ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1999 TO 31ST MARCH, 2000

Order read for consideration in Committee of Supply [4th Allotted Day].

[Mr Speaker in the Chair]

Head T -

The Chairman: Head T - Ministry of Manpower. Amendment No. (1), Mdm Foo.

Mrs Yu-Foo Yee Shoon (Bukit Timah): Sir, I beg to move,

That the total sum to be allocated for Head T of the Main Estimates be reduced by $100.

On 1st April 1998, the Ministry of Labour was revamped and renamed the Ministry of Manpower (MOM). This was done to allow MOM to take on a more integrated approach in planning, developing and managing human resources and to ensure that these functions are well coordinated.

In the years ahead, competition will intensify as the global economy becomes increasingly interlinked. In a knowledge economy, the most important resource will not be merely capital or machinery but human beings. The strategy for us to thrive in the knowledge era must be to convert our manpower into a key engine of growth.

Hence, the first point I wish to raise is on this aspect of manpower planning. Could the Minister enlighten this House on (1) the overall manpower plans that MOM has in mind; (2) MOM's strategy for balancing supply and demand of manpower; (3) how MOM determines manpower demand; and (4) what policies and programmes will be formulated to synchronise the needs of industries for skilled manpower and the needs of Singaporeans for good jobs in the growth sectors.

Could the Minister also tell the House how the above information will be released to the public to raise awareness about job growing areas and the skills needed? We would also like to know the progress of the Manpower 21 study effort.

Last year, for the first time in many years, we suffered a net job loss of 17,000. In the good years, the net job gain was 120,000. What would be the projections for this year?

In the last few days, we heard a lot from our colleagues about the mismatch between employers and employees in job expectation and skills. What effort is being taken by the Employment Service Department to improve this situation?

Because of the low rate of population growth and the rapid aging process of our society, we have had to rely on foreign workers. We also lack skills or knowledge in certain critical areas needed by industries and therefore the infusion of foreign talent is necessary. Otherwise, we will not be able to attract these high-tech industries. This means that fewer jobs will be created for Singaporeans.

However, in a time of job loss and fewer job openings available, could the Minister elaborate on what measures are being taken to balance and manage the supply side of local and foreign workforce? During the recession, there are problems of missing foreign workers and increasing disputes between employers and foreign workers. What measures is MOM taking to tackle this problem?

Mr Chay Wai Chuen (Tanjong Pagar): Sir, I note that the Ministry has set up a special unit called the Manpower Planning Division and the Minister knows my view on this so-called manpower approach which I have expressed in the House. I think developing human resource is a far more important area of focus for his Ministry than just manpower planning.

The significant experience of most of the manpower planning agencies in the US and UK historically is that they are usually wrong in their projections. Even in our case, for decades, we have seen how regular the universities have been out in projecting within a four-year period the output of graduates.

The other day, I was talking to a young officer from the Community Development Council and she told me that she was a graduate from the Estate Management Faculty. She told me that only one third of her cohort from that Faculty probably found jobs in the estate management, real estate or property development sector where they have been trained. The rest have to look for jobs elsewhere in other sectors. There are many other examples of civil engineers, accountants, lawyers, doctors which output from the university does not quite match the demand often times.

The trouble with manpower planning is that at the high level, planning for manpower based on the growth of the economy is tautological. You need so many people in this area because we expect the economy to grow by so much in this sector. At the detailed level, where you try to project jobs at the industrial sector level, you can often be way out because of definition boundaries. This will be particularly so when the new knowledge economy will keep everyone guessing as to which are the sunrise and sunset sectors. In this game, the bureaucrats are not particularly the best participants. Even in the much vaunted stock and flow concept of skill/job retention and attrition, I urge caution. For example, I see in the information slides presented to Members of Parliament and resource persons, yearly inflow of 300,000 foreign labour and outflow of 260,000 for a fresh local cohort of 40,000. This seems to me to be a very large inflow and outflow figure in a year with a local cohort of 40,000.

For years, we have been known to be the training ground for a lot of foreign workers - from maids, shipyard workers or engineering sector to executives, coming here to work and then going to other countries. We should bear in mind that experience and training opportunities go with the job. When a job is denied to a Singaporean, the training and experience opportunities to them are also no more available. 12.45 pm

The danger is that when the Government machinery gets set in, the plan will be to get in the foreign supply to satisfy the equation forecast, while our own people who could be trained, cross-trained or upgraded are in the forgotten loop or out of the loop. Finding new ways and means to train and develop our people is a more valuable effort than just bringing in from outside the members to satisfy the equation.

I wish to add that I am not against foreign talent. My concern and experience in the private sector is that many of the so-called foreign talents here are quite foreign but not quite talent. Bringing in the numbers will deny many deserving Singaporeans the opportunity of training that goes with the job, and the numbers may well be wrong.

Dr Wang Kai Yuen (Bukit Timah): Sir, the exchange between Dr Tan Cheng Bock, Member for Ayer Rajah and BG George Yeo, Second Minister for Trade and Industry shows that the topic of foreign talent can indeed be laden with emotion. And earlier, my colleague, Mr Chay Wai Chuen, has also pointed out the same issue. But the fact is, by and large, Singaporeans welcome immigrants to our land, especially those who can contribute to Singapore and are prepared to sink their roots here. After all, most Singaporeans are descendants of immigrants ourselves. But, as Mr Chay pointed out, this is a question that should be brought out to the open, and that is, does induction of foreign talent introduce competition to our sons and daughters? To a certain extent, I believe it does. A fair number of Singaporeans find that they do have to compete with new immigrants for jobs and housing. In certain cases, they see foreign talents as taking away plum jobs as in banking and financial services, but of course, those are in small number and those people affected can take care of themselves.

On the other cases, they see foreign professionals holding down wages in growth areas like information technology. So, obviously those affected would prefer them to be the king of the hill even though it is a small molehill. So, the affected would usually ask what is meant by the term "foreign talent". They would prefer the dictionary definition of the word "talent" as referring to people that Singapore, by itself, cannot produce and not just cannot produce in sufficient number, but cannot be produced at all. Whereas, I think the Government's definition is more like anyone who can contribute to Singapore in the designated areas.

Let me state upfront that I support our existing foreign talent policies. In many areas where there is a shortage of people, foreign talents help in our economy. For instance, in the area of information technology, the industry is already very vibrant and the turnover too is high as it is. And in today's newspaper, we read about the story of IT professionals earning a very high income, and a lady professional who made dough in hard times would be able to buy diamonds as and when she prefers. So, even today, there are many cases of professionals changing jobs for a 20% jump in salary and after holding the job at the current salary for less than three months.

Therefore, if we just depend on local manpower, I believe that the salary will escalate even faster and we would price ourselves out of the global market. And this is not a problem unique to Singapore. Even in the United States, with a population of 220 million, it is also unable to meet market demands by just depending on domestic supply alone. As a result, the United States is opening its market, and absorbing a high number of foreign IT professionals through increasing the quota of H1 visa in 1999. H1 is a US immigrant visa for skilled professionals. I think we could say that, in the short-term, some individual Singaporeans would face greater competition from foreign immigrants. In the long-term, foreign immigrants bring greater prosperity and diversity to our country. On balance, we should welcome foreign immigrants.

Let me move on to some of the policies implemented by the Ministry of Manpower that would affect the induction of foreign talents. I am referring to the issuance of employment pass by the Ministry of Manpower when it took over that function from the Ministry of Home Affairs. In so doing, it introduces the new classification of employment pass and I am referring to the P, Q1 and Q2. Perhaps, the Ministry believes that the new classification solves some problems in the old system but, unfortunately, it also introduces some undesirable effects.

Firstly, many highly educated foreigners are grouped together, with skilled and semi-skilled workers in the Q2 category, primarily because their current income is not as high as they would like to have, especially in the current economic downturn. By bringing these new immigrants to our country, they have to adapt to our culture and, as such, it is not surprising that their income level tends to be lower than Singaporeans and PRs with comparable backgrounds. Some of these professionals take it as an affront to them to be lumped together with immigrants of lower educational levels. Furthermore, Q2 holders cannot bring their families to Singapore and that would make it very difficult for these foreigners to accept job offers in Singapore. As a result, some of them would ask for higher salary, just to be classified as Q1. To avoid this problem, I suggest that we go back to the principle that we determine the desirability of these foreign talents based on their educational background and their ability to contribute to Singapore on a long-term, and place less emphasis on their current income.

The second item that I would like to bring up is that all immigrants to Singapore would like to receive their PR status as soon as possible. There are many advantages. Being a PR changes the whole orientation for them. For example, they would be able to buy HDB flats in the resale market. PR status gives them a peace of mind to settle down in Singapore. On the other hand, I detect a recent, but a discernible trend of PRs leaving Singapore for greener pastures overseas. I believe one of the reasons they left Singapore is that they discovered that their income has shrunk, as a result of our CPF cut, wage restraint policy and the weakening Singapore dollar. In comparing their income on a global scale, these professionals found that they are losing out to their friends who have settled elsewhere. While their behaviour is entirely understandable, but from those Singaporeans who have interacted with them, what I would call "fair-weather PRs", they lamented that Singapore is being used as a stepping stone. They believe that perhaps we should only issue PRs to those who are really committed to Singapore. I understand that it is a very fine balance between meeting the aspirations of new immigrants through issuing them PRs and also the need to inculcate a sense of belonging to Singapore. There is no easy answer. May I seek the Minister's comment on the issues I have brought up?

Mr Chiam See Tong (Potong Pasir): Sir, in times of high economic growth and full employment, I think it is fair for the Government not to impose a limit on foreign talent. In fact, in 1989, the Government formed the Immigration Affairs Committee (IMAC) with the view to bring in professionals and skilled workers from Hong Kong. The first batch of 25,000 Hongkongers were invited to work in Singapore. Can the Government let us know how many Hongkongers accepted the offer and applied for Singapore PR under that exercise?

In March 1991, BG George Yeo, the Chairman of IMAC, in an interview, informed the Berita Harian that there was no cap on foreign talent, including Malay/Muslims who wish to come to Singapore, as long as they can contribute to the country. He said that a ceiling is only appropriate if the number turns out to be too large. I would add that a ceiling should be introduced in times of high unemployment like the present time. In the past, Singapore has used the Singapore Malay Chamber of Commerce, Mendaki and the two task forces formed by IMAC to attract Malay/Muslims and Indian talents from abroad. In the case of India, advertisements for several jobs in Singapore were made from time to time, and sometimes, like Singapore Airlines, it issued their own advertisements inviting job applications.

I would like to ask the Minister whether IMAC or other Government agencies are still actively recruiting foreign talent to Singapore. I wish to quote BG George Yeo. He said, "We cannot invite someone here and find him a job. This is not the way we work. In any case, it is not sustainable." My feedback is that foreign professionals who come here to find work sometimes are selected in preference to local applicants. It happens like this. Many foreign Caucasians are employed as managers in our local firms or positions where they are responsible for recruitment of new staff. They interview the applicants. If in a group of applicants that are interviewed happens to have Caucasians or ang mohs among them, often than not the Caucasian applications get selected. The Caucasian managers that do the selection often feel that they have the same background and culture as another Caucasian, and probably he can work better with another Caucasian than with a local. In this way, local applications for jobs can be discriminated against.

I have known of one case where a Singaporean with an Australian mathematics degree was not selected for a teaching post in a private institution. He informed me that the interviewer was an Australian. The Australian selected a New Zealand applicant in preference to him. This Singaporean is very sore and wants this case to be brought up in Parliament. Perhaps, this may be the type of case that Dr Tan Cheng Bock had in mind when he warned against foreigners taking over jobs which rightly belong to Singaporeans. I support Dr Tan in his call to the Government to think of Singaporeans first in these hard times. He does not want Singaporeans to lose out to foreigners in their applications for jobs. I do not think that Dr Tan intended to do Singapore a disservice when he made that call to the Government the other day in Parliament. I think Dr Tan realises that Singapore also needs plenty of foreign investments and he did not mean to give any wrong signals to foreigners.

Mr Shriniwas Rai: Sir, when Dr Tan Cheng Bock spoke last week during the debate on the Prime Minister's Office, he was misunderstood, so much so that the New Paper columnist Raoul Patek made a very reasoned argument that we should not close our door to foreign talent. Singapore has always welcomed foreign talents and, in fact, it was a Dutch economist who brought us to where we are today. There are many areas which Singapore does not have the expertise and I do not think that we will have it in the near future.

I understand Mr Chiam See Tong's plea for looking after Singapore. But we can look after Singapore better if we look at the broader economic perspective because these are people, whether in the IT sector or financial sector, who create economic prosperity, jobs and wealth for us. And I think we should not be shortsighted that in times of crisis, we should forget them. To do so would be suicidal. Let me give an example. When I was in law school, most of my teachers were foreigners. Things have changed. Now, the Law Faculty has more local lecturers than foreigners. Similarly, some years back when the Government wanted to bring foreign legal firms here, some lawyers felt that the Government was not being fair. But we have to look at it objectively. If we do not allow these foreign legal firms to be based here, the work will go to Hong Kong and elsewhere. 1.00 pm

Sir, I would urge the Minister not to be shortsighted, but look at the broader perspective of Singapore's economic framework. After all, we are a creature of an immigrant society. Many of our forefathers came from China, India and other places, and the process must continue. And if we want the process to continue, then we must send the right message to the people, because foreign capital and foreign talent are in short supply. Even America, with its huge population, is in need of talent. That is why they go to Silicon Valley from India, China and Taiwan. And if we want to create a Silicon Valley, we must have these foreign talents here. Sir, what is required is for the Ministry of Manpower to lay down a broad policy and send the message to the world at large.

In conclusion, Sir, I do not forget my Singaporeans, because Singapore citizens and permanent residents who have been here have a stake in this country. But we should give an assurance in this House that their interests will never be sacrificed. We are bringing in these people to serve the country better. I hope when Raoul Patek reads today's debate, he will change his mind.

Mr Yeo Guat Kwang (Cheng San): (In Mandarin): Sir, in the world today where competition is very keen, the progress and development of nations are determined more and more by the quality of its people. Therefore, the Government has taken the correct approach in emphasising on continuous and life long training and retraining for our people. We have managed to deservingly earn a reputation for having a first-rate and a world-class workforce. The challenge therefore is how we can maintain and even improve.

In the military strategy of Sun Tze, he said the strength of an army does not depend on large forces. Rather, one must concentrate the forces. And this was taken from Sun Tze's Art of War. In my view, besides helping Singaporeans to upgrade and compete more effectively in the marketplace, we must reduce our dependence on foreign workers. While I am not belittling the contributions of foreign workers, their presence is not without any cost. I strongly urge the Ministry of Manpower to tighten its criteria and selection on the admission of foreign workers, so that not any Tom, Dick and Harry can gain employment in Singapore at the expense of Singaporeans. If there are jobs that Singaporeans do not want or cannot do, then by all means foreign workers can be considered for employment. Today, in Singapore, we have more than 400,000 foreign workers and at least half of them are employed in the construction sector.

Therefore, I would like to know if the Ministry has any plans in the pipeline to encourage the development of automation and buildable designs in the construction industry. I believe this will help to reduce our dependence on foreign workers, and also we can improve our productivity in the construction industry.

Last year, the Ministry introduced a new work permit allocation system for the construction sector. I would like to know how effective this has been and whether there are any more control measures being planned to promote self-regulation in the construction industry.

Throughout the years, there were reports in the newspapers about social problems we face with the vast increase in the number of foreign workers. MOM should help our employers to build proper outside dormitories and develop a comprehensive management system to address the issue of housing for foreign workers. This is something which is of great concern to our people, because if too many foreign workers live in our housing estates, it would create some social problems. With the economic downturn, many contractors have been hit by poor business, and hence face cash flow problems. Is the Ministry considering granting some flexibility with regard to late payment of levy and levy bond for genuine cases?

Lastly, with the measures taken by the Government so far in boosting business competitiveness and cutting costs to preserve jobs for our workers, would the Ministry be able to provide some indicators on how successful we have been, and how effective is the cost cutting package that was introduced?

Mr Chiam See Tong: Sir, Mr Yeo Guat Kwang has touched on the social problems of our foreign workers. He says that there is a need to give better housing to foreign workers. I would like to touch on the recreational activities for foreign workers.

The foreign workers are now a common sight in Singapore. We see them in all construction sites, whether public or private ones. We see them in all our shipyards. We see them in our factories and in our homes. Singapore would not have been able to make such great economic progress if it were not for the labour contributed by foreign workers. We can see foreign workers on weekends congregating at different parts of Singapore, depending on where they came from. On Sundays, we see the Indian foreign workers gathering at the Tek Kah area. The Thai workers congregate at Beach Road Golden Mile area, and the Filipino maids gathering at Lucky Plaza at Orchard Road.

At the moment, there are no sporting, recreational or cultural programmes organised for them. They just loiter around in those places. Some sit at whatever places they can find on the roadside, on railings or public chairs, if there are any in the vicinity. They have nowhere to go. Their wages are low. They do not have any spare money to spend. Whatever spare cash they have is probably sent home to their impoverished families in their own countries.

The Government is estimated to collect about $21.6 million on fees and charges in FY99. Much of this money are contributions by the employers of foreign workers. I think it is equitable or fair that some of these funds, say, about 2%, should be ploughed back to the foreign workers in the form of organised, recreational, sporting, social or cultural activities. As it is, nothing is done for foreign workers outside their working hours, except for the efforts of the hon. Member, Mr Loh Meng See, who was reported in the press to have organised sports and games for foreign workers in his constituency at Kampong Glam. I congratulate Mr Loh for his concern for the foreign workers.

It is reported that crime is on the rise in Singapore and many instances of crimes are committed by foreign workers. If something could be done to keep them occupied, the incidence of crime involving foreign workers may drop. I urge the Government to put some funds aside from the levies collected to organise extra-curricular activities for foreign workers. The ECA outside their working hours shall not only keep foreign workers away from doing mischief but also probably make them better workers.

Mr Shriniwas Rai: Sir, I share the sentiments of Mr Chiam and Mr Yeo who spoke earlier.

Sir, the foreign workers are helping in the economic life of Singapore. Just imagine if these foreign workers were not to work for one week, I think our housing estates will be dirty. Construction sites will come to a standstill. We must appreciate the contribution made by these foreign workers.

There are two areas which I would like to touch - recreation and employment. Sir, there are certain games and sports which are not very expensive, for example, Kabadi for the Indian and Bangladeshi workers. All they require is a field. No other equipment is required. Could we help them by providing them grounds where these activities could be taken?

I will go one step further. The employers should be encouraged to have small recreational areas at the construction sites. I pleaded with the Minister for Information and the Arts for programmes in Thai and Bangla. Unfortunately, he said that it was not possible. We must think of these poor workers who are away from their homes. They are lonely. They work hard. They must be given some opportunity to relax.

On Saturdays and Sundays, they gather at the various places, as has been told to this House, but what about the other working days? Can we do something? I would urge the Manpower Ministry to work closely with the employers.

There is another area on which I have spoken earlier, but I am going to repeat my plea and I hope that it will not fall on deaf ears. This is on foreign workers who have been exploited by some unscrupulous agents in Singapore. These workers come here and they work for one or two months and then they find the companies are closed and they have no jobs. The next thing that follows is that they have to pack and be sent to their countries of origin. Could we allow these workers a slightly longer stay in Singapore, so that they could look for other employment? They have paid huge sums of money, often selling or mortgaging their land. $4,000 may not be a big figure for us. But when we convert this into Indian Rupees or Bangladeshi currency, it is much higher. I will go one step further and ask the Ministry: can we have a job placement body in the Ministry which could help these foreign workers? They are helping us. We should help them.

The Minister for Manpower (Dr Lee Boon Yang): Sir, may I respond to Mrs Yu-Foo Yee Shoon, Chairman of the GPC for Manpower, and the other Members who have spoken on the subject of manpower planning, foreign talent and foreign workers.

On manpower planning, the first point that I want to make is that we have a small workforce of about 2 million. The local workforce grows at around 45,000, maybe 50,000, a year, as the new entrants join the labour force. Between 1987 and 1997, total employment creation in Singapore grew rapidly from about 70,000 in 1987 to a high of 120,000 in 1997. This resulted in persistent shortage of workers and explained the chronic tight labour market situation in Singapore. Of course, the current situation is a complete reversal. Owing to the regional economic crisis and its impact on Singapore, we have seen rising unemployment and a record high number of retrenchments. Last year, 1998, we suffered a net job loss of 23,400 jobs, and unemployment rose to 4.3% in December last year. For this year, the employment situation is likely to continue to remain weak, with employment growth either flat or possibly negative.

Sir, manpower planning is about managing and balancing the supply and demand of manpower for the economy. We aim to balance at the national level manpower demand from industries and manpower supply from both local and foreign sources, so as to sustain economic growth and to optimise the use of our available manpower resource. 1.15 pm

Sir, the Manpower Planning Division is new to my Ministry. MOM is now the central coordinating manpower agency for Singapore. We have adopted a holistic approach to manpower planning needs. This is done in close partnership with many other Government Ministries and agencies. MOM has also appointed academics from NUS and NTU to help us to develop relevant models to guide policy decisions. I note what Mr Chay mentioned earlier on about the fact that many other countries' experience in manpower planning has always turned up short of expectation, and they have in many cases gone wrong. Even our own university, according to Mr Chay, has not come up with good long term projections for manpower demand.

The task of manpower planning is not easy. It is going to be a very difficult task. To hit the target right every time is not going to be easy. But that does not mean we should not do anything. That does not mean we should just leave it on its own to muddle through. We, of course, are also studying how other countries are tackling their manpower planning issues. For instance, in the US, the US Bureau of Labour and Statistics has a long experience and long history of carrying out manpower planning. They have well-established methodologies as well as manpower research and training programmes. We will seek to learn from these more established manpower planning agencies in overseas countries and to tap on their experience.

As this effort by my Ministry to develop a manpower planning model for Singapore is still at an early stage, I am afraid I will not be able to provide Members with details. But I would like to assure Members that our objective is to gather as much information as possible to provide timely and relevant information on manpower and skills demand and supply for better management of our workforce. We will release this information to the public in our regular employment outlook reports which will touch on the industry's specific trends. However, Sir, I must point out that manpower planning in itself cannot ensure that there will be sufficient jobs for all Singaporeans. These will have to depend on the performance of the economy and the resulting job creation. Manpower planning can help us to be more responsive to changes and to deploy workers to growth areas where jobs are still being created. This includes a clear identification and projection of areas of employment creation, analysis of areas of supply shortages and surpluses, and also a wide ranging skills upgrading and workers' retraining programmes to bridge the skills gap.

Sir, Mrs Yu-Foo Yee Shoon has also asked for an update on the Manpower 21 Committee's effort. This was the initiative launched by my Ministry in June last year. The objective is to formulate a strategy for the development of Singapore's manpower capability to forge a globally competitive workforce. The study team includes some 100 top businessmen, captains of industries and civil servants who have held many in-depth discussions on manpower issues confronting us today. Some Members have even made study tours overseas to learn about how other countries are going about in their human resource development and skills upgrading for their own workers.

Sir, their findings and recommendations are being rigorously debated within the Committee itself and refined. At this juncture, I would just like to provide Members with some indication of some of the key ideas which have come out from these discussions.

The first is the concept of a school of life-long learning. This is part of a national framework to enable every Singaporean to pick up new skills in order to enjoy lifelong employability. There are altogether six key features of the school of lifelong learning. First, recognition. Life-long learning must lead to recognition for the skills gained. There must be incentives and this should be employer and also individual-based incentives to encourage employers and workers to pool their effort to send their workers for skills upgrading and retraining.

We have to develop a network of learning or training providers, both public institutions and also private learning institutions, so that any worker who wants to go for skills upgrading will be able to have the opportunity. We must make use of technology. We must tap technology to make sure that training or skills upgrading opportunities can be made more accessible to workers. For instance, we should tap electronic learning (e-learning) through the Internet so that workers can perhaps study either at home or even at community centres where such equipment can be provided.

We should facilitate workers' access to career development, to job opportunities and to training available, and also the kind of funding that Government can give to support such workers training.

Last, but not least, we must have a sustained strategic marketing plan to continually encourage and motivate workers to go for such skills upgrading.

The next idea that has been developed is this concept of developing a manpower industry in Singapore. The manpower industry is defined as a cluster of companies involved in the total development of Singapore's manpower and talent capability. This includes both public institutions and private companies such as management schools and human resource consultancies. We intend to work closely with this cluster and to develop organisations and institutions and companies so that they would be able to contribute more to Singapore's manpower development. The manpower industry has the potential to become a new growth industry serving both domestic and regional needs.

The third idea that has cropped up from the discussion by the Manpower 21 Committee is to prepare for the workplace of the future and the need to strengthen tripartite relationship. Sir, as the concept of work is changing on a global scale, we need to build new infrastructure that will enable more people to work from home or within their communities. Welfare structures such as safety at work, industrial health, workmen's compensation and employment coverage would have to be reviewed to respond to these changes. At the same time, this would be an excellent opportunity for us to strengthen tripartite relationship at both the national and enterprise level.

Sir, besides these key ideas here, there are still many others being discussed and refined by the Manpower 21 Committee. The Committee expects to complete its work by June this year.

Mrs Yu-Foo Yee Shoon has also raised the point about missing foreign workers and the disputes between foreign workers and their employers. Yes, there has been an increasing trend of missing foreign workers, particularly from the Indian sub-Continent. Most of these workers, in fact, are here in Singapore working in the construction industry. Apart from more enforcement actions to round up such missing workers and overstayers, we will also try to introduce new deterrents. Part of the problem of missing workers is, in fact, as pointed out by Mr Rai, because some employers exploit and take advantage of the foreign workers. So they run away. What we want to do is to try and minimise this possibility of employers exploiting the foreign workers. So with effect from 1st April this year, we are going to introduce a measure whereby employers who have more than two missing non-traditional source workers within the same calendar year will not be allowed to employ new non-traditional source workers for a certain period of time. This is to compel employers to better manage and better look after their non-traditional source workers so that they do not run away or abscond and therefore put the employer in a corner whereby he can no longer recruit any new non-traditional source workers.

There has also been a sharp increase in the number of foreign workers making claims against the employers over the last few years. In fact, in 1998, close to 7,000 foreign workers made claims against their employers, mostly on salary arrears. Almost all the claims that we investigated turned out to be valid. In other words, the contractors have, in most cases, attempted to cheat or deprive these foreign workers of some salaries. These are the ones who regularly flout the Employment Act. We take a very serious view of employers who try to cheat their foreign workers or to take advantage of them. So employers who blatantly disregard or violate the Employment Act will not be allowed to apply for new work permits or renew existing work permits for their foreign workers.

Next, I come to Dr Wang Kai Yuen, Member for Bukit Timah GRC. He asked whether in our streamlining of the employment pass system into a PQR system, we have inadvertently disadvantaged a group of skilled or talented workers from overseas who are now granted Q2 employment pass. My answer to him is no. Although we do have salary criteria or guidelines, I believe I had, in a previous sitting in this House, informed Members that the salary yardsticks are just guidelines. They are not rigid criteria which we use to exclude people who do not meet our salary guidelines. In fact, what is more important is the foreigner's education, work experience and the nature of jobs that he or she will be doing in Singapore. We do not just grant employment pass purely on the basis of the current earnings of an applicant. We will look into the real work experience and the qualification. So let me assure him that the new PQR system does not intentionally or inadvertently discriminate against this group. In fact, for those who are well qualified, they will be granted either a P employment pass or a Q1 employment pass, which allows them the benefit of bringing in their dependants. Those who are presently granted Q2 are not because they are earning a lower income but because their skill criteria and qualifications lie in the borderline region, and we want to let them work here for a period of time for a proper assessment. So they can subsequently re-apply for a higher category of employment pass if their employer supports their application.

Dr Wang said he supports our foreign talents policy, but he cautioned against granting PR too readily. Let me say that foreign talents come to Singapore for a variety of purposes. Some come here to experience our culture and to work in an Asian environment for a period of time. Others come clearly with the hope of sinking roots in Singapore. Whether they are here for a short stay or a long stay, I think, is not that important. What is important is that while they are here, they are making a real contribution to our economy. They are really helping us to be more competitive and to grow the economic pie. I think that is more important. So what matters is, during the period of stay they contribute to Singapore's economic well being. Those who want to stay in Singapore and to sink roots here, and those whom we feel that we need and welcome, we should consider them for PR because they will add to the richness and strength and capabilities of our workforce.

Sir, the eligibility for PR of foreigners, whether they are here working first on employment pass or they are applying directly for PR, is thus determined to a large extent by their ability to contribute to Singapore's economic capability, their assimilability and their commitment to our national effort. Over time, such migrants will also become true Singaporeans, like many of our forefathers. They can help us to compete in the economic arena and contribute to social cohesion. So we should not deny ourselves of this source of talents, this source of new migrants, by slowing down the issue of PR unnecessarily.

1.30 pm

Sir, I now come to Mr Chiam who said that he supports that in the period of high growth, Government should not limit the entry of foreign talents to Singapore. He asked about the Hongkongers who have been granted approval in principle to come to Singapore. I do not have the specific figures with me because PR is actually a Ministry of Home Affairs' matter. And if he wants the specific numbers, he should raise the question with the Minister for Home Affairs. But I understand that we have offered 25,000 approvals in principle for PR for Hongkongers. Quite a large number of applications had been received since it was offered in 1989. But as to the number of families who have relocated here, it has only been a few thousand families. It is not such a large number. And the fact that soon after the hand-over, Hong Kong was very stable and developing very well, there was very little justification for Hongkongers to want to uproot themselves, which makes it even more difficult for us to attract them.

But the point he made was quite similar to the point made by Dr Tan Cheng Bock last week, that we should not be talking about attracting foreign talent at this stage while the economy is down and unemployment is high. Basically he supported the point made last Monday by Dr Tan that the Government should think Singaporeans first. Sir, let me explain.

The Government is fully aware of the difficulties faced by the people during this economic recession. We understand that individuals may have difficulty understanding the need for foreign talent when they are jobless or they are without job for some months after graduation. It is only very tempting under such circumstances to press the Government to turn off, or at least reduce, efforts to attract foreign talent, in order to protect our citizens and to give them a better chance. Let me explain why I believe this would hurt us in the long term and will not solve our immediate problems.

The economic crisis is the manifestation of the inescapable fact that the world is changing, and changing rapidly. We are now seeing the removal of geographical and regulatory barriers to the movement of people and capital. This changing world will not stop for us to catch our breath. We cannot bury our heads in the sand and wish away reality. And the reality is that in the 21st century, nations which succeed are those which are able to capitalise on their intellectual and human capital. The basis of competition will be a country's collective knowledge, expertise, creativity and entrepreneurialship. With a workforce of less than 2 million people, compared to the teeming millions in the other cities in the world or in the region, and we are not talking about countries, we are just comparing cities with cities, it is very difficult for us, with less than 2 million workers, to outdo our competitors, based solely on the efforts of Singaporeans alone. We will not have the critical mass nor the resources to succeed on our own. We have to build up a critical mass by supplementing our local talent with a flow of international talent to enable Singapore to compete successfully in the global market. We must position ourselves as a talent capital where Singaporeans and foreign talent work side by side to create wealth for all to share.

Sir, foreign talent is thus a critical element in our strategy for future success. And, indeed, it becomes even more critical and more crucial during this economic downturn. Recently, two of our largest banks (DBS and OCBC) recruited foreigners for their CEOs. This was a strategic move by both banks to bring in the best men in preparation for new competition when our banking and financial sector will be thrown open to international competition. Such foreign talents, and many more like them, are helping Singapore companies to weather the recession, reorganise their operations and reposition themselves for new competition and opportunities. In doing so, they will create more jobs for Singaporeans. Attracting foreign talent can enhance our workforce's competitiveness and capabilities in many new areas. It is about bringing in people who can make the difference and hence we need them all the more in a period of economic decline or downturn.

For those who have been here helping us to compete all these years, we should not chase them away. While overall employment may be shrinking, limiting the entry of foreign talent or asking those who are here to leave will not protect Singaporeans nor solve our employment problems. Indeed, if you prevent company from hiring foreign talent, it may result in its relocation elsewhere. Many MNCs operating in Singapore also run other operations in the region in our neighbouring countries, for instance. If we restrict the access to foreign workers, they can easily relocate to other countries where labour is more readily available and at a much lower cost. This will result in more Singaporeans being retrenched. For one local job protected in the short term, many more local jobs will be at risk in the future.

Recently, Caltex announced the shift of their global headquarters to Singapore. Suppose Caltex had been told they could only recruit Singaporeans, which must be the logical extension of the "Think Singaporeans First" policy, do you think Caltex would have made the decision to relocate to Singapore? Is it better for Singapore to have Caltex operating from Singapore with foreign talent or to have Caltex located in some other cities, perhaps in the region, competing against our effort to build up global oil trading business from Singapore?

Sir, we are in a race for talent, and losing the race will not help our citizens. It will hamper economic recovery and future growth prospects. If we do not accumulate the best talent we can find from around the world, they will simply be drawn elsewhere to compete against us. Instead of stopping the flow of foreign talent, therefore, we need, in fact, to try to position Singapore as an attractive place for them to work and live in. The fact remains that even in the midst of economic crisis, there are still areas which are critically short of talent and need to supplement our inadequate local supply with a flow of foreign talent.

One area is the IT industry, which today's newspaper happens to highlight by coincidence. We are well ahead of others in this region in the IT industry because we have always welcomed foreign talent. Out of the current stock of about 30,000 practising IT professionals, more than 30% are non-Singaporeans. Without these foreign talents, we will not be an IT leader in the region. Every year, out of the demand for about 3,000 new IT professionals, our local universities and polytechnics can only supply about 2,000, leaving a shortfall of 1,000. That is why they are being paid so much. Competition for IT talent is global and intense. Every country in the world today faces a shortage of IT professionals, as Mr Rai correctly pointed out. Even the United States is short of IT talent.

Another area is the telecommunications and media where it is inconceivable that global broadcasters and media companies, such as CNBC and ABN, would want to base their operations in Singapore if they are not allowed to bring in talented broadcasters and media specialists from around the world.

In the advertising and the PR industry, Singapore has again benefited tremendously from the infusion of foreign talent.

R&D is yet another example. A good example which shows that opening our doors to talent from abroad also means making it more attractive for our own Singaporeans and ex-Singaporeans overseas who have distinguished themselves in other countries to return and to lend their considerable experience and expertise to our cause. I give you an example of our Institute of Molecular and Cell Biology (IMCB) which would not be what it is today without Prof. Chris Tan, then an ex-Singaporean whom we attracted back from the US. And not only did he establish IMCB as a world-class institution, he created exciting R&D jobs for many other Singaporeans and foreign talent also. Another example is Dr Chua Nam Hai of the Institute of Molecular Agrobiology (IMA).

Through the efforts and leadership of these two people and many others like them, we have been able to attract more talent. In fact, the IMCB and IMA had succeeded to make breakthrough findings in cancer research and also in agrobiology. IMA, for instance, had filed patents on at least 13 areas which are of commercial value. So these people not only contributed in their own work areas but they also created more opportunities for other Singaporeans.

The challenge facing Singapore in the next millennium is to reinvent ourselves into a country where there are many opportunities for Singaporeans to develop to their fullest potential. We can become a globally competitive knowledge economy with a world-class workforce. But to do so, we must develop our people to their fullest potential and add that little extra boost which can come from bringing in a flow of foreign talent, who bring with them new ideas, new experience and new network connections. If we fail in this undertaking, not only will foreign talent not come to Singapore, our own talented Singaporeans may well look elsewhere for greener pastures, and I think that would be a greater loss for Singapore.

Sir, the Government will ensure that our own citizens are provided with every means to compete with foreign talent on a level playing field. We will invest in manpower development to upgrade our workers' capability to compete. For example, information technology is an area where there are still many jobs available. It is likely to be one of the few sectors that will have a positive job creation this year. MOM will implement a Strategic Manpower Conversion Programme to train professionals from other disciplines in IT skills and to prepare them for jobs in the IT sector. The EDB also has a programme called Training and Attachment Programme to train young local engineers overseas, so that they can acquire new capabilities in order to meet the needs of the economy when it recovers. But we must be prepared to subject ourselves to the discipline of the market where employers are free to choose the best man for the job, be it a Singaporean or a foreign talent. Only then can the Singapore workforce be truly competitive on a global basis. Ultimately, foreign talent attraction and the development of our own people are not competing alternatives. It is not a zero sum game. Both are complementary strategies in our drive to survive and prosper in a very competitive global market. This will become more apparent when through the hard work and efforts of Singaporeans and foreign talent, the economy turns around and there is a larger pie to share.

I should also thank Mr Rai for his strong support on our effort to attract foreign talent. Let me assure him, as I have just explained, that the development of our own local talent will certainly not be sacrificed. We will continue to put more efforts into developing our own talent so that they can compete with the foreign talent.

I now turn to Mr Yeo Guat Kwang who spoke of the need to control our dependency on foreign workers. I think Mr Yeo, in particular, was concerned with the construction industry where we have nearly 200,000 foreign construction workers here. And he asked whether we will take steps to regulate their entry and to encourage the industry to improve its productivity. I think he has touched on a real problem, because the construction industry is, in fact, one of the least productive industry. Over the years, from 1995 to 1998, the industry saw steady decline in productivity. Between 1995 and 1998, the productivity declined by 20%. So there is really an urgent need to get the industry to turn around its approach in the way it works and operates, in order to raise its productivity. That is why we established a Construction 21 Committee to study how we can help the industry to raise its productivity. Some of the ideas that are being discussed by the Committee include the promotion of design-and-build concept, standardisation, modularisation of components as well as the use of off-site prefabricated components. Also the Ministry of National Development will introduce minimum buildability requirement for construction projects in order to enhance their buildability and productivity. 1.45 pm

Based on the Construction 21 studies, we have also taken other measures to address over reliance and over dependence on foreign construction workers. We have in fact lowered the levy for the skilled construction workers while we maintain the levy for the unskilled construction workers. That means there is now a wider differential, in fact, almost $440 for each foreign construction worker. This has in fact given incentives to the contractors to bring in more skilled construction workers and the proportion of skilled construction workers has increased from 12% in April 1998 to 23% in December 1998.

We have also introduced basic skills certification requirement for contractors who want to bring in their non-traditional source construction workers. As of August 1998, we have required contractors to bring in at least 20% of their NTS workers with basic skills certificate, and we intend to raise this requirement. By April 1999, it will go up to 50% and eventually 100%. In other words, every NTS worker coming into Singapore should have a basic skill certificate. They should have some basic construction skills. We are also looking into enhancing the level of this basic skill certificate or skill level so that they are better construction workers.

Mr Yeo asked whether our new work permit allocation system for the construction sector has worked or achieved this objective. Yes, the answer is that the new man-year allocation system has introduced more discipline in the demand for foreign construction workers, particularly, the NTS workers. The new system helps to ensure that the main contractors exercise prudence and discipline in assigning their man-year allocation or entitlement for NTS workers to their sub-contractors.

Since its introduction early last year, there has been a 40% drop in the applications for work permit for non-traditional source workers. We cannot say it is all entirely due to the new man-year entitlement system because the industry has also slowed down during this period. But the new man-year entitlement system had a large part to do with it because we notice that only about 1/3 of the man-year entitlement handed out to the main contractors were subsequently allocated to their sub-contractors. In other words, the main contractors have exercised a great deal of prudence and care in awarding their allocations to their sub-contractors. This has resulted in a lower demand or fewer applications for work permit.

Mr Yeo also queried on the housing of foreign construction workers. This is a problem only for the construction sector, while in the other sectors like manufacturing and services, housing is not a problem. In the construction sector, about 70% to 80% of the construction workers can be accommodated on site, but that still leaves another 20% to 30% for whom the contractors have to find off-site accommodation. We are encouraging contractors to develop proper dormitory housing for their foreign workers. Some companies have taken up this proposal. My Ministry will continue to work with other Government agencies to set aside more land which can be used for developing dormitory housing to meet the needs of the foreign workers.

Mr Yeo also asked whether contractors are facing difficulties as a result of our implementing a levy bond and also our collection in the arrears of foreign worker levy. I understand the problems faced by contractors now, especially when the economy is slowing down. They may have problems in payment or delays so they may not be able to meet all these requirements, particularly the foreign worker levy. We will implement all these measures with flexibility and understanding. Companies that are required to furnish the levy bond are usually those that have been habitually late in making the levy payment or the other new and small companies without a proper track record.

We will exercise flexibility to help genuine contractors to tide over this difficult period. We have made adjustments and refinements to the implementation of the levy bond so that a contractor can be allowed to defer posting the bond, if he can show proof that he has ongoing projects and that there are payments that are due to him which should overcome his cash-flow problem.

We have also been fairly flexible in collecting the arrears of foreign worker levy from contractors who are in arrears for some time, up to a couple of months. As long as they can show proof to us that they in fact have incoming payment, we can help them to resolve the problem.

Next, I turn to Mr Chiam who asked for more recreational facilities to be provided to foreign workers. Mr Rai also joined in that call. Sir, the provision of leisure and recreational facilities to foreign workers is partly a responsibility of the employers and partly of course a responsibility for us to ensure that there are sufficient amenities for the foreign workers to enjoy. I would like to point out that in fact all social amenities in Singapore are open and available to foreign workers as well as Singaporeans. It must be so. We do not prevent any foreign worker from using any of the public facilities. So to ask that some of the money collected from the foreign worker levy be set aside to develop amenities or recreational facilities specifically for the foreign workers is simply not justified because the collection of the levy is for a totally different purpose. The levy is collected in order to bridge the wage gap and to moderate the demand for such foreign workers and not to provide social amenities for them. The money that is collected from the foreign worker levy in fact goes into the consolidated fund and it is used to develop public infrastructure and amenities which eventually will benefit not just Singaporeans but foreigners who are also working here.

Mr Chiam, in particular, has pointed out that every weekend, foreign workers loiter at places such as Botanic Gardens, Little India, Orchard Mall, Crawford Park and Rochor Centre. But I think "loiter" is not the right word. This is their day off. They gather at these public areas with all the amenities that are available there, to gossip, exchange news with each other about what is happening at home and to catch up with friends who are also working in Singapore. Where there is over congestion, I agree that we have to find alternatives for them, and that is what we have done. For instance, we have recently opened up a Sunday bazaar at Weld Road. This was jointly organised by the Police, the Singapore Contractors' Association and the Hindu Endowments Board. The weekend bazaar has been held since November last year. Activities that are held there include screening of free movies by the Singapore Contractors' Association and also setting up stalls by volunteers from the Hindu Endowments Board. The scheme had in fact attracted quite a large number of foreign workers who used to congregate in Little India to come over to Weld Road and to reduce the congestion in places like Little India.

Sir, apart from public amenities, where feasible, employers should also provide recreational and welfare facilities for their local and foreign workers. I entirely agree with Mr Rai that employers cannot just neglect their responsibility for their workers. If the contractor provides accommodation for 70% to 80% of his workers on site, then he should also provide some recreational facilities there.

I think I have covered the areas that have been raised so far.

Mrs Yu-Foo Yee Shoon: Sir, the current economic downturn has once again demonstrated the importance of having good labour-management relations. This has been made possible because of the strong emphasis on tripartism and the efforts made by all three parties - the Government, employers and unions to work out problems peacefully and not adopt positions that are confrontational or would lead to disharmony. However, it is important to nurture and further develop this partnership and not take it for granted. One positive way of doing so is for MOM to support initiatives where the three parties can learn and share experiences together. I would therefore like to suggest that MOM consider getting the Singapore Institute of Labour Studies to organise more courses and training for employers, Government and union officials together to give them the opportunity to learn and to share their experiences. And I would therefore also like to encourage MOM to consider its funding to support the SILS effort. The Government has given the Institute a once-off grant but I would like to urge the Minister to consider the possibility of reviewing this arrangement and provide grants once in three years.

The workforce profile continues to improve with better education. At present, 60% of new entrants to the workforce are tertiary-educated. This means that the pool available for union membership and leadership will shrink as traditionally only the bargainable employees join the unions. This will have serious repercussions on tripartism which will clearly weaken. Therefore, there is a need to review the current restrictions on executives joining unions. For a start, MOM could consider allowing rank and file unions partial representation of executives on issues such as retrenchments and grievances. Japan is a good example of sound labour-management relations, which had survived the turmoil faced by workers and employers in the prolonged recession that the country is facing. One relevant feature of Japanese industrial relations that has contributed significantly to this stability is the practice of allowing union leaders who are promoted to management ranks to continue to remain in office. This fusion of the role has allowed both management and labour to have a better understanding of each other's role and has clearly contributed to the peaceful labour-management relations in Japan. Hence, could MOM look into this issue again and, if necessary, form a tripartite committee representing all the three parties to study the issue carefully and make the necessary recommendations?

I understand that at present, there is a committee to study the guidelines on this area. But according to feedback, it is not very satisfactory. So we would like to urge MOM to relook at this issue urgently and hope that the three parties can actively participate in this area to come out with guidelines which are workable. 2.00 pm

Mr Ahmad Mohd Magad (Pasir Ris): Sir, the subject of tripartite partnership was discussed at length last year when the Nominated Member, Mr Cyrille Tan, moved a motion in this House for the Government to recognise tripartism as a key competitive advantage for Singapore. The Minister for Manpower, Dr Lee Boon Yang, has also just touched on it a moment ago.

Our unique tripartite setting is indeed the envy of many countries and has worked marvellously for us. However, in the wake of constant change and an increasingly competitive business environment, new situations will evolve which will continue to test the bond of the tripartite partners. One that has to be borne in mind is that businesses today, large and small alike, are constantly challenged to deal with the flood of information, knowledge and technology in all forms. Unlike traditional raw materials, knowledge usually is not coded, audited or stacked in storerooms or warehouses for workers to use as needed. It comes in various formats, scattered and is easy to lose. To make knowledge manageable like raw materials, companies need to capture and share knowledge that is in their workers' heads and residing in their computers. Competitive advantage is derived when companies are able to effectively turn these into assets that can be leveraged and into profitable products or services. In an information and knowledge-based economy, this is a key ingredient of business success. Companies that manage knowledge must have the ability not only to attract the young and the new breed of knowledge workers, but must also be able to retain them. Such workers have the competency to help them strategise, analyse markets and, more importantly, provide training.

Employers who fail to recognise the importance of this imminent business landscape risk losing their best and valuable employees. This could contribute to a stifling of business growth which, in turn, could translate into slower economic growth. This is where I believe that the tripartite parties could work together through regular meetings and interactions to anticipate future trends and devise strategies to stablise the employment of knowledge workers. I am glad to note the announcement made by the Minister for Manpower yesterday about the consideration of an annual national Manpower Summit as a potential platform for the tripartite partners to get together and jointly focus on strategic issues relating to manpower development and training needs.

Apart from life-long learning, life-long partnership between workers and caring employers who invest heavily in the education and training of their workers should also be seriously explored. At the opposite end of this, it is also my belief that structural unemployment will be one of our greatest challenges in our pursuit of a knowledge-based economy. It will be a short and long-term problem for us. An annual forum will also be useful in enabling us to regularly re-visit and re-strategise what needs to be done to minimise its impact. Hence, I would urge the Minister to seriously consider the strong merit of staging an annual forum to regularly review manpower issues facing Singapore.

Mr Cyrille Tan (Nominated Member): Sir, I will focus on the extension of the scope of union representation. With the decline of the manufacturing sector, the expansion of the service sector and the spread of IT, more white-collar and professional jobs are created. This change in the profile of our workforce will continue unabated and this will mean a shrinking bargainable base for the labour movement.

While the Ministry of Manpower has expressed that there was nothing to prevent companies from voluntarily allowing their executives to be unionised, NTUC has adopted the persuasive approach to encourage employers to widen the scope of union representation. To date, only 23 companies have initiated such union representation extension. However, it has not been easy for employers to adopt a magnanimous approach to allow executive staff to join unions with open arms.

How do we achieve such extension of union representation? A Tripartite Committee can be formed at the national level to review section 16(3) of the Industrial Relations Act.

Firstly, amend section 16(3) of the Industrial Relations Act to allow partial representation rights over executives. Here, we accord union partial representation rights in respect of executives. The latter will not enjoy the benefits of the collective agreements obtained for its rank and file colleagues but unions can represent them in grievances and other specific problems such as dismissals, unfair treatments and retrenchments. This will help achieve some welfare protection for executives.

Secondly, amend section 16(3) of the Industrial Relations Act to admit executives as ordinary members. This proposal would mean that executives could enjoy the benefits of the collective agreement.

The two above proposals can also have the right for executives to vote and hold office in the Union. This can be seen as a two-stage transition working towards full union rights for executives while pursuing issues like conflict of interests. The proposals can be first adopted on a pilot basis at the public sector. Unions and management can differentiate the extent of representation for different groups of workers. It may reserve the right to take up issues of grievance representation, retrenchment, etc. for some, while the majority can be covered by a more comprehensive collective agreement.

In conclusion, the ability to extend the scope of union representation to executives is important to the labour movement. As each cohort of the population will be 60% tertiary trained (20% university trained and 40% polytechnic trained), our union membership can only be drawn from the remaining 40% of the workforce.

Union membership is what the labour movement is all about. To reiterate, we need to arrest the shrinking bargainable base by extending our scope of representation in order to make our labour movement a strong and relevant one.

Overall, the Singapore model of the trade union movement will benefit the workers, the companies and the country as a whole.

The Minister of State for Manpower (Encik Othman bin Haron Eusofe): Sir, the synergic relationships between the Government, employers and unions have worked well in Singapore. This tripartite alliance is the cornerstone of industrial peace for three decades. It has also brought an environment that is conducive to foreign investment and sustained economic growth.

I fully agree with the Members for Bukit Timah GRC and Pasir Ris GRC that good industrial relations cannot be taken for granted. Tripartite cooperation will become even more crucial in the present economic difficulties as companies restructure their organisation to become more cost-effective and to remain more competitive, and when workers face wage and CPF cuts. Tripartism has served us well in good times. It is even more important in times of economic adversities. A strong bond between the Government, employers and unions will help us to weather the economic storm. I agree with the Members that in a rapidly changing and competitive business environment, the three partners should continue to strengthen their working relationship and to jointly tackle difficulties ahead, particularly the emerging problems of structural unemployment. Through tripartite cooperation, we can also prepare our workforce to upgrade themselves and be globally competitive in the knowledge-based era.

Tripartism has worked in many areas. For example, through the support of the employers and the NTUC, we have raised the compulsory retirement age from 60 to 62 years from January this year. The NWC has been able to reach consensus among the tripartite partners on the recommendation to reduce wage costs by between 5% and 8%, in addition to the cut in employers' CPF contribution by 10 percentage points. It is not easy to reach consensus on such a difficult measure. Our unions and workers should be commended for giving their unequivocal support to help companies reduce business costs so that we can regain our competitiveness in the global market.

On the question of funding the Singapore Institute of Labour Studies (SILS) as raised by the Member for Bukit Timah GRC, my Ministry is aware that SILS has made significant contributions to the labour movement by providing training to union leaders and members. To support SILS' work and programmes, the Government had in the past given annual grants to SILS on the basis of deficit funding. However, to provide the necessary incentive for SILS to raise its own funds, the Government decided to give SILS a one-time matching grant of $2 million into the SILS Endowment Fund as from FY96 based on the Institute's own contribution of $2 million to this fund. Through this funding arrangement, it is hoped that SILS will operate on the basis of cost recovery in running its training programmes. This practice of annual funding was therefore discontinued. Nevertheless, we will monitor the funding arrangement and carry out a review if the need arises.

Let me now turn to the issue of union representation which has been raised by Mrs Yu-Foo and Mr Cyrille Tan, in particular, the question of allowing executives to join rank and file unions to enlarge the talent pool for union leaders. While we appreciate the efforts of the unions to expand their membership, the concerns of the employers on union representation of the executives must not be overlooked. Employers have expressed concerns that allowing their executives to join rank and file unions would result in a conflict of interests. Executives who have to make critical decisions, which may affect their fellow union members, may find it difficult to effectively carry out their roles.

Mr Cyrille Tan and Mrs Yu-Foo have also raised the concern that the current restriction of executives joining rank and file unions under section 16(3) of the Industrial Relations Act has deprived the labour movement of the ability to draw future leaders from among a growing number of employees who are in the executive positions. This is particularly so when our workforce is becoming better educated and most of the new entrants in the labour movement join as junior and middle management personnel. We agree that this issue of allowing executives to join rank and file unions should be studied by an appropriate tripartite forum. This is in line with our tripartite approach in dealing with the important labour relations issues, with a view to arriving at a solution that can best serve the interests of the economy, employers and workers. I think with the proposals which we are considering, like having an annual tripartite summit or conference, these are issues which the forum could discuss. 2.15 pm

Mr Charles Chong (Pasir Ris): Sir, the average unemployment rate in Singapore has risen from 1.8% in 1997 to 3.2% in 1998. I understand that the seasonally adjusted figure for December 1998 has already reached 4.3%. In absolute numbers, this translates to about 89,000 being out of work. However, there are more than 450,000 foreign workers in Singapore in occupations across the skills spectrum, from 80,000 professionals and highly skilled workers to about 100,000 less skilled domestic workers. Theoretically, there should be little reason why unemployed Singaporeans should not be able to find employment if they are willing to moderate their expectations, or upgrade their skills to take on jobs that currently have to be done by foreigners. The figures and projections also indicate that there will always be a need for foreign talent and less skilled foreign workers to supplement the local workforce.

Sir, I am glad to note the formation of the Manpower Planning Committee by the Ministry of Manpower. But could the Minister explain his Ministry's current policy, specifically on the issue of work permits versus the need to ensure that unemployed Singaporeans are able to find jobs?

Sir, much has also been said and done about skills upgrading and retraining of lower skilled workers in order for them to take on higher skilled jobs. While I fully agree with my GRC colleague that we should not aim to be a nation of tuckshop girls and taxi drivers, I think we must also be realistic in our expectations. There will always be a proportion of Singaporeans, especially older and less educated workers who, despite their best efforts, will not be able to make the grade into highly skilled professions due to lack of literacy skills or ability. Decent jobs will also have to be found for them. Is the Minister satisfied that enough is being done for this category of Singaporeans who may not be able to take advantage of the skills upgrading programmes such as SRP?

In areas where lower skilled foreign workers are being used extensively, such as commercial cleaning and domestic services, what measures are being taken by the Ministry of Manpower to encourage employers to enhance professionalism in these areas in order to make these occupations more productive and better paying and, consequently, more viable for less skilled unemployed Singaporeans?

Mr Ong Ah Heng (Nee Soon Central): (In Mandarin): Sir, to soften the impact of the regional economic crisis on us, our key strategy is to focus on minimising unemployment and maximising employability. Last year, the Government, together with various economic and social agencies, stepped up its programme to help our workers who were affected by the crisis.

It is therefore very important that these agencies keep abreast of the latest development in our labour situation, in order that they may tackle the issues at the earliest possible opportunity. Hence, I would like to request the Minister for Manpower to provide monthly reports on job creation and opportunities in the various industries, so that NTUC can match our workers with the vacancies in these industries concerned.

I also understand that skilled workers are urgently required in the new high-tech industries, and some of our workers still do not possess the relevant skills to take on the new technologies involved. However, there is still a large number of workers who seem to be unaware of the seriousness of this crisis. Many workers also do not realise that the jobs they have lost today may not come back even when the economy picks up later on. Therefore, we should do more to upgrade the skills of our workers and to shift their mindset towards one of continuous learning to move into the knowledge economy that we are moving towards. Sir, may I know if the Manpower Minister has any innovative plans to overcome these challenges?

I would also like to request the Minister to enlighten us on the following matters:

1. The proportion of new entrants into our workforce who are gainfully employed, and the proportion that is under-employed. Does the Ministry have any scheme in place to assist them so that they can be gainfully employed when the economy picks up?

2. How many graduates from our tertiary institutions have decided to further their education in view of the lull labour market? Is their delayed entry into the job market actually a postponement of our employment problem? With so many advanced learning institutions around, are they being trained in the required skills, so that the under-unemployment situation will not be aggravated after they have acquired their higher qualifications?

3. Is the Minister satisfied with the success of MOM's "job matching" efforts? Has the Ministry any proactive action plan to improve the success rate? Can the Minister tell us how many workers have refused jobs offered to them despite being placed several times, and the number of companies which rejected the job- applicants recommended by the Ministry? While looking for jobs, are the workers' concern about inequitable pay and long hours of standing valid? Is there any discrimination against older workers in the recruitment exercises?

Sir, I support the Government's action to attract foreign talents who could add value to our economy as part of our strategy to move towards a knowledge-based economy. However, may I ask the Minister for Manpower what measures have been taken by his Ministry to attract local workers to these higher value-added jobs, since these jobs will provide higher income?

Mr Inderjit Singh (Ang Mo Kio): Sir, in the past year and possibly this year, we expect to see record numbers of people being retrenched from work. While many people are able to support themselves through their savings or through family support until they find alternative employment, however, there are still a substantial number of Singaporeans who may not be able to do so for a number of reasons. I would like to propose to the Minister that such families in trouble be allowed to use their CPF savings during this time of difficulty. My proposal is to allow retrenched workers to borrow from their CPF Special Account to pay for essential expenses like school fees, S&C charges, house rentals and for purchase of basic food items. While I agree that we should not change the fundamental purpose of the CPF, which is a saving for us after retirement, I do feel that we need to put in place a system that allows us to ease the burden of the workers who are in financial difficulties, especially during this time. What I am suggesting is not a permanent draw down from the CPF account, but to treat the transaction as a loan. The mechanism could work as follows:

First of all, the Ministry can set criteria which allow workers, who were retrenched and who have been out of a job for a minimum period of time, to borrow from their account. Second, the money borrowed can be used only for certain pre-approved type of expenses. Third, to set a limit for a maximum quantum to be borrowed and for a maximum of, say, six months so that the worker seriously looks for alternative employment. Fourth, once the worker finds a new job, he has to repay the money back to his CPF account, which should include the amount borrowed plus interest on the borrowed amount. The payment can be made in instalments to ease the burden on the worker, and repayment could be made through higher employee's CPF contribution until the amount borrowed is fully paid up.

Sir, I would like to emphasise that I am not advocating a permanent withdrawal from the Fund, but a loan from one's own account to be paid back with interest. In this way, the impact on old-age savings will be almost none and, at the same time, we will reduce the burden on the Government and the various welfare organisations since the worker now finds help himself first, eliminating the need for welfarism.

Mr Hawazi Daipi (Sembawang): Sir, last year, about 28,000 workers lost their jobs and indeed we had just learnt from the Minister for Manpower that there were 23,000 jobs net loss experienced by December last year.

The Ministry of Manpower has initiated a job assistance scheme to help retrenched workers secure alternative jobs quickly. Sir, I would like to know how successful has the scheme been, how many people have sought assistance from MOM, either directly on their own or through their Members of Parliament, and what is the proportion who managed to get jobs through the scheme, and how successful have the job fairs which have been organised at the CDC level.

Sir, I think it is important for MOM to conduct a study on the retrenched workers, so that we know which types of workers face greater problems in getting alternative jobs. In the past year, Members of Parliament have been approached by more residents to ask for help to get jobs. Such cases are referred to MOM. But from the replies given by MOM to these residents, it appears to me that some of the retrenched workers did not take up the jobs offered to them. Some did not even turn up for the interviews to which they were invited. The question is: how many have actually got jobs on their own by the time they were offered jobs by MOM? Because many of these workers are low skilled and low income and if they remain unemployed for a longer period of time, their families will suffer. It is therefore important for us to know why they did not take up the jobs offered by MOM, when, in the first place, they were the ones who sought assistance from MOM through their MPs. It is important to understand this as we will continue to face unemployment and retrenchment problems even when the economy is doing well in future.

Mr Chay Wai Chuen: Sir, this whole discussion on workers' and skills training in Singapore hinges on a set of important criteria which, unless we address them, I am afraid the effort may not be complete. I refer to the importance of the transferability of skills and certification, through the portability of the skills and the certification and the visibility of the skills experienced and the certification.

Sir, the transferability of skills and certification refers to the recognition and credits we accord to various courses or the modules of training. The different pathways should be given recognition. The portability of skills and certification refers to the equivalences that we establish to accept and compare with other skills certification from other places. So, different pathways must be accepted and be recognised. For higher education, training is not just for the elite. Of course, every country has its own education and ranking system. I am not suggesting that we dismantle them, but the important step is to establish the equivalences across skills training and certification, perhaps in a modular structured way.

We have our NTCs and we are working towards the certificate of competencies (COC) for our lower level workers without the NTC. I believe this is the correct way to go. We should even extend the transferability and portability of skills certification across the different pathways of training and education in Singapore. In order for a skill set to be transferable, portable or visible, we need to, firstly, identify the skill set. The skill set may be made up of several modular skills at various levels. Such a modular scheme should be determined as soon as possible, and the most basic of these is, of course, our certificate of competencies. Many of such workers at this level may not be literate in English, but may have many years of working experience in technical jobs, and many of them are well versed only in the Chinese language. I believe we should not deny them. I hope such COC can be determined soonest to form the basis of our skills certification scheme. And our NTC pathways to diploma and university degrees should also be established.

Only a year ago, I had appealed for a constituent who was a top student at the ITE and at the Polytechnic, but was not admitted to the University here. Only the enlightened intervention of the Senior Minister of State for Education gave this determined young man the chance to be admitted to study.

Sir, I hope the Minister will consider this. 2.30 pm

Mr Ahmad Mohd Magad: Sir, the Skills Redevelopment Programme administered by the NTUC by and large addresses retraining of workers who are still gainfully employed. The programme primarily supports employers who are sponsoring their workers to upgrade their current skills or learn new skills so that the workers can contribute towards productivity improvements in the company. However, it is my understanding that workers who are retrenched and who have lost their jobs are not covered by this programme. The Government, through the Ministry of Manpower, should consider extending the surrogate employer's programme to accommodate workers in this category so that they could be retrained to learn new skills and find their relevance in an increasingly sophisticated economy.

To make training programmes more accessible, could I suggest to the Minister for Manpower to consider the setting up of neighbourhood information centres in the HDB heartlands for workers, especially unemployed ones, to have easy access to training and retraining information and how they can benefit from it, if this is not already being planned or done. Wherever feasible, the Ministry of Manpower should also consider setting up training facilities in HDB neighbourhoods to make training more easily accessible, especially for the unemployed.

Mr Low Thia Khiang (Hougang): Sir, I share the concerns of Members in this House that our workers will be in for a tough time with employment, and especially employment that will yield good economic returns. I am also worried that with the rapid restructuring of our economy, our workers could be caught by long term unemployment due to the change in the economic structure where there would be mismatch of skills. Right now, there are workers who were previously enjoying good economic returns in jobs, such as welders, metal fabricators, plasterers, bricklayers, etc. The metal and construction industries are already facing strong competition from cheaper foreign labour from Malaysia, China and India. Cleaners and odd-job labourers are also facing the same problem. Many of these workers have little education and are in their middle age, with families to support. Most of them are from the middle lower or lower income groups. If they are unable to move upwards in tandem with the economy and eventually become unemployed, we would see this segment of the society becoming adversely affected, and this would hurt the cohesiveness of our society in the long run. Although they know they are now facing strong competition and may even lose their jobs in the future, they do not know what other jobs they can switch to and what are the avenues open to them to acquire the necessary new skills.

The Government has announced various schemes in the retraining of workers. The schemes seem to favour workers with at least secondary education. For example, the Report of the Skills Development Fund for 1997/98 shows that in 1997 $5.5 million of grants were committed to the training of workers with PSLE qualifications or below, whereas a total of $54 million were committed to train workers with secondary or GCE "O" level qualifications. In terms of training places, 54,180 places were committed for those with PSLE qualifications and below compared to 286,434 places for higher educated workers. Even workers with university degrees were given higher allocation of grants and more training places than workers with PSLE qualifications or below. I urge the Government to refocus its priority in workers' training to ensure that those who are older and have little education remain employable in the future. Greater efforts must be made to reach out to these workers to offer them training and an alternative career in their job before it becomes too late when they will face long term unemployment and hence financial hardship.

It is no good just pleading with employers to give them a chance, as what the Prime Minister did, not so long ago. Although these workers may not know what is a knowledge-based economy and may not be able to operate sophisticated machines, they are part of our society and are prepared to do tough jobs that many others shun. The Government should help them to avoid financial hardship due to economic restructuring.

Sir, I also wish to point out another weakness in the training programmes being offered, ie, the programmes rely too much on employers to decide whether they should send their workers for training. For example, the Back-to-Work programme, depends on whether the workers are selected by the potential employers for training, and the Skills Redevelopment Programme depends on the employers to send their existing workforce for upgrading. Many workers also see the BEST and WISE programmes will lead them to nowhere or too far to somewhere, as these are not specific skills redevelopment programmes that will enhance their skills to become more employable.

I suggest the Ministry of Manpower make a projection of the manpower needs of the various job sectors and provide grants and offer training places to workers who are currently working in those less promising industries who wish to change their jobs and to build a new career.

In conclusion, Sir, the Government should realise that there are workers who are working in some less promising industries, who are older and it is too late for them to obtain a basic general education. They face the prospect of losing their job. They need retraining badly so as to remain employable in the future. The Government should also note that these workers may not be working in multi-national companies. They are also not unionised. I urge the Government to target this specific group of workers and design programmes that are tailor-made to their needs.

Mr Hawazi Daipi: Sir, I am pleased to note that the Ministry of Manpower has already come up with the key features of the national life-long learning system in Singapore.

With more than half a million workers who are above 35 years or so, who have low educational qualifications and low level of skills, a comprehensive training system is much needed. The Ministry has said that incentives would be given to employers and individual workers so that skills training can be provided and taken up by the employers and workers respectively. Currently, workers whose companies have signed up under the Skills Redevelopment Programme have better chances for training for higher skills than those in companies which have not signed up. Union members can take advantage of the NTUC's Education and Training Fund, but workers in the non-unionised sectors would have less opportunities for skills training.

The proposed national life-long training system must take into consideration the needs of this group of workers. There are also those workers, especially the sole breadwinners, who fear a loss in income if they take up training courses. They should be sufficiently enticed to take up courses so that they can improve themselves.

On the other side of the coin, Sir, are companies which may be reluctant to send their workers for higher skills training other than those provided by the companies themselves. Such companies may fear that their workers may job hop after they have got better training and better skills. How will the Ministry encourage such companies to send their workers for skills upgrading? Sir, the task to help our workers to transit to a knowledge-based economy is a huge one. I do not think it can be done by just the Government. It must be a national effort which involves all sectors in our economy. I would like to ask the Minister for Manpower about the role that would be given to the trade union movement, Chambers of Commerce and Industry and self-help organisations so that our workers who need training to transit into a knowledge-based economy can get all the training facilities and opportunities they can get in future.

Mr Chuang Shaw Peng (Nominated Member): (In Mandarin): Sir, during the budget debates last year, I spoke in support of NTUC's proposal to increase the amount allocated to the Skills Redevelopment Programme (SRP) so that some 700,000 people with education below the secondary level can upgrade their skills to catch up with the economic development of Singapore.

As far as I know, in the past 12 months, tens of thousands of people have signed up for the SRP. The response is very positive and very encouraging. However, during this economic recession, in order to cut cost to improve competitiveness, some companies have retrenched their unskilled or semi-skilled local workers and replaced them with foreign workers. Many of these workers were recruited during the boom time but some were just recruited quite recently. As our population is small, we lack human resources and foreign workers are imported to supplement our local recruits. When we were having 7% to 8% annual economic growth in Singapore, import of foreign workers was acceptable. But during a recession like the present one, we have to adjust this policy to prevent our local workers from being squeezed out. Foreign workers are willing to accept lower pay, some as low as 50% of what our local workers are paid. How could they survive? It is simple. Their families are not in Singapore. Their families are living in countries where the standard of living is much lower than ours. Unlike our local workers who have to pay for their flats, taxes, medical fees and children's education, look after their families and even their aged parents and in-laws, these foreign workers do not have much financial commitments over here.

Many of our workers have the aspiration that one day they will reach the Swiss standard of living. Not all Singaporean workers can be retrained at the same time, but the market is relentless. Whoever is prepared to accept the cheapest pay gets the job. So if our foreign workers policy is not adjusted immediately, then the local workers who are trained will become unemployed after training. As some people have remarked, these people will be trained to become unemployed. Even those who are trained and retrained, their jobs are not completely secure in the face of challenges by the foreign workers. They face the danger of a declining standard of living.

Over the past 20 years, our economy has prospered, and we have been going for the high wage policy. That is to improve the income of our people. At the same time, it has also increased the cost of doing business.

Over the years, the Government and the private sector have been spending a lot of money on the training of these foreign workers. After working for two or three years, and having accumulated enough savings, they would pack up and return to their hometown, and their skills will also go home with them.

The lucky ones, who are given permanent residence here, are not only asking for equal pay as our citizens, but are also starting to job-hop. In this way, we do not have a core workforce. I hope the Minister can issue some guidelines so that we can understand in what circumstances our local workers can compete with the foreign talents. I agree with the views of Mr Low Thia Khiang and some other MPs that without having clear guidelines on how our workers can compete with the foreign workers, we will be going backwards. It will be against our national interest.

Mr Tay Beng Chuan (Nominated Member): (In Mandarin): Sir, as we all know, the only way for Singapore to survive in the 21st century is to build up a world class knowledge-based economy. In order to attain this objective, we need to build our knowledge-based infrastructure. To do this, the key is to build up a high quality workforce.

There is a Chinese saying, "It takes 10 years to grow a tree but it takes 100 years to develop a man." If we want to build up a knowledge-based workforce, we have first of all to go by education. That is the reason why our Government leaders have been emphasising again and again the importance of lifelong learning and lifelong education. Therefore, I would suggest that the Government use actual financial assistance or liberal tax incentives to encourage workers of all grades, young or old, to take part in all kinds of educational and training courses for self-enhancement, to attain the state of lifelong learning.

At the moment, the Government allows the use of CPF savings to invest in properties and shares under the Asset Enhancement Scheme. Enhancement of human resources is very important, even more important than asset enhancement. Serious consideration should therefore be given to some "human assets enhancement scheme" to add value to our human assets.

Sir, I would like to take this opportunity to speak on the Skills Development Fund (SDF). Under the present scheme, only workers whose income is below $1,000 and whose educational level is below `A' level can benefit from the scheme. This standard was fixed quite sometime ago. Now, our Singapore workers' income and educational level have been raised significantly over the years. The scheme should be adjusted accordingly. I would suggest that the income ceiling be raised so that workers with income of between $1,000 and $2,000 can also benefit from the scheme.

Sir, the traditional distinction of workers in terms of blue-collar work and white-collar work is already obsolete now. In future, the distinction between brain work and brawn work will be very blurred. The nature of work in the new knowledge-based economy is such that one can hardly tell whether it involves brain or brawn. Any worker from the administrative staff to the operators at the production line are all valuable assets to the company. They are all part of our precious human resources, and they should be given equal opportunities for skills upgrading.

Therefore, I would suggest that the Ministry of Manpower revise, amend and expand the regulations of the Skills Development Fund, so that junior and middle management staff can also benefit from this training scheme to enhance their professional capability.

Sir, MOM is a Government agency coordinating labour-management relations. While looking after the labour side, it must not overlook the management side as well. I would suggest that while the Government is giving more money to NTUC for skills development, they should also help to finance the business community, agencies or associations in the conduct of training courses for their staff. This will go a long way to enhancing better cooperative relations among labour, management and the Government.

Mr Inderjit Singh: Sir, while I understand that our economy is experiencing a slowdown and jobs are in short supply, nonetheless, I would like to address the issue of job hopping which I believe will become a problem for us once we recover from the crisis.

Sir, in a past report by the Political and Economic Risk Consultancy (PERC), Singapore was ranked 10 out of 12 countries surveyed in the category of employee loyalty and job hopping was cited as a serious problem for our country. This was 10 out of 12 Asian countries surveyed.

The manufacturing sub-committee of the Committee on Singapore's Competitiveness recommended the use of CPF as a measure of controlling staff turnover. I, however, do not agree with the approach they suggested because it results in a permanent disadvantage for the employee. I would like to suggest an alternative approach that does not penalise a worker in the initial years if he or she remains with the company for at least one year. The suggestions I have are as follows:

(1) For the first one year of employment, the employer contributes only half of the prevailing CPF rate to the employee's account.

(2) If the employee stays for at least one year, then the employer reimburses the employee's CPF account with the full amount of the remaining half of the employer's CPF contribution not paid for the past one year.

(3) If the employee leaves within the first year of employment, then he or she will not be entitled to the employer's portion of the CPF retained by the employer.

Sir, in this way, no one loses while the burden on the employer is greatly reduced because the cost of hiring, training and re-hiring can be quite substantial. The employer can use the retained money to defray the cost involved in the re-hiring process.

Sir, despite the difficult environment and the record number of retrenchments, we are still seeing a disturbing trend among Singaporean workers. I spoke to a number of the employers who experienced staff turnover of new employees within the first six months of employment. Some even leave just one day after starting their new job. This happens even today.

From my own personal experience, I have seen this to be a problem. Within the first three months of this year, I have seen a 21.4% staff turnover for reasons like unwillingness to work in clean room environment, disliking the job and the unwillingness to do shift work. This is despite they being told of all of these during the interview process. And this is despite the gloomy employment environment. Some Members also talk about potential employees not accepting job offers. From my own experience this year, we actually interviewed a total of 58 candidates and we looked at the candidates that were referred to us by NTUC. These were people who were retrenched from their work. Of the 58 that we interviewed, some of course were rejected. 26 of those we offered did not accept the job.

Sir, I would say that this problem of job hopping and attitude of employees still exist. In my personal case, the compensation package was designed to match those of MNCs, in fact, even better than MNCs, but workers are still not willing to stay around.

I hope that the Minister will seriously consider this approach to prevent job hopping.

The Chairman: Can I draw hon. Members' attention to the fact that we are running out of time on this amendment. We still have got quite a number of speeches to be heard.

Mr Lim Swee Say (Tanjong Pagar): Last year in June, I was here to express my concern that unemployment could reach 4% by the end of last year, and 5% to 7% by the end of this year. At the end of the day, I was not too far wrong. Unemployment reached 4.3% as at the end of last year and could possibly reach 5% to 7% this year with rising unemployment.

Sir, today I am here to express another concern. Many people feel that our economy is likely to recover by the second half of this year and with that, unemployment will drop and all the problems we have with unemployment will disappear. I do not think so. My view is that unemployment is likely to be sticky this time round. In fact, I believe that unemployment rate is not likely to drop significantly over the next few years. Why is it so? Because I firmly believe that cyclical recovery will not solve the unemployment problem. If we were to look at the experience of the other more advanced economies - US, Europe, and so on - most of them went from unemployment to full employment, from full employment to structural unemployment, from structural unemployment to jobless growth.

In the case of Singapore, I believe that we may face the same problem of jobless growth for the next few years. Because, firstly, as the Minister has mentioned, some employers are adopting a wait-and-see attitude, so they are not likely to recruit people over the next few months. But, more importantly, because new operations which we are creating in the economy are going to require fewer people, and at the same time the pace of restructuring is likely to continue to remain fast. As a result, we are likely to see a very marginal increase in terms of net job creation over the next few years. So my worry is that if we do end up with a prolonged period of structural unemployment, how would that affect social cohesion, national unity, and so on?

Sir, we have to find a way to prevent jobless growth. We cannot do so by trying to slow down the pace of restructuring. But we can do so by focusing on structural recovery. Structural recovery means different things to different economies. In the case of Singapore, our structural weakness is a mismatch between jobs and skills of workers. Therefore, the key to structural recovery in the case of Singapore really is to focus on the training and development of knowledge workers. We need to enlarge the pool. We need to upgrade the capabilities, so that, hopefully, in the near future we can get out of this jobless growth.

Some may argue: are knowledge workers so important? I remember, in my days at the EDB, in the past, when investors decided on investment locations, there were four criteria. Firstly, physical infrastructure. Do we have the facilities to support the operation? Secondly, cost of operation; thirdly, availability of manpower; and lastly, availability of capital. Today, it has changed. The first criterion is manpower. Do we have the knowledge workers to support the operation? Secondly, do we have the knowledge and global infrastructure to support globalisation of operation? Thirdly, availability of capital, because all these operations are capital-intensive; and lastly, cost.

Given this situation, I believe that we have done enough in the areas of nurturing a capital market in Singapore, cost cutting through off-Budget measures, and so on. We are also working very hard on knowledge and global infrastructure, like Singapore One, the Boston of the East, the wafer fab parks, Jurong Island, and so on. But in the areas of capability development, I feel that we are still not doing fast enough and going far enough. I hope we will give greater urgency and greater push on the training and development of knowledge workers so that we can speed up the creation of jobs.

Sir, my question to the Minister is: will the Ministry consider setting up a $1.2 billion fund known as the Manpower Development Assistance Scheme? I have faxed my proposal to the Ministry. I think the Minister has the details. I will circulate it to the media in case they are interested in the contents. But let me just mention very briefly that my proposal is, firstly, to use the fund to support the formulation of new curriculum in all economic sectors; secondly, expand the training capacity in all major sectors; thirdly, upgrade the training capabilities in new growth sectors; fourthly, extend the scope of support to all major categories of employees and professions; fifthly, focus SDF on rank-and-file workers with co-funding support from the Government, and then support skills certification, and so on.

But at the same time, in this proposal I have added two ideas that I think are important. In addition to developing knowledge workers among the local workforce, I support the idea that we have to continue to attract foreign talents. I do not think the issue is one of toning-up or toning-down this message on attracting foreign talent. Rather it is to re-tone our message, ie, let us be more selective, let us go for foreign talent who really can make a difference in helping us to upgrade the capability of our pool of knowledge workers. As for our young Singaporeans, I am very concerned that one out of six young graduates last year is still jobless today. Sir, I think it is something that we should be concerned about, and I hope that the MDAS will do something to help the younger workers too.

In conclusion, let me just say that we are going to go into a period of jobless growth. I do not know whether I am 100% right in my assessment, but I am very sure I am not 100% wrong. So please do something.

Mr Chiam See Tong: Sir, I would like to speak on improving the culture of workers.

In 1917, the communists in Russia rose up in revolution against the Czar. They were successful. They overthrew the Czar and took over power. Among the first social reforms they carried out was to improve the cultural level of the workers. The workers were taught how to behave properly. They were told not to behave like country bumpkins. When they attended a ballet performance at the Bolshoi Theatre, they were told not to wear their overcoats into the theatre but to leave them outside with the attendants, especially when their overcoats were covered with snow.

Stalin was the second communist ruler in Russia. He built the military might of Russia which defeated Nazi Germany in World War II. Stalin once was asked what he thought were the top three priorities for Russia. He said the top three priorities were, firstly, military matters; secondly, cultural; and thirdly, economic.

It is quite surprising to us in Singapore that Stalin should give more importance to culture than to the economy. He was probably of the view that once people became more cultured, they are more disciplined, and would make better soldiers and also would be more responsible and make better citizens.

World War II had shown that both the Russians and the Germans were equally good soldiers. Both were very disciplined and they fought bravely, possibly due to their high cultural level. The average German soldier in World War II was highly cultured. He listened to the music of Wagner, Bach and Beethoven.

We in Singapore have no educational programmes to raise the cultural level of the workers, except when there is a social necessity to do so. The Government then passes laws to curb workers' bad habits, like forcing them to flush the toilets after their use, or not to spit in public places, or not to jaywalk. These penal provisions, although mandatory in nature, do have an educative effect and they do raise the cultural level of the workers. Those laws do make people behave more civilly. In Singapore, I think the Government, and perhaps the NTUC, must have a lot to do in raising the cultural level of the workers. There is still a lot of work to be done to get the workers interested in some sports and games or in the theatre and the arts. It is observed that the average worker, other than his work, has no other interests. He is not even interested in his own family. He spends most of his spare time drinking beer at coffeeshops after his working hours. He goes home late, smelling heavily of liquor to the annoyance of course to his wife and children. This type of workers seems completely lost. They have nowhere to go and do not know what to do with their leisure hours. On weekends, they are probably found in the race-course gambling on horses. The Government condones such a situation as both liquor and gambling bring revenue to the coffers of the Government. 3.00 pm

But I think the present state of the workers in Singapore does not augur well for the country. Something must be done for the present workers to raise their cultural level. As for the future workers, our education system needs to be revamped to teach our children how to occupy their leisure time meaningfully.

Dr Lee Boon Yang: Sir, I will first address the points raised by Mr Charles Chong who is concerned with rising unemployment and asked what is our policy on balancing the need to attract foreign talent and local workers. In fact, I have explained that earlier on. The point I want to make here is that we are well aware of the need to balance the flow of foreign workers with the drop in job creation. That is why in the November 1998 cost reduction package, we have reduced the foreign worker levy for the skilled workers, but we have not changed the dependency ratio. There is still a dependency ratio which will govern how many foreign workers an employer can employ.

We have also not reduced the levy on the unskilled workers, particularly those in the construction sector, because that is where the bulk of the foreign workers come from. What I want to add here is that the mere tightening of the inflow of foreign workers, particularly those in the work permit category, may not result in more jobs for the local workers. Because if we deny access to these work permit holders, we may in fact hamper the efforts of many employers who are trying to regain competitiveness and their market share.

At the lower skills level, many foreign workers are still needed by employers, particularly in industries such as the construction sector, where many locals are just simply not prepared to take up these jobs although there are many jobs in the construction sector which are in fact well within the means and capabilities of Singaporeans. Even in the manufacturing industry, foreign workers are employed because they fill a need which Singaporeans in many instances are not willing to take up. For instance, as described by Mr Inderjit Singh a moment ago, he has experienced a high turnover rate because Singaporeans are not prepared to do some of this work.

Singaporeans are still reluctant to do some of the difficult jobs in the manufacturing sector or those jobs which require rotating shift work. And this is where foreign workers are still needed to help these companies to remain viable and to compete successfully. So we should not be too quick, at this juncture, to deny companies access to even the work permit holders, unless we are sure that the locals, including the unemployed locals, are ready to take on these jobs. If we prematurely make adjustments or turn off the flow of work permit holders to the employers, we may actually hasten their loss of competitiveness, their inability to regain market share and expedite their exit from Singapore. If that happens, we are going to lose 50% more jobs because, as I said, under the present rules, the manufacturing sector has a maximum dependency ratio of 50%. In fact, by having foreign workers here, we are also preserving jobs for other Singaporeans.

He has also asked what we are doing about re-engineering and revamping some of the jobs at the lower end of the skills level which, perhaps, some Singaporeans may have to consider taking up because they may not have the ability or the basic education for further skills upgrading. I agree with him that there is a group of Singaporeans who lack the basic education for them to benefit from any skills upgrading effort. For this group, we have to help them to be redeployed to a different sector. They still have to be trained. But they can be trained to work in a different sector. So my Ministry is in fact working on specific programmes to see how some of the lower skilled jobs can be re-engineered to be upgraded in terms of skill content and professionalism so that Singaporeans who cannot do work in the high-tech industries in the manufacturing sector can now take on these jobs, particularly in the service sector.

One industry that we are interested in looking at is the cleaning industry. Traditionally, this cleaning industry had been very dependent on foreign workers. We are in fact working with the cleaning industry to see how we can enhance the productivity of the cleaning workers. If we can enhance the productivity of the cleaning workers, then they can be paid more. If they can be paid more, the jobs will become more attractive to Singaporeans who do not have the skills to do the other manufacturing sector jobs. We are working with the cleaning association, ie, the Environmental Management Association of Singapore, and also the PSB's Standards Division to design a set of cleaning industry quality standards. We are also developing training programmes and certification for cleaning skills. This is not unusual as one would have thought. In countries like Denmark, they have an established cleaning industry, in fact, a multinational in the cleaning industry. They have very clear-cut and objectively developed cleaning industry standards which help the industry to reach a very high level of professionalism and service quality. Their workers are very well-paid and well-rewarded and they are not dependent on foreign workers to do those jobs. So we should aspire and strive towards that direction where an industry like the cleaning industry can be made more attractive for some of our lower skilled Singaporeans.

However, retraining and re-engineering jobs alone will not solve all the problems. Workers must also have more realistic expectations and change their mindsets with regard to wages and the nature of their jobs, especially during this recession. Recently, we organised a two-day job fair to enhance workers' understanding of clean room jobs. Nine firms with a total of 500 vacancies came along to participate in the fair. At the end of the two-day fair, we succeeded to fill 100-plus vacancies. This is already an improvement. The other recruitment exercise that we had mounted for the clean room sector had an even poorer response. The 100-plus workers recruited are already an improvement. But we have to ask ourselves why the employers have such difficulty filling vacancies for these well paying jobs. Why is it so during this period of high unemployment and recession? If it is a lack of skills, then our workers must be more willing to undergo training and skills upgrading. If workers have unrealistic expectations about what they ought to be paid for such jobs, then they must be moderated because it is a question of how we can remain competitive. We are not the only country with wafer fabrication plant or other electronic industries operating clean rooms. Others are doing so at much lower wages. We have to be competitive.

Mr Ong Ah Heng raised quite a number of questions. I will try to deal with them in the order that he has raised them. He asked whether we can provide monthly updates on job creation and job opportunities in the various economic sectors. My Ministry releases a quarterly Labour Market publication to provide workers and employers with a comprehensive and up-to-date labour market information. The quarterly release supplements the annual Labour Market Survey and also occasional papers on labour market to help job seekers, workers and employers make informed decisions. Currently, we have already conducted a total of 15 regular surveys a year to gather information from the private sector establishments and households. In addition, ad hoc surveys are also conducted by the Ministry on various employment issues. We have received feedback from the employers that this frequency of surveys is already posing a burden on some of them. It is perhaps not practical at this juncture to conduct a monthly survey, as suggested by Mr Ong, because too frequent a survey would just increase the burden on the employers.

Mr Ong also asked what is the number of new entrants into the labour market who are gainfully employed and what is the scale of under employment in Singapore. Sir, the June 1998 Labour Force Survey indicated that there were about 53,000 local new entrants to the workforce. Of this, 86% of the local new entrants were gainfully employed. Among the employed new entrants, 93% were working full time and only 7% were working part-time. Under employment commonly refers to persons who are in the employment but have to work part-time because they cannot find a full-time job. The findings of the same Labour Force Survey revealed that only a small percentage of our workers are involuntary part-timers. In 1998, only 0.4% of the new entrants who were employed were working part-time involuntarily, in other words, they cannot find a full-time job. Among all employed persons, the proportion of part-timers is only 0.3%.

Mr Ong has also asked how many of the graduates in the tertiary institutions have decided to extend their studies and go on to higher studies in view of the poor job market situation. According to a recent employment survey by the National University of Singapore and the Nanyang Technological University, 83.4% of the students who graduated last year had found jobs within the year, ie, by end of December, compared to 95% in 1997. So we saw a 12% drop. The same survey also showed that the number of post-graduate students at NUS went up 27% last year and 20% at NTU. The sharp increase in the intake of post-graduate students could be attributed to this group of students who have decided to continue with their studies instead of coming out into a very poor job market.

Mr Ong asked whether this would just defer the unemployment problem. My answer is no. When the economy recovers and when these students have completed their post-graduate studies, they would in fact be in a better position to make more valuable contribution to the economy.

He has also asked what is our success rate in trying to find work for the unemployed Singaporeans. Mr Hawazi Daipi has also raised the same point on our effort to find work for the unemployed Singaporeans. Sir, we have expanded the Employment Service Department in my Ministry to cope with the increasing demand for job assistance. The number of registrants more than quadrupled from 5,000 in 1997 to about 20,000 in 1998. Despite the higher demand and also due to the shrinkage in job opportunities, the Employment Service Department was able to provide job referrals to about 78% of all job seekers. A total of 4,200 job offers resulted from these referrals. However, not all job seekers took up the offer. Eventually, about 1,000, or 5% of the total registrants, were successfully placed. We have also tried to persuade low skilled retrenched workers to undergo training through the SRP so that they can take the new jobs that are being created. So if you were to ask me whether we are satisfied with the outcome of 5% placement, my answer is no. We want to do better.

What are we doing? What we are doing is that we have incorporated various new mechanisms. We have introduced a broadcast mechanism to provide information to potential employers of the availability of whole groups of workers who are about to be retrenched, or have been retrenched, so that an employer who is still looking for more workers can consider all these whole groups of retrenched workers. 3.15 pm

We have also set up an employment facilitation team to actually go out to establish contacts with companies to find out what are their labour requirements, what are their recruitment plans and to persuade them to pass their job vacancies to us to be incorporated into our job bank, so that we are in a better position to offer more referrals to those who come to us for job placement assistance.

Earlier on, I mentioned organising a clean room fair. We have worked with Community Development Councils to organise job fairs where employers or companies that are still recruiting workers are persuaded to come along, and we advertise this function held at various community facilities and bring the job-seekers and employers together to help them to meet their needs. The placement rate at some of these fairs was much better because they were far more focused. We achieve much better placement rate of 18-20% at the job fairs.

I would like to assure Members that we are committed to assisting all unemployed Singaporeans to look for alternative employment. We will step up our efforts to find the jobs for them. We will also be looking into improving further our job-matching service as well as introducing new initiatives to help out-of-job Singaporeans to look for work.

Mr Inderjit Singh suggested that we allow a retrenched worker and out-of-work Singaporean to borrow from his CPF Special Account to meet the daily expenses. I understand the difficulties faced by some retrenched workers, but we must not just be over engrossed with the immediate problem and to overlook the long-term impact if we introduce any new measures. We should avoid solving one problem only to create a new one. The CPF savings are primarily meant for old age requirement, as well as to meet basic housing needs and also medical needs. Many CPF members have, in fact, used their CPF savings to purchase properties, including HDB flats and private residential properties. The 10 percentage point reduction in employers' CPF contribution rate to help employers to cut costs and to regain competitiveness has already caused quite a number of CPF members to face shortfalls in their monthly mortgage repayment. In order to help this group, we have in fact allowed them to draw on their Special Account savings to make up for the shortfall in CPF contribution. If we now also allow retrenched workers to borrow from their Special Account to meet their living expenses, it would further affect the ability of many Singaporeans to service their housing mortgage. So, the best way to help retrenched workers is, in fact, to help them seek re-employment expeditiously so that they can earn a regular income to support themselves and their families. Faced with a crunch, retrenched workers should be prepared to take on any job. Having a job is better than no job at all.

As I have explained earlier, we will do everything possible at the Employment Service Department to help retrenched workers seek alternative employment. For those whose savings are running out and who lack family support, they can turn to the many community assistance programmes administered by the Ministry of Community Development, the Community Development Councils, the National Council for Social Services, self-help groups and the various voluntary welfare organisations. The community-operated safety nets are there to help those who are in serious difficulties. To ensure families with school going children do not suffer from this downturn, the Ministry of Education also offers such families assistance for their educational expenses. These include partial or full waiver of school fees, miscellaneous fees, as well as textbook grants for needy students. For students studying in the institutes of higher learning, they could apply for the CCC university or CCC polytechnic bursaries, tuition fee loans and study loans as well as bursary and loan schemes administered by the universities and the polytechnics.

The Ministry of Health also has a Medifund which is available to help those who have difficulties paying their medical bills incurred at the public hospitals. The Minister for Finance has also announced generous and wide-ranging rebates on HDB rentals, service and conservancy charges and utilities charges.

Hence, releasing the Special Account savings of a retrenched worker is an option that should be reserved for a worse case scenario of a very deep and prolonged recession. We are only just at the start and we should not rush into such drastic measures immediately. Otherwise it will reduce our options for reaction if the situation does get worse.

Mr Chay Wai Chuen spoke on the transferability and portability of skills certification. I agree with him. I think this is a very important aspect of our school of life-long learning. The present skills training and certification system for the workforce is based on the National Technical Certification (NTC) system. It is a good, broad-based, well-established system that provides the school-going cohorts with all rounded technical and vocational education. However, the skills training of our workforce is more specific and job based. Hence, I agree with Mr Chay that we also need the modular system of skills training when workers and employers can pick the skills that are relevant to their operation. The modular system will help our workers to continuously acquire new skills and keep pace with the changing requirement to enhance their employability.

My Ministry is working together with PSB to develop a National Skills Recognition system which has been recommended by the Committee on Singapore's Competitiveness. The system will define skills standards for job-based competencies that are directly relevant to industries and nationally recognised. The National Skills Recognition system will complement the NTC system.

Mr Ahmad Magad has raised the question of whether retrenched workers are covered by the Skills Redevelopment Programme (SRP). He noted that the Skills Redevelopment Programme has addressed the needs of workers who need skills upgrading, but what about those who have lost their jobs, the retrenched workers. At present, the unemployed or the retrenched workers can seek sponsorship for participation in the Skills Redevelopment Programme by approaching the NTUC or self-help groups such as CDAC, Mendaki, AMP and Sinda. These self-help groups have volunteered themselves as SRP facilitators. They act as surrogate employers for unemployed workers. Unemployed workers who register with the community self-help groups will also receive the same level of funding support as any workers who have been sponsored by an employer. A retrenched worker who is willing to go for skills upgrading under the SRP will not be worse off than one who is presently employed. In fact, the self-help groups offer a training allowance of up to $500 per month when training on a full-time basis, and the full cost of the training will be borne by the self-help group and the SRP. So, as I said, the retrenched workers receive the same incentive as one who is still at work.

Mr Low Thia Khiang was concerned with Singaporean skilled workers who may have to face competition with similar foreign skilled workers. He mentioned welders, plasterers, etc, and if I understand him correctly, he asked whether they are facing competition from foreign workers, particularly from Malaysia. The answer is yes. There is some competition. But are our Singaporeans completely vulnerable? The answer is no, because we have a foreign worker policy which requires the employer to pay a certain levy for the work permit holders and the purpose of the levy is, to a certain extent, to bridge the gap between those who come from lower-wage countries and Singaporeans who expect a higher level of wages. So, there is some protection of Singaporean workers at that level from unfettered competition from foreign workers.

He also mentioned that the training opportunities provided by SDF seem to be skewed, favouring too much those with secondary education, and those with lower education are not getting their fair share of training. I think it is not quite correct because what we have done is that we have embarked on programmes which now deliberately focus on the needs of the less educated or lower-skilled workers. The SRP is an example. It is a $120 million programme to specifically look at the mid-career workers who have lower than secondary education and who have very low skills, and to equip them with new skills or to upgrade their skills so that they could take on the new jobs. We are talking about extending their employability through skills upgrading.

He also pointed out that the weakness of the current programmes for skills upgrading for the workers is that too much emphasis is placed on the employers and he quoted examples like the SRP. Perhaps, he may not be aware of what I have just said in response to Mr Ahmad Magad that, in fact, even unemployed workers can participate in the SRP, provided they go to the self-help groups or to NTUC. And NTUC would even help workers from the non-unionised sector. All workers are covered under SRP. It is not just for those who are presently employed or just unionised workers but every worker who wants to upgrade himself and benefit from the opportunities available under the SRP would be able to do so. They can go to NTUC or the self-help groups to seek assistance.

He mentioned that some of our educational upgrading projects seem to lead to nowhere. He cited the examples of BEST and WISE. I think that is also not correct, because BEST and WISE are programmes to improve the basic literacy of workers, ie, language command and basic numeracy, so that they can later on undergo further skills upgrading. Because without the basic language and numeracy command, you cannot further upgrade your skills. BEST and WISE are just preparatory courses which the lower educated workers have to go through to prepare them for the skills upgrading that would come later.

Mr Hawazi also asked whether we must consider the needs of the non-unionised workers and whether other employers may be more willing to provide higher skills training, because he observes that some of the employers may be reluctant to provide skills training for their higher skilled employees for fear of job hopping, and what is the role of NTUC in workers' upgrading. As I explained earlier on, non-unionised sector workers can also benefit from SRP. NTUC will also serve the needs of this group and I think initially, the non-unionised companies were quite reluctant to come forward to participate in the SRP, as they thought it was for the unionised workers only or by participating in SRP, they would be encouraging their employees to become unionised. But I think this perception has largely been corrected because more and more non-unionised companies are willing to come forward to work together with NTUC, and to send their workers for training under the SRP. In fact, this shows the benefit of having NTUC as a major promoter and supporter of the SRP programme. As to employers who are reluctant to train their higher skilled workers or executives, I think it is a very shortsighted employer who does not train his executives or higher skilled workers just because of fear of job hopping. Then he is forever limiting the capabilities of his employees. He is forever living with a lower level of potential. So employers have to open up, and they have to be more willing to support skills training at all levels of the company's establishment. That is the only way to maximise their human resource potential. That is the only way that he can really compete, by giving all his employees the best training necessary for them to do a good job. 3.30 pm

Mr Chuang spoke on the same point about whether we should not review the foreign worker policy, so as not to disadvantage the local workers and we need to build up a corps of local skilled workers. Particularly, he mentioned the point that many of the foreign workers come from countries with lower wages. The answer to that is that we adopted a policy of imposing the foreign worker levy in order to bridge the wage gap, and to make it very fair for Singaporeans who cannot compete just on wage alone. That is why the foreign workers attract the foreign worker levy, depending on the skills level.

He asked how will Singaporeans get the training to compete and to upgrade against the inflow of foreign workers. The answer is what we have been doing all along. We will provide more opportunities for skills training. SRP is just the beginning. When we implement the recommendations that are being put forward by the Manpower 21 studies, we will have a national framework for a school of lifelong learning. We should provide all workers with opportunities to upgrade themselves.

Mr Tay Beng Chuan made several points. He asked whether we could revise the $1,000 wage limit on the Skills Development Fund. The answer is yes. In fact, in principle, this is agreed to. But the question is, when do we do it? If we do it now, we will be adding to the cost for the employer, because the Skills Development levy is in fact a tax on the payroll. While we agree, in principle, to do so, we will do it at a time when it will have least effect on the competitiveness of the economy.

He also said that the SDF should widen its scope to include training for mid and high level skilled workers within a company. The answer is yes. SDF does support training courses for managerial and executive staff. While the focus up to now has been on upgrading the skills of workers, as they form the majority of the workforce and are most susceptible to retrenchment and structural unemployment, SDF is also willing to support training initiatives for executives and management.

Under the total company training programme, companies are encouraged to take a total approach to training and development that covers workers, executives and management, and all these will be supported by SDF. Currently, approximately 20% of the total training places supported by SDF in a year are actually taken up by managers and executives. I think this is a reasonable proportion for managers and executives who, in fact, form the minority in the workforce.

I agree with his point that managers and even professionals should also constantly upgrade and be kept abreast of new knowledge in order to stay relevant. While the Government can support to some extent, particularly for small companies and businesses, employers should also be prepared to bear a greater share of the responsibility for training and upgrading their managers and professionals. Ultimately, the business will benefit when the skills of their executives and managers are upgraded. Being the main beneficiary, they should also put in their fair share of supporting such training and upgrading efforts. Likewise, managers and executives, being already highly educated, should also bear part of the share in the responsibility for upgrading. There is an individual responsibility for upgrading which they should also accept. Nevertheless, I would consider the Nominated Member's suggestion for Government to work with business and industry groups, apart from NTUC, to form partnerships to promote and support skills upgrading for their members.

Mr Inderjit Singh spoke on job hopping. He felt that it is still a problem that we must address. I have, in fact, previously replied on another occasion that forfeiting a worker's CPF contribution to deter job hopping would detract from the basic CPF objectives of building up savings for old age as soon as a person starts working. Let me add that it would not be effective in curbing job hopping. Job hopping is a complex and multi-faceted problem. Workers may leave a company for various reasons, some frivolous, but others may be perfectly valid and beyond the control of the workers themselves. While excessive job hopping is undesirable, a certain amount of mobility in the labour market is normal, and it will help to ensure an optimal distribution of labour through the economy.

Hence, reducing the employer's share of contribution in the first year or two of service to deter job hopping is unlikely to be effective in curbing job hopping. It is also tantamount to a wage cut for these workers who have to leave their jobs for good reason after a year or less. That could be quite unfair to the workers. Employers should not just pass the blame of job hopping to the workers. What happens in the case where a bad employer fails to provide a new employee with the necessary training or career development? Is it wrong for the employee to look for greener pastures? I believe that every employer also has some responsibility to forge a bond with his workers and to establish company loyalty.

Instead of changing the CPF system to penalise early resignations, employers must also devise their own remuneration system to discourage job hopping. For instance, employers can pay their workers lower starting salary in the first two years, and then reward them with a more attractive remuneration package subsequently if they stay beyond, say, the 2-year period. Such loyalty pay rises are well within every employer's means to do so now and do not require a change in our CPF system. I hope the Member could advise employers to exercise their initiative, manage their workers with long-term perspective and not just shift the blame to the workers or resort to schemes such as a CPF cut.

Let me now address the point raised by Mr Lim Swee Say. He said that we should focus on the training and development of knowledge workers, and he suggested establishing a Manpower Development Assistance Scheme or Fund to promote this training of our workers. I agree with the Member for Tanjong Pagar that we should have as many workers as possible trained and competent to support the knowledge-based economy. As Singapore moves into the knowledge age, the rapid change of technology today and the structural shifts from labour and capital intensive industries to knowledge intensive industries mean that our workforce must be engaged in continuous learning and upgrading.

Since last Monday, in fact, many Members have spoken on the move into a knowledge-based economy. Some have asked what does all this mean. What is the need to develop knowledge workers? I want to emphasise at this juncture that when we talk about a knowledge-based economy, when we talk about knowledge workers, we are talking about all levels of the workforce. We are talking about workers, supervisors, executives, managers and professionals. We are not only talking about the managers, executives, engineers and the high-tech people, we are talking about every single worker in Singapore. We are talking about any worker who tries to learn new skills or pick up new ideas to enable him or her to do the job better, and more productively. When we talk about knowledge workers, we are referring to people who approach whatever they do with curiosity and creativity, always trying to do a better job.

Let me give Members an example which I happen to come across some months ago in the Straits Times. I read this report about a Chinese chef, Sam Leong, at the Four Seasons Hotel. Mr Leong was the man who created a new dish - pork ribs in coffee sauce. It was unusual to offer pork ribs in coffee sauce, and who would have thought that pork ribs go well with coffee? Well, Mr Leong did it. He thought that it would make an interesting combination. He took great pains. Through trial and error, he arrived at a recipe that was properly balanced, tasty and attractive. He went on to create this dish at an international culinary competition and won a prize for it, I believe, in Los Angeles.

Chef Leong is a knowledge worker. He came up with a new idea. He experimented on his own. He failed. He tried again and finally he succeeded in striking a balance and created an award winning dish.

So, what I am saying is that you do not have to have a PhD. You do not have to have an MBA. You do not even have to have a degree to be a knowledge worker. Singapore needs every Singaporean to make that effort. We need many more workers like Mr Leong who is prepared to make an effort, who comes up with innovative ideas, experiment on his own, and comes out with a new concoction that works better. And in this case, an interesting and unusual dish. As long as each and every one of us makes an effort, comes up with innovative ideas that can boost the quality of our work, the productivity of whatever we do, then, in fact, that worker is a knowledge worker.

Mr Lim asked whether we would establish a substantial programme to support training and skills development for our workers to prepare them for this work in the knowledge-based economy. I agree with him that this will be done. Because, presently, we have quite a number of programmes targeted at skills upgrading. The Skills Redevelopment Programme (SRP) is, of course, very well known. There is also the Initiatives in New Technology (INTECH) which is administered by the EDB. It is a $800 million programme to provide grants for manpower development in leading-edge technology. The EDB also has a programme to post young engineers for overseas assignment, so that they can pick up skills and experience that will benefit the economy when it turns around.

For this financial year, my Ministry has set aside $50 million as provision for new manpower capability projects. This includes establishing a national skills certification system, developing and upgrading Continuous Education and Training (CET) providers, and also the Strategic Manpower Conversion Programme, which I described earlier on to train people from other disciplines, to prepare them for jobs in the IT industry.

We are in the process of finalising the Manpower 21 plan. A key outcome will be the development of a lifelong learning system, under the concept of the School of Lifelong Learning. The proposal for a Manpower Development Assistance Scheme will be considered together with the need to fund the implementation of the other Manpower 21 recommendations.

Mr Chiam asked about meeting the cultural needs of workers. I agree with him that culture is not just for the highly skilled or the well educated. Culture is for everybody. We should all take an active interest in culture. But he seems to present the idea that our ordinary workers are bereft of culture. I think it is wrong. It is fallacious. I think Mr Chiam does not mix with the right group of people. He only has to come to my community centre - I will extend an invitation to Mr Chiam to visit my community centre, and I am sure many Backbenchers will also extend an invitation to him - to see the amount of cultural activities that go on in the community centre, and to see and meet the people who come and participate in these activities, whether it is arts and crafts, Chinese painting, social dancing, music. I have children from 1-room flats coming to my CC to learn music, whether it is a Chinese instrument or even the piano. So, what is he talking about that workers in Singapore are deprived of participating in cultural pursuits? Hundreds of thousands of ordinary Singaporeans participate in cultural activities at the community centre. 3.45 pm

He seems to have conveniently forgotten that each year we mount the Arts Festival. The Arts Festival is available to everybody. Every Singaporean can come and enjoy the events and activities during the Arts Festival. In fact, during the Arts Festival there are as many fringe events as there are in the main events where you have to pay to enter. So the fringe events that are held in Suntec City, Westin, Takashimaya, are all free. Anybody can come along and watch an interesting performance, whether it is by a local group or by an international group. So I do not see why he should give us a lecture on the communist approach to promoting culture for the proletariat. I think he is out of touch with what is happening in Singapore. I am very disappointed.

Dr Lee Tsao Yuan (Nominated Member): Sir, I am aware of the time. I would be grateful for as detailed a reply, perhaps in written form, as the Minister has given to the other Members who have spoken.

My idea is really the fact that when we move to a knowledge-based economy, I think we also require a fundamental change in the way in which we work, from one whereby the office hours are fixed to one where we have flexible working arrangements. Precisely because in a knowledge-based economy, creativity does not merely just come in the office, it can come anywhere. Also, because of the fact that we do have advanced means of communication and IT, we can also work anywhere and still be in communication with our office colleagues. So I would urge the Government, in particular, to start this move of changing to flexible working arrangements. Some companies have already done so and perhaps the Government could further give impetus to this move by allowing flexible working arrangements for those whose work has a high component of creativity.

Encik Othman bin Haron Eusofe: Sir, Dr Lee Tsao Yuan has painted a scenario of a knowledge-based economy where work can be carried out or performed away from the traditional centralised office and this is indeed facilitated by high-speed computer and telecommunications technology. This transformation involves moving the work to where people are, rather than people to where the work is. However, I must add a word of caution that not every sector of the economy can be operational off-site. In the manufacturing industry, for example, most of its activities can only be carried out in the factory premises.

There is a global trend for companies to adopt new work processes to enhance their competitiveness and enable their employees to perform work outside the office or to take up flexi-time and part-time jobs. My Ministry recognises this growing trend, which will also change the way we work in Singapore. The knowledge-based economy will require a paradigm shift on the part of the employers and the workers. Employers must be prepared to invest in technological infrastructure to support an IT-based work place. They must also invest in the training of their workers to prepare them for the change.

Sir, a Manpower 21 Sub-Committee on the Workplace Environment is studying how flexible work arrangement could be promoted. Flexible work arrangement will enable some Singaporeans to move away from the traditional office or factory floor in a knowledge-based economy where individuals can also work productively and creatively and make their contribution. The recommendations of the Manpower 21 Sub-Committee would be released in the middle of this year.

The Chairman: It is "guillotine" time. Mrs Yu-Foo.

Mrs Yu-Foo Yee Shoon: Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $93,885,540 for Head T ordered to stand part of the Main Estimates.

The sum of $55,681,600 for Head T ordered to stand part of the Development Estimates.

The Chairman: Order. I propose to take the break now.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 4.00 pm.

Sitting accordingly suspended at 3.50 pm until 4.00 pm. Sitting resumed at 4.00 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head O -

The Chairman: Head O - Ministry of Foreign Affairs. Amendment No. (1), Dr Ong Chit Chung.

Dr Ong Chit Chung (Bukit Timah): Sir, I beg to move,

That the total sum to be allocated for Head O of the Main Estimates be reduced by $100.

Sir, the past year had turned out to be a watershed year for the Asia-Pacific region. It was indeed a horrible year of unprecedented upheavels and unmitigated turmoil. The region has not seen anything like this before in the post-war era.

Leaders are helpless and hapless. People are at a loss. People are angry and frustrated. Nations are in search of new destinies. Almost the whole region is at sea, so to speak, in a sea of troubles.

The strategic situation in the region has changed. The balance of power has shifted. There are new paradigms in the strategic situation. How can then a small country, like Singapore, position itself in this sea change, and be nimble, not only to survive, but also to succeed and prosper?

I wish to ask the Minister for an analysis of the strategic situation in the region. What would be the interests, roles and impact of big powers like the United States, the People's Republic of China, Japan, and the European Community as a whole, on our region? What meaningful roles can Singapore, as a small country, play to help promote stability and growth in the region?

Mr Hawazi Daipi: Sir, in the ASEAN region, the past year had been dominated by important changes in the domestic political situation. Succession issues, reform movements and changes of governments in ASEAN countries seemed to have conspired to bring a situation of political instability to some of our neighbouring countries. These issues have worsened the economic problems that these countries are already facing as a result of the recession. Governments which already have their hands full dealing with the fragile economies now have also to carefully manage domestic political problems.

Pushed, so to speak, to a corner by the turn of events, some of these governments have responded by falling back on domestic issues as their number one priority. Foreign affairs now appear to have taken a back seat. In cases where foreign affairs matters were raised, these have been used to advance domestic agendas.

The downgrading of the foreign policy agenda by certain ASEAN governments may lead to questions over the state of regional security. For instance, the collective defence arrangement, the Five-Power Defence Arrangements (FPDA) exercise, had to be postponed last year. The Spratlys issue remains unresolved and a potential flash point. On a wider plane, regional instability can arise over China's negative reactions to the US-Japan cooperation on the Theatre Missile Defence system. An ASEAN less focused on external security and fragmented by bilateral squabbles would not be able to give a firm collective response to security challenges. This could lead to a lowering of stability and security in our region.

Against this backdrop, I would like to ask the Minister for Foreign Affairs what the Government views as the regional security challenges in the next few years, and what steps would be taken to secure Singapore's interests in this context.

Sir, very often, regional stability is contributed by a good network of bilateral relations. Singapore wishes to have, and must maintain, good relations with its neighbours. Of late, or rather from time to time, these relations are put to test when we face bilateral hiccups, for example, with Indonesia and Malaysia. We have been called names and accused of insincerity.

Indonesia, in particular, has called on us not to be just a "fair-weather friend". This remark has arisen over its perception that our offer of bilateral trade financing and other economic assistance had not been forthcoming. We must maintain a bilateral relation that is based on mutual respect, irrespective of size, and mutual support. However, even if we see strains in our relations, we should always maintain an open communication channel. Could the Minister tell us about the progress in our relations with Indonesia, including the current status of our offer of the bilateral trade financing scheme?

With regard to relations with Malaysia, what is the prospect of us settling bilateral issues in a comprehensive manner?

Mr Chuang Shaw Peng (In Mandarin): Sir, some years ago, when I visited Washington DC, I was staying at a hotel near Chinatown. It was about two or three streets away from Chinatown. I was warned by the Hotel's front desk receptionist not to walk around in this capital city by myself as it was not quite safe to do so. Even if I were to go to Chinatown, it would be dangerous. So I heeded his advice and took a taxi instead. While I was in the taxi, I struck up a conversation with the taxi driver. When he heard that I was from Singapore, he immediately praised the Singapore Government for imposing caning on an American youth for vandalism. He felt that there should be similar laws in the United States to keep the crime rate down.

Subsequently, when I went to New York, I visited a friend who was working at the UN. There, my American friend and his colleagues held the same view as that of the taxi driver, ie, they felt that the Government has many good policies. But when the international media reported the matter, they described Singapore as being run by a dictatorial government which had no respect for human rights and which was in the habit of imposing heavy penalties at random. Eventually they had to trouble the American President to plea for a reduction in the penalty.

On other occasions, I have also come across businessmen, journalists, and friends from other countries who told me that life in Singapore was not as restricted as reflected in the negative reports of the media in their countries. They remarked that in Singapore, whenever they needed any information they could get it almost instantaneously, and one could walk out into the streets at night safely without fear of being mobbed, unlike in other major cities in the world where you go out at your own risk.

As such, I feel that there is room for improvement in the way Singapore handles its international public relations work. Whenever the international media criticise our policies, we can request our friendly foreign media to carry some honest reports on the truth of the matter. Back home, of course, we can publish articles to clarify the matter, but we should avoid blowing our own trumpet. Let other people say the good things about us. The effect will be better, and it can hit the nail on its head. For example, we can interview the taxi driver I have mentioned earlier, or these people working in UN, and report on their views. Publicity wise, this can be more convincing.

Our missions overseas should do some public relations work from time to time. As a matter of fact, this is part and parcel of their job. However, we must step up our efforts in cultivating relationship with the foreign media, particularly the influential ones. It is said that personal contact gives you a headstart in building up relationship. We should make every effort to get to know them better. We may want to engage PR consultants to teach us how to improve our image, or to place some advertisements on these media.

In this high-tech era, billions of people surf the Internet every day. We can post more information and statistics on the Net in some interesting format for people from all over the world to access. For example, we can show our crime rate vis-a-vis that of other major cities in the world. We can also give some information on the ratio of prison inmates to our total population as compared to other countries, the percentage of citizens owning their own homes, and in our schools what is the ratio between students and computers, etc. We could also emphasise the significant deterrent effects of death penalty on drug trafficking, and that more and more countries are beginning to emulate us in this aspect. We can put all these on the Internet. So anyone who is educated and who is intelligent enough will be able to form his or her own judgement on whether Singapore's way of governing is the right way, and whether there is any infringement of human rights in any of our policies.

Sir, I do not mean to say that the international perception of Singapore is poor. However, Singapore is after all, a tiny little nation. People from time to time would like to find fault with us, particularly when the media have to play up some news to win readership and make more money. So long as we do not sing praises of ourselves every day, resulting in our having to defend ourselves vigorously at critical moments and cause people from all quarters to lose confidence in us, there is no harm in doing some public relations work to further improve our image internationally.

Dr Ong Chit Chung: Sir, Singapore and Malaysia are close neighbours, with a long history of relationship, having been subject to the same British colonial rule. And the two close neighbours have a fair share of ups and downs in this complex web of relationship.

I wish to ask the Minister for an update on the recent developments in our bilateral relationships with Malaysia, especially in view of the MFA press statement of 19th February 1999, stating that the Malaysian Government had met Singapore's concerns over the sovereignty and other legal issues pertaining to the Malaysian CIQ presence in Singapore.

The Singaporean and Malaysian teams have met, I understand, on the package of outstanding issues. May I ask what are the issues in this "package"? When would the two teams meet again? What is the Minister's assessment of the discussion, and can we expect a speedy and successful resolution to these on-going negotiations?

Mr Charles Chong: Sir, in the last two years, Singapore-Malaysia relations have been through many rough patches. And it takes no small effort to keep track of the bewildering swings and turns that add confusion to critical issues such as the Points of Agreement (POA) and Malaysia's CIQ facilities in Tanjong Pagar.

On the POA, it would be helpful if the Minister for Foreign Affairs could update the House on its latest status. What would happen to the POA and the provisions contained in the original document, after the new once-and-for-all package settlement of all outstanding bilateral issues mooted by Malaysian Prime Minister Dr Mahathir and concurred by Prime Minister Goh Chok Tong last December? Will there be a new package agreement drawn up between the two governments? And how can Singapore ensure that any new agreement drawn up will not again be subjected to the kind of contentions and disputes that afflict the POA, which is an official document signed between Singapore and the Malaysian government?

Both Prime Ministers have not attached a deadline or timeframe on the conclusion of the package deal. While we do realise that a package deal of such magnitude should not be rushed, it would not serve in the interest of either country to do a marathon with the package. Would MFA consider putting forward to its Malaysian counterparts a reasonable time-table that maps out in phases the discussions and settlements of the respective issues, so that both sides can arrive at a package deal in good time? 4.15 pm

Mr Sin Boon Ann (Tampines): Sir, the operation of a CIQ facility at Tanjong Pagar by the Malaysian authorities has in the last year been a thorn in the bilateral relations between Singapore and Malaysia. If you recall, Sir, our Government moved our CIQ facility to Woodlands last year. The move to Woodlands has created an anomaly for the Malaysian authorities as the Malaysian officers at the Tanjong Pagar Railway Station would be operating as a result of our move to Woodlands without the presence of Singapore officers to lend it authority or power, including the powers of arrest, search and seizure.

While we wanted the Malaysians to co-locate with us, the Malaysian authorities decided to remain at Tanjong Pagar Railway Station and had claimed a legal right to do so. In view of their claim, we have asked the Malaysian authorities to submit their legal arguments to support their position. Deadlines were agreed upon. However, the Malaysian government was not able to keep to the deadline and had repeatedly requested for extensions of time to which Singapore responded positively. The last deadline was in February this year wherein the Malaysian government gave a reply to the Singapore Government and from the reports in the papers, our Government seems satisfied with the reply given.

Sir, we note that Dr Mahathir on 18th December 1998 had indicated that he wanted to resolve all outstanding issues with Singapore in a package deal. These deals include not only the CIQ facility at Tanjong Pagar Railway Station but also the other issues, which include the withdrawal of CPF funds by Malaysians, the use of airspace and of course our water supply. As far as the CIQ issue is concerned, we were at a point where we were awaiting the Malaysian government to revert with legal arguments to back their claim of a right to remain at the Tanjong Pagar Railway Station. So when the Malaysian Foreign Ministry gave a reply and the Ministry of Foreign Affairs announced that the reply has met with their concern and are now prepared to move forward and negotiate with the Malaysian government on a comprehensive package to deal with all outstanding issues, our people were naturally curious about the nature of the reply.

Sir, like my colleagues before me, could the Minister please elaborate in what way has the reply met with our concerns on the sovereignty and other legal issues?

The Chairman: Mr Chiam is not here. Dr Wang Kai Yuen.

Dr Wang Kai Yuen: Sir, I too would like to ask the Minister what is the status of the package approach proposed by the Malaysian government to resolve the issues between Singapore and Malaysia. Furthermore, I would be interested to find out Singapore's position on the Malaysian proposal to build a bridge to replace the Causeway.

From the press reports, Sir, one gets the impression that Singapore is neutral towards this proposal. We neither propose nor do we endorse this idea. Our position seems to be waiting for more information. I think Singaporeans will be very interested to find out the pros and cons of a bridge over the Causeway. In other words, conceptually, would the bridge serve Singapore's interest better? One positive effect in my mind is that pollutants in the Straits of Johor could be flushed away and the Singapore shore front facing the Straits of Johor will become a more desirable place to live. So this is only one aspect of the issues. Perhaps, the Minister could give us a more detailed evaluation of this proposal.

Mr Shriniwas Rai: Sir, Malaysia is our closest neighbour, both geographically and historically. We were part of the same family but because of differences, we parted company. We are now both independent and sovereign. I was a little puzzled last year when I was in Malaysia. One leader suggested that Singapore should treat Malaysia as a big brother. I think in any international relationship, it is very important to get our bearings correct. As a Malay saying goes sak sama, we must be at the same level.

Singapore is an independent sovereign country. We have our own policies. They have their own policies. We do not believe in interfering with their relationship. They should not interfere with our relationship. It is in the interest of both countries to cooperate with each other. Singapore has always offered its hand of friendship to Malaysia. I believe that we should not score points through either media or political organisation. Let us not debate openly our differences. We should talk to each other regularly. Our Ministers meet regularly. A pet topic of Mr Chiam See Tong, who is not here, has been an economic union. In his absence, may I say that I am in favour of close economic cooperation although I do not know whether it is feasible for us to have an economic union now.

Sir, I would like the Minister to clarify what is the position about the water situation. Where are we now? On CIQ, other Members have spoken and the House is interested to know where we have reached the negotiation at this stage. I believe that the question of CIQ should not be delayed unduly. We should come to terms with our differences, and I would urge the Minister to impress upon his Malaysian counterpart that we should have a fruitful conclusion as early as possible.

Mr Zulkifli bin Baharudin (Nominated Member): Sir, Singapore-Malaysia relations have always been described as one of "close neighbours" but I think sometimes this may not be appropriate because even if you have irreconcilable differences with your close neighbours, you can always sell your house and move elsewhere. Some have described our relations as husband and wife, but here, again, you can always get a divorce, move on and lead separate lives.

Our relationship with Malaysia goes beyond that. We cannot change the geography of our region. We will always be together, bound by common history and an interdependent economy, strong social and family ties. Yet, political relationship remains stressful and continues to be so. It has been very unsettling to many Singaporeans to observe how quickly and easily issues like CIQ can be linked to unrelated political points, especially on the sale of water by Malaysia to Singapore.

The practice of linking different issues when conducting bilateral issues is well known for dragging out disputes. ASEAN has always stood for non-linkage. Malaysia has frequently told the West not to link rights with environment, trade or investments. Thus when Singapore expects water or land or other issues not to be dragged to discussions on CIQ, it is not out of some unique Singaporean tendency but based on a principle that Malaysia too recognises very well.

I believe that this principle of non-linkage should extend to players as well as to issues; the present dispute between the two governments is no reason why the rest of the society should turn unfriendly towards each other. This, after all, is very, very far from the state of war. On the scale of bilateral ties, it is but a disagreement over a small number of complex issues.

Ties between Singapore and Malaysia have always been, and will always consist of more than just political relations between two governments. Inter-governmental relations are just one of the many deep and abiding links between the peoples of our countries. Those links extend from the realm of business and economics to the private and domestic with families having members on both sides of the border. Culturally, no country is more similar to Singapore than Malaysia is and the commonalities of language, food, values and lifestyles continue to persist even after three decades of separate development. Today, the two countries' identities are distinct enough for their peoples to feel a strong sense of nationhood but also similar enough for there to be a high level of comfort in day-to-day, people-to-people relations.

I believe that civic groups and non-governmental organisations on either side of the border have a special role to play in re-emphasising the broader nature of Singapore-Malaysia relations. It is only when both people have a deep awareness of the values of their close relationship that both sides will have the necessary commitment to resolve their disputes calmly and rationally, with due consideration given to each other's feelings. Once those disputes are settled, it will again be this broader relationship that helps both countries achieve our hopes and dreams together. This would mean the need for Singaporeans to be mindful of Malaysia's feelings in negotiations. Similarly, it is naturally for Singaporeans to expect their own feelings to be weighed when Malaysia chooses their words and actions.

Singaporeans should be well aware of the vibrant political climate in Malaysia where political rhetoric is part and parcel of political life. This understanding helps Singaporeans to put comments in their place and not to over-react to them in a paranoid manner.

However, Singapore cannot be totally immune to such provocation. Even if rhetoric is mainly for domestic Malaysian consumption, the speakers must know that their words are heard in Singapore, as much as ours will be heard in Malaysia and must know how critical a resource, water, for example, is for our survival, and ensure that statements on the sale of water do not cause any insensitive or unfriendly attitude.

It was noticeable during the negotiations on CIQ that the Singapore Government, perhaps tired of the ever changing position, hardened its stand on the issue which leads to many Singaporeans to say that we should have been more flexible and less rigid and less legalistic in our negotiations and that the complex issues could be resolved if younger political leaders had good relations with their Malaysian political leaders.

I am of the view that our style of government is essentially different. It may be the cause of some political problems but it is far better to be consistent and let the Malaysians understand that we have a style, system and political culture of our own, certainly different and sometimes perhaps at odds with the Malaysians.

Domestic issues in Malaysia will continue to be a major factor in our bilateral relations. While good and strong political relationship is useful, I sometimes doubt if this could alter the course of the complex bilateral issues.

We must still continue to pursue and develop strong relations at all levels and this is why I call on the Government to re-establish sports, cultural, social and civic ties that were frozen earlier. Prior to that, these ties have for very long been very much a feature of our relationship and has provided for deeper, meaningful, lasting and more stable relationship between these two friendly countries that we so aspire and deserve.

The Chairman: Mr Chong is not speaking. Dr Ong.

Dr Ong Chit Chung: Sir, Singapore's relationship with Indonesia has undergone many changes since President Suharto stepped down from office. We want to be a friend of Indonesia. Singapore and Indonesia can work together in a mutually beneficial relationship, in a win-win situation in the region.

However, Sir, over the last few months, we have heard accusations, one kind or the other, hurled at us by various Indonesian leaders and officials, including President Habibie, his adviser, Dr Dewi Fortuna Anwar, and Cooperatives Minister Adi Sasono. These accusations have ranged from Singapore being "too business-minded", according to Mr Adi Sasono, to being a "fair weather friend", according to Dr Dewi Fortuna Anwar, to being "racist", as alleged by President Habibie. What does the Minister have to say about the state of bilateral relations and how does he see the future development of bilateral relations between the two countries in the context of all these accusations?

I would also like to comment on the role that the Ministry of Foreign Affairs played in assisting the departure of large numbers of Singaporeans from Indonesia during the height of the May riots in Indonesia last year. We had then read on a daily basis about the deteriorating situation in various parts of Indonesia and how our MFA officials helped various Singaporeans to get out in time.

We must commend and thank the MFA officials and diplomats for extending such timely and much appreciated assistance to Singaporeans. Many Singaporeans with families and friends there, I am sure, will join us in thanking MFA and the diplomats.

As part of our regionalisation efforts to set up a second wing, many Singaporeans have no choice but are still working in Indonesia. I would therefore like to ask the Minister whether any steps or plans have been put in place to ensure the protection and safety of our own Singaporeans in Indonesia in any new unexpected turn of event in the country.

Mr Sin Boon Ann: Sir, we have seen that the economic crisis has had its terrible toll on the people in the region. The full impact of the crisis is now beginning to show in some places and is expressly more pronounced in countries which are more severely affected by it. I believe that Indonesia is worst hit by the crisis and the tremendous social cost is biting deeper into the society. On a regular basis, we hear stories of families in Indonesia having to stop sending their children to school because of a lack of money or having to cut down on the level of food consumption because there is not enough to go around. Sickness is often tolerated than cured because people are without the means to seek medical treatment or to buy medicine. As a result of the crisis, many people have suffered and are suffering. The suffering is beginning to feed the irrational sentiments that are often based on primordial instincts of race and religion.

We, in Singapore, are very concerned for the welfare of our Indonesian friends and would like to provide as much humanitarian aid as we can to relieve their suffering. It was therefore, with great gratitude and relief, that the Red Cross Society in Singapore and some other civic organisations have initiated humanitarian aid for the needy people in Indonesia. Providing the assistance for Indonesian friends at this moment would also send a positive signal that we are more than just fair-weather friends. Within our resources, we hope that such efforts will continue to seal the friendship which was forged in the decades after we became independent.

In this regard, I would like to ask the Minister for Foreign Affairs whether the Ministry will consider encouraging initiating further humanitarian aid to Indonesians who are severely affected by the present crisis in their country. As a country, we want to extend our sincere feelings of friendship and concern and we would like to help offer humanitarian relief in any way we can. We may be a small red dot in the sea of green. However, we want to be a dot that is a beacon that shows the way for humanitarian relief for our fellow South-east Asians.

Mr Shriniwas Rai: Sir, Indonesia is our close neighbour whom we have strong historical ties. Indonesia has been our important trading partner and I hope that it will still be. What has been happening in Indonesia is saddening. The economic crisis she is going through, we hope, will be over soon. Indonesia's founding father has been a firm believer in the principle of Pancasila. Both Singapore and Indonesia are in the forefront of the non-aligned movement. Singapore has always been mindful of Indonesia's situation, and has done whatever help, both at the people and Government level, to the country. Singapore has conducted her relationship with Indonesia in a very courteous and considerate manner. Singapore does not believe in interfering in other countries' affairs.

Therefore, it is saddening to note recently that some Indonesian leaders have started making reference to Singapore, and what is more sad to see is that a very important fabric of our Government structure is being questioned, ie, our meritocracy policies. I hope and pray that the Indonesian leaders will stop making future comments on this because it will affect our relationship with them. Singapore has always believed in meritocracy and it is because of this policy that our civil service and armed forces have been a model for others. I hope the Minister will convey to his counterpart in a very polite manner that we should keep each other's relationship at a level as is required in an international relationship and not to interfere with each other's affairs. Finally, Sir, I think Members of this House will agree with me that we hope that Indonesia's economic crisis will be over soon because it is in our interest to have a prosperous Indonesia. A prosperous Indonesia means a prosperous Singapore.

Mr Zulkifli bin Baharudin: Sir, Singapore-Indonesia relations, which were once described as strong and solid, have now become unpredictable. Despite years of friendly cooperation and mutual help, we now learn that past deeds and even goodwill are no guarantee to future relationships. Indonesia will remain turbulent for some time. Our relationship will continue to be uncertain, sometimes potentially volatile. Many in Indonesia felt that Singapore can do more to help them ease the pain of the economic crisis. We have made offers of financial assistance in terms of trade financing and humanitarian aid but considering the scale of the problem, our help will never be enough. But that is where our problem will be. So long as we are seen to be more prosperous than our neighbours, less affected than others in the region, and yet heavily dependent on the countries around us, we will always have to manage the expectations of having to do more to help our neighbours.

In this regard, we must try very hard to continue giving humanitarian aid as conditions in Indonesia continue to remain difficult. We must do as much as we can to support the good work done by the Singapore Red Cross Society. Defence relations with Indonesia will remain the key to a more stable friendship and must be maintained at the highest level. I am prompted to bring the example of General Winston Choo, who through his personal and long relationship with military leaders in Indonesia, has been effective in dealing with the potentially difficult issues of humanitarian aid especially when political relationship with Indonesia was somewhat fractured by the fall of Soeharto. In this instance, strong defence relationship has managed to fill the vacuum and gap of political relationship. There is also another reason for strong defence relationship with Indonesia. The economic crisis has made it difficult for many countries in the region to continue with the rapid military expansion plans which were very much noticeable during the period of strong economic growth. Singapore's consistent defence expenditure policy, compared to the feast and famine situation of our neighbours, can be problematic. Some may be misunderstood into thinking that Singapore is engaged or taking the opportunity to be engaged in an arms race. To avoid this perception, we must enhance defence cooperation through regular military exercises and exchange. We should increase visits of Indonesian politicians and military leaders so that they have a good view of our position in Singapore. Creating goodwill by better understanding, knowing and helping our neighbours must be made part and parcel of this renewed commitment to be better friends of Indonesia.

The Minister for Foreign Affairs (Prof. S. Jayakumar): Sir, I wish to first reply to the colleagues who have spoken on the strategic situation in Asia, then I will comment on the relations with Malaysia and Indonesia, respond to comments made on international perception by Mr Chuang.

First, two Members asked about the strategic situation in our region. I will start off first by saying that there is no doubt that the economic crisis has altered the regional strategic landscape. Many economies have been devastated, triggering off political instability in several countries. In this situation, we in Singapore have to be alert to possible instability in the region and be prepared for political upheaval. In Indonesia, the political and social situation continues to be uncertain. What happens there undoubtedly will have a significant impact on regional stability, as several Members mentioned. Having said that, let me also say that the prognosis is not entirely gloomy. And I think there is some basis for cautious optimism when we look at the strategic picture as a whole. The fundamentals and infrastructure that made possible three decades of growth are still there.

As far as the triangular relationship between United States, China and Japan is concerned, we can say that this remains fairly stable. If it were not so, the situation can be worse. Stability in the triangular relationship will continue to provide the basic foundation for peace and security in the region. Asia's recovery will in fact depend on this relationship holding.

On the United States-China relations, which is an important part of this triangular relationship, in the first half of 1998, we saw that it was stabilising at a comfortable pace. Following President Jiang Zemin's visit to the US in November 1997, and President Clinton's return visit in June 1998, this demonstrated the United States' commitment to constructively engage China. But there are now signs of traditional problems resurfacing. These include United States' concerns over China's human rights record, the widening trade deficit, and the transfer of sensitive technology. Underlying differences have once again been brought to the fore. We hope that there would not be a downturn in US-China relations as had happened in 1996. Because that certainly would not be in the interest of either party, and it would not be in the interest of the region as a whole. We hope that United States-China relations can settle on a more even keel after Premier Zhu Rongji's visit to the United States next month.

On United States-Japan relations, the United States sought closer ties with China, there was a perception that United States-Japan relations suffered a slide. Japan, some analysts said, was concerned that the warming of US-China ties could undermine the US-Japan Security Alliance. However, following President Clinton's visit to Japan in November 1998, it restored relations to an even keel. Notwithstanding friction in economic and trade issues, the US-Japan relationship remains the most stable leg in the triangular relationship.

China-Japan relations is the other part of the triangular relationship. China remains high on Japan's foreign policy agenda. President Jiang Zemin made an historic state visit to Japan in November 1998, the first by a Chinese Head of State. However, it will take time for the two countries to completely overcome traditional mutual suspicions and to forge a closer relationship.

It is in Singapore's interest to have the three major players constructively engaged and their triangular relationship strengthened. This will ensure a stable and peaceful balance of power in the region. As Members know, Singapore has reiterated the importance of continued US presence in the region, especially during the present difficult times. Internal domestic changes in each of the powers, including China, we believe, will have an impact on their relations with each other and the triangular relationship as a whole. A China that lapses into serious trouble, because of an inability to cope with internal economic and social problems, obviously will drastically alter the regional strategic landscape. An unstable China is not in the interest of the other major powers nor the region as a whole. Japan is undergoing major long-term economic and structural reforms and her efforts should be recognised, although the results will take time to show. As for the US, notwithstanding a foreign policy increasingly subject to the stresses and strains of domestic political considerations, the US must show global leadership.

Dr Ong Chit Chung also mentioned about Europe. Singapore welcomes a stronger European engagement in the region. We believe that Europe should complement its economic involvement in the region with a greater strategic presence. This will help to promote regional stability and security and assist in Asia's economic recovery. I might add that at the end of this month, Asian Foreign Ministers will be meeting European Foreign Ministers in the Asia-Europe Foreign Ministers' meeting to be held in Berlin and we expect a good discussion to take place at that time. 4.45 pm

Let me touch on the other aspects of the strategic situation in Asia. First, cross-strait atmospherics improved with the Straits Exchange Foundation (SEF) Chairman Khoo Chen-fu's visit to China last October. The scheduled visit to Taiwan of Association for Relations Across the Taiwan's Straits (ARATS) Chairman could lay the path for further progress in cross-Strait relations.

The nuclear tests in the Indian sub-continent in May 1998 are a reminder to all of us that balance of powers, even outside the major ones, remains a delicate issue. The recent summit between the two Prime Ministers of India and Pakistan can be seen as an encouraging sign of rapprochement.

The situation in North Korea continues to be a very real potential flashpoint.

Members also referred to the territorial disputes in the South China Sea. Singapore is not a claimant state. But the recent Mischief Reef incident is the latest in a string of such less-than-friendly encounters between the claimant states. It highlights the need to maintain safe passage through the major sea-lanes in the region. Freedom of navigation and access to sea-lanes is crucial, not only for economic development but also for a stable security environment in the region.

The Mischief Reef incident has also demonstrated the importance of resolving disputes through peaceful means and substantive progress towards resolving contentious issues, of course, will take time, but the atmosphere of discussions has at least improved markedly.

In any case in reply to the Chairman of the GPC, these uncertainties underscore the importance of a continued United States' presence in the region. Singapore also regards the Five Power Defence Arrangement (FPDA) as an important component of the regional security architecture. In this regard, the recent decision to resume the scheduled FPDA exercises is a positive development.

If I were to sum up, Sir, there are tentative signs of economic recovery, but developments in the region remain in a state of flux. It is difficult to predict how the region's political equilibrium and security environment will eventually take shape, although the US-China-Japan triangular relationship will likely be stable in the near term. But we have to be alert to emerging and changing trends in the region, and to act in ways to best secure our national interests.

Dr Ong Chit Chung asked how Singapore can position itself. We are a small country, but Singapore continues to do what we can. As Chairman of the ASEAN Standing Committee, our objective will be to keep ASEAN together and to ensure it maintains a steady course in difficult times. We will also play a role together with other members in forums such as the ASEAN Regional Forum, Asia-Europe Meetings as well as ASEAN dialogue relationships with China, US and Japan to ensure that these key countries continue to place importance in the dialogue relationship as well as their involvement and engagement in the region.

Sir, can I now go on to comments made by colleagues on Malaysia-Singapore relations? This House last discussed Malaysia-Singapore relations on 29th June 1998. At that time, I updated the House on the progress of the various items under the Joint Communique issued after Prime Minister Goh's visit to Kuala Lumpur in February last year. At that time, I reiterated that we were committed to forging a long-term relationship of mutual benefit with Malaysia.

As Members have noted, since then our relations with Malaysia have seen many ups and downs. We ran into a rough patch with the CIQ issue in July 1998, when we rejected Malaysia's claim to any legal right to locate its CIQ facilities in Tanjong Pagar. In July last year, I briefed the House at length on the background to the issue, and subsequently updated the House on fresh developments in October 1998 and January 1999. I will refer to this matter later. In September, following the furore in Malaysia over the launch of Senior Minister's memoirs, Malaysia, without prior notification, unilaterally revoked RSAF's access to Malaysian airspace given under earlier agreements.

Sir, as I have said before, Singapore and Malaysia are really bound by a multiplicity of complex ties, a point which more than one Member underscored. Therefore, any such close relationship inevitably must go through different phases. Therefore, we must expect ups and downs from time to time. As two countries which are so close to each other, we compete as well as cooperate to advance our national interests. But what is important is that we do not lose sight of the central fact of our interdependence. Singapore, on its part, is committed to forging a long-term mutually beneficial relationship with Malaysia, and we will manage bilateral ties on the basis of reciprocity and mutual respect for each other's interests. And this point about mutuality and reciprocity was also alluded to by other Members.

Sir, bilateral relations improved following the meetings between Prime Minister Goh and Dr Mahathir in November and December last year. At that time, both Prime Ministers were working towards concluding a mutually beneficial water agreement in return for our financial assistance to Malaysia under a framework of wider cooperation. At their last meeting in Hanoi in December 1998, Dr Mahathir said that Malaysia no longer needed financial assistance from Singapore. This has been reported. Instead, Dr Mahathir proposed that Singapore and Malaysia could begin to discuss all outstanding bilateral issues, including the long-term supply of water to Singapore, within an overall package. Prime Minister Goh agreed to it but he made it clear that Malaysia still had to submit its legal arguments on the CIQ facilities first, before both sides could begin negotiations on the package. Both Prime Ministers then agreed that the package would include issues like the withdrawal of West Malaysian CPF funds, the long-term supply of water to Singapore, KTMB land in Singapore, the RSAF's use of Malaysian airspace and the location of Malaysia's CIQ facilities.

As I told this House on 20th January this year, we had informed the Malaysians that before we could proceed to the negotiations on the package, Malaysia would have to recognise Singapore's sovereignty and not claim that it had a legal right to operate its CIQ in Singapore. We had also informed them that if Malaysia did not produce its written legal arguments in a month's time from 20th January, Singapore would assume that Malaysia no longer wished to pursue its legal claim to remain at Tanjong Pagar.

On 10th February 1999, we received a paper from Malaysia which clarified their position on certain issues. In their paper, Malaysia did not claim a legal right to operate its customs and immigration facilities in Singapore. Together with the Foreign Minister Dato Seri Syed Hamid's public statements that Malaysia had never questioned Singapore's sovereignty over its own territory, the paper met our concerns over the sovereignty and other legal issues pertaining to Malaysia's CIQ operations in Singapore.

We replied to Malaysia on 18th February 1999 that Singapore's conclusion, after studying the Malaysian paper, was that the Malaysian government did not claim to have a legal right to operate its customs and immigration facilities in Singapore; that it acknowledged that these operations in Singapore were by Singapore's agreement and consent; and that it acknowledged Singapore's sovereignty over Tanjong Pagar and Woodlands. We informed them that, on the basis of that understanding, Singapore was ready to proceed with the negotiations on the package of outstanding issues, as agreed by the two Prime Ministers in Hanoi. In this connection, we invited them to suggest dates to begin the negotiations on the package.

Subsequently, in response, the Secretary-General of Malaysia's Ministry of Foreign Affairs proposed to my Permanent Secretary that senior officials meet in Singapore on 11th March to discuss the package. As our understanding of Malaysia's position was not disputed, we accepted Malaysia's proposal. Accordingly, the first meeting between officials took place last week on 11th March. At this first meeting, both sides have got down to detailed discussions on the items in the package. They have agreed to meet again in April.

I realise that several Members who have spoken are anxiously expecting me to give a lot of details about what has happened in that one day's discussions. But I hope they will appreciate that as the negotiations are still in progress, I am not in a position at this stage to disclose the details of the discussions on any of the specific items. We are negotiating to arrive at a mutually beneficial outcome. As Prime Minister Goh said in his National Day Rally Speech last year, "both sides have much to gain by pragmatic win-win cooperation."

Mr Charles Chong raised the question about the status of the POA. And as a result of what he has said, I should make it clear so that Members would not misunderstand. The fact that we are having these discussions on the package does not mean that agreements that have been validly entered into and which are binding have somehow lost their legal force. That is not so. As I have told the House before, the POA is a legally binding agreement and came into force immediately after it was signed between the then PM, Mr Lee Kuan Yew, and Malaysian Finance Minister Tun Daim Zainudin in 1990. However, Prime Minister Goh has said that the Singapore Government is prepared to consider Malaysia's proposals to have supplementary agreements on the POA, but only in the context of a wider framework or wider package with Malaysia that includes Malaysia selling water to Singapore on a long term basis. Therefore, the decision to discuss the POA as part of the package of bilateral issues does not in any way affect the legal status of the POA.

Let me give an analogy. The bilateral discussions on the package include our request for extension of the 1961 and 1962 water agreements. The fact that the extension of the water agreements is being discussed does not mean that the two agreements are in any way suspended. And if the package deal does not produce results on the extension of the water agreements, the water agreements will continue to remain valid until their expiry dates. I thought I should make that clear.

Similarly, I think Mr Charles Chong and one or two other Members also asked about the CIQ. Likewise, the Government's position, as I stated in the House on the status of the CIQ, remains unchanged. Members will recall that I explained in great length why Malaysia's CIQ could not remain in Tanjong Pagar after we had moved to Woodlands. I also explained that when Singapore's CIQ moved to Woodlands, the administrative arrangements and the legal cover for Malaysia to exercise CIQ functions in Tanjong Pagar ceased. Also, I mentioned serious problems which might be created concerning the improper sequence of immigration clearance, especially if passports were endorsed at Tanjong Pagar. However, because Malaysia at that time claimed a legal right for its customs to remain in Tanjong Pagar, we agreed, as an interim measure, to allow Malaysian customs to operate at Tanjong Pagar pending a resolution of its claim by its Singapore customs officers lending cover of legal authority.

Here, again in line with the agreement between the two Prime Ministers in Hanoi to resolve the CIQ issue as part of the package of bilateral issues, Prime Minister Goh had said also that it is prepared to consider the question of the possible location of the Malaysian CIQ in Singapore provided that there is an overall package agreement. However, at that time, he said we must settle the issue of sovereignty and Malaysia's claim of a legal right before proceeding to the negotiations. As I have said, we are glad to have put the legal issues behind us and have moved on to the negotiations on the package of outstanding issues.

[Mr Deputy Speaker in the Chair]

5.00 pm

The Minister for Foreign Affairs (Prof. S. Jayakumar): A question was asked about the time frame and whether we should give a deadline. I agree with the Member that a package which involves so many issues and of such magnitude obviously cannot be rushed. But I also think he is right that if both sides are earnest, then it should not drag on indefinitely. He is right. But I believe that the officials are fully aware of this fact and they know that the two Prime Ministers expect them to achieve early progress in their talks.

Mr Charles Chong asked how do we ensure that these agreements, when they are reached as a result of the package, will be respected and they will be binding international agreements with full force of validity and status in international law, and will be governed by international law. He will recall that the Prime Minister has told the House that when we spoke about loan and water arrangements, he would bring it to Parliament. I know that it is the Prime Minister's intention that the agreements, as a result of the package negotiations, would also be brought to this House. I assume that this will be done likewise in Malaysia.

Mr Zulkifli Baharudin made some useful suggestions about promoting bilateral relations and, as a general principle, one would find it very difficult to disagree with him. I agree with him that civic organisations and NGOs have an important role to play. Not only do I agree with him, it is important to stress that in diplomacy and the conduct of foreign policy, the promotion of bilateral relations is not the sole responsibility and preserve of the Ministry of Foreign Affairs or Prime Ministers or Foreign Ministers. Other officials, private sector, NGOs and civic groups also can supplement the work of the Government agencies.

He mentioned re-establishing sports and cultural links, but these have always existed. The point I want to make is that Singapore, on its part, has not made any move to stop these links.

If I may now go on to the points made by colleagues on Indonesia. Sir, last year on 1st June 1998, I informed Members that though Indonesia is in political transition, Singapore will continue to work with Indonesia, both bilaterally and within ASEAN, to further strengthen relations to the benefit of both countries.

Several Members have already pointed out that Singapore is a small country with limited means. I believe Mr Zulkifli underscored that point. We have limited means to resolve the magnitude of the needs of Indonesians in the political and economic crisis. When the crisis started, we sought the support of Indonesia's major trading partners for a Multilateral Trade Finance Guarantee Scheme because we knew that we were not able to do it alone. As most of these countries preferred to have their own bilateral schemes, we did not pursue the proposal further. When Indonesia pressed us, Singapore subsequently offered its own Bilateral Trade Financing Guarantee Scheme with diffidence because we did not have the expertise in this area. The Indonesians found our scheme too cautious.

Since the economic crisis had caused hardships for the people of Indonesia, Members know that Singapore announced in July last year our humanitarian assistance package in the form of rice and medicines. Another phase of the humanitarian assistance under this package will be launched soon. I note what Mr Sin Boon Ann has said, but since the current package of humanitarian assistance is not over, we will have to assess this matter later.

Sir, the current difficulties in Indonesia have not stopped us from investing in Indonesia. In January 1999, both countries signed an agreement for the gas project in the West Natunas which is expected to generate revenues of about US$8 billion for Indonesia. This project reflects the strong commitment from Singapore to work together with Indonesia in economic cooperation amidst the on-going crisis.

But as with our other efforts to be of help, Singapore can act as a catalyst to bring back foreign investments into Indonesia when the position is stabilised. We can co-invest with big MNCs in their industrial and agricultural sector. By ourselves, we cannot make a significant difference. But getting big MNCs to accompany us can be useful in restarting the flow of investments.

Sir, Indonesia is undergoing a political transformation. It has to overcome deep economic, social and political problems on its road to recovery. Eventually, they will restore political stability and confidence. But along the way, we have to expect stresses and strains that will affect bilateral relations.

Members have indeed commented the fact that relations between Singapore and Indonesia are going through a difficult period. Various Indonesian leaders and officials have made allegations and negative comments against Singapore.

Sir, I think it is pointless for me to give a detailed rebuttal of all the various allegations that have been made in an off-hand manner without any supporting facts to these allegations. Let me, however, restate that Singapore has a vested interest in Indonesia's stability, growth and prosperity. Indonesia is a close neighbour and a major trading partner. As Mr Rai mentioned, an Indonesian setback would hurt its neighbours, including Singapore.

On these criticisms, I can do no better than to refer to the speech made by Senior Minister Lee Kuan Yew on 20th February 1999 as well as Prime Minister Goh's comments made in Australia recently. Senior Minister Lee said:

"As the internal situations of the crisis-hit countries worsened, there have been more accusations and threats against Singapore. When countries are under pressure, their leaders say and do things that they normally would not. We must expect more of this."

In the run-up to the Indonesian parliamentary elections in June 1999, and the Presidential elections later this year, we can expect more allegations to be directed against us. But we have to avoid being drawn into their politics. As Prime Minister Goh said, we should say the minimum so as to avoid giving any provocation. Singapore would try to avoid being a party in Indonesia's domestic elections.

Sir, we hope that Indonesia will succeed in overcoming its challenges to restore political certainty and confidence. Stability in Indonesia will be the key factor. In this regard, the outcome of the coming elections in Indonesia will be critical. It is important that the elections be seen to be free and fair. Otherwise, it may prolong the political instability and the loss of investor confidence.

Mr Zulkifli touched on the importance of working relations between different agencies. Let me say that, in the meantime, the working relationship between Singapore Government agencies and their Indonesian counterparts have not been affected by the changes taking place there. Cooperation in various fields, I am glad to say, is still going on. For instance, my Ministry has continued to work closely with DEPLU, which is their Indonesian Foreign Ministry, both bilaterally and at the various international fora.

I would therefore like to reaffirm that the Singapore Government is prepared to work with whoever becomes President of Indonesia and forms the next government. We will establish rational and stable long-term relations with Indonesia as we have done in the past 30 years, a relationship based on mutual respect and equality between two independent countries.

I believe Dr Ong Chit Chung touched on the assistance given to Singaporeans caught in the crisis. As a result of that, he asked what is the nature of assistance which Singapore MFA can give. I thank him for what he has said about MFA. It was a combined effort between MFA and various other Government agencies. But in answer to what else can be done, let me say that one of MFA's primary roles is to provide advice and assist overseas Singaporeans when they are in trouble abroad, or they need our support and information. This is quite true, particularly as Dr Ong mentioned, when more and more Singaporeans are travelling and residing overseas, either due to their own efforts or because of our own regionalisation efforts. Let me say that all our overseas missions have contingency plans to meet various exigencies. Wherever there are large concentrations of Singaporeans, we also put in place a warden system to facilitate speedy communications among Singaporeans, especially during emergency situations, such as civil disturbances or natural disasters. Under the warden system, Singaporeans are organised into groupings based on their geographical localities with wardens or leaders appointed for each group. This system proves very effective in Cambodia when over 400 Singaporeans were successfully evacuated. We also activated the warden system for evacuating some 2,000 Singaporeans who were flown back from Indonesia with the cooperation of SIA at that time.

On Mr Chuang's point on international perception of Singapore, I take Mr Chuang's point that MFA and its overseas missions should do as much as possible (a) to counter negative perceptions, unfounded allegations and criticisms about Singapore; and (b) to be proactively promoting a positive image about Singapore. In fact, this is one of the key functions of our missions abroad. But as he himself has noted, Singapore is a small country. We have less than 30 resident embassies throughout the world. But every one of our embassies knows the critical importance of doing this. 5.15 pm

He has also talked about the use of the Internet. I agree with him on the growing importance of the Internet and its usefulness as a tool to explain our policies to Singaporeans and foreigners. And MFA, in fact, has recognised the need to provide the latest information to an ever more discerning public through this media. He may not know that, in fact, MFA has revamped its home page last June providing for more timely release of our press statements, speeches, and so forth. The site is now more user-friendly and averages over 200,000 hits every month. We have encouraged our overseas missions to publish their home pages so that they can be more effective in their own way to reach out to the audiences in their countries. So far, our missions in Kuala Lumpur, Jakarta, New York and Paris have launched their own home pages. London and Shanghai will have theirs later in the month. In financial year 1999, my Ministry will launch another 11 websites for all our overseas missions. In addition to that, our embassies also issue newsletters, and so on. So these things are being done.

But having said that, I think we need to have a proper perspective in addressing the question of perception or misperception, as mentioned by the Member. I would say that Singapore's general international image is not really negative. It is, in fact, positive. In recent weeks and months, in fact, many stories were written in well-known reputed newspapers about the way in which Singapore had handled its own economy in the midst of the regional financial crisis. What we have done has been noted. Of course, from time to time, negative stories about Singapore will appear in the international media. When these negative stories are based on misunderstanding or inaccurate information, our overseas missions proactively and robustly will correct such misperceptions.

But at the end of the day, I think the crux of the problem is not lack of information or inaccurate information. Because there is always a small group of critics or foreign media that is ideologically uncomfortable with Singapore. We have to face this, because we do not fit their preconceptions of what a successful developing country should be. So no amount of dissemination of accurate information or effort at correcting them is going to change their mindset. Yes, we keep on trying, and we will not stop trying. In fact, these critics would want to change us to fit their ideas of what we ought to be. Unless we change, these critics will not be satisfied.

But obviously we should not change ourselves just to oblige this small group of critics. Their views are not necessarily shared by a majority of Western policy-makers or Western public at large, as the Member has pointed out. Many people supported the actions we took. So I think we should not be too rattled by such criticisms. Of course, we should not blow our own trumpet. We have our policies which we think work for us and where they work for us, we will continue to pursue these policies. Where they do not work, obviously we will re-examine our policies and decisions, and adjust. We do not insist that what we do is right for the rest of the world and we do not seek to impose our policies on the others. So we have to be very clear of this perspective when we deal with the comment made by the Member on correcting international perception of Singapore.

Dr Ong Chit Chung: Sir, on what we have discussed just now, I think it should be clear to the policy-makers in Kuala Lumpur, and also in Jakarta, that Singapore and Singaporeans want to have good relations with our neighbouring countries, but on an equal basis and as sovereign nations, and as good partners within ASEAN.

Moving on, Sir, in terms of Singapore-Thai relations, I want to say that Singapore-Thai relations have been warm and very constructive, and beneficial to both sides. There has been recognition by Singaporeans and Thais that we have much to learn from each other, and much to gain in cooperation and partnership in the region.

In early February 1999, the Minister for Foreign Affairs led a delegation of senior officials from the Singapore Civil Service to attend a meeting with their Thai counterparts in Bangkok. Would the Minister brief the House on the outcome of this meeting and other recent initiatives to expand bilateral cooperation with Thailand? What are the steps that have been taken to realise the vision of a Singapore-Thailand Enhanced Partnership, which has been called or abbreviated as STEP, that the Prime Minister launched during his official visit to Thailand in June 1997?

I hope the Minister will give us a step-by-step account of this bilateral relationship.

Sir, can I go on to the next amendment?

The Chairman: Yes.

Dr Ong Chit Chung: Sir, Singapore and Australia have a long-standing relationship, a deep and, I may say, abiding relationship, over many, many years.

In World War II, Australia sent its servicemen to defend Singapore. Some died in the field, never to return home. And many were later imprisoned at Changi.

And in the post-war era, Australia is our strong partner in defence through the Five Power Defence Arrangement. The economic ties between Singapore and Australia are strong and growing day by day.

Just weeks ago, the Singapore Australia Joint Ministerial Committee held its meeting in Singapore, and shortly after, Prime Minister Goh Chok Tong visited Australia himself.

I wish to ask the Minister to brief this House on the significance and outcome of the recent Singapore Australia Joint Ministerial Committee meeting and the visit of Prime Minister Goh Chok Tong to Australia.

Dr Wang Kai Yuen: Sir, at the invitation of the Hong Kong Legislative Council, Parliament sent a delegation to Hong Kong in the last week of January this year. Seven Members of Parliament participated, and the Hong Kong Legislative Council arranged a full programme for the delegation. I am happy to report that throughout the visit, we could feel that the welcome extended to us by the Legislative Council, the various Hong Kong government departments, and authorities such as the Housing Authority, the Transportation Department, was warm and genuine. The Hong Kong government officials were friendly and open and were very willing to share with us their difficulties, problems and information. The delegation felt that to a great extent, the friendly relationship between the two territories owed much to the effort of the Singapore Consul-General, Mr Chan Heng Wing, a man of seemingly boundless energy.

In our dialogue sessions at the stately legislative building, members of the two legislatures concluded that the so-called "tension" between Hong Kong and Singapore is more a perception, resulting from the reporting by the news media, in particular the foreign media, and that it does not reflect the true feelings of the people of Hong Kong and Singapore.

As such, it is rather surprising to learn of the verbal outburst of Mr Chau Tak Hay, the Hong Kong Secretary of Trade and Industry in the Legislative Council when he commented on the extent of control in the Singapore society. Sir, with all due respect to the Secretary, I am afraid that his understanding of Singapore is rather shallow for a man of his standing and background. Perhaps we should invite the Secretary, Mr Chau, to Singapore, and spend some time with us. At the very least, we should send him a copy of SM's book, "The Singapore Story".

May I ask the Minister to give us an assessment of the relations between Hong Kong and Singapore, and whether there is any strained relationship that needs to be looked into?

Dr Ong Chit Chung: Sir, Singapore has taken over the chairmanship of the ASEAN Standing Committee and the ASEAN Regional Forum, two key appointments within ASEAN, just when the region is undergoing tremendous economic difficulties and crisis. These are trying times indeed: times of tension and stress. There is, unfortunately, emerging a perception that ASEAN has failed collectively in not being able to tackle and surmount the regional economic crisis.

There is also a perception that ASEAN is in disarray, lacking in unity, lacking in cohesion, and lacking in direction, especially after President Suharto stepped down from office. This has been fuelled by the emergence of bilateral issues and disputes between ASEAN member countries.

I wish to ask the Minister for his views and assessment on ASEAN and what Singapore's expectations are in our role as Chairman of the ASEAN Standing Committee and the ASEAN Regional Forum.

In the wider context, ASEAN and the European Union have a long established relationship, which has benefited both sides. Can the Minister explain why this relationship is now in jeopardy over a number of issues? What can we do to address this issue and improve the relationship amongst the blocs?

Mr Hawazi Daipi: Sir, ASEAN has been an important cornerstone of Singapore's foreign policy. However, bilateral problems in the past year between ASEAN member countries appeared to have affected ASEAN warmth. What measures, if any, have been taken by both Singapore and by ASEAN to remain on course in regional cooperation? As Singapore has taken over the chairmanship of the ASEAN Standing Committee this year, can the Foreign Minister outline the main agenda and focus that Singapore has set for ASEAN this year?

ASEAN has demonstrated its unity in the face of differences with the European Union over Myanmar's participation in the ASEAN-EU Dialogue. Despite the differences with EU, ASEAN does have other avenues for dialogues with European nations through the Asia-Europe Meeting (ASEM). Is this observation right, or are there more costs to ASEAN than it appears to be?

On Myanmar in particular, how successful has ASEAN's policy of constructive engagement been? Has it led to any substantial opening of Myanmar's economy? Has any progress been made in integrating Myanmar into ASEAN's political culture? How can ASEAN continue to stand united on Myanmar, and yet remain in constructive dialogues with other regional groupings?

Sir, for the past seven to eight years, ASEAN has moved towards wider economic cooperation through the ASEAN Free Trade Area (AFTA). And I believe ASEAN is now working on the details to liberalise the flow of investments within the grouping. Could the Minister inform the House about the progress in these areas of economic cooperation? Has the regional economic crisis affected adversely the scope and speed of these efforts?

Mr Simon S C Tay (Nominated Member): Sir, Singaporeans should understand that foreign policy in ASEAN is not irrelevant in this time of crisis. Our economy is in recession not because of our internal factors but largely because of the knock-on effects of the crisis around us. Our foreign policy, therefore, becomes all the more important in our response.

Like the Members who spoke before me, I would ask the Minister to share his thoughts on assuming the chairmanship of the ASEAN Standing Committee and the ASEAN Regional Forum. ASEAN is the core group for many international and inter-regional institutions concerning investments, trade and security. In this sense, I would like the Minister to share with us his thoughts on AFTA and AIA, not only as goods in themselves, but rather what this may signal for our relationships with other regions.

Secondly, Sir, ASEAN has been a grouping not only of disparate and very different countries, but within the diversity, ASEAN has worked as an institution to build norms, discourage conflicts and the use of force in our region with great success. We try to encourage cooperation and to minimise bilateral problems within the context of wider relations. In this sense, I would ask the Minister to share his perspectives on how ASEAN might deal or help us deal with various bilateral concerns we may have. 5.30 pm

In particular, Sir, I am concerned that some are now talking about a century of ACE (America, China and Europe), ie, a future century which would not include ASEAN. What are the Minister's thoughts as Singapore continues its chairmanship? In particular, I am concerned that Singapore leadership be not seen as a self-appointed and loud captain, but rather as a leadership of service. And in this context, I would encourage us to see our assistance as having to increase, but not just in terms of money but in terms of technical cooperation, training and assisting in dialogue as a bridge between our ASEAN members and the wider world. In this, I think Singapore, despite whatever criticisms may come our way, must not be silent nor be too sensitive but should lead quietly and effectively.

In particular, I am looking to the Minister for his thoughts on his plan of action and taking a longer term about the ASEAN 20-20 Vision, working not just with the older ASEAN members but, particularly, with the new ASEAN members of Indochina and Myanmar in the ASEAN's enlargement.

I would call on the Minister to think not only of the shorter term but also the longer term policies to help this region deal with what is potentially a lost generation of youth and to think of things that may not be so realistic like now, but to lay the groundwork for future developments, such as an ASEAN university.

Sir, may I take the next cut?

The Chairman: Yes, carry on.

Mr Simon Tay: This concerns the ARF. Very briefly, again, Singapore as Chairman of the ASEAN Standing Committee finds itself chairing the ASEAN Regional Forum. This forum allows ASEAN and Singapore to engage with a much larger Asia-Pacific footprint and with many of the major powers. ASEAN in this forum is meant to be in the driver's seat. Yet, many commentators have been concerned that tensions and differences between ASEAN have disabled ASEAN from being truly the driver. I will ask the Minister to share his thoughts about using the ASEAN Regional Forum to continue to engage USA, China, Japan and indeed Europe which are all members of the ARF.

Also, on the ARF, Sir, if I may ask the Minister to concern himself with the ideas of confidence building and preventive diplomacy as new stages of the ASEAN Regional Forum. Sir, in my main speech on the finance policy of this Government, I was concerned about the defence spending, not simply as a matter of a military build-up. I do not think that is our intention. My concern then was much more the perception of our neighbours and the wider region. Would the Minister consider using the ASEAN Regional Forum for confidence building measures (CBMs), dialogue and transparency in this regard?

Dr Ong Chit Chung: Sir, Singapore has taken a strong position at the Sixth ASEAN Summit in Hanoi over the timing of Cambodia's admission into ASEAN. Can the Minister please explain why Singapore has objected to the full admission of Cambodia at the Hanoi Summit? What is the latest status regarding Cambodia's desire to become a member of ASEAN?

Sir, can I move on to the next cut?

The Chairman: The Minister wants to reply. Could you let him reply first?

Dr Ong Chit Chung resumed his seat.

Prof. Jayakumar: Sir, I will respond to the comments made by Members on ASEAN-related issues and my colleague, the Minister of State, Dr Ow Chin Hock, will take up the comments made on Singapore-Thailand, Singapore-Hong Kong and Singapore-Australia relations.

Several comments were made about ASEAN. We cannot deny that ASEAN is going through a very difficult period and the regional economic crisis has really affected all members of ASEAN. Some are experiencing internal political stresses and strains. There have been bilateral issues amongst two or more ASEAN countries. Members are right that outside observers have expressed all sorts of comments and prognosis for ASEAN and ASEAN's future directions. Because of these developments in the past year or so, it has led to perceptions that ASEAN is weakened or in a state of disarray. My view is that we should not deny that ASEAN is indeed going through a very testing period. On the other hand, to be balanced, I would not paint too gloomy and pessimistic a prognosis for ASEAN.

Let me take the issue of bilateral relations problems between some ASEAN countries. Yes, it has happened. Malaysia and Singapore have had their problems and we are not the only ones. Some other countries have also had their bilateral spats and skirmishes. But let us get things in perspective. These problems have always existed and it is not the first time or last time that ASEAN will encounter such difficulties. ASEAN has weathered such storms before and fortunately emerged stronger. This is quite a remarkable thing about ASEAN.

If I may quote two personal anecdotes from my experience. When relations with Malaysia were at times chilly and frosty, there was no problem in my picking up the phone and talking to the then Foreign Minister Badawi on a variety of matters. In my capacity as Chairman of ASEAN, I had discussed various proposals and got his agreement on the phone, particularly, when there were fast moving events like on Cambodia. That was a good illustration of how ASEAN works.

Likewise, going back a few years back, when we had this bilateral problem with the Philippines over the case of Flor Contemplacion, it was clear that both of us did not want the issue to affect ASEAN, or ASEAN unity. In fact, Philippines and Singapore continued to cooperate on a wide variety of measures in ASEAN. Here, again, there was no problem in the Foreign Minister and myself being in frequent contact on the telephone. So I think ASEAN's strength is to be found in the habit of consultations, personal ties and a strong network of institutional links which were developed over a period of 30 years. We have come to a stage where we have discussed our problems honestly but quietly. ASEAN Foreign Ministers and officials continue to meet regularly despite the bilateral problems and I think the comfort levels are quite high.

At the Hanoi Summit last year, ASEAN leaders, without exception, felt a strong sense of purpose to restore ASEAN standing and they adopted a forward looking Hanoi plan of action and Hanoi declaration.

I was asked about the chairmanship of ASEAN standing committee. In that capacity, Singapore would have to work to ensure that ASEAN countries continue to work together to deal with the regional economic crisis. It is very likely that Cambodia will join ASEAN soon. So the Foreign Ministers Ministerial Meeting which Singapore would have to host in July this year will be the first time that all ten ASEAN Foreign Ministers will meet together. It is an important occasion for the Ministers to discuss how the ten countries will work together to strengthen ASEAN and its future.

As chair of the ARF, we also want to see the habit of dialogue and consultation strengthened. I believe ARF plays an important role in building confidence among its countries in the region which contributes peace and stability. And I will say a few more words about ARF. I was asked whether Singapore can play a leadership role in opening new markets amongst ASEAN members. The new ASEAN countries actually understand, in my view, the importance of economic liberalization and the opening up of the economies. As members of ASEAN, they have committed themselves to participating in the ASEAN Free Trade Area (AFTA) and ASEAN Investment Area (AIA). The participation will lead them to lower their barriers and encourage a free flow of trade in ASEAN. Singapore will work with the new ASEAN members to help them integrate into AFTA and also the global economy. Singapore can share with these countries our experience in economic development and familiarise them with measures that can improve the business conditions and investment climate. I think Singapore's regionalisation programme will also help. But in the final analysis, much will depend on the private sector. Of course, in seeking business opportunities in the new markets, the private sector will look for a business environment which is conducive to open trade and investments.

I was asked about ASEAN-EU relations and how is it that problems have arisen. Dr Ong Chit Chung is right that ASEAN-EU dialogue has run into rough waters. In fact, it is at a standstill. Why is that so? It is because of the EU's difficulties over Myanmar's participation in two key meetings. One is the ASEAN-European Commission Joint Cooperation Committee (JCC) which is really a technical meeting to review cooperation activities. The other meeting which has run into difficulties is ASEAN-EU Foreign Ministers Meeting which was to have been held back-to-back with the Asia-Europe Foreign Ministers Meeting in Berlin. The JCC, the technical meeting, was postponed twice due to a disagreement between ASEAN and EU over the format of Myanmar's participation, and both ASEAN and EU are now working towards reconvening the meeting. But the prospects of having the ASEAN-EU Foreign Ministers Meeting on 30th March in Berlin, I am afraid, appear rather dim at this stage.

The main problem is that the European Union's common position is not to grant a visa to the Myanmar's Foreign Minister. The European Union would like Myanmar to be represented at a more junior level. But as the Foreign Ministers Meeting is a ministerial meeting at the Foreign Ministers' level, ASEAN's position is that all ASEAN Foreign Ministers will have to be present and treated equally. In other words, there should not be any discrimination on any ASEAN member's participation and it will be difficult for ASEAN to leave behind one member and the rest of us attend the meeting. It is unfortunate that some of the EU countries' bilateral difficulties with Myanmar on its internal human rights situation have jeopardised the long standing ASEAN-EU dialogue partnership. I say that because, over the past 22 years, ASEAN and EU have built well-entrenched institutional structures to facilitate broad based functional and economic cooperation. This well-established relationship is one that ASEAN continues to value.

I hope that the EU could take into account the larger interests of the dialogue. My colleagues in ASEAN actually are rather puzzled by the EU position because the European Union has no problems sitting with the Myanmar Foreign Minister at the same table at the ASEAN Regional Forum when it is held in our region. They also have no problem sitting with the Myanmar Foreign Minister when ASEAN has its post-ministerial dialogue with the European Union after the ASEAN meeting. So they find this rather inconsistent. 5.45 pm

Mr Simon Tay asked about the ARF. The ARF has actually come a fairly long way since it was established in 1994. It is the only regional forum that brings in all the major powers to discuss regional security issues. It has, over the past five years, managed to build up a certain comfort level and trust among its participants so much so that in recent sessions, even sensitive issues have been discussed. The 5th ARF in Manila, for example, saw a very candid exchange of views on regional security issues, including the impact of the financial crisis. There was also a candid exchange of views over the South-Asian nuclear tests. That these issues have now been discussed in a non-confrontational manner, to me, it is a sign of how the ARF has managed to increase and build up confidence among the participating countries.

The key to ARF's future and resilience is, even though individual countries have different operating styles, it is ARF's adherence to the principles of consultation and consensus. I believe that the future of ARF is hinged on to the mindset of the countries in the forum. Hopefully, our constant interaction will inculcate habits of dialogue and cooperation instead of confrontation. Although the comfort level has increased, we have to deal with decades of suspicion and distrust which cannot be obliterated within a space of a few years. This is why I believe that the process of the ARF and the exchanging of views are important. If the countries are more assured by the process of consultation and consensus, something which I place a lot of emphasis, it will lead to increased trust and eventually cooperation. I might mention here that as an illustration of consultation that even before the ARF is held, I have written to all the Foreign Ministers of the ARF participating countries, soliciting their views on how they see the ARF, to be held in July this year, to move forward, and I have told them that I will take their views into consideration.

Although I do not foresee the ARF rapidly becoming a dispute resolution forum, I share Mr Simon Tay's view that we should probably try to move several incremental steps from confidence building measures to a stage of preventive diplomacy. Mr Simon Tay ended up his speech referring to assistance which we can give to regional countries. I am not sure whether time will permit, but one of the questions which was raised by other Members concerns technical cooperation and he will know that the record shows that Singapore, in fact, is doing a lot within the limited resources that we have under its technical cooperation programme. We spend a lot of money, we train thousands from various countries and the majority of participants who benefit are from the countries in the region.

Sir, with your permission, my colleague, the Senior Parliamentary Secretary drew my attention to the fact that I inadvertently omitted to reply to Dr Wang Kai Yuen, although it was on an earlier matter, when he asked me for information about the bridge proposal. In response, let me say that the Singapore Government has not received any proposal from the Malaysian Government on the development of a new bridge to replace the Causeway. As I have said before, and so has the Minister for National Development, any proposal for such a project will require the approval of both governments. Of course, Singapore will seriously consider any initiative that will foster closer cooperation between Singapore and Malaysia. Naturally, we cannot give a response in abstract terms. We need to know pertinent details. Why is there a need to replace the Causeway with a bridge in the first place? What will the whole project cost be and what are the cost benefits? Will the Singapore end properly tie up with the Woodlands train checkpoint? What will be the toll charges, if any? All these must be addressed, not as a private sector proposal, but in a proposal from the government of Malaysia. So we need a formal proposal, and if there is one from the Malaysian government, we will of course consider it.

The Minister of State for Foreign Affairs (Dr Ow Chin Hock): Sir, let me first respond to Dr Ong's comments on Thailand-Singapore relations. Over the last two years, Thailand-Singapore bilateral relations have further strengthened, characterised by the increased regularity of high-level meetings and exchanges of visits between the two countries. This is attributable to two major initiatives: Singapore-Thailand Enhanced Partnership (STEP) and Thailand-Singapore Civil Service Cooperation Programme (CSEP). Both initiatives were launched during the official visit of our Prime Minister Goh to Thailand in June 1997 and endorsed by the Thai Government.

STEP outlines the broad vision of the two countries to forge a strategic and economic partnership in which the two countries could leverage on, and add value to each other's strengths and competencies. As noted by Dr Ong, the second CSEP was held in February 1999 in Bangkok. In a relatively short period, CSEP has proved to be an important tool to realise the STEP vision. Let me just cite two accomplishments:

a) the institutionisation of cooperation between the civil services of Thailand and Singapore which has engendered a culture of consultations and cooperation. The linkages between the two civil services will contribute to the development of a good and mutually beneficial bilateral partnership; and

b) the identification of concrete cooperation projects in many areas. Notable progress has been made in the fields of education, trade and investment promotion, tourism, telecommunications, industrial parks/estates, and technical cooperation. An MOU on Cooperation in IT was also signed at the second meeting of CSEP in Bangkok.

Such cooperation between Thailand and Singapore is an excellent illustration of how in times of adversity, ASEAN countries can pull together and press on with regional cooperation.

Dr Ong Chit Chung also commented on Australia-Singapore relations. He is right. The warm and strong relations between Singapore and Australia were given impetus by two recent events quoted by him:

a) PM Goh made a working visit in early March 1999, just a few days ago, where PM Goh had a frank and useful discussion with Australian Prime Minister Howard and other Australian leaders on regional developments; and

b) the Second Singapore-Australia Joint Ministerial Committee (SAJMC) took place in Singapore in February 1999. In this biennial SAJMC, three Ministers from each side meet their counterparts.

Dr Ong asked specifically about the Second SAJMC Meeting. In this recent meeting, both sides reviewed the progress in our bilateral relations and exchanged views on international issues and on the implications of the regional financial crisis and regional political developments. Both sides also agreed on several initiatives at the meeting: a G-to-G MOU on IT was concluded between DPM Lee and Australian DPM Tim Fischer. Seven other commercial MOUs/Letters of Intent were also signed. In addition, both sides also agreed to work on establishing a strategic dialogue partnership or relationship between think-tank, a Youth Ambassador Exchange Programme and Third Country Technical Programme courses.

The scope and depth of our cooperation with Australia have increased. Let me cite three areas briefly:

a) Defence. Defence relations between Singapore and Australia are active and strong. Australia is an important training area for our SAF. We have also cooperated with Australian Defence Force in numerous bilateral and multi-lateral exercises, including the FPDA;

b) Economics. Bilateral economic ties are close. Singapore and Australia are top investors and trading partners. Singapore's total foreign direct investment in Australia for 1996 was S$1.82 billion. Australia's investment in Singapore totalled A$1.16 billion as of June 1997. Bilateral trade in 1998 was S$7.4 billion; and

c) Other areas. The launching of Singapore-Australian Business Alliance Forum and Parliamentary Friendship Group has further expanded the scope of our bilateral cooperation.

Singapore's long-term close linkages with Australia will be beneficial for the region as well. Let me cite two reasons. Firstly, as Singapore and Australia have weathered the current economic crisis better, we have been working closely to help the affected regional countries. We have also agreed to have closer dialogue and cooperation on international and regional financial management and financial reform issues. Secondly, in view of its unique cultural and historical links, Australia could be the interface between the West and the affected Asian countries in resolving the current financial crisis. Australia has shown its desire to play such a role by being engaged in Indonesia and proposing initiatives on international financial reforms.

As for Dr Wang Kai Yuen's comments on Singapore-Hong Kong relations, let me give him an overview. Singapore-Hong Kong bilateral relations are warm and close. There are regular visits of leaders and officials from both sides. Bilateral cooperation at officials' level is also progressing well under the Civil Service Exchange Programme. The programme comprises (i) exchange of visits between senior officials; (ii) attachments of civil servants; and (iii) cross appointment of senior officials. There has been a steady flow of incoming visits by senior Hong Kong officials since the handover in July 1997.

Parliamentary links, in the form of Singapore-Hong Kong Parliamentary Friendship Group, are consolidated with exchanges of visits from both sides, including the recent visit by Dr Wang and six other MPs.

As for the bilateral economic relations, it is healthy and good. Total bilateral trade for 1998 was S$20.2 billion. Total Singapore investment in Hong Kong for 1995 was S$6.27 billion and total Hong Kong investment in Singapore at the end of 1994 was S$5.02 billion. I agree with Dr Wang that the so-called rivalry and competition between Hong Kong and Singapore is more a perception rather than real. However, this perception has somewhat affected the bilateral relations between Hong Kong and Singapore. But we understand the stressful situation in the Asian region as a whole has fanned the "absurd" media frenzy over the so-called rivalry, which was played up by Hong Kong and the Western media. Some SAR officials felt obliged to answer to queries by the legislators and media, which have further added to the frenzy. We have reacted calmly and rationally, although we have, at times, come out to robustly clarify inaccurate and baseless comments made about Singapore, including the example cited by the Member.

Singapore's recent financial liberalisation and cost-cutting measures were designed to make Singapore competitive. In some cases, we try to keep up with Hong Kong, not "stamp" on Hong Kong when it is down. Let me cite the Senior Minister in his speech at Tanjong Pagar Chinese New Year gathering, and I quote, "Singapore has learnt from Hong Kong's example and was liberalising its financial sector to keep pace with New York, London, Tokyo, Frankfurt and Hong Kong, not to do Hong Kong in." 6.00 pm

Sir, this is not a zero sum game. There is a considerable degree of cooperation and mutual benefit from having two financial centres, two prosperous cities in Asia.

Healthy competition in some areas is inevitable, but Hong Kong is not Singapore's principal competitor. We are promoting other sectors such as manufacturing, petrochemical and pharmaceuticals, and services (other than financial services).

Dr Wang would agree with me that it is in our interest to have a stable and prosperous Hong Kong. Given the nature of our relationship, Singapore and Hong Kong will always cooperate and compete with each other at the same time. The success of one will be a spur to greater success for the other.

Prof. Jayakumar: Sir, a quick word before Dr Ong moves on to his other cuts. It is not true that we opposed the admission of Cambodia. In fact, Singapore's position on this has been both consistent and based on principles. The decision to admit Cambodia was taken some years ago in 1996 by the leaders of ASEAN. And it was really a question of timing when Cambodia should take its place in ASEAN. Members are aware of the various developments which led to instability in Cambodia. But the formation of the coalition government in November last year was a very important step towards a move to normalcy in Cambodia. Unfortunately, by the time the leaders met in Hanoi for the Summit and where some thought Cambodia could be admitted in time for the Hanoi Summit, it was not possible to take the decision because Singapore, Thailand and the Philippines noted that the political parties to the coalition themselves had announced to the world that a key component of their agreement on the coalition was the establishment of a Senate. And by the time we met in Hanoi, that aspect, which they themselves had proclaimed as an important element, had not yet been given effect by their legislation. So the position we took was that it was premature to take the decision to formally admit them at Hanoi. Rather, we should wait for the establishment of the Senate, because if the Senate was not established and they have already been admitted, then you can have a situation where the political deal could have become unravelled.

I am glad to report that last week I received a letter from the Cambodian Foreign Minister informing me that the necessary steps have been taken by the Cambodian National Assembly which has approved the constitutional amendments for the establishment of the Senate. I have accordingly written to all my colleagues, the ASEAN Foreign Ministers, as well as to Vietnam, which will be the host for the special admission ceremony, that we should proceed to implement the decision of the leaders. And I expect that Vietnam will consult and settle on a date soon for the formal admission ceremony.

Dr Ong Chit Chung: Sir, despite all the criticisms, pot shots and snide remarks, the United Nations is here to stay. It simply could not be wished away. Neither is there any viable substitute to replace the United Nations. It has indeed established itself as a world body for all countries, big and small. It allows small nations like Singapore a forum on the world stage. It is a good place to network, to make representation, to air views and to train diplomats.

Singapore is active at the UN and is bidding for a seat on the UN Security Council for the year 2001. I wish to ask the Minister for his assessment of Singapore's role at the United Nations; whether Singapore will play an even more active role in the UN Peace-keeping Missions; whether Singapore is on track in our bid for the Security Council seat; and what are our chances of securing such a seat.

Mr Simon Tay: Briefly, Sir. A few days ago, the hon. NCMP, Mr Jeyaretnam, suggested that Singapore did not need a defence force, and that it could rely on the UN. The answer by almost all Members was that this was not possible. I too concur that defence by the UN collective security is insufficient. A first-line defence is always necessary. May I invite the Minister to share his thoughts on what then, if it is not defence, do we seek as a member of the UN? Do we seek a layer of peaceful existence and cooperation?

Prof. Jayakumar: Sir, on this matter, I am able to speak with a little bit of personal experience because, many years ago, I was Singapore's Permanent Representative to the UN. And I can say that if it was true then, it is still true today, that as a small country, Singapore lacks the resources to be adequately represented by embassies throughout the world. There will be a limit to the number of embassies we can establish. Therefore, a membership in the UN in the first place provides us with an opportunity to make contact with the broad spectrum of United Nations' member countries, many of whom we would not normally be in contact through diplomatic ties.

Let me say also that another important benefit is that through the UN, we are able to project Singapore and to raise Singapore's international profile. Our membership at the UN, together with our participation in UN-related groupings like the Non-Aligned Movement and the Group of 77, also provides us opportunities to develop and maintain our links with other countries in the developing world. Everybody knows that we have limited resources. Therefore, we have focused on a limited number of issues in the UN. We have not taken a blunderbuss approach of staffing every committee and sending large delegations, because we believe a selective approach is one where we will be able to deliver what we have set out to do.

I hope that in our own small and modest way we have, over the years, developed the reputation of being a responsible UN member as well as an efficient and effective one, but obviously it must be others who will have to judge us. We have also stepped up our involvement in UN activities in areas of interest to us, but where we may obtain political mileage at minimal cost. For example, peace-keeping which was mentioned, Singapore was, as of May 1997, one of only seven countries to sign a MOU with the UN on standby arrangements, ie, to have available officers, observers or medical personnel and aircraft for UN peace-keeping operations.

I should also add that at the UN meetings, my Ministry ensures, as far as possible, we have high-calibre delegates to represent Singapore. In this way, we have played an active and constructive role at various UN forums such as the Law of the Sea Conference or the UN Conference on Environment and Development. And within the UN itself, Singapore tries to be active on high profile issues such as the reform of the UN and the UN Security Council.

We are asked about our bid for the UN Security Council candidature, what are our chances like. One can never be absolutely sure but at this stage, I would say that I am confident that we have a fairly good chance of being elected. We announced our candidature early in order to give us sufficient time to mount a systematic lobbying campaign. This campaign is going well and we have received many expressions of support from numerous countries in all regional groupings in the UN. As Members know, Singapore is the only declared candidate for the Asian group seat, and this is an Asian group seat in the UN Security Council for the term 2001-2002. All the other ASEAN countries have given public endorsement of our candidature. I believe these factors put us in good stead for successful election in the year 2000.

What will Singapore's role be in the Security Council? We have presented our candidature to the Security Council's non-permanent seat for the 2-year term. And if elected, it will give us first-hand experience of how the Security Council operates. In many ways, the Security Council is the heart of the UN system. It is the only organ in the UN that has the authority to take decisions that are binding on all member states. Although Singapore has never served on the Security Council before, we believe and we hope that we will be able to bring to the Security Council constructive and useful, shall I say, small state perspective to the Council. This role that we have identified for ourselves will be particularly useful to those UN members who themselves are small states and share our concerns and sense of vulnerability.

Mr Sin Boon Ann: Very briefly, Sir. Our Prime Minister on a visit to Chile in October 1998 mentioned the need to establish a forum for the academia, business people, Economic and Foreign Ministers to forge a better understanding between Latin America and Asia. The call for a forum was driven by a desire to know more about Latin America, not just the economies but people, culture and the environment. I would like to ask the Minister what steps have been taken since to promote the Asia-Latin America Dialogue forum.

The Senior Parliamentary Secretary to the Minister for Foreign Affairs (Mr Zainul Abidin Rasheed): Sir, looking at the clock, there is no time for samba! Briefly, the Prime Minister first raised the idea of the East Asia-Latin America forum (EALAF) last September. As we know, we have institutional links with North America through APEC, and with European countries through ASEM. So there is currently this missing link between East Asia and Latin America. In the global economy, such a gap between two dynamic regions must be addressed in the interest of both regions and thus we have EALAF. EALAF is envisaged to be a meeting of individual countries of East Asia and Latin America, and not as a regional group to group meeting. So interested countries can join whenever they are ready to do so. Prime Minister Goh has sounded out leaders of ASEAN, China, Japan and Korea on EALAF and the responses have been generally supportive. Similarly, we gather that the response from the 12 Rio group members has also been extremely good. The plan is actually to hold a SOM meeting sometime late this year.

The Chairman: Dr Ong, do you want to speak on technical cooperation very briefly?

Dr Ong Chit Chung: Sir, I will be brief. First, I want to say that we are in full support of the United Nations, but it will be very naive for Mr Jeyaretnam to claim the other day that the UN will be our first line of defence. We still need, paramount of all, as demonstrated in the Second World War, our own defence, and a very strong SAF. The UN can be a forum. The UN can be a back-up, but never the front line for Singapore.

I just want to ask the Minister whether he will tell us what are the technical cooperation schemes between Singapore and the other countries. How can we help the other countries, since we have benefited so much in so many areas?

Mr Zainul Abidin Rasheed: Sir, on behalf of the Minister, the Singapore Cooperation Programme (SCP) has an annual budget of about $17 million. SCP sponsors training courses and study visits for about 2,000 officials annually from 105 developing countries from the Asia Pacific, Africa, Middle East, Latin America and the Caribbean. Singapore, as we all know, is a small country with no natural resources and no large manpower base. Nevertheless, we will do what we can within our limited resources to contribute to the manpower training and human resource development of other developing countries.

We have trained, in fact, 8,000 officials from over 100 countries in specific fields including public administration and management since 1992, and I am sure Members will agree that it is a commendable feat.

The Chairman: Dr Ong, would you like to withdraw your amendment?

Dr Ong Chit Chung: Sir, I think we had a very fruitful discussion on foreign affairs. I want to thank the Minister, the Minister of State and the Senior Parliamentary Secretary. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $117,147,650 for Head O ordered to stand part of the Main Estimates.

The sum of $77,103,900 for Head O ordered to stand part of the Development Estimates.

The Chairman: It is 6.15 pm.

Thereupon Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House.

Prof. Jayakumar: Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 1999/2000 and ask leave to sit again tomorrow.

Mr Deputy Speaker: So be it.