COMMITTEE ON SINGAPORE'S COMPETITIVENESS (Motion)

Debate resumed.

Mr Kenneth Chen Koon Lap (Hong Kah): Mr Speaker, Sir, I support the Minister's motion.

Recently, most international magazines have commented on the regional financial crisis. Nearly all of them have concluded that Singapore with its good governance, sound fundamentals and preparedness to take quick and decisive measures will be able to weather the storm and place herself in the best position to surge forward when the region recovers. I suggest that the MP for Hougang and the NCMP, Mr J. B. Jeyaretnam, read this report. Maybe then, they would not be taking cheap shots so freely at the Government and the Ministers for being not good enough to handle the recent financial crisis. What is comforting to know is that Singapore can indeed be considered the oasis of the region. Nevertheless, the fact remains that we have felt the full impact of the current crisis and that we have to take appropriate action to deal with the difficult times in front of us.

On hindsight, the two tasks of addressing the present economic crisis and the question of competitiveness in Singapore, the future Singapore, I feel that they should have been taken up separately. The task of addressing the current crisis should have been taken up earlier. Because, as early as the 1998 Budget was presented, it was obvious that the economic crisis would deteriorate very rapidly. And if we had taken these recommended measures earlier, it would bring much relief to many companies and businesses and perhaps even lessen the number of workers being retrenched.

I have no doubt that the recommendations by the CSC Report on the reduction of business costs, if followed, would definitely be effective, although the extent of the reduction cannot be fully ascertained as items such as reduction or rebate on Government taxes or charges have not been fully determined. Many Members have expressed that the Government should be more generous in this area, especially in the reduction of foreign worker levy. They should be more drastic than that being recommended and it should also be extended to foreign maids.

I would like to add that, in considering reducing PUB, telecommunications and transportation charges, the Government departments and statutory boards should discard this notion that they have to be revenue positive, especially some of these statutory boards should not be bogged down by the fact that they have been or are in the process of being privatised and therefore they have to be profit-orientated. It is crucial to change the mindset for at least this critical period and take a more long-term outlook. Many Members in this House fear that the reduction in business costs will invariably bring hardship to the employees, especially to the blue collar workers. Therefore, it is important for the Government to take appropriate action to ensure that the cost of living should be reduced simultaneously.

It is of utmost importance because it will help to cushion the reduction of wages and CPF. While the CSC recommended such costs to be reduced by 15%, in the private sector especially, this may not be possible. For in good times, the wage increase in the private sector normally goes beyond that of NWC recommendation and during this difficult time, in certain sectors, wages might have to go well below the NWC recommended level in order to avoid more severe retrenchments. And a reduction in the cost of living is the only way to lessen the pain created by the loss of income in the average Singaporean household.

We should also consider other charges like the town council's conservancy charges, transportation charges, and even education charges like school fees should be reduced. By the logic that all wages and other charges are reduced, these costs would definitely be lower and it should be passed on to the workers. However, even if we can achieve the objective of cutting business cost and lowering the cost of living, we will not be able to address the sharp economic slowdown completely. Our economy must be given a boost. I know that tampering with our national reserves is a very sensitive issue. Personally, I am most reluctant to suggest touching our reserves under any normal circumstances. Having said that, in a situation like now, it would be necessary for the Government to look into ways to make available a certain amount of our reserves to stimulate the economy. If one believes that one of the reasons for accumulating a healthy reserve is to prepare for a rainy day, now is the time that we need the umbrella very badly.

So it would be prudent for the Government to have a well-established plan to apportion some of our reserves in order to undertake projects that can stimulate our economy provided of course that we should have plans to replace such reserves or have the confidence to add on to it when our economy is on track again. This I have no doubt that we are able to do so, because from our track record, the Government and people have year after year been able to achieve a surplus to add to our reserves.

Mr Speaker, Sir, on the long-term strategy, the Committee has rightly identified the manufacturing and services sector as the twin engines of growth in the future, and that it is important to build world-class companies as well as strengthening our base for small and medium enterprises. It further identified that the Government should continue to play an active role in supporting and facilitating the private sector.

One of Singapore's success is its ability to attract MNCs to set up businesses in Singapore. This not only brings in the economic benefit but, more importantly, it helps Singapore companies to benefit from the latest technological advancement and be the forerunner of our own R&D development in the region. As we are a small economy, most of our enterprises are small and medium in size and the GLCs have always provided the leadership in establishing the model for world-class companies, for example, SIA, Singapore Technologies, Sembcorp and PSA, etc. However, in order to realise the objectives of strengthening our own local enterprises and at the same time build world-class companies, GLCs and local SMEs should work in tandem and not against each other. Therefore, the GLCs should stay focused by sticking to their core business as much as possible and maximise their strength in having vast resources both in finance and talent. If diversification is required, one should confine to areas which can provide synergy to the core business. They should not be distracted by short-term gains and diversify into unrelated small businesses in competition with our local companies. They have a different role to play.

I understand from some of the local businessmen that they are puzzled as to why some GLCs started to do business which is totally unrelated to their core business and begin to compete in the very limited market with the local businessmen. Although time and again, they have assured that the GLCs would do business on a level playing field, they think it is a case where the playing field may be level, but the distance between the goal posts may vary because these GLCs have their own network and connections, and therefore render the competition a little bit skewed. It may be a perception. It is important that if we have to strengthen our base of the SMEs, we have to give them space and opportunity. We must assure them that they have the full support of the Government. I believe that the SMEs, GLCs and MNCs can work together with each other and benefit from each other's strengths and weaknesses, just as we need to nurture the talented and experienced CEOs like Walt Disney's, Michael Eisner to help run multi-million dollar corporations. We also need entrepreneurs like Bill Gates who can build a business empire out of nothing. While the corporate CEOs and the private entrepreneurs are very much different in their approach and ways of conducting business, their contributions are of equal importance and one cannot totally displace the other.

Now that the Committee has identified all the steps we have to take in order to achieve the objective of making Singapore one of the most competitive and vibrant business centres in the world, it is important that a detailed plan be drawn up for implementation. We can make a vision statement and set objectives, but if we cannot stay focused and have definite plans and programmes for the realisation of this vision, and all participating parties do not follow certain parameters set out in the Report, it will remain as an academic study and not an effective and dynamic document to get us into the next millennium.

Mr Ahmad Mohd Magad (Pasir Ris GRC): Mr Speaker, Sir, thank you for allowing me to participate in this debate on the motion proposed by the Minister for Trade and Industry.

Since last year's Budget debate in July, many Members have made numerous calls in this House to address issues related to the cost of doing business in Singapore. In the light of the then deteriorating economic backdrop, Members have echoed the expectations and the hopes of the business community that the issue of competitiveness be addressed in the Budget and, in particular, to offer some relief to the high costs of doing business in Singapore. Regrettably, the Budget fell short of addressing this main concern of preservation and enhancement of our competitiveness vis-a-vis our neighbours. While the Government announced a $2 billion package in off-budget measures in June to control costs, many businesses also felt that there is hardly any positive impact on them. The perception remains that the effort to closely monitor the powers of the business community, especially of the small and medium-sized businesses, is lacking and that the Government continues to rely on not so current statistics to steer the economy.

As we debate the motion on endorsing the CSC Report over these two days, I believe the Government realises the extreme anxiousness of our business community and the man-in-the-street about the current state of affairs and their expectation of an integrated and an action-oriented Government approach in swiftly dealing with the issue of our competitiveness.

Since the debate began yesterday, much has already been said and many suggestions made by fellow MPs in terms of what more could be done over and above the recommendations of the CSC. Allow me to offer some of my own thoughts.

First, I think the Government should not hesitate to adopt a radical paradigm shift in fundamental assumptions upon which many policies today are predicated. I believe many of these policies have been formulated based upon a mix of Government controls and free market forces. It is time that some of the past premises employed to formulate existing policies be critically reviewed in the context of their relevance to the current economic conditions. Much has changed in recent months, let alone years.

On concerns of the business community, while the SMEs are generally quite happy with the cost reduction measures recommended, there is still concern that the Government's share of $2.5 billion or so is disproportionate to the amount to be shouldered by the business community and the working populace. There is room for the Government to more clearly explain this. It is understandable that wages are manifold more than Government's charges, but there is a strong feeling that the Government could and need to do more in absorbing more Government-related cost components such as reduction of land costs, property taxes, port and telecommunication charges and giving income tax rebates. This could go a long way in enhancing the much needed confidence and stimulating spending and reinvestments. Much of these have been touched upon by others who have spoken earlier.

Some SMEs continue to express disappointment with the much beefed-up Local Enterprises Financing Scheme (LEFS). They felt that their eligibility to take advantage of the scheme is left entirely to the banks. The latter decides solely whether or not the applicants are eligible for the loan applications. While I fully subscribe to the fact that the scheme should not support clearly hopeless cases, I am concerned about borderline cases which may become victims of the crisis if not appropriately helped. There should be an appeal channel for such cases. I would like to suggest the formation of a Committee comprising members from the Singapore Productivity and Standards Board and banks to review borderline but worthy cases in deciding financial assistance eligibility for such cases.

ERP charges for business vehicles was also a hot topic when the GPC for Finance and Trade and Industry, of which I am a member, met with various business groups. Many strongly felt that ERP charges for goods vehicles (pick-up trucks, lorries and others) used for purely business reasons should be temporarily exempted from ERP charges during the current economic downturn. Most of such vehicles make multiple entries into the CBD and the ERP charges certainly add up to business costs. Suspending such charges will certainly help at a time when every dollar saved contributes to the lowering of business costs.

One important sector that has long been suffering is the retail sector. This has seen a decline over the years and, more recently, hefty double digit declines. They are suffering not only as a result of consumers being more cautious in their spending, but also in the slowdown of the tourism industry since last year. With tourist arrivals not within our control, the retail sector will have to look up more to domestic consumer spending. The wage and bonus cuts undoubtedly will have further negative impact on spending as consumers' purchasing power becomes more diminished. This strongly supports the argument for further tax rebates to stimulate the already weak demand, as echoed by many MPs earlier. A temporary suspension of GST on essential goods and supplies such as clothing and food will also go a long way in not only enhancing demand but also help alleviate the burden of the people affected by wage and CPF cuts. Such tax exemptions on the essential goods are common in many states of the USA to dampen the cost of living impact on the working class.

Retailers are also hopeful of rental reductions relative to the fall in the retail sales. They are heavily counting on the Singapore Tourism Board, working doubly hard to boost visitor arrivals through more active tourist promotions, especially in countries not affected by recession such as the European countries, the United States, China, Taiwan and perhaps India. They also felt that bringing more exhibitions and conventions and staging world-class events such as the performing arts, musical and sports events will not only enhance Singapore's competitiveness but also help position Singapore as the Broadway of ASEAN, if not Asia. We have the world-class infrastructure to support this objective.

Let me now turn to the social concerns. Singaporeans deserve special salute for having shown understanding and willingness to move ahead with the CPF and wage cuts. The coordinated efforts by the Government and the unions to explain the important need for immediate business cost reductions, the rationale behind the need for CPF and wage cost cuts and the prospect of massive job losses if these measures are not undertaken, have generally gone down well with the working populace. However, anxieties are still abound, especially the effect of these cost-cutting measures in the ability to continue servicing their mortgage loans. While the Government has said that it will help HDB dwellers, nothing appears to be in store for the lower middle income earners who, especially over the last two years, have upgraded to private properties. Some of them have lost their jobs as a result of the crisis.

As an interim measure, I would like to propose that the Government consider the relaxation of CPF usage to allow for pooling of CPF resources among immediate family members to help those in trouble tide over their mortgage repayments during the crisis period. Working parents, children or siblings could assist the family member or members in trouble by temporarily allowing them usage of their CPF savings to pay for the monthly mortgage payments subject to certain regulations. Once the troubled family member becomes gainfully employed and overcomes his problem, the assistance should cease and the amount borrowed should be returned back progressively to the lenders.

Savings in the Special Account of the CPF should also be temporarily freed up for such purposes and should similarly be returned upon employment stability and recovery of the economy.

As a regulatory measure to assist troubled first-time private property purchasers, the Government, through perhaps the Monetary Authority of Singapore, could assist in pacing financial institutions involved in lending money for such purposes to help them reschedule loan repayments wherever feasible. HDB policy and guidelines employed to assist HDB flatowners could be used as a basis to regulate this.

The Ministry of Manpower should also seriously consider the temporary reduction of the domestic worker levy. A reduction of 30-50% will go a long way in helping struggling dual income families affected by the CPF and wage cuts, but yet could not do away with the services of a maid to look after their children and/or aged.

For businesses that are doing well and are benefiting positively from the cost reduction exercise, they should also shoulder some social responsibility in these tough economic times to correspondingly lower their product prices or service charges to help cushion the impact of wage cuts taken by the people. If the overall intention is to bring wages down to 1994 level, it is imperative that every constituent of the land, ie, the Government, the corporate citizens and the people, do their collective part to also bring down our cost of living as well as we can to 1994 standard. Only then will some form of equilibrium be achieved.

Sir, in conclusion, allow me to applaud the CSC for their effort and boldness in making several important recommendations, both for the short and long term which, I believe, will have far-reaching implications for Singapore when implemented. Looking on the horizon, it is my hope to see the Government put in place a regular ongoing competitiveness monitoring and benchmarking mechanism to prevent us as far as possible from again being caught off guard. While it is fair to note that the currency crisis leading to significant depreciation of regional currencies, which is also a major cause of the erosion of our competitiveness was hard to predict, there were many tell tale signs pointing to the escalating cost of doing business in Singapore, which the Government and statutory boards have influence in moderating without having to undermine the free market mechanism. This includes, as I have mentioned earlier on, land pricing and rental regulations, a major business cost component, port, utilities and communication charges. Ways must also be found to further refine our flexible wage and compensation system to prevent the need for the CPF mechanism from being continually relied upon in the future to adjust cost and address competitiveness issues.

The unusually long growth period in Asia, including here in Singapore, has made us forgotten that crises, bubbles and crashes are an inevitable part of economic business cycles. We should now brace ourselves to be better prepared for future ups and downs. Sir, having an efficient competitiveness barometer will go a long way in regularly checking where we stand in comparison to regional as well as industrialised and developed countries. Such indicators will enable prompt regulatory actions to be taken that will enable us to sustain our competitiveness on a real time basis and, hopefully, do away with the need for off-Budget measures and jolting the lives of Singaporeans with CPF and wage cuts. Such an approach will increase Singapore's and the business community's resilience in weathering the current and future storms.

Sir, I support the motion.

Dr Tan Boon Wan (Ang Mo Kio): Mr Speaker, Sir, exceptional times require boldness of vision and action. It calls for a common understanding and purpose by the people to collectively meet the challenges. These are exceptional times. Since the release of the Report by the Committee on Singapore's Competitiveness and the reconvened National Wages Council, I had met up with my grassroots leaders and residents. They expressed understanding and support of the two Reports.

Let me make two general remarks before I comment on the measures proposed. In a crisis, we are pressured to find quick answers. Yet, in our evolving history, the present crisis will only be a blip. We must be careful not to pursue quick solutions inconsistent with sound principles, which underpin our long-term interests and survival. Short-term solutions must by its definition be exceptions that can be dismantled after the crisis. These solutions cannot and should not be allowed to adversely change the long-term course of the nation.

Mr Speaker, Sir, it is one thing to accept the rationality and relevance of the recommendations themselves, and yet another the pains faced upon implementation. The people want and expect the Government and employers to convince and show openly that they understand and appreciate the pains suffered and sacrifices made by the people.

I call upon our employers to declare that they will share fairly the profits in good times as they now desire workers to make sacrifices for the company. When the good times return, the cuts should not only be restored but profits be shared through bonus and other benefits.

Let me now turn to the short-term specific measures to deal with the crisis. The need for short-term specific measures arises from our sudden loss of competitiveness. A major reason for this loss of competitiveness is the relative appreciation of the Singapore dollar to the currencies of our competitors. Some hence feel that allowing the Singapore dollar to depreciate is a less painful answer to cutting cost. It would be helpful for the Government to make more efforts to explain why cutting cost is the better alternative.

Let me look at the short-term measures from both the company's viewpoint and the worker's viewpoint. I will start with the company. The cut in business cost is not only for external competition, but also internally to help our companies survive. There is thus strong support for the specific measures proposed by the Committee, particularly the following:

Foreign Worker Levy

The foreign worker levy should be reduced. This will bring much relief to those companies with high dependence on such workers. These workers do not pay CPF and a cut in the latter does not lighten the cost burden. Affected sectors include the food and beverage, and construction. The amount of cut in the levy should provide as good a relief as the CPF cut.

Cut in Land/Factory Rent

The rent of industrial land, factory and commercial properties should be further reduced. The proposal to return to the 1990 rent level is much welcomed. HDB and JTC, being the largest landlords of such properties, should take the lead. Private owners will follow. The short-term help is obvious. There is also a long-term impact as companies can remain in Singapore. Singapore will also be more attractive to foreign investors.

HDB and JTC should also be more willing to rent out vacant land on TOL. I have been told that Singaporeans have been forced to go overseas to grow turf grass for import to Singapore even though vacant lands are available for this purpose here. It is also difficult and expensive to obtain the use of such land.

There were also calls for the following:

Training Subsidies

To encourage companies to train their workers, the subsidies given should be increased. This will encourage and make it easier for companies to retain the workers for retraining. Training fees should also be kept low. These fees have been escalating much too quickly.

Medisave Rate for the Self-Employed

To assist the self-employed, the increase in the Medisave contribution planned for next year should be deferred. In fact, the Government should consider reducing it during this period of crisis.

Parking Charges

Parking charges for commercial and heavy vehicles should be reduced.

Banking Charges

The various banking charges like the opening of letters of credit should be reduced.

Let me now turn to the workers. As wages form a large part of the cost to companies, cost cutting means cutting wages. This is painful for the people. Hence, at the same time, efforts must be made to provide relief to the people.

Some of the reliefs that were sought include:

Housing Loans Repayment

Help should be given for the repayment of housing loans. A major concern with the CPF cut is the worker's ability to finance the monthly repayment of his housing loan. As most people own HDB flats, I hope the Government will announce schemes to help owners of HDB flats. HDB has constantly assured flat owners that they will be assisted. They must continue to reassure the people. I am happy that several banks are also offering alternative repayment schemes to lower the monthly repayment.

The recent decline in interest rates has helped to reduce the monthly instalments of housing loans substantially. But interest rates are capricious. We should not be lulled into complacency by this development. It is necessary to set in place schemes to help with the housing loan repayment.

Maid Levy

The levy should be reduced. This will bring much relief to families who desperately need the assistance of maids such as families with very young children and old parents to look after and both spouses are working. Cut in Fees and Charges

During this period, every bit of cut to the cost of living is a help to the people. There were calls for reduction in fees and charges and for increase in rebates:

School fees at all levels from kindergarten to university be reduced.

Utility charges including telephone charges be reduced.

Transport charges like bus and taxi fares be reduced.

Service and conservancy charges by Town Councils be reduced. Government should also give more service and conservancy rebates, especially to the lower income group. In this period of crisis, the rebate should be extended to 5-room and Executive flats.

Government should give more income tax rebates.

Medical charges should be reduced. The number of Class C beds should be increased.

Companies and hawkers should reduce prices. Particular concerns were expressed for the low income group. Questions were asked if this group of people could be spared the cuts, or alternatively be provided with additional reliefs.

Keen interests were expressed on the restoration of the wage and CPF cuts. Residents were keen to know when the cuts will be restored. They would like the NWC to review the situation regularly so that the cuts can be quickly restored when the crisis blows over.

Now let me turn to the long-term measures to Singapore's competitiveness. While we seek to develop new strategies, it is important not to forget, but to renew and revitalise existing core strengths. Let me share the following:

We have enjoyed rapid growth for over 30 years. Parents who had gone through hard times try to make sure that their children are never in want of anything. This is understandable. But we also run the risk of our young not understanding poverty and what it means to be resilient.

We need to always compete with the world for our existence. This requires hard work, commitment, a fighting spirit and constantly to remind our young of the need to be competitive. If we lack this motivation, we are doomed. After having it so good for so long, is our mental and physical capability still strong? We must stress national values and priorities.

The regional countries have been ravaged by the economic storm. They are chastened. Their systems will now be leaner. We must take this opportunity to learn and emerge wiser from the crisis. We must remind our people that they cannot take things for granted, that our rosy future is not preordained. While we enjoy during the good times, we must also prepare for and set aside something for bad times. The future of Singapore is in our hands. We decide and make the future. If we learn this lesson and emerge from the crisis stronger as a people and a nation, the pains will not be in vain.

Here, I would like to add a word of caution. As we plan for the future, we must not give the impression to the people that this will guarantee us against future economic difficulties. We must remind the people that whatever we do difficult moments can surface. There are too many factors and imponderables in the real world. What we can do and must do is to constantly anticipate and prepare for them. We must not be lulled into complacency.

We must be better motivated and committed to our work and companies. Several employers told me that they have difficulties hiring people, or if they do manage to hire, some workers do not stay on long, even during this difficult period. Our workers are fussy. If the work is demanding, they do not stay long. They hop from one job to another for pay increases, even small amounts. They do not like to go for training. If they accept training, they are not happy with their bonds. Those who are trained often do not stay long, lured away by higher salary elsewhere, feeling no obligations to the companies which train them. I have personally encountered others who during this crisis would rather stay unemployed at home than to take up a lower paid job, or a job that is "too far" away from their home.

We are indeed lucky to have painstakingly cultivated tripartism. We had shared both the bounty in good times and the privation during bad times. This has built trust, consensus and understanding among the Government, employers and employees. Many foreigners have expressed disbelief that our workers agreed to have their salaries cut. In some countries, the very suggestion itself will already cause an uproar. For this, we must indeed be proud as a nation. This is an element of long term strength and competitiveness. We must ensure that tripartism endures.

While the present cost cutting proposals cut down the value of the resources, the actual resources used do not decrease. In view of the scarcity of many resources, we should make an effort to use less of them. We should call upon our people and companies to cut down waste by using these resources more efficiently. They must be constantly aware of the importance of conserving resources. If necessary, we should consider campaigns to remind and encourage people to use water and electricity more carefully, to be more productive in our work, to help keep our environment clean, to protect our facilities so that less maintenance and repair expenses are needed. This is an element of enduring competitiveness.

To conclude, I call upon our people to stand united during this time of crisis, to make painful sacrifices for the nation. We must support the cost cutting measures to help our companies and hence ourselves to ride out the storm. This is in the interest of the nation and for the collective good. Meanwhile, the Government and employers must show understanding of the pains incurred and provide unstinting help to alleviate them.

On a longer term, we must remember that vicissitudes are part and parcel of the economic life of a nation. We must remember this when the good times return. We must never take the good times for granted. We must always prepare for lean times in times of plenty.

Our existing strategy has done us proud as we have braced the current crisis much better than our neighbours. We must forge an even more robust strategy and a national cohesiveness that will anchor the country against future uncertainties.

On this note, Sir, I support the motion.

Mrs Lim Hwee Hua (Marine Parade): Mr Speaker, Sir, I rise in full support of the motion by the Minister for Trade and Industry.

Sir, there is wide consensus that the Committee on Singapore's Competitiveness has carried out a comprehensive analysis and made well constructed recommendations. Many of my colleagues have dwelt at length on the strategic issues. So I will confine my comments to the short term measures.

Feedback by the various industry groups that the GPC spoke to highlighted two observations. Firstly, there is a sense that many of the recommended interim measures are weighted towards manufacturing and construction. Secondly, sectors such as retail and food and beverage are worried that the proposed reduction in wages will dampen consumption, which will more than overwhelm the benefits from a reduction in operating costs.

Generally, companies, especially the smaller operators in trading and services, are seeking help as they face a cash flow crunch in the short term and would like to better position themselves after the downturn.

Sir, I would like now to propose specific recommendations to achieve the following two objectives:

Firstly, to help improve the cashflow for companies and, secondly, to mitigate against the inevitable dampening effect on consumption.

Improve cashflow for companies

Firstly, in the interim, in order to provide maximum impact, as well as send a strong message to private sector landlords, can the proposed reduction in rentals be extended beyond the JTC and HDB to all statutory boards and wholly-owned Government-linked companies?

Secondly, various statistics have pointed to much lower commercial property values. For property tax purposes, can these benefits be felt in a more timely fashion by reducing the lag in pegging valuation levels?

Thirdly, although various assistance schemes such as LEFS have been widened to benefit more companies, many non-manufacturing concerns, such as trading companies, still do not qualify. They seek the availability of some form of Government-assisted trade financing scheme to help offset reduced credit lines by banks.

Fourthly, whilst many applaud the emphasis on training and upgrading, companies would like existing schemes to be more generously applied to executive, managerial and general training. This will allow for smoother progression into managerial roles within the same organisation or industry.

Fifthly, most companies realise the importance of technology and are willing to invest in spite of the high capital costs. However, they usually find maintenance to be a very heavy burden to bear, especially during this period of slowing, if not contracting, revenues. Can the Minister for Finance consider allowing deductions for maintenance costs, for tax purposes?

Mitigate against dampening effect on consumption

Sir, many of my colleagues have commented on the dampening effect on consumption of wage reduction. There is recognition by retailers that consumption is closely linked to disposable income, confidence and consumer psychology. As much as we can wish that the media would not be overly negative or pessimistic, I would like to suggest the following as well:

Firstly, can some temporary relief be provided for individuals, for example, as has been raised by several Members, by reducing the foreign maid levy by, say, $100 per month, in response to the impending reduction in household income, but with the Ministry of Manpower still maintaining control administratively?

Secondly, can the Minister for Finance consider granting a bigger personal tax rebate?

Thirdly, can Electronic Road Pricing, especially into the Central Business District, be temporarily suspended on Saturdays to give the retail sector a boost?

Sir, there has been a lot of debate over how much Government should bear, whether it should be an equal burden or in equitable proportions. Unlike other countries, we at least have the luxury of such a debate. It is a luxury that did not happen by accident, but one that has resulted from strong fundamentals and good Government. Although both arguments are equally compelling, I think we should refrain from distorting the cost structure too much in order to gain more moral authority. We all understand that wage and CPF cuts are hard to stomach, but we all recognise that unless companies can survive, jobs cannot be preserved.

On that note, I would like to urge the Government to consider the additional recommendations outlined above and to implement the CSC proposals as soon as possible.

Mr Gerard Ee (Nominated Member): Mr Speaker, Sir, the Report of the Committee on Singapore's Competitiveness is comprehensive. If only we had the benefit of the findings and recommendations two years ago. For a long time now we have heard grumbling about the high cost of operating in Singapore. I have often heard disbelief expressed over the BERI's Report. For a long time now employers have grumbled about rapidly rising labour costs unmatched by an increase in productivity, disloyalty of labour, poor attitudes of new entries to the labour market.

In this current economic downturn, some employers have expressed their hope that people's expectations will be moderated, more realistic.

The Committee has done an excellent job of identifying the issue and I am generally in agreement with its recommendations. My concern is with the details, the implementation of the recommendations that, if mishandled, can cause much pain without providing the cure. I share many of the areas brought up by earlier speakers and I shall not repeat them. I shall focus on a couple of areas that I feel have not been raised.

We must realign our wage structure to be competitive. The question has been raised as to whether the targeted 15% cut in wage cost is enough. Concern has been raised on the impact of such a cut on the lower paid wage earners and there has been a call to make a bigger cut for higher wages to help the lower paid workers. I would like to caution that higher paid workers may not necessarily have such a large advantage over the lower paid workers. Many do not benefit from large housing subsidies or other subsidies. Many are heavily mortgaged on their home. These people will not have a benevolent Town Council with patience over late payments of conservancy charges. I fear that, without care, suspicion may arise that one party or the other is not bearing a fair share of the pain, and this will have an impact on social cohesion.

Our enterprises will have to carry on the best they can. There will always be a need to supplement our workforce with skilled foreign workers. There is an urgent need to reduce the levy for skilled foreign workers substantially. I do, however, question the appropriateness of reducing the levy on unskilled foreign workers. We should not encourage the import of unskilled foreign workers. Jobs, usually filled by such workers, should be kept for Singaporean workers who, due to the lack of appropriate skills, have to be retrained and are temporarily requiring a job, any job, to survive. As for the foreign workers, we should require employers to hire from among the pool of retrenched foreign workers, instead of forcing them to be repatriated. Many of these foreign workers cannot and do not want to return home because of the heavy debt that they incur in getting to Singapore. It would be a humanitarian policy which will also help see the continuing need for foreign workers without resulting in an increase in their numbers.

To help our enterprises seek new markets and establish offices overseas, we should set up Singapore Trade Centres in the cities where business opportunities exist. These centres should offer a one-stop business support service where Singapore businessmen can rent temporary office facilities at low cost and obtain help to transcend language and cultural barriers.

In conclusion, I support the recommendations made by the Committee on Singapore's Competitiveness. It is now essential to ensure proper implementation of the recommendations and to continue monitoring our competitiveness and fine-tune the system as Singapore regains its footing and get back on track for continuing economic growth.

Dr Toh See Kiat (Aljunied): Mr Speaker, Sir, I applaud the Committee on Singapore's Competitiveness (CSC) for its calls to cut wages, electricity and telecommunication charges, port service charges, extend property tax and income tax rebates, reduce income and road taxes, offer infrastructural support for working mothers who need child care facilities, adjust industrial land prices to international benchmarks, and adjust downwards the cost of owning cars through reducing customs and petrol duties.

Sir, there are many "goodies" in the package for businesses, but I want to highlight the plight of the consumer and the help that we too sorely need. I ask the Government, in accepting the CSC's Report, to spare a thought for the consumers, please.

Specifically, I have a few proposals, but I would not repeat the proposals like the maid levy and GST cut which my colleagues have raised in this House and which I fully support. First, I want to speak against the CSC's recommendation to reduce the $200 GST exemption for day trippers who have shopped overseas. Much as I wish Singaporeans would have a greater sense of dignity and solidarity in the face of abusive and hostile treatment from those they buy from, I realise that the savings are significant and there are some who need the savings badly enough to face shoddy treatment. If Singapore retailers want to increase their customer base, they must really work to bring back the customers and not take the path of least resistance by preventing Singaporeans from shopping overseas. They must take heart from the experiences of good retailers like Borders, Robinsons and NTUC Fairprice.

I am concerned too that once the call to reduce or remove GST exemption is heeded, we would open the floodgates for more calls to prevent "GST leakage". Such a call will have an impact on the numerous small transactions that will be made by consumers on the Internet. Are we going to say that GST is being leaked there too and so retailers should be protected through the diligent collection of GST from such individuals? If so, I fear efforts in promoting e-commerce will be greatly hampered. If retailers are hurting from competition, whether from Johor, Batam or cyberspace - surely the answer is in themselves. I urge Government to further consider easing the burden of the average consumer by, for example, making sure that not only those who earn below $1,200 be spared the wage cut, but, in addition, Government should continue to give rebates for service and conservancy charges in respect of 1- to 3-room flat dwellers and town councils. As my colleague, Mr Gerard Ee, has mentioned, we should have the compassion to allow for those who have financial difficulties to pay their charges in instalments in easy payment schemes.

The HDB also provides a benchmark for property prices, in that the price ceiling of the HDB market is a convenient base on which to prop up the floor of the private property market. With the distance between top end HDB flats and low end private flats as little as they are at present (and almost non-existent between the Executive Condominiums and entry level private condominiums) - surely the HDB could lower their sale prices. If this means a larger subsidy from the Government, is this not the right time to do it? Similarly, HDB mortgage rates could be lowered to provide flat owners some relief. If necessary, such a measure could just be limited to the owners of 1- to 4-room flats, so as to free the disposable income currently frozen into the property market.

I turn now to businesses. Landlords, especially the GLCs, HDB and JTC, must reduce their rental; retailers must cut the prices of at least the basic necessities, as NTUC Fairprice has done; insurance companies must ease up on their collection of premiums or provide easy payment schemes, as NTUC Income has done; and professionals such as doctors and pharmacists must charge lower fees so healthcare becomes more affordable. Restaurant owners must take their heads out of the sand and work at charging less, and accept that they must not insist on a flat 10% service charge in all circumstances. If they could reduce their service charge to only 5%, I suspect the rise in clientele would more than make up for the loss!

Nevertheless, I call on the Government to be easy on the SMEs who scramble to pay the Government charges, levies and CPF contributions on time - but fail. A little more understanding on the part of civil servants could go a long way towards putting a human face on the efficient bureaucratic machine we have. Otherwise, the added burden of heavy penalties will drive the SMEs under and more people will lose their jobs.

In the spirit of tripartism, cost cutting is not just for workers and Government. The employers who are business owners must also contribute their share. In all this, the Consumers' Association of Singapore (CASE) too has a part. CASE's mission is to inform, educate and protect consumers. We have embarked on a campaign to identify cheap places and inform consumers on businesses which will give them value for money - whether they be hawker centres, shops, supermarkets, restaurants, or other businesses. We will be conducting seminars and printing booklets to educate and help consumers to stretch their dollar and to understand their rights when, for example, their hire purchase companies foreclose in on them. We will protect consumers and campaign to expose profiteers, opportunists, those identified with the help of our "eyes and ears" all over Singapore - our 600,000 members, union members and members of the public. We also call on consumers not to patronise food establishments which impose a mandatory 10% service charge (especially if this is on top of a compulsory pickle or peanut charge) without giving real service in return. We will publish the names of these institutions that do not charge the way that we advocate and we will channel more customers to those who are easy on the customers.

We hope, of course, that the Government will show its concern for consumers and give us a grant to work on this project. CASE calls on all consumers to work with us to make our dollars go a long way through this dark storm ahead.

Sir, I support the motion.

Mrs Yu-Foo Yee Shoon (Bukit Timah): (In Mandarin): Mr Speaker, Sir, the Committee on Singapore's Competitiveness has recently made two sets of recommendations. One is on how to deal with the current economic crisis, while the other is on how to prepare our economy to face the future challenges. In the short-term, our workers and the trade unions have to accept pay cuts to help the companies regain competitiveness and, in the process, to save our jobs. In the long term, we have to equip ourselves with new skills to operate in a knowledge-based economic environment. We, in the labour movement, support both sets of recommendations because we are convinced that they are in the best interests of our workers.

During our debate in Parliament yesterday, I was surprised to hear one MP saying that the 15% wage cut is not enough. He suggested a 30% cut. The question is: during the last few months when we were debating on these issues, why did the employers and companies not put forward the reasons for the 30% wage cut? They should list out the cost structure in the various sectors in the business community to present their case. In fact, over the last few months, they have remained silent. So, after we have explained to our workers why we should agree to take a 15% wage cut, they accepted it. Now, the employers are saying that it is not enough. Furthermore, the said MP is a member of the National Wages Council (NWC) which recommended the 15% wage cut. Why is he now questioning the 15% cut? Since he sat in the NWC, he should be in the best position to know why the reduction should be 15%.

From yesterday's debate, we can sense how difficult it is for us in the trade unions to explain to our workers such complicated economic matters. Here, I would like to thank our workers for being so understanding and for supporting this recommendation to reduce 15% of their employers' wage cost.

Today, with the economic downturn, grassroots leaders and unionists have asked whether we have the means to help those in financial hardship as a result of wage cuts and job losses. Do we have a social security net to meet their needs? When our workers are retrenched or have suffered a wage cut, do we have a social security net to help them?

In some developed countries, the jobless can look to unemployment benefits. So some people are questioning why we do not have social security in Singapore. Does it mean that because we do not have unemployment benefits, we do not really have social security? Are they correct in their accusation? I do not think so. I do not think we should look at the issue so narrowly - that just because we do not provide unemployment benefits, there is no social security in Singapore.

In fact, what are the basic needs of the people? First, jobs; second, housing; third, medical care; fourth, education. In fact, all of these have been provided for in our social system but very often we take them for granted, and we forget that they are part of our social security system.

Take jobs, for example. We have made job creation our top priority. Over the years, we have brought in many foreign investments to Singapore. Many jobs have been created. Our preference is on quality investments because they are the ones that can afford to pay higher wages. Over the past 10 years, our real wages have gone up by an average of 5% per year. This is better than what has been secured even in many developed industrialised countries.

Our philosophy is to train people for life-long employability. This is like teaching people to fish rather than merely giving them fish to eat.

So, in this economic downturn, our top priority must be to find new jobs for the retrenched workers. A job with a steady income is anytime better than any form of unemployment benefit. The NTUC has joined hands with the Ministry of Manpower and the SNEF to develop a job bank to match those who are retrenched or unemployed with the vacancies available. At the moment, when we accept this 15% reduction in our total wage cost, we are appealing to the companies to retain the workers in this period of crisis, and retrench only as a last resort.

In Singapore, housing is not a problem. We must thank HDB and its "Home Ownership" scheme. Since as many as 90% of our people own their own homes, even in this time of economic crisis, they do not have to worry that they may be thrown out of their homes by unscrupulous landlords when they default in paying their rents. But in many other countries, like Korea, for example, the workers live in quarters provided by their employers. The moment they lose their jobs, they lose their shelters over their heads too. In fact, in most developed countries, home ownership is about 60% (40% of them are living in rented properties). Once they lose their jobs, they will be thrown out of their house. So to them, unemployment benefit is of paramount importance. Despite that, in many of these so-called welfare states, many people are sleeping in the streets. In Singapore, our situation is different. We have different schemes to help our people. Therefore, I feel that our model is a better one.

Another social security is medical benefits. We all know that our workers in Singapore are adequately provided with medical benefits. They have the Medisave accounts and they have MediShield. For those who genuinely cannot afford to pay their medical fees, there is Medifund to stake them out. Prime Minister Goh Chok Tong has stated on more than one occasion that no one in Singapore will be deprived of medical benefits just because he has no money.

Another social security is education. In Singapore, there are places for all school-going children. The quality of our education is good. Government has set up an Edusave Fund to help meet the educational needs of every child aged between 6 and 16. Workers can use their CPF to pay for their own and their children's tertiary education. For university students, if they are in difficulty, they can apply for loans. About 25% of our students receive some form of bursary or scholarship.

In other countries, if workers lose their jobs, their children have to stop going to school because they cannot afford the fees. There is a report in the newspapers that half of the Indonesian children have stopped going to school. Such a report may be exaggerated but it is true that many parents can no longer afford to send their children to school. This will result in a loss in one generation, with very serious consequences. In Singapore, every effort is made to help children from families in financial hardship to remain in school and to receive education, and bursaries are offered by NTUC, the grassroots organisations and various organisations.

We have a comprehensive system of in-employment training. The Skills Development Fund subsidises the training cost. The NTUC-initiated Skills Redevelopment Programme is aimed at upgrading the skills of workers, especially the older and less-educated ones. In the SRP and CREST alone, the Government has committed $240 million. This is the best welfare because it helps workers to acquire the necessary skills to stay employed.

But in the training programme for workers, we would like to request the Government to set up a task force to study the needs of older and the less educated workers. This task force should provide the workers with information on vacancies and types of skills required in the market and educate them to change their attitudes so that they will be prepared to accept jobs which they were previously rejecting. At the same time, the task force can educate the employers so that they will not discriminate against the employment of older workers.

Some people may ask: "Since Singapore is not a welfare state, where can the retrenched workers turn to?" Although, Singapore is not a welfare state, we have all sorts of schemes which are even better than the welfare state system to help those who really need help.

For those who are in difficulties, they often seek help from their MPs. Some of them say that they cannot pay their utilities bills, S&C charges, rentals, etc. As MPs, we know where to turn to for assistance to these people. Many grassroots organisations like the CDCs and self-help groups are ready to extend a helping hand. In extreme cases, there is of course the public assistance scheme, the bridging loan scheme, Small Families Improvement Scheme, Rental and Utilities Assistance Scheme, Edufund and the assistance schemes established by the various community self-help groups. So long as they accept our recommendations, they will be looked after under any of these schemes that are relevant to their needs.

As for those workers who were retrenched, and are unionized, the unions will negotiate with the employers. Many are paid an average of two weeks' wages for every year of service rendered, and some get as much as 12 to 24 months of salaries in terms of retrenchment benefits. Not too long ago, I had the opportunity to find out from an officer from a developed country that there is a cap of 12 months' salaries as unemployment benefits. So actually our retrenchment benefits compare favourably with the welfare states. As for those who are not unionized and are not in a position to negotiate with their employers, I urge them to quickly organise themselves and register as members of the NTUC so that we can help them.

Although our social security network is good, there is still room for improvement. For example, we need to look at how we can simply find procedures for applications for various schemes to help workers in distress. Perhaps, we can also see how we can improve on the level of support, especially for those who remain unemployed for a long time.

I also urge the Government to set up a one-stop agency which could coordinate the various financial schemes. In fact, the CDC is well placed to be the focal point of all assistance schemes. In other words, if an unemployed person goes to the CDC, he can seek not only financial assistance but also help in finding an alternative job through the Internet network or through other means which can be coordinated by the CDC. In this way, the CDC will be able to help the unemployed persons get all the relevant assistance under one roof, including matching up of training courses and job vacancies available. In addition, counselling can also be provided to help the worried unemployed persons cope with stress and learn how to manage family expenses and job expectations.

Mr Speaker, Sir, there is a necessity for us to enlighten the people in Singapore on our social network and to let them know how to seek assistance from these schemes, if necessary. We, in the NTUC, firmly believe that if we go along with the recommendations of the CSC, and if we are in one heart and one mind as a nation, we will get out of this crisis, emerging stronger. So long as we stay united, we are confident that we can have the power to face and conquer whatever challenges that we may encounter in the future.