PRESIDENT'S ADDRESS Debate on the Address (Fourth Allotted Day)

Order read for Resumption of Debate on Question [1st April, 2002],

'That the following Address in reply to the Speech of the President be agreed to:

"We, the Parliament of the Republic of Singapore, express our thanks to the President for the Speech which he delivered on behalf of the Government at the Opening of the First Session of this Parliament.".' - [Mrs Lim Hwee Hua].

Question again proposed.

Mr Ong Kian Min (Tampines): Mr Speaker, Sir, thank you for allowing me to join in the debate. Today is the fourth day of this debate. As more than 40 speakers have already risen to speak, I would just like to focus on a couple of specific issues. I support the Motion of Thanks to the President moved by Mrs Lim Hwee Hua.

Competition is global

In his Address, the President has highlighted the immense challenges we face and the impact of global competition. Indeed, competition is global and is coming not just from China and the region. The World Economic Forum recently reported that Singapore's global growth competitiveness has slipped two notches from second to fourth placing.

For many years, Singapore has been holding the No. 1 or No. 2 position, and our good rating has been well publicised. But little has been said about the drop in our ranking this time round. For the first time, we have been overtaken by Finland and Canada. Fast closing up behind us include Australia, Norway and Taiwan, whose rankings have improved by three to nine positions within one year.

The need to stay ahead

What we do to tackle the present challenges determines our future. Do we despair and lose hope, do nothing and allow others to overtake us? Do we dismiss it and be content with the slack, thinking that things must somehow get better when the world economy gets moving again? Or are we content to say there is no need to stay at the top all the time? If our answer to the above questions is yes, we run the risk of being tossed out of the race and get left behind. We have to regain speed, make bold strides to catch up and stay ahead.

We must not be daunted by the challenges before us. We must not be disheartened or feel hopeless. On the contrary, we can turn them to our advantage. We can do with a healthy dose of the "siege mentality". We, like the employees of successful global companies, should be driven with a sense of urgency and purpose. We must not be complacent. Microsoft, the No. 1 PC software company, has been described to behave as if it were No. 2 and trying to play catch-up all the time. Nokia succeeded in overtaking its much larger competitors who had the first-mover advantage. Now that Nokia is No. 1, it fights even harder to stay ahead. These companies all know that once you slip, you can go all the way down and never return to the days of glory.

Challenges not unique

The challenges Singapore faces are not unique. I would like to add to what Assoc. Prof. Koo Tsai Kee said yesterday about Hong Kong with my own personal observations. I was in Zhuhai, China, last week. I took the ferry to Hong Kong on Good Friday to catch the SQ flight back home. Going the other way were thousands of Hongkongers leaving Hong Kong for mainland China. The ferries were packed and we had to fight through long queues of people waiting to buy tickets. Hongkongers go to Macau, Zhuhai and Shenzhen by the hundreds of thousands everyday for dinner, movies and other forms of entertainment. On a bad day, one has to stand more than one hour to clear immigration at the Hong Kong-Shenzhen border crossing. Things are cheaper across the waters. People go where they find better value for their money, especially in these lean times. When money was aplenty, people found it inconvenient to travel a little distance, just to save some money. But, now, where they do not make thousands of dollars in one day just buying and selling shares, or hundreds of thousands of dollars buying and selling properties, every dollar counts.

Whilst it is important for us to build first-class infrastructure and facilities and adopt the world's best practices, we have to be mindful of the cost burden that local businesses have to bear which, in turn, would translate into higher prices for the consumers. Sir, to overcome this, we have to attract and retain good businesses to our shores which will in turn generate the purchasing power to support other local businesses and make this a thriving place.

People - the differentiating factor

How then do we achieve competitive differentiation in this global environment? Others can import the same technology and talent to build the same or even better factory, airport and seaport. It must be the people factor that is our strategic resource. Responding to the challenges we face means that we, the people, have to change our mindset.

Allow me to cite an example. A couple of years ago, I did some renovations to my house and wanted some lighting points fixed up. The main contractor, who drove a Mercedes Benz, asked me to show him where I wanted those lighting points. So I went round the house with him and pointed out the spots. The next day, another man, the electrical sub-contractor, came round in a Honda Accord and told me that he understood I wanted some lights to be put up and he asked me to show him where. I did that. The next day, two men came on a 50cc Honda Cub with Johor number plates and told me that they were there to do the job and asked me to show them where I wanted the lights to be installed.

Knowledge acquisition and skill development

Sir, the first word in "KBE" is "knowledge". We cannot merely be brokers and middlemen in a knowledge-based economy. Our workers, our people, must change their mindset and their attitudes. We must want to acquire knowledge.

A manager of an MNC shared this observation with me. He said that while Singapore workers are hardworking, they do not have an inquiring mind. When a sophisticated high-tech piece of equipment is installed, our workers are generally quite contented to be told how to operate the equipment. They do not have the desire to go beyond that and try to fathom the "whys" and the "hows". They will take instructions on how to operate it and, if something goes wrong, the company has to call in the foreign experts. It is like buying a car and learning how to drive it and not wanting to open the bonnet. If something goes wrong, call the workshop. I know today's automobiles are so sophisticated that there is nothing an amateur mechanic can do if it breaks down, but I hope we know at least how to change the tyre.

We do not need to acquire the whole technology. Let me cite this example. I know a Norwegian. He is spending a lot of his time now in Singapore. For many years, he was an engineer in Norway installing and maintaining pumps for oil companies in the North Sea. These pumps are part of a larger system. He just concentrated on the pumps. But he was willing to stick to his area of expertise and, in the course of his many years of experience, he found out which areas in the pump can be improved for better performance. Today, he owns a number of patents and he is here selling his own pumps to our GLCs.

As we move up the economic ladder and progress to the more unstructured "innovation" state, we need to be thinkers and not just mere doers. We need people who question the given and seek new ways to improve. We need to breed more risk-takers and foster an entrepreneurial spirit.

Sir, there seems to be a misconception that entrepreneurs are necessarily school drop-outs. I know there are a few laudable examples of drop-outs who made it big. Their success stories grab media attention and create an impression that university education is a hindrance to the development of entrepreneurship. Perhaps, when opportunities are aplenty, it is those with less formal education, those who have to take bigger risks, who have found alternative routes to success. But in today's competitive world, one must not disregard the acquisition of knowledge and skills to have a fighting chance.

The Managing Director of an MNC told me that the most creative person in his company is the Chief Technology Officer who has doctorates in a number of disciplines and who is willing to think out of the box. With his wealth of technical knowledge and his years of practical experience, he is able to come up with very creative solutions to complex problems, something that a younger person, with less technical know-how and less training, would not be able to do. While we celebrate the success stories of instant entrepreneurs, we must not forget the tens of thousands of scientists, researchers and developers who toil away and churn out patents by the millions and help to sustain the technological development of the largest MNCs of this world and make these successful MNCs what they are today.

Sir, there are no short cuts. The days of easy money are gone for now. We must be realistic and go back to the basics, to the virtue of work and enterprise.

Developing strong local enterprises

Although MNCs have and will continue to play a critical role in our economic development, we have to pay more attention to developing local enterprises. It is time that we developed our own indigenous proprietary technology.

Cultivating innovative ideas

In this regard, the Government has done much in trying to create an environment conducive for innovation. Individual risk-taking is encouraged and failures are not looked down upon. The various economic agencies, the universities and the research institutions are being restructured to meet the new challenges. Local enterprises have tapped various Government sponsored schemes to their benefit. Funding, grants, tax incentives are in general not an issue for those who have a good idea. But for start-ups, what is really lacking here is a first "reference site" where the entrepreneur can use to fine-tune his ideas for commercial deployment. In a larger, more competitive economy like the US, there are hundreds of competitors out there in any industry, each of them willing to try something new, with the hope that it is a killer application and wipe out the competition. It is not a problem knocking on doors and finding someone willing to give a new idea, a new method, a go. But in a small economy like ours, this must be nurtured.

The budding talents need a good break in their home ground to build a track record or reference sites before they can hope to debut and achieve success in the competitive global stage. We need to engineer some form of demand-side innovation.

Sir, Singapore has been described as clean, efficient, safe, and lately, even a funky place. In the global competition among city states, branding and positioning are crucial to attract the right talents and businesses. In addition to the above mentioned descriptions of Singapore, I think we should put ourselves on the map as "the laboratory", the place to experiment.

Mr Inderjit Singh mentioned yesterday that we should set up a string of technology and research centres around the world where talent is found instead of having just one big centre in Singapore. I would like to disagree with him. I would like Singapore to be an even bigger laboratory where R&D spill out of the confines of R&D centres into the field and the streets - Singapore as one big integrated field laboratory for all ideas from all over the world, a proofing ground for innovation and ideas. Let it be known that whoever in any part of the world who has a bright idea can come to Singapore and we have the environment to let him or her try it out. Tell all the talents out there in the world that this is the place to be in. After all, it has been said that we are a good place to attract pharmaceutical companies to try out their drugs here because we are a cosmopolitan city with many races.

The same is true for other industries. We have it all here in a small concentrated place. So if someone has a new idea about using natural gas, we should let him try out on a few of our buses. If he has innovation on how to light up our HDB common corridors more efficiently, let him deploy it in some precincts. Of course, we have to structure a business relationship where we have an equity stake and benefit from the resulting technology and anchor that technology in Singapore for commercial deployment in other parts of the world.

Some years back, a water specialist from a French water treatment company told me that we were very particular about certain properties of our water and that made it very expensive to process compared to our treatment processes. But the water is very good. Everyone knows Singapore has very high quality tap water. I recall DPM Lee saying our tap water tastes good and he misses drinking our water when he is overseas. But we use the French technology and they use us, our good reputation, our good brand name, to pitch for water projects in China. To convince the Chinese that their technology is superior, this French company told them that the Singapore Government is using it and therefore it must be good. Sir, our good brand name goes a long way. It is like you want to buy this PC. You think this is a good PC? It is 'Intel inside'. You think Nestle has good SCM and ERP? Nestle runs SAP.

We do not leverage sufficiently on our top class brand name and we become a showcase for foreign technology. I think it is about time that our local enterprises went out and say to prospective customers that, "Yes, I have a reference site in Singapore. Come and evaluate it." That reference site can be more crucial than the monetary grants and tax incentives that are dished out.

Those who love gardening know that to grow a rare bloom, one needs to give special care and attention to the seedling. Sometimes you need to find a space to erect a hothouse and allow the seeds to germinate and grow. Occasionally, grafting and hybrid help to reproduce better quality variables.

Creating innovation is like cultivating the rare bloom. Bigger organisations, whether GLCs, statutory boards, Government agencies or bigger local boys, can play a crucial role in partnering smaller local enterprise to enable innovation to take root in Singapore. This can be a win-win proposition for all as they have distinct complementary advantages but share the same global aspirations. Instead of both trying to compete with each other, a strategic partnership can be forged whereby bigger organisations provide the environment for solution deployment while the entrepreneur exercises his innovative spirit and creativity.

But, Sir, success cannot be achieved based on economic factors alone. We also need to strengthen the non-economic factors or "soft" infrastructures that support our growth and development. Political and social stability top the list in the factors affecting foreign investments.

In our multi-racial, multi-religious society, the underlying social fabric is like a beautiful hand-knitted sweater. Inevitably, there will be a few frays and loose ends. If we keep tugging at the loose thread and continue to pull at it with no regard to the consequences, we run the risk of unravelling the needlework and destroying all that we have built painstakingly over the years. In our own way, we have strived for unity in our cultural and religious diversity. As Singaporeans, we know that regardless of race, language or religion, we share the same destiny. This is particularly so in a small country like ours. In a bigger country, we can stay a lifetime in Chinatown and not interact with the other communities. A prominent Chinese businessman who runs a business that is worth hundreds of millions of dollars in a large neighbouring country told me recently that racial relations in his country are good and will not pose a problem in future. He sends his children to Chinese schools and later to overseas universities. He does not have to do business nor come into contact unnecessarily with the other races. He has enough space to operate, mind his own business and survive. But in our small country, with a closely-knit society, we are one big community. Community bonding, mutual understanding and respect are pre-requisite to peace and prosperity.

Singaporeans have placed their trust in the Government, just like the patients pinning their hopes on their doctor. In this case, there is no panacea for a quick cure. We have to work together to regain our strength and health, even if it means swallowing the bitter pill, even if it means suffering some short-term pain. We have taken good care of ourselves in the past. Our body constituents are strong. We will find the best prescription to fight this bout of attack. We will develop a greater resilience and emerge stronger.

Sir, on this note, I support the motion.

The Minister of State for National Development (Dr Vivian Balakrishnan): Mr Speaker, Sir, my great grandparents came from India and China over 100 years ago to Singapore. They were immigrants. The less charitable would say, they were opportunists who came in search for a better life and to make a living for themselves and their family.

Two nights ago, my son, 11 years old, five generations later, asked me, "Daddy, if there is a war, why should we fight for Singapore?" It was a question which I could not answer fully because I was rushing to drop him off somewhere and going off for my MPS. But it is a question which troubles me and haunts me even now as I speak.

When you look at the television, newsreels and the newspapers, you see Palestinians, suicide bombers, young men and young women. Rightly or wrongly, whether you believe in them or not, the point is that these people have a cause and have an ideal for which they are dying for. And in Singapore we have our younger generation asking, "What is it about this place, why should I fight for it? What happens if I die?" We just came back from a holiday in Australia and my son said, "Look, there is more space there, it is less crowded, we can get a car, we can drive around. What is the point of sticking it out here?"

Then yesterday, I was having a chat with one of our Mayors, who said that every time she is asked to be a guest-of-honour at a National Service passing-out parade, it brings tears to her eyes. She is a serious person who does not exaggerate. I believed her and asked her why. She said, "Well, because we might send these young men one day to their death." I am a doctor and we would like to think that doctors deal with life and death. I look around here and I realise that in this Chamber, in your hearts and minds you too discuss life and death issues. You will or will not send our people towards a better life, and a better life may sometimes mean the ultimate sacrifice and these are difficult things which we would have to face.

So what are the real issues or real questions facing us as a country, as a nation, at this stage? I want to make a couple of points. My son will not understand them now, but maybe he will read the Hansard years hence and understand that this speech is for him.

Firstly, that Singapore is an artificial country. Secondly, that we are subject to external forces which we do not have absolute control over and these forces will play within our turf, within our country. Thirdly, whilst we talk about filling the stomachs of our population, we must not forget to fill the hearts and minds of our people. And fourthly, as leaders down here, I remember Dr Wang's speech yesterday, in a sense, we need to be able to spell out a vision, to give hope, to give guts and to build the ability of our people. Because if we do not do that, our country has failed and we would have failed our duties.

Back to the first point - an artificial country. Geographically, if you go back far enough in time, geological ages, Singapore is at the southern tip of the Malay Peninsula. In fact, the Johore river and all those things that we are so concerned about now for our water supply probably ran through Singapore and probably its riverbed was somewhere in the east coast of Singapore. There is no geographical reason for the existence of Singapore except that the sea level went up and so now an island forms. Now all this ruckus about reclamation is almost ironic humour that geography and geology are playing on us.

History, yes, the Malays had come here first and we regard them as the indigenous people of Singapore because the Constitution says that. And the rest of our ancestors came here. Again, is there a historical reason for Singapore to exist? You go far back in time - the Sri Majapahit empire, Sri Vijaya - you can always say, "Well, this is part of the Rhio Archipelago, part of Indonesia, part of Malaysia, part of Johore". You can go back endlessly. There is no natural historical reason for the existence of Singapore.

Size, we are very, very small. No doubt my Ministry is doing its best to increase it but the fact is even after our extreme efforts, it will still be very very small. We are, in a sense, trying to be Downtown Manhattan, without upstate New York, without the hinterland of the United States. And yet, we have to be a country, we have to be a nation. We have our own airport, seaport, Armed Forces, Police, Parliament. Again, there is no natural reason for our existence as a nation.

What about the composition of our people? A normal definition of a nation is a group of people with shared characteristics, a shared history, a shared language, a shared religion, who happen to congregate and multiply in a certain area. Our multi-racial composition between the Chinese, Malays, Indians and others is not a natural development. It occurred because Stamford Raffles happened to come along here. He decided that he liked the harbour. Selective immigration occurred even 150 years or more ago. It is a freak of circumstances, not a natural occurrence. We are different from our surrounding neighbours, in terms of our ethnic composition and of our outlook. This is, after all, still a city-state where the Chinese race is the dominant race, as far as numbers are concerned, and that makes us different from our region.

So there is no reason for Singapore to exist from a natural geographical, historical, size or racial reason; which then brings us to thinking why are we here today and why does Singapore exist. It exists because of a man-made obsession with an ideal called multi-racialism. We did not seek our independence for economic reasons or even to make a living. We could make a living as a British colony, as Hong Kong did for a long time. We could still make a living as part of Malaysia, as the Chinese in Malaysia continue to do so. But we were thrown out of Malaysia and we got independence because of this belief that we wanted a multi-racial place, a Singaporean Singapore, where all of us would have our chance to have our day in the sun. That was an artificial ideal which was promulgated by our first generation, which caught on amongst the population. And we said, "OK, fine, as an act of faith, we will do it, and we will create a nation." And whether you want to call it luck, circumstance or whatever, the point is, we succeeded and we got here today.

Next, external forces. This is supposed to be a debate, but I have been intrigued by the fact that there has been almost universal agreement among all the MPs, including the Opposition, on the external forces impinging on us economically. They all talked about globalisation, about new technologies, about free market. There is actually no debate about the recipe for economic growth. The debate, if any, is about the implications of these three forces on our society and how we are going to deal with it.

If you take an even broader perspective, what is happening really is what the Tofflers called the "Third wave of change in civilisation". Ten thousand years ago, when mankind discovered agriculture, society changed because they stayed put in one place. Land was important. They grew their crops. Extended families were important because that was their labour source. And if they grew enough crops and the weather was kind to them, they had surpluses and they stored up. That was the original CPF. They prepared for a rainy day, and life went on.

The industrial revolution occurred about 300-400 years ago. In this case, it is not the farm any more, which was the main source of wealth, but the factory. Families became nuclear families instead of extended families. Political power changed from a feudal structure that characterises agricultural society to the two competing models - representative democracy versus totalitarian socialism. With the fall of the Berlin Wall, we know which political model won as far as running an industrial age society is concerned. Economically, it was about land; it was about labour; it was about capital. But what is happening now, when we talk of the information age and knowledge-based economy, is that another paradigm or sea change has occurred in the means of production of wealth. It is now about ideas. It is about social capital, and it is still about money, except it is now global and it is moving very, very quickly. And what we are still trying to find out and we still do not have answers for is: what does this mean to us politically, socially and culturally?

This is Parliament. This is a form of representative democracy. We are supposed to represent our constituents. But you and I know fully well that in this day and age, it is impossible for any one person to claim or to pretend that he represents all views. We come here as colleagues with our own set of beliefs, ideas, prejudices and biases. We hope that it reflects what the larger society feels and thinks about it, but it is not so simple. When we cast the vote, does that mean every single person out there agrees with us? This whole thing about having Parliament and representative democracy may not actually work in the future. You can, in a sense, have the ultimate expression of democracy because, after all, in a world where everybody is always on and always connected, do you still need Parliament? Well, that may be for a debate in a couple of decades or a hundred years from now. But the point is there is a change, and it is just that we do not have all the answers to that.

There is an optimistic side to the knowledge-based economy. Because in the knowledge-based economy, as opposed to an industrial economy, land, capital, machinery and cheap labour become less important. It is about ideas; it is about systems; it is about organisation; it is about branding, and these are all things which Singapore has an inherent advantage in.

Yes, this knowledge-based economy will cause problems and will cause dislocation, but we are actually ahead of the curve. And the fact that we worry about it and we are thinking about it now actually gives us hope that we will be amongst the first people, the first wave of nations to be able to take advantage of this revolution.

But there is another side to this issue of globalisation. As the world becomes smaller and smaller, and more and more things become common, we sometimes forget that whilst civilisations can change, 10,000 years is a very, very short time in evolutionary terms. Our genes have not changed, certainly not in the last 10,000 years or even longer. Therefore, human nature has not changed. And what we are experiencing now is the clash of a change in environment impinging and impacting on basically an unchanged human nature. So, in this world which is increasingly interconnected and global, we are suddenly realising that, hey, how I feel and how I think actually disconnects with what is happening around me and what I see around me. And so we get this movement which we loosely call fundamentalism. It is a human reaction against changes which we feel or we fear we have no control over, and which we feel or we fear dehumanises us. Because, after all, the knowledge-based economy does not confer meaning, identity, purpose of life, solidarity, love, comfort. It does not provide all these things. But as humans, we still need these things. And fundamentalism is basically a reaction against that.

So before we start pinning labels on people and saying these are terrorists and these are not, sticking it even to religious labels, remember that underneath all this, are much, much deeper tectonic shifts. It is a clash of environment versus human nature. And Singapore, as this tiny dot, bobbing around in the sea, surrounded by tsunamis, is not immune to these changes. Our key challenge therefore has to be how to manage some of the problems or consequences of these changes, key amongst which are the economic and cultural disparities. And this is where you see the opposition, and us disagree.

Let us talk about economics first. We agree that we have to connect ourselves to the world. We have improved our technology. We have to have education, and we have to have free trade. We are all agreed on that. We also accept, all of us on both sides of the House, that there will be increasing disparities in the income spread. There are two solutions in front of you when you see an increase in income spread. Do not get on the bandwagon, in which case everybody stays the way we are now. But it is not possible, because staying put means you sink to the bottom of the sea. Or we say that we will accept that there will be an increasing income disparity, but the issue is what do we do for those who are falling behind. And the metaphor which I could use is that, yes, we have all talked about safety nets to catch people who fall. But at what point does the safety net becomes a hammock, where you can fall and lie there and say, "This is good enough. I don't need to get up." At what stage do you have to convert a safety net into a trampoline, so that you can say, "Yes, I've fallen off, but there's an inherent spring in this, and I can use it to bounce back up." And the way to bounce back up, although it may be something which our population does not want to hear, is about training, education, retooling and reskilling. There is no other way to bounce back up from an economy which is changing, because your job has gone, because someone else is doing it more cheaply, or a robot is doing it more efficiently, or because nobody needs that job any more. So we have got to find ways to convert our safety nets into trampolines.

At the same time, we still need the trapeze, because you need some people to do those high flying, dare-devil stunts. And do not say, "Well, if you get to fly up on that trapeze, you will be a star and everyone else will be a pedestrian watching." We have to allow people to go up on the trapeze. Let some of them succeed, bring glory to the whole act. But at the same time, we still have got our safety nets, because some of them will also fall. And when they fall, hopefully, they will bounce back up because we have converted our safety nets into trampolines.

Culturally, it is not enough to say that we exist because we want to be an independent nation. We draw on our historical ethnic roots, whether it be from China, Malaysia, India or the West. But we cannot rely on them because in Singapore, this peculiar multi-racial mix and this political formula that we have is unique. You cannot rely on the models which existed in the past or the models which exist currently in Malaysia, India, China or the West to use as lessons for how we need to do it. Our ethnic groups must realise that isolation is not an option. Reverting to medieval times is not an option. Copying other countries is not an option. We have got to understand this principle of co-determinism, that what happens to the Malays, the Chinese or the Indians in Singapore is not something which you will decide individually as a Malay, a Chinese or an Indian. When people talked about collective leadership for the Malay community, what they did not understand is this concept of co-determinism. The ultimate fate of the Malays in Singapore is going to be determined not by the Malays alone, but by all of us and, similarly, for the Indians and for the Chinese. And if we start creating a system where we say this is my problem, my business and I will lead it, I will be pre-eminent and predominant in making decisions on that exclusively, that is the beginning of the end because we will unravel the whole thing. So we need to move beyond this. The Government is obsessively secular, and I think we must continue to be, because that is the best guarantee for religious freedom and religious security in Singapore.

Let us talk about the hearts and the minds. Samuel Huntington has said that in the future our loyalties will be determined by what we believe rather than where we live, and this applies, I think, very much to Singapore. So, what do we believe in? I share Mr Raymond Lim's views yesterday. He said, yes, we have done Singapore 21; we have done Shared Values; Agenda for Action. We are even embarking on the Remaking of Singapore. But, really, I think the best statement of our Shared Values is still encapsulated in the pledge written, again, by our first generation leaders one year after independence. It is the concept of a united people, regardless of race, language or religion, a democratic society, justice and equality, and all this in pursuit of happiness first, then prosperity and progress. These values, I think, still stand. It is the philosophical basis for the existence of our nation, and it is good enough to fill our minds and to continue to fill the minds of our young people. For the hearts, my son said, "Well, I suppose if my family is here, my friends are here, it may be worth fighting for this place."

In order to get to Parliament from MND, or even to the Istana from MND, I have to drive past Stamford Road. I look at the National Library - I am not going to bring it up again for discussion - but I look at it with a heavy heart. I drive past my old school, ACS, I see the missing clock tower with a heavy heart. You look at hawker centres which have disappeared, it also brings something to you. It is not that we want to resurrect all those things, it is not possible, but the fact that we have a heavy heart about it, I think, is a good sign. Whether you realise it or not, there is emotional rootedness to this place called Singapore.

Yes, we have been very stiff about saying, wipe out dialects, wipe out Singlish, but the truth of the matter is, there is emotion resonance in these. And we have to realise that, yes, maybe it still makes sense to remove them but be aware of the cost, and be aware that emotional rootedness is as important as material rootedness, as important as mental philosophical rootedness.

So I want to end up by telling my son that, like the first generation, we need to reaffirm our faith in this country; we need to say that, yes, this is an artificial country but it is still my country. Yes, my ancestors came from elsewhere and they were not citizens, but I am different from my ancestors because now I have a country and I am a citizen. We need to tell our children that, yes, the world is in revolution but Singapore will survive. It will survive because we know who we are, what we stand for, our hearts ache and belong to something, to some place, to some ideal. And what we are going to leave behind is worth an inheritance and ultimately worth dying for. In the final analysis, this is our Singapore.

I support the motion, not just going through the motion, but I support the motion from the bottom of my heart.

Dr Wang Kai Yuen (Bukit Timah): Sir, a point of clarification.

I listened to the Minister of State with a heavy heart. He started by quoting his son. His son is not too young - 11 years old, am I right - and he is a fifth generation Singaporean. And the son asked: Why should I fight for this country? First, I think the Minister of State perhaps should ask himself why is it that a young boy like him ---

Mr Speaker: Dr Wang, what is your point of clarification?

Dr Wang Kai Yuen: Would he not want to ask himself what is wrong with our society that for a young boy like him to ask that question? Is there a failure in our education system or is there a failure in our upbringing of the family? And, secondly, his son is going to National Service in seven years' time, so what are we proposing to do to educate the young son that by the time he is 18 years old, he is prepared to spill blood for Singapore, if necessary?

Mr Speaker: Would you like to reply to that, Dr Balakrishnan?

Dr Vivian Balakrishnan: I certainly do not want to blame the schools. This is a real problem. And, yes, it is the family; it is society. But I am being honest with you. I think if you ask your own children, to varying degrees, this is an issue. It is something which, I am submitting to this House, is worth us worrying about, thinking about, and trying to do something about it.

We need to sort out the answers among ourselves first. Because what do we tell our children if we have not sorted this out. If we cannot, with a good conscience, send our children out to fight and to die, then we really have to worry about whether we even have a right to sit here. So these are the reasons why I am telling Members I have a heavy heart, I am worried, and has been hanging over my head, my mind and my heart for the last few days.

Dr Wang Kai Yuen rose ---

Mr Speaker: What point are you raising?

Dr Wang Kai Yuen: I try to find out from him whether he is speaking for a minority of Singaporeans or he is speaking for all Singaporeans. I have three sons. I am prepared to send all my sons to fight for Singapore, to die, if necessary.

Mr Ahmad Khalis bin Abdul Ghani (Hong Kah): Mr Speaker, Sir, I rise in support of the motion to thank the President.

Sir, the President in his Speech gave a very comprehensive all-encompassing sketch of the issues faced by Singapore today. Allow me, Sir, to dwell on two issues, namely, globalisation and social cohesion, and even in these two areas I would be speaking only on certain aspects.

As regards globalisation, I see that there are three types of Singaporeans. The first are those who can handle it; the second, those who get by; and the third are those who find difficulty. The first group who can handle globalisation are those who normally can take advantage of it. They master the new ropes, they make necessary changes and even profit out of it, sometimes quite handsomely too. I call them the "global literates". The second group are those who adapt and manage to get by. They undergo some retraining, some short-term pains, but they come out all right in the end. But the third group finds it difficult to adapt, and even to retrain. They remain jobless for long periods, they accumulate debts and their financial problems bring about social ones. Even if they find alternative jobs, these are the people who remain static in terms of income. I call them the "survivors", not the type who outlasts and gets $1 million at the end of 39 days, but this is the type who literally barely survives only.

While the global literates progress and profit, the survivors remain as they were. Thus, there would be an ever-increasing income gap between the global literates and the survivors. If unchecked, the increasing gap may bring about alienation, envy and social discord. Sir, three months after being out of job, a person would feel depressed. But if this same person sees his ex-employer driving the same 3-litre car coming out of a country club every weekend, the same person who remembers that the ex-employer was the one who talked about bad business, who talked about cost-cutting measures, who talked about the unnecessary evils of retrenchment, then this person would feel very frustrated and very angry. That can bring about social discord.

Sir, I read reports that arising from the economic crisis and globalisation, companies resort to cost-cutting measures. They streamline, they merge. But these reports also say that more often than not, after the downsizing process, most companies do not earn more, they just spend less. Further, at the individual level, those in the top management earn more or less the same income, while those in the middle and lower rungs are either retrenched or have pay reduction.

The Government has put in place many useful measures to help this third group. There are short-term schemes such as job-matching and EDRS, mid-term solutions such as retraining schemes, and even long-term ones such as educating the public on the effects of globalisation and the need for lifelong learning. But I believe that more could be done by those in the first group. I suggest the following:

(1) That there be a set of best practices guidelines on retrenchment which does not only state how retrenchment should be done but what steps should be done before retrenchment is even contemplated, for instance, wage cuts, retraining schemes, job placement measures, and so on. May I suggest that the Ministry, the employers and unions make a study on these to come out with a set of more comprehensive guidelines.

(2) I also suggest that there may be a structure to enable a process whereby employers justify their proposed retrenchment exercise to the Ministry or to the union, and then advice be given verbally or in writing, and this advice may be given also to the workers so that the workers are aware of the advice given by the union or the Ministry. This makes the process more transparent and further, since there is no legal sanction against employers who refuse to heed the advice of the Ministry or the union, my suggestion provides some form of social pressure.

Sir, I am wary that we should not apply measures that deter present employers from continuing their businesses or potential employers from starting ventures here. Thus, I am slow to suggest legislating the process. But the idea really is to ensure that employers really have exhausted all measures, including looking at the salaries of top management, before deciding that people should lose their jobs. In this connection, I also call on the first group to do more to help the third group.

Sir, every Singaporean matters, it is said. But this does not only mean that every Singaporean should be heard or should be cared for. It also means that every Singaporean should contribute where he can. I urge the global literates to bend backwards a little bit more to help the survivors. I recall an advertisement which reads: "If you have it, flout it." Well, I say: "Flout if you want and if you must, but do so by giving and contributing. Stop showing! Start sharing." I am aware, Sir, that many global literates are already doing this, and I truly appreciate their effort. I am only seeking to encourage others to do their part.

I am also aware that my calls are not in terms of hard policies but, like the hon. Member before me, I seek to make calls to the hearts of Singaporeans. I wish to compliment the call for policies, backed by sanctions and enforcement mechanisms, to appeal to the hearts of Singaporeans, especially the global literates. Now and then, Singaporeans are called upon to do some soul-searching and perhaps this is one such call. Soul-searching, Sir, may carry two meanings. One is a search in the soul for something; two, is a search for a soul. I assume, and I hope rightly so, that we all agree we do not need to do the second one. But I reiterate my call that we search in our soul for the three more `C's beyond the five - care, concern, character.

Sir, I move on to my next topic, which is the President's discussion on the movement from tolerance to appreciation as regards inter-community relations.

It is noteworthy that we speak of cohesion and not amalgamation. In previous years, some suggest that the different racial, religious and cultural groups melt into one. We have since moved away from that concept to one where we recognise that differences among the groups are likely to remain. So we conjure the image of a mosaic where different tiles co-exist to form a colourful whole. We have chosen the mosaic floor over the melting pot.

Let us take a closer look at the mosaic floor. By definition, the mosaic floor consists of tiles of various colours, even shapes or sizes. But for it to be pleasant and useful, it has to be coordinated. There must be someone or something that arranges these tiles so that, together, they form a beautiful pattern. Without careful arrangement, the same tiles can be a mess and not mosaic. Or perhaps if you have all yellow tiles on one side, blue tiles on one corner, green tiles in the opposite corner, brown tiles in the middle, we may have a floor of tiles but it is not exactly mosaic either. Thus, the arrangement of the tiles is important.

The question is: who arranges these tiles and how does he decide? Do the tiles arrange themselves or are they patterned by a transcendent force. I recall that Dr Vivian mentioned about co-determinism, and I say that in the Singapore context, in view of the term "co-determinism", it is a combination of both the interaction between the tiles themselves and this transcendent force. Here, the mosaic imagery perhaps may find itself inadequate because mosaics do not move by themselves. But instead of using the sweater metaphor used by my hon. colleague before Dr Vivian, I believe it was Mr Ong, may I suggest a garden instead. It consists of different plants which had hitherto grown naturally. They have hibiscus, aloe vera, heliconia, and even grass. If properly maintained by a gardener, the garden is an exhibition of life and colour. If not, the aggressive plants will take over and after a few months, you have a lallang patch. But yet, at the same time, if the gardener does everything, the gardener does not do everything. Each plant or each type of plant has its own way of reproducing itself. Each type of plant has its own system of ensuring its own uniqueness and its survival. Yet, hybrids appear in forms not imaginable before. The bougainvillea may creep into loops and hang at the most curious places, sometimes even among other plants.

In the context of inter-community relations, we acknowledge that each community has traits which are unique to itself and each community has an interest to guard its identity. Yet, every community interacts with the others, without one having to fear of being subsumed by the other. On top of it all, it is the common will to ensure peace and security so as to facilitate the continuous development of each community and to facilitate the meaningful interaction among communities. The design and plan of the gardener represent this common will of the people. Without the common will, there is no nation. Without the gardener, we have no garden. Belukar, maybe. Sir, Singapore is indeed a garden city in more senses than one may think.

Sir, while it may be pleasing to indulge in this garden metaphor, in reality, inter-community relations is a very intricate matter. To allow each community to retain its own unique characteristics while at the same time moving towards national interaction is to unleash two forces that may pull in opposite directions. I wish to humbly caution that the road to appreciation is arduous. There are three aspects of this road I wish to highlight. The first is that it requires each ethnic religious or cultural group to be more open with one another. For some, it requires a change of mindset. There are many beliefs which the community holds jealously, kept to itself for years and for centuries, but these now have to be exposed, lest such secrecy may arouse suspicion. For some, it requires a change of environment. If you have been avoiding discussing sensitive issues in public in order to maintain peace and harmony, now we have to discuss such issues in public in order to pursue the greater appreciation of peace and harmony.

Sir, recently, there was a short programme on the BBC regarding the causes of extremism and fundamentalism. Almost all the fundamentalists agree that the growth of extremism is inversely proportionate to freedom of expression. In other words, the greater the clamp down on expression, the higher the chances that these pent-up emotions would be channelled through extremist outlets.

The second aspect of this road to appreciation is that, by opening up, if not handled carefully, it may have a negative effect. Expressions of differing and opposing views on cultural or religious basis can heighten these differences. They can cause more tension instead of cohesion. The challenge, of course, is how to pursue the engagement process in spite of many controversies that may arise as we open the lid on sensitive issues.

The third aspect is the need to maintain and develop a comfort base. Even right now, we cannot discuss the things the way we do without first obtaining a certain degree of comfort and confidence among each other. This we have achieved over the years through various measures, such as effective national education, national service, intercultural activities and bilingualism. These are good efforts that will maintain the present comfort level. But to progress towards appreciation, Sir, we need to do more.

To allow effective engagement on sensitive issues, I believe that three points must be looked into. Firstly, each community must be very clear in themselves of their position on several points. The first point is that groups must be clear of their position as regards the development or changes in attitudes of the members of each flock towards their race, culture or religion. The variety of such attitudes over time and space has to be understood. No group is always static or totally homogenous in its attitude towards its own race, culture or religion. This variety has to be appreciated, otherwise we would tend to draw general conclusions from specific instances and this does not reflect the actual situation.

Each group also needs to be clear on its position regarding intolerance and extremism, including an understanding of what causes extremism, what factors affect extremism and how to counter extremism or intolerance. Yet, each group has to reconcile between its understandable desire to eventualise, to promote itself, yet at the same time, being mindful of contradicting positions taken by other groups with the need to maintain the comfort base.

Each group, Sir, also needs to clarify for itself how it views interaction among different groups in the physical, restricted confines of Singapore island, reclamation notwithstanding. We wish to avoid a situation whereby inter-group relations are progressing, but at the same time inter-group relations are having strains. In this regard, each group should identify the items within its own value system that has the potential to cause conflict with the second nature of the state and conflicts with other groups. These items that can cause conflict have to be honestly dealt with in a manner that moves towards the long-term outcome of peace and harmony.

Lastly, Sir, each group also has to have a clear position as regards the role of race, religion and culture in the long-term future. Inter-group appreciation is a long-term desire. And each group needs to search within itself the values and principles it makes to remain relevant, meaningful and contributive to the well-being of this country.

Sir, if each group is not totally sufficiently clear on the above points, then I humbly suggest that they embark on serious studies on them. While we all wish to accelerate this engagement process, it is worthless, if not dangerous, if the engagement process is supported by ill-prepared ideas and thoughts.

Secondly, Sir, for effective engagement, each group must be willing to share its views and engage others on them. While each group should search for common views among other groups, yes, each must be prepared to face and deal with diametrically opposing views as well. Each group must give its commitment to maintain the engagement process. This commitment can be enhanced by the Government making policies that seek to unify while recognising differences, which it is already doing now, but this can be strengthened by (1) ensuring adequate representation of such differing views in national debates; and (2) incorporating greater flexibility as a feature for policies so as to cater for differences. Also the communities, when expressing their views, must do so sensibly and sensitively so as not to undermine the comfort level. Because if the comfort level is undermined, so would the whole engagement process.

The third point as regards effective engagement, Sir, is that confidence builds upon itself. Confidence building is an accumulative process. As we move 10 paces forward, we would face issues that may cause us to take two steps back. But this does not mean that we retrogress for we would have by then moved eight paces forward. The journey will be full of stops, or such stops, and step-backs. But we all must agree to maintain the general direction at a steady pace.

Sir, I agree with the hon. Member Assoc. Prof. Koo that we should not allow the rumour of gloom and doom to fulfil its own prophecy. We must have the confidence to come up better, including this area of social cohesion. As I have said, confidence builds upon itself. If there is no confidence amongst us now, we cannot have any confidence in future for there is nothing to build on.

In this light, let me share an anecdote which came upon me recently while I was in Morocco together with my two hon. colleagues, Mr Zainul and Mr Chiam. My wife chanced upon a man who asked her a question where she came from, noting that she wore a different dress, and she said, "Singapore." His response was enthusiastic. My wife carefully avoided what he meant by "enthusiastic". When she said that she came from Singapore, the man was so pleased and rattled into conversation. It turned out that he was an engineer, an Argentinian and he liked to travel, he has travelled very widely over six continents, and he has stayed for more than a week in Singapore in the years of his travels. At one point, my wife asked him, "So, is Singapore nice?" His answer was, "No. Singapore not nice. Singapore very, very nice."

Sir, I support the motion.

Dr Michael Lim Chun Leng (Pasir Ris-Punggol): Mr Speaker, Sir, I thank you for allowing me to join in the debate on the Motion of Thanks.

The Asian financial crisis and the global economic recession took its toll on the Singapore economy. Our four major engines of growth, the US economy, the combined Malaysia/Indonesia economy, the world semiconductor sales and domestic construction work, stalled. As the Singapore economy took a nosedive, job losses continue to mount. The greatest challenge facing the man-in-the-street now in Singapore is jobs and the job situation can only improve if we can grow the economy and create more jobs.

As we move ahead, we need to develop new engines of growth. We recognise that China will be a major competitor, but we also recognise that China can be a growth engine. While the world's economy took a battering, China's economy continued to grow, although at a slower pace. Singaporeans must awaken to the serious competition that China will pose to Singapore and the world.

Over the last decade, I have had the opportunity to visit China on several occasions. Over the years, I have not ceased to be amazed at the pace of development in China. On a recent trip, I met a Singapore company which makes external claddings for buildings and windows. They have relocated their factories and the entire operations to China. Their cost of production is 18% of the cost of production in Singapore. The Chinese engineers they hired were not less competent than the Singapore engineers. They were willing to work harder and put in longer hours. They were also very eager to learn and were good in research and development. As a result, the company's products have improved at a fraction of the cost that they would have to invest in, if the R&D was done in Singapore.

Yes, Chinese companies will wipe out the competition at the lower end. However, if we are not careful, they will also become competitors at the higher end as well. Manufacturing as an engine of growth, especially in the semiconductor industry and the electronics industry, will be seriously threatened. Recently, we have moved into life sciences and chemical industries, but we need to look beyond manufacturing to grow our services industry.

Beyond its economic competitiveness, China also becomes a serious threat to Singapore in terms of quality of life. Major cities like Beijing and Shanghai have developed into modern cities with rich cultural experiences and wide recreational choices. In Singapore, on weekends, when we think of recreation, we will visit our neighbourhood shopping centres, perhaps take the children to the zoo, go to Sentosa, play golf or, maybe, go to the beaches. In China, a weekend for a family in Shanghai may mean driving to Suzhou, Hangzhou, or one of the nearby scenic areas. It is therefore not surprising that expatriates increasingly find China a favoured choice for location of their companies.

Services will be new growth engines

In the face of severe competition to our manufacturing industry, services can be new engines of growth for Singapore.

Traditionally, Singapore has been a logistics and financial hub. The telecommunications and IT services have also been key sectors but they have also been affected by the downturn. We have to look at other new growth areas in the services sector.

We should consider expanding into other services, including education and healthcare. In education, Singapore remains one of the choice locations for many Chinese nationals. Many Chinese are eager to come to Singapore to learn, study or be trained. We must not put up barriers unnecessarily. We must make our visa process more efficient. Companies have been asked to send their potential students to our embassy in Beijing to be interviewed. Quite often, the officers in charge have many other duties, and this is not a priority for him. Furthermore, many potential students find it troublesome to fly all the way to Beijing just for an interview. We must not put such roadblocks if we are serious about growing these services. Having Chinese nationals to study here will have economic spin-offs with multiplier effects. If we liberalise our student visas, we will be able to grow the educational sector rapidly. On the other hand, we must be careful to safeguard our good reputation. The recent media reports on the cheating cases involving Chinese students who have rented apartments or Chinese nationals who have remitted money, have sullied our reputation. The frequent media coverage may give the wrong impression that these acts are common. These acts are few and far in between and are done by a few and are not representative of Singapore. We must send the right signals that Singapore does not tolerate such acts and we will continue to ensure that Singapore remains a conducive place for foreigners to live in.

If we want to grow our healthcare services, we have to make it less difficult for those who wish to come to Singapore for their healthcare needs, to obtain their visas. We should also actively support the promotion of healthcare services to countries in the region and jointly promote this with the tourism board. Support by the Government for private sector healthcare has seen a large boost in foreign patients coming to Malaysia. Malacca alone attracts about 40,000 Indonesian patients a year to their hospitals. Penang has also become a major medical hub for Indonesians. Further afield, the Bumrungrad Hospital in Bangkok has also become an attractive alternative. The difficult visa process runs contrary to our intention to grow our healthcare services. For example, patients from Bangladesh complained that it is more difficult to get their visas to come to Singapore. As a result, they find it easier to go to other hospitals in the region. A patient of mine, recently having encountered this difficulty, decided to fly to a hospital in Bangkok for his medical review and treatment and, subsequently, he faxed his results to me to ask me for my medical opinion.

We have to ask ourselves how do we create jobs. The answer is to grow the economy. We have to ask ourselves how do we grow the economy. I think it is time we must also ask ourselves in what areas can the Government remove the roadblocks to the growth of the economy. By putting in place a system for a fast-track visa processing centre for health and educational services, we will be able to grow these sectors rapidly. These will translate into benefits for the property sector, the retail sector, healthcare services, educational services, hotel services and even the tourism industry.

Growing our external wing in the China market

We must not limit the growth to Singapore but we must also look at growing the Singapore economy overseas as well. Singapore cannot ignore China's growth but we should use our natural advantages to tap into China's growth. Do we have any advantages over others in getting access to the China market?

Building Bonds

The Chinese have a healthy respect for Singapore's reputation. They like the social environment, the cleanliness and the safety in Singapore. As a result, many of the Chinese parents feel secure in sending their children to Singapore for studies. Many of the students studying in Singapore on Government scholarships, grants or on personal expenses, come from families where their parents are well-placed or are important Government officials. We should actively build bonds with Chinese students who study in Singapore. The friendship and bonds will strengthen the bonds between Singapore and China. We must not underestimate the value of these bonds.

There is another pool which we have not tapped on. These are Chinese nationals who have either become permanent residents or citizens. Their intimate knowledge of the Chinese way of doing things and the good relations they have with their friends and relatives in China, can potentially smoothen our access into the Chinese market and shorten our learning curve.

Improving the Government and the civil service

To face these economic challenges, we not only need new engines of growth, but we must ask ourselves how can we improve the internal operating milieu in Singapore. We must improve the Government and the civil service. Government must accept that it is not always right. Ministries which put up legislation in Parliament or which discuss policy issues with MPs should not only explain policies but must also be willing to acknowledge differences in opinion whenever there is room for improvement. I am glad that the Government will allow more debates on legislation and policies that will give more room for consideration of differing views so that improvements that are suggested can be taken into consideration and, subsequently, allow amendments to be made to legislation or policies. This new era of openness will bode well for Singapore if Ministries can see that they do not have a monopoly of ideas. It remains now for the Government to show that there is resolve and earnestness to remake the Government. If we cannot remake the Government, how can we talk about remaking Singapore?

Next, the civil service must learn to adopt a pro-people, pro-business mindset. There must be greater transparency and accountability in our civil service. Our Government departments continue to be a formidable barrier to both the business community and the ordinary Singaporean.

The civil service gives the perception that it is wrong to empathise with the ordinary Singaporeans, it is a sin for businesses to make money, and it is best not to give the politician the full picture. The civil service must remember that it is not wrong to empathise with the ordinary Singaporean.

A resident of mine came to see me regarding the sale of his flat. He had applied to HDB to remove a half wall of his service balcony so that he could extend his kitchen. He wanted to sell the flat and the HDB officer who inspected the flat said that the flat owner had only applied for permission to remove the half wall, but had not applied for permission to remove the low kerb adjoining the wall. As a result, he insisted that the owner put back the kerb before he could sell the flat. I could not believe my ears when I heard this. It is ridiculous to have a small kerb jutting out of the kitchen floor as it will be a perfect recipe for tripping over and breaking one's bones. The engineering department insisted that the kerb had to be put back before he could sell the flat. As I saw no sense in this matter, I wanted the department to give a good explanation, failing which I will raise this further up. Following that, the department relented and the flat owner was allowed to sell his flat without further alterations. This is just an example of the problems faced by residents. The civil service cannot be a bureaucracy that does not exercise its sensibility, empathy and initiative.

The civil service must remember that it is not a sin for businesses to make money. Let us not kill the goose that lays the golden egg. If the businesses fail, jobs will be lost and it will be worse off for everyone. The civil service uses a technique called "stalling for time" to squeeze the genuine businessmen to capitulate to its demands. I will illustrate this with two examples.

A businessman had applied to participate in a Government land tender put up by the Singapore Land Authority. He complied with the conditions and eventually won the tender. To his horror, when he applied to the URA, he met with a stonewall as URA had claimed that the usage of land, as put out in the tender document, required their consent as well. As a result of this, his application to start work on the land was stalled. After paying several hundreds of thousands of dollars to the Government and having been delayed for a year, he was brought to his knees and was at his wits' end. He finally sought my assistance to appeal to the Government. After writing to the Ministers concerned, I am glad that his appeal was allowed. However, through no fault of his, he had lost time and money.

Another case. An entrepreneur-developer, who is also a community leader, encountered a similar problem. He had applied to the URA for information on a development charge (DC) on a piece of land before deciding on the purchase of that piece of land. Acting on the information on the DC given by URA, he went ahead to purchase the land. When he wanted to develop the land, the URA officer in charge had left, and a new officer had taken his place. The new officer claimed that the previous officer had given him a wrong computation and, hence, URA decided to unilaterally increase his development charge. It has been several months since an appeal was sent to the Ministry of National Development but, to date, no official reply has been received. This stalling has made it impossible for him to proceed with his planned development. As a result, he had no choice but to pay URA according to what URA wanted so that his licence can be approved, otherwise his interest cost and land-holding cost will become a major burden to him. He has yet to receive a reply from the Ministry of National Development. I wonder when they will give him a reply. It has been six months since. Where is the transparency, where is the accountability, where is the pro-business Government?

It saddens me that our bureaucracy can hold our entrepreneurs to ransom. Our civil service needs a major change in mindset. Time is cost in the business world. Increasing Government transparency and accountability is a key area where the Government can make a real improvement.

Finally, the civil service must remember not to hide the truth from the politicians. We are here to work together to make Singapore a better place for all. Not only do ordinary Singaporeans and businessmen face this stonewalling by the civil service. Even MPs sometimes face the same problem. During our Sengkang Town Development Committee meeting, a representative from the Ministry of Health was asked by the MPs on the likelihood of a polyclinic in Sengkang town. The representative replied that a study was being conducted and the report had already been submitted to the Minister, but there was no confirmed plan to build a polyclinic then. The representative was then reminded that the minutes would be made available to the Minister in charge. Upon hearing that, the representative immediately retracted the statement and said that the report had not reached the Minister. Despite the stonewalling by the civil service, I am glad that, finally, after all the lobbying by the MPs in the GRC, the Minister for Health supported the justification to have a polyclinic built in Sengkang and also at an earlier date.

It is time for the civil service to show more transparency and accountability. It is time for them to see themselves as part of Singapore Inc to improve the quality of life for our residents, not to obstruct our entrepreneurs, and to work with MPs to improve Singapore's future.

Yes, the economic challenges we face are daunting. We have the resources and the means to meet these challenges. Let us not set up roadblocks and obstacles for ourselves. I am confident that if we have a Government which will listen and be more open, we will be able to sail through this economic turbulence and steer ourselves to a brighter future. To overcome these serious daunting challenges, we need all Singaporeans to pull together. Together, we will succeed.

Dr Ong Chit Chung (Jurong): Mr Speaker, Sir, thank you for allowing me to join in the debate.

Sir, September 11th was a turning point in the history of mankind. It was indeed a defining moment in our lives. Through CNN coverage, we watched in horror as the World Trade Centre Twin Towers collapsed right in front of our eyes. Thousands lost their lives in an instant. We were stunned. We were numbed. Was this the beginning of the end of the civilised world? Our lives have been changed. Terrorism can strike anywhere, anytime. It also strikes at the innocent.

Terrorism has globalised. So must be the fight against terrorism. Counter-terrorism has to be global. The United States has taken the lead in this fight against terrorism. Singapore, too, must support the anti-terrorist measures in our own national interests. However, some may ask why should Singapore be so closely identified with the United States and seen to be supporting the forces aligned against terrorism. The answer is simple. It is the right thing to do. We must take a stand against wanton destruction of innocent lives. We must ensure safety in travel. It affects each and every one of us. If we do not stand up and be counted, who will come to our help, if terrorism rears its ugly head in Singapore? Others would then ask, "Where were you when we needed you most? Now you are asking for our help?"

Sir, in this inter-connected world of security, trade and investment, we cannot fudge the issue or sit on the fence. It will be foolhardy to presume that the horrors of terrorism will not strike Singapore. Indeed, as the discovery and exposure of the JI plotters amply demonstrated, we have to be ever more vigilant against terrorist cells and the protractors of violence.

Sir, Singapore has been lucky so far. Terrorists could well have detonated the bombs in Singapore. Buildings might have collapsed. Trade would be affected. There would be stupendous loss of lives. This would have scared off investors and tourists. MNCs might relocate their plants elsewhere. Jobs would be lost. The economy, already in recession, would plummet. Worse still, it would put a tremendous strain on our multi-racial and multi-religious harmony. Despair, anger and distrust would reign. It would be the severest test to our nationhood. That this did not happen does not mean that it would not happen. We have to be vigilant. We have to be prepared.

We must therefore work even harder to promote multi-racial harmony and bonding. I applaud the Government's efforts to form Inter-Racial Confidence Circles throughout the island. Whether in our schools, our workplace or home, multi-racial harmony must be our motto and way of life. I therefore urge Singaporeans to invite their neighbours of all races to visit their homes and to join them in their celebrations and festivals, be it Hari Raya, Chinese New Year or Deepavali.

Mr Speaker, Sir, the terrorist threat and the continuing instability in Southeast Asia underline once again the importance of security and defence, and the vital role of the Police and the SAF.

Sir, in this connection, we are all well aware that the pillars of our defence are our national servicemen. We know that national service is a service to the nation and involves an element of sacrifice and indeed sometimes, supreme sacrifice. I would like to refer to the point raised by Dr Vivian Balakrishnan and Dr Wang Kai Yuen. I had done national service myself. I have two sons and both of them are Operationally Ready National Service officers. There is no doubt that they will fight for Singapore and, if necessary, die for the country. Indeed, my second son, James, is studying overseas and one day he told me that at the first sign of trouble, he would fly back to Singapore to bear arms. I am very proud of him.

Sir, in view of this supreme sacrifice, we must give due recognition to our national servicemen. But the limited national servicemen allowances have been kept frozen for a number of years. They have not kept pace with economic growth, cost of living or inflation. Some parents of NS men fork out money to help their sons with their expenses during NS. They do not mind but this is the hardest on parents of lower income groups. I believe that it is high time Mindef reviewed their NS allowances and give our NSmen their dues.

Sir, recently, relations between Singapore and Malaysia have hit another rough patch. We are now quite accustomed to this roller-coaster-like relationship between Singapore and Malaysia. But what bothers me is that across the Causeway, Singapore is always seen to be at fault and Malaysia is seemingly blameless. This attitude is not helpful, to say the least. This rather unsatisfactory scenario is best summed up, in my opinion, by a reader, Mr Yu Kok Wah, who wrote in the Forum page of the Straits Times on 9th March this year. According to Mr Yu, the picture that emerged over the years was what he labelled as Rule No. 1, that is "The Singapore Government must always be sensitive to the needs of the Malaysian government and its politicians".

And Rule No. 2 is "Before Singapore does anything, it has to adhere to Rule No. 1".

Rule No. 3 is "Whatever Singapore has done, it is fair game for Malaysian politicians to criticise because, as always, the Singapore Government has failed to observe Rule No. 1".

Rule No. 4 is "If the Singapore Government sticks to the letter of any agreement signed with Malaysia, it is branded as too legalistic and is accused of not upholding the spirit of Rule No. 1".

Rule No. 5 is "Any comments on our policies by Malaysian politicians are to be treated as good neighbourly advice because of Rule No. 1".

Rule No. 6 is "Any comments on our neighbour will be deemed offensive, intrusive and abusive because the Singapore Government will be seen to have failed to observe Rule No. 1".

All this sounds familiar to us. It seems that only Malaysians have sensitivities. Mr Yu has hit the nail on its head. My GPC colleague, Mr Ravindran spoke with conviction on Singapore-Malaysia relations in this very Chamber last Tuesday. He must be right on target, but now he has the distinction of drawing fire from Malaysian Ministers and MPs in the Malaysian Parliament. Mr Ravindran, as Mr Yu predicted, was accused of being insensitive. More abusive words were used, but I would not care to repeat them because the Speaker might rule it unparliamentary. Mr Ravindran's only mistake was that he failed to observe Rule No. 1.

Last weekend, to be sure and to satisfy myself, my family and I took a boat ride to the waters off Punggol, Pulau Ubin and Pulau Tekong. It was in good weather and my guide was a kelong owner. I can say that our land reclamation is well within our own territorial waters. And I assure you that I was not fishing in troubled waters.

Sir, Singapore will be mindful of the concerns of Malaysia, our nearest neighbour. It is only fair that Malaysia also respects our sovereign rights and national interest. It will be better for Malaysia to send Singapore a full and comprehensive diplomatic note on all issues of concern and we can respond accordingly, rather than talking or boxing through the press. Please hurry, send us a note. We want a diplomatic exchange, not a media exchange or an exchange through Parliamentary speeches.

Notwithstanding this, I urge Singapore and Malaysia together to put the past behind us, put away the historical baggage of merger and separation, and work closely together for the good of the people on both sides of the Causeway.

Sir, we cannot choose our neighbours. Geography and history have devised and placed us side by side. If we can choose, it would be easier. But we can choose to work towards a win-win situation, to the mutual benefit of both countries. This is all the more important and indeed imperative in this inter-dependent world. All the more, as ASEAN faces new challenges, stress and strains from the regional downturn and the new economic challenges from the fast growing East Asian region led by China.

Sir, we can see the big picture, we can understand the strategic consideration and the global dimensions before us. But we must relate and explain this to our heartlanders, to our residents, to the man-in-the-street. We must carry the ground with us. Otherwise, in a crisis, we may fall apart or pull apart by external forces and internal divisions.

In this, we must not talk down or talk over the heads of the people. We must make the effort to explain in clear terms to our residents, for example, through dialogues, presentations and skits.

Sir, if the people do not understand the bigger scenario or support and trust the Government, the best-laid plan we have will come to waste. In this debate, it amply shows that we have to not only convince the people, we have to convince our own MPs in this House. We have to make a start.

On that note, Sir, I support the motion.

Mdm Halimah Yacob (Jurong): Sir, it has been quite difficult catching your eye. In some way, I hope that we can improve this process of catching your eye.

Sir, thank you for giving me the floor. I just want to clarify one point which Mr Ahmad Khalis mentioned just now about retrenchment and the workers. I want to assure Mr Ahmad Khalis and all the Members of the House that when workers are retrenched, we in the trade unions do take great pains to ensure that the retrenchments are not for frivolous reasons. And if we are not comfortable with the reasons for their retrenchment, which we think are not valid, we would challenge it in the Ministry of Manpower or in the Industrial Arbitration Court.

Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.00 pm.

Sitting accordingly suspended at 2.26 pm until 3.00 pm. Sitting resumed at 3.00 pm

[Mr Speaker in the Chair]

Debate resumed.

Mr S. Iswaran (West Coast): Mr Speaker, Sir, I rise in support of the motion.

Sir, the President commenced his Speech by observing that the last five years have been momentous times for Singapore. A new lexicon that has found its way into mainstream use in Singapore perhaps best captures that sentiment.

Five years ago, the words "Singapore" and "recession" would have constituted an unlikely couplet. After all, Singapore was one of the Asian tigers, a dynamo humming along at 8-10% annual growth rates, sometimes higher. The odd difficult year was almost viewed as a necessary respite from the frenzied pace of our growth, rather than as a serious setback.

Five years ago, the words "HDB" and "terrorism" would probably never have been used in the same sentence. We took pride in the fact that it was safe to walk our streets and use our subways, even in the middle of the night.

Five years ago, a new batch of MPs in Parliament - and I was one of them - spoke, not on unemployment and job matching, but on job-hopping and employee loyalty. The focus was very much on managing the consequences of success - high cost of COEs, high property prices and high wage costs.

Sir, we now know that a terrorist cell, based within our HDB heartland, had been plotting unthinkable crimes. The dreaded "R" words - Recession, Restructuring and Retrenchment - are heard with nauseating regularity in our media. And we now counsel our fresh graduates, who were previously spoilt for choice, not to be too choosy when looking for a new job.

Dramatic changes in the external environment have thrust Singaporeans into uncharted territory. And for a younger generation of Singaporeans, born and brought up in the post-independence era Singapore, recent events have taken on a surreal quality, for this is so far removed from the Singapore we have experienced and what we have come to expect in our country.

But the question, Sir, is whether this situation is so fundamentally different to our past? Sure, today, the symptoms are acute and we feel them sharply. But the threat of such adversity has always been lurking.

Thirty years ago, if we had wagered on Singapore accomplishing all that it has, I suspect we would have been given rather long odds by the bookies. Then the question was whether we would survive the throes of separation, the withdrawal of British troops and early stages of economic development.

Three years ago, in the depths of the Asian economic crisis and political upheaval in the region, if we had once again wagered on Singapore's continued success, I think we would still have been given rather long odds. The question was, once again, whether we would survive an economic melt-down, political upheaval and security concerns in our region, in our economic hinterland.

So, here we are today, relatively intact, but facing what our President has described as "the most severe challenges in the history of our nation." Again, it is a question of survival.

Sir, the truth is, the odds have always been stacked against us. External events have compelled us to constantly rise to new challenges. But we have pulled through, as individuals and as a people, through sheer grit and passion for this place. Do we have the courage and confidence to believe that we will once again survive and succeed?

Sir, in thinking about this question and answer, I was reminded of my uncle, curiously enough. He was born during World War II and the 50s and 60s had a profound effect on him. For him, the cry "Merdeka", with clenched fist held up high, is still resonant and it evokes vivid and somewhat emotional memories. And make no mistake, my uncle was not a political activist; he was not a freedom fighter; he is a retired civil servant. And we all know, civil servants are not generally given to emotional displays. But he was a firm believer in Singapore and what it stands for. And for my uncle and many of his generation, that cry from the steps of City Hall was a rallying call. It was a symbol of hope and it was a call to stand up and be counted in the nation's struggle.

Sir, today, another generation of Singaporeans must rise to this call. We need the right policies, but we also need our people to rally behind the policies and the Government. We can call it Remaking Singapore, Rediscovering Singapore, but, in essence, we must once again find the words, the icons and the spirit to inspire a new generation of Singaporeans, to imbue them with hope and to ignite our people's passion. So that a move by another liner to a neighbouring port is seen, not as a body blow to our prospects, but rather as a spur to revitalize our efforts. So that rising competition in the region does not flag our spirits, but rather puts fire in our bellies to try even harder. So that a bland cerebral cost-benefit analysis will give way to an emphatic visceral attachment to this place. Only then can we pull ourselves up by the bootstraps, help each other the best we can, do what needs to be done, and take this adversity in our stride, as we move forward. If we cannot or we do not, then we would be unworthy of the legacy of our forefathers. Sir, that is the challenge for all of us, the Government, this House and indeed all Singaporeans.

Sir, the present circumstances have also had a salutary effect. They have served as a timely reminder that our economy and security are works-in-progress. They are vulnerable to shocks and require constant attention, reinforcement and enhancement.

From that perspective, our social cohesion is yet another work-in-progress. We have come a long way in our effort to build a multi-racial Singapore. And today, we have heard many Members describe the state of multi-racial relations in Singapore using various metaphors - mosaic, garden, a knitted sweater, etc. I am afraid I do not have a metaphor to offer. But the question I wish to ask is whether it is appropriate at this time of challenge for us to also revisit our model of multi-racial relations and ask if we are satisfied, content with where we are today.

We have by now grown accustomed to multi-cultural performances at grassroots and other community functions. We enjoy each other's food and appreciate our diverse cultural heritage and festivals. We also have an awareness of each other's religions and practices. And these are important foundations and we must treasure them.

A recent Straits Times' article on a survey of some 300 students also concluded that inter-racial mixing is fine in our schools. The survey asked questions like: what is another name for the Seventh Moon Festival, the Hindu festival of lights and also which is the holy city of the Muslims. The survey found that 95% of students had friends of other races, and 70% had six or more. I would have liked to have found out what percentage of those students had close or even best friends who were from other races, and how often they socialised with them outside school. While it is good for a Chinese or Malay student to know that Deepavali is the Festival of Lights celebrated by the Hindus, would it not be far better for him to have a good Hindu friend who can not only furnish him with the answer but, better still, invite him to celebrate the festival with his family? Would it not be better even as we share each other's food over a social meal, we were also comfortable enough to share each other's hopes, aspirations and fears?

Sir, this is perhaps the quantum leap we should strive for in our inter-ethnic ties. It marks a transition from itinerant relations perhaps to life-long friendships. I think it is time to challenge ourselves to strive for this higher paradigm in inter-ethnic relations, one underpinned by deep friendships and bonds of mutual trust.

I was inspired by recent discussions and dialogues that were held on a variety of issues pertaining to the Muslim community in Singapore, in particular on madrasahs, the tudung issue and the Malays in the SAF, while I thought the outcomes may not have pleased everyone, the process was sincere, serious and dignified. That sort of initiative and others like the Inter-Racial Confidence Circles pave the way for more that can be done in this respect.

Sir, I believe the Government should commit itself to a constant review of its policies to ensure that they engender more of such friendships and to ensure that it can remove any impediments that might lie in their path.

We have been diligent in our efforts to build a strong multi-racial Singapore. But over the years, we have introduced a range of policies and programmes that have been based on ethnicity and language - ethnic quotas in HDB estates, self-help groups, GRCs, SAP schools are some examples. Some of these policies seek to further integrate Singaporeans. Others were designed to meet certain objectives but might have had the unintended consequence of further segregating us. I think it is hard to really assess what the cumulative effect has been on our society. At best, I would say opinion is divided.

I would therefore advocate that the Government consider appointing a standing Ministerial Committee to monitor the state of ethnic relations in Singapore and to periodically review policies and programmes that might have an impact on our inter-ethnic ties. The purpose is not to discard policies that have served us well, but to take stock and to ensure that in their totality, they continue to move us in the right direction in pursuit of this ideal. That, I think, will ensure that this important work-in-progress receives regular and high level of attention it deserves. Finally, Sir, I do not wish to create the impres sion that this is the responsibility of Government alone. I think each and every Singaporean has a role to play, and our schools are a good starting point. Schools are a fertile point to plant the seeds of such life-long friendships. I was therefore concerned to hear of anecdotal evidence that students are grouping along ethnic lines in our schools, be it in their choice of sports, CCA activities or even in project groups or social activities. I was at a dialogue session recently when one of the teachers who was participating shared with me how he was conducting a class and he asked the students to break up into groups of four. And he said three students of one ethnic group went out of their way to turn around so that they could have a fourth member of the same group, rather than include in that group a student from another ethnic community. I was not sure what to be more troubled by, that there was such an occurrence in the classroom or, as I later found out, that the teacher seemed to be somewhat helpless about the situation.

So we could argue that this is a natural occurrence and that we really cannot do much about it. But this House, and certainly this Government, has never shied away from action on matters delicate when a larger national objective has been at stake. And I concede, Sir, these are awkward situations. If you act, you draw unnecessary attention to it. If you do not act, you allow an unhealthy situation to perpetuate. So what do we do? I do feel that in this sort of circumstances, some tact and with a little bit of deft action, we could perhaps make a difference. So perhaps our principals, vice-principals and teachers could be trained, counselled or made aware so that they can deal with such situations tactfully, preferably imperceptibly, as and when they emerge in the classroom, the school field or in the canteen.

Sir, ultimately, I think all of us - the Government, the grassroots organisations and the people - must take collective responsibility to ensure that Singapore continues to move resolutely towards our ideal of a multi-racial society.

I support the motion, Sir.

The Deputy Prime Minister and Minister for Finance (Mr Lee Hsien Loong): Mr Speaker, Sir, I rise to support the motion.

The theme of the debate on the President's Address has been the remaking of Singapore. Remaking in the sense of new policies, also in the sense of the process by which the new policies are developed, the involvement, the consultation, the debate, the to-and-fro, the binding together of views to develop a national consensus. There is a strong desire, I think, among a significant proportion of the well-educated public for meaningful participation in this process. And there are encouraging signs that in fact this process is developing. Letters in the Forum page now often attract well-argued rebuttals, and no longer require official replies. We have people who spend their time reading the Forum page, scanning for letters which need correction. In the old days, an error would be tracked straightaway. Nowadays, if we wait a couple of days, somebody else will come back with an opposite way, and quite often a very sensible and balanced correction, and we can allow the debate to play itself out. So, I think we are going in the right direction. The Government is convinced that this is the right way forward and is committed to involving Singaporeans in the process of consultation.

One main exercise doing this is the Economic Review Committee. We are leaving no stone unturned in our review of economic policies, whether it is labour, whether it is manufacturing, whether it is services, whether it is taxes, in order to ensure that Singapore prospers in the years ahead. We are taking some time to do this.

Dr Wang Kai Yuen asked yesterday: Why is it so long? Is it because the civil servants have no ideas? I assure him that it is not because the civil servants have no ideas. It is because we are dealing with long-term measures, having already dealt with the immediate measures last year, in October/November, in a $11 billion special off-Budget package. We are considering major changes which need to be carefully weighed. And we are taking our consultations extremely seriously. In fact, if we had acted sooner, he might have accused us of not taking the feedback with the seriousness which it deserves. But we have to take the consultations seriously and we have to take views and make sure that what comes out is in fact fully cooked and properly deliberated.

The real constraint on the pace of our progress is not the Government; it is not the civil service or the bureaucracy. It is the people. How quickly can the people accept new policies and adapt to change? That is the question. Because new policies are unsettling, people need time to get used to it, accept it, understand it, and argue about it. And we need time to understand how to get the policies packaged, polished, rough edges smoothed off, and implemented.

We are not sending all sacred cows to the slaughterhouse. Mr Lim Boon Heng said we should consider sending some sacred cows to the slaughterhouse. We are not sending all of them. But I assure you that we should send all our sacred cows, at the very least, to the vet for a thorough examination to make sure that they are healthy or, if they are not healthy, something can be done.

We pride ourselves that in Singapore no issue is too sensitive to be talked about, nothing is taboo which cannot be discussed. If you raise a subject, we will debate it. If there is a problem, it will be solved. But still some issues are very sensitive - even to raise, never mind to tackle. But we are talking about a fundamental review in a new situation, in a different world, and unless we grasp the nettle and address these issues now, the problems are going to grow and are going to become even harder to tackle.

The review process has to be managed. We are talking about many people. We are talking about many views. We have to discuss issues without alarming people. We have to implement issues without jarring the system, but we must be prepared to discuss many fundamental areas which we have taken for granted. As the President said, "No policy is so cast in stone that it can never be changed.".

The challenge for us is to fix things that ain't broke yet. If something is broken, it is quite easy. Everybody can see it is no longer working, we have to abandon it, something has to replace it. But when something is not broken, but you can see difficulties and problems down the road, then we have to manage that, and it is not so easy. Because, first, we have to persuade people that we do have a problem. And they will say, "Why do you want to raise the subject at all? Matters are working fine." And, secondly, if our policies are still working, we want to make the changes and derive the benefits of making the changes without losing the benefits of the old policies because they are still working, they have served us well, and we do not want to change them. I think in the case of several major fundamental economic policies, we have to address them and approach them with this mindset.

I will cite three just as examples, which are important ones: the CPF, our wage policies and tax policies.

First, the CPF. It is one of the cornerstones of our social safety net. It provides for workers, for their medical benefits, for their housing, for their retirement benefits, even for their children to go to university, and to borrow from the CPF. It is funded, it is sound. It is a valuable instrument which we have patiently built up over many years. But we now have to look at it again. We have to reconcile business costs versus workers' needs. We have got to trade off multiple purposes to which the CPF might be put. How much to go into housing, how much to go into medical, how much to go into retirement, how to balance them, what are the priorities. We have to examine the structure of the CPF more closely, to balance between these different uses and to ask some basic questions. As Mr Lim Boon Heng suggested yesterday, are we investing too much money in housing?

We should also ask, how do we get the members not just to leave the money with the Government in the CPF and earn 2.5% interest, which over 40, 50 years of our working life is really not enough, but to invest the money in pension funds for better long-term returns at acceptable risk, not to take it out and have a punt on the stock market, not to splurge it on a consumption binge, but to invest it prudently with a portfolio, with professional managers who will not guarantee you a return every year but over five, 10, 20 years, will offer you much better than the Government can offer at 2.5% interest.

So we have to examine the structure of the CPF. We also have to examine the specific problem of older workers with CPF - older workers meaning those nearly 55, maybe from 50 years onwards - having difficulty finding replacement jobs, because the job market is changing, and they are not willing to work for low take-home pay because they still have families to look after. And if you say 20% knocked off for CPF, because that is his contribution, he says, "Well, take-home $700, not worth my while to work." Often, therefore, they are doing odd jobs for cash, with no CPF at all. And we see them, they come to our meet-the-people sessions, we ask them: What are you doing? And the standard answer is sua kang, which means working for cash rather than for CPF.

For this group of people, nearly 55 years old, not very well-educated in many cases, would a lower CPF rate make them more employable? It is to be considered. What about their obligations? They may have committed to houses. They may not have finished paying for their mortgages. This is an issue which we have to think about. But, in my view, the overall CPF contribution rate, which is 40% as a target rate, is something which we should maintain. We are not there yet, we are back to 36% after the package in 1998. But we have stated that 40% is our target, and I think we keep that target. We promise to restore it when we made the CPF cut in 1998/99, and I think we should uphold our promise to the workers. And I do not see any justification to see the CPF below 40% in general, because if you consider the needs of the workers, housing, medical and pension, 40% is not excessive.

So that is the first sacred cow which needs a medical examination.

The second one which needs an examination is wages. One issue of wages is portable medical benefits. Members have talked about it. The unions and the employers have been talking about it for some time, and the issue is simply stated. A young worker starting out can work for any employer and the employer will take him. He is still healthy. If he falls ill, the employer bears the medical burden. An older worker, already with medical conditions, wanting to change jobs has a very serious problem, because no new employer wants to take him and carry that burden of taking on his medical benefits.

So how do we provide workers with portable medical benefits so that when he changes jobs from one employer to another, he carries his perks with him, in the same way as he carries the CPF benefits with him? Right now, for employer-provided benefits, if the employer retrenches or goes bust, he loses it. But we need to move from that to something which is portable, which means a change from the existing employer-provided, employer-paid benefits, which means something for workers to get used to.

Secondly, on wages, we have to think about retrenchment benefits. It is the traditional way for workers to tide them over a period of unemployment. It is based on length of service. The longer you work, the more your retrenchment benefits, and it is unfunded, which means that when the time comes, the company looks for money to pay for these retrenchment benefits. This causes a problem. From the point of view of the person who is retrenched, it is good, because he gets something. But the

unions have found that sometimes the benefits of a long-serving employee are a huge drain on the company's financial resources. And the companies may be unable to pay or it could be that they can pay but it will endanger the jobs of the remaining workers, because if you pay the retrenchment benefits, you are no longer viable and able to continue operating.

So the system has weaknesses. And as our business cycles become shorter as more workers find themselves in between jobs, we have got to find a better way to do this. One idea which the unions have thought about and have floated with the employers is to get the employers and employees to put aside a certain amount of money every year while the company is still in good health, for example, in an enhanced bonus system which will vest in their employees over a period of time. So you cannot draw it out straightaway. It builds up, it is yours. After a certain period of time, you can draw it. And you replace the traditional retrenchment benefits with such a scheme. It is an individual-based fund. Then when the employee is retrenched, you do not depend on the state of the company then, but you can draw down what you have earned earlier in this fund, in this enhanced bonus system, until you can find a new job. Some employers already do this. It is something which needs to be studied. It may not work for all of the companies. We should look at this as well as other ideas. But we have to examine the problem of retrenchment benefits.

The key idea, when we talk about wages, is to free up the labour market, to create more jobs. The more restrictions we may have, the more rules we have, the more difficult it is we make for people to join jobs and leave jobs, the more reluctant employers will be to take on workers and the higher our unemployment rate will be.

Mr Ahmad Khalis earlier this afternoon suggested, for example, setting up a mechanism for employers to have to justify to the Ministry before they can retrench their workers and must give reasons and also answer for how much they are paying their senior executives. It is a well-intentioned proposal, but it is a counter-productive proposal. Because the result of this is for companies when they would otherwise hire workers to ask themselves, "Do I really want to take on somebody whom I may not need for the long term, whom I may have difficulty letting go off when the business conditions change, whom I may be stuck with?" And the answer is, "Better not, work overtime with the existing workers, don't hire extra hands."

This is not a theoretical risk. It is a real problem. In Germany, which has the tightest laws for firing workers and is the most difficult of all to let go of workers, they have the highest unemployment rates, and it is not a coincidence. It is because employers make the calculations: too hard to drop, better do not hire. So the key idea which we must follow is to free up the labour market, make it easy for people to change jobs and then we will be able to have high employment rates, not unemployment rates.

The third issue which we have to consider is taxation. Lower direct taxes, lower corporate and personal income taxes are essential if we are going to prosper in the next phase. They are essential because of competitiveness reasons. Other countries have been bringing down their direct tax rates drastically over the years and continuing to do so, and we have to be competitive with them. The Europeans, some of them, the Germans are 30%-plus corporate tax. If we are equal to them, there is no reason why they will consider coming to Singapore. Others are bringing direct taxes down, we have to do the same.

We have to attract talent intensive service industries to Singapore. We are not talking just about factories where hundreds of millions of dollars of investments, one or two employees ordered to go, he goes to Singapore. We are talking about fund managers, we are talking about IT companies, creative companies, people, movies, software. The people are the company. The people are high-earning people. If your tax is not competitive, the person says, "I'm not going to Singapore." The company will not be here. We have seen it. Our promoting agencies - MAS, IDA, EDB - repeatedly, when they want to try and bring activities to Singapore, they are asked, "How much more tax do I have to pay?" So that is a serious reason to bring down not just the corporate tax but the personal tax as well.

We have to bring down direct taxes to encourage entrepreneurship because an entrepreneur goes in, if you want him to risk everything, then he must have the chance of gaining a great deal. And if you say, if you risk everything, you lose, too bad, I give you a pat on the back, perhaps a medal. But you gain, you win, I will tax you 30%-40%, you would not get entrepreneurship. It is one basic reason why there are not so many entrepreneurs in Europe as in America because, in America, tax rates are lower, and Europe is not worth your while. In short, we have to bring our direct tax rates down to encourage more investments to grow the economy and, ultimately, which is most important for us, to create good well-paying jobs for Singaporeans. Unless you bring the direct tax rates down, you cannot do that.

At the same time, we cannot just bring the direct tax rates down. You have got to balance the budget. If we simply cut direct taxes, we will end up with a structural deficit, meaning whether the economy is up or down, the Government cannot balance its books and we will run a budget deficit. For example, Hong Kong now has quite a serious fiscal problem because they have lost one major source of revenue, which is land sales. Their tax rates are very low, their budget is in deficit. The Financial Secretary hopes to bring it back into balance over a period of seven years, but there are no easy solutions and raising taxes is very, very difficult. But we have to balance the budget and a balanced budget, in fact a modest surplus maintained over many years, has been one of the fundamental reasons why the Singapore dollar has been strong, why inflation has been low, why everybody's CPF balances and savings have had their value protected. So unless we protect the balanced budget, we are going to have a very fundamental problem.

So if we are going to bring direct taxes down and we are going to balance the budget, there is only one conclusion, that we have to bring up indirect taxes. What are indirect taxes? We have car taxes. We could raise those if they are not high enough. But I am not sure many Members will agree that they are not high enough. And there is GST, a broad-based tax which applies to everything, paid by everybody, weighs lightly on the whole economy because it is very well spread, efficient to collect and a stable source of revenue for the exchequer, whether the economy goes up or the economy goes down.

So if we are going to lower direct taxes, we will have to consider raising the GST. But before we raise the GST, we have to think very carefully about a couple of issues. One, timing, to be only done when the economy is on a firmer footing. We have to judge when we think that will be ready, because we do not want to put the economy back into a recession by an ill-judged move.

Secondly, we have to consider the impact of any GST adjustment on the lower income group. Because the lower income group consumes a large part of their income or, in some cases, even all of their disposable income and so any extra tax is an extra burden to them. Therefore, if we are going to adjust the GST, we have to buffer the overall burden on these lower income groups. And we also have to address specific concerns over certain vital essentials - education, healthcare, public transport.

So the way we did it in 1994 when we first introduced the GST was we had a comprehensive offset package so that we could make a calculation and assure everybody and show examples that if you are in a 3-room flat or 4-room flat, the offset which you get to tide you over a transition period is more than enough to offset the tax which you would have to pay in GST every year for every household. And in addition to that, we also had reassurance on education, on healthcare, on public transport, on specific critical items so that nobody will be alarmed, panicked into thinking that this is going to be an unbearable burden on him, which it is not. That was what we did last time when we have to do GST. This time, we must do the same.

I think Members will agree with me that it is never popular to suggest the possibility of new taxes. But going forward, restructuring our taxes is a vital step for us to gear up our economy for the changed environment to create more jobs. I look back to 1994 when we first introduced the GST. We reduced direct taxes in 1994 and, in subsequent years, whenever our finances strengthened, we gradually brought direct taxes down again. So, today, our corporate tax is 24 1/2%, our personal tax is 26 1/2%. Because of that, our economy grew after 1994-1995, 1996; 1997, we did well; 1998, the Asian crisis came, we still had positive growth; 1999, we picked up; 2000, we had a boom year; 2001, the US economy tanked, the electronics sector went into a slump, we went down. But we went down from a high level, we went down from an economy which was strong, we went down with reserves in our pocket so that when we needed to help people, we could take some of these reserves and we could have generous off-Budget packages last year - the New Singapore Shares - and therefore, we could pull through the crisis and manage. If we did not have that, had we kept our tax rates around 30%, which is where they were when we first started this process, and just gone ahead, I think we would have gradually slowed down well before 1997/1998; and come 2001, we would have a serious problem and unemployment would have been much, much higher than it is today.

So, these are the considerations which the Economic Review Committee is working through. The subcommittee is finalising their recommendations. The subcommittee on tax which Mr Tharman is chairing, I believe Mr Tharman intends to release his recommendations next week. When the Government receives his recommendations, we will consider them.

Apart from the specific issues which we have to deal with, one broader issue which we should consider, as we look forward, is the question of our social safety nets. We have been careful over the years to avoid subsidising consumption in Singapore. We subsidise investments, broadly understood, education, housing, basic healthcare. It has been important to us that we did this because we are not just a free market economy, we are also a nation and we are also investing in our people and building a population together. These social safety nets will remain major elements of our social compact. It is part of the deal. You are a Singaporean, this is the package. You work, you do well, but to start off with, here are things which you will get, not quite a birth right, but which every Singaporean will get. The safety nets are especially necessary to protect the minority who cannot fend for themselves. But for education, housing and healthcare, our target group is not just the bottom 20% who cannot look after themselves. In order to fulfil our social objectives, we are aiming these expenditures on a broad middle ground of Singaporeans because we want full and equal opportunities for everybody. So everybody goes to Government schools. We want a home owning society. So 90% of the population lives in HDB flats. We want good basic medical care. So we have social policies which reach the vast majority of Singaporeans.

These social supports are still important. But we have got to fine-tune them and especially, we have got to fine-tune the housing and healthcare part to keep them effective. The State must not over-provide because, by over-providing, we may undermine enterprise and self-reliance and we may create a dependence mentality. Our experience with the Economic Downturn Relief Scheme, which we introduced last year, is quite salutary. MPs will have first-hand experience. We did it because we needed to do it, because we were in a sharp recession. So we said up to $200 for three months. But quite a number of Singaporeans spread the word around that the Government is distributing money. And they came to queue up for the hand-out because it would have been remiss of them not to come and take this opportunity. And they came and we met them at the meet-the-people session. I had one young man come perfectly able-bodied, strapping, he said, "Where is my money?" I said, "What do you mean by where is your money?" He said, "I only got $100." I said, "Why should you have more than $100?" He said, "You said $200 x 3 months here." He produced me a newspaper cutting. I said, "It says up to $200 for three months." He looked at it, he said, "You said up to $200. You did not say up to three months." So I asked the grassroots leaders to review his case again very carefully to determine how much he really needed from the EDRS. But from his point of view, and many other Singaporeans', it is rational. "You are distributing, I better make a bid." So, if we are going to help people, we will have to be very careful to make sure people make an effort. And it is not just a hand-out.

So we very quickly learnt. Now, when they come, all the MPs say, "Here you are. I have a list of jobs. Have you applied for any of them? If not, here is an application form. After you have tried, come back and look for me again." And even the new MPs have also learnt this technique, because this is the way human nature is and that is what we have to guard against. We are nowhere near that, but we have to make sure that our safety nets avoid that. And in the case of healthcare, we are making some adjustments and the Ministry of Health is introducing selective means testing to direct the benefits to where they are most needed and, in the case of housing, MND is also making some reviews. These are major adjustments which can only take place over a period of time because they affect a lot of people. But they are adjustments which we have to begin to think about and to implement carefully, step by step.

Mr Speaker, Sir, may I now speak about the role of the Government. Dr Wang Kai Yuen asked what is the Government for. The people have elected us. What do you expect of the Government?

I would say this is what the Government needs to do, as far as economic management is concerned. First, set the strategic direction for the country. Make this a prosperous developed economy, one where everybody benefits from progress, make this a stable and harmonious society where all the races and religions live peacefully together. That is the first requirement. Set the goal, set the strategic objective, persuade everybody, that is what we are working for.

Secondly, pursue prudent macro-economic policies: be careful with our taxes; be careful with our budget spending; be careful with our exchange rate policy or monetary policy, meaning the Singapore dollar exchange rate; do not take liberties, do not take shortcuts, because if we decide to go for deficit financing, borrow money to spend or we decide to depreciate the currency as a way out of our troubles, the logical conclusion of that is Argentina. We are not getting there.

Next, the Government has to set the rules for micro-economics, to make it efficient, to make sure that people can do business properly. So we liberalised telecommunications. You can have 001, 008, 018, any number of international telephone numbers. Let there be free competition. We cannot go and micro-manage who can charge you how much, but we can set an environment where there will be competition and that will bring the price down. So we are talking about petrol prices. We cannot decide how much the petrol companies can charge you. It is impossible. We are not operating the petrol companies. But we can say, "Here are white sites. Take them." If NTUC wants to run a petrol station and compete against the petrol companies, by all means may the cheapest petrol win. But please manage the queues outside the petrol station.

So we need to have the right micro-economic rules. We set the rules. We do not play the game.

Next, we have to invest in people, in infrastructure. That is critical. You could take a purist view and say, "Well, the market will do it. I will not build trains, I will not build schools, I will not fund education in university." But as a pragmatic approach, we think it is right, we think it is the best way. The Government will do this, because if the Government did not do this, quite frankly, I do not think it would be done and, certainly, would not be done as well.

So, overall, we can foster a pro-growth environment in Singapore. You can go to China. Yes, it is cheaper. The land is cheaper. Many people brighter, some of them better educated than ours. But a whole pro-growth environment, that is not so easy for them to produce, and that is something which we can produce in Singapore. We have harmonious tripartite relationships. The unions work with us. The employers work with us. We have the whole system working, whether it is the banks, whether it is the telecommunications companies, the Government is predictable, there are no arbitrary impost, there is no red-tape. We have a pro-growth environment, but we will focus on what the Government can do but the private sector cannot do. If the private sector can do it, we will leave it to them. If they cannot do it, we will do it. What we cannot do, as a Government, is to be: employer of last resort - if you cannot find a job, I will hire you; investor of last resort - you need somebody to buy into your company, I will do that; or Father Christmas of last resort - nobody else will do for you, we will do that.

Dr Wang Kai Yuen says how can we be going just on the basis of self-reliance, we are such a small country, small island without resources. I say, on the contrary, because we are a small island, because we have no resources, therefore we have to be self-reliant. If we were a big country, if we had oil, gas, timber and gold, then we do not have to be self-reliant. You just sit back, the Government will provide. But, lacking those, we have to fall back on our wits, our strength, our effort, and that means Singaporeans have to be self-reliant. Those were just the cards we were dealt with when we were created, and that is the way we are.

Several MPs raised the question of keeping costs low. Mr Ravindran mentioned this first. He asked whether the Government departments were making huge profits. After that, Mr Steve Chia echoed him. I have a friendly word of advice for Steve Chia who may be new, that he should be careful when he picks up points from the PAP Backbenchers and uses them. Usually it is quite safe because our Backbenchers make good points but, once in a while, they are off target and then he will be in trouble. In this case, I think they are wrong.

Singaporeans get Government cheaply. The total tax burden in Singapore is only 18% of the GDP. If we go for welfare programmes, if we have more subsidies, if we have unemployment benefits, if we go for free medical care like European countries or like Britain, then the burden will go up and the cost will go up. In Europe, the government consumes 45% of GDP. We are 18%. In America, which has much lighter burdens than Europe, the government consumes 30% of GDP.

So the way to have low costs is for us to have a small Government and keep our subsidies to a minimum. There is no free lunch or, as the Opposition sometimes says, in Chinese, "yang mao chu zai yang shen shang", ie, wool on the sheep grows from the body of the sheep. Anything which the Government spends, it is the people's money. If we do not recover the costs of services, then the Government has to fund these services from taxes or from printing money. Our policy is to recover the costs, no more. We try hard to improve efficiency and cut costs further, and there are opportunities to do that. And I would not say that, in every single instance, we are as lean and as trim as we could absolutely be. But, by and large, we are not doing too badly in Singapore.

But just to make quite sure, let me make you all a generous offer. Anybody who thinks that we are overcharging for any service and that you could do it cheaper, make us an offer, take over providing that service, and we will make a deal with you. You take it over, you make a reasonable margin, we will save some money and the public will also save some money. We are quite serious about that. From the Ministry of Finance's point of view, if people will come forward with such offers, it will make it much easier for me, as Finance Minister, to keep expenditures and taxes down. But, by and large, we are not doing badly and our policy, as stated in the Addenda, is not for us to make a profit from our services. It is just to break even and cover our costs.

Finally, if I may put in a good word for civil servants. Assoc. Prof. Chin Tet Yung blames civil servants for rigid policies and for not listening with their hearts. Dr Amy Khor also asked for civil servants to be less rule-bound because, otherwise, they may be neither civil nor servants. After the former Speaker's speech yesterday, I hesitate to be misunderstood as being thin-skinned, but since the civil servants are unable to defend themselves, it is my duty to speak on their behalf.

Civil servants do not always measure up to the ideals which we have set for ourselves in the Public Service 21, but we have set our ideals and we do try our best, first, to implement efficiently, flexibly and courteously policies and, secondly, to be transparent and to explain the decision and why we have reached a certain decision, even if we cannot accede to it. It is not always possible, because sometimes reasons are confidential, sometimes a matter of judgement and, if it is a matter of opinion, then a panel of decision makers has to look at the facts and decide. There is no right or wrong. If you are the appellant, you will say, "I want it"; if he is the decision maker, he has to make a decision. But, to the extent possible, we will explain, we will operate efficiently, quickly and we will give you a proper answer.

But remember that the policies are decided by the political leaders, not by the civil servants. We, the Executive, have to take responsibility. If the policy is wrong, the MPs should raise it in Parliament and we can debate it and decide whether we are right, in which case, the policy stands, or, if we are wrong, in which case, the policy should be changed.

In the specific case which Assoc. Prof. Chin raised about HDB not approving premature requests to sell flats because owners cannot afford it and they want to downgrade, it so turns out that it is not true that HDB never agrees. From time to time, HDB does agree. It examines all the cases and, in specific cases where there are good justifications, HDB will act. Last year, they had about 30 cases where the minimum occupation period was waived for financial hardship.

So, if there is a policy which is not right, Parliament is the place to debate it. If there are cases which are not properly handled ---

Mr Speaker: DPM, could I interrupt you, please, to allow Mr Mah to move the exempted motion?