COMMITTEE ON SINGAPORE'S COMPETITIVENESS

Order read for Resumption of Debate on Question [23rd November, 1998],

"That this House endorses the strategies and policies set out in the Report of the Committee on Singapore's Competitiveness, contained in Paper Misc. 3 of 1998, as the basis for strengthening Singapore's competitiveness.". - [Minister for Trade and Industry].

Question again proposed. 1.30 pm

Mr S. Iswaran (West Coast): Mr Speaker, Sir, I rise in support of the motion moved by the Minister for Trade and Industry to accept the recommendations contained in the Report of the Committee on Singapore's Competitiveness (CSC).

It is significant that the CSC has examined not just short term concerns arising from the current regional economic crisis, but also long term issues to strengthen our ability to compete in the global market of the future. It was as recent as May/June last year that we as a nation were collectively seized with the competitive challenge posed by neighbouring and other economies. Indeed, it was such considerations that led to the formation of the CSC. Today, those thoughts seem rather remote as we and our neighbours grapple with the consequences of a profound economic downturn.

The CSC report is a timely reminder that the fundamentals have not changed. As the Minister has mentioned, regional economies will emerge from the current economic crisis stronger, leaner and more cost-effective. Their labour, land and currencies will be cheaper. As the Committee has observed, it is not just cost, but also our capability that will underpin Singapore's long term competitiveness within such an environment.

A key recommendation of the CSC is to reduce total wages by 15%. Although a painful recommendation, I fully endorse this recommendation. It is an essential step in restoring Singapore's cost competitiveness. This need is evident especially when we realise that even after this across-the-board reduction of costs, we will not fully offset the relative strengthening of the Singapore dollar against regional currencies over the last 18 months.

It is also a signal to the international business community that we are different. It is a tribute to the strength of tripartism and labour-management relations in Singapore that this issue has been discussed extensively in recent months in a systematic, cool and rational manner. The CSC's recommendation and the reasoned response of organised labour in Singapore must surely have distinguished and differentiated Singapore in the eyes of global investors.

By and large, Singaporeans accept the need for wage reduction. However, they feel that it should be done equitably and in tandem with the introduction of measures to ease the impact. For instance, the wage reduction will have a significant impact on the ability of many to service their home mortgages. More than 100,000 Singaporeans use their entire CPF for this purpose and many others use most of their CPF similarly.

Homeowners are hopeful that Government will institute adequate measures to ease their burden. One means would be to allow them to use contributions to the Special Account for a limited period to service their housing loan. Another measure could be the establishment of a bridging loan facility to help Singaporeans, in both public and private housing, who are affected by the CPF cut to tide over this difficult period.

Sir, there is also a view that the wage reduction should be progressive. The 15% figure should be taken as an average with high income earners taking a proportionately higher wage cut and a lower burden imposed on the rank and file.

In this regard, many Singaporeans are looking to our political leaders to set the tone by taking a deeper cut than that recommended by the CSC. They readily concede that it is not necessarily an economically rational response since the resultant cost saving will be insignificant in the overall scheme of things. They also recognise that Ministers have already forgone wage increases due to them this year. However, it is an important emotional issue. Knowing that our leaders are showing the way might make it a little easier to swallow the bitter pill in these hard times. I would, therefore, urge the Government to consider a deeper cut in wages for the political leadership (including MPs) and the higher echelons of the public sector.

Having said this, Sir, I wish to stress that wages in Singapore should not only be flexible downwards but also, when the time is right, upwards. This applies equally to workers, senior civil servants and Ministers. When times are better, employers should reinstate the wage cuts imposed on workers. Similarly, when the economic condition improves, the wage cuts taken by our Ministers and senior civil servants should be readily restored without question, both within this House and without. Just as we seek today a departure from the formula to determine the pay of Ministers and senior civil servants, we should be equally prepared to do so when the time comes to restore the cuts that they take voluntarily.

An important recommendation of the CSC pertains to the need to review the tax treatment of ESOPs - Employee Stock Options. The purpose of ESOPs is to align employee's interests with that of the company. As the company grows and its value increases, so too will the value of its shares and the stock options held by its employees. Indeed, the longer employees hold their ESOPs, or their shares after the exercise of the options, the better for the company. It also has the advantage of diminishing the incentive to job hop. Indeed, Sir, this is not an uncommon practice in places such as Silicon Valley, where from the receptionist to the CEO hold stock options.

Yet the current practice of taxing ESOPs at the point of exercise as "earned income", rather than waiting for the point at which the underlying shares are sold, creates a perverse incentive - the employee will probably sell his shares as soon as the option is exercised in order to realise his gains and pay his tax liability. As we move into a knowledge-based economy, intellectual resources, ie, our people, will become an even more important asset to companies. In that context, ESOPs will become an essential component of remuneration which today comprises mainly the basic salary, flexible components and bonuses. I would urge the Government to review the tax treatment of ESOPs to make it more compatible with the knowledge economy envisioned by the CSC.

Sir, finally, a point from a social perspective. The recommendations of the CSC make compelling business and economic sense. Many big words like "competitiveness", "talent" and "capability" have been used. But these recommendations will have a profound impact on the lives of average Singaporeans, and also on the work of CDCs and VWOs that serve the disadvantaged within our community. We must address these social consequences especially because social cohesion is a key competitive advantage for Singapore. Families will find it difficult to pay the bill for childcare, before-and-after-school-care, and maids. Yet, two incomes have become an even more important issue in this economic climate. I would urge the Government to consider extending further assistance in this regard through grants, rebates and extending the reduction of the foreign worker levy to domestic maids, either as part of this exercise or in the forthcoming FY99/2000 Budget.

CDCs and VWOs have also been hit by a double whammy. Their sources of funds, corporate and individual, are slowly drying up. Meanwhile, the demand for their services remains unchanged or even rising in some instances. This is especially the case for those serving the economically disadvantaged. I would urge the Government to consider extending additional financial assistance to VWOs and CDCs as a short term measure. One formula could be to increase the matching grant from Government, although this may not go far enough where even the basic seed money is hard to come by in the first instance. An alternative could be for the Government to set aside a fixed sum explicitly for this purpose. VWOs can then apply for additional grants and these can be assessed on the merits of each case.

Sir, I conclude by thanking the Minister and his team for a very comprehensive Report and I think this will now be tested in the implementation and its speed of execution.

Dr Ker Sin Tze (Aljunied): (In Mandarin): Mr Speaker, Sir, when the Committee on Singapore's Competitiveness (CSC) was established in May 1997, its original terms of reference was to map out a plan to enhance the competitiveness of Singapore in the face of intensifying competition from the neighbouring countries as well as the developed countries over the next 10 years. However, in July 1997, the regional economy began to deteriorate. Short-term measures to restore our competitiveness became most urgently required. As a result, when the CSC presented its Report, a major portion was devoted to solutions to resolve the imminent economic crisis, such as the reduction of wage cost by 15%, reduction in foreign worker levy, lowering of JTC/HDB rentals, electricity tariffs, telecommunications cost, port charges and vehicle taxes, etc. Property tax rebates and stamp duty exemption are to be continued. All these measures are very timely and worthy of our support. But the Report seems to overlook the two following areas: (1) the predicament of shopowners and stallholders in the HDB estates, and (2) the competitiveness of our retail industry.

Let me deal with the first issue. The Report recommends a 15% reduction in the total wage cost. To big companies with many employees, this is an alleviation of their burden that may help to restore their competitiveness. But to the retail shops and small-time stallholders who employ just a very few employees, many of whom are their own family members, these cuts in employers' CPF contribution and bonuses will not significantly reduce their operational cost.

Business is bad for these shop-owners and stallholders because of the economic downturn, and they cannot make ends meet. Then, when these wage-cut measures are fully implemented, the spending power of the general public will also shrink. This will affect their business even more. On the other hand, they have to pay for their overheads and service their loans. With less income, they will find it difficult even to survive. Not too long ago, a stallholder who could not service his loan was slapped with hefty interests by the finance company, and he was even taken to court. This is a glaring example. Therefore, helping these shop-owners and stall-holders by reviewing their cost to tide over these difficult times at the moment is of utmost importance. These small-time neighbourhood traders are mostly operating in the HDB estates. Many of them were encouraged by the Government's "Shop For Everyone" scheme to purchase their existing shops and stalls. The majority of them took loans from banks or finance companies to finance their purchases of these shops or stalls. Now, because of poor business, they are having problems with their cash-flows. They cannot keep up with the instalment payments or service their loans. As an adviser to the Federation of Merchants' Association, I would appeal to the Government to advise the banks and finance companies to reschedule the instalment plans by extending their repayment periods. This will help to lighten the burden of these people. The Housing and Development Board should also consider lowering the rentals so as to help these people to tide over their difficulties.

The second issue is how to restore the competitiveness of our retail industry. The retail industry has been in the doldrums for quite a long time. With further deterioration of the regional economy, the retail industry has a very grim future. Thailand and Malaysia have devalued their currencies by huge margins. So to the tourists, it is better and cheaper to shop there. In comparison, Singapore's retail industry is finding it more and more difficult to attract tourists to come and shop here. This will affect our tourism industry directly. Since tourism is one of the main pillars of the service industry, which is one of the main items of concern in the CSC Report, how to help our retail industry and tourist industry reduce their business cost is therefore another important issue.

To many departmental stores and supermarkets which employ large numbers of people, a cut of 15% of CPF and wage costs together will effectively cut down their operational costs. But to the small shopkeepers in the shopping complexes, the effect will not be very significant. Another recommendation of the CSC is that the Government should continue to grant the 55% property tax rebates. With its implementation, only owners of shopping centres and complexes will benefit. Some of them may pass on the savings to their tenants by reducing the rentals. But, the vast majority of property owners do not lower their rentals because they themselves are also facing financial problems. Another way to further help the owners of shopping centres is to adjust downwards the net annual value of the commercial properties. In recent years, because of bad times, the pressure to lower the shop rental is always there. But because the net annual value has not been lowered, they continue to pay very high property tax. So it is very difficult for them to lower their rental. I hope that the authority concerned will review the net annual value of all the commercial and industrial properties soon. If the property owners can have their burden alleviated, they will be in a position to lower their rental, and the tenants will also enjoy the benefit of some cost-cutting. In this way, they will be able to sell their goods or provide their services at cheaper prices, and hence enhance their competitiveness.

Sir, I support the motion in the name of the Minister for Trade and Industry.

Mr Jeyaretnam: Mr Speaker, Sir, a great many of those who have spoken, particularly coming from the Government ranks, the PAP MPs, have all expressed immediately their support and enthusiasm for the Report of the Committee. The two Opposition Members who spoke yesterday were less enthusiastic. I must say that, speaking for myself and for the Party, we do not share the enthusiasm that has been shown for the Report of the Committee.

We find this Report disappointing and discriminatory. Why do we say disappointing? There are several factors which prompt us to say that the Report is totally disappointing. One is the timing of this Report. As the Report mentions, the Prime Minister would appear to have announced his intention to appoint a committee way back in November 1996. Then it took him about six months to convene a Committee on Competitiveness in Singapore. That was in May 1997. And we have a Report from this Committee 17 months later - I understand the Deputy Prime Minister will be announcing the measures the Government will implement - but we have yet to hear what measures the Government will accept and implement. I should have thought, Mr Speaker, Sir, that these measures would have been announced before this debate, so that the Members in this House could then pronounce their views on the measures taken by the Government. That is what I thought was going to happen. But clearly that was not the intention. As the Party's Member for Hougang said in his speech yesterday, this recession was foreseen. I was talking to a bank official some days ago and he said that the danger signals were seen as early as 1996. He said it was quite evident to them that Singapore was going into a recession. And yet no measures were taken then to avert the crisis. The Government prides itself - and we have heard this so many times - that it does not wait for any crisis or problem to arise, it nips it in the bud. But, in this particular case, it does not appear to have shown the same enthusiasm as it has - of course, when it comes to political action.

This lack of prompt action was mentioned by the Member for Hougang, as I said, yesterday and we heard from a PAP Member - or was it a Nominated Member - who did not seem to answer our point at all. He talked about chickens and the eggs. Again, as the Member for Hougang pointed out, we had conflicting statements from the Ministers about the crisis. I remember, when I was proposing a number of measures, as far back as February or the beginning of this year, the Minister for Finance and the others were saying that Singapore had not been badly affected and we would take the necessary measures when the crisis hit us. That is unlike, as I said, what the Government has done when it came to taking mainly political action. And, again, it was in February of this year on my motion for the Ministers to give up 25% of their salaries to show their identification with the people, when I said there were already indications that pay cuts were taking place. The Deputy Prime Minister, in his reply, which was quoted by the Member for Hougang, said that Singapore was still competitive. There was no problem about Singapore's competitiveness. And yet eight months later, we are told that Singapore is not competitive and we have got to take the measures. So were Ministers really not aware of what was happening in Singapore? Have they lost touch with the conditions prevailing in Singapore? Or were they just beaming with their own over-confidence? We heard the Deputy Prime Minister say in that speech how wonderful the Ministers had managed Singapore's economy and their efforts had been lauded by people outside.

So our first point of dissatisfaction is the timing and the delay that has occurred in announcing the measures that would be taken.

Secondly, as has been mentioned outside this House, the measures and the Report itself are not bold enough. There is nothing innovative. There is nothing radical about any of the measure. And may I say that it is more or less a repetition of what the Committee in 1985 or 1986 submitted, perhaps dressed up a bit more to meet the present situation. I wonder why that is so. One senses, reading the Report, that there was a concern in the Committee not to tread on government toes and try to be as placatory as possible to the Government in making their recommendations. Is that because we had two Cabinet Ministers sitting on top of the Members of the Committee listening to the deliberations and commenting on anything they had to say? Not only did we have two Cabinet Ministers, we had another Minister. Could the Committee not have been left entirely to the private sector, people who we say are experts in the field, instead of having a political control over it? This, again, is one of the facts of life in Singapore, as has been mentioned, that everything in Singapore has to have a political master overseeing whatever is being done, even when it comes to playing football. Is it not time that we trusted the private sector to do its own work without overseeing how they do it and what recommendations they will put up? So that is another point of our dissatisfaction - that it is not bold enough, nothing innovative.

There is an assumption that our fundamentals are strong. This, of course, is what the Ministers have been saying - our fundamentals are strong, so there is nothing for us to worry. But are they? Is there any attempt made to question whether we have got the correct fundamentals for our economy? The Report suggests that perhaps we do not have the fundamentals, but they do not go far enough to point out what exactly is strong and what should be done about it. Mr Chiam referred to paragraph 29 of the Report, the Executive Summary, and I do not propose to read it. But the Committee stresses the need for Singapore to be an open cosmopolitan society and for the need for a critical mass of Singaporeans who are risk-taking entrepreneurs. They say about the need for Singapore to be an open cosmopolitan society. This is what we in the Workers' Party have been saying for many years that Singapore needs to be an open society. It is good for business. It is good for the economy of the country and it is good for our people. But are we an open society? The Committee does not appear to answer that question. They should have, and they should have suggested what was wrong with the society at the moment today. Do we have a critical mass of Singaporeans who are risk-taking entrepreneurs?

Mr Speaker, Sir, if you want Singaporeans to be critical, it must follow quite clearly that you have got to encourage them to ask questions. They should be encouraged to enquire into what is happening in Singapore and get the answers to those questions. That is not happening in Singapore simply because we are not an open society. We take the attitude that the affairs of the country do not concern the people. It is only the concern of the Government and we should just trust them and they would deliver the goods. Some goods they have delivered. So clearly, we do not have an open society.

Secondly, they talk about human intellectual capital being the key to competitiveness. It is in page 81 of the Report, paragraph 3.a., Mr Speaker, Sir. They say that human intellectual capital is the key competitive edge and they propose reviewing the education curriculum, examination and the school ranking systems to help foster creative thinking and an entrepreneurial spirit among the young. They continue with this question of the education in Singapore in page 86 of the Report, paragraph 11, where they say "The content of the education curriculum should help to prepare the young for the workplace of the 21st century."

We, in the Workers' Party, - and I have to repeat this because I would suggest to the Ministers that they should read the Workers' Party's manifesto - have been urging a complete review of the education system in Singapore today. This was way back in 1988. I am glad to see that the Committee thinks that there should be a review. And further on, they talk about the content being reviewed and not teaching our children to be parrot-like and regurgitate what they have been told. We have to start, if you really mean to be economically progressive, with our young people who are going to take over and the spirit of enquiry must be started there. Do we have it? The answer is clearly no. The Committee has admitted that it should not be regurgitating what they have just been told.

Moving on to the university level, do we encourage and actively urge an inquiring spirit among the university students? Or do we sit on them and confine their learning to just the subjects for which they have come to university to get their degree? So we do not have those fundamentals. There is also the cost of education. I see that in page 91, paragraph 35.b., in commenting on the need for foreign talent, the Committee recommends that the Government reduce the cost of children's education in Singapore by ensuring an adequate supply of land for international schools. Here, of course, they are talking about the children of the foreigners working in Singapore. But what about reducing the costs for our own children, something which we, in the Workers' Party, have been urging? It is a burden for families who are not earning enough to provide proper education. It is a burden for them to provide a proper education that their children need and the schools, which the curriculum and the content are not doing. So would the Government consider this? I will, at the end of my speech, put forward the Workers' Party's proposals and I will have something to say then.

Another point of dissatisfaction is that there is really no evaluation of what went wrong in Singapore. We of course know that it was precipitated and perhaps aggravated by the regional crisis. But was there nothing wrong with the way that we were conducting or managing our economy? There was no attempt to examine in this Committee's Report the role of the GLCs and their management. We know that over the last few years, the GLCs have lost a lot of money that belongs to us, the taxpayers. And, yet, there has been no proper examination on accountability. The GLCs have not been made accountable to this House on the decisions that they have taken and why they have lost monies. And we are talking about public monies, not their own monies.

So should we not rethink about the role of GLCs? And I have also heard that the GLCs, because of the fact that they are Government-linked, enjoy an unfair advantage. Should we continue with that? Are we providing an even field for the conduct of businesses in Singapore? Or are we giving an unfair advantage to the Government companies? But, more importantly, what is needed in Singapore more than anything else is openness and accountability and we are not getting that from the GLCs. If you go to the Registry of Companies to seek information, you are told, "Well, this is not public. You cannot look at it. If you tell us what good reasons you have we can perhaps consider it." The activities of the GLCs in their various businesses should be made public as much as possible and not kept a secret. Again, there is nothing about the Government policies that might have contributed to the recession. Why is no attempt made to examine whether the Government in its policies may have perhaps contributed to the recession?

I mentioned, Mr Speaker, Sir, that this recession was foreseen way back in 1996 by people outside. The Government not only did not take any attempt to correct anything that was wrong, but it would appear that they were more interested in winning the elections that were going to come on over the next one year or after that. So, we heard a lot about the asset enhancement programme of the Government. That was their bonanza for the voters to vote in the PAP Members into Parliament so that the PAP would continue in power. And along with that, as part of the programme, there was the liberalisation for purchases of properties, particularly, HDB. What was the result of all that? It boosted prices, making land cost becoming more and more difficult for the companies and those who are doing businesses in Singapore. It boosted the rentals. Yet no attempt was made in this Report to point to that and, as I said, is it because we had Ministers sitting on the Committee.

But I was glad to see, Mr Speaker, Sir, that after the Report was released, the manufacturing sub-committee in a press conference was a little bolder. This sub-committee said that they would like to see the Government contribute more than 30% of the package and they would like to see the Government use up the surpluses from the statutory boards to help overcome the recession. Maybe without the Ministers sitting next to them, they were bold enough to come up with those statements. Finally, another disappointing aspect of the Report is that there is not enough data, not enough information given in this Report on how they have arrived at their conclusions and recommendations. Mr Speaker, Sir, in an attempt to try and understand their recommendations and to make some suggestions here, I wrote to the Ministry of Finance and the Ministry of Manpower to ask for certain information. Did I get it? Not a word, I have not heard from them.

Is this the open society that we are proclaiming ourselves to be? But what I am saying is that this Report does not contain the information and data on which they base their conclusions in making recommendations, particularly on the cost-cutting measures. There is the suggestion that there should be some cut in the utilities rates, electricity and telecommunications. They have not tried to answer the question or have they sought an answer to the question why in spite of fuel prices falling, electricity tariffs have not gone down. At one time, the reason given was that the Singapore dollar was weak and that offset the falling prices. But now, as I understand it, the Singapore dollar has strengthened against the US dollar.

Mr Speaker: Order. Your time is up, Mr Jeyaretnam. Your 30 minutes is up. Could you return to your seat?

Mr Jeyaretnam: May I just beg your permission to suggest the Party's proposals? Just give me three minutes.

Mr Speaker: I am sorry. You are allowed only 30 minutes like everybody else. Please return to your seat.

Mr Jeyaretnam: But I would beg you, Sir, because I have got the Party's proposals for this House to consider.

Mr Speaker: You should have made it within your 30 minutes. Could you return to your seat?

Mr Jeyaretnam: As it pleases you. But I am begging you to give me a little bit of time to put the Party's proposals.

Mr Speaker: There is no need for you to beg. 30 minutes is 30 minutes.

Mr Jeyaretnam: I am begging you, and I would ask the House to allow me to put the Party's proposals.

Mr Speaker: Could you return to your seat, Mr Jeyaretnam?

Mr Jeyaretnam: All right.

Mr Lim Swee Say (Tanjong Pagar): Mr Speaker, Sir, thank you for this opportunity to participate in this debate. I support the motion standing in the name of the Minister for Trade and Industry.

Firstly, I would like to touch on the point on what this CSC Report is all about. Put in a very simple language, imagine two persons walking in a jungle and all of a sudden, they heard that the tiger is coming up on them. One of them bent down to tighten his shoelace. The other person says, "What are you trying to do?" He says, "Obvious. I am getting ready to run." This other person says, "You must be crazy. You think you can outrun the tiger?" The guy says, "No, I do not think so. But all I need to do is to outrun you."

Mr Speaker, Sir, the point here is that we live in a world of jungle. Competition is everywhere and in this jungle, there are many tigers - the tiger of recession, the tiger of unemployment, and the tiger of retrenchment, and so on. Basically, what the CSC Report is all about is to get Singapore running faster than our competitors so that we do not have to be beaten up by these tigers around us. But it is not easy to start running because it is painful and stressful. Some would say, "Why run? I do not see any tiger, I do not see unemployment in Singapore." Then some will say, "Before we start running, we need to start fighting among ourselves first. Let us go for political reform so that we will all loosen up and could run even faster."

It is obvious that all these suggestions are not constructive. Some would even ask, "Before we start running, we should ask ourselves how come we end up in the jungle. I think the Government is wrong because they should not have led us into the jungle." Worse still, they say, "This Government, how come they did not have the foresight to tell us in advance that there are tigers in the jungle."

Let us put it this way. This is the worst crisis that this world has seen in the last 50 years. The world economic experts, up to today, no one dares to say that they could foresee the arrival of this recession. When the NCMP mentioned that a private banker told him in 1996 that he saw exactly what was coming, I was shocked. Perhaps the banker should come to the open to explain to the world how did he in 1996 foresee the regional crisis was coming and that Singapore was heading for recession in 1998. Because that could win him a Nobel Prize. Some would say that, "If we have to run, why not you run first because I am not convinced that we have to run." For example, if the Ministers do not take a pay cut, how can you expect us to take a pay cut? Again, we forget that the Ministers have been leading by example all these years. We forget that in 1997 when all of us were enjoying pay increase, the Ministers took a pay cut of 2.5%. We forget that in the first half of 1998, when the situation was still all right, when we were talking about wage restraint, when workers were getting 2% to 4% of wage increase, the Ministers took the lead for a wage freeze.

Sir, none of us in the labour movement has stood up to urge the political leaders to take pay cut first because we have full faith and trust in this Government. We know that the Ministers would take the lead in taking a bigger pay cut, not because the opposition MPs have asked for it nor the labour movement has pressed for it but because our leaders know what to do. They always believe in doing the right things and we know they will never disappoint us. Therefore, there is no need for anyone of us to come up to claim credit should the Ministers decide to take a deeper pay cut because the recognition should be given to the Ministers for their leadership by example.

On the point that Ministers have not been doing their job in looking ahead into the future, as a result, we have to take a wage cut today. The message seems to imply that the Government has not been doing the job well. Speaking as a member of the labour movement, we do not think so. Just think about it. Singapore's economy is one of the most open in the world. About 70% of our demand here is externally driven. By right, at a time like this, the Singapore economy should be worst hit than many other economies because we are so externally driven. And yet look at what has happened in Hong Kong -5% GDP (contraction), Malaysia, -5%; Korea, -6%; Thailand, -8%; and Indonesia, -13%. What about Singapore? This year, we are still talking about 0.5% to 1% growth. The reason why Singapore is able to be in such a good position today relative to all the other economies is because our Government has been able to look ahead and make sure good governance and public policies are always in place. As a result, our workers today do not have to suffer the kind of pain that many of our fellow workers in other countries and economies are suffering today.

Therefore, as far as the labour movement is concerned, we believe that there is nothing fundamentally wrong in Singapore. There is nothing fundamentally wrong with our workers, companies or the Government. Let us accept that we want to run because we want to run faster than all other competitors so that we will be able to return to full employment in the nearest future and all our workers who are able and willing to work can continue to enjoy good employment.

Having said that, I want to emphasise the point that the CSC Report is not just about cost-cutting. In the last few weeks, if you had listened to radio talkshows, it is not surprising that quite a number of the callers who called up the radio talkshows referred to the CSC as the "Cost Committee". In fact, CSC is being referred by many people as a "Cost Committee". It is not. The CSC is not a Cost Committee. It is a Committee on Competitiveness. The key word is "competitiveness". The CSC is not about making Singapore cheaper all the time. It is about making Singapore better all the time. Mr Jeyaretnam said that this Report is not bold enough. He says that we need to have more social reforms. Yesterday, Mr Chiam See Tong said that we should have political reform. The CSC is not about political or social reform, but about economic reform. Here we are talking about moving towards a knowledge economy. For anybody who knows something about economic development, he will recognise the boldness contained in this Report. In fact, many countries are amazed that Singapore is able to look 5 to 10 years ahead even at a time of economic downturn and aim to come up stronger and more competitive. In that regard, as Singaporeans, we can all be proud of this bold vision in the CSC report.

But having said that CSC is a bold report on economic reform, I would like to highlight that we must be aware that we must not pursue economic competitiveness as an end in itself. It is important that as we pursue economic competitiveness, we do not achieve it at the expense of social cohesion. If I may relate another story. A group of people come together to build a housing estate and the leader told them, "Let us make this the best housing estate we have ever built. Give it our very best and make it an estate we can all be proud of." The workers were excited and everyone started to work. But along the way, a small group of people in the team decided that things were going too nicely and they should have some excitement. So they went around talking to the workers. They asked, "Why do you work so hard? We can build this to be the best housing estate. At the end of the day, it will fetch higher prices and the people who move in would enjoy a beautiful home. But what will happen to us? We will just move on to build another housing estate." Over time, the workers lost heart. The carpenter started to take it easy on the carpentry work. The one who laid the tiles took it easy and as a result, workmanship became very shoddy. By the time the housing estate was completed, the workers packed up and were ready to move on to the next housing estate project. The leader came with a bunch of keys in his hands. He asked the workers to line up and he gave each and everyone a key. The workers asked, "Boss, what is this all about?" The leader said, "Remember, when we first started this project, I urged you to give your very best to build the best housing estate that we have ever built. Why? Because this is going to be our home and everyone of you would be given a unit for free." It came as a shock to the workers. How they wished they had put in their very best in building this housing estate. Now, they have to live with whatever mistakes or lousy workmanship that they have put in.

This is exactly the point here. We are talking about building Singapore as our home. When we talk about economic development and social cohesion, we must always remember that we are not building this home for anybody else. We are building this home for ourselves and our children. Therefore, it is with great disappointment, speaking as a Member of this House, to see some Members here adopting a partisan approach in debating this motion. This CSC Report is not a PAP report. It is a report formulated by Singaporeans and friends of Singapore. There are many foreigners who are not Singaporeans but they share the commitment and contributed their ideas and efforts. Why? Because as friends of Singapore, they want to see Singapore well. Many people work together very hard to come out with this Report. And to see a Member coming to this House to talk about PAP Government versus Workers' Party and so on, I think it is with great sadness that I have to hear what he has said.

Sir, as Singaporeans, let us be aware that it is important for us to work together to sustain our economic competitiveness. But equally, if not more important, is that as we implement the recommendations of this Report, let us not weaken social cohesion. Therefore, as a Labour MP, I call on the employers to stop calling for more cuts, because a 15% cut in business costs is already a significant achievement that Singapore can achieve. Ask a businessman, in all the other countries, are they able to secure the support of Government of the labour movement to go for a 15% cut? Are they able to secure the to lower business costs by 15%? So be thankful for what we are able to achieve as a nation. Let us move on. As employers, do not ask whether 15% cut is enough, but rather ask yourself what more can we do so that we can be more productive, we can be more competitive.

As it is today, there is already some sign of social tension between the local workers and the foreign workers, between young Singaporeans and older Singaporeans. There is even talk that maybe we should defer the extension of retirement age, so that the older Singaporeans can retire next year, instead of working beyond 60 so that their jobs can be taken by young Singaporeans. There is also talk about stopping foreign workers from coming so that the retrenched Singaporean workers can fill these jobs.

Sir, if we allow these issues to be taken out of context, we are going to end up worse off all round, because two years from now, three years from now, yes, we may be able to regain our cost competitiveness, but in terms of social cohesion, we may have created the social tension that will take a long time for us to mend.

Sir, the issue now must be to recognise that we are in a much better position than anybody else, but we do not wait for things to turn worse before we take action. There are enough opportunities for everyone. What is more important at a time like this is for us to work together, be consistent, send a clear message to all Singaporeans that there is no painless solution today. The severity of the crisis is that it is not possible now to look for painless solutions. So employers, give up the idea of a painless solution. No way can we cut wages by 30%, CPF by 25%. No way. Just accept it and let us put our minds together and move on.

Likewise, our workers, do not pretend that life can go on as usual. As we move towards a knowledge economy, we must upgrade our skills. Likewise from the angle of the national economy, all Government agencies have to speed up their effort to reposition the economy. Basically, we are down to these three points: skill redevelopment for the workers, business re-engineering for the business enterprises and re-positioning of the economy towards a knowledge economy. If we can do that, then I think all of us can work together to create a better future, one that all Singaporeans can be proud of in the 21st century.

Mr Chew Heng Ching (East Coast): Mr Speaker, Sir, I rise to support the Report of the Committee on Singapore's Competitiveness. The strategies and policies proposed are timely and much needed as we can now capitalise on our strengths, review our weaknesses so as to ride out the economic storm and emerge leaner, stronger and better positioned to engage the global economy on a higher platform.

Sir, it has been argued that the proposed reductions in our costs may not go far enough to offset the impact of currency realignments that have taken place since the onset of the economic crisis. Between June 1997 and November this year, the Singapore Dollar has depreciated by about 15%. This compares with a devaluation of 72% of the Indonesian Rupiah, 36% of the Thai Baht and 35% of the Malaysian Ringgit.

It is worthwhile to note that Singapore does not need to close this currency gap completely to remain competitive. We have superior qualitative advantages and strengths that far outweigh the absolute cost differences with our competitors. Indeed, we have just been ranked No. 1 Business City in Asia by Fortune magazine, above Taiwan and Hong Kong and have received consistent top ranking by PERC (Political Economic Risk Consultancy).

Hence, in this mammoth exercise to review our competitiveness, we should not only focus on the quantitative aspects. We should also take steps to remind ourselves and reinforce the qualitative aspects that contribute to Singapore's competitiveness. These aspects include the benefits of a stable political environment, non-corrupt government, a positive business climate, excellent infrastructure, highly educated and skilled workforce, conducive industrial relations, racial and religious harmony and social cohesion. This year, we have been confronted with the images of rioting, mass rapes, destruction of property, with a disturbing racially motivated slant to violence amongst our neighbours. Sunday's religious clashes in Jakarta serve as a grim reminder. These are some of the results of endemic corruption which have accentuated inequality and poverty, and precipitated the social and political instability that is plaguing many countries now. The results are a loss of life and the destruction to property, elimination of decades of economic growth and wealth creation.

I see it therefore necessary that in this exercise, we should remind ourselves of the need for political stability, non-corrupt government, racial and religious harmony and social cohesion. We cannot afford to be complacent. Indeed, a pre-requisite to our economic achievements in the future must be the need to strengthen these institutions institutions that are fundamental to these intangible qualities in our effort to make Singapore more competitive and attractive to investors. These include, amongst others, our transparent and efficient legal and political system, a pro-business environment led by Government agencies like the EDB, and our meritocracy, compared with corruption, cronyism and nepotism which characterise some of our competitors.

The development and evolution of intermediate civil institutions like the Community Development Councils (CDCs) and more public forum such as the Singapore 21 Committee and other feedback mechanisms would also serve to forge unity, nationhood and consensus. This process of consensus and consultation must continue to be a fundamental part of our strategy and policy for the next millennium.

Sir, unique to our success is the close cooperation between our unions, the employers and the Government which is a remarkable competitive strength and advantage. In the next millennium, we must strive to further strengthen this tripartite relationship which has presented Singapore as a stable, pragmatic country with an efficient workforce to attract global MNCs and investors.

Sir, I would like to touch on some of the qualitative competitive aspects of our workforce. We have mainly been looking at costs and skills, which I consider to be hardware items. Critical to a competitive workforce are the software items as well. We should take the opportunity in this downturn to address the work attitude of Singaporeans which is critical for us to succeed in the future.

It is high time that we considered reducing our dependence on foreign labour, as in reality not all Singaporeans will be able to climb the skill ladder. Some foreign workers, particularly unskilled ones, contribute to numerous social problems. It is therefore in our interest to encourage more and more Singaporeans to undertake jobs that are shunned by the majority of Singaporeans, as being "low-class" jobs. Jobs like maids, conservancy cleaners, construction workers, etc. We must change the work attitude of Singaporeans to take on these jobs as we have to cater to those workers in the 40-60 age group who simply cannot be upgraded as they have less than basic education.

There are other aspects in our workforce which can be improved. Singaporeans have to be nurtured to be more tolerant of failure and be less risk averse. The ability to accept failure and take risks is critical in forming our attitudes in society towards the perception of jobs and towards alternative careers.

Sir, we should shift from a more materialistic evaluation of work to a standard where the pursuit of unconventional careers, new business, or even what is perceived to be a less than desirable job choice, becomes acceptable and even commendable in our society. We should focus not just only on earning a good income but on the right job match and an improvement in the overall quality of life. The Singaporean worker has to change his attitude from being a functionary in the system for a fixed salary, to one that genuinely takes an interest and pride in the work he produces.

This has an important bearing on labour productivity and will enable the Singapore worker to gain a significant competitive edge, which wage cuts and skills upgrading alone cannot address completely. We need to emphasise this qualitative aspect that is fundamental to our competitiveness as well. And it is for this reason that I strongly support the call for employees to be treated as stakeholders of companies and for the employee share option scheme to be liberalised to encourage more Singaporeans to be shareholders of the companies in which they work.

Sir, I would like to caution that in our haste to cut costs, we have to also consider adequate compensating factors to offset the corresponding declines in disposable income. This is to avoid a self-fulfilling deepening of the economic downturn as consumption shrinks, affecting our domestic economic activities and asset values, as families adjust to wage cuts.

The perils of deflation are quite evident in the Japanese economy, for instance, where the government has had to embark on radical steps to stimulate consumption after a prolonged stagnation, as even negative real interest rates failed to generate demand.

I therefore urge the Government, as we implement the cost cutting exercise, to consider and implement corresponding measures that may prevent a severe recession that would result if consumption falls. We should have adequate additional, either on-budget or off-budget, measures to boost confidence and to avoid by default a deflationary spiral in asset values and domestic business activities, as Singaporeans in the next few months tighten their belts whether out of sheer need or kiasuness. The savings that the Government has from a reduction in the wage bill for the public sector should be passed on to generate economic activities and to boost domestic demand. As our workers accept the bold step of wage cuts, the Government could equally be bold in cutting costs to the individuals as well, such as lower transportation costs, lower petrol taxes, higher income tax rebates, amongst others.

Similarly, in line with the call by the Feedback Unit, I would like to urge that private sector companies, corporations and employers pass whatever savings they have arising from wage cuts to consumers by way of lower prices of their goods and services. Here, I would like to commend the big local financial institutions in taking the lead by rescheduling mortgage loans and lowering interest costs and the NTUC Fairprice by lowering prices of essential food items. More corporate bodies should follow the example. This is necessary so that the real impact of wage cuts can be mitigated, and we can move down to a more cost competitive economic structure without necessitating a real decline in disposable income and threatening a deflationary spiral.

Sir, this Report has given us directions to remain competitive, or to be more competitive in the next millennium. But we must not be complacent. It does not mean that it will get us out of the current recession immediately. There are still too many variables outside our control. Prospects for next year remain uncertain. I would like to paint an extremely gloomy but still probable scenario, and that is the devaluation of the Chinese renminbi coupled by failures to revive the Japanese economy and a recession in Latin America and its consequential impact on Europe and the United States. The Chinese economy is undergoing severe stresses since the onset of the economic crisis. Indeed, the Chinese have undershot their growth target of 8% for the first nine months of this year, and even the 7.2% GDP growth figure is estimated to be an overstatement of the real economy which is plagued by weak financial institutions and huge excess capacity.

The financial crisis that is now destabilising Japan and Latin America may knock on the doors of Europe and the United States, plunge the world economy into a severe recession, precipitated by a devaluation of the Chinese renminbi next year. In this scenario, Sir, it would appear that the direct cost cuts recommended by the CSC may not be enough to offset the adverse effects of another round of currency devaluations by our competitors. Overnight, the proposed 15% cost cuts may be lost in the midst of such a scenario, further dragging down our economy. If such a scenario occurs, we may have to further review and cut our costs.

Sir, I do not mean to be unduly pessimistic or gloomy. The scenario I have just painted appears a likely one, as recent as two to three months ago. But events that have occurred recently have changed the scenario a bit and the outlook today looks less pessimistic. It is still not optimistic. But we should not be complacent. We should continue to prepare for the worst and hope for the best.

Finally, Sir, not every country can have the foresight and the cohesiveness to be able to implement a comprehensive cost cutting programme that involves $10 billion in savings to businesses with the majority of 70% coming from wage-related costs. I am proud that we are going forward in biting the bullet upfront, so as to secure our long term economic interests. Singaporeans have shown that they have the unity and the pragmatism in banding together in the past to ride out storms in the global economy. I have confidence that Singaporeans will have this unity and the pragmatism today to overcome this storm. We have to continue to reinforce our qualitative competitive strengths and distinguish ourselves with our honesty, integrity, stability, unity and resolve, whilst upgrading our efficiency and managing costs. I am confident that with this ambitious plan at hand, we can emerge leaner, stronger and more cohesive as a workforce, as a people and as a nation to face the challenges in the next millennium.

Mr Chuang Shaw Peng (Nominated Member): Mr Speaker, Sir, at first glance, the CSC Report in the form of a press release appears to repeat what has been reported in the mass media in the past few months. One tends to be disappointed and believes that nothing substantial was forthcoming to save a recessionary economy and the jobs. However, I must confess, after going through 186 pages of the Report, I was quite impressed by the work of the Committee. The CSC Report is comprehensive, bold, in-depth and professionally written. It has addressed most of the key issues concerning our economy at present and how competitiveness can be enhanced in the future.

Its completeness leaves me with only a few areas to criticise, particularly many of the requests made by myself and numerous Members of this House have already appeared in this Report. To name a few, many Members have asked for cuts in wages, rents, petrol tax, promotion of venture capital, investment in human capital, more training for workers, etc. In general, I find it hard to fault the contents, except for the following comments.

First, the CSC Report should have been split into two parts. Part I on cost cutting could have been completed and announced earlier. I concur with several hon. Members of this House that the cost cutting should have been part of the off-Budget measures implemented in June this year. Like a morphine jab for a patient in great pain, earlier cost cutting would have helped the affected companies gain their competitiveness earlier and confidence in our economy would have been regained earlier.

However, Mr Speaker, Sir, I am not here to cry over spilled milk. What is more important is for the employers, workers and investors to recognise that our Government has the political will to exert its leadership and has once again performed the impossible to rally its people around them to make the economy competitive again. In other countries, the 15% CPF wage cut would have led to massive strikes and protests. Our Government has put forward a very convincing reason why cost cutting is very necessary for our economy to chug along, to save jobs and to prosper in the future. However, what is not clear in the Report is, and I share the same sentiments with many who spoke before me, how much of the $10 billion is borne by the Government. Mr Leong Horn Kee has mentioned earlier that with the 10% cut in CPF and 5% cut in wages, that would amount to $7 billion. It is expected that the money supply to the economy would dwindle substantially. Though the banks may help in increasing the money supply through extending more credit to the home buyers, the net effect can still be contractionary. Hence, I wonder if the Government's economists have worked out the appropriate amount to cut from the non-wage parts such as utilities rate, JTC/HDB rentals, etc. to offset the reduction in consumption power and avoid a further slump in domestic demand.

If it is not sufficient, the Government should introduce more expansionary policies to avoid a deflation. The September figures already showed large drops in retail and food consumption. This shows that the consumers could have started slowing down their consumption before the wage and CPF cut. This must have contributed to part of our negative growth in the last quarter. If there is no immediate positive stimulus in the pipeline, the market perception is still that in the short term businesses may not pick up much. I urge the Government to stimulate the economy more, even though some may have leakages and the effect of stimulation cannot be 100%, but as Members have pointed out earlier, the Government has plenty of reserves which I was made to understand are getting good return. My guess is that we should have an additional $3-$5 billion a year from the return on investment of reserves, if we can convince ourselves that for one or two years, our return on reserves can be lower, or even zero. Is there anything wrong with that? Any investment, be it private, mutual fund, hedge fund, can have some bad years. I suggest that we can use some of the profits on the investment to stimulate the economy and keep the principal untouched.

Next, let me go back to the non-wage cuts. The cuts in these areas will not make the Government the only loser because the cuts in CPF and bonus of the civil servants plus the much reduced tender prices of Government projects will have resulted in a lot of savings for the Government in the first place. I hereby urge the Government to be more aggressive in cutting utilities rates, MRT rates, rentals, etc. After all, the corresponding rates of return from Singapore Power, MRTC, JTC and HDB factories depend very much on how much the fixed assets were valued. Just to give an example. Singapore Power could have inherited high land cost because its incorporation took place at the height of the property boom. Like private companeis that have to make provision for losses due to a drop in land values, entities such as Singapore Power should be allowed to write down its land value so that even after it cuts its utilities rates, the return on investment would not be substantially affected. This is a logical step for our utilities company to benchmark against those in the region whose competitiveness has been enhanced by the drop in currency and land values.

For the time being, to the employers, the 15% cut in business cost as suggested by the CSC come as a great relief. Before this, many were wondering how their firms will survive with our high cost structure. This matter has been brought up in this Chamber by many Members of this House throughout the year. Many firms depend on domestic demand, which is one-third of our total demand. Many of those who export also depend to some extent on domestic demand as a base business. If the CSC's recommendations result in a reduction in domestic demand or diminishing capabilities of the local firms, I can say that the net result may not be desirable.

The NTUC, after convincing the workers to be prepared for the CPF and wage cut, has called on employers to increase revenue. But, with the economies in the region in a slump, this is not an easy task for most employers. At this juncture, we should perhaps re-examine our Government procurement system to see whether the local companies are given fair opportunities to conduct business. Particularly, in the area of construction, which is one of the few areas that Government can pump-prime, the rules do not necessarily create a level playing field for the local and foreign firms to participate. Mr Speaker, Sir, I hereby declare my interest in a construction company. To draw a pictorial description of our tender system, I would like to describe our Government procurement system as a convex, tinted, one-way mirror. A local firm standing in front of the mirror will find itself smaller, darker than the real one. A foreign firm standing behind can see through the system to gauge the size of our companies and take full advantage of such transparency.

Mr Speaker, Sir, for years, foreign firms, particularly in construction, have been dumping their products and services here. They have been practising marginal pricing, transferring costs to generate revenue to stimulate their own economy and reducing their fixed overheads. The local firms are just like a lightweight boxer challenging a heavyweight boxer. They probably do not appear as solid and impressive as the heavyweight. But if the job requires only a lightweighter, why must we choose a heavyweighter? Or, can we hire a foreign trainer, I emphasise foreign, under our wing and build our fighters into a world-class heavyweight? There have been many examples where our tender system itself excludes our own firms. Some of the conditions ask for track records which could not be found previously in our republic. In the world of construction, many countries try hard to use their procurement power to build their own capability. But it did not seem so here.

Mr Speaker, Sir, I am not advocating protectionism. I am suggesting that the competition should be fair. Dumping should be strongly discouraged. Otherwise, the local firms will always face an uphill battle to acquire knowledge and to build capability. Without the projects, the local firms cannot have the chance to hire foreign talents to build up their knowledge and experience base. This is similar to building a national soccer team. If we import every player, including the captain from overseas, we do not really have a national team. This team can easily go away and we end up with no players at all. In other words, in economic terms, our economy has hollowed out. But if we have foreign talent to be part of our team, to be our sparring partners, then our players will eventually emerge to be as good as any foreign player. I think CSC should find a way to ensure that the playing field is level for everyone, and our supporters will cheer for our home team. The present situation whereby our own crowd cheers the foreign teams and boo the local team does not have the right spirit to build our competitiveness to become world class companies. I have so far cited examples in construction which I know very intimately, but the general public sentiment is that the same applies to other sectors. How are we going to build world class companies if we have no confidence in our own people? May I quote a famous Chinese proverb from the "Tactics of War: (Sun Zi Ping Fa) - Yi ren bu yong, yong ren bu yi [ ]. It means that we should not suspect the person we wish to engage and we do not engage those we suspect.

That leads me to the next recommendation on the building of world class companies. It is a natural and good thing to have GLCs to kick start the development of world class companies. This is partly because the Government knows the GLCs' capability and has trust in them. But such trust should not be extended in such a way that the GLC grows in an indiscriminate manner and becomes a monster. In the world of business, people talk about core competence to excel. The GLCs should stick to their core business and try not to encroach on areas which the local companies can do equally well. The financial clout of GLCs should be exploited to do those businesses such as launching satellites, telecommunications, airlines, large-scale engineering, etc, but not businesses such as restaurants, golf courses and real estate. Temasek Holdings, as the overall guardian, should examine and evaluate the business plan of GLCs carefully to ensure that they will not pose unfair competitive advantage over local firms. Let us be mindful that it is the world trend to stay away from being too diversified. There are many case studies on this. IT&T, the Korean chaebols, are vivid examples of what we should avoid in building our world class companies. On the other hand, Nokia, Ericsson are the good positive examples cited by CSC on how they succeed by finding a niche market in technology.

In my conversation with friends, colleagues and foreigners, one question that often pops out is the accountability of the management of GLCs. Will they be subject to the same level of scrutiny by the public and the investors as any other public company? I think if GLCs are to grow into world class companies, the management must be held accountable for the performance of the company. If they are good, they should be handsomely rewarded. If not, appropriate accountability should ensue.

The second aspect of building GLCs into world class companies, as recommended by the Report, is that it gives the reader the impression that GLCs are the only likely candidates. I beg to argue that GLCs should stick to their core business and let other SMEs be nurtured and built into world class companies in areas that GLCs have no obvious competence. There is no guarantee that GLCs would succeed. By letting some SMEs to grow is a logical way to diversify our economy to have more breadth and depth.

The CSC Report touches on the introduction of more incentives such as employees' stock option plan, tax reduction for foreigners who work in Singapore, etc. Yes, I support this market oriented approach in management. After all, one of the key measures of success is the amount of money one makes. ESOP, the employees' stock option plan, makes a lot of sense. But, Mr Speaker, Sir, I beg the Government to look beyond implementing just those few suggested measures. Singapore has always been quoted as a "fine" country. And that is to say, we have used more sticks than carrots. In the earlier development of our nation, perhaps it took more sticks than carrots to accelerate the climbing of the value-added ladder. Some of the sticks are increased rents; increased wages; and imposition of quotas and levies. But the world is quite different now, especially in the aftermath of Asia's economic crisis. The carrot method, such as ESOP, will perhaps work better. So far, similar policies, such as levy differential, construction quality score, PSB's grant for R&D, have worked out very well. They have achieved good results. Hence, I urge the Government to deploy more carrot methods to stimulate the growth of the economy. And I believe such incentive methods will let the Government get back more, in the form of taxes and other benefits, than what they give away as incentives.

Another area where the CSC Report is not clear is that as the business facilitator, how would Government act as the regulator and promoter at the same time? There is bound to be some conflict of interest. The CSC Report mentioned the receipt of feedback that the approval process remained opaque and hence suggested greater transparency and accountability within the civil service. Yes, this is very good. But, quite often, the system itself does not work out this way. I want to give an example, again, in the construction industry. When a project is delayed due to changes in design or client's requirement, the supervising officer may impose liquidated damages on the contractor to establish a bargaining power to negotiate for waiver of claim from the contractor. Clearly, this is a conflict of interest. The very person who causes the delay is given the discretionary power to mete out the penalty. So in order not to jeopardise his career, the tendency will be to take the easy way out. Outside the construction industry, I believe, similar examples exist. I hence suggest that in addition to the CSC's recommendations in the chapter on Government as business facilitator, closer attention should be paid to modify and improve the civil service structure so that their efficiency will be in line with the private sector and no wastages and losses will be passed on to the private sector unnecessarily.

May I now quote another example about conflict of interest. The Government and the construction industry have been trying to promote the upgrading of skills and engagement of skilled workers. So the levy differential policy was perceived and implemented. However, in the early stages of implementation, the industry has fed to the Government that the policy, which has stark results in promoting skills upgrading, also has side effects, such as giving a particular country, such as China, an unfair advantage on the cost. Most of the skilled workers who enjoy a low levy of $100 today come from China. But it is a known fact that Chinese workers are very difficult to control and only Chinese companies can control them through their home connections. Therefore, the policy actually opens the door wide open to the Chinese construction firms who now outbid everybody because of the low levies. In other words, the policy creates an uneven playing field. If the policy is not remedied through the diversification of sources of workers, the construction industry will hollow out. There will be no other but Chinese construction companies. Then, how will local firms compete and generate revenue to keep the workers, engineers, architects and foremen employed? How are we going to build capability?

Mr Speaker, Sir, to sum up, the CSC Report provides a great vision. It is, in fact, a dream for most nations. But can we get there in 10 years? You need a lot of change in mindset, politically and socially, to change from the current status to that vision in 10 years. Many of our people, our industries, our entrepreneurs, our civil servants are perhaps not ready for the goals envisaged by the CSC whose members constitute the most successful, forward-looking, dynamic individuals. The job now for the Government is to convert the wonderful ideas of CSC into reality. This is not an easy task. But if our Government is able to persuade our people to take pay cuts, I do not see why it cannot realise the vision.

Mr Speaker, Sir, I support the motion.

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

Sitting accordingly suspended at 3.10 pm until 3.35 pm. Sitting resumed at 3.35 pm