ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question (27th February, 1998],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1998 to 31st March, 1999." - [Minister for Finance].

Question again proposed.

Mr Chuang Shaw Peng (Nominated Member): Mr Speaker, Sir, for the benefit of those who were not present during my presentation yesterday, I beg your permission to give a summary of what I said. The main point that I put across was that the timeliness and accuracy of information for decision-making is extremely important in this fast-changing world. And this is even so in the preparation of a nation's Budget. I touched on the increasingly alarming reports of the banks' exposure to regional economies. Malaysian banks also sustained heavy losses.

Mr Speaker, Sir, it looks like events are unfolding faster than information can be gathered, analysed and disseminated. Yesterday, we got the financial results of UOB. The figure for their classified loans for regional economies is $332 million, out of the total classified loans of the bank of $991 million. Since this is the first time the bank has made such a disclosure, there was no historical data with which I can compare and get the year-to-year difference. But it may be sufficient to surmise that the difference between the $991 million and $332 million, as just mentioned, was due to local loans, and the difference is about $660 million. Mr Speaker, Sir, $660 million classified local loans.

A similar analysis of DBS Bank gives us a figure of $735 million for classified local loans. With just these two banks, the combined figure is a staggering $1.4 billion. I wish to highlight here that the $1.4 billion for the two banks must be telling us that there are many local enterprises who cannot service their loans any more.

The figure will be bigger if we combine the results of all the big four, Hong Kong Bank, Standard Chartered, Citibank and other banks that lend to our companies. Further analysis shows that for UOB, the $332 million classified loan is out of the 19.7% of total loans, and $660 million is out of the 80% of total loans. I may surmise that the total loans' current status is only half as good as those compared to regional loans. And my guess here is consistent with the survey results of the various associations that our local companies are not doing well. I hence call on the Government to get the banks to make quarterly reports, instead of half-yearly reports, to increase transparency and market efficiency, and to work more closely with the associations to feel the pulse and the health of our companies.

Having cited these figures, I am concerned that the proposed Budget is not meeting the needs of the current economic situation. The market has reacted so. If the Government is not reacting fast enough, would we get into deeper trouble which will cost us more to get out? The slow reaction of Japanese Finance Ministry's officials to their country's economic problem and Japan's slow recovery has presented to us vividly a classic example of why lagging and conservative policies may not be ideal after all.

Yesterday, I called on the Finance Minister to have a more expansionary Budget. I urge the Minister not to allow the current economic difficulties to deflect our long-term infrastructure development plans and, hopefully, it will not affect the construction of underground road systems and the facilities needed to push our vital economic sectors. As demonstrated by the first phase of our MRT project, kicking off big infrastructure projects during an economic downturn enables us to construct these facilities at bargain prices. We should capitalise on the current situation by building more MRTs and LRTs because construction costs are low.

On another note, I would like to focus on one point which is related to private equity funds. Although there are now tax incentives for this industry, there is still no clear strategy by the Government to develop a vibrant private equity fund industry.

So far, the Finance Ministry has given incentives for developing Singapore into Asia's premier fund management hub. This is to basically focus on promoting Singapore as a centre for managing Asian marketable securities investment portfolios of both Asian and Western clients, and for managing global marketable securities for clients. However, specific initiatives for developing Singapore as a hub for private equity fund management industry seem to be one thing in the new financial sector policy announcement. In this connection, we should note that the private equity fund management industry in Singapore is much less robust than in Hong Kong. There are much more new equity funds founded there every year. More funds are under management and more fund management companies have headquarters in Hong Kong than in Singapore. Singapore only captures a very small fraction of the private equity funds investing in the region, although we are strategically well located for such regional funds targeting for investment in the ASEAN countries.

In this regard, what plans does the Finance Ministry have for the private equity fund management industry? What are the strategies in attracting more internationally reputable private equity fund managers or groups to establish their headquarters here?

Now, many local enterprises are cash-squeezed, and news has it that Malaysian, Thai and Indonesian private companies are in dire need for capital injection. It is clear that this is an opportune time for Singapore to encourage more private equity funds, big or small, foreign or local, to have their headquarters in Singapore, so that there is rapid matching between private companies in need of funds and those who are willing to invest in them. Note that private equity funds not only have the advantage of not being able to make massive, rapid pull-out, compared to those involving marketable securities, it also fuels growth for many start-ups, as everybody has witnessed in Silicon Valley in the USA. This will be a big boost to entrepreneurship and is also consistent with Singapore's on-going strategy for regionalisation.

So far, it may sound as if I am supporting the financial sector only. But actually a vibrant dynamic private equity industry would benefit our SMEs more than just the financial market. And this brings me to the next point.

There is constant complaint among our SMEs that the Government's policies, though pro-business, have always been pro-MNC and pro-GLC only. EDB is the main Government body in charge of the promotion of SMEs and bringing our SMEs to the vision of Singapore 21. Yet there is no clear strategy outlined in this Budget regarding this. It may be an opportune time for the House to consider the reorganisation of EDB so that fresh ideas and new directions can be injected to promote SMEs to cater to the new possibilities in the fast-changing global economy. This rejuvenating effort can only be good for the nation.

Yesterday, Mr Inderjit Singh said that Taiwan has weathered this crisis better than others because they have a strong SME economy. And I hope the Government will take a serious look at this.

The last area I would like to touch is that I notice from this proposed Budget that no major amount is allotted for manpower training. And this is strange because many, many Members of this House have repeatedly emphasised the importance of retraining policy, and there was even talk about tripartite cooperation on training. Here, I call on the relevant Ministries to focus more on the specific plans to carry out training to avoid structural unemployment as seen in many developed countries.

With the setting up of the Ministry of Manpower, I believe the policy of manpower training will be more comprehensive and effective. Accordingly, more funding should be provided as an off-Budget measure. Mr Speaker, Sir, it was reported in this House not too long ago that there are 700,000 workers in Singapore who have had only up to secondary two education. If we were to train 5% of them per year, namely, 35,000 workers, and it costs $2,000 per worker, we will need $75 million in total per year. And that is a very slow retraining process, because at 5% per year, it will take us 20 years to retrain all our workers and many of whom would have retired by then. So I suggest that budget for training should be in the region of $100 million to $200 million so that we can cover 10-15% of the workforce per year. And I believe this will be more beneficial to the economy than the $130 million rebate in property tax given to a handful of developers, as rightly pointed out by Dr Lee Tsao Yuan yesterday.

In summary, I believe that the Government should have their operation orders ready to avert a developing crisis, rather than wait for an emergency before thinking of remedial action. Through off-Budget measures, the Government can take the driver's seat in introducing more infrastructure projects, more manpower training, encouraging more private equity funds, working more closely with SMEs, so that we can get the buzz into our economy, as what our Senior Minister has judiciously called for. Perhaps then, the people may be better helped in getting prepared to weather this crisis.

Mr Choo Wee Khiang (Jalan Besar): (In Mandarin): First, I would like to indicate my support for the Budget Statement.

Mr Speaker, Sir, from the media reports, we can generally see that many in Singapore have expressed disappointment over this year's Budget. Some business people have expressed the view that they are completely lost as to why there are no off-Budget measures as announced by the Minister. The small and medium-sized businesses are even more so in this case. Generally, people feel that the Government must be more positive in helping the economy, the businessmen and to stimulate our economy so as to enable us to tide over the storm in Singapore. Right now, we are very disheartened about the effect brought about by the economic turmoil and it is quite reasonable that the business people expect the Government to announce rescue packages and measures for the people.

I agree with Mr Leong Horn Kee that the Government must pay closer attention to the current developments and should work together with the local organisations in business and industry to maintain a continual dialogue with them. I hope that, if it is possible, the Government should immediately set up a Special Committee, a Special Task Force, to prepare for the rainy day. This Task Force or Special Committee should aim at helping the Government to provide views and collective wisdom, to collect feedback so that Singapore and the country can go through this storm. The members of this Committee should be representatives from the Manpower Ministry, Ministry of Finance, MTI and representatives of private sector organisations.

Mr Speaker, Sir, apart from increasing the tax cut for income tax and interest tax, etc, I hope that the Government will help those first-time buyers of properties to give them special attention because these people who bought the properties for the first time normally have financial problem. In other words, they do not have adequate cash upfront to pay for the properties. So I do not know whether the Government is prepared to consider allowing such people to make use of their CPF money to pay for the first downpayment of 20%. Then the people who benefit will not be the first time property buyers but also others as well. At the same time, I hope that the Minister for Finance will allow the business community to understand why there is so much prudence in the present Budget. Many members of the business community feel that, as compared to our Budget, the Hong Kong budget appears to be more flexible and better able to help the business community to tide over the crisis.

Mr Speaker, Sir, let me go to the next important topic. In this year's Budget, the emphasis is on education. I feel that at this time of economic and financial turmoil, highlighting and placing emphasis on education is only right. I feel that education is not only aimed at educating people in English, the Science subjects like Chemistry, Physics, etc, but equally important is the need to bring up our children to become cultured, civilised citizens with traditions. In other words, we must also have moral education, physical education and community education for our children. If we over-emphasise on intellectual education, concentrate only on how many `A's the children can score, and neglect the other aspects of education, such as moral education, physical education, community education, then you may end up with negative results. These results would be the production of a new generation of people who care only for their own self-interest and utilitarian value of life but do not care about respect for the old, the teachers and become arrogant and swell-headed. They do not even know how to repay the society to serve the country and to be loyal to the country.

In recent years, juvenile crimes seem to be mounting in Singapore. The question is: is it related to the lack of promotion of moral education in Singapore?

Mr Speaker, Sir, this morning, the Lianhe Zaobao published an article by Mr Lee Ther Sen, who is an educationist. In the article, the importance and effect of moral education and community education is emphasised. The article highlighted one important point. He said that community education is social education. The problem to be solved is to correct the conflict of interest between the individual, the society, the country and the community. It is to overcome the problem of extreme individualism so as to provide social cohesion and harmony. So community education is not only a question of relation between the individuals and the society to promote solidarity, it is also an important key and a collective will to overcome difficulties and crisis. Therefore, he said that community education is an indispensable link of the five aspects of education which must be given its due respect and importance. I entirely agree with what he has said.

I feel that, Mr Speaker, Sir, if we neglect this invisible asset, we will only do so at our own peril. We should not neglect the nurturing of our children in this aspect. We must bring up a next generation of Singaporeans so that we do not produce zombies. Some people have described that our future generation will be just like zombies or robots. They only know Science, Biology and Chemistry. They do not know about their oriental traditions, culture and roots. They do not even know the virtues of the oriental societies. The Prime Minister, Mr Goh Chok Tong, has already mentioned in one of his recent speeches that we must not only emphasise intellectual education, we must equally emphasise the other aspects of education. I therefore hope that the Government will pay due attention to this aspect, ie, physical education and moral education to bring about a better, more suitable and relevant education system for Singapore, and with a proper strategy.

Mr Speaker, Sir, sometimes I cannot help thinking whether we should have an overall comprehensive review of our education system, especially for the primary level. What is taught at the primary level might be an over-emphasis on intellectual education and forgetting about good citizenship, moral values and ethics. These are important lessons that they must learn for their foundation in life. At the same time, I do not know whether the Government or the Ministry of Education should think more about our mother tongue education. If our mother tongue education is not made more interesting and popular, then our children may not be able to directly understand and get a feel of our own culture and tradition. So I think it is necessary for the Government to review comprehensively the primary education. This kind of intangible asset is a very important motivating force for the progress of our country. Of course, we cannot live without money. But you also cannot live without these virtues. Without such virtues, I think the prospects of our country would be jeopardised.

Mr Ong Kian Min (Pasir Ris): Thank you for allowing me to join in this debate. Sir, I rise to support the Budget Statement presented by the Minister for Finance.

The current regional crisis has seen our political leaders and Government acting in a rational and sensible manner in dealing with the difficult and complex issues confronting the region. This Budget is another example of the prudent approach that needs to be adopted to ride through this crisis. The Budget is conservative and prudent and rightly so, in the light of the present economic, political and social uncertainty facing the region as a whole. We must not lose sight of the big picture that we are in the midst of a regional crisis of unprecedented proportions. The outcome of this crisis is not at all clear and is impossible to predict because it is dependent on a multitude of factors and variables, many of which are beyond our control. We must be prepared for whatever situations that may arise. But, in the meantime, to dedicate resources for longer term strategic investment in defence, education, economic infrastructure and skills upgrading and the promotion of high growth industries.

Whilst the dedication of resources for long-term strategic investment makes sense for the whole country as a whole, it sounds a bit hollow to the business people who are facing cash-flow problems and having difficulties in staying afloat in the short to medium term. Businesses would only benefit if they are still in business when these long-term investments bear fruit. All these improved economic infrastructure would mean nothing if the business folds up before then or is so sapped of energy and resources that they cannot take advantage of the eventual recovery.

The issues confronting businesses are more short-term in nature. They are looking for and expecting something more from the Government to help them tide over these difficult periods and survive. They feel that the policy measures adopted in this Budget did not reflect the severity of the current situation and question whether the Government's assessment of the situation was based on old statistics compiled a few months ago. But if one had just visited the Travel Fair over the last weekend and see the hoards of people snapping up holiday packages, one would never have imagined that we are in the midst of a regional crisis.

Sir, notwithstanding the difference in assessment, I am gratified to note that the Minister for Finance has assured us that the Government will monitor the regional environment and economic conditions vigilantly and keep in touch with the private sector. Should the circumstances turn for the worse, other off-Budget measures could be taken to address the situations as and when they develop. However, for the present, people are shouting for help.

Many businesses and workers had hoped for a cut in tax rates. It seems logical that during hard times like these, the Government should help by collecting less taxes so that people can take home more. To someone who received a smaller bonus or no bonus at all last year, or got a small or no pay increase this year, the natural tendency is for him to wish for a cut in income tax or an increase in tax rebate to cushion the impact of the reduction in income. But we must not forget that the Government has already introduced substantial tax cuts over the last 12 years. Currently, only about 30% of individuals pay personal income tax and corporate income tax is paid by companies which are doing well enough to generate the profit. These individuals and profitable companies should not shy away from their responsibility at a time like this.

This reminded me of the thoughts of our Senior Minister on the fragility of a multi-racial society which he shared with journalists and diplomats at a dinner in June 1996. He pondered the question of whether the Singaporean would share with his neighbour who is of a different race in times of severe stress and starvation. If there is only one bowl of rice, will the Singaporean share with his neighbour? We are not in the kind of crisis which the Senior Minister had in mind. Far from it. But are the more fortunate Singaporeans willing to share with their fellow Singaporeans who are not so fortunate? This is a test of our cohesion and our ability to stay as one nation in times of difficulty. The top income earners who are fortunate enough not to lose their jobs and corporations that are making profits must do their part by contributing their share in building a better tomorrow.

Sir, I am also told that the two major problems that business people are presently confronted with are weak regional exports and low domestic demands for their goods and services, and the high cost of doing business in Singapore compared to our neighbours. On the first problem of weak demand, there is little that we can do right now if the other regional countries cut back on their imports because of their economic downturn.

On the domestic front, consumers have every reason to be careful in their spending during times of uncertainty. Some friends of mine have told me that in austere times like this, they have to do their marketing and shopping outside Singapore, where their Singapore dollar carries far greater purchasing power and goes much further. Another group of friends I chanced upon at the Travel Fair last weekend said that they could only afford to take a short holiday this year in the region, because the tax rebate was only 5%. If there had been a cut in tax rates or larger rebate given to them, they would have more money to spend on a longer holiday to Europe or to the United States. These comments lead me to wonder whether our retailers would benefit from any fiscal measures to increase disposable income at this point in time.

On the second problem of high cost, we cannot compete with the other regional countries based on cost alone. Before this crisis, they were Asia's tiger economies capable of producing and enjoying many years of high economic growth. As a result of this crisis, their currencies have devalued and the cost of their exports had correspondingly decreased. If and when they get their acts together, restore confidence, put their economies back on track, they will emerge as formidable competitors. We need creative solutions to tackle our problems. We need to be more productive and highly skilled so that customers can find good value in the goods and services that we produce.

Training and skills upgrading for our local workforce are therefore very important. However, training and skills upgrading are often seen by businesses as cost items and often the first expense to be cut when business is down. Manpower is our only resource we have as a nation. We must continually upgrade the skills of our workforce. In a downturn such as this, many companies are experiencing the slowdown in business activities and workers are not fully occupied. Instead of keeping the workers idle or retrenching them, sensible employers would want to take this opportunity to release them for training or retraining. But many can ill afford the training cost in difficult times like this when budgets are tight. More should by done by the Government to help defray the cost of training and to further streamline the procedure for making claims and reimbursement to ease the employers' cash flow situations.

Training and skills upgrading should not be confined to the low skilled workers, but must be carried out at all levels, especially at the time when globalisation and global competition compel us to attract the best and the brightest to come here to work, at the top end of the workforce, the professionals and the managerial executives. We can expect very high calibre foreign talents coming here from the more developed countries. Top talents are a mobile lot. They go where their services are needed and where there is money to be made. For example, during the boom years of this region, many project finance experts worked out of Singapore to advise on projects in this region. Now that these projects are shelved, these experts have been redeployed to other parts of the world where there are still projects to be financed. In the meantime, the debt restructuring, corporate recovery and insolvency experts are being redeployed from other parts of the world to this region because their expertise is in short supply here and they are needed to do work. We cannot therefore be forever dependent on foreign talents, just as we cannot be dependent on foreign borrowings to drive our economy. Although talent, unlike capital cannot be moved away at the mere push of a button or click of the mouse, they can still swiftly take flight when the country becomes unattractive. We must therefore build up our core competencies, skills and expertise, just as we have built up strong monetary reserves over time. Whilst we need foreign talents now, our local workforce must take the opportunity to assimilate knowledge, upgrade our skills and be competent to do the job ourselves, in the event that we are left to pick up the pieces.

Whilst much has been said about retraining and upgrading of our older less skilled workers, I feel that not much attention has been given to white collar workers, even though they face the same uncertainty and problems of retrenchment. I know a young graduate bank officer who has worked for 5-8 years as an Assistant Manager in the corporate banking department of a foreign bank. New banking facilities are now put on hold. She is fearful that she would be retrenched because of a world-wide cost cutting programme implemented by her head office. I asked her what she would do if indeed she were retrenched. She replied that she had no idea, as there was an over supply of people with her skills. Perhaps she would sell insurance. If the worst comes to the worst, she may have to give piano lessons to earn a living.

We would like to believe that being educated, they should be able to take care of themselves and find alternative employment for themselves. But my feeling is that many, especially the younger ones, simply do not know what to do. Many who are in their early to mid-30s have joined a tight labour market after the last recession in 1985. Their skills were very much in demand but they enjoyed good job prospects and uninterrupted high earnings for more than a decade. This is the first difficult period that they are encountering in their career.

Apart from the employees in the financial services sector, and banks are streamlining their operations and cutting back, similar difficulties are faced by conveyancing lawyers, who are affected by the drop in property transactions, property agents in a lacklustre property market and many others. I would urge the Government to do more and provide more guidance to help them cope with the crisis. At the same time, I believe managerial executives and skilled workers must also be realistic. Instead of twiddling their thumbs and waiting for the return of the good old days, they must proactively retrain to do other work or find work elsewhere. Employers and corporate executives of search firms have lamented in the past that Singaporean executives were spoilt and fussy, and it was very difficult to get a Singaporean to be posted to a developing country like China, Vietnam or Myanmar. Singaporean executives can no longer be choosy. Like our counterparts from the developed countries who go where the business is, they must be ready and prepared to be redeployed to places where we can leverage on our expertise and make full use of it. This is especially so now when there are many good investments to be found in the region and skilled people are critically needed to manage them and bring out the true value in these investments.

Sir, a clear underlying message in this budget is that in view of the uncertainty, we must keep our resources and reserves so that these can be used at the appropriate time. Ever since independence, we have been constantly reminded of the need to save for a rainy day. We have done so consistently and built up strong reserves. Many are now asking whether this is the time to use what we have saved for so many years. The present situation has been described as the worst in decades. Is this not exactly the situation which we have consciously and painstakingly prepared for? Have the rains which we have prepared for arrived? Sir, I believe that we should continue to be prudent and watchful, because the situation may not have hit bottom yet. And it is impossible to predict how events will unfold in the near future. We must therefore be prepared for any eventualities and keep some resources in reserve in case the situation turns for the worse, and heavier storms of greater ferocity hit us in the future. In these difficult times, Singaporeans must stand by each other. This is the test of our cohesion and our ability to work together and stay together as one nation in times of difficulty. We must remain confident and do our part in building a better tomorrow.

Sir, I support the motion standing in the name of the Minister for Finance.

Mrs Lim Hwee Hua (Marine Parade): Mr Speaker, Sir, it is usually difficult to speak of long-term plans when the issues at hand appear overwhelming. There are numerous illustrations of this around us. It was under such an uncertain economic climate that the budget was presented.

The virtues of planning for a sound economy cannot be over stated. It has been this constant push towards identifying key areas and then providing a conducive business environment to facilitate growth that has enabled us to have a stable economic framework.

The Government has added yet another boost to the financial services sector amid concerns that some quarters may be experiencing extremely tough business conditions. In fact, the current economic crisis is testimony to the importance of charting longer-term growth paths that are sustainable, and also the cost of not doing so. For us in Singapore, where we are small and we have no natural resources, we simply cannot wait till the storm is over to resume long-term planning.

Incentives for the financial sector

Sir, it is with this perspective that I support the thrust of the financial sector reforms, as manifested in the comprehensive range of initiatives, including the incentives contained in the Budget Statement.

In the short-term, although business prospects look daunting within the Asian region, and concerns mount over the viability of major financial institutions, Singapore continues to be well-positioned to play a significant role in regional finance. The financial sector reforms will pave the way for an even bigger role, particularly when regional economies begin to recover. The benefits can be tremendous. At the national level, there is further growth impetus to the financial services sector and together with multiplier effects, to the economy at large. Once we have formed a critical mass, we will find it easier to sustain stability in growth.

At the industry level, financial institutions can innovate to a greater degree in products and services, thereby enlarging their business potential. Companies, in turn, will have more avenues of raising funds for business needs and consequently realise an enhanced return on their investment.

What about the individual? As retail customers, we can enjoy more choices and newer, more sophisticated investment opportunities. We will no longer be restricted by a lack of choice to leaving savings as idle deposits. Instead, we can gradually choose to diversify across different investment instruments, other than just stocks, or even across the region, if we so wish. We can also avail ourselves of more innovative loan schemes for our different needs.

For our local financial institutions, I believe the reforms can cut both ways. Competition from non-local institutions who have expertise gained elsewhere will no doubt intensify, but Singapore banks can capitalise on their long-standing track record and intimate local knowledge to consolidate their positions.

The changing landscape means that Singapore banks will increasingly find the traditional banking businesses more challenging, as companies, especially the bigger ones, no longer rely solely on direct borrowings. They may choose to raise capital on a wider scale, via, say, convertible bonds or borrow in foreign currency for offshore needs. The availability of alternatives will increase competition for bank loans and, consequently, lower spreads on these loans that the banks make.

Neither will companies nor individuals simply leave their surplus cash as fixed deposits, which have hitherto been a major source of funding for banks. This may raise the cost of funds for banks and, similarly, squeeze their spreads again. Given both these projected trends, there may then be pressure to keep loan volumes up by changing the loan mix towards more real estate or property, or by simply assuming more risk. If this were so, the resultant bias in asset quality is something we would have to be vigilant about.

Local banks can and should capitalise on their strong market presence in Singapore to extend more, if not new, products and services. There needs to be, to borrow the cliche, "a paradigm shift", in terms of redefining the reliance on the traditional bread-and-butter lending business. They should also not shy away from importing the necessary talent to make this quantum leap.

Whilst it is inevitable that for Singapore to realise the benefits of these reforms, we would have to tap foreign expertise, the Government should ensure a sufficient supply of manpower resources, suitably trained, to support the larger financial role envisaged. This is to enable more Singaporeans to partake of the growing significance of the financial services pie.

Proactive stance towards assisting troubled sectors and companies

Sir, like my fellow GPC members and Parliamentary colleagues, I would like now to dwell a little on the issues at hand, particularly the plight of the smaller local companies who are bearing the full brunt of the regional crisis. As you have heard, not only are they experiencing a drastic drop in demand, but also are they saddled with bad debts and a credit squeeze, which all conspire to result in a serious cash flow crunch.

The Minister for Finance has promised that the Government will monitor the current regional turmoil vigilantly and implement off-Budget measures should the situation deteriorate even further. This is a promise which I believe many, especially the smaller companies, are clinging on to. There is concern, Sir, however, that the speed of deterioration is such that we do not have the luxury of reaction time to anecdotal evidence. Swift measures may have to be taken to counter anticipated untoward effects. To ensure the timeliness of these measures, a proactive stance is necessary to prevent problems from being full-blown. I would therefore like to urge the Government to consider extending more assistance, especially towards easing cash flow for companies. This could take the form of allowing companies to defer tax payments for a specific period or increasing the quantum of rebates on property tax.

On that note, Sir, I support the financial policy of the Government.

Mr Lew Syn Pau (Kreta Ayer-Tanglin): Mr Speaker, Sir, I join my colleagues in supporting the Budget Statement. At a time like this when all our neighbours are tightening their belts, I think we are very fortunate to have a budget with $2.7 billion in surplus, no increase in taxes (except on cigarettes), but on the contrary, we have new tax concessions to promote the financial sector, the transport and logistics sector, exhibition organising, cyber trading and even the recruitment of foreign talent.

In this very difficult period, the people in the neighbouring countries are rallying behind their leaders. The Thais, for example, have their "Thai help Thai" campaign, and the Indonesians have their "Love the Rupiah" campaign. Perhaps, we in Singapore, should also have an "Appreciate Singapore" campaign to drive home the message to younger Singaporeans on the need for and the benefit of hard headed economic, social, political and financial policies, which have stood us in very good stead in this current turmoil, but which have been the butt of many criticisms at many other times. Having said that half in jest, I must add that we must be careful that while drawing lessons from the current Asian economic and currency crisis for the education and edification of our young, we must be sensitive to the needs and feelings of our neighbours. In fact, we should certainly use the occasion to extend a helping hand to them, within our means, of course, whether in monetary support or in kind. Such financial support, I presume, will not be reflected in the Budget, but off-Budget, in our balance sheet at the appropriate time. I think the people of Singapore should support our leaders as they try to do this as sensitively as possible.

This Budget has been viewed by many again as a "Shenton Way Budget" for the many financial and tax incentives it contains to bolster the banking and finance sector. In my view, we should not begrudge the additional fiscal measures the Government is introducing to attract even more financial activities to Singapore so as to make it even more competitive than the other Asian cities. In fact, having been in the banking and finance industry personally, I can tell you that the feedback from many financial institutions in the last Budget was that the ceiling for some of these incentives was set so high that only a few bigger fund managers benefited. I am glad that in this Budget, the Minister for Finance has lowered the threshold requirement for fund managers to qualify for full tax exemption from $10 billion to $5 billion of non-resident funds for a period of five years. This will allow more fund managers to take advantage of the incentives.

However, I must point out that many fund managers move to, or increase their operations in Singapore not only because of tax incentives, but also in the hope of getting more funds from the Government, statutory boards and Government-linked companies to manage. In this respect, the fund managers have been a bit disappointed with the great caution, or reluctance with which funds have been farmed out to the private sector for management, even after the Senior Minister's announcement of greater liberalisation in this area a few years ago. I am happy to note that the Government has given renewed commitment to liberalise the fund management industry and allow the private sector fund managers to manage more Government funds. This will go a long way to help our fund management industry to grow and strengthen further.

Our bond market is in an even greater stage of infancy as the Government which normally provides for the backbone for the bond market in most countries does not borrow from the public. I welcome the package of incentives to promote the development of an active bond market in Singapore. We certainly need a more active and vibrant bond market if we want to be a premier financial centre in Asia.

So far, the incentives to promote our financial industry have been targeted at companies, ie, only the companies are seen to benefit from the tax concessions. I have been told by some people that this alone may not be adequate to entice companies to move to Singapore because employers are still finding it hard to convince their employees, especially those based in Hong Kong, to relocate to Singapore because they would be worse off in Singapore in terms of personal tax status. Some have even suggested perhaps that the Government should give special tax concessions for such employees to entice them over to Singapore. Personally, I do not support this suggestion as this would result in reverse discrimination, ie, foreigners would enjoy a better tax package than locals. I believe strongly in a level playing field for both locals and foreigners, whatever the origin.

Next, I would like to express my support for the Government's decision to keep a tight lid on operational expenditure, but increase capital expenditure in the key areas of education, economic infrastructure and defence. It is certainly an ideal time to accelerate key economic infrastructure projects like the reclamation at Changi East, Jurong Island Phase 3, the upgrading of industrial facilities at Tuas, and even the construction of the North-East MRT line. The efforts to boost the economy through counter-cyclical spending will not only save taxpayers' money during the regional downturn, but also be appreciated by all in the building and construction industry. Having said that, I would like to make an observation that we have been building many 5-star facilities such as the Changi Airport and so on, when we could afford them in better times. No doubt these facilities have helped to establish Singapore as No. 1 in many areas, from the best airport to the best port in the world. During this downturn, however, as part of our austerity drive, perhaps 4-star quality may suffice, especially for facilities for internal use which are not open to foreigners or tourists. For example, tiles should be used in place of marble or granite in some places. This would also send an important message to the young that we should learn to live within our means and tighten our belts when necessary.

Next, I congratulate the Finance Minister for finally agreeing to abolish stamp duty on all instruments, except for those which relate to stock and shares, and immovable properties. I had brought this up last year in the Committee of Supply and I thank the Minister for his quick response this year. I am sure this move will go a long way to reduce costs and inconvenience to businesses and members of the public.

Finally, I would like to comment on the Electronic Road Pricing and vehicle tax rationalisation. The ERP rates and the vehicle tax rationalisation scheme have been announced last week. Although I am happy that the exercise would be revenue neutral in about eight years, I must say that I was a bit disappointed that the Ministry did not take advantage of the occasion to simplify the road tax structure. The structure today is still very complicated, and I believe the complex structure was a result of the need to include a wealth tax in the formula. My question is this: would it not be more efficient to collect the wealth tax upfront one-off in the cost of the car, for example, the Additional Registration Fee and the COE, than to do this every year through the road tax? The road tax, as we all know, is not really a usage tax. It is a fixed cost that we have to pay every year, much like a flat fee, just like the registration fee. The only real usage taxes that we have are the ERP and the tax on petrol because they go up with greater usage. So the ARF and the COE, in my view, could have been used as the sole wealth tax that vary with the OMV cost of the car. Strictly speaking, a larger engine capacity of a car does not necessarily mean that the car is more luxurious. So my message here is: in formulating taxes, I believe the consideration for equity should be balanced by the need for simplicity.

With these comments, Mr Speaker, Sir, I support the Budget.

Mr David T.E. Lim (Aljunied): Mr Speaker, before I speak, I would like to declare my interest as Special Adviser to Chairman, EDB, for Regional Projects and Software Transfer, and also as Executive Vice-President, Special Duties, in Sembawang Corporation. In both these organisations, Mr Philip Yeo is the Chairman.

Several Members of this House have spoken against the EDB's and the NCB's actions to name three scholars who chose to break their bonds rather than to return home to serve. Collectively, they have put forward a number of arguments to support their stand. To paraphrase, these are:

Firstly, that scholars who break their bonds will still return to serve Singapore in other ways. By pursuing their interests and developing their talents, they are of greater service to Singapore, not lesser.

Secondly, breaking a bond is not such a big issue that such scholars should be named and humiliated in public and so discourage others from taking up scholarships.

Thirdly, that a practical solution to this problem would be for organisations to increase the number of scholarships so that the net number of returning scholars would still be sufficient for the organisations' needs.

Those who hold these views are saying that the scholarship is just a commercial agreement which can be set aside when expedient and settled by the payment of money. But every scholar knows that this is not true. They know that the prestige and honour that accompany a scholarship carries with it an equal measure of responsibility. The more prestigious the scholarship the greater the responsibilities: to return to serve, to lead, to benefit future generations. These are unwritten obligations but well-known to both scholar and sponsor.

My view is that EDB and NCB did the right thing by naming the scholars who broke their bonds before they even completed their studies. By so doing, they affirm the high standards which they expect of these scholars and the importance they place on their moral values in addition to their academic abilities.

I now turn to the arguments which were raised by the MPs who disagree with this stand.

The first argument that scholars who break the bonds will serve society better in other ways fails to recognise the importance of integrity. To unilaterally break a bond is to dishonour a promise. This is not a small matter. For if a scholar decides not to keep his promise now, how can we depend on him when he promises to do more later? He may be smart and well qualified. But how will we know that his new promise will not be broken as well? Integrity once broken up is like Humpty Dumpty - hard to put together again.

The second argument that bond-breakers are publicly humiliated when their names are published is inconsistent with itself. If the scholars argue that they have done no wrong, why do they consider it a shame to have their decisions noted in public? If, indeed, they had the greater interest of society in mind when they broke their bonds, why do they object that society should know? By that logic, they have discharged their obligations by paying their bonds. By the same logic, should we not tell the public that they have given up their scholarships, just as the public was told when they received their awards? And if this policy discourages those who have no intention to ever serve their bonds, would we not have created more opportunity for others who are ready to put country and corporation before self? If there is shame in public naming, it is only because the bond-breakers know that they have done a dishonourable thing.

The suggestion that we should offer more scholarships so that bond-breakers will not impact the sponsors' deployment plans will only make matters worse. Consider this analogy. Do we employ more road-sweepers if pedestrians throw more litter? Or should we find ways and means to remind pedestrians that throwing litter is wrong, and to penalise those who do so? The more road-sweepers we employ, the more litter will be thrown. Do we then keep on employing road-sweepers? Will we become a nation of road-sweepers? In like logic, if we signal that bond-breaking is acceptable, will we not only be encouraging more scholars to break their bonds?

Sir, EDB and NCB have not taken the stand that bonds can never be broken. Indeed, I am told that EDB has allowed a number of scholars to break their bonds, some even before they completed their studies. There were various reasons for this, such as ill health or family problems, or poor organisational fit. And EDB has also exercised flexibility when scholars have wanted to stay on to further studies or to transfer to other organisations. But what is not acceptable to them is for scholars to unilaterally discharge themselves simply by opting to pay off their bonds, and in the case of the three scholars named, without serving even one day.

Singapore has benefited from the many thousands of scholars who have come back to serve their bonds. Since Mr Philip Yeo joined the EDB, more than 300 new EDB scholarships have been awarded. These are precious opportunities. EDB's scholars owe a debt of gratitude to a selfless and tireless Chairman who canvassed far and wide to convince corporate sponsors of the value of investing in Singapore's young. They would do well to repay it by not breaking their bonds.

Anyone who says that the Chairman of EDB has become too big for his shoes does not know the man nor his heart. I have worked for him for 20 years. He is demanding, and in his own words, a slave driver. But he has a heart that cares, especially for his staff and his scholars. We have heard strong accusations about his improper conduct, within the protection of this House. But we did not hear why he said, what he said. Those who presented the story half-told would do justly to tell the other half.

Koh Buck Song of The Straits Times was right in saying that bond-breaking is really about bigger issues, by attracting talent and heartware. It is these things and more. It is about our values.

Sir, if we look for reasons to break a promise, we will always find one. Integrity costs. But unless we are willing to pay the price, not in dollars, but in self-sacrifice, then we should not be so quick to make the promise.

`A' level results are out, and scholarship season is now open. My advice to would-be scholars is to choose carefully and wisely. Do not take a scholarship just for the perks. Choose a scholarship based on what your interests are and which organisations you are willing to commit to. Remember, that in three, four or five years' time, you would have to return to face yourself, whether to honour your promise or to find some excuse to go your own way.

Sir, I thank the Minister for Finance for giving us a Budget that recognises our immediate needs and which also continues to provide for our future growth. I share the sentiments of my many colleagues who have highlighted the need to pay closer attention to small businesses which are failing and workers in danger of losing their jobs. The help which is needed goes beyond tax reliefs and rate cuts. It is important at this time that every Government agency also pays particular attention to the myriad problems which will arise. Some companies may take advantage of the situation to curry extra favours from the Government. But many will face genuine problems from rules and regulations which were merely inconvenient when times were good but which may now make a difference between break-even and bankruptcy. At this time, more than ever, the public service needs to be alert to the need to reinvent itself to ensure that its policies and procedures are sensitive to the problems faced by the business community.

Sir, whatever surprises the future may hold for us, we have a strong economic foundation to meet these challenges. But whether or not we succeed does not depend on just our financial strength but also on the integrity and loyalty of all our people. As individuals and as a society, let us pull together and act with purpose, not out of fear nor merely for monetary gain, but because we are committed to do right and worthwhile things.

Sir, I support the motion.

Dr Tan Cheng Bock (Ayer Rajah): A point of clarification. I have listened to David's comment. Unfortunately, Chng Hee Kok is not here. Can I take it from him that he is saying that Chng Hee Kok did not tell the complete truth? This is important. He is a Member of Parliament, and I would expect him to tell the truth.

Mr David Lim: Sir, I think this is an important point, and I hope the Member involved will clarify the matter.

Dr Tan Cheng Bock: Maybe he wants to ask Chng Hee Kok to clarify the matter.

Mr David Lim: Sir, I was not present at the breakfast meeting. What we heard in the House was the reaction of the Chairman of EDB to statements that were made at the breakfast meeting, but we do not have the benefit of those statements.

Dr Tan Cheng Bock: So if you were not present at that meeting, I was wondering how did you come to that conclusion that Chng Hee Kok's statement was not the complete truth.

Mr David Lim: Sir, I am Special Adviser to Chairman, EDB. I have spoken with him. I have heard his side of the story.

Dr Tan Cheng Bock: If I can clarify, Mr Speaker, Sir, that Chng Hee Kok's point was the issue of the Chairman asking him to resign, and also those MPs, who concurred with him on that view, to also resign. So as a Parliamentarian, and he is also a Parliamentarian, telling me this story, I believe him. I am asking whether that issue is right or wrong.

Mr David Lim: So the question is: why such a question was posed, why such a statement was made? Why did the Chairman of EDB ask a Member of Parliament to resign? I do not know if Dr Tan knows the reason. But if he does, perhaps he will share it with this House.

Dr Tan Cheng Bock: He asked him to resign because he said, and he told me, that, first, he is a Government Member of Parliament, and that the issue is a Government policy, and for those two reasons, he asked him to resign.

Mr David Lim: Sir, that is not my understanding of what transpired. [Interruption.] But the Member, who was present, is not here in the House now.

Dr Tan Cheng Bock: Yes, it is unfortunate the Member ---

Mr Speaker: Order. Dr Tan, I have allowed you to seek clarification on the speech which Mr David Lim has made. But I do not think we should be going into what transpired at that meeting, because none of you was present.

Dr Tan Cheng Bock: Thank you, Sir.

Mr Speaker: So have you anything else to clarify? No, all right. Mr Zainul Abidin.

Mr Zainul Abidin Rasheed (Cheng San): Mr Speaker, Sir, after hearing Mr David Lim, I would like to venture to answer his question, whether we need to be a nation of road-sweepers. I think we would not need to be a nation of road-sweepers. I do not think we need to. Neither do I want to appear sweeping the issue under the carpet, for I agree with him that the issue is not just about scholarships and bond-breaking, but it is about our greater values, our social and national bonding. And I trust there will be another occasion, perhaps with all those who have spoken on this matter present, and we will thrash it out once and for all, for it is a very important issue, and I think we should not take it lightly.

Sir, I rise in support of the Budget presented by our respected Finance Minister, Dr Richard Hu.

Sir, all kinds of labels have been given to Dr Hu and his budget over the years that the latter must by now surpass many of the clever images and adjectives chosen for branded goods normally given by the media and the commercial jargon.

As Mr Lim Boon Heng, Minister without Portfolio and Secretary-General of the NTUC, said in the latest NTUC News, why call it prudent, as though Dr Hu's Budget had been imprudent previously. True, the Finance Minister has always been prim and proper, and precise to the needs of the day.

We also know that Dr Hu is no prima donna. Dr Hu has always been patient and open to suggestions and we therefore appeal to his good sense to prevail. And also since Dr Hu has promised that the Budget is not the-all, and that the Government will respond with off-Budget measures, we stand reassured. After all, Dr Hu said, "we have more than adequate resources to cope with any eventuality." But, like Dr Lee Tsao Yuan, Mr Inderjit Singh and many others, I would rather like to see more of those off-Budget measures soon.

I agree with the comment that we do not need a crisis' budget, but neither should we be near complacent' about the possible effects of the economic uncertainties of the region. In the words of the cool, calm and collected Dr Richard Hu, this economic outlook is "volatile and unpredictable."

We need to continue to monitor the situation closely and respond accordingly. After all, being nimble has always been Singapore's forte. But allow me to reiterate, the signs are telling us that we would be better off with the off-Budget measures sooner than later.

Mr Speaker, Sir, it was only eight months ago that quite a few Members in the House questioned the need for the Government to keep such a large current surplus for Fiscal Year 1997, suggesting more could be done with the money to help the business and the people to be more productive. Dr Hu stood his ground, reminding us of the need for prudence.

Lo and behold, soon after the debate, regional events began to unfold exposing the fragile nature of the region's financial foundation. The currency and economic turmoil that followed was unprecedented. The ramifications are serious and the full effects are yet to unfold.

Now, the budget surplus proposed for Fiscal Year 1998 was reduced by about 50% compared to Fiscal Year 1997, ie, from $5.09 billion to $2.73 billion. This looks credible. This, I believe, is for good reasons. It has allowed a budget that will result in a 25% increase in development spending and selected tax reliefs, especially in property and banking. However, since these are high growth sectors, the ripple effect will be felt by many, not only in `Shenton Way' but also by workers at large.

True to Singapore's economic development philosophy, we find spending money on productive forces more effective than on the consumptive nature. Put simply, it follows more of teaching them to fish rather than providing the fish itself on a silver platter. That, I agree, is a good line for a better catch.

Nevertheless, my concern is, do enough Singaporeans appreciate and understand the seriousness of the ongoing regional and economic turmoil since last July. As Dr Hu suggested in his first two sentences of the Budget Statement, Singapore's 7.8% growth in the economy in 1997 did not reflect the seriousness of the situation. The question now is: does the proposed 1998 Budget help to do so? Yes, there is less surplus. Yes, there is more on development spending. Yes, there is tax relief for selected sectors. Yes, Dr Hu has promised more help in case of any "sudden downturn", but could not more be done now to help drive home the point about the seriousness of the situation and to better prepare the population to take advantage of the opportunities later? We can also ask: is the Budget not too prudent? When we are expecting a possible growth rate as low as 2.5%, should not more pump-priming be done? Do we need all the over $2 billion surplus in difficult times? Surely, we do not want to be caught again like in the mid-80s. For example, why was the individual tax rebate for Year of Assessment 1998 be reduced by half to 5% only? Many people are asking: is that the way the Government wishes to help when times were to get difficult because of the currency and economic turmoil in the region?

We know that there is this promise of off-Budget measures if and when the situation worsens but Singaporeans are anxious to see the kind of immediate signals the Government would be willing to show or give in terms of budgetary/fiscal measures to help alleviate the position of those affected, especially those from the lower-middle and lower income groups.

One area of immediate concern is the fate of workers who may be retrenched, which we are told, whose numbers will increase. There is room for more assurances and concrete programmes to help them. The Government should also consider funding CDCs to monitor the situation at the grassroots level and to coordinate the assistance programme necessary. This of course could be done in conjunction with the new Ministry of Manpower and NTUC. Of course, we would like to see help being given especially to those who want to be helped. Generally, I gather Singaporeans have three to six months of savings, and when the situation worsens, especially for those retrenched, what kind of safety net can we help them with, without of course succumbing to welfarism. In this context, many workers and union leaders are also wondering what signals the Government is sending for worker training and skills redevelopment. It is hardly visible in the 1998 Budget. In fact, a most marked omission.

More can and should be done for skills upgrading. The Skills Redevelopment Programme (SRP) deserves more attention and financial back-up. SRP is currently helping to speed up development of a national skills certification and recognition system in Singapore and promote industry-wide collaboration in skills upgrading and certification. These projects initiated by NTUC and supported by EDB, PSB, ITE and Polytechnics show promise and should therefore be given further financial boost. And I am not talking of a token allocation. This should be a big billion dollar item for the medium and longer term.

The Government should team up with the labour movement and employers to instil a greater sense of urgency for worker training and upgrading. This calls for a significant commitment from the Government in terms of funding. More could and must be done for worker training and skills upgrading, through SRP particularly.

Now that the cool, calm and collected Dr Richard Hu is back in the House, I hope he will be creative in dishing out a sum that will help reflect and send a "collective will" message that we are serious about skills upgrading. After all this, we want our workers and economy to come out leaner and fitter and, in fact, more resilient.

Mr Chiam See Tong (Potong Pasir): Can I get a clarification from Mr Zainul? If I heard him correctly, he says that, as regards retrenchment, he wants the Government to fund CDCs and coordinate at grassroots level. I would like to ask him how does funding of the CDCs help workers who are retrenched.

Mr Zainul Abidin Rasheed: Mr Speaker, Sir, there are two points I mentioned in that statement. One is for CDCs to monitor the situation at the grassroots level, in terms of the effects of the economic turmoil in the region and once it is felt by the people who are retrenched and they are feeling the hardship, the CDC will be close enough to the ground to monitor and see what kind of problems the economic situation has created. The other point is in terms of coordinating the programmes and the Government could help either through NTUC or the Ministry of Manpower and the CDC, again being close to the ground, could also help to coordinate these programmes.

Mr Chiam See Tong: Can I get a further clarification? He does not seem to give me an answer. I would like to ask him: how does giving more money to the CDCs help retrenched workers? That is my point.

Mr Zainul Abidin Rasheed: I do not think he got my point. I was saying that the CDCs could help in terms of monitoring and also coordinating the programmes. To do that, they will also need some funds. But the actual programme of helping retrenched workers will come through SRP, retraining and upgrading of their skills. That was also tackled in my speech.

Mr Tay Beng Chuan (Nominated Member): (In Mandarin): Mr Speaker, Sir, under the shadow of the regional financial turmoil, the Minister for Finance announced the 1998 Budget on 27th February. But in this Budget, the measures relevant to the business community are inadequate. This can be borne out in three areas. Firstly, there is a wide gap between the "purchase order" placed before the Budget and the "delivery order" given after the Budget. Secondly, on 2nd March this year, there was a significant drop in the share market that shows the disappointment of investors over the Budget. Thirdly, the reaction as reported in the media showed that there are voices of disappointment everywhere and the voices are quite loud indeed.

Of course, I would not be so naive as to indulge in wishful thinking that the Government will deliver according to the "purchase order". Based on our trust in the Government, we can put ourselves into the shoes of the Government and look from an overall angle the intention of the 1998 Budget. We cannot deny that the 1998 Budget, being extremely conservative, does have certain positive implications.

For example, firstly, it conveys the full confidence of the Government in not allowing the little boat of Singapore to go adrift in a big storm as it firmly controls the rudder and remains on course towards our long-term objective.

Secondly, before the uncertainties of political and economic factors outside Singapore are resolved, any measures put up by the Government could turn out inadequate or not directly relevant. So instead of indiscriminate use of medicine, it is better that we watch and monitor the development of events and situation before prescribing the right medicine to cure the disease.

But here, in the midst of disappointment, we have not missed the promise of the Finance Minister for off-Budget measures. Therefore, we have turned our disappointment over the Budget into new hopes that the Government, presently taking the "containing motion with quietude" stand, will definitely introduce appropriate off-Budget measures at the right time to help the local industries and enterprises.

Mr Speaker, Sir, the business community has always been faced with the heavy cost of doing business in Singapore and they have to cudgel their brains. The business people have to face the problem of lower sales and the pressure of rising business cost. This is what we call "adding frost to snow". According to the Economic Intelligence Unit's survey report, Singapore's cost of business is ranked No. 10 in the world, comparable to that in Europe and America, and much higher than our neighbouring countries like Malaysia, Indonesia and Thailand. I think that the most important task ahead is that we must lower the cost of doing business here. This is an urgent task to us.

I hope that the Government can look into the direct costs of business like factory rentals, shop rentals, wage cost, Government taxes and charges, transportation cost, etc. If all the Government agencies can look into the situation and quickly adjust such costs of businesses or to suspend collection of certain charges, it will help our local businesses and, to a certain degree, restore the confidence of the business people.

Mr Speaker, Sir, in the budget, HDB and JTC have already announced the freezing of rentals for one more year. Of course, freezing is better than no freezing. We appreciate that. But just freezing alone is not enough. The Government should consider lowering the rentals.

In January, the House already approved the motion tabled by Mr Cyrille Tan on tripartism. The Government's refusal to reduce rentals appears to go counter to this spirit, because just freezing rentals is not enough. In good times, enterprises move forward. The rentals go upwards. But now through no fault of ours, but because of the effect of the regional financial turmoil, business suffers losses. We move backward and the Government just freezes rentals. That is "running on the same spot". When the economy prospers and the businesses recover, the Government will not stand there and wait for the businesses to catch up. Instead, it will immediately raise rentals. This amounts to sharing prosperity in full while only sharing hardship in part and will delay the recovery of businesses. Such practices do not seem to be totally consistent with the spirit of tripartism.

Apart from rentals, another burden on the businesses in Singapore is the wage cost. Compared to our neighbouring countries, our wage cost is already quite high. The recent devaluation of the currencies of our neighbouring countries has made our companies and businesses even less competitive in terms of wage cost. In the long run, this will be detrimental to our exports and to our foreign trade. I feel that the Government, apart from encouraging our businesses and workers to enhance productivity, should also help to reduce the wage cost for our businesses. So I would again appeal to the Government to exercise restraint on wage increases in the public sector, so as not to create a vicious competition that may push up wage level in the private sector.

The Government levy on foreign workers is aimed at preventing undue increase in foreign labour and social problems. This levy is to control the demand for foreign labour. But now with this economic turmoil, our demand for foreign labour has dropped. So this is the right time for the Government to lower such levy.

Mr Speaker, Sir, faced with the financial turmoil sweeping across the region, we should all be united together with one heart to make the necessary sacrifices and preparations to avoid an economic recession. If this negative situation should persist or even worsen over the next few months, I would urge the Government to decisively and immediately adjust the CPF contribution by employers.

The 1998 Budget contains an increase of 30% on education expenditure. But no new measures have been introduced for retraining of employees. As the Government has said, an economic slowdown is the best time for retraining of our workers and employees. Our labour market is highly flexible, allowing free competition to determine the allocation of human resources. As such, if company A pays for training an employee, the benefit may go to a new employer, company B. This is to say that the value-added to the employee will not necessarily go back to the employer paying for it. But for the whole of Singapore, the nation for sure benefits. In other words, like formal education, staff training is also to some extent a "public good". Therefore, in terms of staff training, the Government must play a greater role and give more incentives. I think it is very much the Government's responsibility.

Mr Speaker, Sir, Government taxes and charges by the statutory bodies have also become a rather substantial part of the business cost. Therefore, the Government should constantly review such taxes and charges and evaluate their negative effect. And, if necessary, the Government must take off-Budget measures to reduce the company tax, GST, road tax and port charges, etc, to ensure that our competitiveness can be sustained. As encouraged by the Government, many local enterprises have gone regional. But, unfortunately, they are suffering heavy losses in this financial turmoil. Not only have they failed to get proper returns, they also suffer great losses and heavy setbacks because of the currency turmoil. In order to maintain their morale and to help them go through this difficulty, I think the Government should liberalise the corporate tax system and give the enterprises the necessary assistance by allowing companies to deduct losses of subsidiary companies overseas from their group profit. In addition, the Government should also grant them double tax deduction in respect of wage cost overseas and other related costs.

Last year, the Government reduced the property tax to 12% in order to help lighten the burden of property owners. At the same time, however, the Government, raised the annual value of properties so that the quantum of tax paid has actually gone up. Now, property prices have already come down. The Government should also correspondingly lower the annual value of properties and the quantum of property tax. I hope that the Government will further reduce property tax to 10%, so as to further lighten the burden of the property owners and, thereby helping the property owners to maintain their confidence in the property market.

Singapore's motor vehicles are the most expensive in the world. Everybody knows that. From the point of view of economic theory, we can say that when the price is low, the demand will be high. When the demand is low, the price will be high. This is indisputable. Given that the Government adopts the COE system to restrict the increase in the vehicle population, the high cost of motor vehicles naturally follows. The Government has already started to increase the cost of vehicle usage and, proportionately reduce the cost of vehicle ownership. Still, I feel that basing the costs of owning or using motor vehicle completely on economic efficiency and market pricing has its drawback.

For example, a rich man is prepared to spend $100,000 to buy a car for his university-going daughter to avoid the inconvenience of using the public transport. On the other hand, a small businessman can only afford $80,000 to buy a vehicle indispensable for his business. Under our present free market competition framework, the businessman will lose out in the competition, and the rich man's daughter will get to use the car. Is this outcome optimal for Singapore's economic development? I doubt very much.

This is not a simple issue. Precisely because many Government policy issues are not simple and need talented people to work out good solutions that we whole-heartedly support the Government's high-pay policy to recruit talents into the Government. I believe the Government has the means and the ability to think of a better way to lower the transportation costs to a more reasonable level, so as not to hurt the competitiveness of our businesses.

Before the announcement of the budget, the Singapore Chinese Chamber of Commerce and Industry conducted a survey among its members. The result shows that many enterprises and businesses have suffered as a result of the regional financial turmoil. We know the Government's economic policies are driven by strategic long- and medium-term plans and objectives. For many years, we have accepted the Government's self-reliance principle, ie, within the law, everyone pursues his profits, enjoys the fruit of his success, but also bears his own risks. We also understand that, to do business in Singapore, you must depend on yourself. So this survey should be interpreted as reflecting the true difficulties faced by the business people, rather than attention-seeking sort of "groaning without being ill".

The development of the financial sector is very important. There is no doubt about it. If Singapore can become a world-class financial centre, then local enterprises will also benefit. To a very large extent, multi-national companies have their own intra-trading. I think this has provided some cushion for Singapore's economy in this financial turmoil. We also concur with the Government's call for local enterprises to pool their resources together to go into the so-called sunrise industries such as telecommunications, high-tech, logistics and transportation, and electronic-commerce, etc.

But I would again appeal to the Government not to neglect the SMEs in Singapore. They are important and special to Singapore as a nation and Singaporeans as a people. First of all, the small and medium-sized enterprises, just like the Government-linked companies and some large companies such as Yeo Hiap Seng, are "our own". When Singapore is in trouble, they are the people who will remain in Singapore. They have no other places to run to, and they do not wish to run. They are local indigenous businesses. The big companies also started off as small companies. So if we neglect the small and medium-sized enterprises, then you will be doing a disservice to the entrepreneurial spirit of Singapore.

Undoubtedly, because the SMEs have not reached the economic scale, they are at a disadvantage. But, of course, they also have the advantage of being a small boat which can manoeuvre with a lot of flexibility. But, more importantly, they are the symbol of Singaporeans', especially the young Singaporeans', entrepreneurial spirit. We have been alarmed that this kind of spirit is gradually fading away. So we cannot just pay lip service that we encourage entrepreneurial spirit. In terms of policy and taxes, Government should substantially give reasonable or long term assistance to these local enterprises. We do not expect the Government to over-zealously help them. We know that will be quite futile. The Government will also not oblige. What we are asking the Government to do is to realise that the SMEs are not fully grown as yet. They are still in the seedling stage. We must care more for the SMEs. Because their roots are short and small, the Government should help these companies to grow faster by giving them more water and fertilizer. Otherwise when the leaves of big trees cover up all the sunlight and their thick roots obstruct the tiny roots of the SMEs, even if the latter's seedlings are of good quality, they cannot survive and will seek better and more friendly fields elsewhere.

Recently, some statutory boards published the names of bond breakers. Although I may not agree with this, from the debate on this matter and my own experiences, I feel that it is quite true that the "me-first" attitude of the younger generation has reached the extent that we cannot afford to overlook. From my own humble view, I feel that in our economic development process, we have over-emphasised efficiency and financial benefits. This is one of the reasons why young people care more for benefits but less for the spirit. In helping our SMEs, in terms of transportation cost, it would not be enough for us to just talk about economic benefits. To make it even clearer, certain things may not be competitive enough today. But their values in the long term may be very high. So in our economic calculation, we should not under-rate the importance of future value. The Government's economic policy has been well founded and far-reaching. In this financial crisis, foreign countries have already praised us for what we have been doing. It is based on this Government's outstanding achievements that I sincerely hope that the Government will be able to introduce off-Budget measures to encourage our local small and medium enterprises and to lower the cost of doing business in Singapore.

Mr Shriniwas Rai (Nominated Member): Mr Speaker, Sir, may I ask my friend for some clarification on one issue? He represents the Chinese Chamber of Commerce. I am interested to know, and probably the House may be interested to know, whether the views he has expressed are also the concerns of the other Chambers of Commerce?

Mr Tay Beng Chuan: The answer to that is yes.

Mr Shriniwas Rai: I am obliged to him, Sir. 2.20 pm

Mr Lim Swee Say (Tanjong Pagar): Mr Speaker, Sir, I rise in support of the motion in the name of the Minister for Finance.

Sir, the long term is made out of a series of short terms. To survive the long term, we need to grow in the short term. Likewise, to grow in the long term, we need to survive the short term. In this regard, I am very impressed by Budget 1998, because it addresses both the need to survive the short term and the need to grow over the long term. In particular, I would like to highlight three areas where I am very impressed.

Firstly, during this period of economic slowdown, many companies are facing problems with cash flow and profitability. The various measures announced by the Minister to contain the rising cost of doing business in Singapore will go a long way in helping businesses to survive the short term. Secondly, the small and medium enterprises, together with the manufacturing and services sectors, are the key source of employment. The review of the Local Enterprise Financing Scheme (LEFS) is a very timely move by the Government to support more SMEs during this period of difficulty. Thirdly, Asia, in the year 2000 and beyond, will be a very different Asia. By then, many countries, if not all of them, would have turned around from the current turmoil. It is very important that Singapore is well positioned for the 21st century.

In that regard, I am very impressed by the various incentives and measures announced by the Minister to position Singapore as a global hub in Asia in the 21st century in terms of being a financial hub, exhibition hub, information hub, technology hub, electronic commerce and so on. So all in all, as I say, Budget 1998 is a very good budget and I would like to congratulate the Minister for coming out with such a good budget in such a difficult time.

There is a saying that we are able to refine better than we are able to create. Now that the Minister has created a very good budget, as a humble MP, I would like to contribute just some ideas on how this good budget can be refined a little, for the better.

Sir, imagine we have a plane that is normally full. In fact, there are times when we even have to add extra seats to cater for the over demand. All of a sudden, one day, for whatever reason, the passenger load drops, and we end up having many empty seats. This is a situation we are not used to. But for the airline, when they see all these empty seats coming up, there are a few things they can do. The first thing they can do is to lower the fare, make it cheaper so that many people can travel. The second thing they can do is to do some promotion to attract new passengers, people who have no intention to fly on their airline and bring them to their airline. The third approach is to target certain special groups and give them special fares, maybe tourists, for example, so that in that way they fill up those seats. But why do airlines make all these extra efforts to fill up all the empty seats? The answer is simple. Because if nothing is done, by the time the flight is over, the empty seats are gone forever. There is no way you can recover the empty seats.

Mr Low Thia Khiang: Use a smaller plane.

Mr Lim Swee Say: Mr Low Thia Khiang says, "use a smaller plane". I suppose you can. But the problem is that later on when the business picks up again, what do you do? Do you change back to a bigger plane? Of course, it costs money to change from a big plane to a small plane. Therefore, I would like to offer this suggestion because whatever we do now under Budget 1998, it is quite clear that the economy is likely to grow between 2.5% and 4.5%. It can be 2.5% or 4.5%, maybe lower or higher. But whatever it is, I think it is quite safe to say that in 1998 and 1999, we are not going to be able to fully utilise our full potential because the Singapore economy has the potential to grow at 5% to 7% a year. But this is not likely to happen in 1998 or 1999. Therefore the question is: what should we do with this slack in the national economy? What should we do with this spare capacity? Because, like the airline, if nothing is done to make full use of this spare capacity, by the year 2000, I think we will look back with a lot of regret because what is gone is wasted forever.

Sir, I would like to put forward this suggestion that there are two ways we can make use of this spare capacity. Various Members of this House have suggested that we should introduce some stimulation package to stimulate the economy. That is one way of helping the companies to survive, to keep them alive, keep them above the water, so that hopefully when the economy turns into high growth again, they can move on. The second way is to look at it in a more proactive and constructive way and ask ourselves: can we turn this spare capacity into an investment for the future? What I am saying here is this. I am not talking about giving more incentives and subsidies to help companies to survive. I am proposing that we help companies to become stronger so that by the time the economic crisis is over, companies will be in a better position to compete in a more competitive Asia. This is theory. This is concept.

Let me turn this into some concrete ideas. We can turn this spare capacity into an investment at three levels: at the national economy, the company and the individual worker's level.

Firstly, at the national level. We always think that in a crisis like this, investment will drop and therefore we should expect fewer investments to come to Singapore, and be ready for the hard time. I think otherwise. Recently, I met a senior executive of a leading MNC of the world and I asked him, "How are you doing in Singapore?" He said, "Well, not too bad, quite tough though. Profit margin is low. Singapore dollar is high and therefore you are more expensive. But I think we will survive." Then I said, "How about investment plans? Do you think you will do something this year?" He said, "Oh, it is interesting that you ask this question. Because our headquarters just did a review. They come to the conclusion that by the year 2000 the Asian market will grow and expand again." Which means they have to do something in 1998 to prepare and position themselves for the year 2000. They look around in Asia. They concluded that at this moment in 1998, for their capital-intensive, skill-intensive and technology-intensive investments, in fact, there are not many places in Asia they can put their money now. Because of the uncertainty in the economy and the political situation, in fact, Singapore is one of the very few countries where they can invest today to position themselves for the year 2000 And he said that, in fact, this year they are going to increase their investment in Singapore. They are going to undertake more operations in Singapore.

Therefore, I believe that we can turn this financial crisis into an opportunity for Singapore to move further ahead provided that we are prepared to set aside more resources to incentivise these investors so that they can do more in Singapore. In this regard, I would like to suggest that the Minister for Finance may wish to consider allocating a supplementary budget to economic agencies like the EDB under the Economic Development Assistance Scheme (EDAS) so that agencies like EDB, TDB, NCB, PSB and NSTB can make use of this slow growth period in the Asian region to go all out to attract more companies to speed up their investment into Singapore. So that by the year 2000 when the market returns, Singapore would be in a much stronger position to capture this Asian market.

Secondly, at the company level. Again, many of us would imagine that during a period of slowdown, companies would be talking about retrenchment, downsizing, cost-cutting. I think we may be 70% right because out of every 10 companies, I am very optimistic that we can find two to three who are prepared to look ahead to the year 2000 and beyond and ask themselves what they can do during this period of slowdown with their spare capacity within the company to reposition themselves to build new capabilities to compete in the future.

Recently, I visited a few companies and, some of them are Japanese companies. They mentioned to me that this is a period where they will focus in three areas. First, quality; second, productivity; and the third area, innovation. Their point is that by the year 2000, if their operations are going to survive in Singapore, in terms of quality, productivity and innovation, they must be so far ahead of their competitors in the region operating at a lower cost location. During good times, they have no time to go through this re-engineering. But now, during a slowdown, time is on their side. So instead of asking workers to stay at home, take a pay cut, they are now turning this spare capacity into an investment for new capabilities for the future. However, many of them told me that it is easy for them to secure additional resources from the headquarters during good times to fund investment upgrading. But during this difficult period, when revenue is down, profit is down, it is a big challenge for the executives in Singapore to convince their corporate headquarters to invest during this difficult period. Their suggestion is, how they wish the Government can do its part too to co-fund, to incentivise them, in some of these upgrading programmes.

So in that regard, my second humble suggestion to the Minister for Finance is that I hope the economic agencies will not scale back their level of incentive support during this difficult period. Instead, I think they should increase the level of support so that companies which are prepared to go through the process of re-engineering to prepare themselves for the year 2000 and beyond, should be given more encouragement.

Thirdly, at the individual level, and I think the Minister is aware that this is the level where I am most concerned. For many years, we have complained that workers are not committed to training. Why? During good times, they have no time for retraining, because workers would like to work overtime, because overtime brings extra income to the workers. And this is something we can understand. Now we are in not-so-good times, overtime has been cut back. In fact, quite a few companies are now going on shorter work week where factories open for four days, and workers are asked to take compulsory leave and stay at home. In a way, this spare capacity is now being wasted, because workers are now staying at home doing nothing. Here is a situation whereby during good times, they have no time for training. Now they have time for training, companies have no money to send them for training. So we are always caught in this no-time or no-money situation. I feel very sad that we are not taking the bold step to break away from this no-time or no-money situation.

For companies, many of them, I believe that if we are prepared to co-fund training with them, many more employers are prepared to re-train their workers. The Skills Redevelopment Programme is spearheaded by the NTUC, co-funded by EDB, PSB, and supported by the training facilities offered by ITE, Nanyang Polytechnic and Temasek Polytechnic, and so on. We have demonstrated that, given a sufficient level of support, the employers are prepared to retrain their workers during this period of slowdown. And many workers, the older workers, the not-so-young workers, the under-educated workers, are prepared to respond to training. Under the SRP today, more than half the workers are more than 40 years old, and more than 70% of the workers undergoing training have less than secondary two qualification. We believe that, if given sufficient funding support, we can expand the SRP to beyond the unionised sector into a national programme, so that we can turn this period of slowdown into a period for investment, retraining, and skills upgrading of the workers, so that our workers will remain employable in the next century.

Sir, these are my three suggestions which I hope the Minister will consider. But having said all this, I think, at the end of the day, whether Singapore would do well in the future depends not so much on how much money we have, how good is our strategy, but on what kind of people we have in Singapore, what kind of Singaporeans we have in Singapore, what kind of leaders we have in Singapore in the future. And here I am not talking about leaders who have the knowledge and expertise. I think equally, if not more important, we need leaders with the right value system. In that regard, I think the debate on the scholarship is a very relevant issue within the context of Budget 1998. Because if the young leaders of Singapore, the leadership of the future, have only good knowledge but not the right value system, I do not think Singapore can sustain our growth in the future.

Many Members here mentioned that we must invest in the young Singaporeans, in the citizens of the future, and I fully endorse this. I would like to cite Chairman, EDB, Mr Philip Yeo, as an example of a person who really believes in investing in the young Singaporeans. I must at this stage declare my interest. Firstly, I am the Chairman of the National Computer Board (one of the two statutory boards that is involved in this whole issue); secondly, I was MD of EDB, and I am now still on the Board of EDB; and thirdly, I am a scholar, and I have been bonded to the Government for 11 years, and I am proud to say I am not a bond-breaker.

Mr Speaker, Sir, Mr Philip Yeo believes in developing the talents for the future. So wherever he goes, he makes sure that there is a scholarship system in place to invest in the young Singaporeans. In 1981, when he became Chairman, NCB, he set up the NCB scholarship. In 1986, when he became Chairman, EDB, I think not many people are aware, he secured a $50 million fund from Glaxo to set up the Glaxo-EDB scholarship. When he became Chairman, Sembawang, again, he expanded the scholarship programme. Why? Because he believes that for Singapore to sustain our growth in the future, we need to have young, good and capable leaders. To have good leaders, he believes in giving them the best education you can find in this world.

Let me highlight this. For a long time, the Government has a lot of reservations about sending scholars to America for study and allowing scholars to go beyond the basic degree. Mr Philip Yeo changed all that. He was the first to allow NCB scholars to study in US, to do Masters, and likewise, in EDB, in Sembawang. Why? Because his belief is that you must give them the best. If the best is in USA, let them go to USA. When he became Chairman of Sembawang, I was told that some of the staff asked him: why are you giving all this money to scholars to benefit just a few persons? And he explained that the future of a good corporation depends on having good leaders, but, in return, he would expect a lot from the scholars. I was told - I was not there - that once he met up with Sembawang scholars and he told them, "I hope everyone of you will remember - that this scholarship money is not my money; it is not the money of Sembawang management; it is not the money of the shareholders, but this is the workers' money." Because as the Chairman of Sembawang, he could have declared all this scholarship money as bonuses and wage increase for the workers. But because he is looking ahead to the future, that is why he puts the money to fund scholarships. And he told the scholars, "I hope everyone of you will appreciate that the workers of Sembawang are funding your education. I hope you do your very best when you go to school. And I hope that by the time you graduate from school, you will come back to repay these workers of Sembawang by giving your very best to Sembawang Corporation."

And I think what he said to the Sembawang scholars is equally applicable, whether it is at a statutory board level or at the national level. Yes, we have bond-breakers. But we are not talking about the same kind of bond-breakers. Mr Leong Horn Kee mentioned that he served 10 years before he broke his bond. There is nothing wrong with that, because he served 10 years. After breaking his bond, he is still contributing to Singapore. But what we are talking about here are scholars who did not even serve one day and who decided to break their bonds. Of course, many will argue that after five years, 10 years, they will return to be better persons. Time will tell. But at this moment, in 1998, if we look back at what happened the last five to 15 years, under NCB, six scholars broke their bonds without serving a single day. And at this moment, out of the six, only one is serving in Singapore. The other five are now in USA. At least one of them has already sunk roots in USA. He has got a good job, a good family, and he has no intention to return.

So the point here is this. It is like what Mr Philip Yeo told the Sembawang scholars: this is the workers' money. And I, as a labour MP, would like to tell all the public sector scholars the same thing: that every single cent that goes into scholarships belongs to the taxpayers, to the citizens of Singapore, and, therefore, when they take on a scholarship, I hope somewhere in their heart they remember that when the Government or a statutory board gives them a scholarship to create a better future for themselves, they will in return think about how they can create a better future for the average Singaporeans, for the common Singaporeans of Singapore.

Dr Yaacob Ibrahim (Jalan Besar): Mr Speaker, Sir, I support the Budget Statement presented by the Minister for Finance, Dr Richard Hu.

In fact, after this year's Budget Statement was delivered on 27th February 1998, a Member of this House remarked to me that he wished he was working in the financial sector. This summarises a commonplace perception that this year's Budget is primarily aimed at bolstering the financial sector. Perhaps given the economic downturn and the difficulties faced by certain financial sector players, this emphasis on the financial sector is understandable. But the economic downturn is not restricted only to the financial sector. Hence there is a perception that the Budget does not go far enough to help other sectors of the economy and the ordinary man.

Sir, I would like to express my concern here, especially for small and medium-sized companies. The move to expand the scope and range of the Local Enterprise Financing Scheme (LEFS) is indeed welcome, given the credit squeeze companies are facing today. Companies benefiting from this scheme are invariably small or medium sized. However, some have expressed concern that the smaller SMEs may also be "squeezed" out by larger SMEs who are expected to enjoy the lion's share of the benefits of this new initiative.

I would urge the Government to ensure that all deserving companies are able to enjoy this scheme without regard to their size.

Last year, I spoke about the need to encourage SMEs to undertake research and development work. I wonder if the Minister could enlighten the House on the successes of the programmes undertaken by PSB to help SMEs grow and develop. Such successes would show that these programmes can assist these companies in building their core capabilities and developing adequate in-house expertise that will help them to ride out the economic crisis that may hit us this year.

On the same point, Sir, I am somewhat disappointed that there are no special provisions in the Budget to assist SMEs to become more competitive. I understand that the LEFS scheme is a useful device to help companies continue their operations. This is important. But can we do more to help these companies to grow and develop core capabilities?

Sir, I share the view of the Finance Minister that the role of government is to ensure that good business conditions prevail. Given the current regional economic crisis, shaping up confidence internationally and domestically has become all the more important. Yet it may appear to some SMEs that confidence domestically does not seem to come their way. For any SME, an investment into a new product or service is a major undertaking. In this time of uncertainty, they would be cautious as any wrong move may wipe out their entire operations. While we do not want SMEs to go into bad investments, we also do not want them to be overly cautious. An undue fear of risk ultimately may not be good for their continued good and development. The Government is in a good position to assist SMEs in this area and to bolster confidence in their potential. I share what Mr Lim has just spoken. Sir, can the Government consider increasing funds to the SMEs to allow them to invest in new areas so as to stimulate the economy? I am not advocating corporate welfarism. Perhaps, we could consider an arrangement where both the SMEs and Government share the risk in new areas of investment.

Finally, as noted by the Minister, small companies still lag behind in the area of worker training. I hope we can do something to ensure that SMEs do not lag behind even further. We must not allow some SMEs to dismiss as a hollow platitude the Government's view that during this period, we should consolidate, build up our core capabilities and strengthen our fundamentals.

It is the role of Government to ensure that confidence in the economy and market place is restored quickly. Everyone and not just the business community must feel confident. I agree that it is important for the people to support and have faith in this Government's ability to govern and to protect, especially people's livelihoods. But how do we achieve this with this Budget? How, to borrow a term from Admiral Teo, do we ensure that our people sector can ride out the coming storm and come out of it better off than they were before? What can Government do to encourage optimism, strengthen resilience, and promote strong work ethos among the people in this difficult time? The last thing we want is for the people to throw in the towel.

Financial incentives to encourage workers to train are one good way. The ordinary worker, however, may feel hard pressed to go for two or more jobs during this period instead of going for some training programme. Training programmes for some will be at best a difficult option with uncertain payoffs. And what about people who do not require training? What about people who stay put in their job and help their companies to grow? What about those who choose not to migrate but instead decide to hang in here with all of us? What can we do for these people?

Yes, I do agree that we must all realise that things will be difficult this year. But the Government can do little things to calm our financial jitters and to allow us to face the expected difficult time in a stronger psychological state of mind. Can we consider, for example, increasing childcare subsidies so that working parents can concentrate on doing a good job at their work place? Can we not delay the increase in the maid levy? I am sure we can find other ways to bolster the staying power of our fellow Singaporeans.

Sir, I welcome the Government's move to continue investing in the young. I see there are many students in the Strangers' Gallery. Spending on education will not be reduced despite the economic uncertainty. This emphasis on the continued importance of human resources is the right signal to send to the ground.

In this context, measures must also be introduced to continue to protect our young from unhealthy addictive habits such as smoking. I am glad to note that duties on cigarettes will be increased in line with our national policy to discourage smoking, especially among the young. Sir, I would encourage the Government to increase the duties even further. Despite all the campaigning to discourage smoking, anecdotal evidence shows that it is on the rise. All in all, smoking is something we can have less of and even possibly eradicate from Singapore. But I understand that Singapore being a cosmopolitan society and wanting to attract foreign talent must be careful not to unnecessarily alarm people with draconian measures. Nonetheless, Sir, I would support any further increases in duties on cigarettes if it helps to protect our young from wasting their health and damaging their future. The income earned from such duties could be put to good use, perhaps in some of the areas I have mentioned earlier.

Sir, the move to continue giving rebates on HDB service and conservancy charges and rentals to citizens is indeed welcome by many. I noted some unhappiness among citizens living in 5-room flats as to why they have been left out. Given the current economic difficulties, they too would feel the pinch. However, I am sure they would understand that these measures are meant to help citizens in certain income brackets.

There is, however, a group of people which I am concerned about. These are the very poor, perhaps destitute who often have no social networks to rely upon. Some, I believe, are on public assistance. The full impact of the regional economic crisis could lead to price increases. In this regard, I wonder if this group of people would not be affected. I would urge the Government to consider increasing the public assistance amount to this group of people. It would show that despite our difficulties, this Government does care for those who are really in need.

Sir, the week after the Budget was announced, I came across two groups of people wanting to see me during my meet-the-people session. The first was a group of people running small businesses at HDB shops and the other was a family running a stall at a wet market. The former was complaining about fines levied on them for displaying items along the corridors fronting their shops. They complained bitterly about poor business and how it was difficult to make ends meet. The latter group wanted to give back their stall to HDB due to bad business. Bad or slow business seems to be a recurring theme whenever I do my market visits. I know that all businessmen complain of bad business even in good times. It is a business strategy to evoke sympathy from potential customers. But I am not sure that given the current regional economic crisis, their complaints are merely strategic hyperbole.

Our petty traders are feeling the pinch. They do not make a lot of sales, yet their business costs seem to be high. In my area several stalls have closed down. We need to do something for these people. I would urge the Government to consider some help for these people.

Sir, I am tempted to appeal to the Government to consider a balanced budget. Many in this House have spoken about the need to stimulate the economy. However, it is also good to have that small budget surplus for this coming year. The Minster has assured us that off-Budget measures will be considered if the situation warrants it. In this instance, the surplus will definitely come in handy. On the other hand, using part of the surplus to assist companies to grow and develop, as well as to help families tide over their finances during this difficult period, is an investment in a better future for all. The question is how much of the surplus to use now or later. If we use all of it now and things get worse, we may end up facing a negative growth with no surplus to fall back on. If we tighten our belts too much, we may end up with heavy pockets but the economic flu may turn to pneumonia. We need to avoid the temptation of emptying out our pockets, but we must take measures to stimulate the economy so that we are in a good position to strike at the next economic boom. I support the overall thrust of the Budget, but I urge the Government to address some of the concerns I have raised.

Sir, I support the Budget Statement.

Mr R. Sinnakaruppan (Kreta Ayer-Tanglin): Mr Speaker, Sir, I rise in support of the motion. Sir, a few days ago, I was trying to think of what to speak in this debate. Actually, I was thinking whether I should speak on the tax incentives for the bond market. But, Sir, given the fact that the bond issue has changed quite somewhat, I thought I would leave it to my more learned, able and articulate colleagues to talk about it.

Sir, my first reaction to the Budget was that it was a good Budget against the backdrop of our uncertain regional climate, the storm that is looming, the gloom and doom. The modest surplus budget, to me, was just as pro-business as it was pro-worker. If it is pro-business, then obviously it must be pro-worker. But there are gaps, in fact, some big gaps in the sense that it is not pro-worker because it is not addressing the plea to increase funding for skills upgrading of workers and it is not so pro-business in the sense that not much help has been given to SMEs other than the enhanced LEFS scheme and nothing much has been done for manufacturing companies. Nevertheless, Sir, the Budget is a people's budget in the sense that there was something for everyone. And here, I was quite surprised when the Straits Times the next day said something like "Dr Hu unveils a prudent Budget", implying as if the previous years' Budgets were not prudent. As far as I have been in this House, every year it has been a prudent Budget. Anyway, Sir, many Singaporeans, given the current economic situation, do not count the blessings of a reasonably good budget in bad times. They forgot that the Indonesians, Thais and Malaysians are not having it as good, and they will never have as good a budget for some years to come.

I spoke to some of my friends when I got home two Fridays ago. First, I spoke to a fellow unionist, a university hostel friend who works in a bank, and to some other friends from the corporate world. The unionist told me that he was somewhat disappointed with the Budget. He said that the Budget was not good because the income tax rebate was only 5%, a reduction from 10% the previous year. Then I asked him curiously whether he pays income tax. He grinned and said that he did not pay income tax, but was just reflecting the views of what his manager at his workplace had told him over coffee. Most Singaporeans, Sir, are second-hand complainers! They are just gracious enough to complain on others' behalf and lend empathy.

Anyway, this friend went on to a more substantive reason as to why he was disappointed with the Budget this year. He said that instead of giving a big financial boost to the efforts of NTUC in skills upgrading, the Government had chosen to say that it wanted companies to spend on training like the way it spent on education of our young, our school children. His point was that while it was correct to ask companies to spend more on training and upgrading the skills of our workforce, without strong financial incentives from the Government, it is going to be foolhardy to ask companies, especially small companies and local enterprises, to spend more on training. For most SMEs, the opportunity costs of training their workers, both in terms of time away from work and the costs relating to payroll and training, can be very significant and Mr Lim Swee Say has spoken eloquently about it. It also means that the small companies cannot meet their production schedules on a daily basis. If they cannot meet the production schedules on a daily basis, what it means is that their companies would be rendered financially not viable both in the short term and in the long term. And especially in times like this, the consideration of the CEOs in SMEs is business survival.

Unless and until Government starts to spend as much on our workforce as it does on our school children, it is the workers of Signapore, especially the workers in our SMEs who are going to suffer and face the future consequences of structural unemployment. While my fellow unionist agrees with Dr Hu that `nobody can expect lifelong job security', he feels strongly that many under-educated workers in Singapore had for various reasons lost out on a basic education. He wants to ask Government to play an active role to help provide the funds for them "to learn how to fish for they cannot just depend on their companies to provide their fish for a life time."

Sir, my own response to this call by my fellow unionist is that he is right to ask the Government for more money for workers' skills upgrading but, at the same time, I feel that companies cannot shirk their responsibilities in worker training. I think the Government can encourage SMEs to spend more on training by taking a lead in the same way it has developed financial incentives as a catalyst for SMEs for business upgrading activities. Sir, for example, the Government used to bear up to 90% of the financial costs if SMEs embark on, say, ISO 9002 consultancy. This encouraged SMEs to venture into such business consultancies. When this attracted many SMEs, the Government gradually lowered the percentage subsidy, I believe, to 70%. Likewise, the Government should entice companies into training their own workforce. Already, such an incentive on training and payroll costs exists in the scheme initiated by the NTUC - the Skills Redevelopment Programme. What the Government needs to do is to elevate it to a national scheme, as Mr Lim Swee Say has pointed out, so that more funding will be available to training and more SMEs can be encouraged to join the scheme.

Sir, then there was this other friend that I spoke to who helps the Handicapped Welfare Association. He told me that it is time that Government increased handicapped earned income relief given the fact that the costs of living have actually increased for the handicapped, especially for those who need to employ a maid to look after them or those handicapped who need to own vehicles as they are unable to take public transport. He suggested that the maid levy can be reduced for this special group and on a case-by-case basis. It is felt that the $3,500 tax relief is insufficient to pay for the maid levy and her salary. On Sunday morning, I flagged off a Handicapped Welfare Association's "Wheel, Walk or Jog" event, and many in the Association have made a plea and sent me a detailed proposal which I will be happy to pass it on to Dr Richard Hu.

Then there was another friend who had always felt that it was time that the Government listened to some feedback from young Singaporeans. He had attended the Institute of Policy Studies (IPS) Young Singaporeans Conference last October. In fact, I too was invited to attend one of the feedback sessions together with some of the younger MPs in this House. The participants included some 50 very bright and upwardly mobile younger Singaporeans holding key positions both in the private and public sectors, and they were all largely in their 30s. My friend reminded me that the conference had brought out a strong message that young Singaporeans like them wished that the Government moved away from the preoccupation with economic growth and development as the predominant basis of all national activity and sense of nationhood. I asked him what had that got to do with the Budget Statement. Sir, before you rule me out of order, his response was that these were fundamental issues that public policy makers had to reconcile before public policies took root through the Budget Statement.

Sir, I have recently received from the IPS a summary of the deliberations and I think it is worthy for me to highlight some of their thoughts for the Government to consider. It was felt that if the country would become solely a function of `making a living', then the nation would lose its function the moment a better living can be gained elsewhere. Economic logic is no respector of national loyalties. A sole preoccupation with economics as a basis for nationhood could even undermine it in the long term.

While it was acknowledged that economic progress was a necessary component for nationhood and social cohesion in Singapore, more should be done to strengthen the intangible sense of citizenship and belonging. A sense of attachment to Singapore would hinge on the citizens' sense of fulfilment of their lives here. Some participants bemoaned the fact that life was stressful and driven mainly by the need to pour on the concrete' with little or no time to smell the roses'. There seemed to be a trade-off between productivity and leisure. It was felt that just like productivity, indicators of quality of life need to be introduced in Singapore. Some felt that the stresses and strains that the middle class subjected themselves to, to attain their material `lifestyle' aspirations were pegged to the patterns of consumption of the developed nations rather than to the small resource poor city-state of Singapore. Hence, "the pressure is about how to increase comparative consumption advantage over one's neighbours."

Sir, although not explicitly stated in the conference, the new policy to attract foreign talent into the economy must have provided a question posed at the conference, ie, "is there a difference between a Singapore citizen and a permanent resident? If the difference is negligible, should we then just privatise citizenship?" If it were perceived that some of the privileges of citizenship could be had for one's contribution to the economy, and gain what a speaker referred to as `value-added citizenship', it would not be a large step to eventually commodifying citizenship.

It was felt that there was now a sense of cognitive dissonance over the Government's discourse on Singapore as a corporation and Singapore as a nation state. The current foreign talent policy has sent the signal that citizenship was valued by the nation state according to one's economic contribution, but yet the demand on the Singaporean has been that he or she should relate to the nation state with an emotional sense of attachment. So this issue of scholarship bond is only symptomatic of a bigger problem.

Sir, I quote another person at the forum and he said:

`What we suffer from is a contradiction in roles and responsibilities .. If you look at it from a country's perspective, issues that you need to consider are unlike those of a company's perspective. . From the company's perspective, it is up to the employee to upgrade himself. [Of course, with some Government help.] From the country's perspective, we expect the country to upgrade us to be more competitive. If Singapore Inc. were to go to the extreme, there may be [social] fallout, people structurally unemployed as a result of cost-benefit analysis.'

Sir, there was also a need to remember that what may prove to be valuable in building a nation and in explaining how a society functioned could not be priced or quantified. The orientation towards an economic cost-benefit analysis or a managerial approach to governance would overlook these.

One other principle to consider, therefore, as we seek to truly release new energies for our thrust into the new millennium could be to choose total, holistic, system-wide solutions over piecemeal sub-optimal ones. This must begin with a rigorous intellectual review of governance and public policy in Singapore today.

Sir, coming back to my philosophical friend, I asked him that given this gloom and doom, is there any public policy that the Government can review to show that it cares more for the young Singapore professionals vis-a-vis attracting foreign talent from elsewhere? He said, "I can think of one thing." And pointing to me, he said, "and you had spoken passionately about it in Parliament two years ago." He was talking about my speech two budgets ago about young professionals' aspirations to own a landed property or private condominium and their dream to own was slipping away from them. He felt that this was the time when property prices have come to a halt, but prices are still high. They are still at the 1995 price levels. He felt that if the Government is serious about creating a national identity for Singaporeans to be rooted to this soil, then this is the time when they can help upwardly-mobile young Singaporeans to sink their roots here. And he was quick to add that he had no pecuniary interest as he was already living in a landed property.

For example, he felt that the Government can meet the aspirations of these young professionals, instead of trying to attract foreign talent, by relaxing the 20% cash downpayment for the purchase of private property to, say, 10%. This is because many young professionals do not have much cash. They have a lot of assets, but, very often, it is not in cash. This is a time when the market is soft that good buys can be made. Waiting for another two to three years will enable them to save and have more cash, but the market will unfortunately catch up with them. If the Government does this by reducing the 20% downpayment to 10%, it will not only win the hearts and minds of these young professionals to go beyond Singapore Inc to feel for the country and to sink their roots here, but it will also, as a byproduct, help breathe some life into the market, though personally I do not like to speak for property developers. But that is another story!

Sir, let me end my speech by wrapping up the view of my friends with a simple story that you might have heard before, the story of the Elephant and the Six Blind Men. Once upon a time, there were six blind men who wanted to know what an elephant looked like. They wanted to learn by feel and experience and satisfy their mind as to what an elephant was. So an elephant was brought to them. Mr Lim Swee Say is here. He likes to hear jokes.

The first blind man, who stood near the broad and sturdy side of the elephant, said that the elephant was like a wall. The second blind man felt the tusk and said that the elephant was like a spear. The third felt the trunk and said that the elephant was like a snake. The fourth man touched its leg and knee and said that the elephant was like a tree. The fifth man touched the ear and said that the elephant was like a big fan. The sixth blind man touched the tail and proclaimed that the elephant was like a rope.

Sir, the moral of the story is this. Like the blind men, my friends are relating only the aspects of the Budget Statement that affect them from their personal perspective. Other things are not relevant to them and do not seem to matter and therefore their perspective may be somewhat myopic, from the perspective of a person with a clear vision to see the entire elephant. But their perspectives are not wrong but just incomplete.

Dr Richard Hu and the Government have a clear vision and can see the big picture of the elephant, ie, the holistic picture of the country and they have come up with a budget that has something, however small, for everyone. While it may not satisfy any one more than the other, it is the right vision for Singapore given the regional backdrop. It is a cautious budget and rightly so. But, as Dr Richard Hu has said on TV on Budget night, the Government can still make a number of off-Budget pronouncements when the course of the sail becomes calmer and less choppy. And I hope that the Government will give due consideration to some of the perspectives of the `blind men' who may have something to add to the big picture. The blind, such as those in my anecdote, have other sensitivities that are heightened, such as the sense of touch and the aural sense. For those of us who can see, but only from our limited perspectives, it might be wise for us to listen and reach out to those with heightened sensitivities and needs, whom we might have overlooked and not heard diligently enough.

Sir, I support the motion.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.35 pm.

Sitting accordingly suspended at 3.13 pm until 3.35 pm. Sitting resumed at 3.35 pm