COMMITTEE ON SINGAPORE'S COMPETITIVENESS (Motion)

Debate resumed.

Mr Seng Han Thong (Ang Mo Kio): (In Mandarin): Mr Speaker, Sir, for the past one year a remark which Singaporeans often make in the coffeeshops has been "times are bad". What most people talk about are CPF cut, wage cut and whether prices will go down. At home, what worries people is whether they could keep their jobs as they have seen their own relatives and neighbours retrenched. Moreover, they worry whether they have enough money to service their mortgage loans.

Mr Speaker, Sir, with the nation-wide cost-cutting measures announced by DPM Lee yesterday as well as the measures announced by the Minister for Manpower, Dr Lee Boon Yang, in place, I think we can rest assured that things are moving in the right direction. After the CSC Report and the National Wages Council's recommendations were published, the people's attention is focused on the various cost-cutting measures, particularly the specific cuts in taxes, rentals, CPF contributions and wages. In the forum page of the newspapers, the dialogue sessions and in coffeeshops, we begin to read and hear these questions being asked: "Has the Government done enough? Have the employers done enough? Have the unions done enough? Have the workers done enough?"

There are people who mentioned again and again that Ministers should take the lead in having a pay cut. There are also others who doubt whether senior management staff in the private sector are willing to take a deeper pay cut. Some have asked whether companies which are still making profits should be entitled to cut their CPF contributions. We hope that bosses in the private sector would be sensitive to the needs of their employees, and would not take this opportunity to exploit them. On the other hand, we also hope that there will not be politics of jealousy in our society. When we are all faced with a common problem, we should put in a concerted effort to seek solutions to these problems. We should not wait to see who should make more sacrifice. Everyone has to make sacrifice in order to enhance our competitiveness.

Mr Speaker, Sir, DPM Lee's measures demonstrate another spirit in our society, that is, we should share good fortunes and go through thick and thin together. Now that we are faced with difficulties, do the Government, employers, unions and workers know what our difficulties are? How did these difficulties come about? We should not indulge in mutual condemnation. While we share in good fortunes, we should also bear adversity together. How do we overcome these difficulties? It is obvious. We should take measures to reduce our business costs. However, when we resort to cost-cutting, we should endeavour to minimise the impact on the poor wage-earners.

I am glad to hear that petrol companies have announced a reduction in petrol prices. Singapore Telecom has also announced reductions in IDD charges. We sincerely hope that Government agencies and the private sector will do the same.

On the union side, the NTUC launched a $23 million package to help the workers tide over this difficult period. When this scheme was launched, one reporter asked whether the miserable price-cut of 5% to 10% was of any good when people do not even bother to stop and pick up a 5-cent coin when they see one on the ground. Having enjoyed the good times all these years, our people have become so casual about small amounts of money.

However, I would still appeal to businessmen to pass on the savings from the cuts in taxes, rentals and CPF by reducing the prices of their goods and services, even if it is just for 5 cents or 10 cents. If the ordinary people could save 5 to 10 cents each time they go to work by public transport, shop at the supermarket, or to have a meal at the hawker centre, these savings when added up could amount to something significant. This would in some way help to offset the pains inflicted by the pay cut and CPF cut. In this respect, the NTUC has taken the lead. I hope the retail sector would also follow suit by giving discounts to their consumers. The media can help by giving publicity to those shops which have reduced their prices. When consumers know where they could buy things at lower prices, they would do their shopping there. This would lead to more shops giving discounts or reducing their prices in order to attract customers.

It is this spirit of "every cent counts" that we try to imbue into our children's mind when we ask them to deposit their savings into piggy banks so that before Chinese New Year, they could use their savings to buy new clothes and new shoes. Our national reserve is like a "piggy bank". Some people have suggested that we should dig into the national reserves to solve our problems. But I think it is not wise to do so. I think the reserves should be made use of only as a last resort. To do so is like children using a stick to try and dig out a few coins from the piggy bank to spend. If there are other options, we should not dig into the national reserves. We should turn this spirit into a Singapore spirit. We should encourage everyone to save. That we have a huge reserve is a result of our savings because we have enjoyed good times for many years.

Our people have become used to living in comfort that they tend to become grumpy when they are suddenly faced with hard times. We can understand that. When the sole breadwinner has lost his job or when the company has gone bankrupt, we ought to understand their plight and give them a helping hand. For those Singaporeans who have no family members to turn to for help, the CDCs and other self-help organisations should step in to render assistance. Whether we are civil servants, employers, or grassroots leaders, we ought to empathise and be more compassionate with our fellow country men who are now in difficulties. I hope such message could be conveyed to all Government Ministries. We hope, through the present crisis, we could become more vigilant and be more able to cope with changes.

Mr Speaker, Sir, let me cite a real life example that shows how a long period of prosperity can cause our people to be less able to cope with adverse circumstances. Nowadays, more and more housing estates have covered walkways to link their blocks to the bus stops and to shield them from rain and the hot sun. However, one resident complained to me that there was no covered walkway near his block and that it was very hot to walk to the bus stop at noon and when it rains, he could not go to the bus stop. But this resident has forgotten that during the time when there were no such facilities, no one complained that he or she could not walk to the bus stop, rain or shine. What you need to do is to walk faster or to bring an umbrella when it rains. He seemed to have forgotten this instinct of coping with changes. A long period of prosperity could bring about such negative effects on the mettle of our people. It is hoped that the present crisis could lead us to realise the importance of how to survive through hardship and changes.

Mr Speaker, Sir, the "every cent counts" spirit is manifested in the various recommendations in the CSC Report. I support the motion standing in the name of the Minister.

Mr Ang Mong Seng (Bukit Gombak): (In Mandarin): Mr Speaker, Sir, I met a few workers when I went to my office this morning. I took the opportunity to ask them what they thought about the cost-reduction package introduced by DPM Lee in Parliament yesterday. Spontaneously, they said, "Oh, lucky, no need to cut salary and I still get to receive the year-end bonus. Not bad!" So I asked them, "What do you think about the 10% cut in the employer's CPF contribution?" They said, "Oh, we know some time ago that our CPF will be cut by 10%. In order to reduce business cost for our employers to survive, we are prepared to accept this temporary measure, for the sake of our nation." When they are about to leave, they asked me, "As a Member of Parliament, can you help us to get the shopkeepers to bring down their prices? Then we will be very happy."

Three things came to my mind. First, they said, "Oh, lucky, no need to cut salary and I still get to receive the year-end bonus." This proves that when accepting the recommendations of the CSC, the Government has carefully considered the plight of our workers, and they have also listened to the feedback from the MPs and the public. I would like to commend our Government for making the right decision in not having involved our lower-income employees in this round of wage reduction. Secondly, they said, "Yes, we knew that our CPF is going to be cut by 10%." On this point, it also proves that our labour MPs, the NTUC and union leaders have done a good job in explaining to the workers the rationale for this round of CPF reduction so that all the workers understand why this cut is necessary. So when the Government announced that the CPF would be reduced, they accepted it spontaneously.

Thirdly, when they asked me whether I could ask the shopkeepers to bring down the prices of goods, it shows that after reducing costs for the business, the next thing to do is to reduce the cost of living. So today, I will focus on this point, that is, hereafter, how are we going to help the people of Singapore so that they have a better standard of living and our quality of life will not be affected by this economic crisis.

In order to achieve this, I hereby urge all trade associations, coffeeshop owners' associations and retailers to join in a nation-wide sales campaign. Our Singapore Government has been very successful in promoting various campaigns, such as the Speak Mandarin Campaign, the Courtesy Campaign, the Healthy Lifestyle Campaign, etc. We have achieved very good results. At this point of time, it may be appropriate for us to have a "National Sales Campaign". Why should we have a National Sales Campaign? Because I think we can achieve three objectives.

First, we can offset the additional burden imposed on our workers due to wage-cut measures.

Secondly, Christmas, Chinese New Year and Hari Raya are coming. With all these festivals coming, if we can have a National Sales Campaign, it will also help to stimulate business activities so that our economy could recover faster.

Thirdly, through this National Sales Campaign, coupled with propaganda by our Government agencies such as the Singapore Tourism Board, we could attract more tourists from other countries to visit us. At a time when the other countries are having problems, we can attract tourists to come to Singapore and shop here.

I feel that with these three objectives in mind, we would be able to herald in some good news during this time of crisis. However, to promote such a campaign, we need to have the support and help from all the traders. When I spoke to a coffee-shop owner about the campaign, he told me, "If I reduce 10 cents from each cup of coffee, with a thousand cups of coffee sold every day, my daily income will be reduced by $100. However, if the Government would reduce our property tax, rental, transportation charges, we would gladly participate in this campaign." Eventually, he agreed to participate in the Bukit Gombak Constituency Sales which we are planning to have just before the New Year.

This National Sales Campaign can help the lower-income families to reduce their cost of living. However, if we want to do it, we must do it in full strength. I remember once I consulted Minister George Yeo on a certain project. After listening to me, he said, "If you feel that you are doing the right thing, go ahead and do it. I will support you." This signal that he gave to me was a great encouragement to me. He gave me a lot of confidence and courage. Here, I would like to take this opportunity to tell the traders, the coffeeshop owners, "If you think you are doing the right thing, do not be afraid, go ahead and do it!" Nothing ventured, nothing gained. Only then, can we get good results. The National Sales Campaign may not be restricted only to the retailers, even the banks can join in.

I remember that the Minister for Finance mentioned in a television interview that the banks are going to reduce their interest rates. If that is so, the banks might just as well join us in this National Sales Campaign, by announcing a cut in the lending rates. I think if the bank loan interest rate is lowered, the property market will pick up, and our shares index can break through the 1,500 mark.

An hon. Member: It has already breached 1,500.

Mr Ang Mong Seng: (In Mandarin): It has already done so? Then, let us go for the 1,600 mark. I believe that if we can put in a concerted effort, with cooperation between the people and the Government, we can achieve some good results.

Now I would like to talk about the foreign worker levy. As the DPM has already mentioned, the foreign maid levy will not be lowered, and I understand the rationale behind it. However, during a dialogue session of the Feedback Unit, someone raised the point that since some tax reliefs are already in place for working mothers to offset the levy, why not extend this benefit to the husbands as well. As taxpayers can enjoy tax reliefs up to $8,280 per year for a foreign maid, it may not be a bad idea to let the husband and wife claim the relief between them, so long as it falls within this ceiling of $8,280. Whether the husband claims or the wife claims, so long as it does not exceed $8,280, there is no loss to the Government.

Secondly, the levy on HDB resale flats. Dr Vasoo has raised this and the Parliamentary Secretary has already explained. But I still hope that HDB would re-consider this matter and allow those who are living in three-room flats to upgrade to bigger flats without having to pay the high resale levy. Let me quote an example. In 1997, a three-room flat could be sold for $160,000. To upgrade, the owner would have applied for a four-room flat which was then sold at about $150,000 by HDB. But now three-room flats in the western part of Singapore are selling at just $110,000, a drop of some $50,000. At the same time, the applicant is required to pay a 20% resale levy of $22,000. Thus, the applicant is left with very little money.

I hope that HDB would consider helping these people who want to upgrade but are now being caught in this economic downturn. At the moment, for a three-room flat, you pay 20%; for a four-room flat, you pay 22.5%; and for a five-room flat and above, the resale levy is 25%. I suggest that we reduce the levy by 5%. Let the resale levy for a three-room flat be 15%; four-room flat, 17.5%; five-room flat and executive condominium, 20%. In the early days, those who sold a three-room flat paid only 10% in levy. It has been increased to 15%, and then 20%. Now that the tide has gone down but the boat is still so high up, I think we should allow the boat to go down with the tide. Let us follow the trend. I think it is more equitable that way. I hope that HDB will consider this matter.

Another point I would like to raise is on building up world-class companies and improving the competitiveness of our local companies in the international market. This is a very far-sighted and creative approach recommended by the CSC. It recommended that many small companies could merge together to form a big company. But we all know that in our oriental society, it is very difficult for two or three companies to merge. In the past it was difficult, now it is also not easy. Even in the future, I do not think the prospect is good. However, the Government can take the lead to form a company and then invite all the companies in the same trade to join in like, for example, Temasek Holdings. We can invite these small companies to join in, help each other and then form a big company with strong foundation. After that, invite bankers and financial institutes to join in and give financial support, and then we have a huge local company which can be developed into a world-class company to venture overseas.

I have heard the views and feedback from some of the businessmen. They say, "Cooperating with Government companies can be very frustrating because the civil servants who are running the business are often too rigid and inflexible." I would suggest that if we set up such a company and it is managed by civil servants, let them take care of administration and finance. But when it comes to sales, business dealings, etc, leave it to the businessmen to do it. Because between businessmen, they speak their own language. Only they can understand the nuances in the language they use. We should take advantage of their expertise in this area. For example, if you talk business with people in certain countries, whenever you start negotiating, they will ask you to cheng shang ming biao lai. To the bureaucratic Singapore civil servants, this simply means, submit your company's profile. But, in fact, what they really meant was "present us with branded watches." When you squarely submit your company's profile, it will most probably end up in the wastepaper basket. But, if you are smart enough to hand in your Rolex or Omega, your chances of success are definitely better. If it is a big project that can bring in big money for you, it is probably worth the while entertaining them.

After you have cheng shang ming biao (presented them with branded watches), the next thing is, they will invite you to yanjiu, yanjiu, which on the surface sounds like "consider and discuss", but in fact it is just another hint for you to send in the yan (tobacco) and jiu (liquor). Toe the line, make the right move, and you get the contract. If not, then it is too bad, you are out of contention! If you want to deal with these foreign businessmen, you need to have a tacit understanding of the way they operate. This is something our law-abiding civil servants cannot do. But our businessmen can do it. They are the experts. They know how to talk business.

The CSC has been far-sighted in recommending the eight long-term strategies. It is not possible for me to go into every one of them. Of course, we may have other opportunities in a future forum to discuss all these. Here, suffice for me to say that I support the recommendations put forward by the Committee. I like to thank the Government for accepting these recommendations. In the past, many people used to say, "Whatever recommendation that is made, once you come to the Government, they will dilute it by 40%." But this time, the Government did not dilute it. As a matter of fact, the Government enhanced it. The Committee recommended cost-reduction of $10 billion but the Government gave another $500 million to make it a $10.5 billion package. This is indeed unprecedented!

Sir, I support the motion.

Mr Shriniwas Rai: Mr Speaker, Sir, I am obliged to you for giving me this opportunity. Sir, I rise to support the motion moved by the Minister. Allow me to share some of the observations which I am going to make this afternoon.

Sir, the Report is bold and imaginative. Some of our best minds in the Government, the private sector and the academia have worked long hours to put up this Report. Those of us who have read this Report feel a sense of gratitude in the way they have confronted the issues. The Report is farsighted, comprehensive and well written.

Sir, may I ask this House to acknowledge the contributions made by all the people involved in the Report, from the main Committee to the sub-committees. It is interesting to note that most of the members are from the private sector. This is encouraging. It shows the Government's faith in the private sector, and this faith has been well rewarded. This is not a Government White Paper, but largely a product of private sector's efforts.

Sir, the goals set out in the Report are achievable. We all have to work for it. We are fortunate that our fiscal management and budgetary measures have left us surplus in good years to meet the difficult years ahead.

However, there is some pessimism in some sectors that the present economic slowdown will last for a few years. Some say it is the worst - and I agree with them - economic crisis that we are facing. Only time will tell how long the present condition will last. Much depends on our neighbours as well as on Japan.

Sir, I am more optimistic. We can be masters of our own destiny. The acid test of a society comes in times of crisis. We are going through such crisis now. We have gone through the previous crisis and we have overcome. We will overcome the present crisis, provided we have the will and determination and resolve as a united people.

Sir, yesterday DPM Lee announced the Government's measures. The Government has acted very swiftly in facing the problem. He has given solutions to the short-term problem, but the Committee has also recommended some long-term measures and I hope the Government will take the opportunity at the appropriate time to debate them as well.

The wage cut has been accepted by the employees. In many countries, such a move would have caused political crisis, perhaps even crisis in the standing of the government, but we are fortunate. And it is to the credit of the NTUC and its leadership that it has persuaded the workers to accept some temporary cut. It is laudable that there is a stable industrial climate in Singapore. Labour, Government and employers all have worked in achieving this. The NTUC has done a remarkable job in getting the workers to accept less CPF and less pay. Sir, I was moved when my fellow NMP, Mr Cyrille Tan, related the question of retrenchment. He knows the problem because he himself has been a victim. He painted a graphic picture. Only a person who has been retrenched can show this.

Sir, whilst the workers are asked to make some sacrifice, I am disappointed to read in the Business Times that the corporate world is not showing the same trend. Whilst the employees are asked to sacrifice, some of the captains of our corporate world are taking more pay, when, in fact, their company's performance has declined. I appeal to the corporate world to be realistic and not to be marginalised by their action. The directors cannot persuade the workers to take a pay cut when they themselves are not prepared to live by example. There is no room for double standards. Similarly, those companies which are doing well must reward their workers.

Sir, I now move to the financial sector. Our financial sector is in good health. Our system is transparent. Thanks to the MAS and its officials. My complaint is that our banks are too over cautious. They are too conservative. Permit me to elaborate.

MAS does not believe in getting involved in the management of credit and bank interest. It may be so on paper. However, it can - I emphasise on the word "can" - persuade the banks to be more market oriented. When savings interest rates go down, the banks must try to lower their interest rates. The banks must not be over anxious over loan portfolios. They must not stifle enterprise. There may be some companies that may be going through difficult times now but they have a potential of growth in years to come. They should give a helping hand to them. They should not recall loans. They should do so only as a last resort.

I now move to the property sector, Sir. The last two years have seen property prices decline, in some cases as much as 60% from the peak. Nobody knows when we will reach the bottom. Had the Government not intervened in 1996, we would have a sad story today. Nevertheless, I urge the Government not to allow the property market to collapse. It will not be good either for the property market or for the banks or the country. What the Government should do is to take away some of the restrictions it had imposed earlier. I ask the Government to reconsider its position.

Moving to manpower, Sir, manpower is our main asset. One area which we should look at is our birth rate. Those who can afford should be encouraged to have more children. We cannot forever depend on guest workers.

Sir, in order to get talent, we should start young. We should encourage the bright students from other countries to come and study here. They will stimulate our students. Some of them may want to stay back and even those who return to their countries would be our life-long unpaid ambassadors. In this respect, companies could offer scholarship. SIA has such a scholarship scheme. I urge other Government-linked companies to do so.

We should encourage more international schools to be set up here. We have the potential of becoming the educational hub of Asia.

Sir, I share the Government's concern in attracting foreign talents. Let me take the example of the print media in Singapore. The Straits Times has a number of expatriate journalists. They have helped to improve the quality of the newspaper. Sunanda Datta Ray and Asad Latif are just two names. They are senior leader writers, very sensitive positions. Yet we have them there. Even the American and British print media have foreign talents. The world is looking for talents. If we do not attract them, other countries would do so. We must never forget that we are by-products of an immigrant society.

It is very encouraging to note in the Report that the institutions of higher learning are being asked to increase their intake. With the changing of our educational policy, we would become a learning nation. Every individual should undergo some form of training every year. Our institutions of higher learning are offering extension courses. We should add more such courses.

Sir, the world is changing fast. We are in the information technology age. It is imperative that we have an educated workforce. Employers must take the lead in job training. It is not just the responsibility of the Government and the labour movement. The employers have a role to play. This mindset must be changed if we hope to become a knowledge-based economy. Sir, we must also try to upgrade the skills of our foreign workers, for they form an important factor in our workforce. Many of these workers are educated but they may have a poor command of English. We could offer them some courses in English.

Another area which we must review is our retirees and housewives. We have not attracted them enough. Perhaps the labour market must examine this because, as the Minister said earlier, only 3% of our workforce are part-timers. 3% is a very small number and is indeed very low.

May I now move to tourism, Sir. It is a growing industry. Whilst we are also attracting talents, we have an edge over the other Asian countries. In short, we can export some of our talents. Take hotels. In some Asian countries, we still find European and American hotel managers. Can we build up our talents here so that they could manage hotels in other countries? Better still, build or buy hotels in these countries, as some companies are already doing now. The trend has already started.

Similarly, Sir, I have spoken and I will speak again on the question of tourism. There is a growing class of tourists who are interested in Asian culture. Music and art attract them. Our population mix is to our advantage. We should encourage musicals, operas and ballets. Similarly, we should hold art exhibitions and musical performances. I would suggest that a committee be set up, as we have a niche over the other countries. Sir, I was pleased to read this morning in the International Herald Tribune that our cultural scene has actually attracted their attention.

Sir, there is another area and many Members have spoken on this, ie, how to stimulate our retail sector. While I am not advocating that we should give spending coupons proposed by the Japanese government, I think there is not enough money to be spent in the retail sector. People do not have the money, and even those who have the money, they are trying to save for the rainy day. We must try to give some help to this sector, because it forms an important sector of our economy.

Finally, we must not forget our political stability. I agree with my colleague, Dr Lee Tsao Yuan, that Singapore is fortunate in having a good government. We must evolve our own political system where the citizens can participate not only in decision making but take some of the burden of the Government. We must strengthen our civil society which is not only prepared to speak but also do its best for the society.

Sir, there is so much to talk and so many Members are going to speak. I end my speech with this plea. Fellow Singaporeans, we are fortunate that we are not as badly hit as the other countries. Let us put all our resolve, put the past behind us and try to build a bright future for our children. We can do it and we will do it. We have the resources. We have the money and the means. Let us all contribute our effort to achieve the goals set out in the Report.

Sir, the motion has asked the House to endorse the strategies and policies set out in the Report. I think the Government, Members, Opposition Members and NMPs must show to Singaporeans and the world at large that we are a united and one people. May I ask the entire House to give a resounding support to this motion? It should have a 100% approval from this House.

Sir, I support the motion.

Mr Loh Meng See (Kampong Glam): Mr Speaker, Sir, I rise to support the motion.

Yesterday, DPM BG Lee Hsien Loong gave the Government's response to the CSC's recommendations. Once again, the Government has shown that it is a responsible and credible Government. It is prepared to take hard and difficult decisions. These decisions could not be easily taken in many other countries. In times of need, the Government is providing the right political leadership to rally and mobilise the people to the common cause. In the short term, we want our companies to survive and to save jobs for our people.

Sir, the Opposition has taken cheap pot shots at the Government for failing to foresee the danger signals and taking the early pre-emptive steps that could have avoided the sharp decline in the economy. The Opposition should understand that confidence is an infectious thing. The most difficult thing about managing the economy is the psychology of people. Every step taken by the Government is closely watched and interpreted by investors and traders, both locally and overseas.

It is not only in the economy that is of interest to the investors and traders. It is politics that has contributed to the worsening regional business and trading environment. For a period in the early days of the regional economic crisis, the foreign financial analysts and fund managers did not make any distinction between the situation in Singapore and the rest of the region. With our political leaders taking the lead to explain Singapore's policies and strategies, foreign investors and traders now understand that Singapore is different and Singapore got what it takes to continue to do well despite the political uncertainties in our neighbouring countries. In fact, we are taking advantage of the adversity of the regional economic crisis and turning it into a window of opportunity for Singapore to widen the gap in comparative advantage against our competitors.

Sir, in the new era of information technology, telecommunications and the globalisation of the economy, we have to contend with the highly volatile international market environment. We have therefore to be quick and nimble in our response to new changes and developments affecting us. We have to be agile and flexible to operate successfully in this new environment and this requires a change in mindset. All the more we need a consensus in the vision for Singapore in the next 10 years. The Report of the Committee on Singapore's Competitiveness does just that. The target set provides the direction in which we can all work together towards a common goal. The aim is to continually improve the standard of living of all Singaporeans.

For the last two days, I heard Mr Low Thia Khiang repeatedly saying that it is not necessary at this stage to cut the employer's CPF contribution, as he thinks the economy will recover very soon and we need not take the bitter medicine. He seems to suggest that the retrenchments taking place are part and parcel of working life. Too bad, you are affected. After all, only a small percentage is affected by retrenchment and unemployment. Why bring in the rest to suffer together with this minority?

Sir, indeed, there are more than 1.8 million working persons in Singapore. From the selfish point of view, it could be argued that 90% of the workforce would have no problem retaining their jobs. Many could not see the threat of retrenchment or unemployment affecting them. Possibly, those working in the public sector may feel this way. We all know that nothing remains static. There is always a danger of the contagion effect. Even in good companies, people can be affected through takeovers, mergers and acquisitions. In good times, it is easier to secure alternative employment. In difficult times like this, those retrenched and new graduates may have to sit out for many months before they can find alternative employment. This is our major concern - to save jobs and to create many more new jobs for our people. What the Government has done is to promote shared values and shared interests. It is also of educational value to let every Singaporean know that we are in it together. Perhaps the Opposition Members may not be aware that they are promoting selfish attitudes among Singaporeans to care about their individual selves. Perhaps there are those who believe, like the Opposition Members, that we can take the more laissez-faire approach and things will improve naturally towards recovery. I would rather that we be safe, prudent and conservative in our approach in handling this tricky economic situation in hand. Even with these measures, we cannot guarantee that we will recover quickly. So we do what is necessary and hope for the best.

I wish to commend the action taken by the Government to help bring our economy on an even keel. I am happy that the daily-rated employees and Divisions III and IV public sector employees do not suffer the direct cuts in their monthly salary. The Government, as an employer, is taking good care of the lower salaried staff.

As I have said earlier, the public sector employees may feel the most secure during this period, because they are insulated from the experience of those directly affected by the downturn in business. Civil servants are always occupied. What more with work being generated for them with Government pump-priming and revisions to Government taxes, levies and charges. The Government, by its action in cutting the salaries of civil servants in Division III and above, is bringing civil servants closer to the reality on what is happening in the economy.

As there is a cap in the employer's CPF contribution at the monthly salary of $6,000, it is only fair and equitable that those in the higher income category above $6,000 be made to take a direct pay cut. I am happy to note that the Ministers, Members of Parliament and senior civil servants will have their annual remuneration reduced by up to 10%. This is what leadership by example is all about, and the rest of the people should be pleased that the right tone is set for them to follow.

Sir, an interesting feature in the package announced by DPM Lee yesterday is the effort to help our domestic retail trade by plugging the leak in our economy, by reducing the exempt limit of GST to travellers. I believe Singaporeans will support the move. I am sure the retail sector will welcome this gesture of the Government. I am also sure that the businesses are pleased with the reduction in the foreign worker levy. The total savings of $204 million will be an added fillip to the companies, especially the manufacturing sector.

The CPF has undergone many modifications. We are introducing many uses for CPF. I am concerned whether, in the long term, CPF account holders will have enough to live on during their years in retirement. Will the investments in property and shares allow them to realise good values in time for their retirement? I would suggest that the Government do a thorough review of the CPF scheme so that we do not unconsciously lead to the unintended effects arising from the many uses of CPF accounts.

Sir, on the subject of human intellectual capital, Mr J. B. Jeyaretnam yesterday criticised the Government for not reviewing the educational system. I am surprised with his remarks. He must have been deaf to the outcry of parents and teachers that we have been making too frequent changes to our educational system. I am glad that he supports the need to constantly review our educational curricula to keep up with the times. It is precisely what the Education Ministry has been doing, introducing critical thinking skills, information technology, national education and even community service into the school curricula. The GPC for Education has always been supporting the Government's efforts to bridge the skill and qualification gap, to ensure that graduates and school leavers have the capability and competency to fit easily and quickly into the work requirements. Our students are already perceptibly different today from yesteryears. They are more confident, articulate and have inquiring minds. They are our hopes for the future. I am confident that young Singaporeans can benefit from the wide range of educational courses in Singapore.

Sir, the NTUC leaders and the labour movement are to be applauded for their hard work to arrive at this consensus. In fact, it is because of their hard work that they have made our jobs so much easier today. After this debate, Sir, this is the time to act. I am optimistic that our economy will recover in the not distant future.

Dr Lily Neo (Kreta Ayer-Tanglin): Mr Speaker, Sir, I stand to applaud the CSC for a job well done and the Government for its response to the CSC's recommendations. I believe the Government's decisive and comprehensive package, announced by DPM Lee yesterday, will bring us out of this economic crisis sooner and will place us in a better position to handle future challenges. I would like to mention, in particular, that I welcome the Government's initiative to cut the salaries of the Ministers by 10%, in spite of the two consecutive years of wage freeze. It is good that our Government has again shown us its readiness to lead by example.

Sir, while I agree with the Government's decision to cut the employer's CPF contribution by 10%, I am concerned about the cut of 4% from the Special Account. This will mean many account holders will find it harder to attain the Minimum Sum. I would like to reiterate that the Minimum Sum in the Special Account is extremely important because life expectancy of Singaporeans is increasing towards 80 years of age and many will require their Minimum Sum for subsistence in times soon to come. I strongly suggest that the shortfall in contribution here be promptly reinstated at the end of these two years.

I also agree with the Government's package of aid to alleviate the burden of lower income families. However, I am disappointed that there is no mention of any help for the retrenched. Sir, I would like to entreat this House to also consider the more immediate and adverse side effects of the economic downturn which has left many people unemployed. Just last September, 62,000 workers in Singapore were without jobs. Sir, 62,000 may be just a number, mere statistics to some people. But not to us, because this means that the bad effects of retrenchment are affecting too many of our people. And the lives of these Singaporeans and their family members can indeed be badly affected, not only in financial terms but also in terms of psychological and social well-being. The conviction and confidence to achieve that Singapore dream gets questioned. These people can be left totally demoralised. Indeed, the distress from retrenchment can be very heart-breaking and the hardship from income loss can be very harsh. Although this may be especially so for sole breadwinners of families with children, the hardship will be felt by all members of the affected families.

Sir, there is no provision for unemployment benefit in Singapore and I am not an advocate for one. Welfarism has many down-sides and will not work in Singapore. However, we must have some degree of humanitarian and social conscience considerations from the Government. We have built up strong reserves over the years for rainy days, I presume. Are we not in the middle of the storm right now? Although I agree with DPM's reservation yesterday about our changing from a nation of savers accumulating wealth to a nation of spenders depleting it, I would like to see a helping hand extended to the families of those retrenched workers who are having genuine difficulties, often through no fault of their own.

The Government could disperse a one-time funding through the CDCs to tide over the retrenched who are in dire need during the two difficult years envisaged. Not all the retrenched workers will need the help because some have personal savings, some are from double-income families and the spouses are not unemployed. Some would simply not want such aid and certainly not for the full two years and so on. Nonetheless, even if hypothetically, every single one of the 62,000 retrenched or unemployed workers were to apply for the two full years of $500 per month subsistence help, the amount would be just under $750 million. This, indeed, would be a large sum of money, but it would be well received humanitarian aid from the nation to its very own citizens.

Sir, these are not ordinary times and what can be done should be done. I have met people who have been retrenched. They looked trapped and the desperation they expressed is unbearably profound. Now, there will always be argument that we may encourage reliance and complacency as well as ending up with a "dole queue". Sir, I feel that these fears will not be validated because the applicants will need to apply for the monthly aid and they will, of course, be subjected to satisfying the eligibility criteria set out to stem abuse and dependence. Moreover, $500 per month is barely enough for subsistence and the majority of people will want to earn more than that in order to have a better living for themselves and their families.

At present, there is a 4 to 1 matching grant of up to $3 million each year from the Government for the CDCs when money is raised by the grassroots. It is not easy to raise funds during times like these. There is a varying capacity by different constituencies to raise funds. The ones that have the least capability to raise funds may be the ones that need the most to support families in financial difficulties. Moreover, most of the money raised for the CDCs in many constituencies have been committed to other charitable projects. In this context, therefore, I plead with the Government for this one-time outright funding through the CDCs to help the retrenched.

There is also no mention in the Government's response about the need to look into the employability difficulties faced by the older workers in the country. I share the same concern as mentioned by my parliamentary colleague, Dr Vasoo, in this area. I believe that skills upgrading of workers is the correct path forward. I also believe that higher technology industries will position us better economically in the future. However, it is necessary for us to also consider the social implications for the society as a whole when we try to achieve our ideals. We run the risk of leaving many of our people completely redundant and causing more social ills than necessary. There are about 500,000 lower-skilled workers at the moment and many of them are above 40 years of age. Mr Speaker, Sir, how many and how fast can these people be upgraded in their skills? Retraining takes time and not everyone can be upgraded in skills for a multitude of reasons. The lack of motivation may be a reason. But, financial considerations, the lack of opportunity and the inability to master new skills are even more important limitations. Of course, we cannot accept such excuses if we want a more productive workforce. Nevertheless, while trying to achieve our goal, the livelihood and well-being of these people have to be considered. Along the way, we should leave a niche section of the economic pie for them. In this respect, Sir, I would like this House to consider the following:

(1) Lower technology jobs should not be phased out completely. They have to be supported and even encouraged until such time when we have trained our unskilled and semi-skilled workers.

(2) Employers must be encouraged to hire more older workers. Perhaps we need a helping hand from the Government by way of incentives such as (a) linking the quota of foreign workers employed with the number of older Singaporean workers employed or (b) special tax incentives for companies which employ older workers.

(3) On the part of employers again, job vacancies must be made available or even created for our local workers. There is no doubt that Singaporeans shun certain kinds of jobs and tend to let foreigners fill them. This should be addressed, for instance, by the use of more prefabricated materials in the construction industry or by the use of automation in the manufacturing industry, and so on. Steps taken to change the mindset of employers towards such ideas ought to be addressed.

(4) Emphasis on changing the mindset of our local workers should also be enhanced. We need to encourage more of our own workers to take up jobs that have been designated as "for foreigners only" or jobs that are considered lowly and demeaning. Being choosy and unwilling to take on jobs below their expectations in terms of salary or status is probably the most significant mindset change required. Such mindset change will have to come in due course because more workers will be competing for limited preferred jobs in the market.

(5) The Skills Redevelopment Programme's efforts towards helping companies upgrade the skills of their workers is most laudable. This programme must be encouraged and promoted resolutely to encompass more sectors of our economy.

Sir, in our efforts to equip ourselves for this economic downturn, I would also like to beseech this Government not to ignore the plight of our womenfolk. I would like to commend these two points for attention:

Firstly, women comprise 40% of our workforce and many of them bear the burden of having the multi-role of looking after the home, bringing up children and caring for their elderly parents. Many need maids as a result of these responsibilities. We need to help them. Although the Government is not lowering the levy for foreign domestic helpers at this juncture, I would hope for a review later. A lower levy will go a long way when family incomes are to be significantly reduced. Furthermore, not many working women earn enough to benefit from the double tax deduction. In fact, there were only 17,425 women who were eligible last year, or about only 15% of the total number of employers of foreign domestic workers.

Secondly, childcare centres and before-and-after-school care centres have certainly been a boon for more mothers to seek jobs and contribute to the economy. The importance of these centres is recognised by the Government. More of them have been set up and subsidies for working mothers have been rightly given. I would like to see attention given here by having the subsidies increased in view of the impending CPF and pay cuts. Mr Speaker, Sir, I applaud the CSC's recommendation to have "neighbour care" by extending child care subsidies to all working mothers, instead of restricting them to those who send their children to formal childcare centres. This would create more jobs for the homebound women to mind someone else's children in their homes.

Sir, in conclusion, we need to work together as a nation, with a single-minded wish to see us out of these bad times. We will experience hardship and we will remember the saying, "no pain, no gain". However, I would like the Government to let the degree of hardship become a factor in all our endeavours and to remember what I would add, "too much pain is no gain too".

Sir, I support the motion.

Mdm Claire Chiang See Ngoh (Nominated Member): Mr Speaker, Sir, so much has been discussed about Singapore's competitiveness. The cost-cutting packages announced in this House by DPM Lee was a "sunshine" package. However, these discussions on long-term economic policies and short-term cuts in business costs, which will take time to be implemented and felt, are not all understood by the man-in-the-street nor by a large segment of Singaporeans not trained in economic terms. Their immediate concerns are still the threat of unemployment and the impact of wage and CPF cuts.

The recommendations evidently will enhance business competitiveness but they are pressing ordinary Singaporeans to shoulder the urgent responsibility of making Singapore more competitive, by accepting a wage cut and lowering of safety net contributions from employer's CPF contribution. This is the reality of global competition when we have to cut wages to stay competitive, because they form the most significant component in our operating costs.

Sir, accepting "tough times" and a harsh business reality, however, does not wish away the assault of deprivations and the pains in people's struggles to make ends meet. Many MPs had, in the last few days, called for a compassionate gesture by the Government to try its utmost to alleviate the financial pains of Singaporeans so that, as Dr Michael Lim said, "their spirits will not be broken", and I echo their calls.

What more can we all do for the vulnerable in this crisis? I do not agree to using the reserves or, as DPM Lee said yesterday, lao ben [ ]. And he had translated that to guan cai ben [ ]. That is a little bit fatalistic, and it is like the end of a journey, because there is no life in coffins. I would call it a "reserve in perpetuity" - there to guarantee generations of Singaporeans, our children and grandchildren the security of having something there for them, as a last resort. Take my own family, for example. We set up a trust for our children so that if anything happens to us or our fortunes, they have the reserve to fall back on. We explained to them that they have to grow it for their children and grandchildren, in perpetuity. And if there is a critical need, it can only be for education need. We believe, if everything else fails, an education guarantees a job, and life. Therefore, I agree, bu yao dong lao ben [ ], bu yao da puo man [ ]. Do not touch the reserves. It is a psychology of security for the country.

So what can we do? I will highlight five focus areas which have direct impact which we can still work on.

The first is more of the many commendable programmes already started by MOM and NTUC in areas of job search and placement and skills training for workers. I am glad to hear from the Minister this afternoon about the employment facilitating channels and the retrenchment advisory unit. Those are positive initiatives. But I would call for the strengthening of three strategies. The first is the strengthening of job matching channels for older persons. We know how hard it is for the 35 to 40-year olds to get employed, because employers and marketplace prefer younger workers with qualifications.

[Mr Deputy Speaker in the Chair]

5.10 pm

Mdm Claire Chiang See Ngoh (Nominated Member): MOM has said that if employers are found to have terminated the services of a worker unfairly on account of old age, the Minister can order his reinstatement to his previous job, or require the employer to offer monetary compensation to the affected worker. Sir, that is very reassuring. We have read in the papers how hard it is for the 40-year olds to find jobs. The most recent one reported was Mr Shaik Alauddin who could not find a job for 11 months.

Some of the reasons given in that article were valid - skills level, unmatchable capabilities, low work adaptability, etc. But we have to look closely at our million over 40-year olds and do a skills audit. In view of the current employers' attitude and market demand for fewer workers, who are cheaper but higher qualified ones, it may mean more "older persons" will have difficulty finding jobs. (And that represents probably three-quarters of the Members of the House here in the `50s who may become potential job seekers!). We may need to identify the kind of industry clusters which we can match and train them for. This category of people still have 20 more good years to contribute to society; it is our economic loss not to employ them.

I am glad to note that DPM's response yesterday registered the same concern. May I then ask if we can consider special incentive schemes for employers who employ older persons?

The second strategy is to identify more part-time work for working mothers. The Government has removed some of the disincentives for part-time work in public service by allowing part-time workers to claim the same CPF contributions and leave schemes as full-time workers on a pro-rata basis. Dr Aline Wong, in a recent statement, reported that private sector companies, however, have not been flexible in making part-time and flexi-time work more readily available to their workers. I support Dr Aline Wong's call for employer groups to study how part-time schemes are practised in some countries such as Britain and Sweden, and learn from them.

Can we think of setting up a dedicated database to identify the kind of part-time work in demand in the marketplace, so that a part-time job clearing house can be set up and a mechanism for job identification, recruitment and placement can start to operate? The 900 queries for part-time jobs which Minister Lee Boon Yang reported two days ago provide a baseline for us to identify what workers are looking for and what special job designs can be customised to absorb them. This is a good start to systematically examine part-time job clusters for the Back-to-Work programme.

The third strategy is more of the excellent initiatives like SRP and CREST which are targeted at 800,000 workers for the next five years, but to be extended to other beneficiaries like housewives, older persons, schools, voluntary groups, etc, so that we truly can become a learning people and thinking nation at all levels.

I would like to make a call to all employers in the private sector at this juncture to reinforce the efforts of the Government by creatively aligning their work and people resources in such a way that workers, old and young, men and women, can still have a job, even if need be, on a part-time basis. For example, we can adopt a policy of wage cut by reducing two or four work days in a month for each staff. Administered on a rotational basis, the company carries on business as usual with fewer staff having to double up and perform cross-functionally. Freed from office time, many staff can now attend to family matters and go for some inexpensive training courses. Life will be more balanced, although in some cases, the salary cut can be inadequate. However, it is better that everyone in the company has a little less, than a few to lose their jobs completely. And I also urge employers to pay back to workers, in the form of bonuses, in December 1999 if their companies did well next year.

My second focus is more community-based initiatives like what CDCs and voluntary agencies have developed. I will highlight two strategies. The first is reaching out to the poor. Here, I would like to applaud grassroots leaders and volunteers in Tanjong Pagar and Marine Parade and recently Ang Mo Kio/Cheng San CDCs for their mission to brief the poor in one- and two-room flats on help schemes available to them. I observed that even among the social service agencies, the knowledge of available resources for coping with the economic crisis is fragmented and poorly understood. The next obstacle for a needy person, after she or he knows where to get help, is the overwhelming procedures involved in getting the help, especially for older persons and those who feel threatened by an English-speaking institution and are illiterate.

It is unfortunate that the myriad schemes offered by Government, including CDCs, CCCs, Women's Executive Committees and all the Family Service Centres and other civic bodies are not sufficiently publicised and disseminated to the needy families. This is the reason why I applaud the volunteers in the CDCs for taking the pain to go to the needy homes, listen to their problems, help to fill up the forms by detailing the sort of problems to be tackled and then fax over to CDC staff for them to follow up their support function by contacting the relevant authorities.

This painstaking exercise, for me, is "grassroots democracy" at its best. I hope this effort will repeat in every constituency. By mobilising all these volunteer groups, residents in the community and CDC staff, we are revitalising the "gotong royong" spirit.

The second strategy is to bring the bureaucracy to the man-in-the-street like what the CDCs did by setting up an employment hotline, employment information and exhibitions in shopping malls and working closely with MOM to help residents fill up employment forms. I hope more of these will continue which would clearly break up the tyranny of the "bureaucratic leadership" which Mr Chiam See Tong cautioned us against yesterday.

My third focus is more of what the Government can do in the area of rents, fees, taxes on utilities and assistance schemes to help the cashflow situation of ordinary folks. The cost reduction package announced yesterday had gone beyond what the CSC has recommended, for which we should be thankful. However, Sir, another 5,000 more people will be losing their jobs, bringing our total unemployed to 25,000, according to recent MOM estimates. More and more bankruptcies were recorded in the first eight months of this year. What shall these households do?

I am glad to hear that the Government will consider releasing CPF monies to family members to pool their resources together to pay for their house mortgages. The presenting problems, however, of clients seeking help in Family Service Centres in the past six months were essentially difficulties in securing employment, in meeting basic needs, children's school related expenses and lifestyle adjustment. The hardest hit are single parents from low income families whose situations worsen when the search for permanent employment gets harder because of the poor job market.

I hope the special assistance schemes set up by NTUC, MCD and MOM will respond to the critical needs of these vulnerable groups fast and generous enough. I would like to know if any emergency fund has been set up for Ministries to have access to when they are called to respond to difficult cases and whether the criteria for application for these funds have been broadened in recent months to meet the needs of vulnerable families.

DPM Lee yesterday urged us to build our "national resilience" and "social cohesion" to stand together and maintain a sense of common purpose. Let us note that people under crisis and struggling to survive, burning candles at both ends, are too spiritually and physically exhausted to be able to put their mettle to test. It is the rest of us who are better off, who must, in partnership, stretch our "helping hands" to pick up those who are falling and slipping - this is truly for me the ethos of strengthening our shared experience of adversity and struggle. In the scheme of things, whose helping hand is the firmest and the most able to be generous - the Government, of course.

The fourth focus is more of what NTUC Fairprice has done by cutting down the cost of living by price reductions. It was a generous move. And as a direct beneficiary, I look forward to more cuts in even more items in January 1999. I applaud the adoption of NTUC Income for helping insurance policy holders and borrowers pay their premiums and housing loans, and a whole lot of other measures to alleviate their financial pains. To me, NTUC sets the exemplary standards in proactively moderating the impact of the economic crisis on daily costs of living of ordinary people.

My fifth focus is more stress on fast response time in all Ministries by providing efficient and shorter processing time required for some of the assistance schemes offered by the Government. Maybe our bureaucracies could consider engaging a corps of paid part-time residents or retrenched persons to do the tiresome liaison work of attending to applications, giving appropriate information, filling up forms and completing the follow-up detail actions. The devil is in the detail, as we say. An economic crisis requires crisis intervention skills which are fast, efficient and effective to ensure that those affected have the information and access to critical services.

In conclusion, I have been travelling around in the region in the last six months and most foreigners I met had conveyed such excellent remarks about how Singaporeans and our Government have tackled the economic crisis with remarkable discipline and caution.

My deep disappointment with this Report is its lack of long-term strategic thinking on the value of the social fundamentals as social capital, which is crucial for human development and critical for honing a competitive society. By social capital, I mean the network of institutions and relationships that are important for the productive functioning of a society. The network includes the families, community bodies, social service agencies, civic bodies which are connected by shared ethos and collective memories of a place.

Intangible as they are in their contribution in terms of dollars and cents to business productivity, social capital provides the sealant in community bonding and the social stability upon which economic competitiveness thrives. Resources spent on people services help to moderate the phenomenon of marginalisation and alienation among pockets of a population that can undermine social stability. The effort includes more financial and employment support to groups with special needs, for example, the disabled and mentally challenged; and more support across the board for voluntary organisations which repair the broken pieces of people's lives.

I hope the Government truly regards its role just as important as businesses, and if the latter are going to enjoy lower rentals in State-owned enterprises, can it not also grant free rent for one year, or perhaps considerable rent deductions to all VWOs operating on void decks? I agree with Mr Koo Tsai Kee that the 50-50 shared operating costs between State and the VWOs is a generous formula and in the total operating costs, rentals are not a major component. However, every dollar saved from rentals, averaging at about $5,000 a year is a whole lot of money for VWO, and what a relief it is to save some money to run a service programme for the community. No doubt, we can raise funds by organising fund-raising activities, but we all know how hard it is to raise that extra dollar. I hope the Government will give this request a serious thought.

Another noticeable omission in this Report was the neglect of the family as one of the drivers in the millennium competitiveness, requiring a strategic blueprint in mapping the synergy between the public and private sectors in their efforts of incorporating the agenda of family needs as part of workplace reorganisation. The Report registered, in two paragraphs, the value of pro-family work policies, such as flexi-wage and flexi-time work schedules. There are many more family-friendly policies to consider, such as childcare infrastructure, flexible compensation structure, home-working opportunities, etc, that we need to explore that will enhance productivity levels of men and women in general, without sacrificing the needs of the family.

We need a new mindset to organise people resources in both the public and private sectors that is less discrete, more fuzzy and blurred, but no less ineffective and inefficient, a perspective that is multi-disciplinary, multi-functional and cross-boundary. Economics, politics, sociology, history, moral and civic studies have to be cross-fertilised to guide the way we think and plan agendas for Singapore's competitiveness.

For me, the competitive Singaporean for the millennium is someone who is clear in thinking, able to amass and process the information around him, fast on his or her feet to respond to crisis and adapt to change, quick and hands-on with his hands, so that he or she is not just a talker but a doer, and feels the compassion for the needy and the vulnerable and for Singapore, which he or she calls "Home".

It requires more than what this Report had blue-printed to produce the Millennium Singaporean that will be the competitive agent to bring Singapore to the next higher level. Engines, machines and electronic disc drives are only part of the competition. The other part, and a major one, is people resource and their mindsets, values and spirit. Perhaps the CSC is not the forum for presenting these laudable ideas. I therefore propose that the Singapore 21 Committee's recommendations be used as Part Two addition to the Report of the Committee on Singapore's Competitiveness, bringing into sharp focus the significance of social capital underlying economic constructs that will make Singapore a city of excellence and a society of distinction.

I do support the motion standing in the name of the Minister for Trade and Industry.

Mr Goh Choon Kang (Marine Parade): (In Mandarin): Mr Deputy Speaker, Sir, there is a Chinese saying, "Even a wise man sometimes makes a mistake, while a fool may once in a while come out with a good idea." Having heard some 50 wise men and wise ladies over the last three days, let me also offer my non-wiseman idea on the subject.

DPM Lee announced yesterday the cost-cutting package for Singapore. Overall, I feel that this is a pro-business package. Of course, there are also some measures which may be said to be pro-people. But I must say the vast majority of measures introduced are designed mainly for the benefit of the business. In fact, the magnitude of some items of the cost-cutting measures may even exceed the expectations of the business community, for example, the foreign worker levy. As far as the business community is concerned, it is good news.

However, DPM Lee cautioned that this package, though designed to reduce business cost in Singapore to enhance our competitiveness, was no assurance of a quick recovery to the economy because the determinants are external and beyond our control. But I have a question, if these external factors, ie, the regional economic situation continues to deteriorate, then what should we do? We need to have quicker measures to react to the new reality. In fact, this package to tackle the current crisis is just some short-term measures. The Committee on Singapore's Competitiveness (CSC) was originally set up to look into how to strengthen the competitiveness of Singapore over the next ten years. It just so happened that a currency crisis broke out very soon after the CSC was formed, and it was suddenly landed with the responsibility of working out some ad hoc measures to help our businesses in Singapore tide over the crisis.

In other words, we do have a designated mechanism, an official or formal mechanism, to deal with the sudden emergence of a crisis. So, with the experience gained from this present crisis, perhaps we should seriously look into the feasibility of setting up a permanent mechanism, a think-tank sort of body, to deal with any crisis that may appear from time to time.

I think this is something which the Government should consider very seriously. The current crisis has also highlighted one other point and, that is, our forecasts of the overall trends in the economy seem to be quite off the mark. It appears that the authorities responsible for the forecasts, including the Government agencies and the universities, have not been able to accurately forecast the trend of economic development in the region. It looks like accurate economic forecast is even more difficult than weather forecast. Sir, before anybody can come up with a more reliable mode of economic forecasting, I would suggest that the CSC should be kept alive as it is a useful mechanism to have, particularly when its composition is a good mix of representatives from the business world. Having their fingers on the pulse of the business world, these businessmen can detect every movement in the rapidly changing business environment. They are sensitive to changes and know how to respond and react quickly.

Mr Deputy Speaker, Sir, when faced with this serious economic situation, the Ministers and senior civil servants have decided to take the lead in taking a cut in their salaries. This is a very great inspiration to the people, and it has very far-reaching effects. This is a clear indication to our people that our leaders are sharing the pains with the people. The proposed pay-cuts to the civil servants will save the Government some $176 million. Of course, this is a very significant amount. In order to ensure that the sacrifices made by the Ministers and senior civil servants are made more significant, I suggest that the Government make use of these savings to set up an emergency fund to help the lower-income families which are presently in financial difficulties to tide over the current predicament. I hope that the Minister for Finance will agree to this proposal of mine.

Another way is to allocate sums of money from these savings to the various Citizens' Consultative Committees (CCCs) welfare funds to carry out more welfare work because, with the present difficult situation in our economy, the CCCs are finding it very difficult to raise monies for their welfare funds. So I hope that we can make use of the savings from the pay cuts of the Ministers and top civil servants to the CCCs to help their constituents. By so doing, I hope and I believe it will also help to strengthen the bond between the people and the Government. This will not only give tangible help to those who are in need but also inspire our people.

Now, let me talk about the bread-and-butter issues. I hope that the HDB would seriously consider lowering the selling prices of new HDB flats, because over the past few years, the selling prices of HDB flats have gone up quite a lot. Granted that HDB flats are still considerably cheaper than private developments, we cannot fail to take cognizance of the fact that the prices of private properties have already fallen substantially. This will, in turn, affect the prices of HDB flats. Besides, building materials and construction cost have also fallen considerably. For example, I understand that the prices of cement, which is one of the very important building materials, have gone down by about 30% in the past couple of years. With such cost savings from cheaper building materials and pay cuts of the workers, it is obvious that the construction costs of HDB flats will be lowered and HDB should pass on these savings to the people, especially the first-time buyers, the young couples. Right now, these young people have to accept a lower starting pay, or to wait longer to get a job.

Finally, there is one other matter that we should concern ourselves with, and that is, with the announcement of the Government package, how are we going to ensure that this package will give real benefits to the end consumers. For example, the hawkers, the food courts, and so on, when are they going to lower their prices so as to lighten the burden on the consumers? Mr Ang Mong Seng suggested holding a "National Sales Campaign". Actually, shopkeepers and hawkers who find their business thinning away are already giving special offers and sales in desperate attempts to attract customers. The question is: for those who are doing a roaring business, how are we going to convince them to lower their prices? I think we can use administrative measures and increase competition. For example, the Ministry of Trade and Industry could call up all the business associations, the hawkers' associations, the shopkeepers' associations and remind them that they should pass on at least in part, if not in full, some of their savings from these cost-cutting measures, to the consumers. I think we should also encourage the NTUC to open up more coffeeshops at suitable locations so that there will be more competition in the retail food industry. This will help to lower the cost of living.

Mr Deputy Speaker, Sir, I support the motion.

Dr Teo Ho Pin (Sembawang): Mr Deputy Speaker, Sir, I rise in support of the motion as proposed by the Minister for Trade and Industry.

Sir, over the last 14 months, many Singaporeans have experienced the effects of the regional financial crisis. Some are affected financially while others are affected psychologically. The crisis has made all Singaporeans learnt one important lesson, that is: `Do not take things for granted'. Economies can fall, diplomatic relations can sour, property and stock prices can fall, income can reduce, and our quality of life can drop.

By now, many Singaporeans understand that they are much more fortunate than many people in other countries. This fortunate situation does not happen by chance. It is the foresight of our Government and our prudent management of the economy that have sheltered Singaporeans from the vagaries of the regional crisis. That is why the Government is now again rallying the support of all Singaporeans to take tough measures to position themselves in the global market in the next century.

In times of crisis, all of us must make sacrifices and take a longer viewpoint in our actions and deeds. In this way, Singapore will be able to cope with the crisis and emerge stronger as a more competitive economy in the global market.

The Committee on Singapore's Competitiveness (CSC) has indeed done a very comprehensive study to spearhead Singapore into the next millennium. Although many visions and strategies were recommended in the Report, it would be better if more details on targets and method statements could be highlighted to guide the respective Ministries, statutory boards or companies to achieve the desired outcomes.

Sir, I am glad that the Government has accepted the cost-cutting package to increase Singapore's competitiveness. But, with falling demand from regional economies, I would urge the Government to take aggressive measures to strengthen the capabilities of our local firms and increase the market share of their products and services.

Sir, I would like to offer some suggestions for the Government to consider: Market Diversification

As a small country with limited resources, Singapore has no choice but to depend on foreign investors and other countries' economies. Therefore, it is crucial for Singapore to widen its business dealings with more countries so as to cushion the effects of fluctuating economies in the future.

But we need to identify suitable products and services, which are in demand in these markets. We need to develop market niches. Potential areas include consultancy services for housing, industrial park, health, R&D, and education services. As for consumer products, we must form strategic alliances with MNCs to penetrate specific markets. Singapore has the Asian culture and goodwill to become trustworthy partners of MNCs. I would urge the Government to set up a task force to focus on strategic alliances with MNCs.

To be successful in market diversification, it is also essential for local firms to have strategic marketing. Many local firms are family businesses and may lack the exposure in international marketing.

Although the Trade and Development Board has been searching for more new markets, we need the expertise of private marketing firms, especially our own top marketing firms, to conduct market research and sell our products and services. I hope the Government can consider engaging the services of local marketing firms by paying them a retainer fee. These marketing firms can then be engaged by local firms, on a commission basis, for increasing their sales overseas.

Building world class companies

I support the idea of nurturing our local companies to be world-class companies. The CSC has proposed that GLCs should kick-start the process as they have the resources and experience. Although the GLCs can take the initiative, we should also, at the same time, support promising local firms to be world-class companies. Doing business is all about networking and business acumen. To succeed in strengthening our external wing, the Government must provide resources and take a stake in both GLCs and private firms to strengthen their competitiveness internationally.

Strengthening Small and Medium Local Enterprises

The regional crisis has surfaced some weaknesses in our SMEs, especially in financial planning and management. In order to play a supporting or partnership role to MNCs and GLCs, we must upgrade the management capabilities of our SMEs. Although there are many Government schemes to assist SMEs, not much guidance has been given to position our SMEs to be strategic partners of MNCs and GLCs.

I would urge the Government to provide a scheme whereby SMEs can engage professional management firms to conduct management audit to streamline their operations and strengthen their competitiveness. These audits should focus on building capabilities instead of merely cost cutting measures. Such audits must also be conducted regularly, maybe on a 3-year basis, to ensure that SMEs are kept viable and relevant to our economy. We must also set criteria to measure the success of all Government assistance schemes in order to make sure that they add value to our local firms and our economy.

Cost Cutting Measures

While cost cutting measures are inevitable, we should seriously analyse the impact of these measures on Singaporeans, especially the lower income groups. It is timely for the Government to reconvene the Cost Review Committee to study the public's concerns regarding the rising cost of living. We should also study the expected standard of living and quality of life of Singaporeans in the next millennium.

According to a survey conducted by the Asiaweek of 40 cities, Singapore does not rank consistently high in terms of standard of living and quality of life, especially in areas such as housing, hospital beds and cars. We need to determine a balance between standard of living, cost of living and quality of life.

To be the hub of Asia and attract foreign talent, Singapore must benchmark its quality of life with comparable cities in the world. Unless this is achieved, it will be difficult to attract top foreign talent.

Sir, in the short term, I hope the Government can cushion the impact of the cost cutting package on Singaporeans by adopting the following measures:

(1) Provide a one-off 15% personal income tax rebate.

(2) Provide a one-off subsidy for pupils in pre-school and kindergarten centres.

(3) Reduce the car park fees for HDB and URA car parks by 15%.

(4) Provide more tax relief for Singaporeans who upgrade themselves through skills training including professionals.

(5) Encourage banks to allow HDB shops and hawker stalls to restructure their loans.

(6) Increase the S&C rebate to HDB residents.

(7) Increase the National Servicemen's allowance to boost the morale of SAF servicemen.

(8) Exercise more flexibility to allow parents to send their children to nearby schools so as to reduce their transport cost burden. This could be achieved by having more pupils per class or building more classrooms in existing schools.

Sir, I support the motion. 5.50 pm

Mr Sin Boon Ann (Tampines): Mr Deputy Speaker, Sir, like most of my colleagues and as the last speaker on the list, I too support and agree with the motion standing in the name of the Minister.

The Report of the Committee represents what is by far the most comprehensive study since the mid-80s to address the immediate problems and the long-term strategies to keep Singapore on the right track of sustained economic growth and development.

Yesterday, in this House, we heard the DPM giving the Government's response to the CSC recommendations. The response has been most encouraging. It shows that our Government takes a very serious view in dealing with our immediate problems. The measures that have been proposed so far are broad ranging. It seeks to deal with our immediate problem of business cost in one fell swoop rather than to deal with it in a piece-meal manner. These cost cutting measures no doubt will cheer the business sector. This should send a very strong and positive signal to our people and foreign investors.

The measures introduced by the Government could not have come at a more appropriate time. The regional economic crisis, as we all know, has led to a deepening of contrast in the cost competitiveness of the economies of the region. The weakening of the currencies in some of the more severely affected countries has made Singapore, which is relatively unaffected by the crisis, a much more expensive place to do business in. This is no good for us, especially when our economy is very much export driven. Just looking at the cost of business alone, Malaysia, Thailand and Indonesia, by virtue of their currency depreciation, which in some cases depreciated by more than 100% against the US dollar since early last year, are now that much more competitive against Singapore's exports. This, if not for the other political problems that are confronting some of the countries in the region, would have made these countries extremely attractive alternative places for direct investments or relocation of investments from Singapore.

Sir, while I agree that cost cutting measures taken by our Government will help to provide immediate relief to our businesses, cutting business cost alone is not going to be the only long term solution to sustaining or improving Singapore's competitiveness against the region and the whole world. More must be done. Indeed, this was recommended by the Committee. In general, one must go beyond the symptomatic approach of cost cutting to one where paradigm shifts and other strategies would have to be engaged. To the credit of the Committee, this was the approach taken. As an example, the Committee has boldly recommended that we should move away from investor protection approach in regulating the securities industry to one where the authorities play a supervising role, ensuring that the market is sufficiently transparent to allow the investor to make his own independent judgment about investment decisions. Leaving aside the question of whether or not this is an acceptable approach, the recommendation does suggest a rather radical shift in the thinking of our policy makers.

Sir, in some ways, our country is now at the crossroads. The economic crisis has brought upon us hardships for our people and our businesses. Yet, at the same time, there are opportunities and challenges that present itself. We have been relatively unaffected by the contagion of the region. Yet, we cannot rest on our complacence and not take advantage of this opportunity to pull ahead of competition. In that sense, we should now seize this opportunity to redefine some of our economic goals and the means by which these goals may be attained.

The Committee has identified several strategies, by which it is hoped would help preserve Singapore's status as one of the most competitive states in the world. Most of the strategies did not come as a surprise. However, there are also many which are seen as bold initiatives for Singapore.

Sir, I support, in principle, the proposals of the Committee as set out in the Report. The vision, as articulated by the Committee, is one that I agree with, ie, making Singapore an advanced and globally competitive knowledge economy within the next decade, with manufacturing and services as the twin engines of growth.

While it is easy to identify with the broad proposals of the Committee, I do have a number of issues which I would like to raise in this House. Time does not permit me to cover the proposals in a comprehensive manner. I shall confine myself to only some of the recommendations.

Manufacturing and Services as Twin Engines

We recognise the importance of manufacturing and services as important engines of growth for our economy. Indeed, since independence, our high economic growth has been led by the manufacturing sector; hence, the emphasis on manufacturing.

While we recognise manufacturing as providing the engine of growth, I note, at the same time, our high dependence on multi-national corporations (MNCs). We are no doubt grateful to these MNCs for bringing investments to Singapore and providing Singaporeans with employment. However, we should recognise that MNCs are not indigenous companies. They are more likely than local companies to pull out their investments and cut down operations in Singapore when it is expedient for them to do so. We have seen this in the mid-80s and how our employees became displaced in the process. These MNCs do not owe us a living and we do not expect them to.

In the area of manufacturing, we should therefore hedge against this dislocation by continuing to concentrate on our local enterprises. We should build on our local manufacturing bases. The Report has quite correctly pointed out that we need to build up a strong capability in all parts of the value chain. Hopefully, we can nurture enough local companies with strong capabilities that will provide an alternative base for the manufacturing sector. In this regard, we have much to learn from Taiwan where the strength of the local small and medium enterprises have helped to shelter the country against the forces of contagion which have affected the region.

Sir, I recognise the need to strengthen our local manufacturing capability. We should do more to help our small and medium enterprises (SMEs). We recognise that our SMEs, because of their size, have inherent limitations. I have spoken to many operators of SMEs and their feedback has a very familiar ring about it; limited access to funds, stiff competition from Government-linked companies, and a perception that the Government does not take them seriously enough. I took a look at the participants of the CSC Report and I was sad to note that a committee as important as this, and for all the importance that we have attached to local companies, we have not included the Association of Small and Medium Enterprises in the Committee. Sir, I think this is a glaring omission. I must, at this moment, declare my interest in the matter as a member of the Association of Small and Medium Enterprises.

I know that we have various incentive schemes for the small and medium enterprises. However, the feedback I got is that these schemes are rather difficult to apply for. The red-tape that the applicant has to go through is discouraging enough. Take, for instance, the Local Enterprise Financing Scheme. Will the Minister kindly enlighten us on the extent to which our local companies have been successful in applying for financial assistance through the Local Enterprise Financing Scheme in the last six months?

Of course, we have often heard the lament from our local businesses that every time they are reasonably successful in an area of business, the big local boys, in the form of the Government-linked companies, will either come to compete with them, often unfairly because of their sheer size, or to buy them over. We have seen this before, whether it is in property development, construction or even in the pastry business. The net effect of competition from the larger companies has been to crowd out the smaller companies. Sir, we should, as far as possible, refrain from doing this if we are ever going to give these small and medium enterprises a fighting chance. I would therefore urge that the new economic promotion agency should not repeat our oversight of concentrating on big foreign investments to the exclusion of the smaller players in Singapore.

Strengthening the External Wing

Developing the external wing as a means to hedge against the risk of over reliance on the local economy is often seen as a sound and effective strategy of our Government. It has been more than five years since we heard and, for some, heeded that call. During that time, I can say that the experience of those who have ventured overseas has been rather varied and different. Some have found their investments profitable; most others have found the going tough. Singaporeans, in their venture overseas, have tended to rely on areas that they are most comfortable with and perhaps with the most experience in. Consequently, Singapore investments overseas are most visible in industrial parks, hotel developments and office complexes. Unfortunately, these are investments that call for substantial infusion of capital and with long clawback periods for the initial capital injection. The extended period of time required makes these investments rather vulnerable to the vagaries of the internal and external economies and politics. When these companies first ventured overseas, little did they realise that dealing with the local governments and appreciating the extent that the local politics can make a difference to the extent of the success of the venture.

Take our Suzhou Industrial Park, for example. This is often seen and is, in fact, often touted as the flagship of Singapore's regionalisation programme overseas. If we look at the development of the Suzhou Industrial Park, we have every reason to be proud of its standing as representing everything that Singapore stands for. Yet, it was not without its difficulty. Some years ago, we realised to our consternation that the Mayor of Suzhou was undermining our development by promoting a rival industrial park there. It took the efforts of our Government and the influence of our Senior Minister Lee to put our position firmly with the Chinese that they cannot take us for a ride.

The Suzhou Industrial Park has the support of our Government. What about the other private Singapore investors who answered the call of our Government to go overseas and who run into difficulties with unreasonable and bureaucratic foreign officials? Can our Government be there for them? I note the recommendation of the Committee to encourage local investors overseas to pool their resources together. Sir, this is not enough. We should have strong Government backing for our overseas investments. This may be given through the setting up of specific Governme nt agencies, other than TDB, which can be relied upon to assist our investors in a more dedicated way. This can include, for instance, helping them to resolve problems at the Governmental level. For countries like Vietnam and China, businesses are often carried out with government agencies. If a framework can be established whereby our Government can lend some official support and is able to use that to get the cooperation of their counterpart in the relevant places in these countries, I believe it will help our investors go a long way with their investment.

Building world class companies

The Committee has recommended that to be globally competitive, we need to be able to build up a stable of our own world-class companies with core competencies that can compete effectively in the global economies. To kick-start the process, it is recommended that Government-linked companies with their present size, core capabilities and share of talents, are best placed to lead the drive to kick-start the process of building world-class companies.

Sir, while I agree that we should build up a stable of world-class companies, nurturing our own companies to attain world class status is not the only way. In my speech at a Budget debate, I had argued that we could have leap-frogged the process by taking over some of the companies with leading brand names in the world. This may be more advantageous than trying to nurture world-class companies, as this gives us almost immediate access to markets and also the cutting edge in technological developments. Rather than inventing the wheel, we should buy the wheel and make further improvements to it. We have the money for it.

Sir, choosing our Government-linked companies to lead in the process of creating world-class companies raises certain underlying issues about these companies and their roles. We know that Government-linked companies play an important role in the development of our economies and have, to some extent, helped build our national profile in the global economy. Our favoured son, Singapore Airlines, for instance, has always made us proud as an example of a world-class carrier.

However, Singapore Airlines is but one of the more prominent example of the many Government-linked companies that we have in our stable. Over the last decade, numerous companies and subsidiaries linked to the Government have been spawned, especially when Government functions and departments are increasingly being privatised and corporatised.

Government-linked companies are unusual and in a way different from the ordinary private sector companies. In shareholdings and management, these companies have close linkages to the Government. For many of these companies, our Government holds a substantial portion, if not all, of the shareholdings in them. Their corporate management is often staffed by those who are seconded from the civil service or those who had retired from the civil service. Their close association with the Government has given these companies some advantages in their dealings with clients and financial institutions.

Some of these Government-linked companies are listed in the stock exchange and are thus subjected to the requirements of the stock exchange to observe the on-going process of corporate disclosures of information. This requirement of relative transparency provides some amount of discipline on the part of the company and is often seen as a principle of good corporate governance. In a sense, shareholder and market accountability helps to protect the shareholders' interest in their investments in the company.

Sir, this is fine with listed companies. The question remains about the unlisted ones. For these companies, which are not listed on the stock exchange, the perception is that they may not be subjected to the same discipline of accountability and control as the listed ones. The conduct of these companies is quite naturally not as transparent as those that are listed on the stock exchange. There is not enough information filtering through about these companies.

In the case of ordinary companies, it is understandable that there is some amount of privacy that must be observed, as these are private shareholders' funds. In the way in which the private limited companies have developed, it is meant to provide the benefits of limited liability without at the same time of having the undue burden of disclosing too much corporate information about the company, other than perhaps the accounts filed with the Registry of Companies.

On the other hand, there are some who feel that private limited companies of the Government are not private. Because the funds held in these companies are those which belong to the public, there is some expectation that these companies be made more transparent through greater disclosures to the public and adopting good principles of governance, which in this case may include indexes, for example, to show the extent of the return on capital, and subjecting the managers to the same forces of the market discipline of hire and fire. This will provide some assurance to the public that even private limited companies of the Government are properly run. I am not saying for a moment, Sir, that these companies are not properly run. On the other hand, I will be the first to say that we have some of the best companies in this stable. However, as the saying goes, justice must not only be done but must be seen to be done.

I would say that these concerns have been generated in recent months by the high profile failures and acquisitions of some of our Government-linked companies. The concern that I am expressing is that unless we can impose a framework for greater discipline among these companies, we may be exposing ourselves to greater weaknesses by encouraging these companies to become world-class companies. Spectacular world-class companies may also suffer from spectacular world-class failures. These companies are not created overnight by pouring in massive capital alone. Therefore, I would cite caution in the way in which we approach this issue.

There is just one more point that I would like to touch on before moving on. Over the years, we have engendered the growth of Government-linked companies that are multi-disciplined conglomerates. We have GLCs, for instance, that have interests ranging from shipbuilding and repair to food retail outlets. In recent years, it became fashionable to form property development companies. The fact is that many of our GLCs are into property development and are often in direct competition with each other. This form of competition has resulted in needless waste of resources.

Lest we get lost in the myriad of investment activities, we should ask ourselves whether each GLC should seek to redefine itself in terms of its core mission rather than reaching out all over, like the proverbial octopus. I would argue that our GLCs should take a step backwards and re-examine its mission statement. To avoid wastage from unnecessary competition, GLCs should restructure its group holdings, get rid of its peripheral businesses and be single-minded by concentrating on its core business and competition if it wants to compete on the world stage as a world-class company. Banking and finance

In its sectoral report, the Committee recommended a number of strategies to help make Singapore a premier financial hub in the region. Among some of the strategies recommended included the point that financial institutions should be allowed to assume higher risk profiles that they are comfortable with within prudential limit. Along with the suggestion, it was stated that the authorities should move away from protecting the individual investors to focusing on protecting the industry against systemic risks. The Committee also reported that over-protecting investors from specific asset risks also means losing out on potentially lucrative opportunities.

Sir, I understand that the stand taken by the Government has always been on the basis of caveat emptor. It also means that it is not the business of the Government to ensure that every investment made by its people will be rewarded with success. While I agree with that principle, I would submit that there is a difference between allowing the people to make the final choice of business as opposed to maintaining a framework to ensure information flow which is backed by legal sanction if necessary, to allow investors to make the appropriate choice.

Let me explain. Under our present laws, it would be an offence for anyone to offer securities to members of the public without complying with the necessary requirements of disclosure through a prospectus that must be filed with the Registry of Companies. The Act sets out the type and nature of information that must be provided in detail. The purpose of such requirement, presumably, is to ensure that investors get enough information about the company to make intelligent choices. Such requirements serve to protect the investors well.

Unfortunately, such policy of investor protection does not seem to be applied uniformly. We seek to protect investors under the Act in their investments in securities. However, there seems to be a gap in their protection when it comes to property investments overseas. We see many of these sad stories in respect of our people's investments in China. I remember, in the early days some years ago, when China projects were first launched in Singapore, there was an air of excitement. For land scarce Singaporeans, the prospect of owning a piece of sizable real estate in China cheaply and at a price which was extremely affordable is something which is very attractive. I remember saying to myself then that it seemed a little anomalous that while we required people who sell securities to members of the public to make such detailed disclosures in the prospectuses, such requirements are not necessary for people who sell properties in Singapore. I do not think the developers who promote these projects have to swear statutory declarations about the truth of their advertisements, neither were they required to file complete details about their companies or its track record, or provide performance bonds to any trustee in respect of the promotion of their developments. Yet, at that time, there were many Singaporeans who went to such exhibitions and bought properties purely on the basis of scale models of developments. I remember telling myself that some of these investors could get themselves into trouble because of these relatively lax requirements. Some years later, I was right. These days, it is not uncommon for people to complain about how they have been short changed in their property purchases in China, and the sad truth is that there is very little they could do about it.

Sir, my point is that while we may want to concentrate on focusing on insulating our industry from systemic risks, we cannot, at the same time, neglect our moral responsibility of having to protect our own investors against the more unscrupulous promoters. On the contrary, I would argue that we should review our laws to see how we may strengthen our laws to protect our investors even more.

Finally, Sir, the strategies recommended by the CSC and the measures introduced by the Government are indeed comprehensive and broad ranging. Our journey has only just begun. However, while the Committee can point us to the direction which Singapore should take, for many of these strategies, there is substantial work to be done. I have no doubt that our Government would be able to rise to the occasion. I would urge all the people of Singapore to, at this time, close rank and stand behind our leaders as we work to pull Singapore out of this most serious challenge in recent years. Together, we will succeed.

The Minister for Trade and Industry (Mr Lee Yock Suan): Mr Deputy Speaker, Sir, I wish to thank all Members who have spoken in support of the motion and for their strong endorsement of the recommendations of the CSC.

I think all, except possibly the Opposition Members, have strongly supported the recommendations, and this is extremely encouraging for the CSC members and all others who have contributed to the work. In fact, it is difficult to understand why the Opposition Members are not supportive, because it is so obvious that the economy is in crisis and that it is necessary for all Singaporeans to pull together to ride out this crisis.

As DPM Lee has said, we are facing the toughest crisis since independence. So it is important that we do the right things and send the right message to the investors and stay on top of the problem.

I am very happy that the Government has accepted the Report and all the key recommendations. In fact, the package of short-term measures that the Government has announced exceeds the expectations and the quantum is $10.5 billion, which is more than the figure of $10 billion that the CSC recommended. I think the feedback from the ground is that people are generally quite happy, including those who have been critical in the past, because they did not know what were the details and because there was perhaps insufficient explanations at that time.

Looking at the feedback, in fact, there was hardly any dissenting voice. One criticism that came to mind is the one by Mr Peh Chin Hua, that the quality of the paper was too good. If that is all, then I think we are on the right track.

DPM Lee explained yesterday why we are taking this package of measures and why our position seems to have changed from February when we were still thinking that we could register maybe between 2.5% and 4.5% growth this year. He has explained that the whole world has changed. In fact, just a few weeks ago, people were worried that there could be a global economic melt-down. Because of the measures taken by the Federal Reserve in cutting the interest rate and that the IMF package is now being put together for Brazil, people are now breathing more easily. But I do not think we are out of the woods yet. So we need to do our best.

Several Members have asked how we arrived at this figure of 15% cut in wage cost, whether it was based on hard numbers, political bargaining or judgment. The truthful answer is that this is a gut feel. It is based on our best judgment of the situation, based on data that is available and also on the understanding of the overall economic situation and the competition that we are facing.

Naturally, those companies which are now faced with a sharp fall in demand from the region, and these are mostly local companies, are the ones which are most severely affected. As Dr Wang Kai Yuen has mentioned, the response that he got fell into two groups: the local firms which are mainly directed at the domestic market and the regional market. They are the ones asking for more measures because their demand has fallen off and they are faced with cash flow problems and they need more help. So they are the ones who are probably asking for the 20%-30% cut in their cost. On the other hand, some of the multi-nationals who are here are in fact very pleased that we have been able to do this. And Singapore is probably the only country in the world that has been able to mobilise everybody, the masses, through our trade unions, with our strong tripartite cooperation, and cut wages voluntarily, including the CPF. So this is a strong message that we are sending to investors, that Singapore is a different kind of country. We face up to the problems together, and we are determined to work together as a team to overcome the crisis.

I met somebody from one of the top multi-national companies just a couple of weeks ago, and it was his first time in Singapore. He is from one of the top 500 companies in the world. He was utterly impressed and he said, "It is fantastic, you know. You have this Singapore Inc. approach." So I explained to him our measures and so on. I hope at the end of the day, he is going to put in more investments into Singapore. In fact, his question was: where are the workers? So I told him that we now have a relatively high unemployment rate and we intend to allow more foreign workers in, if necessary, and we are upgrading the industry all the time. For projects that we want, like this particular project which is in the computer area, we would try and free up the market and allow in more workers. So, as I said, I hope we will get some investments from that company.

So the MNCs which have links with the region, which have, for example, subsidiary companies in Batam, and they are able to continue operating, they are less affected by the financial crisis. These companies are able to take advantage of the lower cost as a result of the devaluation of currencies, and they are happy. There are also other sectors like the shipyards which are doing all right because their costs are local and their revenues are in US dollars. So they find that they are now more competitive because they are competing with Middle-east yards and the currencies of the Middle-east are still strong.

But, having said all that, I think the general feeling of the Ministry and our statutory boards is that we have lost competitiveness. The key figure that stands out is this loss of market share in the US. As I mentioned in my speech, kicking off this debate, our share of exports of electronics to the US has fallen by about two percentage points, from 9.3% to 7.3%, over a period of only 1 1/2 years or so. So that is very worrying for us because electronics form a very major sector of our economy, especially in the manufacturing sector, and they employ many workers. For the exports of non-oil manufactured products, of that figure, more than 60% are electronics. So you must be able to compete in that area.

Looking at the figures, we have seen increases in market share from countries like Mexico, because of the NAFTA factor, from the Philippines, even from the PRC, even though they have not devalued their renminbi. It shows how competitive their costs are. In the case of the Philippines, they were under the IMF regime until recently. They have not had the excesses of the other neighbouring countries. So their economy is still functioning and I believe they are now very attractive to quite a number of investors. We see, for example, that Japanese companies are going there to manufacture disk drives, and they will offer stiff competition to us here. Most of our disk drive manufacturers are from the US and we are one of the biggest manufacturers in the world.

So the feeling is that we have a gap over them in terms of capability, in terms of supporting industries, in terms of efficiency, but the gap is narrowing. We have to cut our costs. Basically, the decision is that this time round, we must do a re-calibration of our costs downwards - wage costs and other cost factors - and especially the land cost factor. Because the way the property market has been booming, it causes a lot of ripple effects, not only in terms of the market rates that the Government will have to try and peg for our industrial land but also in terms of the other effects, the way they work through the system, since land cost is a factor in every area, whether it is transportation or utility, or what-have-you.

The assessment is that we do have to do a re-calibration, and that is why we came up with this figure. I think 15% is about right, not too much, not too little. Of course, we only know when we implement and we see what is the outcome. And if we have to do more, then we must do more. But if we do better than expected, then there could be corrections, there will be better bonus for employees and so forth. Basically, this cut of 15% of wage cost will bring us back to the level of 1994, and at that situation we were still very competitive. In fact, the economy then was growing close to 10% rate and the worry was that the labour market was getting too tight.

The other way to look at this is that in 1985, when we had a similar recession and the GDP declined by about 2%, the CPF was cut by 15 percentage points, and that is equivalent to 12% of wage cost. This time round, the assessment is that the crisis is more severe because it is a world-wide problem now. So we have to take more drastic measures. If you look at the currency values too, the neighbouring currencies have depreciated by about 20% to 30% between 1st July last year and the latest figure, as compared to Singapore of about 12%. The currencies have recovered recently but we still have this gap over the neighbouring countries of about 15% or so.

I hope I have given Members some idea of how we sort of did a gut feel, assessed the situation, and came out with this figure. We do not want to overdo it because it is a balance. If we overdo it, then people become very depressed and very pessimistic, and this could also dampen the demand in Singapore.

Coming back to this point about the printing cost being too expensive, I was thinking, when I listened to the Member, that if we had spent less money on poorer quality paper, it would have meant less business for the printers. So it is a balance. Do you want to save cost or do you want to stimulate the economy? So we have to strike a balance here.

Having said that, it is true that this $7 billion cut of wage cost may have some dampening effect on the economy. Of that, about $4 billion will be CPF. So there is no withdrawal of funds from the economy. But the balance could result in some withdrawal of funds. So I hope the Minister for Finance will consider this factor and bring forward some stimulatory projects in the new budget and go for a bigger budget deficit, so that we will be able to keep the economy going. The world-wide signal now is that it is time to reflate, but at the same time, we must be able to compete.

There was a criticism from quite a few Members that these measures came too late. I have to answer this criticism because I have been very involved in the whole process. If Members may recollect, the Prime Minister said, as far back as November 1996, that he felt that our costs were getting out of line. Therefore, he was suggesting that we should have a committee to review the cost situation. And that is how the CSC came to be formed in May. We could have formed it earlier but, of course, we had elections and all the process that we had to go through. So this Committee was formed in May. And when we first started, all of us were looking way ahead. The economy was booming away, labour was tight, turnover was high, job-hopping was a problem. But when this crisis came in July, the whole situation changed. Now the worry is about unemployment rather than job-hopping.

If you cast your mind back, at that time, the whole situation was in turmoil. The currency market and the stock market were very volatile. Everybody was very careful and anxious not to upset the market. You do not want to send the wrong signal and say, "Oh, things are going to be terrible!" Because then the market would really go down and it would be a self-fulfilling affair. So when we came out with figures on GDP projections, we tended to be careful, to be realistic, but not overly pessimistic. So, at that time, we felt that we might still be able, with our momentum of growth from past years, to make maybe 3% growth. So the package of measures were tailored for that situation. It was kind of a measured approach. On hindsight, I still think that was the best way to do it. Now that we are convinced that the storm is really on us and it is a very serious problem, our costs are really out of line, we have come out with a very big package of measures. And we still have reserves left, in case we have to do some more because the crisis is not over yet.

Members mentioned the problem of liquidity. The feeling here is that, generally, there has been no problem of liquidity squeeze. I think DPM Lee, in some answers to oral questions, has explained that, in fact, the bank lending has continued to grow, although at a slower rate. The problem has been that the banks are now naturally more cautious, and rightly so, because some of them are so exposed in the region.

That is why we have liberalised the Local Enterprise Finance Scheme, and I am glad to report that in terms of the short-term lending for export factoring, for working capital, the demand and the quantum of loans have really gone up. But in terms of loans for fixed assets, naturally companies are cautious. So the quantum has not gone up that much. The difficulty here is that we do not want to have a situation where our civil servants try and second-guess the bankers. The bankers assess the applications and they decide whether they are worth supporting or not supporting. As it is, we are sharing half the risk, and we are giving the entire spread of 2 1/4% on both the Government's share as well as their share entirely to the banks. That means they are earning a spread of about 4 1/2% on their loans. It is, I think, adequate for the purpose. But they have to assess whether it is worth their while and safe for them to lend. In cases where the borrowers feel that they deserve something better, they can go and see PSB, and then PSB can perhaps talk to the banks and discuss and see whether their assessment is correct. At the end of the day, the decision must be made by the banks. Having said that, we are open to suggestions. We are studying this all the time. If we can liberalise this further in a safe way and extend this scheme to more sectors, we will be happy to do so.

There has also been concern for the retail sector, the sharp decline in demand as a result of the fall in tourist arrivals and the reduction in local spending. Here, I think it is important for us to go out and get more business. A short while ago, I was just at a function to present the Tourism Awards and I announced that the Singapore Tourism Board would be spending $30 million more next year in its marketing efforts. This will be on top of the usual $80 million per year that they spend on marketing. So it is an increase of 40%. This will tie in with the new programme they have to launch to welcome the new millennium. And I hope, with this effort, we will be able to increase our share of the tourism market.

The key thing here is that it is not enough just to cut cost. We must all go out and try and get more business through STB, the Trade Development Board and EDB, and they are all going to work that much harder to try and get business for Singapore.

Again, Members have spoken eloquently about the needs of the individuals. I think this is very important. We not only must ensure that our costs are competitive but also that the needs of individuals who are affected are taken care of. One way of doing this is through the CDCs, as mentioned by quite a few Members. I personally will be in favour of providing more funds to the CDCs. But, again, this depends on the Ministries concerned. Remember that I am talking here as Chairman of the CSC.

A few speakers, including the last Member to speak, Mr Sin Boon Ann, have been quite critical of the Government-linked companies. I think some of the comments are valid. Some of the GLCs have, in fact, strayed from their core business. That is why the CSC has come out with this recommendation that they should focus on one area. Even the big companies, like Sony and others have come to realise that they have gone into too many areas. They have gone into movies. They have gone into what-have-you and realise that they have to go back and concentrate on areas which they know well, because there is only so much managerial resource. If you spread your management too thinly, then you cannot look after the business properly. So the recommendation of the Committee is that the GLCs should refocus and spearhead our efforts into particular areas and, hopefully, they will be able to lead us in our regionalisation drive as well by bringing along the supporting industries and the others. This is an area which, I believe, Temasek Holdings will be looking carefully into.

The other area I want to touch on briefly is this long-term vision which Members have supported generally. It is an ambitious but, I believe, achievable vision. But it may take longer than 10 years, I agree. Some Members have said that, in fact, this vision is not entirely new and that is also true. Because we have been going on this track all this while and it goes to show that we are on the right track. I remember that, as far back as 1969, not quite 1969 when I joined EDB, but early 1970s, we were already talking of having brain services, promoting brain service industries. So here, we are back to knowledge industries. We have done a lot since then, the kind of manufacturing that we have gone into, wafer fabrication and all that. We have moved into more knowledge and skill-intensive areas, and that is the correct thrust. It is good for us that we maintain this core of manufacturing. I think Hong Kong has come to realise too late. They are hollowed out. They pushed all this to Shenzhen and elsewhere and even though that is part of China, and they are part of China, they have to compete very hard. And now, what is the role for Hong Kong? That is their worry. And that is why the CSC recommended that we should have both manufacturing and services. In fact, the two are complementary. A lot of the services actually are for the manufacturing, whether it is transportation, logistics or financing. So our aim should be to promote high value-added services and manufacturing together.

One of the key areas that we will have to strive for is to try and develop technopreneurship. This is the idea of a knowledge economy and we are studying, of course, Silicon Valley, looking at how Taiwan does it, how Israel does it. We are investing a lot of money in R&D. The question is: can we realise more returns from that? It is good to build up capabilities and it is very important. But, eventually, we must be able to have our own start-up companies, float them and develop our own indigenous companies.

Here, I would like to mention that the Government is taking this effort very seriously. The Government has decided to set up a committee chaired by DPM Dr Tony Tan. There is a committee known as Technopreneur 21 Ministerial Committee (T21MC) - we have all these acronyms nowadays - chaired by DPM Dr Tony Tan and there will be three other Ministers on this Committee. My colleague, BG George Yeo, will be Deputy Chairman and the others will be Mr Lim Hng Kiang and RAdm Teo Chee Hean. So you can see that it is a very high-powered Committee. The intention is to give this area a big push because I think this area of the future, it has come with the development of computers, with the development of IT. We have Singapore One. We are trying to make more use of it. I think we are really at the cutting edge. The question is whether we have the talent. Can we attract more people to come here? Can we link up with other countries and achieve synergies?

IT is one big area. The other area will be in the life sciences. Nowadays, it is possible for researchers to screen drugs, millions of drugs in a short period of time. So now with all these new areas of cloning, cloning of heart tissue and so on, these will be new growth industries of the future. I realise there will be a lot of ethical problems as well. These are growth industries and we should not miss out on them.

So the investment in R&D, the setting-up of Science Parks, setting-up of Incubator Units, providing support to the technopreneurs who are usually more scientifically inclined rather than businessmen, holding their hands in business, and so on. These are things that we are putting in place. And with Dr Tony Tan and BG George Yeo who are very keen in this area, I am sure we will see some progress in this sector.

It is getting late and I do not want to prolong this debate. I just want to thank all the Members for their contributions. I am sure all their ideas will be considered. I cannot answer all the points today. But the officers who are watching the closed circuit TV have been carefully taking down all the notes and all the points will be considered and, where feasible, they will be implemented. Thank you. [Applause].

Resolved,

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.