PRESIDENT'S ADDRESS (Debate on the Address)

Debate resumed.

The Parliamentary Secretary to the Minister for Education (Mr Hawazi Daipi): Sir, in the aftermath of the terrorist attacks in the United States and the detention of the 13 members of the Jemaah Islamiyah (JI), it would be dangerous to ignore the heightened sensitivities to race and religion that have surfaced. Apart from the political, security and economic concerns brought about by the shocking terrorist acts in Singapore, we have to come to terms with major ongoing issues and trends which would affect our well-being and sense of nationhood. As has been repeated many times in this House in the last few days, the world has changed and we must take a hard look at the implications of these events before we can make our own adjustments and move on. The world economic environment has changed. The nature of economic competition for investments, jobs and markets has changed as a result of economic globalisation, the rise of China, rising competition from regional neighbours and the faster pace of technological changes.

We have to reinvent ourselves to have a role in the changing economic environment on which the President has reminded us. But today, I would like to focus on one aspect of the President's Address which is social cohesion, especially in the light of the September 11 terrorist attacks and the JI arrests. Prime Minister, Ministers and all of us, Members of Parliament of this House, have facilitated a series of frank and open dialogues on how we should manage racial and religious harmony. We have to discuss these issues constructively if we want to strengthen our racial, religious and social cohesion which is fundamental in our statehood.

The formation of Inter-religious Confidence Committees and Harmony Circles could help to promote greater interaction and understanding among different races at grassroots levels. Following media reports, discussions and debates after the September 11 incident and JI arrests, some members of the Malay-Muslim community feel that they and Islam have been put in the spotlight. Government leaders have taken pains to allay such fears and concerns and to remind non-Malay-Muslim Singaporeans that their fellow Malay-Muslim citizens are largely moderate and peace loving and should be given the support to continue to be so. It is not enough to see community leaders distancing themselves from extremists and radical acts and tendencies. It is equally important for us to have the average citizens to understand the issues and reject extremism and radicalism. That is why it is important that we reach out to the average citizens, not just community leaders. The way they react could be influenced by their own personal experiences and that of people known to them and also by individuals with influences.

The majority of moderate Malays and Muslims would want to tell their fellow Singaporeans not to fear or be apprehensive with the wearing of the headscarves or the tudung by Malay/Muslim women. They would also want to reassure that the covering of the head does not signify the closing of the mind and that their contribution to the companies and employers would not be reduced just because they put on the tudung. Malays and Muslims would also, among other things, want others to know that their quest for halal food does not mean that they cannot eat at the same table as non-Muslims who take non-halal food or drinks. Sir, on the other hand, there is also a need for Muslims to understand the kind of perception that they may create if they go overboard and insist on things that make themselves exclusive. Unfortunately, Sir, there are elements in the community who are pushing the agenda in the way that would stir the calm and harmony that we have achieved. The Malay-Muslim community must not be swayed by such people who may use religious arguments and who may even sound logical but, in reality, are intolerant and even extremist in their attitude. Sir, like some other Members of the House, I would like to urge fellow Malay/Muslim Singaporeans and all Singaporeans to focus their attention on education as a tool to move upwards and to play a better role in society. Education supports racial and religious harmony in two important ways. Firstly, education is one of the key institutions that develops social capital and expands our common space. Our schools represent the one way whose reach is almost universal and where common experience starts from young. The schools are critical institutions in which our young enjoy a common education experience of growing up together or finding out about our history and heritage and working towards a common goal. It is therefore important for us to guard our schools jealously as a common space for our multi-racial and multi-religious community.

Secondly, education is one of the pillars that supports the principle of meritocracy. Education provides opportunities for our people to reach their fullest potential regardless of their race, religion and socio-economic background. While we cannot eradicate totally the income divide, we have, by investing heavily in education, built many bridges and open the doors for Singaporeans to move up the socio-economic ladder. It is up to the individuals to seize these opportunities for training and education so that they can secure a better life for themselves and their families.

The Malay community has been making steady progress over the years. In year 2001, for example, 92% of Malay pupils taking the PSLE qualified for secondary school, and this was an improvement from 74% in 1990. The corresponding national averages were 97% in 2001 and 88% in 1990. Sir, the gap has been narrowed to just five percentage points from 14 percentage points over a period of about 10 years. The community needs to continue to focus their minds and energies on raising the educational and skills qualifications. I would again like to urge the Malay/Muslim community to continue to push forward in education and make full use of the opportunities that have been and will be open to them at all levels.

Sir, the Malay-Muslim community can make even better progress in education, the profession and commerce if they focus their attention on the things that matter - education - and not be distracted by a small but loud minority who want them to believe that the community has been discriminated against, their religion belittled and their concerns trivialised. If such people like those in Fateha.com succeed in making the community believe that it has been made second class citizens in Singapore, the Malay/Muslim community and Singapore will be the poorer for it.

Sir, racial and religious harmony will continue to be a key prerequisite in our pursuit for continued progress and nationhood. But it is not the only form of cohesion we need to achieve. We also need to forge cohesion among people of different backgrounds, between the better-off and the less endowed, between the better educated and those with modest education, and between Singaporeans and new Singaporeans and foreigners who work here. Efforts through the Remaking Singapore Committee are opportunities for us to achieve these objectives beyond economic progress.

Sir, we cannot control the storms and waves that we sail in. But we can strengthen the boat and the crew. We have just embarked on a process of remaking Singapore. This is an opportune time for us to come together with fresh and open minds to chart the future course for Singapore. If we can forge the type of social compact and strengthen racial and religious harmony together, we can face and surmount any challenges that Singapore will face. On this note, Sir, I support the motion. 3.55 pm

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, I would like to join my colleagues in thanking the President for his Address.

In his Address, the President paints a very gloomy picture of our outlook over the next three years. Many Singaporeans after hearing him are taken aback by the bleak forecast. Our people have always assumed that with the PAP Government in charge, our future is assured. At the 3rd November General Elections, our people were already painfully aware of the severity of the recession and the challenges facing the nation. They gave the PAP a renewed mandate with increased popular support because they believed that with a proven team in place, Singapore will be able to weather the recession and to continue to do well. Five months had passed and before Parliament was convened, during this interim period, the recession had deepened, the unemployed continued to rise. Our people long for our Government to hold out a ray of hope, a promise of a better tomorrow. After all, is it not what the General Election was all about? Vote for the PAP and we will guide you to a better tomorrow. After listening to the President, our people are not so sure anymore. Instead of hearing what the Government could do to lead us out of the recession, in the debate so far, we have heard from Member after Member telling Singaporeans that they have to be more self-reliant, that we should not look to the Government to solve all our problems.

Mr Speaker, Sir, it is well and good that our people should be more self-reliant. But there is a limit to what the individuals could do, especially in an island country like Singapore. We cannot go back to farming, we cannot go back to itinerant hawkers, we cannot drive pirate taxis. Yes, we could go back for more training and retraining. I think it is right and proper that we look to the Government to bring us through the recession. Are we Singaporeans being too dependent on the Government? I do not think so, Sir. After all, what is the role of a government? To do what the individuals on their own cannot do. To provide leadership in a crisis. Our people want to be led. So, we should lead them. It is important at this juncture when Singapore is at a turning point, at the deepest recession since our Independence, that this Government provides strong leadership. We all could recall, close to 30 years ago, the then Prime Minister, Lee Kuan Yew, pointed to a bare batch of land and declared, "On this piece of land, we will build a modern metropolis." He was brash, even arrogant, confident. But he did egg our people on. I hope in the remaining days of this debate, we would be able to hear the frontbench elaborate on the Government's vision of our country and the plan to bring us there. We need a strong dose of leadership to restore the confidence of our people.

Mr Speaker, Sir, we understand that the various committees established by the Government after the GE have yet to finish their work. Yes, we anticipate that their recommendations would probably result in new policies and new tax changes, come the Budget in May. However, the elapsed time of half a year by the time we come to May to figure out what to do, seems rather long. As the Chinese saying goes, "yuan shui jiu bu liao jin huo". Basically, it means "distant water is useless in fighting the immediate fire".

To me, Sir, the long delay seems to give us two impressions. Firstly, the Government is unprepared about the need to make major changes and is now scrambling. One wonders how is it that our highly acclaimed civil service did not anticipate the challenges facing us and make appropriate plans for it, not to mention taking the necessary action. Secondly, it gives the impression that the better ideas of how to fix our nation's problems could be found only in the various remaking Singapore committees whose members are, by and large, drawn from the private sector. We have already heard from Mr Khaw Boon Wan, who left the comfort zone of the civil service, that he gained a lot from interactions with the members of these committees. He paid accolades to the wealth of experience brought to bear by these committee members. He has been in the civil service for a long time. What he said is actually telling us a lot about the civil service.

Mr Speaker, Sir, perhaps we are a bit too pessimistic about the Singapore economy in the short term. But maybe that is how Government works: underestimating the severity of the recession before it hit, and over-estimating its severity after it hit. The recession turned out to be the worst in our history primarily because of our dependency on electronics and hard-disk drive manufacturing, whose global demand had fallen off the cliff in the past 12 months. It seems to me, Sir, now that the external demand is recovering as the US experienced a strong growth of 6% in the first quarter of 2002. The US Consumer Confidence posted the largest jump in 11 years in March this year. So, just like a spring that has been compressed, once the force is removed, the spring will bounce back. Given the depth of our recession, the Singapore economy will rebound without too much Government interference.

However, in the mid to long term though, the President is correct that we are facing the toughest challenge in returning Singapore to growth. Mr Matthias Yao pointed out earlier the nature of the retrenchments in recent months, ie, these retrenchments are the result of restructuring and not because of failing businesses.

Sir, while the Government is focusing on the remaking of Singapore, I suggest that we should not forget the few lessons this recession has taught us. One lesson that is foremost in my mind is the difficulty faced by older workers in finding new employment. The Government has introduced several training schemes for retrenched workers. This is indeed laudable. However, we all realise that the number going for retraining is low compared to the number who are unemployed. One of the reasons is the scarcity of jobs out there. Without the assurance of a job, the motivation to retrain is hard to sustain. The other reason is the bias of our society against older workers. Many Members have already spoken on this. Ms Indranee Rajah had touched on the 50+-year-old lady who could not find a job despite her search. We, as Members, have all come across individuals who cannot even get an interview, when the potential employers learn that they are over 40 years old. These employers did not even bother to find out about the experience or the salary expectations of these older workers.

Mr Speaker, Sir, I believe that we should remove as many of the hurdles standing in the way of the older workers as possible. I would like to see the Government take a more pro-active stance in eliminating discrimination against older workers based on age. I think this has already been touched on by certain Members. Ms Irene Ng spoke about introducing legislation to ban all kinds of discrimination. The Minister for Manpower has already responded and I will not elaborate further.

But I do have a suggestion to make, and this is to overcome the employers' concern about higher medical costs of hiring older workers. Today, when an employer hires an older worker even at the same pay as a younger worker, he still has to worry about the higher likelihood of the worker having a serious illness sooner. He has to pay the insurance company a higher premium to cover the medical benefits of this older worker. I suggest that we should have a portable insurance policy for workers, very much like the CPF scheme. I am not talking about the Medisave Scheme, which is basically a medical scheme for post retirement. I am referring to a new initiative of having a portable insurance scheme in place so that as workers change jobs, they still carry with them the same insurance policy across employers, that they can continue to enjoy the premium paid in the past. I believe that having such a scheme in place would remove one more disincentive of hiring older workers.

Mr Speaker, Sir, the immediate concern of businesses in Singapore today is the difficulty of making a profit. In a recession, there is very little one can do on increasing the turnover side. Thus, cutting business costs is foremost in the minds of most CEOs and businessmen. Most businesses have already cut their internal costs to the bones. For additional cost reduction, they look towards the Government. This was the sentiment expressed by CEOs and businessmen in the recent series of dialogues organised by the Feedback Unit on the upcoming Government Budget.

By the way, the word "feedback" means the transmission of evaluative or corrective information to the original or controlling source about an action, event or process. So, by its very nature, the process of feedback is a one-way street. If my eminent colleague, Dr Amy Khor, wants a two-way communication, she should not use the word "feedback". She should advocate "dialogue". And instead of having the Feedback Unit, perhaps we should have a "Dialogue Unit".

Mr Speaker, Sir, coming to the work of the Feedback Unit, there is consensus among participants that Singapore is a high-cost country. They opined that we have become such a place through our high wage policy, asset enhancement policy and land transport policy, such as vehicle ownership restrictions. In all these areas, there is no easy way to climb down from the high plateau without major social dislocations. For instance, in the case of land cost, there is no easy way to reduce this cost without causing politically unacceptable asset deflation in Singapore. Thus, most businesses are holding their breath, waiting for some relief to be announced by the Government. As I have said earlier, half a year seems to be a lifetime for those whose noses are already below the water.

But cutting business costs only offer short-term relief. And, as we all know, competing on costs is a game of diminishing returns. We need a long-term strategy for future growth. And what is this strategy? We long to hear from the Government. Mr Inderjit Singh has done an excellent job earlier describing the ills of our economy and some of the ideas to fix them. Mr Balaji Sadasivan was right on the mark when he called for the creation of a catchment area of consumers within a 7-hour flight time around Singapore based on the Singapore brand of quality, reliability and consistency.

Mr Speaker, Sir, if we look at the countries around the world, we could group their economies roughly into three groups based on their major wealth creating activities. In one group are countries with primarily agricultural and earth resource sectors. Then, there is another group of countries with the manufacturing sector as their engine of growth, such as Taiwan, Korea, Japan, Singapore and, increasingly so, China. Then, there is a third group that has gone beyond the production stage of economic development with diversified major contributors from the other sectors, such as services, education, entertainment and knowledge-based. For want of a better word, let us call the third group the post-industrial economies.

Singapore became successful by pursuing the production model where manufacturing plays a central role in wealth creation. And to support that role, we have an education system that, by and large, produces technicians, engineers, administrators and people like me, to man the economy. To date, we have done very well. But, along the way, our costs have increased. As Mr Heng Chee How pointed out earlier, we probably have gone as far as this formula could take us. If we were to continue fine-tuning the formula, we would, at best, become another Japan, albeit on a much smaller scale. Today, the Japanese industry is still the pride of the industrial world. But its domestic sector is very arcane and inefficient. It is now in a deflationary trap as more and more of its production facilities are being relocated overseas. Mr Balaji pointed out rightly that we should transform ourselves into an economy with goods and services that people are willing to pay regardless of cost - in other words, the post-industrial economy. The question is how.

Perhaps, we could take a closer look at the US. Its economy is broad-based and has vibrant sectors in services, food, entertainment and sports, besides the more traditional sectors in agriculture, manufacturing and housing. Its lifestyle products are permeating the whole world. Every time we eat a McDonalds hamburger, bite into a Pizza Hut pizza, take a sip of Coke or buy a pair of Adidas shoes, a certain amount of our payment is transferred to America. The same thing happens every time we listen to a piece of music, watch a movie or a sports event copyrighted in America. The US is a high-cost country, yet the world continues to pay no matter how expensive the products are. As long as our economy is stuck in what I call the manufacturing and production stage, it would be easy for other countries to join in the competition. If Japan could not compete against China in low cost and yet quality production, there is very little chance that we could.

We should emulate the US in our own ways. At this point, I find myself echoing the views of Mr Steve Chia on the role that creative thinking could play in a diversified economy. In fact, we have so many common points that we almost sound alike. No wonder, Sir, he was at one stage mistaken to have come through the ranks of the PAP. We should develop our own franchise food chains like Katong Laksa, our own entertainment industry and our own sports heroes. Again, Associate Professor Chin talked about the pursuit of arts and other activities that at this juncture are not assigned economic value by our economic planners. However, in a post-industrial economy, where creativity and innovation are valued, we do not just need technicians, engineers and administrators, but individuals with unique talents. We talk about greater creativity and innovation as being crucial to our future. We also know that to bring this about, we have to fix our education system. But, Sir, we do not know how or perhaps we are hesitant to make drastic changes.

The key question that we have to ask ourselves is this: as people are our only resource, are we handicapping our children to face challenges in the future as we continue to foster behaviour to our examination systems like PSLE, "O" levels and "A" levels examinations? Today, we have created a system where teachers and students become very good in producing As. In the latest "A" levels examinations, I believe there were close to 700 students with 4As and the newspapers reported that some of the Junior College students cried when they scored only 3As. My goodness - what are we becoming? What does an 'A' mean in this examination, especially in technical subjects like Mathematics, Physics and Chemistry? I think we have just become very good in using existing knowledge to solve known problems in the shortest possible time. That is what it means. When we put our best and our brightest through a grill to the neglect of other more intellectual and leadership development pursuits, we have to ask ourselves whether we are doing justice to our children and whether we are laying the foundation for their future.

I understand that MOE is exploring ways to address some of the perceived problems in our education system. Progress has been made here and there. Assoc. Prof. Low Seow Chay had touched upon it yesterday on some of these attempts, but emphasising examination results is a problem of our whole society, and not just our education system alone. For MOE to address this issue by itself would be like solving problems piecemeal without seeing the big picture.

Mr Speaker, Sir, if we are indeed serious about diversifying our economy, I surmise that we have to make fundamental changes, and to make fundamental changes in the education system, we have to review the reward system for our young people which we have fine-tuned to perfection over the years. For a start, we should review how candidates are selected for the best job in the Government, which happens to be also the best job in the country. We should re-examine the selection of scholars for scholarships offered by the Public Service Commission, other statutory boards and GLCs. Nowadays, a student will never get a chance for a scholarship interview without "S" papers and scoring all As. Sir, if we continue to select candidates based on examination results, we are not going to encourage creativity and innovation, something which my colleague, Mr Zainudin Nordin, also felt strongly about.

In the post-industrial economy, we need individuals who would be able to create value from their activities where none existed before. Yet, in our education system, we are grooming an elite class who has become very good in solving existing problems using known solutions and only the exceptional ones are able to break out of the mould and think out of the box. Clearly, Sir, there is a mismatch and only the Government could transform this value system. Parents alone could not do it.

Mr Speaker, Sir, it is useful to reiterate that meritocracy should be based on the ability of an individual, and not on academic achievement. We already know that. When we look at the Frontbench, there are very few PhDs. But there are quite a few in the Backbench, including myself. So, why do we not extend it down to the "O" or "A" levels? For school leavers without working experience, we have always used examination results in the past as a proxy to determine a person's ability. When the number of As started to proliferate, this proxy has outlived its usefulness. We might want to broaden the selection criteria to include participation in sports, leadership quality and so on. For male candidates, I think we could include their performance in national service, such as whether they have been selected as officers. If we do so, I am not sure what we will do about the female candidates. Perhaps, someone can think about other appropriate criteria. For those with jobs in the Administrative Service, one way is to select them, mid-career, based on their actual performance in the job, preferably in the private sector. The problem with our current approach is the uniformity of ideas and responses in our elite Administrative Service. In a crisis like what we are facing today, as I have said earlier, we have to look outside the Administrative Service for different experience. And yet, through our scholarship programme, over the past 30 years, we have locked up a significant number of talented individuals in the comfort zone of the civil service to a point where we might actually starve the private sector of talents.

These are just specific examples. I am not saying that if we fix all these, all would be well. But I am confident that once we change the reward system for young school-going children, our young people will respond and Singapore will be all the better for it.

Mr Speaker, Sir, I believe that we have to make system-wide changes that will shake Singapore to its very core, changes that will bring about the desired behaviour needed for continued progress. Changes, as we all know, are difficult, especially changes that go against the grain of our own experience. We are all prisoners of our own experience. Our Ministers and top civil servants are all products of the existing education system. Could we make such a change that will deny our own experience that has brought us success? But if we are serious about leaving no stone unturned, we have to slaughter some sacred cows.

Mr Speaker, Sir, we must avoid being stuck in the production economy and migrate to the post-industrial economy. Our present difficulties are not caused by the emergence of China. If it is not China, it would be some other countries like Vietnam or Thailand. China has just made our condition more difficult and shortened the timeframe we have to carry out the transition.

Mr Speaker: Dr Wang, you have got about three minutes to slaughter your sacred cows before your time is up!

Dr Wang Kai Yuen: Thank you, Sir. As I mentioned, we need to work as one to move in the right path. We better make the right choices at this juncture as the wrong choices would mean that we would have wasted our efforts and we would need many more years to recover from our mistakes. I do not envy the burden placed on our new team of leaders. Leading Singapore after year 2007 will be a difficult task but I have confidence in them. If the right solution is somewhere out there, I am sure that they will find it.

Dr Amy Khor Lean Suan (Hong Kah): May I seek a point of clarification, Sir? With due respect to the Member for Bukit Timah, I understand that the definition of feedback at this point in time is what the eminent Member has stated. But I think feedback is also an iterative process because after the feedback is given, the people giving the feedback will expect some reactions so it becomes feedback begets feedback.

Mr Speaker: Dr Wang, I will give you two minutes to reply.

Dr Wang Kai Yuen: Mr Speaker, Sir, I am an engineer by training. In all the feedback systems that I have studied, designed and worked myself, the feedback loop is always one way. The arrow goes in one direction. It never comes back in the other direction.

Mr Chay Wai Chuen (Tanjong Pagar): Mr Speaker, Sir, perhaps the two Members can carry on their conversation outside this Chamber. Sir, I wish to speak in support of this motion in the name of Mrs Lim, the Member for Marine Parade GRC.

The President in his Address draws us to two sets of challenges facing this country - one external and the other internal. He identifies them as the most severe ones challenging our country in our history. I can remember two occasions in the past 37 years of our history since independence in 1965 when we were confronted with economic and political challenges of this dimension. One was in 1967 with the prospect of British withdrawal and the unemployment rate at 10%. The challenge then was really domestic and economic and we were so down then that there was probably little choice. Once we embarked on the policy alternative of attracting foreign direct investment and export promotion, the ground was set for take off. We were fortunate as our leaders then took this path, while the other countries have not quite got their act together in the late 1960s and the early 1970s. They were still entangled in ideological arguments about theories of economic development. Political leadership then of gelling our people into a cohesive nation, and a rugged society took us on the growth path once and for all for more than two decades.

The second challenge to us was in the mid-1980s when, through some of our own economic policies, we realised we were pricing ourselves out of the growth path and the Economic Competitiveness Report made many policy recommendations for getting ourselves out of the recession. The challenge then was also domestic and of our own creation.

This time, the problem we face are both of external and domestic, economic and political. In the economic sphere, the challenges we face this time are drawn from three major driving forces of changes in the world economy - globalisation, deregulation and rapid technological change. These driving forces will affect us in determining our growth and employment profile. Together, they form a new definition of the new economic citizenship. There are new opportunities but they bring with them new risk and uncertainties.

It is about global competition. Since the end of the 1980s, two billion people in the world gave up the plan or command economy and joined the market economy - among them, China, India, the former Central and East European countries, Russia and the Latin American countries. They have skilled and industrious people and for several decades, they have been waylaid, living under the plan or command economy which did not react adequately to market signals and demand.

Today, these countries are competing for global foreign direct investment and going for growth. Their supply of labour, resources and land is huge. In particular, China and India stand out for their tremendous market potential.

What remains then of our competitiveness in attracting foreign direct investment for growth? The markets are growing in the new economies. The developed economies which we have been integrated with in trade and investment are slowing.

The future for us, I believe, lies in industrialising the technology we have acquired or developed by ourselves or in joint partnership. If we overcome this current recession with the same mode of attracting foreign direct investment to add to input growth, I would not consider it as credible or even as a middle-term solution.

We must collaborate and develop the technology for products and processes. Switzerland, though a small country, has built up huge enterprises with their own technologies in product, process and market access. Examples are Nestle in food, Ciba-Geigy, Roche in pharmaceutical. Yet the Swiss have their own traditional economic sectors where business organisation, operation and processes are honed to service the domestic economy, including the tourists. All these things are easier said than done. But that is precisely why this current challenge is so immensely different and uncertain.

Domestically, we have to undertake economic restructuring. The fact of it is that dynamic economies have to continually restructure by introducing challenging market forces into the economy for the participants, whether as businesses, workers or government to react. This is so because of changing technologies and changing demand. Also, new entrants will always do it cheaper elsewhere. And to do this, we need enterprise and flexibility in the business and regulatory environment.

The President in his Address talks about identifying new areas of growth, especially in the services sector such as telecommunications, banking, retail and construction. Industry-wide structural changes globally and technological changes brought about the competitive changes in these industries. They raise issues of viability of the businesses in competition and skills retraining for the labour force.

I wish to point out a paradox for Members to consider. The two most protected sectors we had all through our sustained economic growth period of the seventies, eighties and into the nineties were paradoxically telecommunications and banking. Did we not pride ourselves in the world as a telecommunications hub and financial centre all this while? And paradoxically, while we lament retail and construction, these are the two sectors most exposed to international competition from the early days.

Services embrace many areas of businesses, from the high investment, high technology type, such as telecommunications and IT, to the more mundane corner-street retail shop service or the cleaning services. Knowledge-based businesses are also classified as the services sector. By virtue of its wide definition and the fact that so much of these services do not enter into the tradeable international competition, it makes sense for us to develop this sector, at least for our domestic economy and the employment it can create. It does not have to be reflective of the state of the art, but must answer to our need - the need for employment of our dislocated workers.

A person who lost his job and starts a shop selling something is also in retail. He must be given a chance for his effort to try. He is not going to compete with the likes of Carrefour or Wal-Mart, but he may find a niche for his business activity. We must not make entry into business too restrictive, by control over space or regulation. Hence, I am not surprised that the Voluntary Exit Scheme proposed by HDB last year for shopowners met with such negative response. Make the use of the space more flexibly and lower the rental, and I believe HDB will be helping the economy.

Cold Storage, owned by Dairy Farm and previously by foreigners, was not born yesterday. It was here earlier than FairPrice. Then there were Yaohan and K-Mart. In construction, big foreign contractors, with their own government support had always had the advantage of bidding for contracts in Singapore. Why is productivity so low in the construction sector where we have put the most part of our domestic capital formation in it? We have foreign contractors and foreign labour galore in this sector. Why is it a laggard sector in productivity? Obviously, there is something about the innovative process, the so-called construction technology, that is missing, or has not quite been achieved in spite of all the money spent there. Something about the skill development process that was not quite nourished sufficiently. Something about the market signals which large number of cheap foreign construction labour failed to provide in the market corrective mechanism.

The President's Address mentioned that we can no longer expect 8-10% growth, and that we should be happy if we make 4-6% per annum. I am gratified by this revised growth target. However, I suggest that more important is for us to focus on productivity growth and, correctly, total factor productivity growth that is now the champion of SPRING, the Standards, Productivity and Innovation Board. I have argued the case for total factor productivity measurement for the last 13 years in Parliament. It is in Hansard.

An economy can grow by adding up growth in factor inputs, such as capital investment and labour input. But up to a point, such growth is futile, if productivity gain is not generated because wage increases will eat into the value added; or newer production from somewhere in the world will make us less competitive. Capital investment will also move to these countries in search of better rates of return. Today, faced with competitors with huge labour supply, input growth is not a viable solution. In the long run, it is not growth but productivity that determines whether our people will have a better standard of living.

I welcome the Government's intention to strengthen the spirit of entrepreneurship and risk taking among Singaporeans, as the basis for Singapore's future competitiveness. We must welcome foreign talent. We must also value our own. That must be the corollary of our national economic agenda. Are our existing rules flexible and expeditious enough for our entrepreneurs to allow them to pick up the threads and go ahead quickly, or be caught in bureaucratic regulatory pitfalls?

One of the issues highlighted in the Addendum to the President's Address touches on innovation, the responsiveness of the public sector and improvement in service delivery. I totally agree and I find that a lot of good can be achieved through some inter-Ministry coordination to cut red tape. I give two examples.

Many MPs will have come across this problem in their house-to-house visits where residents complained about the mosquito nuisance for themselves and their children. It could be in the open field, which is under one Ministry or the Land Department, or a construction site for a school under MOE, or a construction site under MND. I see that the Senior Parliamentary Secretary to the Minister for National Development is smiling. So, many different Ministries can be involved in these sites, and the Town Council staff, which the poor MP can count on, has to get the bureaucratic red tape sorted out before some action can be taken. Every time after a Ministry's clearance, some fogging is done by the relevant body and after that forgotten, leaving the mosquitoes to breed again. It seems an unsolvable problem, but actually the solution is quite simple. Quite frankly, some local action by the Town Council can be done on these sites to fog regularly and the bill and fines be given to the Ministry or the contractors. But that would require an inter-Ministry coordination effort to cut the red tape.

The second example I want to give concerns the never-ending fortnightly visits to the immigration authority office to extend social visit passes of foreign spouses of Singaporeans. Each time the poor Singaporean has to take leave to bring his/her spouse to the office and pay a fee for renewal. Can we not make life a bit easier by granting such Singaporeans' spouses a 3-month visa? Straightaway it will help to solve the frightful queue at the SIR office and help save cost for these Singaporeans. Do these spouses not deserve at least a 3-month visa? I have actually come across many cases where they have been renewing fortnightly visas for two years. If anything, it will enable them to plan their family life better with a 3-month horizon, and put less stress on the families. Can one imagine what life is like with a foreign spouse on a 2-week visa for months on end?

Finally, I note in the Addendum that it is the Government's policy to ensure as low a tax burden so that Singapore would be attractive for investment and job creation. It is also mentioned that the Government is aiming for a modest budget surplus over a business cycle. If I understand this correctly, as it seems to be saying, it would be good news. Maintaining fiscal discipline is undoubtedly important.

I am not against budget surplus, but persistently high budget surpluses draw dynamism away from the private sector economy. Public savings in Government revenue must find its corollary effects in diminished private sector savings, thereby affecting private sector investments which create further wealth and jobs. The public sector officials argue for public savings for the ageing economy. But do not forget, the private sector members must be responsible for saving for their own old age.

Other statutory costs, Government charges, licensing fees add up as other additional costs besides taxes. While taxation may be comparatively low, the operating environment after the flow through may cause the cost of operation to be high because of the various statutory costs. A look at the Report of the Estimates Committee will bear me out, to see the amount of such statutory collections. We need to really address this issue in our review of the economy to make our economy competitive.

Finally, Sir, the President has highlighted the cultural issues and challenges we face as a nation. I have focussed mainly on the economy, but there is no doubt that the social challenges confronting us require a renewed response from us to find more common ground. We need to know more about ourselves as Singaporeans. This should be done in schools, in the workplaces, in community centres, in the celebration of festivals. We must learn to speak the languages of our other brothers and sisters. Only then will the bond among Singaporeans be stronger than the forces which can tear it apart.

Sir, I support the motion.

The Senior Parliamentary Secretary to the Minister for National Development (Assoc. Prof. Koo Tsai Kee): Sir, may I take this opportunity to congratulate you as Speaker of this Parliament. I would also like to thank the President for his invaluable insights, and Mrs Lim Hwee Hua for moving the motion.

Sir, it is late in the day. You have listened to close to 40 speeches. It is unfortunate that I am the last speaker. Although I am the last speaker, I am sure I do not have the last word. But I thought, Sir, you might like to listen to a story for a change. This story happened in China during the warring period, what the Chinese call the Zhan Guo period, roughly from 475 BC to 221 BC. Because of the constant outbreak of wars in China during that period, hence the term "warring states".

Two states, Wei state and Zhao state decided to sign a peace treaty, but they did not trust each other. Hence, in order to enforce the sanctity of the treaty, it was the practice then to exchange hostages, and the higher ranking the hostage they would exchange, the more sincere the treaty would be. The Wei king was very keen to secure this peace deal, because he knew, like us, that peace is the foundation for prosperity. So he sent his most loved son to the Zhao state. But the journey from the Wei state to the Zhao state was long and hazardous. There were bandits and all kinds of people waiting to disrupt the journey. So the Wei king decided to send Pang Gong, his most loyal, trusted and most able official to escort the prince. Pang Gong was honoured but very worried. The journey to the Zhao state was long and treacherous, but that did not frighten him. What he was worried about was that the long absence from the Wei state would allow his adversaries in the palace to poison the mind of the king, and undermine the trust the king had in him.

Before he left for the journey, he asked for a meeting with the king. So he asked the king, "Your Majesty, would you believe me if I told you that I saw a tiger in the street this morning?" The king replied, "Of course, not, it is ridiculous. This is Wei state. We are a peaceful country." The loyal official persisted and said, "Your Majesty, suppose I told you that another person saw a tiger this morning." The king said, "In that case, I may have to look into the rumour. I cannot dismiss the rumour outright." "Your Majesty," the official insisted, "what if a third person also saw the tiger on the streets and told you so?" The king said, "If three persons told me the same story, then there must be truth in it. I believe there must be a tiger in the streets." The loyal official said, "Sir, Your Majesty, I have just tricked you, because you must never believe in rumour. There is no tiger in the Wei state. When I am away, Sir, many officials will try to poison me. You must never believe them, because my loyalty to you is absolute." The king said, "Don't worry. Go! Just send the prince there. Secure the peace deal. You are my best official, most loyal and the most skilled." And so the official went.

No sooner had the official gone on the journey, the first enemy came and poisoned the mind of the king. The king dismissed him, "Go! I don't believe you." A few days later, a second official came and told the king, "Pang Gong may harm the prince along the way. Don't trust him." The king began to waver. And then a few days later, a third official, and more and more, came to tell the king that the official accompanying the prince cannot be trusted. Eventually, the king lost trust in the loyal official, and this story became known in the Chinese idiom as san ren cheng hu, translated literally, it means "three persons make a tiger". Sir, you might well ask: What relevance has this story got to do in this important Presidential Address?

Sir, of late, there is a climate of gloom and doom all around. I enjoyed Dr Wang Kai Yuen's speech very much. Even his speech was very pessimistic. This haze of pessimism hangs over many of us - in this House, outside the House. The interminable streams of media stories about MNCs relocating their factories and operations out of Singapore, the stories about terrorism at our doorsteps and stories about insecurity around the region are depressing indeed. People are whispering quietly in our ears: Can Singapore compete? Will our children have a future? Or, will we perish? The rumours are spread from one person to another person outside the confines of this House.

One begins to wonder if Singapore is indeed losing its core strength - its competitiveness. While each individual story is true, Maersk has gone, maybe more may be going, more factories are closing, Shell IT hub may be going to Kuala Lumpur, BMW may be going away again, or part of it at least, together, these stories become a tiger out in the streets, and we believe that a tiger exists waiting to vanquish our economy. Indeed, some of my closest grassroots leaders have told me quietly over coffee-shop talks: Is this the beginning of the end of Singapore?

Sir, Singapore must never fall into the trap of being haunted by the ghost of the tiger in san ren cheng hu. Take the story of PSA. Many people have told me that the relocation of Maersk to Tanjong Pelapas is the beginning of the end of PSA. I say these people do not know Yeo Ning Hong. They do not know PSA's management. They do not know the port officers and the port workers' union. I know all four of them. When I became MP, Yeo Ning Hong was in this House. I went to the NTUC; I worked with the port officers and port workers' union. Khoo Teng Chye was my schoolmate. And these are brave warriors, Sir. I do not think they will let PSA down. Well, we might have lost Maersk, maybe one or two more might go, but I think PSA will survive, and we must believe it will, and we must support these people and not blame them for chasing Maersk away. Let me tell Members in this House and the people in the streets. PSA is PSA. Tanjong Pelapas is Tanjong Pelapas, and the twins shall never meet. We will revisit this topic sometime later. History will vindicate me.

We have heard so much about remaking Singapore. It is becoming a fashionable word - remaking, remaking, remaking. You cannot go wrong if you remake something. But before we remake Singapore, Sir, I think we should rediscover Singapore, rediscover our indomitable spirit to fight in the face of adversity, rediscover the confidence in this Government, rediscover the talent in each one of us. Unless we discover these attributes, remaking is no use. We are not short of ideas. Ideas are a dime a dozen. You talk to your Feedback Committee, Dr Wang. Everyone will give you three ideas. You want intellects, Ph.D, go to the university, a dime a dozen. Not enough! Send out consultants' reports. Ask consultants to come, Mackenzie. Anybody, you pay to give you all the ideas. They are mercenaries. You pay them, they give you ideas! No payment, no ideas.

But the attributes I talked about cannot be bought. We must rediscover them. Over the years, rust has crusted these attributes, and we begin to blame each other, blame the Government, blame the individuals, blame high costs. More than 30 years of uninterrupted growth has made us rich. Now we are afraid to lose what we have gained. Thirty years ago, our fathers, our grandfathers fought with this Government, and they fought together, because we had nothing to lose. We stared danger in the face, and we came so far. Today, we are rich. We are scared. We are facing a brave new world, a little uncertain, but very scared. I say, do not be scared. We should rediscover the spirit of the brave men and women of the 60s, and face the brave new world with renewed courage.

Sir, if we are not so strong and confident, we will suffer the same fate as Hongkong. What is happening in Hongkong today? The new Hongkong is the most dynamic and entrepreneurial city state in the world, but no longer. If you go to Hongkong today, a different mood, a different gloom has befallen the city. Some years ago, before the changeover in 1997, on the front page of Fortune magazine, the headline story was called, "The death of Hongkong". That story was sold like hot cakes in Hongkong; not that they enjoyed it. They read it, and they were incensed, and many people put a challenge to the editor of Fortune magazine that if Hongkong were to suffer post British rule, the editor of Fortune will be made to eat the cover of that magazine from page to page.

Five years on, I think that challenge rings hollow. Hongkong is in the death throes. Hongkongers have lost confidence in themselves, and many have given up, and more are giving up day by day. Unemployment today in Hongkong is a record 6.8%. We are close to 5%. Up to January 2002, that means early this year, Hongkong has had 36 months of consecutive deflation. That means, month after month, people are not buying, people are not spending and not investing, because they are waiting for prices to go down even more. They have lost confidence. And they are wallowing in pity and sorrow. This year, Hongkong is expected to chalk up a record budget deficit of something like HK$65.6 billion. The Secretary of Finance said that if it goes on like that, Hongkong's coffers will be broke in five to six years.

Surprisingly, all these are happening in the shadow of China, the fastest growing economy in the world. So one must ask: why are Hongkongers so pessimistic? Should it not be riding the dragon? Hongkong used to be the tail that wagged the dog of China. Today, Hongkongers are walking the streets, their heads down, and the unkinder ones say, their tails between their legs.

Last week, I read a column by Christine Loh. Christine Loh used to scold the Government. She would tell the Government to go to hell, Government is doing this wrong and that wrong. And it is surprising to see that Christine Loh took on the role to rally the people, and Christine Loh wrote in a column of South China Morning Post - I think the South China Morning Post weekend. She said: "Why are we so gloomy? There is a future in Hongkong. Just listen to Zhu Rongji. What did Zhu Rongji tell Hongkongers? He said, and he told the Hongkongers, `There is no city in mainland China today that is able to surpass Hongkong. Not yet.' From Zhu Rongji, the Chinese Premier to Hongkongers."

In my recent visit to Hongkong, many Hongkong friends (taxi-drivers, casual street vendors) have told me in Cantonese. And, Sir, with your indulgence, I will repeat what they told me. They said, "Heong Kong wan yuan ler, mo ta wan de ler!" In other words, the game is over, game set and match. Hongkong is finished, kaput habis! And that is worrying because Hongkong survives on a dose of confidence; without confidence, Hongkong is nothing. I think the mercurial Hongkongers will survive but not until their people have picked themselves up and rediscovered their spirit.

We are a bit like Hongkong today. We are demoralised. We are worried about high costs. And in this House, we have heard many pessimistic speeches. But now back to Singapore, Sir. Tales of downsizing, retrenchments, relocations, shut-downs are indeed very depressing. These stories appear in the newspapers every day. That we have gone through the worst recession, at least statistically speaking, is a fact. Yes, unemployment is a record high. The Ministry of Manpower has warned that it might go higher. Yes, terrorism is here to stay and we cannot wish it away, and, yes, Malaysia is picking on us again. Yes, of course, we are an expensive city. And, yes, the region is trapped in a global slowdown. Indeed, we have lots of problems. But, Sir, no, this is not the end of Singapore. The first thing we must believe is this is not the end of Singapore, and we will survive, and we will reinvent ourselves once we have rediscovered our basic virtues. Just like we did in the 60s when the road ahead was even more uncertain, more rocky.

Sir, to conclude, there are three reasons for my conviction or one conviction based on three reasons. First, we have more resources today than we have ever had. Our reserves are healthy; financially we are liquid, with very, very little debts; our infrastructure is impeccable. Yes, we are expensive, we have got to watch the costs. This is where remaking comes in. Second, we have a better workforce than we have ever had in the 60s. Our best are world-class. Dr Wang said that there are a few Ph.Ds. in this House. In the 60s, there were very few, probably none, maybe Dr Toh and Dr Goh. Third, we have a formidable total defence force and an extremely cohesive community. The Government, the unions and employers work as a team. In the 60s, the people were fighting the Government on the streets, the unions were fighting each other, and employers and the unions were at each other's throat. Today, we are sitting on the same side of the table and talking. But beyond all this, I think the most important reason is that the Government is not in self-denial. The President's Address laid out the challenges, pointed out the dangers ahead - I think that is a good rallying point.

Sir, we can remake Singapore once we have driven the tiger - the tiger of san ren cheng hu - back to the warring states.

Mr Speaker: Dr Tan Cheng Bock shall be our last speaker.

Dr Tan Cheng Bock (Ayer Rajah): Thank you, Mr Speaker, Sir. I know I am not scheduled to speak. But when I stood up to speak, I was stopped by you, Sir. I had only wanted to caution my good friend, my fellow MP Inderjit Singh, on his choice of words. He made a good speech. Throughout his speech, I was feeling very uncomfortable in his call for economic colonisation. He belongs to the new generation of Singaporeans. He did not live under the colonial days, and economic colonisation may be a new economic buzzword - am I right? I am not so sure. But I live at a time when Singapore was a colony, and the British were our colonial masters. And the word "colonisation" has a very strong emotive meaning, not only for my generation but also for the generation of those people across the Causeway and in Indonesia, and also in many other countries not only within this area but just a little bit further from the two countries which have just got rid of their colonial masters. Therefore, the words "economic colonisation" could be misconstrued and misinterpreted by many people, and we coming to invest with a colonial mentality when we go there to do business. We must not allow this to happen. That is why I chose to speak. And I am sure Mr Inderjit Singh never had this in his mind. He may be quite innocent, but these two words could carry a very wrong connotation.

Mr Speaker, Sir, we are a small nation with some economic clout, but we are nothing compared to the US, nothing compared to Japan, nothing compared to Europe. We do not have their might and influence. So we should get our perspective right. We are only trying to find niche markets in this global economy. So, let us just do that, and do it in a quiet and humble way.

I support the motion moved by Mrs Lim Hwee Hua.