MEDISHIELD

Mr Tay Beng Chuan asked the Prime Minister if he will (i) give an assessment of his recent visit to the People's Republic of China from the economic point of view, and (ii) inform the House what business opportunities have been identified or made available for our business community.

Mr Goh Chok Tong: Economic assessment

My recent visit to China has re-affirmed my bullish assessment of its growth prospects. It is a large market of 1.2 billion consumers and an attractive investment destination. It can be a strong economic partner, if our businessmen can grasp the opportunities it offers.

Of course, like all emerging economies, there are some areas of concern that bear watching. For instance, China's traditional industries are still suffering from over-capacity. Domestic demand remains sluggish although the government is trying to encourage greater spending.

Nonetheless, I am confident that the Chinese government remains committed to the path of economic reforms, and is prepared for the full introduction of foreign competition upon WTO membership. China's impending accession to the WTO will keep up the pressure to speed up reforms in its State Owned Enterprises (SOEs) and financial sector in particular.

One strong impression I had from this trip is that while the Chinese government is vigorously pushing ahead with its economic reforms, it is at the same time busy preparing for the New Economy. During our visits to Zhongguancun in Beijing and the Xi'an Hi-Tech Industrial Development Zone, we saw that the Chinese government had begun to build infrastructure, including info-communications infrastructure, and to enhance institutional capacities such as in research and development, with a view to riding on the New Economy for sustainable long-term growth.

Another issue of particular concern to the Chinese leadership was the outflow of Chinese talent. Premier Zhu Rongji told me that China was losing about 70 to 80 per cent of its graduates from top Chinese universities, mainly to the US. Beijing's Tsinghua University has 10,000 of its graduates working in Silicon Valley. Xi'an's Jiaotong University lamented that two thirds of its graduates did not stay in Shanxi Province after graduation. The Shanghai leadership is aggressively attracting talents to help convert opportunities offered by the Internet revolution and other growth sectors such as life sciences to real business activities. For example, they are offering scientists and professors from Beijing double the salary and rent-free accommodation plus flexible employment terms to work in Shanghai.

That is why when I suggested that Asian countries should collaborate to forge a "Silicon Valley of the mind" to retain Asian talents in Asia, it met with an immediate and receptive response. Business Opportunities

As China continues to develop and open up, there will be many new opportunities for our businessmen. The Chinese government is now giving greater emphasis to the development of the inland provinces. The inland provinces are many years behind the coastal region. Their opening up will create even more investment and trade opportunities. I understand that the business delegation which accompanied me to China had identified 37 business opportunities while in Xi'an for further consideration.

It is up to the private sector to assess and decide on the type of investments to be made. The government will, however, help to facilitate their efforts through our economic agencies. For example, the Singapore-Shandong Business Council, established in 1993, has successfully initiated 12 areas of cooperation such as manpower training, finance and banking, enterprise development, hospitality services and information exchange. Our economic agencies, universities and research institutes will also continue to work with their Chinese counterparts to enhance exchanges in mutually beneficial areas such as IT and telecommunications, tourism, R&D and financial services.

Mr Yeo Guat Kwang asked the Minister for Health whether there are any plans to ensure that MediShield will remain affordable and effective such that the coverage is adequate and the premium deductible will not rise unduly.

Mr Lim Hng Kiang: MediShield is an insurance scheme. Just like other health insurance schemes, the premiums will be higher if the co-payment is low, or if more disease conditions are covered by the scheme. We are fortunate that since its introduction in 1990, we have been able to keep the premiums low and affordable and expand MediShield coverage to new treatments and drugs, without increasing the premiums or co-payment. To give just two examples, we have recently extended MediShield reimbursement to stereotactic radiotherapy for the treatment of brain tumour, and Prograf, an immunosuppressant drug used in organ transplants. So, MediShield has delivered better and better value for money to patients over the years.

However, we cannot take this for granted. The best way to keep MediShield premiums as well as patient co-payment affordable to Singaporeans, without compromising its coverage of a wide range of disease conditions, is by ensuring that Singaporeans remain healthy and when they do require medical care, the cost increases are moderated.

The Government is already heavily subsidising health care in Singapore. Acute hospital care is subsidised at 80%, 65%, 50%, and 20% for Class C, B2, B2+ and B1 respectively. Polyclinics are subsidised at 50%. The measures to contain health care costs must be complemented by individual responsibility. Our best insurance for the future is to continue to encourage all Singaporeans to lead healthy lifestyles. If they fall ill and have to be warded, they must choose their wards prudently based on their financial means. For those who cannot afford to pay even the subsidised rates due to financial hardship, Medifund acts as a final safety net.