TURNING ECONOMIC SLOWDOWN INTO OPPORTUNITY FOR FUTURE GROWTH

Debate resumed.

Mr Tay Beng Chuan (Nominated Member): (In Mandarin): Mr Speaker, Sir, more than 2,000 years ago, the great Chinese philosopher, Lao Zi, said in his famous Daode Jing (Moral Canon), "In calamity lies good fortune, and in good fortune lurks calamity." The meaning of this saying is that good fortune is concealed in calamity and calamity is also hidden in good fortune. In other words, bad things may turn into good things, and good things can also turn into bad things.

In the past decade, when the leaders and people of many Asian countries were complacent over their unprecedented economic growth, it never crossed their minds that the calamity in the form of a financial crisis was lurking in the good fortune of economic prosperity. As such, when this calamity of financial crisis surfaced, they appeared to be caught off-guard. Of course, such a reaction is perfectly normal.

As Singaporeans, we ought to be happy because we have a good and responsible Government. The Singapore Government leaders have all along possessed a very strong sense of anxiety. Even in the good years when we had good and strong economic growth, the Government has been reminding the people not to take economic prosperity for granted, but to look at the success as the fruits of our hard work and diligence.

Senior Minister Lee Kuan Yew has, on more than one occasion, told the people of Singapore to "be prepared for danger even in times of peace". Therefore, the arrival of this financial crisis should be looked upon more positively as a challenge to the Government, the business and the workers, to see whether they could once again put the advantage of their tripartite co-operation to full play, pull together in times of trouble and tide over difficulties, rather than treating it as a crisis per se.

"In calamity lies good fortune". Bad things can be turned into good things. This is an objective dialectical law of the development of history. It cannot be diverted by man's subjective will. As such, I strongly believe that the current financial crisis will be a turning point for the further development of Singapore's economy.

In this respect, I support the long-term objective of the motion moved by Mr Lim Swee Say and Mr Seng Han Thong, that is, to suggest that the Government should make full use of this economic downturn to strengthen our economic competitiveness and social cohesion, so that Singapore will emerge from this regional crisis even more competitive and resilient.

As for the short-term target as raised by the two hon. Members, that is, to urge the Government to rally the support of the entire nation to minimize unemployment, I have no reason not to support it, because it concerns not only the abstract meaning of the standard of living of the people of Singapore, but also the actual problem of the friends, relatives and neighbours of each and every one of us here. However, I hope that while trying its best to rally the entire nation to ensure that our unemployment remains at the lowest level, the Government would also make every effort to ensure that the impact on the industrial and commercial sector of Singapore, particularly the SMEs, would be minimal.

If we were to make a rough analysis of the employment structure in Singapore, we will find that the vast majority of Singaporeans are employees of the five major categories of employers, namely, the Government and statutory boards, MNCs, Government-linked companies, local large enterprises, and the SMEs. In the current financial crisis, all the five categories of employers are affected, without exception. But the "degree of injury" varies. The first four categories have strong financial and resource capabilities. As it is said, "a lean camel is still bigger than a horse". Their injuries are just superficial. After a period of recuperation, they will regain their strength and vitality. As for the last category, that is, the SMEs, they are critically injured. If they are not treated promptly, they will most probably succumb to their injuries.

The Chinese Chamber of Commerce and Industry conducted two surveys on the SMEs this year. In the January survey, 73.9% of the SMEs indicated that they suffered drastic reduction in their turnover and, at the same time, 45.1% indicated that they had cash-flow problems. In the June survey, both figures exceeded 80%. If the situation continues to deteriorate, the consequences would be too ghastly to contemplate.

While the other countries in this region are recording negative growth, Singapore managed a 3.8% growth in the first half of this year. This is evidence of our strong and healthy economic foundation. Yet, while we rejoice in feeling how privileged we are, we must not forget that this financial turbulence has in fact destroyed a good number of enterprises which could not withstand the impact, with many others hanging by a thread in a precarious position. Since the beginning of this year, more than 12,000 employees have been retrenched due to liquidation or down-sizing of their companies. According to a report, by the end of this year, this figure would be more than doubled, touching 30,000. Apparently, we no longer enjoy the enviable situation of full employment that we have enjoyed over the last many years.

The Secretary-General of NTUC and Minister-without-Portfolio, Mr Lim Boon Heng, recently told the media that if the economy further deteriorates, the first thing to do would be to save jobs. And to save jobs, we must ensure that there is a market for the type of services and products we supply, and to reduce cost. He also said that the Singapore dollar was higher than the currencies of our neighbouring countries. Unless we can reduce our unit cost, improve our productivity and implement cost-saving measures, Singapore may lose out to countries where the cost is lower. At another occasion, DPM BG Lee Hsien Loong raised a similar point. He said that reducing cost, including wage cost, would not only help the companies to survive, but also enable the companies to be more competitive, thereby helping the workers to save their jobs.

Mr Speaker, Sir, the spirit of the speeches of DPM and the Minister-without-Portfolio happens to coincide with the objective of this motion before us. As a representative of the business sector, I agree that the business sector should also try its best to coordinate and put to full play the advantage of our tripartite cooperation. Let us put in a concerted effort to lead all the people of Singapore in tiding over the current difficulties.

However, I must emphasise that to do this, our imminent task is to help the local large, medium and small enterprises to maintain their confidence and fighting-spirit to persevere in exerting themselves in their struggle for survival, for the sake of their own business development and the welfare of their workers, so as to tide over the troubled waters and search for a breakthrough.

As employers, unless it is of absolute necessity and as a last resort, we do not wish to retrench our workers. As a matter of fact, we are even reluctant to cut the salaries of our workers, including reducing the CPF contributions. Because, by so doing, it will result in reduction in the workers' income, which in turn result in lower purchasing power. Lower purchasing power will then lead to further contraction of the market. The end result is that we, the businessmen, will stand to lose.

This is a vicious cycle. It will make our economic situation turn from bad to worse. Recently, the Senior Minister called upon Singaporeans to consume more. I believe he made this call because he was worried that Singapore's economy might fall into this strange vicious cycle.

Mr Speaker, Sir, our local enterprises must reduce their operational cost. This goes without saying. However, labour cost is only part of the cost of doing business. In other words, if the local enterprises can further reduce the other parts of their operational cost , such as rentals, taxes and other charges, our pressure on labour cost will be relatively alleviated. Lowering of labour cost implies that less workers will be out of job. Is this not the short-term target that the two hon. Members are seeking?

Of course, the Government has already adopted some measures to lighten the burden of the SMEs. We are not turning a blind eye to all these. Indeed, we are grateful to the Government for the various cost-saving measures, particularly the series of off-Budget measures introduced by Finance Minister, Dr Richard Hu, in Parliament on 29th June. However, as a Nominated MP representing the interest of the industrial and commercial sector, I am duty-bound to accurately reflect the views of the SMEs in this august Chamber, that is, what the Government has done seems to be not quite enough.

Mr Speaker, Sir, the Singapore entrepreneurs, big or small, generally keep to the excellent tradition of our forefathers, that is, they all possess the sense of duty and sense of mission towards society and the nation. With the zeal of "what is taken from society to be used in the interests of society", they often share the profits they earned from their business with their employees, and even donate generously to national and community welfare organisations, benefiting Singaporeans of all races, religions and walks of life. Of course, we have not forgotten to pay all the taxes and levies to the country, accumulating a lot of surpluses for our national coffers. Now, these large, medium and small enterprises are subjected to the sudden impact of the financial turmoil. Faced with the pressure from the various cost inflation and credit squeeze, they can be said to be burning with anxiety and racking their brains for solutions. In this crucial moment, if they are unable to receive further support and assistance from the Government and the understanding and cooperation of their employees, then eventually they will collapse and have no choice but to wind up their business. Then, not only will more workers lose their jobs, the Government will also lose tax revenue. As a result, the entire national economy will shrink further.

Mr Speaker, Sir, when the Chinese Chamber of Commerce and Industry announced the results of the second survey of this year on 26th June, it recommended to the Government to adopt a series of pro-business measures in the areas of taxes, property sector, banking and financial sector, transport and communications, supplementary schemes, etc. to help the local SMEs tide over this crisis. In order to save time, I will elaborate on just a number of important points.

In respect of taxation policy, we hope that the Government would adjust the GST, say, from 3% to 1%. This will help to reduce some pressure of the small businessmen. In addition, we also hope that the Government will allow more personal income tax rebates.

In respect of the property sector, we hope that the Government will further revoke the anti-speculation measures for the property market, and to raise the CPF portion of the purchase price to 90%.

In respect of the banking and finance sector, we hope that the Government will relax the credit regulations, and at the same time try to adopt some measures to stabilize the exchange rates.

In respect of transport and communications, we hope that the Government will consider reducing the duties on diesel and petrol. At that time, we also suggested that the Government postpone the implementation of the Electronic Road Pricing system. But the Land Transport Authority has already announced that they are going ahead with it. It may seem inappropriate if I were to raise this point again today. However, I must emphasise that if the Government discovers any negative impact with the implementation of this system, it should promptly make some adjustment to it.

In respect of supplementary schemes, we hope that the Government can establish some special schemes to help those companies which are facing difficulties in capital turnover. At the same time, assist SMEs to explore new markets, for example, help them to go to emerging markets in India, Europe, South Africa and Latin America to look for business opportunities.

Mr Speaker, Sir, we hope that while the enterprises and the workers are making substantial sacrifices, the Government can also make corresponding adjustments in its policies, and lead us out of this "coldest winter in the history of Singapore", into a beautiful and warm springtime.

I fully support the motion.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Speaker, Sir, thank you for giving me this opportunity to speak in support of the motion.

The recent regional financial and economic crisis can be said to be the most serious one in 30 years. Various countries in Southeast Asia are suffering from its serious impact, resulting in many companies closing down and many workers unemployed. There was even social unrest in some countries where properties were destroyed and many lives were lost. This economic crisis which has been evolved into a political and social crisis has serious undermining effect on the prosperity of the societies that have been painstakingly built up over the years. In order to avoid such incidents from happening again, leaders of the various countries are actively trying various ways and means to buffer the deterioration to the economy.

The various countries in ASEAN have manifested their cooperative spirit to help these countries which are in trouble. Singapore has participated in the economic action of the IMF to save Thailand. We have also committed a US$5 billion guarantee for the letters of credit used in bilateral trade between Indonesia and Singapore. At the same time, we have lobbied for the assistance of the United States and the IMF with the hope that with the cooperation of the various quarters, we would be able to prevent the economy from deterioration, with a view to an early recovery.

For the moment, we are most concerned with the stability of the renminbi. Once the renminbi devalues, there will be another round of economic crisis for the region. The economy of the whole of Asia, even that of Europe and the United States, will be affected. A regional economic crisis is not an easy problem to resolve. It is not something which Singapore can overcome by itself. We have to depend on the cooperation and assistance of our neighbouring countries and the super powers for an early recovery.

So long as the economic crisis does not evolve into a political or social crisis, the Singapore Government should have the ability to lead us out of the crisis. The economic recession in 1985/86 is a good example of our Government's capability. However, all the people of Singapore must have full confidence in the Government's ability to lead us out of the bad times. We must stand united with the Government so that we would be able to resolve these economic problems together. At this time when we are facing an economic downturn, it is a test on the degree of unity between the Government and the people. We should also make use of this opportunity to strengthen our social cohesion.

Just as we are facing the regional economic crisis, our neighbouring countries adopted an uncooperative attitude in our removal of CIQ from Tanjong Pagar to Woodlands. They have also issued some erroneous statements aimed at undermining the unity between the Government and our people. This is very dangerous. With regard to the background of the removal of our CIQ from Tanjong Pagar to Woodlands, the Minister has already given us a very detailed explanation. I feel that so long as the policy is for the benefit of the people, we should implement it. So long as the people and the Government stand untied, we would not be affected by erroneous arguments coming from outside.

Mr Speaker, Sir, the country belongs to us. The Government is elected by us. We should give the Government 100% confidence and to give it our full support so that the Government will have the full authority to deal with its foreign policies. So long as our stand is correct, the principles are right, the matters will be eventually resolved.

I feel that the imminent task before the Government is how to implement appropriate measures to help the businessmen tide over the difficult times. At the same time, we should use effective ways to help the retrenched workers in securing alternative employment. The Ministry of Manpower (MOM) has already provided this service. However, MOM alone is not enough. I feel that the CDCs and the community centres in all the 83 constituencies in Singapore should set up "Employment Services" counters. We should combine the resources of the Ministry of Manpower, the Ministry of Community Development and the CCs to establish a National Employment Network to help Singaporeans find jobs and tide over the difficult times. If everybody has a job, then socially we will have no big problems. We would be able to maintain a peaceful society and to work hard to get us out of the recession. So long as we stand united as a nation, we will be able to take one step at a time to get out of this financial crisis, and position ourselves in better conditions and solid foundation for our future economic development.

Dr S. Vasoo (Tanjong Pagar): Mr Speaker, Sir, I rise to support the motion. Sir, there are a few critical issues that we need to address, especially at this time of our economic crisis. This economic crisis has not been brought upon by ourselves. It is like an economic haze because, as you all know, if somebody burns a forest somewhere, we are affected by it. So we are faced with this dilemma and many of these events are in fact beyond our control. I hope that Singaporeans, workers and others would be able to see that these problems are not really brought upon by us. Many of these events are outside our control.

In the light of this, it is very important therefore for us to mobilise ourselves and to rally behind the Government, the trade unions and the employers so that we should begin to join hands and see how we can brace this economic storm. Unless and until we get together to think of effective and creative solutions to these problems, I do not think we will be able to surge forward and find new solutions and opportunities to deal with the problems.

I feel that, at this stage, it is very important for Singaporean workers, the Government and the employers not to blame each other. It is time that we should get together and see how we can tackle the problems which are very critical and crucial for us. This is essentially necessary because it is time that we should rally and find a creative solution and band together to surge forward to bring Singapore another economic growth, and to try and find ways to reduce the burdens that we will be facing.

Sir, there are a few important issues that we need to tackle, to try and ensure that we can keep Singapore as attractive as possible so that people would want to come and invest in Singapore. If we really cannot make Singapore an attractive and competitive place, then I do not think it is possible for us to solve the problems. So how do we ensure that Singapore is an attractive place for people to come, whether they are foreign talents, or people who want to invest in Singapore, or people who want to be educated in Singapore, or tourists who want to come to Singapore?

It is an important issue that we need to address and Singaporeans must examine this, that we all have a responsibility that we all owe to Singapore, to try and see how we can work at this hard time to find effective and cohesive efforts to tackle the problems. Unless we stay together as a bigger family, I do not think we will be in a position to weather the storm. We may be in sixes and sevens and this will inevitably do us in. So I urge Singaporeans, be they workers, students, families, retirees or others, to come and work together to solve this economic crisis that we are facing. Although many of these problems are beyond our control, when we band together, we are likely to find ways to meet the problems.

What I can see, Sir, is that it is very important to have political stability, especially at this time. There are various people trying to blame us for their problems, particularly the Malaysian politicians, and many of them have recently said that we are doing them in or undermining them. Being a small country, we want to live mutually, with good understanding and with good neighbours. How can a small country, like us, try and create problems for others? We want a stable place, we want a stable Singapore, we want a stable community, we want to have a stable ASEAN region, and we are trying our best to contribute to this. Therefore, it is important for Singaporeans to realise all these issues and the blames on Singapore by many politicians outside Singapore. Recently, Members must have read many of these Malaysian politicians blaming Singapore for their problems.

Is this the case? I do not think it is the case. We are a peace loving people. We are a small nation. What else can we do? We would like to live as peacefully as possible. As good neighbours, we will encourage and support the interest of the wider majority in the region. I do not think we should stomach all this bullying and blaming. As Singaporeans, I am sure, we must be able to see the broader picture that Singapore wants to be mutual, supportive and have as good as possible a relationship with anyone who wants to bring progress and provide a better life for all within the region. So we need to cooperate, and Singapore's belief is this. All our workers in the various factories and industries believe that the more stable the place, the more prosperous the region, the more attractive it is, the more stable the governments are in the region, the better for us, be they Singapore workers, Malaysian workers, Indonesian workers or workers in the ASEAN region.

So I would urge Singaporeans to make sure that we do not allow foreign politicians to subvert us and bring dissent. What I am very concerned about is the possible resurgence of religious fanatics, racial fanatics, language fanatics, in trying to subvert us. We will have to be aware of this. We should ensure that we do not allow this to happen in the context of Singapore's growth and development at this stage, because it is very easy to put the blame on racial division for an economic problem. We are a multi-racial society and, being a multi-racial society, there is always this danger that you have fanatical elements to assign the blame to various racial groups for their problems and issues.

I hope that thinking Singaporeans will band together to ensure that there is progress, be they Malays, Indians, Chinese or Eurasians. We all have a stake in Singapore. We should in fact try and see how we can work together and we should not be allowed to be made use of by fanatics who are out there to do us in. If we succumb to this whole thing, then Singapore would be a broken society and we will never be able to put it back because political stability is a very critical issue for all of us. Without political stability, you can talk about economics, better education and better housing, all these will never happen. If we do not manage this carefully and we are not aware, we are all gullible Singaporeans, and we allow ourselves to be subverted and made use of, then we cannot put Singapore together. Because once the setback happens and once it is exploded in our hands, then Singapore would never be the same again.

I hope that all thinking, well meaning Singaporeans, whether they be Malays, Indians, Chinese or Eurasians, should band together to see what we can do to help Singapore to move ahead. We should not allow religion, race and language to stand in our way because these are not the critical issues. What faces us is the economic issue and we should see how we can come out with sound economic plans and policies to tackle the problem. I think this is very critical and essential for us to move ahead.

Sir, the second important issue is to have a proactive labour union, workforce and employers. It is important for the labour union, workers and employers to work together. And here, I do not think we can assign blame on any of these quarters. If we do so, we will be foolish because we will be doing ourselves in. We are in the same boat, whether you are an employer, worker or Government. Try and puncture the boat, try and rock the boat, who is to gain at the end? Employers are not going to gain at the end of the day if they are going to retrench workers at the slightest excuse they can find. Neither can workers say they would want to have better salaries at this point in time. It is very important for the three parties to work together and find effective solutions to their problems.

I see that there is a need for employers, unions and Government to come out with strategic plans, particularly unions and employers, to deal with saving jobs and to think strategically in terms of ensuring that the workers are not retrenched because many of these workers have served a long time in their companies. Some have served 15 years while others have served 20 years. So I think it is important for us to ensure that workers who have been with these companies are given the best. We should try and see how they can be kept and, if they need to be trained, we should find ways in which they could be trained.

Sir, recently, many employers took the slightest excuse to retrench older workers. I am very concerned about this. I want to find out from the Ministry of Manpower what steps are being taken to ensure that these workers are not retrenched at the slightest excuse. Many of these workers have worked for many years in the company. When bad times come, instead of finding strategic solutions to deal with these issues, they find a short cut approach through retrenchment which is not a solution to the problem. Many of these workers have given their lives and many years of service to the company. It is humanly important for the companies to think of ways in which they could help these workers to be reorganised and find ways in which they could be redeployed. Sir, there are also the other aspects that we need to look at and, that is, to see how the Government can also play a part in trying to soften the blow by taking a number of measures. First, many of our workers are paying mortgage loans and we are quite fortunate that about 85% of them are living in HDB flats. I want to find out from the Minister whether there are contingency measures to help defer payments and other approaches to tackle the problems of their housing mortgage loans.

The other issues that we need to look at are job placements and manpower plans; what are the long-term manpower plans and how workers are going to be trained; whether these are in place and whether we would have to develop a comprehensive plan that can carry us for the next 20 years in terms of having an effective manpower plan to deal with the training and development of a more educated workforce. I would like to see more training incentives by Government and also incentives to enable companies to begin reviewing what training plans they can implement at the work site. I think there is a need for Government to provide matching grants for companies that are very interested to run their manpower retraining plans. If many of them can be encouraged to do so and they fit in the overall manpower plan, I think it is in the interest of Singapore and for Government to support these companies to think of how they can participate in the retraining of workers. And that will help us to have a better educated and well trained workforce to meet the contingency plans of the future.

Sir, there is also a need to look at how Government could soften the blows of the economic downturn. We could look at how we can cut costs in terms of land cost, cost for rents of industrial sites and other related things. How can Government review, besides the current measures that are in place, the off-Budget measures, whether there are some long-term measures to review how we can reduce business costs in view of the economic problems? Can we do this? Can we take a bolder step to try and ensure that Singapore remains very attractive in terms of land, capital and factory costs for the development of our own infrastructure? There have always been a lot of arguments by many investors that our land cost is high and, over the years, we have become quite expensive and less competitive compared to other countries in the region.

The last area we need to look at is the training of workers. I am very concerned that close to 48% or nearly half of our workforce are 40 years and above. As Mr Lim Swee Say has said, we are moving towards an aging workforce and half of this workforce are going to be aged workers of the future. It has serious implications in terms of productivity, in terms of rejuvenation of what they can do and how they can be retrained, in terms of their social security and their old age pensions. I think there is a need for serious examination as to how we should tackle this aging workforce and, despite the extension of retirement age, how can we utilise this large number of workers who are in the 40s and who are going to be in the 50s. There is this big number of them and I think we should come out with a serious plan in terms of what could be done for them.

Many of us will be in the aging workforce in about 10 years from now, me included, Mr Speaker. I am sure the Minister for Manpower would agree with me that this would be one of the serious issues that we would be confronted with. How do we attract younger people into the workforce when families are very small? We do not have enough people to come into the workforce. What do we do and how do we try and ensure that there is a continuing productive workforce that will help in terms of Singapore's economic growth.

Sir, I feel that, ultimately, it is very important for workers, for employers and for Government to band together in these economic hard times that we are facing and many of us have said that recession is going to be deeper in the next few years and we need to stay together as a strong family and Singaporeans must find ways to work together despite all these external problems that we are facing. I think it is important that we stay ahead, we stay cool, we stay collected and we remain cohesive. If we are able to do this, then I think we have a good future, we have a good promise to be able to deal with the hard times ahead.

On that note, I would like to support the motion standing in the name of Mr Lim Swee Say.

Mr Zulkifli bin Baharudin: Mr Speaker, Sir, I rise to support this motion.

I would like to touch specifically on the issue of social cohesion which Mr Lim Swee Say and some other speakers spoke about. I have no doubt that there is enough goodwill, public spiritedness and national pride among Singaporeans that when the crunch comes, I am confident that Singaporeans would be willing to do whatever they can to help one another. But I am afraid that we do it too late and wait for the worst of the economic situation to hit us before we do something. We have seen how in Thailand and Korea, people give up their jewellery and gold in order to save the country. And we have seen starvation and hunger in Indonesia.

While in Singapore the situation is not as bad, never have I known more people, including my friends and acquaintances, who have either lost their jobs or risk losing one. I have known of families who have to take the painful decision of having to cut their children's tuition because they have suffered, because of retrenchment. This is sad because I fear the implication that we have on our children. That is the reason I think we have to do everything we can to help buffer our children from the impact of this economic crisis. I therefore urge all Singaporeans, young and old, to start doing something to help fellow Singaporeans who are in need of help.

The Government has stated that retraining of workers and continuing education are important aspects in our strategy to prepare ourselves during this difficult time. Let me just highlight examples of how Singaporeans can help in this effort. The Singapore Corporation of Rehabilitative Enterprises (SCORE), of which I am a board member, recently organised training for inmates to prepare them to work as cooks in the hospitality industry. It costs more than $50,000 to pay for trainers and tutors for the 17 inmates. Despite the slowdown in business faced by many hotels, SCORE has, with great success and difficulty, managed to secure sponsorship for these trainees. But I think we could have done better and train more people if more qualified Singaporeans are prepared to come forward and train these people.

It is times like this that we must ensure that every Singaporean counts and be an important contributor to our national economy. Untrained and unskilled workers would only be a national burden we cannot afford. Even at the neighbourhood level, Singaporeans can help neighbours to babysit their neighbour's children, provide tuition at the various tuition centres in the neighbourhood or even do simple things like preparing a meal for their neighbours or giving a neighbour a ride to the office. Simple things like this take on a very important and significant meaning in times like this. Everyone can help and must help. Whether you are a doctor or lawyer, school teacher or taxi driver, everyone can play a part if they want to.

I would suggest that agencies like the Community Development Councils and the National Council for Social Services set up registers to match the skills of Singaporeans volunteering their services with the needs of the community. I note the Minister for Education's call to develop what he called the people sector. I really feel that there is no better time and no greater need than now for each and every Singaporean to do something for their friends and neighbours. I know of families where both parents with young children have to take on an additional job or do shift work, leaving behind their children at home to look after themselves, to cook and to wash. In this example, a caring and friendly neighbour does help.

The current economic difficulty poses the danger of weakening our social infrastructure when people become self-centred, less caring and disinterested in things around them if it does not bring immediate benefits. We have seen how countries become more protectionist and nationalistic. Internally, we must be aware that our people can become more selfish. This attitude cannot be allowed to take place in our society. On the contrary, we must rally our people to do more to help strengthen our social infrastructure and civil society. This is a calling to all Singaporeans. We must ensure that we not only recover from this crisis economically stronger but equally important is the need to preserve and enhance social cohesiveness of our people. And this can only be achieved through shared experience, good deeds and good work amongst all our people.

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, thank you for allowing me to join in the debate.

Sir, I support the motion. We have so far been fortunate in that Singapore has been hit by the regional economic crisis relatively late as compared to our immediate neighbours. Malaysia, Indonesia and Thailand are going to be in a recession and possibly in deep recession, and Singapore cannot avoid but go into a recession later this year, in my own opinion. The downslide should continue for another year or so. We can either get defensive and become conservative in such an environment or, alternatively, we can be aggressive and consider this downturn as an era of opportunities to invest while preparing for a better future.

Sir, I fully support the call from all the Members who have spoken before me for the public, private and the people sectors to work hand in hand to solve our problems as a team. I will, however, focus my speech on what I feel we can do to strengthen our economy, both in the short and the long-term. While some of the suggestions I am going to make would be appropriate as Budget proposals, I feel that we cannot wait for the normal Budget cycle and they should be addressed very early. I therefore hope that we can take some more off-Budget measures to further strengthen our economy.

Sir, there are some areas where I feel our fundamentals are weak, basically the fundamentals of the Singapore economy and if we can focus in correcting the problems, we will be able to do much better than before. However, if we do not tackle these inherent weaknesses in our economic structure, we will not be able to take the full advantage of the next upturn. Worse still, we may face even worse problems in the future should another downturn hit us.

One obvious problem in our economy is the over reliance on the property sector. I refer the House to the Business Times report dated 20th July, titled "The Perils of the Property Economy". I fully agree with the analysis made that the Singapore's economy, just like those of our neighbours', is heavily dependent on the property sector.

We must realise that the property sector also impacts many other sectors of our economy, especially the financial sector. It was reported that the banks in Singapore have an exposure to the property sector of about $49 billion or a whopping 34% of our GDP as of May this year. And it is believed that this is an under estimation, since the numbers do not take into account the loans that are given to professionals, individuals and so on. It is likely that the exposure of our banks could be close to 50% of our GDP. By any account, this has to be a very unhealthy position for any country to be in.

Sir, this is one area where all Singaporeans, including the Government, can learn a very valuable lesson. We need to reduce our dependence on the property sector drastically. In the Western economies, property is nowhere near the top in terms of contribution to economic growth. If we look at our top companies and wealthy people in Singapore, most of them made their fortunes through the property sector, while those in the Western countries came mainly from value added activities like technology and innovation. In Singapore, many companies tried to make a quick buck through the property sector. Even bus companies, food companies and others tried to do so. Even the Government, through most of its Government-linked companies, too is to be blamed for adding to the perils of our economy by getting involved in the property sector in a big way.

[Mr Deputy Speaker in the Chair]

4.30 pm

Mr Inderjit Singh (Ang Mo Kio): I therefore feel that our solution is to defocus from the property sector and to refocus on more technology and innovation based economy. In Singapore we do not have enough large local companies capable of growing in this area other than the likes of Creative Technology. I urge the Government to stimulate the private sector in this direction by creating a conducive environment for more technology and innovation based economy which, in my opinion, will be better able to weather a downturn if it comes again the next round. I also call on the private sector to do likewise to be more entrepreneurial in developing their business in this direction. This downturn provides us the best opportunity to restructure our economy. Sir, while we cannot become the USA, we could try to become the Silicon Valley of the East.

One of the effects of the property economy has been asset price inflation, particularly the high land rentals, building cost and property cost. Being involved in the electronics sector and in the high technology area in the last 15 years, I have seen many examples of new investments deciding not to locate in Singapore or existing companies who decided to move their investment overseas because of the high cost being one of the major issues. The economic downturn has made this problem even worse with our neighbouring countries being able to offer much cheaper land cost.

While the off-Budget measures did try to address the issue by offering rental and property tax rebates, I feel that the Government did not do enough to instill long term investor confidence. Permanent cuts would have been much better, because investors and businesses would see the rebates go away in one to two years should the economy recover. In my opinion, the Government could take this opportunity to put in place long term measures, like very clear policies on strategic land pricing, where a large cross section of companies will be allowed to pay much lower rentals for companies that we would really like to bring into Singapore, which can provide widespread employment. One other way is to give a 10-year tax rebate in lieu of high rentals paid to JTC or HDB so that we can de-couple the market price of property from the cost of doing business in Singapore. In this way, companies will take a longer term view of investing in Singapore.

Sir, we also need to do more to bring in investments by offering innovative incentives. I must admit that the Economic Development Board is doing a good job here. But there are many more private sector initiatives that could develop into concrete investments in Singapore and hence creating jobs. We all know that our neighbours are today able to offer exactly the same investment incentives as we can. In fact, their approach in luring investors is to copy exactly what Singapore can offer and then to offer a little more. With their cheaper land and labour cost, we are definitely in a disadvantaged position and have in fact lost a number of big companies that could have invested here in Singapore to them. We therefore need to be more transparent and be more innovative in the type of incentives we can offer to these companies.

During the Budget debate this year, I talked about the need for us to promote entrepreneurship among Singaporeans. I also asked for a review of the bankruptcy laws, easier listing of high-tech companies on the Stock Exchange, promoting venture capitalists and a number of other incentives that can help us better create an environment of innovation. In his reply, the Minister for Trade and Industry said that his Ministry is in the process of reviewing some of these things. I feel that the process needs to be speeded up so that we could take advantage of the many opportunities that are available in Singapore and in the region. We should not wait for the next Budget cycle to announce some of these changes.

Similarly, we need to do more to encourage our companies to accelerate their regional drive and not to slow down, despite the economic crisis. Banks need to be more proactive in lending to their strong clients. Unfortunately, in this environment where tremendous opportunities to invest are available for our companies, and there are viable companies in the region, cash flow seems to be a problem. Since our local banks are very conservative, I feel we can do with many more venture capitalists locally. However, the incentives to some of the small venture capitalists are not as attractive as those provided to the big fund managers. Most of these incentives favour the fund managers, for example, very generous tax cuts.

I urge the Government and the Monetary Authority of Singapore to review some of these rules and incentives to make it more conducive for such boutique funds to flourish and to do away with the bias favouring the bigger funds. I feel that by creating such an environment today we will position ourselves to benefit the high technology investments that are going to come our way in a few years to come. We could learn a lot from Hong Kong and Taiwan in doing such things.

In conclusion, I support the motion and feel that, other than improving labour cost and productivity, we can create a much more vibrant business environment that consists of a high proportion of value-added activities while we try to move away from the low value-added activities like the property sector.

Mdm Claire Chiang See Ngoh (Nominated Member): Thank you, Mr Deputy Speaker, for giving me this opportunity to support the motion.

I would like to take the opportunity to add two proposals.

First, that the Government should invest in and develop social infrastructure. During economic downturns, governments often adopt expansionary fiscal policies and invest in physical infrastructure such as roads, schools, MRT lines, and so forth. Our Finance Minister during last Friday's sitting listed out in detail the current and planned infrastructure projects to be accelerated to increase public spending. These are hard, tangible projects which directly generate jobs and spur economic demand. The tendency is, however, to cut back on investment in social infrastructure, as these are seen to be not contributing directly to economic growth.

I would argue the contrary. Not only can investment in social infrastructure spur employment creation, but it can also achieve two further objectives. It can contribute to Government's efforts to retrain retrenched people in new skills which 21st century Singapore will need. And, as we prepare for a long period of slow growth or even no growth, it can contribute to the social cohesion which we will need to tide us over difficult times.

Let me elaborate. For the past few months, MOM has taken the lead to develop numerous re-skilling programmes and to work with MOE to create a culture of life-long learning for workers. This focus on continual learning, training and education to enhance workers' existing skills or train them for new skills is a significant long term strategic measure to develop our competitiveness. I also note that DPM BG Lee Hsien Loong recently identified the service sector as an opportunity for a comprehensive infrastructure to be set up including "a regulatory framework, promotion strategies, and an approach to attracting and developing manpower."

I urge the Government to also see the social services sector as another opportunity sector for development.

The social services community has drawn the bulk of its manpower from volunteers. But while volunteerism remains a bedrock principle in community service, there is a dire need for more professional workers to help us deliver a higher level of service to the community. Recession or not, Singapore has all the socio-economic and demographic characteristics of a developed society, and if we study other developed societies, we can anticipate that demand for social services, and by implication for full time social service workers, will increase in the next two decades. And I see a growing demand for more sophisticated and informed care which the market can respond by developing a range of job types.

The need for trained therapists, para-medical and social service workers to cater to the elderly, the chronic sick and the disabled, will grow as our society ages rapidly and medical technologies increase longevity. As a developed society, we will face the pressure to improve services for the small but growing part of our population which is intellectually or physically disabled, or blind or deaf. For the marginalised and criminalised population, such as drug offenders and young criminals, we will face pressures not to just increase deterrence, but improve rehabilitation and aftercare services.

What I am saying is that a lot more jobs at both the community preventive and remedial levels are necessary to fill the gaps in the continuum of services in this sector. We should stop seeing them as social problem professions. We need to see them as people service professions which we must nurture within a comprehensive social infrastructure. During times of crisis, we all the more need social engineers who are trained to repair and mend people's lives, and by doing so, they strengthen society's competitiveness and resilience as a whole.

For the amount of resources spent on economic solutions, significant inputs must equally be spent on developing social service infrastructure to reap investment returns not in dollar terms, but in terms of social cohesion. Social cohesion can be threatened even during economically good times. During bad times, the lack of social cohesion can sabotage all credible economic efforts.

I propose that the various skills training or retraining funds be extended to train some of the retrenched or structurally unemployed to seek employment in the social services sector. This is consistent with MP Lim Swee Say's call for maximizing employability of our workforce. Here, I am broadening the call for cross sectoral employability. Government's investment here will be both in the provision of training funds and also in identifying sectoral needs and the provision of social service jobs.

Although it will be employment-generating, my proposal is not an ad hoc approach to just mop up the jobless. In the long run, we create new employment, and develop a manpower resource for staffing the social service sector to address our social problems. Such investment in social infrastructure therefore has both short term and long term merits. The workers who are past 40 and who are retrenched are most suited, in my opinion, to these jobs, because they are married, they have families, they have lived life and they have learnt from the hard knocks of living. This proposal is consistent with what Minister Lee Boon Yang said last Friday that in lieu of setting up a Retrenchment Fund for workers, the more lasting measure is to retrain workers and help them keep their jobs or re-enter the job market eventually.

My second proposal is for the Government to set up a task force to develop our own misery index as the first step towards developing our own social security net or social safety net. With full employment and double-digit growth for the past decade, Asia, Singapore included, never really pondered about the social consequences of unemployment. Any able-bodied, willing worker should be able to find some job, though perhaps at a lower pay. Now, we face the prospect of sustained period of relatively moderate unemployment by western terms, but serious by our previous standards. Government has long promised that for the truly destitute, basic services such as primary health care, education and housing will not be denied. This is indeed a promise which many other societies cannot give, and for that I am proud.

But beyond the truly destitute, there is a broad range of the poor and near-poor who may be long term unemployed or unemployable. While we as a society do not believe in welfarism and its excesses as practised in the west, we do need to ask the question: should we create a social safety net for the truly needy? This, of course, begs another question. Who are the truly needy? Can we measure this by just one yardstick, such as net income? My answer is no, because a chronically sick, old and disabled person with no relatives, who earns a subsistence income is to me more needy than a young, able-bodied person living with relatives but earns zero income. If income is not the sole yardstick, then what are the others, and how should they be weighted? By the year 2030, we will have two active persons supporting the needs of one elderly person. How are we allocating our funds to meet their needs? Is it time to look into an elderly welfare fund to repay to these older persons who had contributed to the making of this nation?

I strongly believe that education and employment are the best welfare policies in the long-run. But for pockets of our population, there may not be available opportunities. School drop-outs, single parents, the illiterate older persons, deserted homemakers, the severely disabled, the very sick. Among these, some individuals can still contribute given some level of support. The questions that follow will be to whom, how much and for how long.

In order to develop an appropriate social safety net which avoids resource wastage and programme duplication, we need to define a "misery index" as it has sometimes been called, which takes into account various factors to determine who are the truly needy in our society, for whom a social safety net needs to be constructed.

So far, we get scattered data and signals from the community on the extent of the impact of this downturn on family situations. Some hotlines registered a rise in the numbers of calls related to financial difficulties; a few social services registered increasing petitions for financial support. These are early indications of the hardship but we cannot clearly establish if they are due to the current economic slowdown or not. How bad off are Singaporeans? Who are the casualties in this regional crisis?

Mr Chan Soo Sen this afternoon, in response to my question, said that between the years 1996 and 1997, there were only 41 applicants for the Interim Financial Scheme and the Ministry only disbursed $11,000. Are we saying that people are not poor enough? Or are we saying that the forms for applications are too complicated that they have decided not to fill them? Or are we saying the criteria for the application are too stringent, and maybe it is time to broaden the criteria? I do not think we know the answers.

In a written response to me from MOM, it was reported that out of 80% of job placements for the retrenched workers, only 10% accepted the referral. This says to me that workers are still choosy and therefore times are not as hard yet. So I have varying impressions.

I am proposing that we set up a cross-agency fact-finding task force comprising Government statisticians, academics, social workers, and others, to conduct surveys to identify the distressed in our midst, and to devise a Singapore specific misery index with indices which are socio-economic in nature.

I recognise that we need to be cautious, not to travel on the slippery slope of welfarism as practised in some developed countries, and we must not determine social policies based on compassion and generosity alone, but on principles of efficiency and effectiveness. We all appreciate the contingency measures recently set up by the various Ministries and CDCs to offer assistance to people with financial difficulties. A question I would then raise is: when was the last time we thoroughly reviewed our social security schemes? Are these schemes adequate? As other ASEAN states are now studying ways to create their social safety nets, is it time for us too to review ours and identify new ways of providing funding and infrastructural support for the families, in view of the fact that this economic downturn may well be the worst that Singapore and the region have experienced in 50 years?

A timely and well-considered policy evaluation exercise by the Government, in conjunction with social services agencies, regarding investment in social infrastructure as well as the creation of appropriate safety nets for our most needy, will contribute both to our short-term economic recovery as well as long-term well-being of a society.

Mr Shriniwas Rai: Mr Deputy Speaker, Sir, the motion moved by Mr Lim Swee Say is timely. It is a time of crisis, although I do not agree with some of the suggestions. I think we are going through an economic crisis. It is important that the people and the Government rally together and come to grips with the problem and try to find the solution.

Sir, the Government can lead but it is equally important for the people to be led in such a way that they will reach their destiny. We are fortunate than many other rulers in the region are worried about their political fortune. Here the ruling Party does not have to worry about change of power from one man to another. There is political stability here. The banking system is still sound and this, I think, is a credit to our political leadership and to the people for working hand-in-hand. It is important for us, therefore, Sir, to see that this institution is preserved. Many a time we take it for granted. But when we look around the region, we realise how fortunate we are for having a banking system that is sound. Of course, some of us feel that the bankers are trying to be a little too cautious in this period. I would urge the MAS from time to time to give the bankers some indication, that they should be a little slow in enforcing claims. Because I have heard from some clients that the bankers are asking for reassessment of their loans, which they are entitled. But unless these customers are in danger of collapsing, I think we must not pull the carpet. It is very important for the banking system, the institution, to gain the confidence of the people. I know that DPM had said earlier that banking is a private institution, and we cannot interfere. But I think the Government can take the lead in giving indication as to which way the banking sector should go.

Sir, Dr Vasoo mentioned very eloquently about the spirit. I think it is very important for us to have the fighting spirit in us. What I am a little disappointed with some of the people is this. There is some sector, and I give an example, where we see very young able-bodied men in early 30s, 40s, working as security guards. What is the pay? $1,000, $1,100. My work in SINDA has led me to meet some of these people and talk to them. And I asked: "Why can't you be a driver?" He said, "I have no driving licence." I said, "Why don't you go and take a driving licence? It will take some time." He said, "Oh, it is difficult. I have got a family to support." All he requires is half an hour to one hour, three to four times a week, and the job is ready in the market. Similarly, a restaurant man was telling me that he is finding difficulty getting workers. So something is wrong here. While some people are losing jobs, there are other people who are happy with their jobs. So I share the sentiments shown by earlier speakers that we must at all costs tell the people that they must upgrade. And unless they upgrade, unless the productivity increases, they are not going to succeed. Here again, Sir, if I could share with Members a classic example of how an institution went out of time.

We used to have in early 1970s a company called the Singapore Traction Company. Who were its rivals? More than half a dozen Chinese bus companies. They started with mosquito buses. I remember they carried 20 passengers. But because STC did not know how to change with the time, the small bus operators merged together and took over STC. It operated through a Charter. It was guaranteed by the British government through a charter. But it did not know how to compete and live with the economic realities of Singapore in changing times. When the market was open, they could not compete. Similarly, Sir, as Mr Lim Swee Say has said earlier, we have to be conscious of not only the cost price but we must be in position, as our neighbours are going to have cheaper cost of production, and we must be seen to be very competitive. Today, I think the only solution is through productivity and education. There are a lot of Singaporeans who do not even have primary education. The WISE and BEST programmes must be worked to such an extent that they are all gainfully employed.

Sir, I move to another related issue. Again, I would like to draw from personal experience. Over $60 billion is tied to property. Every young Singaporean wants to upgrade from 4- to 5-room flats to Executive flats to terrace houses. There is nothing wrong with being ambitious. But let us have a sense of realism. Can we afford at the end of the day to pay the instalments in case there is a rise in interest rates? And specially so for those who have bought, let us say, a terrace house in 1995 for $1 million, it is probably now worth $700,000 to $800,000. And if the bank suddenly decides to call back just $100,000, where are they going to find this money to pay? So my appeal to all these people is to get their priority right.

The Government, through the Housing and Development Board, has built enough houses. Nobody lives in the streets, save for some of the foreign workers. We all have a home. Get the priority right by having some savings. And I am really surprised when I see young people, husband and wife, earning $9,000 a month jointly, and they straightaway upgrade from a 4-room flat to a terrace house. Why must we be so much attracted by this private property? Sir, I have a private property because I could not qualify for HDB flat; otherwise, I will opt for it. In fact, when I am older in my age, I probably would do that. There will be homes for the aged, I hope by then. HDB will build them. Sir, the question that we have to ask is: can we afford? I think this is where I would urge members of the public to be very careful with these commitments.

Sir, the other matter is this. It is in times of crisis that the community really is being examined, whether we are one social cohesive unit. As has been told by Mdm Claire Chiang and Dr Lee Tsao Yuan earlier, we must feel for fellow Singaporeans. I am not asking that if you have a whole loaf, give the whole thing to him, but share some of the suffering. Those of us who could afford to share a bit of our extra, give it to them. Talking about social cohesiveness, I think the Government can feel a sense of achievement. Last Saturday, together with Mr Inderjit Singh, I attended a function organised by the Sikh community. Very young Sikh boys and girls, who are secondary school students, were singing in Punjabi, songs based on Singapore's national values, and I was really touched. I can understand a little bit of Punjabi. Hindi is my mother tongue. And I was really touched by these boys and girls, how they could sing the core values of Singapore. Ten years ago, I do not think they would have done it. This is called community bonding. The Minister for Community Development was there. It is an example of bonding of a community, small it may be. We were told by Bhajan Singh, the Chairman of Sikh Advisory Board, who is an educationist himself, how Sikhs have welfare schemes to help those in need. I thought it is something we can emulate from them for the whole of Singapore.

Sir, I wanted to say many things but, unfortunately, most of the things have been touched and I do not want to prolong the debate longer than necessary. Sir, this is the disadvantage of being the last few speakers. Everybody has spoken what probably you wanted to. But I just want to say one thing. Whatever we do, we always must do, the Government and the people, and it is important that Government from time to time consult the people, not after it has taken the decision and then get the feedback from the people. I think that is not correct. Consult the Chambers of Commerce and the various professional groups, get their inputs and see how the policy is going to be implemented to help the community. And I would say that the Government is concerned, because the Government always consults, but its consultative process must go for some fine-tuning. I urge the Ministers from time to time to consult Chambers of Commerce because they are the most concerned people in this issue and I share the sentiments of my fellow NMP Mr Tay Beng Chuan.

Sir, with that, I support the motion. 5.00 pm

Mr Low Thia Khiang (Hougang): (In Mandarin): Mr Deputy Speaker, Sir, I have some doubts on this motion. This motion urges the Government to rally the support of the entire nation in this time of economic downturn to minimise unemployment in the short term and strengthen economic competitiveness and social cohesion for the long term so that Singapore will emerge from this regional crisis even more competitive and resilient.

First of all, to unite all the people of the nation and to enhance social cohesion and the competitiveness of the country is something which a responsible government should be doing. To emphasise that point in this time of economic downturn, the Government should unite all the people. In moving this motion, are the PAP Members saying that the Government has not been doing enough in this area?

Secondly, during the general election last year, in order to win votes, the PAP Government used the HDB upgrading policy which undermined the unity of our people and weakened our social cohesion. Now the PAP MPs are raising this motion to rally the support of the entire nation. Is it an admission of the mistakes committed during the last general election?

Thirdly, the focus of this motion is on unemployment and the economic downturn. Is it because the PAP Government's feeling that its economic trump card of urging the Singapore people to submit them in exchange for economic growth, for the creation of wealth and for enhancement of assets is losing its effect and it has come to a sudden realisation of the importance of national unity? By right, the Government and the people should work together. This is something which of course should be done. Yet, during the election, the PAP Government was unable to share the fruits of prosperity with those who opposed them. And yet, at this time of economic downturn, they are asking everybody to share the sufferings. It is like the Emperor Qian in ancient China who sought company of the ugly but resourceful concubine when he was in trouble but favoured the pretty but ineffective beauty when everything was fine.

Despite all this, I would say that national unity and a strong sense of identity with the nation is the basis for the prosperity of the nation. Although the PAP Government has not been kind to the people, in this time of crisis, I support this motion to rally the support of all the people in the nation. To rally the support of the entire nation and to enhance our social cohesion, I feel that the most important thing is to make everyone in Singapore feel that he is a part of the country and he is being treated fairly. For the Government to get the support of all the people, it should treat every citizen fairly, particularly in the distribution of the fruits of economic success. We should look after the people and make everyone truly convinced.

If the PAP Government is sincere in enhancing social cohesion and achieving the target of national unity, first of all, it must remove the psychological barrier that prevents our people from being united together and should consider the following suggestions. First, we should remove the political elements in the conditions for HDB flat upgrading. This political factor is that when all conditions are the same, the rate of support for the PAP becomes a deciding factor. The impression given by the PAP in the last election was that the housing estates in the opposition constituencies will never be upgraded. I think the Government should clarify this point. PAP Government should also consider announcing the schedule of upgrading of flats in all constituencies in advance to prove that its deed matches with its words.

Secondly, we should amend the criterion for application of CIPC funds from the Ministry of National Development so that the opposition town councils can apply directly to the Ministry for CIPC assistance in improving the facilities of the housing estates.

Thirdly, to open the MRT station in Potong Pasir. If they feel that there is not enough volume of passengers, we should develop the nearby areas so that the residents in the opposition wards could also benefit from that. This will show that the Government makes use of national resource without favour and takes care of every citizen and in turn expresses the Government's sincerity in uniting the entire nation.

Fourthly, the Government should remove GST and reduce the various charges. Although all these suggestions have been rejected by the Minister, the Government should consider the feelings of the people. At the time when everyone is facing the impact of the economic downturn, especially the lower income population and those who lose their employment, the Government should respond to help by minimizing the pressure in life.

Fifthly, the Ministers should volunteer to take a pay cut, although I understand that the pay cut by the Ministers will not help to improve our economy. But when the people are facing economic difficulties, as leaders of the nation the Ministers volunteer to take a pay cut, it will have some positive effect.

Sixthly, the PAP Government should frankly admit that the prosperity and development of the Singapore economy is dependent on the regional and world economy and not just on the economic policies of the PAP Government.

I hope that the PAP will stop blowing its trumpet and proclaim to be the saviour of Singapore and assuring the people during the general elections that they will have their assets enhanced and their incomes will be increased year by year as though the PAP Government is omnipotent, they can solve all problems and help the people in every way. This resulted in people not seeing the need to be united in order to make use of the strength of unity to help the nation pull through in a crisis.

Mr Speaker, Sir, as I have said earlier, to enhance our social cohesion and to unite our people, the important factor is to treat every Singapore citizen fairly. The PAP Government has been using the national resources to distribute unfairly to the people, inducing and threatening people, such as the HDB upgrading programme, CIPC funds and infrastructural measures, such as the MRT. It has created a psychological barrier that prevents our people from being united. This feeling is not only in the hearts of the people in the opposition wards, but it is also something which has been disturbing every Singaporean who has a conscience. The PAP should now realise that every citizen has its own contribution to Singapore. The PAP should be magnanimous to accommodate those who hold different views and the supporters of the other political camps. If the PAP Government has such a heart, I believe that we can enhance cohesion, we can make all the people stand united and create a home that belongs to us, our Singapore.

Mr Chuang Shaw Peng (Nominated Member): Sir, on many occasions in recent years, I have heard many top executives, top businessmen, educationists and even politicians, complaining that the long boom years have led to escalating costs, demanding workers and lower productivity. We should all somewhat have a recession to moderate the untenable cost.

We have a tremendous economic slowdown or even a recession coming. Some people from the very same group complain and they cry foul and ask for help. So are we really hypocrites? Although this crash in East Asia has come too fast and too great for most people to anticipate and be prepared, why are there so many people out there who are affected by the crash? Perhaps, we should re-examine ourselves and see whether we are all part of the reason why the economy has turned sour. Did we not try to get more gains out of the stock market or property market? Did we not try to get more pay to buy a second home or have more overseas holidays, without regard whether we are adding more value to our jobs? Collectively, yes. Greed in people drives the market economy. But that very market economy is sustainable only if the collective decisions or the expectations of the players are rational. When the decisions become irrational, that is, when the speculative effect overwhelms the investment effect or the cost overwhelms productivity, the market has to correct itself to a truthful equilibrium position. We should not cry now.

Instead, as a nation, as a people, we should take stock. We should honestly and boldly be self-critical. We should examine our systems for possible weaknesses, reflect on our mistakes and then tap on the internal and external resources to formulate new strategies to move on. With $100 billion in reserves, our economic situation is not in a state of panic. But we should not be complacent either. Rather, we should see what our huge reserves and our people, that is the only other reserve we have, can serve to procure us a better future.

Here, I would like to draw an analogy to a situation faced by a large and cash-rich corporation like IBM a few years ago, even Microsoft, two or three years ago, when they faced an attack on the Internet issue, and how these companies with bloating cost, with possibly unwise investment or wrong product lines, had eroded their competitiveness in the global marketplace. So what would the CEO do? The immediate task of the turnaround CEO would be to troubleshoot quickly by examining their strengths and weaknesses internally and externally, benchmark its own company against the best in the world, and formulate a clear strategy to rally its employees from the bottom to the top to work towards a new corporate goal.

I strongly believe that, for a nation like Singapore, we should do exactly the same but on an even larger and wider scale, covering not only the economic issues but social and political as well. Before we can rally the people round, the Government should face the economic crisis and take advantage of it for future opportunities. We should carry out a diagnosis to find out the symptoms and put forward a very clear plan stating the directions, the resources required, the timeframe and possible belt-tightening measures that our people and businesses have to bear to cope with the economic slowdown and be prepared for a brighter future. Without the plan, I do not think people can see the light at the end of the tunnel. That is what they are feeling now.

The recent economic forecast conducted by various agencies shows that most likely Singapore is going to have negative growth for the third and fourth quarters. Barring some exceptional turnaround, we are definitely heading for a recession. Hence, I think the Government should not hesitate now to assert its leadership by declaring a very comprehensive national action plan that will help to mobilise and unite the people as a cohesive force to resolve the economic problems. The citizens of Singapore can lend better support to the Government if they are convinced. The efforts are genuine, workable, comprehensive, not just piecemeal, haphazard or sectoral. When a person is feeling down, he needs comforting words. In this trying moment, it is particularly necessary for the Government to be more sensitive to the nagging complaints of its people. To cite just a few examples, the typical complaints are, as Mr Inderjit Singh has pointed out many times before, the encroachment into private business domain by the GLCs and the resistance to changes by Government departments. For example, Mr Lim Swee Say mentioned about the concept of price-minus and cost-plus, and also the lack of sensitivity or understanding by Government administrators about the problems in the private sector. Another example would be - of course, everybody knows about this - the ever rising business costs and, last, the boom and bust of the property sector and its related banking problems.

The first few problems have been very well covered by all the Members here earlier and I am not going to elaborate any further. The last one has been touched on by Mr Inderjit Singh and Mr Rai, but I think I want to elaborate more.

As it is, I think the property sector makes up too big a chunk in our whole economy. Based on the Straits Times report last week, correct me if I am wrong, the people and the institutions in Singapore committed $140 billion to the property sector. Last Saturday, in a Chinese paper, there was a report on the Accountant-General's Report on the Government's net worth. It shows net assets of $251 billion. Hence, even a primary school student can find out that the total commitment to property is equivalent to 60% of the total assets of the Government.

Next, concerning the same matter, I understand that the valuation of land by the Government is based on the moving average of recent land tenders. Now I am going to give Members some examples. Supposing the price of the last $10 billion worth of land is bidded up by 10%, that means somebody pays $1 billion extra for the $10 billion. Then the remaining $130 billion would correspondingly rise by 10% too. That is the way we value our land, and that is a $13 billion increase.

So, all the property owners are euphoric over this and the banks, of course, feel very secure and they probably encourage more borrowing. With more loans available, what happens? The borrowers would buy more properties and so they chase property prices up.

Our financial institutions, whose traditional preferred lending policy is to have property as collateral, actually encourage the property sector to grow in this unhealthy manner. You can imagine if you are an owner of a firm, you invest money into training your workers. Would the bank lend you the money? But I am sure if you use the money to pay for a piece of property and mortgage it to the bank, the bank will be very happy. So where is the line drawn? Are we encouraging people to buy property or are we encouraging people to put more money into something less tangible? Because of this practice, as a very prominent foreign banker pointed out, the banks in Singapore probably have not perfected their skill in making loans in any other way but getting a piece of property as a collateral. So in boom years, because of this lending policy and because the way land is being valued, the property sector grew disproportionately to the whole economy. The banks' performance also exceeded that of the GDP, year after year.

Now, with the economic crisis prevailing in the region, this issue is here to haunt us. It is beginning to appear, from what I read in the papers, that the country seems to be held to ransom by the property developers and the banks, because everybody worries that the bankruptcy of these companies would have far-reaching repercussions. So we have to address this issue. The importance of addressing this issue cannot be over emphasised.

As an individual, the problem closest to my chest is the fear of not being able to maintain payments of a mortgage loan at a time of unemployment. As a nation, our economic competitiveness is also dragged down by the over investment in low value added properties. So I beg to urge the Government to confront this issue head on and do some clear thinking about it.

I am not here to speak against the developers and bankers. I am not here to beg the Government to subsidise the property sector. But I think the more sensible way to solve this problem now is to moderate the decline in property prices in a very gradual way so that there will be a soft landing.

What should the Government do now? I think the Government should immediately accelerate the creation of new wealth in knowledge-based economy, as Mr Singh has pointed out, by diverting more of our resources to human capital and to the promotion of new industries. In the long run, we should reduce our overall exposure to properties and increase high-tech services or, as Mr Lim described, the capability competitive sector, significantly. And in the short term, to alleviate the unemployment problem, the Government should come out and stress the need for workers to work harder and smarter, so as to increase productivity which is in a way translated into better chance of keeping jobs. The employers, of course, should also adopt a more positive attitude rather than the kind of pessimism they seem to convey in the press. They should improve themselves by emphasising on more skill training for their workers and also get involved in more value added activities. And, of course, the Government can take this opportunity to show their concern, to establish rapport with the businesses by helping them to search for new strategies, new directions or new markets beyond the region.

In summary, Sir, I support the motion by sharing Mr Lim's call on the Government to blur the invisible line drawn between me, Government, and you, the private sector, and work together as a united force to brave the storms ahead.

Mr Chiam See Tong: Sir, we have come to almost the end of the debate and I do not think it would be useful for me to suggest any solutions to our economic problems, because I think most or nearly all the solutions have already been given in this House today.

Like my colleague, Mr Low Thia Khiang, the other Opposition Member in this House, I think we are particularly concerned in this issue of social cohesion. I support what Mr Low has said, ie, the Government should be fair to all citizens whether they are in the Opposition or whether they are supporting the Government. In good times, when the economy was booming, our banks were flushed with money, the Government spoke a different language. At the last election, the Government said, "If you support the opposition, you will be last in the queue. Probably you will never even see upgrading." That kind of a policy alienates one section of the population from the other. And we, in the Opposition, have felt the alienation policies of the Government. We have heard threats being uttered by the Government, "that if you vote the Opposition and if you get stuck in the lift, you should be rescued last."

An hon. Member: No.

Mr Chiam See Tong: Yes, this was in the early days. The opposition ward shall be slow in getting public services. If somebody sets a fire in the lift, the police might not attend even after a complaint has been lodged.

Some hon. Members: No.

Mr Chiam See Tong: This kind of threat tactics will certainly not build a cohesive society. Even now, presently, the Opposition is being unfairly treated. A simple application for the use of land to fly kites or to hold a lantern festival and we would not get an early reply. How are we going to prepare for the event? How are we going to send out notices? And every time we ring up and ask about a simple answer to the application, they say, "We can't give you an answer now because the answer from the top has not come down yet." Sir, the way the Opposition is treated is really shameful. So I hope that the Government, if it wants a true cohesive society, I think they should treat the Opposition fairly like any other Singaporean.

Mr Low has spoken about the CIPC funds. Millions of dollars have been distributed to the PAP wards, but the Opposition wards are not enjoying any of those funds. Then when we talk of applications we wish to make, we always seem to get it rather slowly, whether it is for a licence to speak at a public dinner or whatever simple applications like that. Then, every week, we have to meet in the void deck to see our residents and other people from other parts of Singapore in the meet-the-people sessions. We do not have a proper place to meet, whereas the PAP MPs have got nice air-conditioned rooms, computer sets, everything. But we, as I have said, are like the Chinese medicine sellers with one table and one chair at the void deck. So I hope all these can change.

Having said all that, do the Opposition support the Government in times of difficulty? Of course, we do. We are Singaporeans. We want to see Singapore do well. We want to see that the economic downturn can go away very quickly. Dr Vasoo has spoken of the fact that we are all in the same boat. I know we are all in the same boat, but we are not even in the third class. Probably we are in the bottom or in the hull of the ship. Whereas the PAP and others who support them are in the first class. Nevertheless, if we sink, we all sink together. It is true that we are all in the same boat but I hope that there can only be one class and not several classes.

As regards this problem of the economic downturn, how do we turn around? As the Deputy Prime Minister has said in public, the problem is external. This is like a person getting flu. We have to go through the full cycle and then we get cured. But meanwhile, I think what we can do is to try to give a remedy to the symptoms to lighten the sickness. I think Mr Tay Beng Chuan has already said and I think the Government should look at the problems and the plight of the small business people sympathetically and if it can, I think it should lower some of its levies, its charges and lower the costs of all these small businesses.

But I think in the long term, the important thing is productivity. Even foreign organisations have pointed out that Singapore workers have got a bad attitude and have low productivity. I have seen it with my own eyes. We were in Copenhagen once on some kind of a conference and we were in a lounge of a hotel. I noticed that only one lady was managing everything, collecting money, taking orders, being a waitress, serving, taking back all the used plates and crockery. Sometimes she was assisted by a man who came out once or twice. But, basically, it was one lady doing the work. I have never seen that kind of productivity in Singapore. I hope we can really improve our productivity. There is nothing wrong with our Singapore workers. They are very skilful. I think they can work if they want to, the problem is attitude. Singaporean workers have got something in them which is hard to describe. They seem to be reluctant to be as productive as what they should be. I think the genesis of this attitude problem is our education system. I think there is a flaw in our education system. All this streaming and dividing the sheep from the goat is bad for the child. Right from the early age, the motivation of the child has already been killed. In fact, there is negative motivation on the child. As the child grows up, he just refuses to be cooperative. He refuses to contribute and be socially useful. So there is a negative attitude about this type of children who have been branded in the early days as a failure, as a no-good, as a drop out. So what do you expect him to be? If you tell me that I am a drop-out, I am no good, what do you expect me to be? I think for the long-term of Singapore, not just for quick turn around in this economic downturn, the education system of our country has to be looked at hard. I have spoken against streaming at an early age since 1984 and the problem is always there. I was in Parliament in 1984 and they were saying that half of our 600,000-odd workers did not even have an education. They were illiterate. They did not know how to read. They did not know how to write. They cannot recognise numbers. How are they going to be productive? Today, we still hear the same thing. 700,000 of our workers have got no secondary education. As for retraining, it is only 5,000 of them. That is not good enough. We have to revamp the education system across the board and only if their productivity is high, then their wages are justified. This is the message that I want to tell the House.

Another matter is attitude. We should give the dignity to our labourers. There is dignity in labour. That must be recognised. If a person has to work with his hand, so be it. But he can be proud of it and be good at it. Whether he is a cook or a carpenter, if he is good at it, then society must respect him for what he can do, and not stress too much on academism, brain work and degrees. In fact, a former Member of this House has already pointed out that there is too great a disparity of wages between manual workers and university graduates. If you go to a western country, you will be surprised to note that a carpenter can earn just as much as a university graduate. But I am just trying to say that his skill is recognised by society and he is paid for it.

Singaporeans can be educated to get rid of their negative motivation and be taught initiative, leadership, and work on their own instead of always being supervised. I think one of the problems of foreign workers - they have almost nil productivity - is because they have to be supervised all the time. I have seen that in the Town Council. As soon as you leave the foreign workers alone, off they go somewhere else. They would not be working anymore. So they have to be supervised every minute of the day. That is the problem. I do not think we want our workers to be like that. We want our workers to be responsible and to show initiative. If you leave them on their own, you pay them a day's wage, they will give you a day's work. 5.33 pm

The Second Minister for Trade and Industry (BG George Yong-Boon Yeo): Sir, I support the motion standing in the names of Mr Lim Swee Say and Mr Seng Han Thong.

In discussing the problems of employment and employability, it is important to understand the nature of this crisis, because what we do must be in accord with the dynamics of this crisis. This is the biggest event sweeping Asia since the Second World War. It is a big thing. Already it has brought down a number of national leaders, like General Chaovalit in Thailand, President Suharto in Indonesia, Prime Minister Hashimoto in Japan. It contributed to the election of Kim Dae Jung in South Korea and President Estrada in the Philippines. It is not over yet. We know it is not over yet because the fundamental problems have not yet been resolved.

The key is, of course, the Japanese economy, which is two-thirds of the Asian economy. The old political consensus in Japan has broken down. Today, it does not matter how brilliant you are as a Minister or as a civil servant. Within that sticky rice culture, it is very difficult to effect change. Within Japan itself, there is no great sense of a crisis. Because Japan is unable to re-stimulate her economy, the effects of the Asian crisis have not only not been contained, they are increasingly being felt in North America and in Europe.

Members would have read in yesterday's newspapers President Clinton using the argument to Congress to persuade them to cough up more money for the IMF, that if they do not, and the Asian crisis is not stabilised, it will in the end drag down the US economy. These are large forces not within our control. We have to observe them closely and carefully, the way a farmer would try to estimate the effects of an El Nino. There is nothing you can do about an El Nino. But you can dig reservoirs, you can protect yourself, and this is the approach that we should take. This is completely different from the 1985/86 recession. Therefore, we should not be too quick to apply the lessons of 1985/86 recession to this current economic downturn, just as generals have always been advised, never, never to fight the last war.

Take, for instance, a big change in the larger situation, the dollar-yen relationship. In 1985, the Japanese yen was 250 yen to US$1. The Americans complained that it was too low, and they had this current account deficit. During the Plaza Accord, they forced Japan to revalue the yen, and within three years, from the Plaza Accord in 1985 to 1988, the yen rose from 250 yen to US$1, to 130 yen to US$1. If you look at the graph, that is just one movement. But it created a sea change in Southeast Asia, because an expensive yen led to an outflow of Japanese capital out of Japan and a lot of it found its way into Southeast Asia. Malaysia had good infrastructure, administrative and physical infrastructure, they were a beneficiary. So was Thailand. The Plaza Accord was in 1985, and by the end of 1986/87, Malaysia and Thailand were on a boom. We were coming out of the recession and we were swept along. Indonesia had a boom later in 1988/89. China after Tiananmen, June 4th 1989, by 1990/91, ethnic Chinese capital from Southeast Asia, Taiwan, Hong Kong went in, and that in turn sparked off a Chinese boom.

The Japanese economy is huge. It dominates most of Asia. So that 50% change in the value of the yen led to an in-rushing tide which brought prosperity to all of Southeast Asia. It was supplemented by a revaluation of Korean Won and the Taiwan NT. So in addition to the capital flow from Japan, there was also the capital flow from the NIEs. Let us now look at the events of the last few years.

In the middle of 1995, it was 80 yen to a dollar. Today, 1998, it is about 143, 144, 145 yen to a dollar. Within the same period of three years, the yen has moved the other way, about 50%. Because of it, it has an enormous contractionary effect on the economies of all of Southeast Asia. In other words, what we are talking about are huge tidal flows over which we have no control because the yen-dollar relationship is not dependent upon what happens in Southeast Asia. It is dependent upon the complex interaction between the US economy and the Japanese economy. The key contradiction now is that Japan has no capacity to lead internationally, even though it is the world's greatest creditor country. America is the only leading superpower left in the world but it is also the world's greatest debtor country. It is a complex relationship suffused with policy and other implications. But that relationship plays dice with our lives. The question now is, this tide which is receding, how long will it recede? The last tide brought 10 years of prosperity to Southeast Asia. This tide, we hope it will turn around quickly, but I do not see it turning around yet, and we have to wait, and have to wait anxiously, and in the meantime take all necessary precautions. We hope for the best but prepare for the worst.

The period of boom in Southeast Asia led to a period of excess. Suddenly money was easy. Borrow American dollars on the short term. Institutions were weak and capital markets were opened freely before the regulatory structures were in place. So they became very vulnerable to short term capital flows. This happened in particular in Thailand and Indonesia. Worse, there grew in Southeast Asia, political structures which were fueled by easy money. Politically connected vested interest got rich, because they were near centres of power. All that was fine and a wonderful game to play when the tide was coming in. Now when the tide is receding, all those poorly built structures have either collapsed or have become very shaky. During high tide, the water looks very calm and beautiful. During low tide, all the sins and wreckage show.

In Singapore, we are completely affected. Because we are, as it were, in the middle of that tidal cross flow. We cannot fight the tide. If we fight the tide, we are sure to lose. We must float with the tide. We are feeling it. There is a lot of pessimism in Singapore, not all of it justified. We have to revise our growth projections downwards every few months. And as Mr Lim Swee Say and many MPs have spoken about this afternoon, unemployment is growing and will continue to grow for a while yet. But unlike many of the countries around us, our fundamentals are strong. This is where I profoundly disagree with Mr Low Thia Khiang who said that when we were successful we blew our trumpet. Now when the tide is down, we should take the blame. We never took liberties with ourselves. Even when times were good, we were frugal. In fact, the PAP Government had a certain reputation for being very careful with money, and watching the cents. We were like Joseph in Egypt. Years of plenty, rather than squandering the money, we carefully built warehouses, stashed away whatever we could, whatever we did not consume, wasting not a grain, because we were preparing ourselves mentally for difficult times. I hope the difficult times will not be as long as in the Bible, but still we cannot be sure. We should not take liberties with ourselves, as we did not when times were good.

But, of course, as a number of speakers have pointed out this afternoon, there have been a few excesses in Singapore, particularly in the property market. Young people became very ambitious, leverage themselves to the eye balls, and are now in trouble. It is sad that every generation must learn its lessons for itself, that whatever their parents may have to tell them, they must make their own mistakes before an internal balance is found. But because our infrastructure is basically strong and our system is basically sound, I think that lesson comes relatively cheap.

It is crucial, as Mr Lim Swee Say and many MPs have said, that whatever the situation, whether the tide is coming in or going out, that we maintain our relative competitive position. Take no chances. Always assume that things will get a bit worse. It is like running with lead weights. If you do not have to wear those weights, you fly. Here, we have got to worry about not just short term investment conditions but the long term, as Mr Inderjit Singh has said.

The key is to convince domestic and international investors that Singapore runs a tight ship, that our core philosophy is that there is no free lunch in the world. That if we make a good living it is because we are of service to others. No one owes us a living. If we have something in the kitchen, we have something in the living room, it is because we work hard for it. We must continue to project this philosophy to all potential investors, foreigners and Singaporeans, that whatever we need to do, we will do. There are no sacred cows. There are no mindsets. If we have to adjust, we will adjust. That is all. Because if we do not adjust, if we become paralysed or ossified in our present position, then we will be swept aside. That is all. I think most Singaporeans understand this. And it is because they understand this that we continue to do well. In fact, when I listened to the many Members of Parliament who spoke today, except for the two Opposition MPs who have to say something, on the whole, there were really no sides to this debate. On the fundamentals of competitiveness and having to make a living in the world, on education, on discipline, on collective effort, there is no disagreement. And this is the great strength of Singapore.

In many countries in Asia today, because of economic astringency, very quickly the economic problem becomes a political problem, and the fracture quickly finds its way to the core, because powerful vested interests are involved. I support A, he wins, I am millions of dollars richer; he loses, I am finished. If B wins, he wins, and so on. But in our system, complete rationality, complete objectivity. If this is something that must be done, let us do it. We can disagree honestly, but not on the basis of your vested interest versus his vested interest.

You remember last year before the crisis, we established the CSC, the Committee to look at Singapore's competitiveness, chaired by Minister Mr Lee Yock Suan. And no sooner had the Committee sat for two or three sessions, we were straight into the downturn. At each meeting it was a different set of circumstances than the previous one. So we have had to adjust our position. When we started, a top item on the agenda was job-hopping, and many papers were written on how to stop the job-hopping problem - very creative policy adjustments to stop that problem. Today, that problem has completely evaporated. We do not even talk about it. The problems are unemployment, restructuring, competitiveness.

The Committee has been meeting, its sub-Committees have been working very hard. The report will come out at the end of the year. And many of the ideas have already been incorporated in the meantime. It is economic competitiveness in the end which will solve the problem of employment and employability in Singapore; nothing else. And to maintain our economic competitiveness, there are two things that you have to watch out for, and they never change. One is our cost structure. It does not mean that we cheapen ourselves. Cost structure does not mean that we must be the cheapest in town. We offer value for money, but we must watch the cost structure to make sure that we are not out of whack. Secondly, and this is an endless task, we must continually increase productivity and efficiency. This is an endless game.

Cost structure. Lowering business cost was, of course, the focus of Dr Richard Hu's off-Budget measures which came to $2 billion. If you look at the exchange rates, we can be in danger of being uncompetitive. Around us, Malaysia, Philippines, Thailand, they have gone down close to 40%, Indonesia, much more. We have only gone down 15% to 20%. Of course, Hong Kong has maintained the peg. So they are above us. But as any of us who has travelled in the region will know, things look incredibly cheap in Thailand, Malaysia, Indonesia and the Philippines. So if we are not careful, very quickly investments can flow out of Singapore into the region around us. We have got to watch the cost structure, and make sure that all components of costs are kept as low as possible.

We do not want to fiddle with the exchange rate, because the reason why the Singapore dollar is viewed with such high regard in the region and why so many ten thousand dollar Singapore notes are in circulation in the region is because there is a deep trust in its value. And I would say that it lies at the core of our financial system. The easy way a weak government would take is to lower the Singapore dollar, devalue it. And then you get a flush, things may appear better, but long-term problems are not solved. And I do not think we should use the Singapore dollar to solve this problem. Instead, let us be trim and flexible. If we have to make adjustments, Government, workers, unions, everybody together, we make those adjustments, take the decisions, and not toy around with the Singapore dollar.

Land cost, rental cost, because of the boom years, they have gone out of line. So they are coming down. I think they will have to ease to a lower level. We want a soft landing. We do not want a major destabilisation of our financial system. And I think the market will gradually correct itself, and we should be in a more competitive situation in the coming years. Of course, when the tide comes in again, then we will float up again. But in the meantime, do not take it for granted. Let us ease ourselves into the lower position so that rentals are lower and business costs are lower.

As Mr Tay Beng Chuan and other MPs have said, we must also watch Government levies, Government fees and taxes, and whatever causes problems, and where we can make adjustments, we should. But this is really for the Finance Minister to decide and we have to wait till next March for new measures to be announced, if and when those measures are deemed to be necessary.

Another major component is, of course, wage level, especially in the service industry where it can be more than half of total cost. In many manufacturing sectors, it could be up to 40%. We have got to allow wages to adjust. Mr Lim Swee Say said that to be pro-employment is to be pro-business. In the old days, that would have been considered a reactionary remark. Today, that is a very progressive remark. To be pro-employment is to be pro-business. Because if the businesses do not survive, where is the employment? So we have got to watch our wage levels, accept that it varies from industry to industry, from company to company but, at the least, we restrain; at the most, we prepare for adjustments. We have built up over the years now a variable component of up to 20% in the public sector and maybe 16% in the private sector. We should be prepared to go into those before talking about the CPF. But even if it means talking about the CPF, so be it. No sacred cows. Whatever we need to stay competitive. And that must be the impression we give to foreign and local investors. This Government, this society, these people called the Singaporeans, they will do everything necessary to stay in business, and we intend to stay in business.

We should, of course, minimise unemployment. But minimising unemployment must not mean stopping unemployment. That will be very dangerous. The Ministry of Manpower has set up a tripartite retrenchment panel so that companies which have to retrench would give early warning, and try to prepare the workers for it. We have the SRP. We have various funds and programmes to help retrain them and to get them new jobs so that the pain is minimised. But if that company, if the industry, cannot sustain that level of employment, their unemployment is inevitable, we should not stop it. It is part of the process of adjusting. We have got to float with the tide. If we anchor ourselves when the tide is shifting, we will be in trouble.

Mr Tay Beng Chuan spoke at length about the plight of the SMEs and how many of them are in pain. There is a liquidity crunch and the LEFS programme which is introduced can only help some of them. I think we should do all that we can to make life easier for them but we must accept that whatever we do, we cannot save everybody. If we try to save everybody, we will be in deep trouble. But those whom we can save, we should save. The LEFS is being extended in order to allow more to be taken in. But at the end of the day, the banks must decide. Government is only co-financing. The banks must decide who will survive and who will not. Yes, if we can raise the level of the water by one inch more, more will be saved; but it is not possible to freeze things in position. That will be the wrong strategy.

That is on the cost side. Then on the productivity and efficiency side, there are many things that we have to do. The key in the end is the individual. We can have the best infrastructure. We can have all the programmes, all the bells and whistles, but if the individual does not make the effort and does not try harder, nothing can be done. And all our efforts are to enable the individual to help himself. Unless he is sick or an invalid, there should be a way out for him through one of our programmes.

The SRP was initiated by the NTUC, together with the SNEF and the Government. SDF put in $50 million. The Government threw in another $50 million. And recently the Government added another $20 million. So they set up a skills development centre and introduce a whole range of courses. In other words, when the economic agencies sense there are areas of potential growth which can take additional employment, we put out these indicators, encourage those who might be unemployed to upgrade themselves and try. But, of course, as many MPs have said, it may mean that they have to travel further. It may mean that they have to work shifts. It may mean that they have got to convert from white collar to blue collar. But so what? I was in Thailand two or three weeks ago. There was this Thai businessman whose company had gone bust, and he now sells sandwiches. The newspapers have been reporting on him. He is bubbly and very cheerful about it, and in a very wonderful way he has given heart to a lot of Thai people. And if Singaporeans make that effort, I do not think that the problem of unemployment will get out of hand. To begin with, there are hundreds of thousands of work permit holders in Singapore and many of their jobs can in fact be taken over by Singaporeans.

We must educate every individual to the fullest possible. Mdm Claire Chiang has talked about social infrastructure. We are spending a lot of money on building up our educational infrastructure. Not just a formal school system of primary schools, secondary schools, ITEs, polytechnics and universities, but also life-long education, so that all of us are used to the idea of going back to school to update ourselves, whether it is on Windows, whether it is on computer-aided manufacturing, or whatever. Eventually, what we hope is for all our institutions to become "one institute, two systems" - one system for those who come out from school; the other for those who are coming back from working life in order to upgrade themselves. And that is the kind of society that we must become, the kind of culture that we must have. Never stop learning. Always have a child-like curiosity for what is new, and try. Fail, never mind; try again. Fail again, never mind; try again. In the end, learn something. And if we cannot master these skills ourselves, encourage our younger brothers or sisters, encourage our children and grandchildren to master them, because it is good for them.

We are preparing for something which we know will come, in the 21st century, when wealth is increasingly based upon knowledge, not land or raw materials or natural resources but on human minds and the knowledge in those human minds and their ability to network together. This is why we have been pushing IT; we have been pushing Singapore One and encouraging our young children to prepare themselves for that kind of a world. Then, however that world changes, you will still come up against a computer, you will still come up against Windows; you will still come up against Internet, and you make the necessary adjustments. Whether in a restaurant, in a bank, in a shopping centre, in the SAF, whatever, it does not matter. Put someone before the computer screen and he is there hammering away, no sense of being intimidated.

There are other things that we should do too, like encouraging entrepreneurship and so on. These are all long-term efforts. If we can make 1% improvement a year, we would have done well. It is not something which will change the situation rapidly. EDB has mounted an Industry 21 programme which targets not just manufacturing but also manufacturing services. I announced some of the details in June this year.

Our corporations will also have to restructure. We must help them to restructure. We must not, through threats or moral pressure, make it more difficult for them to restructure. Dr Lee Tsao Yuan talked about POSB. Why not we slow the process down, make it easier for those who have loans from POSB and so on? Yes, in every case, it is better to hold back restructuring. But there is also a heavy price when we hold back restructuring. Because every year lost is a year lost to competitors. And at a time like this, I do not think that our instinct should be to hold things in place, but to help individuals, corporations make the adjustments. But whether or not POSB can lengthen by a year the grace period, that is for POSB to decide. But we must remember that, at the end of the day, all restructuring is difficult. It is never easy.

One of the most important things that we should pay attention to in this period is to fight political pressure to make life more difficult for foreign talent and foreign workers. At a time like this, the easiest thing to do and to say is, "Let's keep the foreigners out. Save the jobs for Singaporeans and treat it as a zero sum game." And at the political rally, on a soapbox, one can make quite a stirring speech. Our trade unionists can make quite a stirring speech on this. Therefore, at a critical period like this, it is very important that all of us, PAP MPs, Opposition MPs, NMPs, all of us, hold to this position that we need foreign workers.

If we do not have these foreign workers, our economy will seize up. Let us say, for electronics companies, 40% are foreign workers. Without that 40%, there will be no 60% for Singaporeans, is it not? Without foreign workers, who will build our homes, our MRT line, who will repair our ships? There are many areas which Singaporeans would not want to do even if they are quite hard up. And we need foreign workers for those jobs. And at all times, there are imbalances. We need machinists, we need computer programmers, we need restaurateurs, and so on, bring them in. Of course, where a Singaporean is equal to a foreigner, prefer the Singaporean, choose the Singaporean. We do not have to say this. Instinctively, every Singaporean employer, for reasons of cultural affinity, would prefer a Singaporean. If he has to choose between whom to retrench, a Singaporean or a foreigner, and they are more or less the same, I have no doubts in my mind that he will retrench the foreigner, not the Singaporean. So I do not think this is such a serious problem. But we must not allow this issue to be politicised or polemicised.

And when we talk about foreign talents, it is even more important. Our universities, our research institutes, our financial sector, in many areas, without foreigners, we cannot maintain this high level of performance. In fact, at the higher reaches, the majority may have to be foreigners. If you look at the economy of London, or the economy of Tokyo, or the economy of New York, how many are local to London or New York or Tokyo. If you tell the City of London that you can only recruit Londoners, I think the City of London might as well pack up. So in the same way, to maintain the kind of economy that we have, we have got to have a free flow of talents coming in from outside, and this is very important. But as I said, this is a subject on which it is very easy to make stirring speeches and get the ground worked up in the wrong direction. Therefore it is incumbent upon all of us who have a sense of responsibility to hold this ground because on it depends our long-term survival and the long-term employment and employability of Singaporeans.

DBS, OCBC, you notice recently, having to restructure and adjust to a new situation, both of them have recruited foreign CEOs. Should we stop them? That would be stupid, would it not? In fact, I will go a step further. All over the region now, bright, able, dynamic entrepreneurial people have gone bankrupt or are without jobs. Should we not, selectively, encourage some of them to come into Singapore so that when the tide comes in again, we will have a thick layer of entrepreneurs and foreign talent to take our economy even further into the next century? If Hong Kong, in 1949, did not get that outflow of talent from Shanghai, and Hong Kong in 1949 was not a very prosperous economy, would Hong Kong have done as well as it did? If Taiwan did not get the one million mainlanders, would the Taiwanese have achieved that kind of progress which they achieved? The one million was the cream of a whole continent. So we should have the instinct and the wisdom at a time like this to welcome foreign talent into Singapore so that when times improve again, we will take off in double quick time.

But the key to all this is political unity and social cohesion, a point raised by almost all MPs this afternoon. This crisis will put our society under stress. It will put our institutions under stress, it will put corporations under stress, it will put every family under some kind of stress. I do not think any family is unaffected by it.

Should we have welfare? I listened to Mr Lim Boon Heng yesterday saying that we should not have a retrenchment fund because this can impede our long-term competitiveness. And I think we are very lucky that, in Singapore, the trade union movement understands this profoundly. If we have welfarism and get ourselves into the European position, then we are sowing the seeds of future problems for years and years to come. The European economies are doing quite well now, but their unemployment levels remain stubbornly at well over 10%. Why is this? Because of overly generous retrenchment benefits. There is a tremendous moral hazard involved. So we must guard against this. We can have welfare, yes. If a breadwinner is unemployed, children need school books, school fees, assistance from MCD, yes, help him, help him to get a job, help the children remain in school, do his examinations, get jobs later on. And in every CDC now, we have a whole slew of programmes through various NGOs and grassroots organisations to provide help. During the boom years, I think many of us, in various constituencies, had to go around persuading children to take up bursaries and scholarships. Maybe in the coming years, they will come on their own. But I think we have the programmes and if we need many more such programmes, so be it. But always watch the moral hazard and do not allow an attitude of welfarism to seep in, then it is by right, and if you do not give me, I will vote against you. Because once we settle into that position, it is well-nigh impossible to get out of it.

Have we done poorly? Mr Low Thia Khiang said that we discriminated against certain Singaporeans. Mr Chiam See Tong said that we discriminated against his kite fliers and that his MPS is conducted in the void deck instead of in an air-conditioned room. If you look at the bottom 5% to 10% of Singaporeans of any race, we are far better off than any other city in the world. Our bottom 5%-10% are better looked after than the corresponding groups in Tokyo, or New York, or Los Angeles, anywhere in the world. And it is because of this that we are socially very stable. Yes, in minor things, these are part of the rough-and-tumble of democratic politics. But on major things, we provide a solid base for all Singaporeans regardless of race, language, religion or political affiliation. Mr Chiam knows this. When he talked about fires in Potong Pasir not being fought by the Fire Brigade, or crimes in Potong Pasir ignored by the Police, he knew he was joking. If he was not joking, I say we should have a proper debate in this House and a proper Commission of Inquiry for the Fire Service and the Police Department. It was a joke and we should take it in that spirit and not pursue the matter much further.

But at a time like this when economic conditions are hard, human societies turn inwards. Mrs Lim Hwee Hua talked about how her friends complained to her about the $5 billion aid we gave to the Indonesians. There is a lot of carping, "If you can give Indonesians $5 billion, why cannot you help me?" To begin with, let us get the facts right. That $5 billion have not been disbursed because the IMF programme under which we rode along has not been implemented. We are helping Indonesia in other ways, through trade financing, humanitarian assistance, our investment in natural gas, by maintaining operations in Batam, Bintan and the Riau Islands.

Is it right at a time like this for Singaporeans also to turn inwards and ignore our neighbours? I think that would be wrong because we are then sowing seeds for long-term difficulties. How can we turn our back because Singaporeans want help? The majority of Indonesian workers earn less than S$1 a day to support an entire family. Their future is in their own hands. There is not very much we can do to help. But if we can help in small ways, we should, and we are. There is nothing wrong with that and we should not be defensive about it. It is in our own enlightened self-interest to help our neighbours because our destinies are intertwined.

But at the same time, I hear some MPs talk about some of our Malaysian friends making unkind remarks against us. We should be principled and firm. We should not be taken for granted. And at a time like this, Singaporeans should have the instinct to bunch together. Last week, a friend of mine from the SAF, he used to be a senior doctor in the SAF, called me up. He said, "I want to see you urgently." I said, "Come, let's have lunch together." He was very unhappy because he works in a private hospital and in the doctor's room, one Singaporean came in and railed against the Singapore Government for being difficult with Malaysia. He said that we should just give in. CPF, return it. CIQ, why do you want to make all these changes? This friend of mine was so angry. We were friends in the SAF for many years. He said he gave him a 40-minute lecture and all the other Singaporeans in the common room became very encouraged, and some of them also spoke up. The Malaysian doctors in the room kept quiet.

At a time like this, it is crucial that we bunch together, that we have the instinct that, "Look, we must help our neighbours, but in a way which is proper and principled." And we cannot assume that this regional crisis will not lead to political crisis in various parts of the region. Many things can go wrong. The horrible events of May in Indonesia were triggered off by the regional economic crisis. Other bad things, other evil things can happen in the region. We have got to be careful, we have got to be mentally prepared for it. We cannot turn inwards. The other day, I was very cheered. I was talking to Teo Chee Hean about the SAF. He told me that the morale of the senior SAF officers is very high. I felt very good about it because if, at a time like this, our SAF officers are weak-kneed, then we might as well pack up and go, is it not? We have got to, especially at a time like this, go out of our way to help those who are in difficulties but to help them in a way which does not create long-term problems for ourselves. And I think on the whole, Singaporeans have that instinct. There is a certain resilience which our people have got.

The NEE Exhibition has been a tremendous success. I have not heard a single negative remark about the Exhibition. We extended it by six days but within one afternoon, all the tickets were snapped up. Why is this? It is because when Singaporeans look back upon their past, upon what their forefathers have done, what an earlier generation of leaders had brought us through, they felt proud and their morale went up, and we must build upon this. And what we really must have is a certain spirit of resilience, pak buay see ( ) kind of spirit. However the situation turns, we will survive; we will find a way to prevail; we will find a way to compete.

Mr Low Thia Khiang said at a time like this, Ministers should take a pay cut. I am glad to tell Mr Low Thia Khiang that Ministers will take a pay cut because our salaries are pegged. The salaries in the private sector have gone down and, with a time lag, Superscale salaries will also go down. So he need not be too worried about this subject.

An hon. Member: MP's allowances?

BG George Yong-Boon Yeo: And so will our allowances too.

The point is: if we do not make major mistakes, our boat will stay afloat. We must be prepared for what can become a long haul, all working together, all at battle station, alert, Government, employers, trade unionists, social workers, looking after each other. If someone falls over, a lifeboat; a dent, quick repair; a leak, plug it.

Will there be seven years of famine? I hope not. But can we be sure? And should we be so reckless as to say, "Let us in one decisive move raise this boat when the tide is ebbing." Some friends have told me, they said, "Government has been saying reserves are for a rainy day. Now there is a storm. Now is the time to spend the reserves." The storm has just started and we have got to husband our resources carefully. And if we do it carefully, not losing our nerves, but with a quiet sense of self-possession and self-confidence, we will sail this boat, position it well and when the tide comes in again, we will be far ahead.

We will take some knocks. There will be casualties and a few Singaporeans may even lose heart and leave Singapore. In the 1985-86 recession, we had a small outflow. And this time round, there may be a small outflow again. But the majority of us, I think, will stay and we will bunch together and keep this boat chugging along and prepare for a new situation. When sweet and gentle breezes return again, the region will not look anything like what it was before last year. The landscape will be different. We cannot be sure. We cannot have a fixed plan that we must be there or here, because things are changing so fast. But we know the general direction we must move towards. We know there is no free lunch in the world. We know that every Singaporean will have to carry his own weight. We know that we have got to be competitive and that is the only sure way to stay employed and to stay employable.

Sir, I support the motion. [Applause].

Mr Lim Swee Say: Mr Deputy Speaker, Sir, first of all, I would like to thank all the Members who have spoken up on this motion. I would like to acknowledge their contribution and key points.

Sir, I will go in the reverse order. Mr Chiam See Tong and Mr Low Thia Khiang, basically, called on the Government to treat everybody fairly and equally so as to strengthen social cohesion, and we have heard the response from the Minister. NMP Mr Chuang talked about the over investment in the property market and the need to divert this investment in the future to human capital. NMP Mr Rai talked about the need to upgrade workers so that they can take on better paying jobs and he called on the people to save more. Mdm Claire Chiang talked about the importance of the people services sector and the need to strengthen the social safety net, and to set up a Singapore misery index. Mr Inderjit Singh talked about the need to have a vibrant business environment for technology and innovation-based economy. I like that very much. Dr Vasoo talked about the need to have a fighting spirit and the need to do long-term manpower planning, if possible, for the next 20 years. I thought that was excellent too. NMP Mr Zulkifli talked about the need to match the VWOs, the social workers, to the needs of the people at a time like this. Mr Ang Mong Seng talked about the need to set up an employment network linking MOM, CDCs, CCs and so on. NMP Mr Tay talked about the need to give more support to the SMEs and to have a stronger process of consultation with the private sector. Mr Sinnakaruppan proposed the earlier release of the report on CET 21. NMP Dr Lee Tsao Yuan talked about the need for early and big enough off-Budget measures. And, first but not least, Mrs Lim Hwee Hua and Mr Seng Han Thong talked about the older workers, skills upgrading, cost cutting, job matching, unity and so on. And I thank all the MPs for their contribution.

I also want to thank the Second Minister for Trade and Industry, BG George Yeo, for his very spirited and inspiring response. I am very glad that he talked about the need for employment, employability, competitiveness and national unity. I am most impressed by his pak buay see kind of reply and I guess some of the MPs here are also the pak buay see type of MPs. So if your proposal has not been responded by the Minister, please continue to bring them up on a future occasion until some response comes out with a yes or no, whatever way.

Mr Deputy Speaker, Sir, I would like to summarise my motion in this way. I think Mr Low Thia Khiang also asked this question about moving this motion at a time like this. Is it because the PAP Government admits making mistakes and so on? I want to explain. The one and only reason why I proposed this particular motion at a time like this is because I remember what a Chinese businessman told me about five years ago. The Chinese businessman was very successful in China. I hope he still is because I have not been in touch with him for quite a while now. I asked him, "How did you manage to be so successful? Somehow everywhere you went, you made money, when other people may be losing money." He said, "Very simple. Zui wei xian de di fang, ye shi zui an quan de di fang [ ], meaning that the most dangerous place is also the safest place. Why? Very simple. If the place is very safe, everybody rushes in. The place will be so crowded and the market is not enough to go round everyone. So in the end there is no winner, because they all undercut each other. What he did was he went to places where nobody dared to be there, because it was known to be dangerous. This is dangerous from a business point of view, not in terms of physical safety. Basically, he was a pioneer. He looked around China. He looked at the provinces, the cities and places that he thought there were investment opportunities. But before anybody else moved in, he moved in first. Because of that, he was able to basically make a good business out of that venture.

I think for Singapore, in terms of the national economy, it is the same thing. I think we have been taking risks all these 35 years since independence and that is the reason why our economy has been successful. We went to foreign direct investment (FDI) when many people, many countries, thought FDI is no good for the country. They say it will enable the multi-national companies to come in to exploit our people and our resources. But we said, no. We say that it is dangerous but also the safest. So we went to FDI.

Today's situation has changed. Looking ahead, in the future, as I mentioned, I think the Minister has also mentioned about the realignment of the regional currencies. The economic space that we are in today is going to be very crowded in the future, by the time the crisis is over. Therefore, we have to look for new space, space that is even more dangerous and has fewer players so that we can continue to succeed.

Yes, it is very easy for our regional economies to copy us. They can copy our strategies on paper but it is very difficult for them to duplicate the implementation on the ground if we are prepared not to shy away from greater and difficult challenges and, in a way, more dangerous places. But to survive in more dangerous places, we better be stronger and better, and that is the only reason why I proposed this motion because I think at a time like this, instead of being bogged down by short-term problems, we should cast our mind, our vision, ahead or beyond this crisis, and ask ourselves what can we do now over this year, the next two years or three years, what can we do to make Singapore stronger and better. So that by the time the crisis is over, when we have to venture into more dangerous places, we will be ready and we will succeed.

Sir, let me in conclusion, as the Minister BG George Yeo has mentioned, at a time like this, there is a lot of stress, a lot of ya li [ ]. There is a Chinese saying, we must ba ya li, ding wei dong li [ ], meaning you must turn the stress, the pressure, into forward thrust so that we can run even faster.

Sir, on this note, let me thank again the House for the support of this motion and I look forward to your approval.

Resolved,

That, in view of the economic downturn, the Government should rally the support of the entire nation to minimise unemployment in the short term and strengthen economic competitiveness and social cohesion for the long term so that Singapore will emerge from this regional crisis even more competitive and resilient.