for land under development. However, exemption will be given to approved building projects endorsed by the EDB. May I ask the Minister why should the exemption not be extended to all industrial building projects?

In view of the urgent need to help the SMEs, may I suggest that a national committee involving private sector businessmen be commissioned to consider ways to help SMEs upgrade on a national scale.

Sir, let me now turn to the distribution of surplus to the people. Giving money back to the people is not an easy task. Whatever ready cash that the people receive from the Government, they will soon come to rely on it as part of their income. The more cash they receive, the more their reliance on it will be. I therefore agree with the Government's approach of asset enhancement through HDB upgrading and CPF top-up schemes, and of keeping the payment of cash through rental and S&C charges modest. The money that the Government gives through asset enhancement is likely to appreciate in value over time. In times of real need, these assets can be liquidated and the extra cash can be used.

What I hope to see the Government do more is to help those who needed more help. Let me give an example. The CPF Minimum Sum has been raised from $34,600 to $80,000. Its purpose is to ensure that retirees will have at least a certain monthly income to see them through their old age. There are, however, a lot of older workers who will not have enough CPF savings to make up the required Minimum Sum. The CPF top-up scheme for all Singaporeans above 21 will help but is insufficient. We should therefore have a CPF Minimum Sum Top-Up Scheme to help deserving older workers to go nearer the Minimum Sum target. We want to encourage workers to work after 55. So if a worker does not have enough Minimum Sum at 55 and if he is prepared to continue to work after that, the Government should consider topping up his CPF if he or his employer can credit at least a certain annual sum into his account. I hope the Minister will consider this kind of suggestion.

With that, Sir, I support the Budget.

Dr Arthur Beng Kian Lam (Bedok GRC): Mr Speaker, Sir, if one were to look at the Budget Statement for "give-aways", one would definitely be disappointed. The commonly heard comment is why were there not more "goodies" for a year which showed sparkling performance. I must admit that I personally expected more "goodies". However, on reflection, it was not the numbers game that was the most important part of the Budget Statement. It was the underlying philosophy which I found most engaging and most enlightening. Let me elaborate.

The section on "Laying the Foundation for Sustained Growth" is an area, to me, more important than the "give-aways" announced. It stressed, firstly, social progress and social cohesion and, secondly, it focused on the two key new challenges for the future: (a) entry of new players; and (b) the development of a middle class society in Singapore. I would like to comment on these areas.

Social Progress and Social Cohesion

In economic terms, this refers to equitable income distribution and addressing the role of government in social programmes like public housing, primary health care and education. In all these areas, the Government has done well.

In Singapore, we believe in a meritocratic society which gives equal opportunity to all through education. Here I cannot agree with Mr Ling How Doong on his philosophy regarding scholarships. Education is universally available to all. We have successfully addressed many of these issues. However, we can refine these areas to meet future challenges and give our citizens an even more satisfying quality of life.

Public Housing

The Main Upgrading Programme and the Interim Upgrading Programme have been welcomed by our residents. This is a very meaningful way to ensure that our public housing estates do not turn into slums like in the old cities, whilst at the same time enhancing the personal value of each homeowner's assets. In the area of the Interim Upgrading Programme, I feel that additional funds should be given to two main areas: (a) lift upgrading and (b) utilities upgrading - rewiring, changing of ageing water and sanitary pipes. This should not be a part of the allocation of $6,000 per unit, but could be funded jointly by the Town Council's Sinking Fund and the Government.

The Minister for Finance may be wondering why I am bringing this up at this point of time. It is because I know that if I bring this up during the Committee of Supply, the Minister may answer that he would refer this to the Minister for Finance. So I thought that I would bring this up to the Minister's personal attention.

Every person living in the block uses the lift daily, and the lift does not stop at every floor. With an ageing population, for the lift to stop at every floor becomes no longer a luxury, but a necessity. On utilities, it is just commonsense that tells us that it is of no use upgrading the exterior if the utilities are not functioning. Many would like to install air-conditioners in their flats and this can cause an overload on a block basis. I would urge the Minister for Finance to support these measures and to ask him also to seek the support of the Minister for National Development.

Education

Our education system is sound and good, and 60% of each cohort now enters polytechnic or university. However, as the Minister has stated, education does not stop here. Education involves training and retraining or continuing education or upgrading. In this area, we must do more. I support the views given by my colleagues earlier.

There are two groups of persons who I especially want to see assisted. Firstly, these are the polytechnic and "A" level holders who, after some years at work, want the chance of a university education. Their chance of being accepted into NUS is small, so many go overseas at great costs. Many borrow from friends and relatives. The second group are the graduates who are not necessarily "scholars" or "high-fliers", but who are nonetheless doing well and want to upgrade in specific areas, especially that connected with their work, ie, after several years of work experience, they want to progress further. The courses that these persons may want to attend may be costly. There is no scheme to help these two groups of people. Perhaps the Ministry of Finance and the Ministry of Education should look into the setting up of a fund to help these two groups. The SDF does not cater to these two groups. These are highly motivated individuals who should be assisted to further upgrade and contribute to Singapore's economy. Yes, the Open University is one avenue, but can there be others? Addressing these matters will indeed add to better social cohesion, as these individuals who are striving to help themselves would then not feel "left out" or "denied" because they are not the "high-fliers". They form the very important group of middle managers.

In the Budget Statement, the importance of regionalisation has been explained. However, some serious social problems related to regionalisation should also be addressed at governmental level. An example of this is the provision of hostels in some schools for children whose parents are overseas. However, this is costly. Can the Government assist in this area by providing grants or tax rebates? Furthermore, to keep families intact, opportunities for the family to be together should be made possible. For the wife who has to give up her job, should not some form of tax rebates on the husband's income be made possible? Also, could it not be considered making the air-ticket home tax-exempt? For example, a company may allow the employee to come back once a year and if the ticket is also tax-exempt, then the family can be together twice a year instead. I am sure that our very efficient Inland Revenue Authority is capable of drawing guidelines to make sure that these socially desirable objectives are not abused. It is often not possible for the whole family to move overseas with the husband or breadwinner for many, many reasons.

Another area that requires a relook is that of the use of Medisave for our citizens who are working overseas and hospitalised overseas.

Sir, Singapore no longer has a "development" bank. The Development Bank of Singapore now prefers to be known as DBS Bank. It is thus good that the Government has addressed the needs of the SMEs through the EDB venture capital funds, and also to allow the EDB to make strategic investments in SMEs. This again is very important, as regionalisation must not only benefit the "big boys" but all Singaporeans, directly or indirectly. The EDB as a leader, mentor and master-planner, now has even more teeth to assist the SMEs. The EDB should be congratulated on its performance, and should also urge the other GLCs and MNCs to bring more SMEs on board in their overseas ventures.

Finally, Sir, I am comforted by the Minister's statement in paragraph 41, and I quote:

"It will keep the overall burden of Government levies on successful Singaporeans as low as possible, taking into account both income taxes as well as other levies like the foreign maid levy, and revenues from land transport, including COEs."

Yes, the issue of the middle class needs to be addressed. Often, we champion the cause of the poor, but are awkward in addressing the needs of the middle income earners. I must congratulate the Minister for identifying this as one of the two key new challenges for the future. One can see the very different approach to the problem by the Minister for Finance compared to that of Mr Ling How Doong. The middle class are a highly mobile people and sought after by many nations, both developed and developing, and even the underdeveloped. Their needs and aspirations must be addressed. The Minister has made a statement on the Government's stand on this. I hope that he will elaborate on the specific issues that he has addressed in paragraph 41, and I hope that in the Committee of Supply debate, his other Cabinet colleagues will amplify on this area.

In the Bedok GRC, there are condominium units which are also ageing. Is there a similar plan for upgrading in a manner similar to that of the Interim Upgrading Programme? After all, they are also Singaporeans, be they middle class Singaporeans. Yes, the Minister is right, the needs of the increasingly large pool of the middle class need to be addressed.

On this note, I congratulate the Minister on the Budget and support him.

Mr John De Payva (Nominated Member): Mr Speaker, Sir, going by newspaper accounts, employers or people representing the corporate world, like some Members in this House, are unhappy with one aspect of the Budget. Contrary to expectations, the Finance Minister has not lowered the corporate tax. But surely these people also pay income tax. Since there is to be a 10% rebate across-the-board, surely they will also benefit, at least as individuals and by large margins.

The Minister has introduced several measures to help companies become more competitive through employers, though employers expect much more from the good Minister. What about workers? Are they pleased with the Budget? Yes, they are, somewhat. They stand to gain from rebates and concessions announced by the Minister. Nevertheless, I hope the Minister would not think me churlish if I were to argue that overall the better off in society benefit more than the less well endowed. A person who has to pay $10,000 income tax will now save $1,000 because of the across-the-board rebate of 10% of income tax. On the other hand, a worker who has to pay $1,000 income tax will save just $100.

In the last financial year, a 5% across-the-board cut in income tax was given before a rebate of an amount not exceeding $700 of tax payable. In layman's term, it means that those whose income tax was $700 or below need not have to pay income tax. In this year's 10% across-the-board rebate, is it more generous than last year's? Would people again escape paying income tax if their tax is $700 or lower? I would strongly urge the Minister to retain the $700 cut-off point. Better still, why not raise it to, say, $1,000?

In 1991, Mr Goh Chee Wee, the Member for Boon Lay, then a Backbencher, drew needless blood from the Straits Times for suggesting that a good segment of workers earned less than $600 a month. Recently, in response to my question on the SDF levy, Mr Goh stated that raising the ceiling from $750 to $1,000 would cover about 50% of our workers. This means that the take-home pay of workers earning $1,000 is $800. The point I am making is that we do have a sizeable proportion of workers earning relatively low salaries. They will not benefit from the 10% income tax concession. True, they will gain from the $200 which the Government will put into their CPF accounts. They will also earn another $300 if they or their employers have put $750 into their CPF accounts in an 18-month period ending 31st August 1995. But the well-heeled will also have the $200 plus $300 credited to their CPF accounts. Here, on this point, I would want to ask why the age of 21. Thousands of workers in manufacturing, in the retail, in the hotel or even in the civil service are below the age of 21. Why not give this concession to the working class?

If we look at the rebates for conservancy charges and rentals for HDB dwellers, we cannot but note that they are skewed in favour of the lower income. This is as it should be. It is good that concessions apply even to those living in 5-room flats. But with a large surplus, surely the Government can be more generous towards the lower income. Let me reiterate my point. Since we made an exceptionally high surplus last year, why stint on those who could benefit more from Government generosity? Here, let me state that I support the Minister's argument that as we equip Singaporeans with skills to compete effectively, we need to pay attention to those among them who are most able to create wealth for all. I say by all means reward these able Singaporeans. But look again at what we give to our lower income.

While still on the lower income, let us pause and ask: have we done enough to raise the skills level of such people so that they can move up in life? Members would have read in the newspapers of my recent criticism of seven professionals who argued that Skills Development Fund money should be used to pay for management training instead of training unskilled workers. I am happy that the SNEF supports the line I took. SNEF has made it clear that it shares NTUC's concern over the mass of workers with only primary education and with little or no skills. Both SNEF and NTUC want to have these unskilled workers given proper training to make them employable even if they were retrenched. But I am not sure this is going to be an easy task.

Older workers, those 40-plus and without skills, are the most vulnerable should there be an economic downturn. But because the economy is humming along nicely, many do not see the need to go for training. Why? Because they are tired after a hard day's work or they prefer to do overtime to earn a little extra. Whatever the reason, a number of these workers are not training. By training, they may lose out on additional income. They may be having additional jobs, part-time jobs, to make up for the shortfall. Here is where subsidies can be given to encourage this cohort to go for skills upgrading. Some form of make-up payment, if I may suggest, for loss of income arising out of availing oneself for training or re-training.

There is another group of Singaporeans which should also be given appropriate training. I refer to the thousands of women who have either dropped out of the job market to look after children or who have never worked. They need to be lured back to the labour market. Funds can be made available to train or to re-train them. By them taking up jobs, perhaps we can restrict the number of foreign workers.

On this note, Sir, I support the motion.

Mr Low Thia Khiang (Hougang): ( In Mandarin): Mr Deputy Speaker, Sir, on the surface, this year's Budget appears to please everyone. There is no increase in personal income tax and the Goods and Services Tax (GST) has not been increased. On top of that, the Government is unconditionally giving $200 to every Singapore citizen above the age of 21. However, the people of Singapore will not forget that the GST has already been implemented since the last financial year. Although the GST is a mere 3%, it has enabled the Government to collect a revenue of $1.5 billion in the last financial year.

It is worth mentioning that the GST revenue estimate took a sudden jump from the original $960 million to $1.5 billion. The Government expects to collect $1.6 billion next year. Will the Government's GST collection exceed its estimate again? Let us wait and see.

In other countries, the governments normally expend more than their budget. But in Singapore, the Government's net income exceeded its budgeted amount. This must be another "First in the World"!

With the huge increase in GST collection, the Government has also announced that offsets against the GST will be increased from the original $1.2 billion to $1.7 billion. As such, the Government is saying that the GST is revenue negative.

I do not understand how the Government works out its sums. What I know is that in order to offset the impact of GST on the people of Singapore in general, one of the measures was to pay one to three months of service and conservancy (S&C) charges and rentals of some HDB dwellers, for which the Government paid out $28 million. As for the other measures, they would only cause a reduction in the Government's revenue. How do these measures implemented together with the GST suddenly increase so greatly? I would like the Minister for Finance to enlighten us on this. Who are the people favoured by the Government to receive such unexpected windfall in these measures?

In implementing the GST, the Government promised that the corporate tax would be reduced to 25%. But this year, because of the fear of overheating the economy, the corporate tax is not further reduced. If corporate tax is not reduced and Singapore is still able to retain its competitiveness in the international market, then the Government's earlier argument of implementing GST so that the corporate tax could be reduced in order to be competitive in the international market just cannot hold water any more.

Furthermore, in 1994, the average labour cost in the manufacturing sector was not any lower than 1993. It is worrying to see from the economy as a whole that the average labour cost has, in fact, increased by 1.9%, which is higher than the cost in 1993. Compared to other Asian NIEs, in terms of US dollars, I think the relative competitiveness of Singapore is declining. Furthermore, with the exchange rate of the US dollar declining and the Singapore dollar remaining so strong, I believe that our competitiveness will decline. If the Government does not try to lower the cost of doing business in Singapore, our economy will surely be affected.

With regard to the fiscal measures in this year's Budget, the 10% rebate on personal income tax across the board is of no great benefit to the lower-income people. According to the Government, the majority of Singaporeans do not need to pay any income tax after the implementation of GST. Therefore, the 10% rebate will only enable the higher income group to receive even more benefits.

What is even more disappointing is that the Government is only prepared to pay the same amount as in last year in respect of the S&C charges for the HDB dwellers. Since the GST has increased the Government's revenue and surpluses have increased so much, logically, more should be given back to the residents, especially those in the smaller flats.

Because their income is lower, many of them cannot enjoy the 10% across-the-board income tax rebate. Furthermore, they also cannot benefit from the tax rebate allowed to offset GST which was originally set at $700 but has been reduced to $650. This lower-income group does not get any real benefit and every day they have to pay GST to the Government. Is it fair to them? In the next financial year, the Government should try and compensate this group of people for their losses.

Furthermore, after the implementation of GST, when the Government is providing tax rebates and returning some of its budget surpluses to the people, it should consider the GST tax burden of the individual families. A family with more members, where the wife is a housewife and the children are still young and not economically active, and with retired parents or siblings who are still schooling, the GST tax burden will certainly be higher. The Government should alleviate the GST tax burden of such families.

Although the Government is strongly promoting the enhancement of family cohesiveness and encouraging children to maintain their parents, there is nothing in this year's Budget to put this policy into effect. On the contrary, the Government is introducing measures with punitive implications. The water conservation tax is one example. Of course, water is precious and Singapore lacks water resources. Encouraging people to save water is a right thing to do. But using 20 cubic metres as the standard, irrespective of the size of the family, and punish those who use water in excess of the quantity fixed by the Government, branding them as "wasting water" and making them pay the water conservation tax, is just too arbitrary. I hope that some originally filial children and daughters-in-law will not make a fuss when their parents take a bath too many times during the hot weather, and stirring the whole family into a tempest.

Mr Deputy Speaker, Sir, this year's Budget is no different from that of the previous year. Apart from the financial sector which will receive quite a lot of benefits, the cost pressure on the other businesses has not been reduced and there is no tangible improvement in the international competitiveness of Singapore. Yet, this huge monster in the form of GST is hanging over the life of the people of Singapore. The lower-income families with large family sizes, and those with heavy financial burden do not seem to get much compensation from this Budget. As compared with the previous year's Budget, this year's Budget is merely an "old medicine in a new bottle"!

Mr Choo Wee Khiang (Jalan Besar GRC): ( In Mandarin): Mr Deputy Speaker, first of all, let me state my support for the Budget announced by the Finance Minister. This afternoon, I heard with regret the speeches by Mr Ling How Doong, a Nominated MP and Mr Low Thia Khiang. Mr Low said that this year's Budget appears superficially to be one that would please everybody. I think this is a very unfair comment on a budget so carefully and thoughtfully presented by the Finance Minister on behalf of the Government.

All the newspapers, whether Chinese newspapers or the English newspapers, share the view that this is one budget that will benefit everybody. It is a farsighted budget. If you say that this year's Budget is no different from last year's, then it only goes to show that the budgets presented by the Finance Minister and the Government are consistently far-sighted. What they have done is for the long-term benefits of the nation and not like what Mr Ling How Doong is advocating - to turn Singapore into a welfare state.

As for the Goods and Services Tax (GST), Mr Low said that the GST is a huge monster. I tend to agree with him to a certain degree because GST has become a part of life in Singapore. However, the revenue increase from GST is basically due to two main factors: firstly, the consuming power of our people has increased and, secondly, the extent of inflation.

As for inflation, the Ministry of Trade and Industry (MTI) has already given its explanation. Inflation is well under control. Because our economic performance is good, people have better purchasing power - that is the reason why the revenue from GST has increased. This is a very fundamental point.

Let me give you an example. A resident of a 1-room or 2-room flat has an income of $800 per month. If his income is more than $800, then it will not be possible for him to live in a 1-room or 2-room rented flat. If his annual income is, say, $10,000, 3% is $300. From the 10% rebate on income tax given by the Government and the rebate on the S&C charges, the benefit he gets is more than $300. So the net income is more even after paying his GST. When Mr Low criticised the GST and the Budget, he should have thought more carefully along this line. He was wrong in his calculation, just like Mr Chiam See Tong.

The implementation of GST in Singapore is still in a very preliminary stage, but it appears to have been accepted by the people already. While we are still trying out this GST system, I think we have to look at it on a long-term basis, and not be short-sighted in our approach.

Just now, the Nominated MP made his plea on behalf of the people and workers in the lower income group. I do agree with him in many aspects. Personally, I have conducted a lot of house-to-house visits and I have met a lot of residents in the lower-income group. In many aspects I agree with what he said. However, I feel that if we want to help the members of the lower-income family, we should take a more long-term view. Most senior members of these low-income families have low educational level, and they are unskilled. Therefore, our duty is to see how we could help them to improve the prospects of their children so that the next generation will be better-off with better education and higher skills level in order that they may be able to stand on their own feet in a highly competitive society like ours. This is the most important point. Of course, we can give them some immediate benefits like rebates in S&C charges, income tax rebate as well as CPF top-up. There are also many other things we could do. Some residents asked for rebate in telephone charges because they could not afford to engage private tutors for their children, so they have to use the telephone to discuss homework with their classmates. So the telephone bill is costly. Some asked for rebate in electricity charges, and so on and so forth. Some even asked for rebate in water charges. We heard from the Minister just now that water is of vital importance to us.

To a certain extent, I agree with the concern of the Minister as to how we could help the lower income family. However, we cannot just have one uniform measure to help them. I think we should think more positively and ask the Minister whether he could implement some measures to help the lower-income people with large families. We must not just criticize that this Budget does not benefit the poor. We have to come out with some constructive suggestions on how to help the poor families. If you say 20 cubic metres are not enough, then how much do you want? 100 cubic metres? 200 cubic metres? I feel that Mr Low Thia Khiang should be more patient and allow the Minister more time to give us more details on how to help the lower-income families.

Finally, I would like to take this opportunity to express my hope that the Government will consider the suggestions by the Nominated MP and the other MPs that, while considering the long-term benefits, it should also see if some short-term policies may be adopted to assist and help the lower-income Singaporeans. As it is said, "Water from afar cannot help to put out a fire nearby". I hope that the Minister will seriously consider this matter. 5.03 pm

Mr Imram bin Mohamed (Nominated Member): Thank you, Mr Deputy Speaker, Sir, for allowing me to join in the debate.

Sir, the Budget Statement by the Minister for Finance is certainly one that is welcomed by most Singaporeans. The general population can certainly be pleased with the rebates in the HDB rental, service and conservancy charges, the CPF top-up as well as the easing of their tax burden. It is good that the Government is distributing these goodies across-the-board and it should be such as these handouts are to a large extent a refund of the excess GST collected in 1994. The GST being a broad-based tax which affects all Singaporean consumers, it is only right that the excess collected be distributed equitably to Singaporeans at large.

While I welcome the Budget Statement, I cannot help but feel that pensioners and retirees do not stand to gain much from the rebates and easing of their tax burden. I believe this issue was raised last year when the GST was introduced. I do not see it being addressed in this Budget.

Sir, monies from the Central Provident Fund and pension are not subject to tax. Yet our retirees who have withdrawn their CPF and are receiving pension find themselves subject to taxation when they spend their hard-earned savings. In this year's tax changes for individuals, the retirees are treated no different from the other income earning Singaporeans. They ought to be treated more generously. After all, these people have done their fair share in contributing to the Singapore economy during their working years.

Mr Deputy Speaker, Sir, I also feel that the worries of the small retail business owners are not adequately catered for in the Budget. The past year had seen overheads rising for all these small businesses and they are finding it harder to make ends meet. The introduction of the GST has resulted in a reduction in their profits. Many had to absorb the cost of the GST in order to be more competitive and to retain their market share. The strengthening of the Singapore dollar too has also affected the business of those who depend on tourist clientele. With further strengthening of the Singapore currency, the Government may have to review the viability of Singapore being marketed as a shopping destination for tourists.

While the reduction in the property tax rate from 15% to 13% is aimed at reducing costs for the industrial and commercial sectors, many small business owners may not benefit from it. By and large, they rent the premises they conduct their business in. Though the Minister has encouraged landlords to pass on the tax reduction to the tenants, this may not happen especially as rents are normally determined through tender.

Another area I would like to touch upon is with regard to estate duty. Sir, I understand the limit of exemption from estate duty was last fixed in 1984 at $500,000 for liquid assets and $3 million for immovable properties. I feel these figures are badly in need of a review considering the large income and asset inflation that has taken place over the last 11 years.

Mr Deputy Speaker, Sir, this tax is known to be referred to as a misery tax for when a head of family dies, the family has not only lost a breadwinner, but also suffers the misfortune of having to bear additional tax burden. Like the Malay saying goes, Sudah jatoh di timpa tangga pula. One may even question the justification for such a tax. A man has already paid his due tax on his income earned during his lifespan. He has to pay again when he dies. It is a form of double taxation. For Muslims, it is a triple tax. This is because Muslims also pay to MUIS and other recognised bodies an annual tax on accumulated wealth. I believe the Government has no fixed formula to determine the ceiling for exemption from estate duty. The figures are simply reviewed from time to time. I urge the Minister to review it on a more periodic basis. Where estate duty is concerned, if we do have to err, we should err on the generous side.

Finally, Sir, I would like to commend the Minister for a good and cautious Budget. While I support the motion, I hope the Minister will consider the points raised. It will further enhance the Government's image of one that cares and has compassion for all its citizens.

Mr Lew Syn Pau (Tanglin): Mr Deputy Speaker, Sir, the economic performance for last year at 10.1% GDP growth was indeed creditable, probably better than many of us expected. Even more comforting was the fact that growth was broad-based, which augurs well for all sectors again this year. Moreover, inflation was kept at 3.6%, despite the introduction of the GST of 3%. This good performance, I believe, did not occur by chance, but is a result of sound economic and financial policies of the Government. I congratulate the Government for a job well done, especially the measures taken to ameliorate the impact of GST which became a non-event.

The budget for the next financial year appears to be a cautious one in order to prevent overheating the economy, yet contains the essential elements of a good budget. It rewards one-off those who have contributed to our economic growth, and it carries measures to promote the further growth of our financial markets. It is prudent to be cautious in the face of greater uncertainty in the world, increased cost pressures and an expected lower growth rate of 7.5% to 8.5%. It is better to have financial policies that are long term and sustainable than to have populist ones that may have to be unravelled when the short term euphoria is ended.

Let me now comment on some of these fiscal policies in greater detail.

Expenditure Policy

I support the Government's FY95 Budget's spending priorities on defence, education, infrastructure, healthcare and quality public housing.

First, on defence. Defence takes up about 28.9% of the $19.5 billion budget and this is the largest share. It is up from 20% from FY94. Although I recognise the importance of defence, being an NSman myself, I would like to ask the Minister what accounts for the bulk of this increase and what measures do we have to account for the effectiveness of this higher expenditure.

Next, on education. The education budget takes up 18.8% share and is the second largest. It is up 8% from FY94. At $3.71 billion, it is only 3.25% of GDP. Most countries spend between 3% and 5% of GDP on education.

We have made great strides in the field of education, especially in the provision of tertiary education to our children. Our stated targets are places for 20% of each cohort for university and 40% for polytechnics. It is a vast improvement over having just NUS, NTU, Singapore and Ngee Ann Polytechnics not too long ago. Yet, frequent questions are still being raised on whether we are spending enough to increase the number of places at the two universities, NUS and NTU, to meet the needs and aspirations of our students who qualify. Too many students are still being turned away because of our stringent admission criteria, some because of the quota imposed as part of our overall manpower planning policy, and others because of the high cut-off points arising from keen competition. The more fortunate ones from wealthier families go overseas to UK, USA, Canada, Australia and New Zealand to get degrees of their choice. Some of them return home to Singapore after graduation, others do not. The question I have is whether we have assessed the extent of this brain drain on our manpower resources. Are we able to cost it, including the outflow of foreign exchange? Are we able to measure it against the cost and benefit of creating more places here for such students, without sacrificing quality and standard?

The Government has expressed concerns in the past about over producing graduates and the inability of the local labour market in absorbing them. If this happens, the Government fears that these graduates might be disenchanted, disillusioned and eventually emigrate, leading to a brain drain too. I believe the situation today is slightly altered. With the push for regionalisation, our labour market is no longer just the Singapore labour market, but that of the region. It is a much bigger market, with easy mobility for many entrepreneurs and professionals. With the Government's encouragement for each person to be educated to his or her highest potential, a polytechnic education for many is not enough. We have evidence of many polytechnic graduates competing for places in NTU and NUS. Those who have gained admission, I am told, do very well. Others who have gone overseas instead have done equally well, doing Singapore proud.

My question is: should we restrict the number of places at our two universities to 20% of each cohort, knowing that the people's aspirations are rising, the demand for such places is increasing, and many can qualify and do well? I believe the budget is not the issue. We can afford to spend more on education. Perhaps it is even time to consider a third university to meet the needs of our young.

Hence, I am heartened to note that the Minister thinks likewise. I quote from paragraph 25, Part 1, of his Budget Statement:

`To cap the supply of university and polytechnic graduates is an unworkable and self-defeating alternative. It will slow growth and depress earnings for all, including the graduates, who will have few job opportunities in a stagnant economy.'

From a psychological and emotional perspective, I believe Singaporeans who have been educated in Singapore at substantial Government subsidy are more likely to be proud of Singapore, and call Singapore their home, even though they may live and work overseas or elsewhere in the region. University life is a short but intense one, and one that all of us remember for the rest of our lives. So would you not prefer that they be in Singapore during this period of time than be overseas paying their own way?

The demand for university education is further manifested by the success of the OUDP thus far. Other science courses are being planned by the OUDP. I hope the Government will continue to support the OUDP financially so that the fees will continue to remain affordable.

I also support the relatively higher expenditure on independent schools, autonomous schools and the gifted education programme. As they have proven to be a success so far, I hope the number of places in these programmes will be expanded so that more of our students can benefit from them. Our talented young should be nurtured early so that our politicians, senior civil servants and captains of industry can stand shoulder to shoulder with the best in the world.

As for Edusave, I am happy to note that another $500 million is budgeted for the Edusave Fund in FY95. If the economy performs well again, I would like to suggest that this amount be topped up to $1 billion. Secondly, we should continue to encourage our parents and students to make greater use of their Edusave funds. The Government may also wish to consider giving Edusave grants to primary schools so that they will be better off financially to provide all-round education to our young.

Public Housing

The next subject I would like to touch upon is regarding housing. Our public housing programme is without doubt the best in the world today. 86% of our people today live in high quality public housing, especially in the newer public housing estates. The Government is spending enormous sums of money. In fact, the bulk of the capital subsidy of $719 million is for upgrading the older housing estates.

The question that has often been asked, as I visit residents in private housing estates, is: what about the upgrading of the common areas in private housing estates? Should not the Government also set aside some funds to upgrade the public areas in private housing estates? Let me say that these residents are not begrudging what the Government is doing for the older public housing estates. They are happy for those who benefit from the upgrading schemes. Nevertheless, we should be aware that many private housing estates in Singapore are also more than 20 years old. The few common playgrounds and parks in some of these estates are run down and in need of major upgrading. Drainage in some estates is wanting, as flooding during sudden downpour still occurs. Estate roads, which were once considered adequate, are now too narrow and congested, as many areas have been rezoned to a higher plot ratio for medium and higher density housing. I have raised this issue before and I have been told that the various Ministries have already budgeted for the maintenance of roads, drainage, parks, etc. in their yearly budget. But these amounts budgeted are just enough for routine maintenance only, not major upgrading. Upgrading is expensive, and this is why we set aside separately almost three-quarters of a billion dollars on upgrading for FY95.

I would like to propose that the Government also consider setting aside a modest budget every year for the upgrading of older private housing estates, estate by estate, starting with the oldest ones. After all, if you look at the profile of the taxpayers of these private housing estates, I am sure they pay more than their fair share of income taxes.

Goods and Services Tax

Next, I would like to turn to revenue and tax changes. I would like to comment briefly now on the GST. I am happy to note that the GST was implemented successfully, and due to the high economic growth, the GST collection is now expected to be $1.5 billion. We have been told that the GST offset package has since been revised to $1.7 billion. I would like to ask the Minister how this offset package has been revised.

Next, I welcome the incentives announced to further boost fund management, risk management and capital market activities in Singapore. These incentives, I am sure, will help to further enhance Singapore as a financial centre in this region.

On income tax changes for individuals, I welcome the across-the-board one-off rebate of 10% for Year of Assessment 1995 and the rebates on HDB service and conservancy and rental charges for those who live in HDB flats and who probably pay little or no income taxes. The one-off rebates allow the Government to vary the amounts every year depending on the economic performance and our affordability. I also support the CPF Top-Up Scheme, the reduction in property tax and the increase in water conservation tax. We should all learn to conserve our precious water resource before it is too late.

In conclusion, I would like to say that the FY95 Budget is probably one of our best budgets ever, with a budget surplus of $5.75 billion. No economy is immune from recession. We should therefore save up as much as possible and invest wisely while the going is good. For the man-in-the-street, a good budget must offer opportunities for wealth creation and allow him to translate his hard earned income into greater purchasing power for him and his family. To achieve this, the Government must continue to attract investments to Singapore and, at the same time, create opportunities in the region. It must also redouble its efforts to contain the cost of food, housing and transportation, the three main components of household expenditure. If we succeed, the budget will continue to be a happy event and we can be assured of more good years to come.

Sir, I support the financial policy for FY95.

Mr Leong Horn Kee (Thomson GRC): Mr Deputy Speaker, Sir, one of the most striking features of this year's Budget is the substantial budget surplus attained. In fact, a standard positive feature of the Singapore Government's Annual Budgets is the consistent healthy budget surpluses achieved year after year.

Just look at the last three years. The budget surpluses were:

In 1992, the budget surplus before contributions to Medifund and Edusave was $4.9 billion. In 1993, it was $7 billion. In 1994, it was $9.2 billion.

For financial year 1995, the Minister has budgeted for a $5.8 billion surplus, which is in spite of the huge provision of $18.5 billion for both Operating and Development Expenditures. This is a good $4.4 billion or 31% above the actual total budget achieved in FY94.

Sir, we are proud to have a Government that could manage the economy very well, achieve high economic growth and, as a result, turn out routinely strong surpluses. We should compliment the Government for its capable handling of our economic affairs. However, Sir, looking at these surpluses, I want to ask the Government the following questions:

First, is the impact of the surpluses deflationary? That is, could we have achieved even better growth and create a stronger and more robust economy, if we had siphoned less money out of the system via budget surpluses?

Second, are we not taking away too much of the private individuals' and corporations' initiatives in investment making, as surpluses are taken away from them?

The above are two of the many implications that I feel the Government can consider. In addition, I thought the Government can also consider whether to do a comprehensive review of our taxation and non-tax revenue system. Are we over-taxing the system as to stifle initiatives and growth? Are the taxes and non-tax fees charged fairly spread and burdened by the different segments of the people? Are we over-taxing certain segments of the people? These are questions which I thought it would be useful for the Government to have answers.

May I move on to comment about some specific budgetary measures. First, on the CPF Top-Up Scheme and the CPF Share Ownership Top-Up Scheme (SOTUS). These two contributions of $200 and $300 respectively for the two schemes are generally well received by the people. I am in support of these measures. However, I would like to raise a few comments that have been made to me by my grassroots leaders. One remark is that these payments do not help the very poor. On the other hand, the amounts are not that meaningful to the very rich either. For the poor, they cannot get hold of the $200 which is put into their CPF accounts, as they cannot draw out until they reach 55. As the Chinese saying goes, yuan shui jiu bu liao jin huo [ ] which means far away water cannot save near fire. So those people who need money cannot touch the $200 that has been given by the Government as a handout. Similarly, for the $300 SOTUS scheme, the housewives, low-income earners and unemployed are also disadvantaged. These people may not earn enough to make an active $750 contribution into their CPF accounts. And to expect them to put in $750 cash may not be within their means either.

One alternative suggested is that instead of these handouts of $200 and $300 each into the CPF accounts, the Government can consider creating a certain pool of funds to be targeted to help the poor families and under-privileged in the areas of education and medical costs. The funds to be allocated to these schemes need not be large and can be administered by the grassroots organisations of each constituency. For a start, we can consider allocating a block grant of, say, $250,000, per constituency. This amounts to only a total of $20 million for all the 81 constituencies in Singapore. This sum actually is very small compared to a total of $640 million provided for under the two CPF Top-Up Schemes. But it will be a very much appreciated gesture by the Government. If the Government can accept this idea in principle, I am sure the details and mechanism can be worked out.

On relief for pensioners from the GST, with the introduction of the GST, I understand that there is a pool of people who have to pay GST and are not getting any reliefs. These are the Government pensioners who retired after 1978 and who are now living in small private houses. These pensioners do not enjoy the pension re-adjustment which affected only those who retired before 1978. Such pensioners who are living in private residential estates do not enjoy any rebates on the service and conservancy charges given to HDB dwellers. In contrast, they are paying higher property taxes with the revision of their property tax assessments on their houses over the years.

I think the Government should look into some reliefs for this pool of pensioners. Perhaps, at the next review of pensions for retirees, some adjustment can be made for them to account for their GST payments.

On water conservation, I would like to comment that the proposed increase in water conservation tax on domestic customers from 10% to 15% will again affect the lower income earners. The low income earners are usually very thrifty and therefore are careful not to waste water. In contrast, the high income households will not be badly hit in their pockets as they have the means to pay, and therefore may not be as water conservation conscious. Hence, I feel that a more effective approach is through education. There can be talks in schools and corporations. Campaigns can be organised every year to remind the people. I believe that education and reminders are more meaningful and effective. I also believe that Singaporeans are generally very responsible and responsive to such Government campaigns. Hence, I would like to urge the Government not to over-use the monetary punishments as they would be adversely received and are in fact regressive in taxing the poor more.

Sir, I wish to conclude by commending the Minister for a comprehensive and well-meaning Budget. In particular, I would like to congratulate him for achieving a record budget surplus.

Dr Lee Tsao Yuan (Nominated Member): Mr Deputy Speaker, Sir, it has been a long day. I would very much like to raise a number of issues in the Budget but I will confine myself just to one.

I would like to focus on two related issues in the area of education. First, the social implications of intensive education upgrading and, second, the need for Singapore to become a learning nation.

The Minister pointed out that there has indeed been a significant increase in the proportion of the tertiary educated (graduates from the polytechnics and universities) to 54% of the cohort today with a target of 60% in the near future. Take university education as an example. There are many more university graduates now compared to 20 or even 10 years ago. While there were only 1,770 graduates in 1980, for example, there were more than 7,000 in 1993 and this is even excluding the thousands who have graduated from universities overseas. Graduates have to get used to no longer being at the pinnacle of the pyramid. University education has become more broad based. This massive ramping up of the tertiary educated surely has wide ranging social implications.

First, consider the salaries of fresh university graduates, for which data are available. Ten years ago, from 1979 to 1984, fresh graduates on average used to earn 1 1/2 times that of the average monthly earnings of the workforce. In 1983, for example, fresh graduates earned nearly $1,400 while the average monthly earnings was about $860. If one were to take gross median income, however, that would be of course less. Now, however, the ratio is 1:1. Fresh university graduates in 1993 received on average $1,920 while the average monthly earnings for the workforce was $1,918. In other words, 10 years ago, university graduates, even from the start of their careers, had higher purchasing power compared to the average earnings in the workforce. Today, however, the purchasing power of fresh university graduates in relative terms is about the same as that of the average wage earner. This is exactly what one would expect with the rapid increase in the number of graduates. This is not to say, however, that salaries of professionals and managers are not high in Singapore. An international comparison would show that Singapore's middle and senior management salaries are already comparable with those of developed countries and higher than those in many developing countries.

Second, in the 1960s and early 1970s, the vacuum left at the top by the departure of the British meant a unique opportunity for Singaporeans to move very quickly up the career ladder. It was not unknown, for example, for Singaporeans in their early 30s to become Ministers, Permanent Secretaries, CEOs in the private sector. But that was in a different era. Now, while the practice of meritocracy still rewards the superstars, the maturing of the workforce plus the raising of the retirement age do mean that promotions will occur, but occur at a slower rate.

The third implication is that society will have to get used to a longer average time spent in getting educated. By the year 2000, with 85% of each cohort receiving post-secondary education, those with only secondary education or less would face difficulties later on unless deliberate efforts are made to upgrade their skills.

These three factors - the decline in the relative income of fresh university graduates, the slowing down of upward career mobility and a longer average time spent on education - can lead to frustration because they are changes which have been compressed within a short span of time. The good life is still attainable in Singapore except that it might take longer or the concept of what is a good life may need adjusting. Expectations need to be lowered. This, I believe, is one important social consequence of the heavy investment in education.

The second issue which I would like to raise is the re-examination of the concept of education. In today's world, with rapidly changing technology, it is not only computers which become obsolete. Labour skills can also become outmoded very quickly. There is increased pressure to upgrade one's skills which is equally true for the top management as it is for the rank and file worker. Also, it is fairly common for a person to have two or three different jobs in his or her own life time, especially with longer life expectancies and the raising of the retirement age. It is therefore important to broaden the concept of education. Education should not only mean formal pre-employment education. It should also include the concept of continuing education for upgrading job-related skills. I believe Dr Arthur Beng has also spoken on this subject.

In today's fast changing world, learning should occur not only in schools and universities, but need to take place continuously throughout one's working life. In order to meet the challenges of more intense competition, it is time to actively promote the concept of a learning nation, a learning society in Singapore. Training and retraining need to become a fact of life, difficult though it might be, just as the 80 degree climate is for us. One way to do this is for the Government to encourage job-related training. This is already being actively promoted at the worker level for those with "A" level and below. There are many schemes in place for skills upgrading and retraining of workers. Organisations such as the Institute of Technical Education offer a wide range of courses such as BEST, WISE, MOST and TIME. Many of these are supported by the Skills Development Fund which is administered by the National Productivity Board, a key organisation spearheading this effort. I support the proposals made by Dr Ow Chin Hock and Mr Chew Heng Ching for increasing the SDF. Dr Ow has suggested transferring part of the foreign workers' levy. Mr Chew has suggested channelling part of the budget surplus to the SDF. It would be good for the SDF to be expanded to support "A" level and less worker education.

However, there are few mechanisms in place to facilitate and encourage job-related training for professionals and managers - those who have tertiary education. While some companies, especially the larger ones, regularly sponsor such training, others do not. I suspect that productivity could be significantly enhanced if there was a systematic and regular training at the professional level. Take the recent regionalisation effort, for example. It would be helpful if a person going on an overseas assignment went to country familiarisation and cross-cultural communication courses before his or her own posting. While this is routinely done in larger companies such as multi-nationals, it is still not a common corporate practice in Singapore.

I therefore suggest that the Government give some thought to fiscal incentives for the purpose of encouraging job-related training for professionals and managers. The principle of Government subsidy for education is a well established one. Formal education in schools, polytechnics and universities is heavily subsidised in Singapore and justifiably so. If the concept of education is broadened to comprise formal education as well as continuing job-related education, then it would be logical for the Government to lower the cost of job-related training as well as formal education.

There are two possible methods of doing so. First, the Government can give a double tax deduction for training expenditures, which means conceptually treating training in much the same way as capital investment. In other words, just as there is capital formation in the physical sense, there is also capital formation in the human sense.

The other way is for the Government to subsidise, say, up to 20% of training cost. There is one other possibility - the use of the Skills Development Fund. However, since the SDF is financed by collections from the Skills Development Levy from employers, I suggest that the fund be used for training and skills upgrading of the employees, especially the workers. If the SDF is expanded to encourage job-related training for professionals and managers, then more funds would be needed. Of course, employers can contribute towards this purpose, but I suspect that this would be an unpopular measure in the business community. The scheme would also need to be properly administered. Some controls need to be established so that abuse of the system, such as sending personnel on junket trips abroad, is minimised. One way is for courses to be approved by some Government organisation such as NPB before being eligible for the Government incentive. If the principle is approved, the details can be worked out by the experts.

In conclusion, I am fully aware that the Government should not do everything. The burden of training should fall on the company and the individual. I am also not advocating a subsidy mentality. However, job-related training is not consumption but is human capital formation and does enhance productivity. Since people are the only resource in Singapore, we need to equip them with skills not only before but during their roughly 40 years of employment.

I therefore support the financial policy of the Government but do hope that more can be done in terms of job-related training.

Mr S. Chandra Das (Cheng San GRC): Mr Deputy Speaker, Sir, like other MPs before me, I would like to congratulate the Finance Minister, Dr Richard Hu, for giving us a sound budget for the financial year 1995/96.

Yet, Sir, some Singaporeans were not that much enthused by the Budget Statement. Some went on to say that it was a non-event. Why was this so? Frankly, I believe that high expectations were raised unnecessarily by the media. The event was advertised in the same manner as programmes like "Masters of the Sea" or "Under One Roof". Maybe in order to get a higher television rating. Night after night, there were wish lists ranging from reduction of personal income tax to corporate tax. Everybody interviewed wanted something. So when these wishes did not feature in Dr Hu's statement, there was disappointment. Sir, I begin to wonder whether it is necessary to build up such high expectations on an event like the Budget Statement.

Mr Deputy Speaker, Sir, on the Budget Statement itself, I have a few comments to make.

Sir, to stimulate fund management and other areas in the financial sector, further incentives and tax breaks were given. This is good and it should be welcomed. While it is necessary to stimulate the growth of new areas with tax breaks, I think the retail sector could have done with some help. Everyone is aware of the tough times facing the retail sector. Yet apart from the reduction in property tax, this sector was left to fend for itself. Maybe the Singapore Tourist Promotion Board should have made a stronger case to the Finance Minister on behalf of the retail trade.

While on the subject of financial sector, I think our authorities have a good system of vetting Singaporeans getting involved in the financial sector. For example, if one wants to become a remisier, even if he is a professional, he has to take various tests before he is given a licence to operate as a remisier in the stock market. I think this is good and it should be continued. My question is whether the same stringent conditions are applicable to foreigners working in our financial sector. It seems it is easy for a foreigner settlements clerk to head a futures company in Singapore. It is now revealed that his application for a licence in the United Kingdom was not allowed. My question is: are the rules the same for foreigners and Singaporeans? If not, Sir, this area needs tightening up.

Sir, the tax breaks given in the Budget benefit large corporations, both local and foreign. This should be encouraged. But at the same time, additional help should be forthcoming for our SMEs. I would like the Finance Minister to consider a lower corporate tax level for SMEs, as one of the many additional measures to help our local businessmen.

If this present trend continues, local companies will be phased out in a matter of time and we will end up as a nation of shopkeepers and book-keepers. Surely we do not want this to happen.

I am aware that the Government is assisting the SMEs. But I am suggesting that more should be done. Maybe we should set up a separate agency solely to concentrate on the problems and needs of SMEs.

Sir, SMEs here are to stay and the Government should do all it can to help them grow. Maybe the Finance Minister can consider these proposals.

Next, I welcome the tax rebates for the individual - an across-the-board 10% rebate, the $300 share ownership top-up scheme and a further $200 paid into the CPF account of every Singaporean over 21 years and above. The Finance Minister is indeed very generous. All this is possible because of the healthy state of our finances and the good economic growth that we are enjoying.

My only regret is that the less advantaged in our society could have been given a little bit more, especially when we have done that well. $30 million given in terms of relief to 1-, 2-, 3-, 4- and 5-roomers is, I think, slightly on the low side. The Minister could have been a little bit more generous to the 1-, 2- and 3-roomers. The loss of revenue on the 10% tax rebate amounts to $234 million, but the relief given to the 1-, 2-, 3-, 4- and 5-roomers amounts to $30 million. The question one asks is whether this is equitable.

Sir, my last observation of this Budget Statement refers to the question of the management of our surplus. Many have asked: how are our surpluses being managed? How are our investments performing? The management of our surplus should also be transparent. There should be some form of disclosure on the performance of our reserves.

Sir, I support the financial statement.

Assoc. Prof. Walter Woon (Nominated Member): Mr Deputy Speaker, Sir, thank you for letting me speak. I had not actually expected to speak today. So I must apologise if my speech sounds rather extemporaneous. I had to re-create from memory what I meant to say.

I support the motion at hand. But I would like to focus attention on one particular aspect, and that is, the question of corporate governance in Singapore.

Let me, before I go on, declare my interest as a practising lawyer and as a director of a listed company.

We have seen in the Barings case that the fingers are now pointing to lack of controls within the bank itself. And the question that has been on everyone's mind, both here and abroad, is: can it happen in Singapore? The knee-jerk reaction to something like Barings is of course to tighten up everything indiscriminately. But I think that would be self-defeating. You cannot complain on one hand that we lack entrepreneurs and then, on the other hand, try to control every aspect of commercial life.

Let me state my position clearly. I am not against strict regulation to ensure that the market is clean. What I am against is mindless regulation that seeks to control everything, where regulators poke into every nook and cranny and try to control everyone in everything that they do. To keep the market clean, two things are necessary. Firstly, you have to have clear laws, consistently enforced, so that people know exactly what they can do and what they cannot do. For a businessman, it is not of any use to go to a lawyer and the lawyer tells him, "Well, you know, maybe you can do this because the laws are vague. If you do this, perhaps you will be prosecuted; perhaps you will not be." That is no use to any businessman.

Secondly, you need adequate penalties, so that a person who does break the law, when he is caught, sentenced, he should be deprived of his wrongful gains. It is no point having expended all the efforts in bringing a person to book if the penalties are totally inadequate and the person goes out of court laughing and grinning from ear to ear because he has just been slapped on the wrist.

Unfortunately, in many aspects, the system that we have in place is the precise opposite. Very often, we have vague laws and we make it hard for a businessman or lawyer to know for certain whether a particular course of action is legal. And sometimes, very often, I would say, we have penalties which were set maybe 10, 15, 20 years ago which today are inadequate.

Let me take the second point first. I have previously spoken in this House about the inadequacy of penalties under the Securities Industry Act and the Futures Trading Act. The same holds true, I think, of the Companies Act generally. For something as serious as market manipulation, for example, the maximum penalty is $50,000 fine for an individual and $100,000 fine for a company. Will these penalties deter potential crooks? Will Members in this House consider justice to have been done if the crook who makes $20 million gets off with the maximum $50,000 fine, and can spend the rest of his loot with impunity? May I say that penalties like these are totally inadequate as a deterrent. It is like being flogged with a wet lettuce.

The Minister said previously in this House that his Ministry would look into the possibility of confiscating the proceeds of white collar crimes. May I suggest further that some thought be given to expanding the court's power to make compensation orders, as is presently provided in section 401 of the Criminal Procedure Code. Greater use of this kind of compensation order will not only give the courts the ability to deprive a wrongdoer of the fruits of his crime but will also take the strain off the legal system because it will avoid having to commence duplicate civil proceedings later on to recover compensation.

Section 401 of the Criminal Procedure Code is the section that has, if my memory serves me correctly, nearly a 100-year pedigree and was not really designed for white collar crimes. But it is one of the options that I think we should be seriously looking at.

Reverting to my first point, since the Companies Act was enacted in 1967, it has been amended nearly a dozen times. It has grown by nearly 50% in terms of sections; in terms of weight, it is probably the largest statute that we have on the book. But in all that time, no one has really sat down and thought about rationalising the many sections. We have borrowed freely from other countries - from the United Kingdom, from Australia, from Canada, from Malaysia - and all these things have been stitched together in a patchwork quilt. They do not really form a coherent code.

My concern is particularly with the provisions that govern directors. In Singapore, we have anticipated some of the problems of corporate governance raised in other jurisdictions. For example, in our Companies Act, it is compulsory for listed companies to have audit committees, something that the UK still does not require by legislation. Part of the scheme of improved corporate governance revolves around the necessity for having non-executive directors. In listed companies, audit committees must consist of independent non-executive directors. The idea is that the non-executive directors should check on management to make sure that management is not abusing their power. The trouble is, as the law presently stands, if a person wants to be a non-executive director, he knows the extent of the liability, he would probably think twice and thrice about doing it.

I often conduct seminars for the profession and for laymen about directors' duties and the reaction I usually get at the end of the seminar is: how can I quit my job as a director? Because all the liabilities seem frightening when you look at them. To reassure people, I tell them the chance of being prosecuted is probably less than the chance of being struck by lightning on a golf course. But that is very little compensation to those people who are prosecuted, because one has to remember in Singapore that being prosecuted is a no-win situation. Even if at the end of the day you are acquitted with no stain on your character, you still have to pay your lawyer, and that is going to be very expensive. So it is no consolation to you that you will go down in the law history books as a case that establishes a point of law when you have to pay for this privilege. And, therefore, we sometimes find that giving advice to clients who have a risk-averse mentality, they say, "Okay, right. Since you cannot tell me for sure this is okay, I would rather not do it and get into trouble in Singapore with all the attendant problems."

One of the problems of the Companies Act is that it is drafted on the basis of a premise that is no longer true. And the premise is that the board of directors will actually run the company. In small companies, this may be true. But the larger the company gets, the less likely it is that your board is involved in day-to-day running. And by the time you get to the size of a listed company, the chances are that your directors really have very little input, especially non-executive directors. They have very little input into the management of the company and they are, in a sense, at the mercy of management who feed them information. The board meets once a month, twice a month perhaps, but the day-to-day operations of the company are run by employees.

Unfortunately, the Companies Act does not recognise this simple commercial fact of life. While the original Companies Act was drafted way back in the 1860s, non-executive directors were not thought of. But they have now become a fixture of corporate life. This leads to all kinds of anomalies.

You look, for example, at section 160A of the Companies Act. This requires a resolution of the company to approve certain substantial property transactions between a company and its directors, between a company and persons who are connected to the directors. So, for example, if you have got a non-executive director of a company that deals with luxury cars, if this non-executive director's wife wants to buy a car from the company, technically, you should get a resolution of the General Meeting. You call an Extraordinary General Meeting (EOGM) and you get a resolution approving this. But if the Chief Executive Officer, who is not a director, wants to buy a car, there is no requirement for a General Meeting resolution, when the Chief Executive Officer is in a far better situation to influence the pricing than your non-executive director. This is an anomaly that arises because that distinction is not made.

In the Malaysian equivalent of this section, there is an exception for transactions in the ordinary course of business. This suggestion had been made before by various people, including myself, to parliamentary draughtsmen but has never been accepted because it is said - this is hearsay from the parliamentary draughtsmen who told me some years ago - that MAS will not accept something like that. They would rather everything goes to the General Meeting. In practice, what happens? People ignore this, nothing happens to them. But if somebody wanted to make an issue of it, they could make an issue of it, because that is what the law says.

We have sections that are the legal equivalents of a drift-net. They stretch out for miles into the ocean; they catch everything in sight, the good and the bad, the innocent and the guilty, and then the prosecutor decides who to prosecute. For example, section 156 of the Companies Act which requires directors to disclose their interest in contracts to the board as soon as possible after they know of this interest. You take the director of a company that runs a supermarket. Technically, every time he goes into the supermarket and buys groceries, he is making a contract with the company. He should in fact then go back to his board tomorrow and say, "I have bought $50 worth of groceries." There is no exception for transactions in the ordinary course of business. Everything is criminalised. It is not just a civil matter. It is a criminal matter. You could be prosecuted; you could go to jail. You have to make this disclosure even though all the other directors know of your interest. In the UK and Australia, these cases have come to the judges and the judges have said, even though the section does not say anything, if everybody else knows about this, no disclosure is required. And this of course is a commonsense approach. But this commonsense principle is not in the section, and that is the problem.

Another section is section 163 of the Companies Act. This criminalises the taking of loans from the company by a director of a related company. Take a very common situation. Many listed companies have got dozens of subsidiaries. Their officers, officers of a holding company, are nominee directors on the boards of the subsidiaries. Many of these listed companies have car loan schemes. So the officers of the holding company take a loan. They do not realise that if they are directors of the subsidiary and they take a loan from the holding company, technically, they commit an offence, for which they can go to jail, for which they can be fined, unless the loan scheme is approved by the General Meeting. How many of these companies have actually put these car loan schemes to the General Meeting? I venture to suggest not that many. And if you go through the list of listed companies, you will find quite a number do not have the approval and quite a number of these nominee directors actually are guilty of breaches of the law.

There are many cases of inappropriate criminalisation. Do hon. Members know what their spouses are investing in on the stock market? Well, if you are a director of a company, you better find out because if your spouse has an interest in the shares of your company, you are deemed to have an interest, you are supposed to make disclosure within two days. Otherwise, it is a criminal offence.

How many of the hon. Members of this House have changed their address in the last few years? Did you bother to inform your company within two days? That is what the Companies Act says, two days. Otherwise, it is an offence. So we have cases of inappropriate criminalisation. Things that may be small technical breaches but for which you have a fine, a jail sentence, possibly disqualification from directorship.

There are sections in force that push businessmen to do things that are commercially illogical. Supposing, for example, Company A has an investment in Company B. They have a non-executive director on the board of Company B. They want to increase their stake in Company B. What is the logical thing to do? Surely, you would talk to your representative and find out whether it is a good idea. If you try that and your non-executive director has got price-sensitive information which is not generally known, Company A and its board of directors are guilty of insider trading. So if you want to increase your stake in a company in which you have a non-executive director, do not ask to speak to him, do not see him, do not have any input from him, do the investment blind. That is what section 103 of the Securities Industry Act forces directors to do.

There are whole significant areas which are free from legal guidance, the whole area of nominee directors, for example. What are nominee directors for? Surely, to represent the interest of the companies that appoint them. But in 1965, a Singapore judge said that for a nominee director to report back to his board certain information that he gets would be disloyal. We have problems with determining who owes to whom the primary duty of loyalty. Is it to the company who pays you, or the company on whose board you sit? All these things require some guidance.

Rather than detain Members of this House much longer by carrying on this catalogue as I could go on for hours - you can ask my students that - I am not saying that the Companies Act is unworkable. I am not saying that the law is unworkable. What I am asking for is that we should stop for a moment and just stop adding sections without thinking about what we are doing to the rest of the law. We have not set out to look at the Companies Act and see how it inter- relates with other pieces of legislation, like the Securities Industry Act, the Futures Trading Act and with things like the listing rules of the Stock Exchange. The tendency has always been to add rules rather than to consolidate and to rationalise. May I suggest to the Minister that perhaps he might at some time consider reviewing this whole area of corporate law to ensure that the legal infrastructure we have is as excellent as the commercial and financial infrastructure that we have? If we want to be a world-class financial centre, I do not think we should be content with a selection of hand-me-down sections borrowed from various countries.