GOVERNMENT CHARGES AND LEVIES

Mr Tay Beng Chuan asked the Minister for Trade and Industry whether the Government is prepared to help the many businessmen who face severe credit squeeze or cash-flow problems in their ventures into the regional markets and probably require some extraordinary assistance to tide over this difficult period before they can bounce back; and, if so, what are the enhancements that can be immediately introduced to existing Government financial assistance schemes to help these specific areas.

Mr Lee Yock Suan: Local companies which require fixed asset financing for regional projects can apply to the Economic Development Board for its Regionalisation Finance Scheme (RFS). This scheme provides SMEs with financing for equipment and industrial properties in their overseas operations. Since the regional financial crisis started, the EDB has received and approved more RFS loan applications. In the first 7 months of 1998, 9 loans amounting to $12 million have been approved, compared to a total of 10 loans for $8 million in 1997.

The Trade Development Board has expanded its Trade Development Incentives to assist companies in setting up overseas marketing offices and other business development programmes such as branding, franchising and licensing. To assist companies in exploring new markets, TDB has also increased its funding for companies participating in its trade missions and in approved trade fairs.

My Ministry welcomes suggestions on how we can further assist our investors here and abroad. Any measure taken must be based on sound market principles and recognise the financial risks and rewards of any investment decision. We cannot use public funds to bail out any project which has become non-viable as a result of the regional economic crisis.

Mr Tay Beng Chuan asked the Minister for Trade and Industry whether the Government, in recognising the pressing need to watch and lower the business costs in order to woo investors, save jobs and help firms stay competitive, will (i) take immediate steps to reduce government charges and levies, including the foreign worker levy, port charges, Electronic Road Pricing charges, petrol taxes, Housing and Development Board/Urban Redevelopment Authority car parking charges and Goods and Services Tax; and (ii) seriously reconsider establishing an Inter-Agency Government Charges and Levies Review Committee to strengthen the existing Government mechanism of monitoring and co-ordinating all the major fee hikes of all Government agencies to maintain our international competitiveness.

Mr Lee Yock Suan: Our cost competitiveness relative to the regional countries has been affected by the sharp depreciation in the regional currencies. The Government has therefore taken steps to reduce business costs through various cost-cutting measures in the FY1998 Budget and the June off-Budget package. These measures include property tax rebates, rental rebates and tariff reductions.

Excluding material costs, the major component of business cost is wages. In May this year, the NWC recommended that firms exercise wage restraint and put the flexible wage system to effective use given the economic slowdown. Taking the lead, the civil service cut its mid-year variable bonus payment from three-quarter month to half a month and indicated that there could be further reduction in the year-end payment. Companies and unions have exercised wage restraint this year. Many have settled for a wage freeze; some a wage cut. If the economic situation deteriorates further, a cut in the employers' CPF contribution rate may be necessary to reduce wage levels across the board.

My Ministry is monitoring the overall business cost situation closely. We will do whatever is necessary to keep Singapore competitive. This includes reviewing all Government fees and charges as well as a possible CPF cut. The Committee on Singapore's Competitiveness has obtained feedback from businesses and will deliberate further on this matter.

On Mr Tay's second question, it is not necessary to set up another committee to monitor and coordinate major fee hikes. There is already a mechanism in place to coordinate fee increases. The Ministry of Finance monitors and coordinates the magnitude and timing of any fee increases. My Ministry monitors the impact of such increases on both the Consumer Price Index and Unit Business Cost to ensure that we remain competitive. Major fee hikes require the Cabinet's approval.