1ST APRIL, 2002 TO 31ST MARCH, 2003 (Paper Cmd. 3 of 2002)

Order read for consideration in Committee of Supply [3rd Allotted Day].

[Mr Speaker in the Chair]

Head P (cont.) -

Resumption of Debate on Question [16th May, 2002],

"That the total sum to be allocated for Head P of the Main Estimates be reduced by $100." - [Assoc. Prof. Chin Tet Yung].

Question again proposed.

Assoc. Prof. Chin Tet Yung (Sembawang): Sir, when we received news about the detention of the Singaporean with Al-Qaeda links by the Northern Alliance in Afghanistan, it must have shocked many of us. Many of us asked how is it that a Singaporean could have been involved. It brought home to us the sad truth that terrorism is a world-wide scourge that spares no country, however small and however secure. Of course, what was most reassuring was that our ISD, having received information from one of its sources on the first suspected terrorist, had already been discreetly monitoring him and those linked to him. ISD subsequently detained a number of suspects linked to him and briefed the Americans on this case around mid-December. It was only after the briefing that the Americans informed ISD that the video-tape about targets in Singapore was found. Fortunately for us, the people behind the making of the tape had already been detained by the time the existence of the tape was disclosed by the Americans. A potential catastrophe was therefore avoided.

Sir, combating terrorism is no longer just a national security issue. It is a multi-national security issue. Intelligence departments have to work together and share information quickly and accurately, if we are to have any success in avoiding terrorist attacks.

I am glad to read in the Straits Times that there will be a meeting of the ASEAN Security Ministers to come up with an ASEAN-wide counter-terrorist agreement, next week in Kuala Lumpur. One of the items on the agenda apparently would be to discuss how to shore up domestic laws to meet the challenges of combating terrorism.

Sir, it is strange how a catastrophe can change opinions on detention laws. Before the September 11 terrorist attacks, many countries in the liberal world and other liberal NGOs criticised the detention laws, such as the Internal Security Act and the Criminal Law (Temporary Provisions) Act as draconian. Recently, the US Attorney-General, John Ashcroft, endorsed Malaysia's Internal Security Act, which is actually very similar to ours. Indeed, the US now has a Patriot Act that contains over a thousand provisions, far exceeding the scope and powers of the Internal Security Act.

Sir, I think that, now, no one would question the need for such legislation as a powerful weapon to fight against terrorism. The task is to see how we can have legislation that would enable the law enforcement agencies to do their job well and yet not intrude into the lives of ordinary law-abiding citizens.

Sir, I would like to ask the Minister just two questions. First, whether Singapore's existing links to, and the level of cooperation with, other intelligence agencies, especially those in the region, are adequate. And, secondly, whether there needs to be a review of our domestic legislation to shore up the powers of the law enforcement agencies to combat terrorism.

The Minister for Home Affairs (Mr Wong Kan Seng): Sir, I thank the Members for raising the questions. They have expressed concern about the security situation, and asked whether Singapore is prepared for the threat of terrorism.

Let me first give Members an overview of the security situation and measures that we have taken to deal with it.

The threat of terrorism to Singapore is not a new one. We have had our brush with terrorist groups in the past. But, in all these incidents, the involvement of Singaporeans was minimal. In contrast, the recent Jemaah Islamiyah episode saw the participation of Singaporeans in terrorist plans which, had they succeeded, would have resulted in significant loss of lives. Mr Tan Soo Khoon and other Members have commented on this too.

Why is this Jemaah Islamiyah terrorist group so different from the previous groups? At the risk of over-simplification, what has made the difference is impact of the Al-Qaeda. It was the exposure of Jemaah Islamiyah leaders to the jihad in Afghanistan and to Al-Qaeda training which radicalised them, not only by imbibing Al-Qaeda's sophisticated terrorist tradecraft, but also its ideology of global jihad. Ibrahim Maidin, the Singapore Jemaah Islamiyah leader, understood the importance of this Afghanistan and Al-Qaeda exposure, and went to considerable lengths to ensure that a flow of selected Jemaah Islamiyah cadres were sent to Afghanistan. That the Jemaah Islamiyah subscribed to the Al-Qaeda's global jihad agenda is obvious. For even as it maintained its own vision of, first, an Islamic Indonesia, and later an expanded vision of an Islamic nusantara (meaning Malay Archipelago) comprising Malaysia, Indonesia and Mindanao, Jemaah Islamiyah members were ready to take part in the Al-Qaeda's global terrorist war against those whom Al-Qaeda deemed as the enemies of Islam, namely the Americans.

Hence, in 1997, nearly four years before the September 11, 2001 attacks, Singapore's Jemaah Islamiyah members had themselves conceived of a plan to attack the shuttle bus conveying American personnel to Yishun MRT. This plan was submitted to, and was approved, by the Al-Qaeda leaders, but for reasons unknown, was not subsequently pursued. Then again in October 2001, when an Arab-Canadian Al-Qaeda operative approached the Jemaah Islamiyah for help to launch multiple truck bomb attacks against US-linked targets in Singapore, the local Jemaah Islamiyah cell readily acceded to this request. Had they not been stopped in time, these attacks would have no doubt occurred. In fact, even after they learned of the arrests by the Internal Security Department, the Jemaah Islamiyah leaders met in Johore a few days later and instructed the Singapore Jemaah Islamiyah members to continue with the attacks in retaliation of the arrests. To this end, the Indonesian Jemaah Islamiyah bomb maker, Fathur Rohman Al-Ghozi, who was called "Mike", was about to buy 4.8 tonnes of TNT when he was arrested by Filipino Police following intelligence from the ISD. At the time of his arrest, he had already acquired and stashed away 1.2 tonnes of TNT, 2,400 metres of detonator cord and hundreds of detonator caps destined to be smuggled from Mindanao to Indonesia, then to Malaysia and, finally, to Singapore.

Sir, the terrorist challenge that Singapore and the rest of the world are facing today is like nothing we have ever encountered before. Terrorism is not a new phenomenon. It is an old scourge which has plagued many countries throughout the world since even the turn of the 20th century. But most of these terrorist groups were generally local in their agenda and their operations. These would include, for example, the Liberation Tigers of Tamil Eelam in Sri Lanka, the Irish Republican Army in the UK, the Basque Separatists in Spain or even the Shining Path of Peru in South America. In our region, until recent years when links were established with external groups, we have the Abu Sayyaf and the Moro Islamic Liberation Front in the Philippines. All of them mounted terrorist operations mainly in their own national domains. The Al-Qaeda however is a trans-national terrorist organisation with sleeper cells all over the world. It has operational reach anywhere in the world.

The Al-Qaeda is, of course, not the first of its kind in this regard. There were terrorist organisations which also operated internationally. Members of the Japanese Red Army, for example, came all the way to Singapore to mount the Laju incident in 1974. What makes the Al-Qaeda unique is its ability to successfully franchise and indigenise its terrorist expertise and ideological agenda to other autonomous, local militant Islamic organisations throughout the world, including, as you have seen, the Jemaah Islamiyah. The Al-Qaeda is able to weave together a brotherhood of local terrorist and militant organisations, each with its own agenda and revolutionary histories but, at the same time, ideologically linked to the agenda of a common global jihad. This means that even if the Al-Qaeda is dismantled, the pursuit of its jihad continues in these local groups. And given the internal resources and the capabilities of these groups, the threat of terrorism can continue for a long time to come. This is what makes the current complex terrorist threat that we are facing such a resilient, borderless and porous phenomenon. This is why Singapore strongly condemns all forms of terrorism.

As a responsible member of the global community, Singapore fully supports international efforts in combating terrorism. In doing so, the United Nations Act was enacted to implement the United Nations Security Council Resolution 1373. Under the Act, regulations allowing us to effect measures mandated by the UN Security Council can be issued. At the same time, relevant international conventions and protocols relating to terrorism are being reviewed.

Singapore works closely with its ASEAN partners to combat terrorism. The ASEAN Ministerial Meeting on Terrorism that I am attending in Kuala Lumpur next week is an example. ISD has regular contacts with its foreign counterparts to exchange intelligence. These have resulted in significant successes, such as the arrest of bomb maker Fathur Rohman Al-Ghozi in the Philippines. Beyond terrorism, our law enforcement agencies have established close relations with the other regional counterparts to deal with other transnational crimes, such as drug trafficking and other serious crimes.

Sir, Mr Tan Soo Khoon is interested in our National Emergency System (NEST). The NEST has been in place since 1982 to ensure that Singapore survives any security threat. It is a comprehensive system encompassing civil security, civil defence and the smooth operation of our economy during an emergency. It also ensures the provision of essential services such as water, power, health services, food and fuel.

All the Ministries and certain key Government agencies are involved in NEST. I chair the National Emergency Council comprising the Permanent Secretaries of all the Ministries and the key appointment holders of certain Government agencies to set the policies and provide guidelines to coordinate and prioritise the operations of the various bodies involved in this National Emergency System. 12.45 pm

There is also a Security and Policy Review Committee set up since 1988 and comprising the Ministers for Defence, Home Affairs and Foreign Affairs to monitor the strategic security issues, particularly those requiring inter-Ministry coordination. We also have the Executive Group, chaired by my Permanent Secretary, and comprising the Permanent Secretaries of the key Ministries to lead in the management of any civil security or civil emergency situation, such as a hijack, a bomb explosion, terrorist sabotage and other civil disasters.

In 1994, we set up the National Emergency Behaviour System as a key component of the National Emergency System to mitigate and manage stress experienced by victims and provide psychological support for traumatised individuals during a civil or a national emergency. Today, we have emergency responders, nurses and teachers who are trained as emergency behaviour officers.

Various exercises are carried out from time to time. Some are more visible, such as the air crash exercise conducted in May 2001 along Holland Road which involved representatives of grassroots organisations as well as Government agencies. We also conduct blood donation drives and shelter exercises which involve the public from time to time.

In addition, the Singapore Civil Defence Force conducts civil resource mobilisation exercises regularly. And I am glad to note that the civil resource owners have shown encouraging support for these exercises. There are other exercises which are less visible to the public, and these are primarily to test out the response plans of the various agencies in handling and dealing with an emergency situation. Members asked me to tell in greater detail what these plans are. For obvious reasons, we do not publicise these plans, lest potential trouble makers learn how to overcome them, or to sabotage them.

Sir, coming back to the emergency behaviour officers, many of them have been put into practice when we had the air crashes in Palembang and Taiwan, as well as in other earthquake disasters, such as in Taiwan.

Sir, several Members also spoke about the need for multi-agency coordination to deal with terrorist threats. We recognise this. At the strategic level, the coordination is enhanced through the establishment of the National Security Secretariat, which DPM Tan mentioned yesterday, and it is staffed by the Home Team and officers from the Ministry of Defence. The Joint Counter-Terrorism Centre was also set up to share intelligence on terrorism among the intelligence agencies.

To further tighten the inter-Ministry coordination, my Ministry has recently set up the Homefront Security Centre, which will have oversight of the security operations and joint exercises to test responses to the various threats. It will work closely with MINDEF and other Government agencies and departments.

Sir, Singapore's openness to trade and travel is our economic strength, but it can also be a security weakness. So, following the September 11 attacks, security measures at our borders have been intensified to prevent the infiltration of undesirable persons. Stringent immigration and security checks are carried out at all sea, land and air checkpoints. All seamen are now required to undergo full immigration clearance. To facilitate this, the Clifford Pier and the West Coast Ferry Terminal have been gazetted as designated landing points with full immigration, customs and security facilities recently.

Where possible, we have also enhanced our operational capability using technology. The Singapore Immigration and Registration has acquired equipment to detect forged travel documents. X-ray machines and walk-through metal detectors are deployed to detect weapons and explosives. Explosive sniffers capable of detecting explosives such as TNT, or even C4 - an explosive substance found in the shoe of the man who travelled on a plane to America - which has a low vapour emission, are also deployed. Mobile x-ray machines at the land checkpoints enable effective inspection of cargo vehicles. In addition, my Ministry, together with the Ministries of Transport, Trade and Industry and Finance, is considering a security regime to screen and inspect imports, exports and transhipment cargo at our ports. This system will leverage on technology, such as x-ray scanners and radiological detectors.

Since October last year, visa requirements have also been imposed on visitors from certain countries in view of the global security situation. This allows security screening of visitors before their arrival in Singapore.

Key installations and high-risk establishments are attractive targets for terrorists. If our key installations are sabotaged, lives will be lost and Singaporeans' confidence will be shaken. Therefore, Police and, in some instance, the SAF and Gurkha officers are deployed at establishments such as Changi Airport, Tuas and Woodlands Checkpoints, key Government buildings as well as our oil and water installations. Regular patrols are conducted and physical measures, such as closed circuit television and security lighting, are put in place. Police and ISD have also conducted training for security agencies and in-house guards of key installations. The training includes the identification of bombs, firearms and other weapons, and how to respond to incidents such as a bomb explosion, should it occur.

Sir, when arrested, the Jemaah Islamiyah members already had four tonnes of ammonium nitrate kept in a warehouse in Malaysia, and were planning to acquire another 17 tonnes to manufacture truck bombs. While ammonium nitrate is widely used as fertilisers, it can also be turned into explosives. There are other commercial substances that can be similarly misused. While we have a system of monitoring the import, transport and storage of hazardous materials, my Ministry is currently studying whether the controls over hazardous materials and commodities that can be misused by terrorists need to be refined.

It is widely believed that many terrorist activities are funded from Osama Bin Laden's personal fortune through a series of money laundering operations. It is vital that the integrity of our banking system be protected from such abuse. Singapore has a rigorous system of checks to detect and counter criminal use of the financial system. We will be introducing the Terrorism (Suppression of Financing) Bill in Parliament next week. This legislation will give effect to the International Convention for the Suppression of the Financing of Terrorism, which Singapore signed on 18th December 2001. Thus far, we have not detected any terrorist accounts in our financial system. Nevertheless, we will continue with our strict monitoring.

Sir, Members may recall that the US had five anthrax-related deaths last year. This caused a series of anthrax hoaxes in many parts of the world. From October last year to 16th May this year, 143 cases of suspected anthrax were reported to the Police. All turned out to be false alarms or pranks. I urge those who tried this not to waste the Police's and the security forces' resources by calling them up and putting white powder substances, and therefore detracting them from their major role of protecting the public.

Prof. Chin and Mr Charles Chong asked if we are ready to deal with biochemical threats. I would like to assure this House that we have a system in place to monitor and detect any biological outbreak early. Our security agencies and medical services are prepared and equipped to deal with such contingencies. We have systems in place to monitor and detect any biological outbreak early. The Ministry of Health has sent out directives to medical practitioners to alert them to the symptoms that a patient would demonstrate upon the exposure to biological or chemical agents. Our hospitals also have adequate facilities and medical supplies to handle such a contingency. Since 1996, after the sarin attack in Tokyo, the Singapore Civil Defence Force has been raising its level of preparedness to respond to any chemical or biological agent attack. The Civil Defence Force will reorganise its resources to better handle these threats. Two new hazardous materials (Hazmat) stations will be established on Jurong Island and in Tuas by 2004. The skills level of the Hazmat specialists will be enhanced and more sophisticated equipment acquired. We have also conducted study visits to other countries to see how they deal with such threats and to learn from them.

Prof. Chin is also concerned about threats to our financial system or cyber crime problems. Threats like these are certainly emerging in cyberspace. Terrorists can carry out cyber attacks against critical infrastructure facilities, such as telecommunications networks, and cause great damage to our economy and our lives. To deal with this, the Infocomm Development Authority has worked out policies, plans and crisis management framework for infocomm emergencies with the Singapore Computer Emergency Response Team.

Sir, I fully agree with Prof. Chin that it is just not enough for the Government agencies to be prepared. The community has an important role to play. Homefront security must be the shared responsibility of every Singaporean. Since the introduction of Total Defence concept in 1984, the Government has been consciously enhancing the security awareness amongst Singaporeans. For example, the Civil Defence Force provides handbooks containing a list of important telephone numbers as well as information, such as the use of improvised covers at home, tips on cardio-pulmonary resuscitation (CPR), first-aid, dealing with hazardous materials, etc.

I would like to inform Prof. Chin that volunteers are indeed given a role in ensuring the community's security. For example, we have the Civil Defence Executive Committees in the various constituencies which focus on the fire safety and emergency preparedness, and manages the Civil Defence Volunteer Scheme. To date, a total of 60,000 CD volunteers have been trained under this scheme in skills such as first aid, rescue and evacuation procedures, and basic fire fighting. This ensures that they are equipped to take care of the community in times of emergency. Another example is the Neighbourhood Watch Zones which boast of a total of 4,000 volunteers, of which about 1,000 are women. These provide the "eyes and ears" on safety and security issues in the neighbourhood.

In a crisis, it is vital that the community does not further dissipate our security resources through unwarranted fear, suspicion and paranoia. Singaporeans could also help our security agencies by staying calm in an emergency and alerting the security agencies if they come across something suspicious in the neighbourhood. Police has and will continue to share information on what to look out for and who to call should suspicious items or persons be found or detected. 1.00 pm

Mr Yatiman asked how we can prevent ourselves from being a target for the terrorists. Let me say that, today, every country is potentially vulnerable. Singapore is no exception. Although we have crippled the Jemaah Islamiyah cells and its plans in Singapore, the threat of terrorism has not gone away, and it is not likely to disappear for some time to come. We have protective measures in place, but there is no recipe for immunity. The best we can ask our people to do is to be vigilant and take a shared sense of responsibility over our common collective security. For example, the critical information that the ISD received that led to the Jemaah Islamiyah investigation came from a concerned Singaporean who told ISD that a Singaporean called Muhammad Aslam bin Yar Ali Khan had links with Al Qaeda. ISD put him and his associates under surveillance but did not arrest him when he left for Afghanistan on 4th October 2001. After he was arrested by the Northern Alliance in Afghanistan, news broke at the end of November and MHA was asked by the press to comment. Fearing that all his associates would flee, ISD began arresting the Jemaah Islamiyah group on 9th December last year.

The concerned Singaporean who passed ISD the information was not the only example in this case. There were others who stepped forward with useful information when the case became public. This included an expatriate working in Singapore. Obviously, everyone who lives in Singapore and shares in its safe and secure environment can have a positive contribution to make. The world is a less safe place today; we need to be on guard. But we must not let this sober reality undermine our self-confidence and allow fear to reduce us into paranoia and paralysis. We must not allow ourselves to be intimidated by terrorism; life must and will go on.

Sir, we are ready to deal with the challenges posed by the current security climate. I can assure this House that our officers are well trained and equipped to handle a wide range of security threats.

Singaporeans themselves must never take racial and religious harmony for granted. I am glad to note that Singaporeans reject extremist elements, regardless of race or religion. The stability and trust that has taken more than 30 years to build must prevail if Singapore is to survive as a nation. This requires the involvement of all Singaporeans. By remaining vigilant, united and steadfast, the challenges would be more easily overcome, and we would emerge a stronger nation.

Dr Lily Neo (Jalan Besar): Sir, the Central Narcotics Bureau caught 3,417 drug abusers last year. This is an increase of 8% over the previous year. Among them were 784 new abusers, representing a 17% increase.

Today, I would like to raise a primary concern that the number of people caught with synthetic drugs has gone up. The new "club drugs" Ketamine, Ice and 55 are now more popular with abusers, with "K" or Ketamine, being the most popular currently. Its popularity is due in a large measure to the misinformation that it is not addictive and has no long term ill-effects. Abusers take between two and three swipes of one gramme each time. The first swipe causes hallucination of about an hour and after that the abuser is sober; hence, giving the impression that he is in control. The second and third swipes might cause the abuser to be amnesic and has no recollection of what happened the night before. Because of that, it had been used in gang rapes that went unreported. "K" is most commonly found in nightspots and is peddled by the drug syndicates. Often, the senior syndicate members recruit younger boys and girls to traffic on their behalf.

The popularity of "K" to traffickers and abusers alike lies in the difficulty in detecting the drug in the abusers should they be caught. Ketamine offences have risen to 24%, and the number of people caught using, possessing or trafficking the drug increased to 207 last year, up from 167 in 2000. More than half of those arrested (55%) are younger than 25, and one in three of the young abusers is female.

There is a high incidence of repeat offenders in synthetic drugs. The age of abusers starts as young as 14, when they are still in school. Almost always upon addiction, the abusers would switch to the most popular and sometimes stronger type of drugs. Many young girls end up in a vicious cycle of crime, abuses and flesh trade to sustain their lifestyle. The younger girls are forced into nightclubs and KTVs as hostesses. Does the Ministry of Home Affairs have any figures on such cases of young offenders? If not, will the Ministry of Home Affairs have studies done on this?

May I ask the Minister for Home Affairs whether there are any proactive plans taken by his Ministry to curb the rising trend of synthetic drug abusers? May I ask whether there are any local back-street synthetic drug manufacturers, since such drugs are supposed to be easily produced? Are we vigilant in this area?

Since many of the synthetic drug users are young people and many starting as early as 14, should there be more public education and drug awareness programmes targeted at our school children? This is important because many of them do not realise the potency and addictive effects of Ketamine and its long-term ill-effects. May I beseech MHA to be current in its knowledge of new synthetic drugs and adapting quickly to the prevailing scene at all times. We need to be on top of the current situation as best as we can.

Sir, MHA should collaborate with MOH on a regular basis in using the services of the Centre for Drug Evaluation and Institute of Science and Forensic Medicine to analyse the new synthetic drugs so as to design appropriate urine and blood tests to detect them. Enabling drug detection will help us curb such drug abuse.

The Senior Parliamentary Secretary to the Minister for Information, Communications and the Arts (Encik Yatiman Yusof): Sir, enjoying a strategic location for the air and sea routes has given Singapore tremendous advantages economically. Through this unique geographical position, we succeeded in developing Singapore into air and sea hubs. However, these two have brought special problems. Along the heavy movement of goods and people through various entry points too flow the illicit drugs. Singapore receives 7 million tourists a year. In addition, tens of thousands of Malaysian workers cross into Singapore daily to work here. Many Singaporeans too shuttle across the Causeway and the Second Link.

Considering that Singapore is not far away from the Golden Triangle, the nearest source of illegal drug, and the fact that our country is a major transportation hub, the risk of Singapore becoming a transit point for drugs is real. We have lived under these circumstances for a long time and so far, the Ministry has done an excellent job in preventing drugs from flowing into Singapore. However, for every new measure taken, the drug syndicates would always find new ways of overcoming them. My question is: what are the new plans that the Ministry has in mind to counter this?

Sir, recent figures released by the MHA show that the number of those detained for drug abuse had stabilised. What are the factors that have contributed to this situation, and what further steps the Ministry has in mind to further reduce the number of drug offenders? What sort of support is offered by MHA to the affected families and is such assistance sufficient?

Mr Wong Kan Seng: Sir, the number of drug offenders arrested has declined significantly, by 34% in the last 10 years, from about 6,250 in 1992 to 4,130 in 2001. Mr Yatiman asked what were the factors that contributed to this decline. Since the mid-1990s, we have taken a multi-pronged approach in dealing with this drug problem, ie, preventive education, vigorous enforcement and a comprehensive rehabilitative and after-care regime to tackle drug abuse. We do not work alone. We work with all the agencies that are responsible to deal with this issue. We work with the Ministry of Education. We work with the Ministry of Health. We work with the Ministry of Community Development and Sports. And we also work very closely with many community self-help organisations, voluntary organisations which are concerned about our young people being involved in drugs, and help them to get out of the problem.

Sir, effective enforcement is a cornerstone of our overall strategy. So we doubled our Central Narcotics Bureau's manpower in 1995. The CNB has also reorganised and improved the effectiveness of its intelligence division. We used to have a very small set-up, but we have decided to increase the number of officers in this division so as to get better information to deal with drug syndicates. This enabled the CNB to break up many more drug trafficking, smuggling and distribution syndicates than before. Just last year alone, the CNB smashed 24 syndicates, six times more than it did in 1994 when we had less resources. We have also strengthened our laws, for example, by sending hardcore addicts to long-term jail sentences. Apart from acting as a deterrent, this has actually kept the hardcore drug addicts away from contaminating the young. As a result, we see a decline of younger people in drug addiction.

But we must keep on top of this evolving trend. As Dr Lily Neo has pointed out, new synthetic drugs such as Ketamine are gaining popularity, just as Ecstasy was gaining popularity in 1996/1997. Although the number of Ketamine abusers is small, we are paying very close attention to it. Dr Neo is concerned particularly about young girls being addicted to Ketamine. We are similarly concerned. 133 Ketamine abusers were arrested last year. This is an increase from the 78 in year 2000.

It is correct that one in three of these Ketamine abusers are female, as compared to one in 10 among the other abusers. This trend mirrors the increasing abuse of such drugs, not just in Singapore, but also regionally and internationally. We are not alone in having this problem. But that is no comfort. 20% of the Ketamine abusers, as I said, in the last two years were actually below 20 years old, of whom half were girls. The relatively high abuse rate among the young females is because of the misconception - their wrong thinking - that Ketamine is a benign drug which they think will not be harmful or addictive. Let me, at the outset, dispel this misconception. Ketamine produces a progression of effects from a state of dreamy intoxication to delirium, accompanied by an inability to move, feel pain, or remember what has occurred under the influence of drugs. So girls are particularly susceptible to other problems if they indulge in such drugs. Ketamine causes hallucination, alters sensation, mood and consciousness. It distorts hearing, touch, smell, taste and visual sensation and causes nausea, vomiting and loss of memory. I do not see the fun in taking such a drug.

Many of our young abusers consume Ketamine at night entertainment outlets. CNB regularly conducts enforcement actions in these places. Just as it did with the problem of Ecstasy abuse, it requires the nightclub operators to inform the CNB should they come across such people. However, to date, neither the Police nor CNB has come across any drug trafficking syndicates luring young girls into prostitution via Ketamine addiction.

Ketamine is detected through urine analysis conducted by the Centre for Forensic Science. So we work very closely with the Ministry of Health. Urine specimens of suspected Ketamine abusers are sent there for anlaysis. No one should be under any illusion that he or she can consume Ketamine and get away with it.

Synthetic drugs, including Ketamine, are not known to be produced in Singapore - that is the lucky part. But they are produced in clandestine laboratories in the region such as the Philippines, Indonesia, Cambodia, Malaysia and smuggled into Singapore - that is the frightening part, because it is so widely produced in this region, and they can be brought in quite easily. We have to ensure that our border checks are tightened up as well. But we have many travellers coming into Singapore every day and that task will be difficult. We will have to depend on intelligence to detect syndicates and to raid such places where drug abusers hang around and arrest them. 1.15 pm

Sir, volunteer groups like the National Council Against Drug Abuse (NCADA) and the Singapore Anti Narcotics Association, working with the CNB, have undertaken many preventive drug education programmes with the schools and the general public. Every year, the National Council Against Drug Abuse has many programmes involving the schools and the students, as well as many out-of-school youths working together with SANA. The result is a marked decline in the number of new drug abusers, from 1,421 in 1996 to 784 last year, and that is, in a way, an encouraging sign that we do not have many more new ones coming in, although we continue to have them. We cannot completely stop people from abusing drug. Only enforcement action can reduce that.

Aftercare is also an essential part, which is what Mr Yatiman asked, in curbing the drug problem, as it helps drug addicts to resist and overcome their addiction. Here, the Prisons Department and the Singapore Corporation of Rehabilitative Enterprises (SCORE) work very closely together with the volunteer groups, such as Singapore Aftercare Association and the halfway houses. This has proven to be successful in keeping down the proportion of former drug abusers returning to drugs.

Assistance is also granted to families of offenders to help them cope with the incarceration of their loved ones. Families of offenders can approach the Industrial and Services Cooperative Society Ltd and SCORE for assistance. The Industrial and Services Cooperative Society offers annual book grants and scholarships to help them cope with their children's schooling and expenses. It also employs family members of offenders. Family members of offenders who face difficulties in finding jobs can also approach SCORE for employment assistance.

In addition, my Senior Parliamentary Secretary, Mr Mohamad Maidin, holds weekly meetings with the family members of drug addicts, to see what sort of assistance they need. Ex-drug addicts and their family members are given further assistance. Help rendered includes employment, accommodation and counselling. The Prisons Department and the Singapore Anti-Narcotics Association have, since 1998, spearheaded the Family Education Against Drug Abuse programme. This programme teaches families the necessary skills and knowledge to cope with and facilitate the addicts' recovery.

Apart from all these measures, families of offenders can seek help from other community agencies, such as the Community Development Councils and the Family Service Centres. These measures are enough from now to help the families of offenders to tide over the difficulties arising from their incarceration.

Mr Charles Chong (Pasir Ris-Punggol): Sir, Community Safety and Security Programmes (CSSP) are action plans drawn up by grassroots leaders, residents and the Home Team to tackle community issues and problems affecting the safety and security of the local neighbourhood.

It started in 1997. The main purpose of CSSP is to encourage the community to look after its own safety and security matters through self-help, mutual support and active citizenry. I understand that, since the year 2000, CSSP has been expanded to include schools in crafting their own safety and security programmes. Could the Minister provide the House with an update of how successful has CSSP been in getting the community involved in addressing neighbourhood safety and security issues? What initiatives have also been taken by the Home Team to facilitate problem solving CSSPs by grassroots leaders and residents? And would the Minister consider implementing a National CSSP Awards to provide recognition about standing initiatives and to encourage more in the community to get involved in CSSP?

The Senior Parliamentary Secretary to the Minister for Home Affairs (Encik Mohamad Maidin B P M): Sir, Mr Charles Chong has just asked for an update on the Community Safety and Security Programme (CSSP).

Sir, I am pleased to note that, since the CSSP was launched in 1997, we have made very good progress. In December 1998, there were 66 Residents' Committees involved in the CSSP. Today, we have 502 Residents' Committees and all 53 Neighbourhood Committees have implemented the CSSP. In addition to that, more than 100 schools have adopted the CSSP. But numbers do not tell the whole story, Sir. The range and quality of CSSPs have also seen marked improvement. Today, CSSPs encompass crime and fire prevention, road safety, juvenile delinquency, care and support programmes. In recent years, commercial enterprises, such as markets, have also come on board.

And CSSP, as we have noted, is a form of pro-active community self-help. To maintain its effectiveness, it is crucial that all CSSP practitioners receive adequate training in problem solving as well as in community building tools. With this in mind, the Home Team and the People's Association conducted a series of workshops in January this year to train more than 1,700 grassroots leaders and Home Team officers in the skills needed for effective community involvement. We will continue to build up the capabilities of CSSP practitioners, so that we can sustain the CSSP efforts and improve the quality of the solutions devised.

We will also expand CSSPs in our schools. School CSSPs mostly belong to one of three categories - juvenile delinquency, preventive education as well as road safety. These programmes have generally been successful although we recognise that we can still do more. Already there are encouraging signs that point to a broadening of the school CSSP programme. For example, the Northeast CDC has been working with the National Police Cadet Corps (NPCC) and the Police to develop young student leaders by involving NPCC cadets in local CSSP projects.

On the suggestion by Mr Charles Chong to consider implementing national CSSP awards to provide recognition for outstanding initiatives and to encourage more in the community to get involved in CSSP, I am pleased to inform him that the Police is currently working with the People's Association to implement a common set of criteria for CSSP awards to cover all CDCs. From then on, we can have a better programme.

Sir, I also wish to assure the House that the Home Team will remain committed to the CSSP. As CSSP grows in numbers and in scope, the Home Team will continue to provide support and resources, wherever we can, so that we can achieve the CSSP's goal of building a caring community and safe homes for all our citizens.

Assoc. Prof. Chin Tet Yung: Sir, one of the most challenging tasks in any penal system is how to rehabilitate offenders after they have served their sentence. In our society, a criminal conviction carries a stigma that is very difficult to remove. We are not a very forgiving society.

Let me recount the fate of an NUS graduate, who graduated with an Upper Second Class degree, whether through the rashness of youth or whatever, he was foolish enough to commit a petty theft for which he was fined $1,000. There was no imprisonment. Unfortunately, that was not the end of the matter. His subsequent punishment, as it were, was much more severe than the fine. Even though he attended many job interviews, he could not find a job, because he had to tell them that he was convicted of an offence. And even when he was offered a job finally, he was told that the pay would be very much less than a clean graduate, and in some cases, $1,000 less. We do not seem to be able to forgive, let alone forget. We should try to give those who genuinely reform and who have done their time a second chance.

Part of the problem lies with the Registration of Criminals Act. This Act provides not just for the registration of criminals who commit offences in Singapore actually, but indeed include those committed in Malaysia as well. And, in fact, the Minister may additionally order the registration of criminals for crimes committed in other countries. There is no doubt that we do need such legislation, especially when the offenders are either recidivists or have committed really serious offences. But I do think that there is scope for more discriminating approach to the registration of criminals.

First, there should be a differentiation between the serious cases and the petty cases. Indeed, there is room to argue that there should be separate registers and that in the register for petty offenders, there should be a time limit after which the record should be erased. I am thinking here especially of the first-time offender who commits a registrable offence but who was not sentenced to imprisonment. If such a person were to keep a clean record, for example, for 3-5 years, I think he or she deserves a second chance.

Second, when a record is erased, I think it should be legislated that it should not be regarded as a false declaration to state in a job application form, for example, that he or she has not been convicted of an offence. Because erasing the record is just one step and it would be regrettable if we did not take the extra step to make the erasure meaningful.

Third, under current legislation, section 7 of the Act allows the Police Commissioner to exercise his discretion to dispense with registration for certain types of first-time offenders. I urge the Minister to review the situation immediately and see whether this power can be exercised in appropriate cases. In the meantime, I hope that amendments to the relevant legislation will be tabled as soon as possible.

For those who have seen and have paid their debt to society, let us try to forgive and forget. Let us try to give these individuals a second chance.

Mr Heng Chee How (Jalan Besar): Sir, persons convicted of crimes, and especially those who were sent to jail, face strong social stigma and sometimes the stigma stays with them for life. As a result, many of them find it very difficult to find work, try as they might. And the situation that Prof. Chin Tet Yung has just described is one example, and that is of a person who has not gone to jail. In our meet-the-people sessions, we come across cases of those who have gone to jail and their difficulties are even greater. This inability to find work easily, in comparison with others, hampers their ability to reintegrate into society.

Sir, as we survey the economic landscape, we know that it is going to be more turbulent going forward. This means that even persons, who have never had brushes with the law, would find it more difficult to find work and to hold on to work, because of the changes in technology, skills requirements, and so on. For persons who have to endure and face social stigma associated with their having been convicted of crimes, and especially having been sent to jail, would actually find it extremely difficult to compete for a job and to earn a living. The strain is not only faced by them, it is also faced by their families and society at large directly or indirectly.

For the families, their inability to find work would directly reduce family income, leading to increased hardship. In the case of society, we would then have to live with perhaps a higher level of long-term unemployment for this group and also a higher rate of recidivism. Therefore, it is in the interest of our society and nation that we seek new and additional ways to lower the barriers for re-entry of such persons back into society.

Sir, I would like to ask the Minister what measures is his Ministry taking, in the light of the changed economic landscape, to further help these offenders with skills upgrading and job placement, both while they are serving their sentences as well as after that. I would also like to ask the Minister whether his Ministry could consider extending the use of non-custodial punishment options to a wider range of less serious offences. 1.30 pm

Encik Yatiman Yusof: Sir, our vision is to be a caring, compassionate society. But, in order to be compassionate, I agree with Prof. Chin that we have to be forgiving.

For drug and criminal offenders, there are numerous programmes carried out by the authorities, both during and after detention, to enable them to return to new life. This is, indeed, a laudable objective. However, the success of such effort depends on how the Government, the community, the employers and the family of the individual concerned are prepared to help. For many years, SCORE has been actively involved in skills training for the law offenders. How many of them have gone through such training every year, and how many managed to find jobs with the help of SCORE? Sir, the idea of training them and placing them under various pre-release schemes and post-detention programmes is to give them a second chance. The success of these efforts depends on three factors:

First, whether we succeed in changing the mindset of the ex-offenders, and to make them lead a new life;

Second, whether there is societal acceptance of the ex-offenders; and

Third, whether we can make them financially self-supporting to enable them to regain their self-esteem.

Sir, it is in the third aspect that worries me most. While it is true that over the years there has been an increase in the number of ex-law offenders being offered jobs, many are still unable to do so. During my MPS, I often come across cases in which these people are being turned away by potential employers simply because they have criminal records, some as far back as 16 years. The potential employers often cite the police record as the reason for not employing them.

I share the concern expressed by Prof. Chin on this issue, and I would also like to urge the Minister to do something to remove the stigma and help those caught in such circumstances to fully turn over a new leaf.

Mr R. Ravindran (Marine Parade): Sir, I would like to ask the Minister whether a review could be undertaken on the number of offenders who have been sent to prison arising from offences which do not carry custodial sentences, particularly, fine defaulters, ie, a person who is unable to pay, eg, car park summonses, or a person who is unable to pay a small fine for a simple driving offence.

I am asking the Minister to do a review to find out whether we are sending people unnecessarily to prison. These offences are usually not serious enough to merit custody. They go to prison anyway, due to their inability or unwillingness to pay. Such a sanction impacts most severely on those without means, giving the impression that justice discriminates against the poor. By sending such people to prison, we can cause severe hardship to them. They lose their jobs, the family is in distress, they earn the ill repute of having gone to prison and, most damaging of all, they are demoralised. In many cases, the individuals who end up in prison are those who have low incomes. Of course, it would lead to another debate, whether the punishment should fit the crime or the offender.

I am asking the Minister whether he could undertake a review of the number of prisoners who have ended up in prison, and see whether alternative methods of punishment can be considered for them. For example, they can be required to do community service. Alternatively, the courts can be asked to allow these individuals a longer period of instalment to pay up their fines. I am quite sure that my proposed approach is a better approach. Imposition of a prison term means that the fine goes uncollected. In addition, there are significant costs associated with incarceration. I feel that such a state of affairs is neither in the interest of justice nor sound financial management. I am of the opinion that there is a pressing need to introduce reform in relation to the system of fines, both in the interest of justice and with a view to relieving pressure on prison accommodation generated by the current system.

In the same review, I would also urge the Minister to consider alternative means to release alleged offenders, pending trial, other than by using the bail mechanism. Presently, when an alleged offender is unable to furnish bail, before he is charged and before the actual trial date, he is remanded at Queenstown Remand Prison. At times, the bail amount may be small but, as the alleged offender is poor, he is unable to furnish bail. According to statistics provided by the Asian and Pacific Conference of Correctional Administrators, as of mid-2000, there were 2,311 such unconvicted remandees, or 16.8% of prison population in Singapore came under this category.

It really hurts me to hear of cases where such individuals are subsequently acquitted and their detention all along was an injustice. Perhaps we can consider a home detention system, or allow a bail bond insurance system that is being practised in the US.

Dr Mohamad Maliki Bin Osman (Sembawang): Sir, the incarceration of individuals often affects many people around him, especially his family members. Following incarceration, often times, the family experiences a sense of loss and crisis, and often sends them scrambling to try to manage. This is often more serious when the incarcerated individual is the head of the household.

I acknowledge and am pleased to hear the Minister mentioning earlier that families are more involved in the rehabilitation process of drug offenders. I wonder if such programmes are extended to criminal offenders too, because, often times, in my experience, when the incarcerated person is in prison, the family readjusts itself and tries to adapt one way or the other in the absence of the person. In due course, the family manages one way or the other, with support services around. But when the person comes back, the family has to readjust again to readmit him into the family system. This often creates a lot of problem for the family. Ever so often, the incarcerated individual comes along and says that the family is not able to accept him again, or is less supportive of him. In that regard, often times, what he does is that he takes the easy way out and says the family is not supportive and, therefore, he returns to his old ways and the vicious cycle continues.

Sir, what I am asking the Minister is whether it is possible for the Prisons Department especially, to include family members in the rehabilitation process of criminal offenders, not just drug offenders, because what we need to do is to really maintain the family unit, even when the incarcerated person is in. I recognise that the Prisons Department will probably face constraints with regard to allowing civilians into the system, but we need to consider this seriously because, otherwise, we are going to continue disconnecting family members from the incarcerated individual. At the same time, it may prevent future generation of incarcerated individuals or offenders.

The second point I would like to raise is with regard to employment opportunities. Rehabilitation is often seen as in the process when a person is incarcerated. Often times, we do not pay too much attention when the person is released. What is important is that the adjustment process is equally important when the person is released, and employment opportunities have been found to be critical in preventing them from going back to their criminal activities. I recognise the role of SCORE in trying to create employment opportunities for ex-offenders. But what I do hear a lot is that, often times, these ex-offenders are given employment amongst ex-offenders. This does not create a sense of normalcy. What they need is employment amongst non-offenders, to create a sense of normalcy that they are reintegrating into society.

I am glad to note that earlier this week the Minister for Home Affairs mentioned that there is going to be an amendment to the Registration of Criminals Act, and I echo very strongly Prof. Chin's call for it to be tabled as soon as possible, such that we are giving second chances and new opportunities for ex-offenders to be reintegrated into society.

May I also suggest - I raised this point earlier this week - the idea of creating job opportunities in the civil service for ex-offenders? I think MHA has responded. I urge MHA to try to encourage all other Ministries to show that they are open enough to accept ex-offenders amongst them. This would then set the example for the private sector to emulate.

The Chairman: Dr Maliki, can you wind up your speech, please?

Dr Mohamad Maliki Bin Osman: Sir, in line with our vision of accepting failures and redefining success, I think we need to operationalise second chances.

My last point, Sir, just one minute.

The Chairman: No, not one minute. Half a minute, please.

Dr Mohamad Maliki Bin Osman: My last point, Sir, is to ask the Minister for an update of drug offenders who are in long-term detention. I think that was sometime in the mid-90s and the first group will be released soon. What are the rehabilitation plans for them, especially in returning to society?

The Senior Minister of State for Home Affairs (Assoc. Prof. Ho Peng Kee): Sir, I thank the many Members who have spoken on this very important topic.

First, let me address their concerns as to the rehabilitation of offenders, in particular, measures we have put in place to ensure, first of all, that they are properly trained and have the skills whilst in prison or DRC, so that when they get out of prison, they can find jobs. There are two parts: skills and training whilst in prison, and when out, finding jobs. The other main concern is this question of non-custodial sentences, whether more can be done to help particularly those offenders who have committed minor offences, to keep them out of prison.

Sir, let me say at the outset that the Ministry of Home Affairs is committed to rehabilitating offenders who are resolute about turning over a new leaf; in other words, they are genuine and they really want to change and start afresh in society. Hence, we have adopted a number of initiatives over the past years. These initiatives are broad-based and spearheaded by various agencies. That is the way we approach this matter - not just ourselves, but getting on board various agencies, both statutory boards as well as VWOs, and also good-hearted citizens, who want to help out.

Hence, recently, we launched the CARE Network. CARE Network is spearheaded by the Prisons Department, together with the Singapore Corporation for Rehabilitative Enterprises (SCORE). It brings on board agencies like SACA, SANA, NCSS and ISCOS, where they take what we call an in-care and after-care approach; in other words, through care, to look after the addict and prisoner whilst he is in prison and try to provide a seamless transit to the time when he is out of prison.

First, what happens when he is in incarceration? During the period of incarceration, vocational training and academic courses are offered to selected inmates, based on their suitability, such as interest in the courses, and whether they are receptive to rehabilitation programmes. Academic education is also offered to selected inmates to improve their literacy. Members would have heard of the Kaki Bukit School, which has turned out very good students, some of whom have done even better than the national average.

Members have highlighted the role of SCORE. Indeed, SCORE has geared up in this area. Over the years, SCORE has become a key player in preparing offenders for the job market. SCORE runs vocational training programmes for amenable inmates to equip them with relevant job skills. Many of these vocational training courses lead to recognised certification by institutions, such as ITE. To ensure the relevance of these courses, SCORE conducts market surveys and seeks advice from representatives from industry. Since 1982, SCORE has trained nearly 20,000 inmates.

SCORE also operates its own industries, and works with private companies to offer inmates the opportunities to learn useful skills, such as furniture making and computer repair. At present, there are 28 firms operating different industries and employing more than 2,000 inmates annually. Through these opportunities, inmates acquire work ethics and job discipline, preparing them for employment upon release. This is a point that Mr Yatiman talked about, this question of self-esteem, the need for counselling. So, it is not just offering them skills in a vacuum but, as they imbibe skills in terms of job-related skills, they also imbibe social skills - how to interact with fellow workers, how to meet job requirements.

We all know that transiting from prison to employment can be disorientating. Hence, SCORE also provides psychological counselling, collaborating with the NTUC Skills Development Centre to conduct Work Skills Training Programmes to prepare inmates for the phase when they will be out there without the physical support of the prisons, and having to relate with different groups of people. 1.45 pm

That is in-house care. What about when they leave the prisons and the drug centres? That is the point that many Members have spoken about. This is an important point because all would come to naught if they feel having done so much, when they are out there, everybody does not accept them. We want to say that society should be more accepting, family should be more accepting - Dr Maliki and Mr Yatiman had talked about the importance of family - and, hopefully, employers will be more accepting. This is a point that Prof. Chin and various other Members have talked about.

Hence, this is also a key concern of MHA. Here again, we have got what SCORE is doing and what we have also done outside of the SCORE efforts. First, a brief sharing on what SCORE has done. SCORE has in place this Corporate Assistance for Rehabilitation Scheme through which employers offer training sponsorships and work attachments. So far, more than 1,800 inmates have benefited from this scheme. This is quite important.

SCORE, as I mentioned earlier, also keeps in touch with industries. I think this is important. One key feature is that SCORE maintains a database. Currently, there are about 1,500 companies which have indicated interest, readiness or willingness to employ these ex-offenders. I understand that last year alone, SCORE managed to secure the support of another 230 companies, despite the weak job market. Last year, SCORE managed to give employment assistance to about 1,600 offenders. I think this is very good.

What do they do? They do work as production operators, cleaners, technicians, welders, electricians and cooks. Dr Maliki made this comment and raised concern that not too many of them should be put together; otherwise, they are not learning how to relate with the outside world. He should rest assured, because there is this approach where not more than five ex-offenders are employed in a company at the same time. That is very good.

MHA is mindful, as Mr Heng and Mr Yatiman have noted, that ex-offenders face barriers in their job search, as society stigmatises them. I have answered earlier in this House that we are reviewing, and will amend the Registration of Criminals Act, so that those who are convicted of very minor offences will have their criminal records considered spent or expunged after a certain period of time, provided they do not re-offend. This will, therefore, be a step towards helping them to rehabilitate so that should there be screening of their records by employers, the records will not surface. Also on its part, prisons give testimonials and also help in referrals.

Prof. Chin made a good point because the question in most of these application forms will be, "Have you ever been convicted by a Court of Law?" The fact is, despite the record being expunged or considered spent, the truthful answer must be "yes", and that will remain so. That is why I will, like many of the Members here, urge employers to take a more flexible and compassionate approach. In other words, do not just balk at the fact that the prospective employee has a record. Come on board because Government, society, families - all of us are trying to give offenders with a genuine desire to turn over a new leaf - a fresh start in life. Employers should also think about it and do their part.

Dr Maliki, in particular, has mentioned family involvement. I want to assure him that prisons indeed take this very seriously. If he has followed media coverage, he would have read about ground-breaking initiatives involving families, bringing them into the prisons setting. He talked about whether this is wise. I think they do it selectively and wisely. For example, Mother's Day. We have had occasions in the past to bring in even children to spend some time with their mothers. The Prisons Department tells us that this works because it starts the mother thinking whether what she has done is correct. There is fresh resolve when they part company that she will not do it again. There are other programmes also where families are involved, for example, play-and-wait programmes and so forth.

The other point that has been raised by Members is whether there should not be a more non-custodial punishment for a wider range of less serious offences. An Inter-Ministry Committee, which I headed a few years ago, recommended a range of community-based sentences (CBS). Some of these are indeed being rolled out. We all know that when appropriately applied, CBS address the limitations of existing sentencing options, such as hardship on offenders' families, no break in employment, because the offender can continue working, and also the question of difficulties in re-integrating into society, because he would remain in society.

In particular, I want to highlight the Tail-End Home Detention scheme which was implemented two years ago in April 2000. This scheme basically allows prisoners, who have committed minor offences, to serve the tail end of their imprisonment at home, subject to electronically-monitored curfew via tagging. As of 30th April 2002, a total of almost 1,200 inmates have been placed on the scheme. I am pleased to report that the success rate is 99.8%. Only two offenders have so far failed this programme. Recently, we also introduced a community-based programme, involving a stay in a Half-way House, for drug addicts on long term imprisonment - I think that is Dr Maliki's concern. He talks about long term imprisonment offenders who are coming out. We are doing a pilot programme now to ascertain whether after the period of incarceration, a stint at a half-way house will help them to re-integrate.

Given the success of the Tail-End Home Detention Scheme, MHA is considering widening its scope. We are also exploring the possibility of introducing Front-End Home Detention to allow offenders, who have committed very minor offences, to serve their sentences at home. A feasibility study is now in progress.

In addition, the Attorney-General's Chambers' Law Reform Division is conducting a study on the decriminalisation of minor regulatory offences. In its study, it will assess whether and in what circumstances some criminal offences should be reclassified as non-criminal infringement. The study will also investigate the use of administrative and civil sanctions as enforcement mechanisms to replace or complement enforcement through criminal sanctions for these minor regulatory offences.

Mr Ravindran has raised a concern about fine defaulters. He suggests that more should be allowed to pay fines by instalments. I think that is one way to go. Mr Ravindran will know that under the CPC, fine instalments are already allowed, and my understanding is that the Courts already allow this for deserving cases. I agree that more can and should be done. MHA will work with the Courts to see how best to move forward. Fine defaulters, who are genuine and really want to pay the fines by instalments, can do so. I understand that, on request, more offenders are given longer grace periods to pay their fines. Under the Automatic Traffic Offence Management System (ATOMS), you can settle your fines electronically. ATOMS is not so much to give the offender the opportunity to pay by instalments, but to settle it more quickly and to settle it more expeditiously. The Courts will enhance the system. They are thinking of the possibility of extending ATOMS to other regulatory offences, which are commonly processed in the night courts.

What about bail which Mr Ravindran mentioned? Here again, we have to balance the interests of the State, public safety and security with the concerns that he has raised regarding the offender. A bail system applies in many places in the world. The thing is to set bail realistically. Here, in most cases, no cash is put upfront. It is a matter of getting a surety with sufficient assets to stand as your guarantor. This system works well. The question is that those who stand as surety must do so with their eyes open. In MPS cases, a lot of them are sureties, who stand as surety and later on find that they have to pay because the person has absconded. Explaining the system is important. I hope that the Member will appreciate that there is a need to maintain a bail system, so that the integrity of the court is kept intact and the person who is required to appear in court at a certain time will do so.

Sir, I have covered most of the points. Time runs. The point is that we have done quite a bit in this area. Let me end by saying that it is not just what Government will do, but everybody must play a part, including employers, families and society out there.

The Chairman: Time indeed runs. I would like to remind Members that we have another 10 speakers plus the reply which should be finished within 41 minutes. Mr Tan Soo Khoon.

Mr Tan Soo Khoon (East Coast): Sir, I have just three quick questions to ask the Minister. My first question concerns the road accidents involving the motorcyclists. Last year, about 100 motorcyclists died on our roads. The sad thing is that many of them who died were in the prime of their lives. A lot of accidents involving motorcyclists involve motorcycles which were below 200 cc. My question is: what can we do to reduce the number of road accidents involving motorcyclists?

I understand that in the United States, the authorities there are very strict regarding motorcyclists. Apart from the fact that it is compulsory to wear crash helmets, authorities there issue guidelines as to what the motorcyclists should wear on the roads. For example, they advise that motorcyclists should put on jackets, so that in case they are involved in some accidents, the jacket would help to protect them from injuries. They even advise something like "do not wear shoes with shoe laces", because the shoe lace can get entangled in the motorcycle in case of an accident. But over here, we can see people riding around a motorcycle wearing a singlet and slippers.

My second question involves the recent imposition of the seat belt rule for passengers in the rear seats of motorcars. I applaud this move. I think the seat belt rule has been in place for many years. I am only surprised that it has not been implemented until recently, and vigorously. What I cannot understand is why the driver, apart from being fined, is given three demerit points. I would like to ask the Minister or the Traffic Police not to be too generous in giving demerit points. I think this is a question of overkill. When we first had this system of demerit points, the idea was to punish road users or drivers, who drive their vehicles in such a way that they cause a hazard to other road users. I can well understand that we need to issue demerit points to people who speed, or even to people who use their handphones when they are driving. But why are we issuing demerit points to a driver when it is his rear seat passenger who refuses to buckle up, or maybe the passenger could have buckled up, but along the way, while the vehicle is moving, he unbuckles himself? How can the driver, who is right in front, see what is going on behind him? Sir, it is just like when you fly on an airplane, if the seat belt sign comes on, and you still refuse to buckle up, and something happens - bumpy weather, you bump your head - well, good luck to you - but you do not punish the pilot. 2.00 pm

Lastly, Sir, I refer to the report some 2-3 weeks ago in the Sunday Times souped up cars were speeding along Orchard Road in the early wee hours of Sunday morning, something like 3-4 am. What surprises me also is why the Traffic Police were unaware of this, because I understand that this is common knowledge amongst quite a lot of people in the motor industry or in the business of souping up cars, and I think at that early Sunday morning hours there are still a lot of people walking along Orchard Road. So I do not understand why the Police, who were patrolling the streets, were not aware of this problem, unless, of course, at 3.00 am on Sunday morning, the Traffic Police have gone to bed.

Mr Steve Chia Kiah Hong (Non-Constituency Member): Sir, I want to touch on two of the topics that Mr Tan also talked about, but in a different aspect. I also applaud the Traffic Police (TP) for requiring motorists to belt up, but it seems that punitive measures have been taken for non-compliance. Prior to enforcing this law, the TP did not carry out sufficient educational programmes to educate motorists on the importance of belting up. It would be a pity if the Government has to resort to using punitive measures to ensure compliance of all our laws.

Second, fatal motorcycle accidents. Like Mr Tan, I share this concern, but I also want to declare my interest as the President of an active motorcycling club. The statistics supplied by the Ministry confirmed my belief. 82% of all fatal accidents over the last 5 years happened on bikes below 200 cc. 24% of these victims got their class 2B licence within a year and met with an accident. Many of them died also as a pillion to these new riders. Something is wrong here. Either bikes below 200 cc are inherently not safe, or newer riders are more accident prone, or both. The answer is probably somewhere in between.

As a motorcyclist, it always pains me to hear of a motorcycle accident, and my heart usually skips a beat. I hope the Traffic Police will act on my suggestion, from the motorcyclist's point of view, on how to improve motorcycle safety. It will be different from what Mr Tan mentioned.

One, the TP should prohibit P-plate motorcyclists from pillioning passengers. These new motorcyclists on the road have not clocked enough riding hours, experience or defensive skills. How then can they be allowed to take responsibility of the life of their pillion passenger? They should take the first year of their licence to familiarise themselves with the road hazards and improve their riding skills before they be allowed to pillion a passenger. This may sound harsh, but my experience in motorcycling tells me that this will save lives. Having a pillion on a small cc motorcycle changes the power and handling dynamics of the bike. If a motorcyclist is a new rider, he will not be able to handle a sudden road hazard like a negligent or drunk driver driving straight into them.

Two, defensive skills training. All class 2B bike licence holders should be encouraged to go for licence upgrade after one year. This could be done with insurance company to offer higher discounts for insurance premium for the licence upgrader. The class 2A test should also include greater defensive skills element in its training content.

Three, heavier punishment like jail and caning for motorists who cause fatal accidents through negligence or drink driving, or for lack of care for vulnerable motorcyclists. My experience and many anecdotal evidence from fellow bikers confirmed that there are many big car owners out there who neglect the safety and risk of other motorcyclists by cutting too close into their lanes. There are also some crazy drivers

The Chairman: Mr Chia, could you speed up and finish your speech, please.

Mr Steve Chia Kiah Hong: Some crazy drivers reportedly even disturbed a motorcyclist by cutting in very closely by, then slowed down, and then cutting in again. Others pressure the small cc motorcyclists by tailgating so closely behind. We always hear of newspaper reports of a motorcyclist losing control of his motorcycle, but never explained why. Something is wrong somewhere here. I hope the Police will investigate further.

The Chairman: Mr Chia, please end your speech.

Mr Steve Chia Kiah Hong: Finally, Sir, I hope the Police will take a serious view of this.

Mr Ravindran: Sir, I would like to ask the Minister whether he could review why there is a delay in allowing people to take driving tests in Singapore. Here, particularly, I would like to ask whether he can look at the supply and demand side.

On the supply side, whether we can explore the possibility of having more driving centres or, alternatively, whether we can recognise driving test results issued by overseas driving test centres which are properly accredited and which conduct their tests according to international standards. And, thirdly, whether we can also consider if somebody wants to set up a proper driving centre in a neighbouring country, say, in one of the islands and have it properly accredited, and have international standards of testing, we can recognise such driving test results.

On the demand side, one of the groups of people who regularly go for driving tests in Singapore, and adding on to the queue, are those who get 24 demerit points, or whose licences are suspended by the court. At the moment, there is a double whammy.

Sir, if you commit an offence, you get a fine and you get 24 points, your licence is suspended. Then if your licence is suspended for a year, you get a triple whammy. You are required to go for a driving test all over again. My question is whether we can decouple the third whammy, which is the requirement to go for a driving test one more time. Because there are certain offences, for example, driving in a bus lane, which carries three demerit points, not wearing a seat belt, carries three demerit points - all these things do not really relate to driving skills. They are more mistakes and simple offences which do not impact on the driving ability or pose any serious danger to other drivers on the road. So I would like to ask the Minister to seriously consider whether there is really a need for those who have been suspended for a year to go for driving test again, and whether we can decouple this exercise so that we reduce demand on our driving test centres.

Mdm Ho Geok Choo (West Coast): Sir, I would like to raise a question on what I perceive to be too long a waiting period for conversion of Malaysian class 5 licence to our Singapore class 4 vocational driving licence.

Many of our private bus operators employ Malaysians with class 5 licence as bus drivers in Singapore. Upon approval of their work permit, their class 5 licence is converted to Singapore class 3 licence. This is followed by another waiting period of some three months or so before a test date is given for conversion to class 4. Upon successful conversion to class 4, another waiting period of 2-3 months is again required before a date is given for the vocational class 4 licence driving test. By the time the Malaysian bus driver obtains his vocational class 4 driving licence, it can stretch to a 6-month waiting time.

I appreciate the need for Malaysians working in Singapore to hold a Singapore driving licence. What I consider as inconsistent is the fact that there are Malaysian-registered heavy vehicles which ply our roads daily. In particular, I am referring to Malaysian lorry and van drivers who come in from the Causeway or the Second Link, and ply their vehicles all the way to our port container terminal. These drivers do not have a Singapore class 4 licence, and yet are considered safe and competent enough to drive on our Singapore roads. That being the case, the long wait for conversion cannot be explained by the fact that these Malaysians waiting to be employed must first be tested to be competent and safe. If this were so, then there seems to be inconsistency in our policy. In fact, the long waiting time has dire consequences on the bus operators. Very often, the recruited bus drivers decide to give up their jobs as they find the waiting period too long and cannot afford to go on without a salary during this period, since they are not yet productive on their jobs. The bus operators, in this instance, would have expended resources that only brought in futile results.

Can I request for the Minister to kindly look into shortening the waiting period for conversion of such licences?

Encik Mohamad Maidin: Sir, questions concerning the safety on our roads have been raised by Mr Tan Soo Khoon and Mr Steve Chia. May I first, at the outset, say that our roads are generally safe for our road users. They are mostly in good condition, well-maintained but, at the same time, we also have people who speed on our roads and there are also people with dangerous driving habits. As a result, accidents do happen. Unfortunately, as mentioned by Members, the majority of those who died, or who were seriously injured, eg, last year, were motorcyclists, and some of them with pillion riders. They formed about 89 out of 197 fatalities, and 210 out of 340 people who were seriously injured on our roads.

Definitely, the Police takes a very serious view of the vulnerability of this group of road users. And measures have been put in place to enhance the safety of our motorists, in particular, motorcyclists. For motorcyclists, specifically our approach involves:

(1) Improving the quality and standard of rider

training and testing;

(2) Vigorous enforcement; and

(3) Intensive public education.

Sir, let me first touch on improving the quality and standard of our rider training. Learner riders need to be equipped with good riding skills and habits in handling their motorcycles on the roads and also when they are interacting with other road users.

On-the-road-training was introduced since 1985; in other words, they have to experience what it is like actually driving on the road before they get their licence. And computer-simulated training was also started in 1998. Emergency braking on wet surfaces and also riding at night on public roads have also become part of the curriculum. Sir, the training syllabus for learner motorcyclists is regularly reviewed. All these were designed to improve the training system so that they are better prepared when they are ready to ride the motorbike on the road.

The Traffic Police also partners various organisations to promote motorcyclists' safety and to improve road safety. These organisations include the ITE Ang Mo Kio Safe Riding Club, Harley Davidson Club, National Safety Council, tertiary institutions and organisations with large fleets of motorcycles.

Sir, at the same time, I must say that other motorists have also a role to play in ensuring a safer road environment for our motorcyclists, and they should give motorcyclists sufficient space on the road. This is the concern raised by Mr Chia earlier. Tailgating and also squeezing of motorcyclists to the side of the lane is not only inconsiderate, but is also very dangerous. The Traffic Police has been conducting on-going public education efforts to stress the need for drivers of motor vehicles to give way to motorcyclists.

Let me now turn to the problem of speeding on our roads. In the first three months of this year, about 7,000 motorists were booked for speeding. But this is down from 9,500 over the same period last year, partly because of our enforcement efforts.

As for motorcyclists, 3,307 of them were caught speeding last year as compared to 2,400 in the year 2000. The thrust of Traffic Police's enforcement efforts is to curb speeding and dangerous driving. Enforcement actions against dangerous drivers and riders are conducted regularly. This is the concern raised by Mr Tan earlier. In fact, for those people who were found speeding at 40 km or more above our speed limit, they will immediately be charged in court and may face disqualification from driving.

The Traffic Police is also continuously looking out for illegal racing, as it is not only a nuisance, but it is extremely dangerous to the racers and to other road users. Sir, Traffic Police regularly patrols areas where illegal racing is known to take place. Between January and April this year, the Traffic Police mounted a total of 325 operations against speedsters, out of which 69 were concentrated at the Lim Chua Kang area, Tuas, as well as Orchard Road. As rightly pointed our by Mr Tan, they have been known to be racing in these places illegally. The penalties faced by these speedsters range from composition fines to possible conviction and disqualification by the court. The Traffic Police will continue its enforcement action against these speedsters. But I must say that because they are illegal and they are organised at times and at places which they did not inform the Traffic Police in advance, it will not be possible for the Traffic Police to be at all the places where they are racing. But where we know, where information has been given to us, we will indeed take action to stop them, and to take all necessary action against this group.

The Chairman: Mr Maidin, could you please speed up?

Encik Mohamad Maidin: Mr Chia raised his concern about L-riders. Actually, the number of riders in Class 2B, new licence holders, were very few. The majority of this group, about 85% who were involved in accidents have been on the road for more than one year. They are experienced drivers. As I said, part of the problem is speeding by the motorcyclists and other motorists, and also some dangerous driving habits which have contributed to such accidents. At the same time, we hope that with a better training programme, we could help them to be even better drivers, and we hope that other motorists will not make it difficult for them. 2.15 pm

Sir, Mr Ravindran earlier mentioned about learner drivers who can take their test faster. At the moment, learner drivers take their training at our driving schools as well as from private instructors. On the average, they take about five months just to undergo practical training in driving. And the five months of training is considered reasonable, because learner drivers have to cover a wide range of driving skills and pick up good driving habits and, hopefully, make our roads safer.

This period of training also provides learner drivers ample time to familiarise themselves with the traffic as well as road conditions in Singapore. And we believe that for a life time of driving, this initial investment of five months is well worth it.

The wait for a test slot takes another two months. Hence, on average, the total time taken for a learner driver who passes on the first try is about seven months. I think it is still well worth it. The are a limited number of practical driving test slots. Between January and March this year, there were 17,100 driving test slots available compared to 19,000 learner drivers seeking to take their tests. So, test slots are somewhat limited by about 2,000 in number, partly because of the availability of driving circuits for practical tests. There are currently only three driving circuits here. As the three driving schools need to conduct practical training using the driving circuits as well, test slots have to be properly spaced out and scheduled. The Traffic Police is aware of this constraint, as mentioned by Mr Ravindran, and is working with the driving schools to explore ways to increase the number of test slots. With that, perhaps the timeframe for passing one's driving test can be shortened slightly.

As for Singaporeans taking the test, for example, in Batam, at the moment, we have our own programme or scheme because of various reasons, including the fact that our road conditions, users and the traffic here are not similar to other countries, let alone Batam. So there is a constraint, At the moment, in fact, Singaporeans who go overseas and get their licences do not get automatic recognition here.

The Chairman: Mr Maidin, we have 18 minutes left, and there are still six Members who want to speak.

Encik Mohamad Maidin: Sir, I have one more point to answer Mdm Ho.

The Chairman: Do it quickly, please.

Encik Mohamad Maidin: Yes, Sir. A foreigner can drive in Singapore without converting his foreign driving licence, if it is for short periods. He is allowed to drive up to one year, if he is driving in and out of Singapore. Thereafter, he is required to obtain a Singapore driving licence. But a foreigner who is working in Singapore is considered a resident. Therefore, he is treated like a Singaporean and he must get a Singapore driving licence before he can drive a vehicle in Singapore. These include drivers who are Malaysians and who are working for SBS and other companies. Foreigners with foreign driving licences are nevertheless subject to our regulatory regime of our Traffic Act, and have to comply with all the provisions of the Act.

At the moment, it is not possible to shorten the period for foreigners. They have to wait for a while.

Sir, as regards concerns raised about seat belts and whether or not demerit points are justified, I must say that the concern now is not to reduce the three demerit points against drivers who fail to ensure and comply with the regulations. Instead, our thinking now is to consider whether the passengers, especially those who have a licence and did not belt up, should also be considered to get three demerit points. Because he is a qualified driver and he did not comply with the regulations.

Sir, sometimes a fine is good enough. Sometimes it is not good enough. Sometimes many of our drivers are more concerned with demerit points. Therefore, demerit points can also play a very important part to ensure that people are more caring and wear seat belts.

Mr Ravindran: Sir, I asked the question on decoupling the suspension and the driving test, and I did not get an answer. Perhaps the Senior Parliamentary Secretary could respond.

Encik Mohamad Maidin: Sir, normally, people get suspended because the court is satisfied that he has committed a very serious offence. Therefore, the suspension is necessary. And the idea of sending them back to school is to make sure that they re-familiarise themselves with the law and, hopefully, pick up good driving habits. The idea is that, in the end, when they go back to the road, it is for their own safety and for the safety of other road users. That is the key reason and I think it is still relevant.

Dr Wang Kai Yuen (Bukit Timah): Sir, I just want to ask the Minister why visitors from China, both social visit pass and business pass visitors, face a more lengthy application process compared to visitors from other countries.

The other aspect I would like to ask is on the student pass. It seems to me that SIR must be the only immigration authority in the world that terminates student passes based on their examination results. I would like to find out whether SIR could liberalise this policy.

Mr Ong Kian Min (Tampines): Sir, I would like to make two points regarding permanent residence. The first is that I have come across cases where permanent resident status was granted to one spouse and not to the other. This creates a problem for them, as the family unit has no certainty in making Singapore its permanent home. If the wife is working here and the husband is left behind in Shandong province in China, what do you think the most likely outcome would be? One outcome is that they make plans to move on to the United States or some other country, and we lose them eventually. The other possibility is that the husband finds another woman there and divorces his wife. Now, what business do we have in breaking up families? If for some reason, we cannot grant the other immediate family member PR status, then I think we should not grant that applicant PR status in the first place, as he is not likely to be here permanently without his family. In not allowing all the family members to reside here, we force him to use this place as a stepping stone to something else, and this defeats our purpose and our objectives.

My second point relates to permanent residents becoming so permanent that they do not want to accept citizenship. Many PRs who have been PR for many years do not actually want to be Singapore citizens, unless and until something terrible happens to their home country. There are many reasons for their decision. The main reason, I suspect, is that they enjoy the best of both worlds, and can always take that step at a later stage. In the meantime, they remain mobile and continue to enjoy the rights of citizenship in their home country and the many benefits of being a PR in Singapore to the envy of Singaporeans. I know permanent residence means they can reside here on a permanent basis. But I would like to ask the Minister whether an expiry date should be imposed on the PR status.

Mr Charles Chong (Pasir Ris-Punggol): Sir, the precursor of the Singapore Penal Code is the Penal Code of the Straits Settlements, which was passed by the Legislative Council of the Straits Settlements in 1871, and this was, in turn, based on the Indian Penal Code of 1860. Come September this year, the Singapore Penal Code would have been in force for 130 years. This is significant if we consider that while the Penal Code has been amended from time to time, it still retains its main provisions in their original form. The wait of 130 years is showing in the Penal Code, and several of the provisions in the Code appear to be rather inappropriate for the Singapore of today. For example, section 429 provides that whoever commits mischief by killing or rendering useless an elephant, a camel and a host of other non-indigenous creatures including cows shall be punished with imprisonment for a term which may extend to five years or with a fine or with both.

Sir, in present times, as we remake Singapore and are willing to sacrifice sacred cows, section 429 appears to be grossly out of date; similarly, for sections 428 and 498 for which I do not have the time to go into. Many of these provisions are rarely or never used to prosecute offenders precisely because they are so irrelevant to society today.

Sir, may I suggest that a comprehensive review of the Singapore Penal Code be done to re-evaluate the role, the scope and the relevance of its provisions, and to weed out provisions which are no longer needed or desirable.

Ms Indranee Rajah (Tanjong Pagar): Sir, I would like to speak on the topic on a gap in our law, and this is in the area of stalking and harassment. I think as a result of urbanisation and widespread use of information technology, we are seeing an increase in a new type of aberrant social conduct, namely, stalking and harassment. As regards stalking, we all know what that means. Harassment can take many forms; particularly with the use of IT, it is taking the form of e-mails and SMS messages through the handphone. The current status of the law does not afford sufficient protection. The only relevant legislation is the Miscellaneous Offences (Public Order and Nuisance) Act. The combined effect of section 13 (a), (b) and (c) is that it prohibits threatening, abusive or insulting words or behaviour in written or oral form within sight of a person, or in such a manner as to believe that immediate unlawful violence will be used. The problem is you can have a conduct which is not threatening, abusive or insulting, but which is nevertheless harassment, eg, silent phone calls in the middle of the night, persistent calls of conduct. Or you send flowers which the person does not want or if you send dead flowers. Or you could send unwanted gifts which people do not want either. When I became an MP, I received a message to return a call. And when I did, I discovered he had not called but this woman had left messages with a whole host of people to call him, and it was a form of harassment.

It was only in October of last year that it became an actionable tort in Singapore when our High Court ruled that you could actually have a civil course of action. Sir, the problem seems to be that we do not have sufficient legislation, and I would like to ask the Minister if he would be prepared to look into legislation to provide for it to be an offence for the police to have appropriate powers for other remedial action, eg, referral for counselling or psychiatric evaluation. And, finally, if the person is not a Singapore citizen, then perhaps to review the conditions of his stay in Singapore.

That is all I have, Sir.

The Chairman: Mr Steve Chia, I give you two minutes to raise both your points before the Minister replies.

Mr Steve Chia Kiah Hong: Thank you, Sir. I will make it in two minutes with my questions.

First, can the Minister tell us how many applications for society registrations have been rejected in the last three years? If any, can the Minister also explain what and why they were rejected?

Second, it is unreasonable for the Registry of Societies to charge $400 simply for the registration of a society. Any subsequent changes to the constitution, the ROS charges $140. Can the Minister look into reducing these charges significantly?

Third, can the Minister kindly explain the rationale for restricting the societies to certain parts of Singapore, like in Geylang? In view of the excess capacity of HDB shophouses, will the Minister look into allowing societies to register and function in these shophouses?

Sir, I will now go on to my second cut on public entertainment licence. Can the Minister also explain why it takes 21 days to issue a speaking permit? Can the Minister look into reducing that? The Minister said previously in Parliament that they are going to shorten the period. I want to know how it is getting along. Can the Minister cut the approval down to three days in the name of efficiency and productivity?

My last point. Can the Ministry also do away with the need to apply for the entertainment permit personally and physically? Like all Government Ministries, I hope the application for the public entertainment licence can also be done electronically on line?

The Chairman: Prof. Ho, you have about seven minutes to answer all the questions.

Assoc. Prof. Ho Peng Kee: Mr Chia said that he had two questions, but he had four questions. The Minister is not a computer who is able to produce all these specific answers. I will try, but then I have got six minutes.

Let me take Dr Wang's cut first. I think Dr Wang is concerned about tourists coming particularly from China, and whether we should in fact tap this vast market. Let me assure him that MHA is aware that there is a large market out there. And together with other agencies, we will do our part to facilitate the entry of these tourists. But, of course, the Member must be aware that we must balance the considerations, because besides genuine tourists who come here, there are also others who come here illegally and who work illegally. And this includes, in fact, even students. Whilst we also want to tap students and, in fact, many PRC students study here, we are also mindful that the system must be able to sieve those who are genuine from those who come here for other reasons, using either the tourist visa or the student pass as subterfuge.

Let me just say that we have been flexible in granting visas to genuine visitors. For example, last year, SIR received 330,000 visa applications from Chinese and Indian tourists, and 99% of these were approved. Only 1% was rejected. I do not have the breakdown for the Chinese and Indians, but taking them as a group, both these markets are something that we do recognise. Most of these visas were processed within 2-3 days. So, it is not true that it is taking a long time. 2.30 pm

The other point is that we also hold regular dialogues, not only with economic agencies but, for example, with the National Association of Travel Agents (NATAS) to explore ways to facilitate the entry of genuine visitors from these countries. For example, we revised the banker's guarantee recently for the 96-hour visa for PRC tourists. Previously, each travel agent had to furnish a banker's guarantee of $100,000. But, with effect from 15th April this year, the banker's guarantee has been waived for Singapore travel agents who consistently bring in PRC tourists who do not overstay; in other words, based on their record.

This, in fact, is the approach we also take with applicants - schools and other training institutes - which want to bring in Chinese students to study in Singapore. We realise that there is a market out there. Many of them want to come here, but we also must realise that there is a plethora of agencies here. For example, we have the Government schools. We have the institutes of higher learning. We have schools with good reputation like NAFA and LaSalle. And then there are private institutions doing a whole range of activities. The approach SIR takes will put the onus on these training institutes and schools to ensure that whoever they bring out do not violate conditions, like not working, and so forth. In fact, SIR is fine-tuning its procedures, examining things like, for example, the need for a sponsorship so that more students can come out. Basically, the point is that we are mindful of the need to tap this market.

Mr Ong Kian Min talks about permanent residence. In fact, we are mindful that we should not separate family units when they apply for PR. Generally, that is the principle we work on - preservation of family unity. Hence, the spouses and children of Singapore citizens and Singapore PRs may be granted PR under their sponsorship. In the instance where family members apply for PR together, they are considered as a family unit. I am informed that in a large majority of cases, if the main applicant is successful, PR is also granted to the spouse and children. In these cases, if the spouses and dependants are not able to come in because the main applicant economically does not satisfy the salary cut-off, or is not able to establish an income that is stable, then, in many cases, they are also granted long-term social visit passes. That is the main point. If Mr Ong has any particular case, he can refer them to me. I think we are considering one of his cases now.

The other point is that PR is granted on the basis of free entry in and out of Singapore, based on a re-entry permit. That is the system we work on. PRs who come to Singapore, who live in Singapore, because of our PR assessment scheme, they are assessed to be able to contribute to Singapore. That is why for those who live in Singapore, we take it on that basis. When they renew their REP, at least that shows an indication on their part that they want to continue using Singapore as their proxy home. Some may not want to become Singapore citizens straightaway. But the point is that they do contribute to Singapore's well-being.

Mr Charles Chong's point on the Penal Code, yes, indeed, it is an old dame enacted in 1871, and so we are reviewing it. There is a process where, together with MinLaw and Attorney-General's Chambers, we are looking at all the 400 provisions to update the provisions, and also to update the penalties. It is taking some time because there is a need to integrate the scheme that we want the Penal Code to have, not only internal consistency amongst the various provisions but also with other statutes as well. This is just to assure Mr Chong that we have this in hand.

Ms Indranee Rajah has expressed concerns about what she calls a lacuna, or gap, in the law. Let me assure her that we are indeed studying the issue of whether or not there is a need to enact specific anti-stalking and anti-harassment laws in Singapore. I think she is aware of a study made by the Singapore Academy of Law. We will look at it and, if appropriate, we will enact it. But I must say that in the Singapore context, we must be careful. Because of our close proximity, Police must be very satisfied that they can practically be able to implement any anti-stalking or anti-harassment law. Otherwise, somebody just lingering around in the void deck may fall foul of that law.

The Chairman: Order. "Guillotine" time. Prof. Chin.

Assoc. Prof. Chin Tet Yung: I wish to thank the Minister, the Senior Minister of State for his valiant attempt to answer all questions, and the Senior Parliamentary Secretary for the comprehensive answers in the time given. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $1,567,189,860 for Head P ordered to stand part of the Main Estimates.

The sum of $562,280,700 for Head P ordered to stand part of the Development Estimates.

Head W -

The Chairman: Head W - Ministry of Transport. Mr Chay Wai Chuen.

Mr Chay Wai Chuen: Sir, I beg to move,

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

Sir, the Minister has recently announced that PSA is currently reviewing its charges, and this is after the pullout and loss of two major customers - Maersk and Evergreen. I believe they constitute about probably 15-20% of its turnover. Recently, the Minister has also announced that $80 million will be spent to develop more infrastructural facilities for the maritime cluster.

The loss of top customers should not be taken lightly. Already, we hear that Tanjung Pelepas is expanding the number of berths for more shipping lines. In this area, I believe customer relationship management is an important area of focus for any business. Whether Tanjung Pelepas went backwards to entice the top two customers that is quite immaterial to me. The fact is that two top customers went. We should not under-estimate what two top shipping lines can do there.

The Minister has argued that there is more than just cost in the equation. There is also value in our port facilities, infrastructure, IT connection, connectivity, reliability, efficiency, and so on. What I would like to ask the Minister is that we should be aware of industry-wide changes in order to estimate this kind of demands in the market. It is definitely not cost alone. Shipping lines want to operate their own berths or terminal for maximising their own value, and also because they want to build their own global supply chain integration. Supply chain linkages in extracting value from the competitive environment is a very important part of modern business. Many managements in these shipping lines are answerable to their boards. Building their own global supply chain, therefore, is an important strategic objective of these companies, and I believe PSA should collaborate with them.

Many of these big shipping lines and big corporations have their own advance schedule planning in supply chain network for these global players and they can maximise upstream and downstream planning schedules and connection. These, I believe, can overcome connectivity advantages of PSA. Global players also have their own IT and infrastructural strengths, we must remember.

I have been arguing for a private operation of berths for the last three years. I hope the Minister's answer this time would be different. But I believe we can anchor important customers and shipping lines by tendering out facilities over a lease period, and also a possibility could be through schemes of joint share of revenue. In this way, we can establish partnership with the major players. We must never under-estimate the downstream losses of the linkage effects in the economy arising from this loss of customers, whether it is in the service sector, freight sector, logistics or ship-chandling. Will the Minister assure the House that policies will be applied to prevent further loss of customers and prevent the erosion of primacy of our port?

Mr Tan Soo Khoon: Sir, Singapore's status as a premier port in the region and a transshipment hub is under siege. The loss of Maersk Sealand last year to Tanjung Pelepas and now, this year, Evergreen, means creaming off at least $2.2 million twenty-foot equivalent units of containers, or 15% of PSA's annual volume. What is probably just as serious is that if you lose two big customers, you also lose the feeder lines that provide the connectivity.

Sir, how will a line like Evergreen manage to squeeze a good deal is something which is quite well-known in shipping circles. It just went from PSA to Tanjung Pelepas back and forth, pushing down prices with each offer and counter offer, until one side blinked. This is a common business tactic. When you have a choice, you can bargain until the other side gives way. It also shows that during bad times, no matter how much you tout your strength, in terms of efficiency or innovation, or how far you are ahead with information technology in your operations, in the end, what counts most to the customers is cost. Sir, when you are in business, you sometimes have to be prepared to take a cut in your profit just to make it attractive for you to lure a customer. The important thing is to get your customer first, then make the money later.

Sir, I am aware that PSA did go through great lengths to keep these two major customers. But I think the danger here is whether the loss of these two major lines will in the end attract others to move ahead, others like COSCO of China and "K" Line of Japan. And Mr Chay Wai Chuen has just said, what about the downstream effects on the economy?

One reason why Maersk moved was that it could not get a dedicated terminal from PSA with which it could have then been in a better position to manage its own logistics and costs. I join Mr Chay in asking whether PSA is now re-thinking this policy.

Maersk Line was also attracted to Pelepas because it was offered a 30% ownership in the port. Recently, the Prime Minister has suggested that PSA should think of selling shares to the major shipping lines. I also read just a few days ago that PSA's IPO has now been postponed. Does this mean that PSA is now re-looking at it or will it have a private placement of shares to shipping lines?

Lastly, on the horizon, there is a bigger threat to us. Just yesterday, it was announced that Thailand has revived the idea of a canal through the Kra Isthmus, and it is going to be called the Thai Canal. This idea of a canal through the Kra Isthmus has been on the cards for something like 200 years. But, I think, this time the Thais mean business. This will cut shipping traffic through the Straits of Malacca and certainly will affect not just Singapore but Tanjung Pelepas. But I also understand that the Thais have offered Singapore a stake in the project. I would like to know the Government's thinking on this.

Encik Yatiman Yusof: Sir, like my colleagues, Mr Tan and Mr Chay, who have spoken before me, I am equally concerned by the departure of Maersk Sealand and Evergreen Marine to Tanjung Pelepas. While the Minister had, during last Monday's Questions for Oral Answer, explained the transfer of these two shipping lines would not affect our port positioning dramatically, I am still a bit concerned on the impact it has on our workers and businessmen.

Sir, the port does not stand by itself. There are so many parties that are directly or indirectly involved in its downstream operations. The decline in terms of volume handled by PSA would also mean that those working with the port - in the transportation of goods and the processing of them - would be affected. These are people who work as movers, crane operators, bulk breakers, distributors and packagers. They face a real prospect of losing their jobs or businesses.

The departure of the two shipping lines is a signal that PSA's current approach and strategy require serious review. Could the Minister elaborate on the future direction and fresh efforts to ensure PSA remain competitive on a global scale? Other ports are also facing similar competition, for example, Pusan in Korea versus the fast growing Chinese ports of Shanghai and Dailan, and Rotterdam versus the rest of Europe. We have to make necessary changes to avoid from following the fate of Liverpool when the America-Europe trade pattern changed. 2.45 pm

Sir, apart from facing challenge from the emerging competitors from the region, Singapore is also facing changing pattern of shipping routes and shipping technology. What plan does the Ministry have to return to our port's pre-eminence?

Mr Ong Kian Min: Sir, the port is Singapore's life line and supports many local businesses. I share my colleagues' concern that any decrease in PSA's local freight volume will have a serious impact on the other related sectors in Singapore.

Many people were therefore cheered when they read the headlines on the back page of the Straits Times of 7th May 2002, which states, "PSA stays buoyant, handling 39% more containers in April". This appeared remarkable. But a closer reading of the article revealed that the pronounced jump was, to a large part, due to the 182% surge in traffic handled by PSA's overseas terminals. Although volumes at its Singapore's terminals grew 8.6% in the first four months of this year, PSA handled 15.52 million TEUs for the whole of last year, a fall of 8.9% over the year 2000. Latest figures show that PSA is handling 1.4 million TEUs in Singapore, ie, two thirds of its total, and 740,000 TEUs abroad, representing one third of its total.

I would like to ask the Minister whether PSA, by having operations in various parts of the globe, would divert its management's attention away from the local port operations. Overseas volume represents one third of PSA Corp's total, and is growing rapidly. If other ports are more profitable to manage or have more potential for growth, would management focus more on these high growth areas? How do we ensure that PSA is committed to managing its Singapore's port operations well? Would it not be better for PSA to be split into two or more separate companies, like Singapore Power, one to concentrate on international business and the other to focus on management of the local port? Or should we introduce competition like expanding Jurong Port to take over part of the container operations in Singapore?

Mr Chay Wai Chuen: Sir, a well-known economist coined this phrase "the death of distances" a few years ago, because of this advance in technology and communications which makes relatively unimportant or, worse, irrelevant many facets of businesses and services, and also open up new vistas or business opportunities.

From the point of view of airplane technologies, if planes can fly longer distances without refuelling because of greater efficiency, potentially dominant air routes can be altered, and airports and airline businesses can be very seriously affected. We pride ourselves as an important air hub when our airline - Singapore Airlines - by its superior brand name, has been anchoring many of our hub services. In this process, Singapore, as an air hub, in competition with the many regional air hubs, such as KL, Bangkok or Hong Kong, has emerged creditably.

With the emergence of China as a power economy and Northeast Asia as a significant growth region, and the relative slower growth of the Southeast Asian economies, Singapore's air hub location is slightly tangent. Coupled with this background, one must seriously ask what is the cost competitiveness of our air hub. One of the most powerful key macro economic variables that has changed as a result of the last Asian financial crisis was the dramatic realignment of exchange rates of many of our competing countries. The merger and acquisition and the rescue buy-out faced in this restructuring is over. Today, what we are seeing is the realigned competitiveness at work.

Perhaps the Minister can reassure us. Today, if one were to ask many average businessmen chasing sales, it is not surprising that they will switch planes at many of our regional airports, eg, KL, Bangkok, even Perth. Airline tickets originating from these centres are much cheaper, as much as 50% or more than SQ. I assume the airport facilities are equally cheaper than Singapore airport. This underlies my concern about the competitiveness of our airport as a hub.

Our port and our airport have been important pillars in our economy. How does the Minister ensure that they get the measure of the competitive environment, just like the policies on market competition and deregulation that the Government proposed in the telecommunications sector a few years ago, which have driven costs down and value for the consumer up? It is not just the bottom line of Singapore Airlines that matters, but also many of the related services in the air freight businesses that will be of concern.

Mr Ang Mong Seng: (In Mandarin): Sir, although Singapore is just a little red little dot on the world map, it is well known throughout the world for its excellent airport. Changi Airport has, over the years, won accolades and awards from various international agencies, and has been consistently rated as the best in the world.

With very intense competition ahead, are we able to maintain our enviable position and supremacy for the next decade? First of all, the new Bangkok International Airport will be opened in 2004 and, recently, the Malaysian International Airport has been offering very attractive discounts to attract more carriers to land there. The other airports in the neighouring countries are also seeking to improve their facilities and services. I would like to ask the Minister whether these competitions will affect Singapore's position as an aviation hub. What measures are being taken to face these competitions?

With the advancement of technology, airplanes can now fly longer distances without having to make midway stops. Many airlines are cutting down stops in between destinations in long-haul flights. I believe this must have a certain effect on us. The growth of the airline business depends not only on the efficiency and facilities of the airports, but also on the economic development of the country, its tourism industry and the convention business.

All these businesses will generate tourist arrivals in Singapore, especially if we can attract more conventions to be held in Singapore. We should spruce up our attractions in Sentosa so that we can attract more tourists. We should also step up our efforts to sell Singapore as an international convention venue. I would like to ask the Minister whether the Ministry of Transport has any comprehensive plan to match these challenges, by strengthening our airport services to cater for heavier air traffic.

The Chairman: Mr Tan Soo Khoon is not speaking. Mr Yatiman.

Encik Yatiman Yusof: Sir, the experience currently faced by PSA could be a good lesson for the authority responsible for maintaining Singapore's position as the airline hub of the world. Competition from the region is getting stronger and could be fiercer, in terms of selecting airlines, passengers and cargoes. Countries in this region and beyond are offering services and facilities at much lower cost. I would like to ask the Minister whether his Ministry has a clear strategy to ensure the pre-eminence is retained. And as SIA is key player in the development of Changi International Airport as an air hub, I would also like to ask the Minister to comment whether the current SIA's ticket pricing structure will have a long-term effect on our position as a top air hub in the world.

Mr Chay Wai Chuen: Sir, has the Ministry considered the setting up of a trucking exchange by siting a depot, for example, in the centre of the island to provide a trucking exchange, so that containers can be switched to other trucks which ply in that sector? I believe productivity can be improved in this way. Often, in a journey, a truck carrying cargo on a container might ply empty on the return journey. I am talking about Singapore. The journey is twice as long as necessary and productivity on the return trip is nearly zero. The trucking exchange, through B2B IT infrastructure, can exchange information and plan schedules so that participants in this exchange can minimise costs and plan schedules. Naturally, to anchor this, big players are needed. But once it is up, it is the small players who can distinctly benefit by lower time cost and equipment driver cost. Roads also will be less heavily used with less charges to pay.

In Europe, such depots exist for trucking to exchange containers running in different sectors. Essentially, it is an informational exchange with B2B business transaction, and the rest is a matter of schedule planning and organisational arrangements. IT costs are not so prohibitive these days and the space required, I believe, may not be so big. The value added to the economy can be very great, opening a new area of business. Trucks with container loads from other inland parts of Asia - Malaysia, Thailand, Cambodia, Laos - can perhaps one day even switch loads in such a logistics hub, and grow to be a land port to complement the port of Singapore.

The Minister for Transport (Mr Yeo Cheow Tong): Sir, first, let me thank all the Members who have spoken for their comments and views. Mr Chay, Mr Tan Soo Khoon, Mr Yatiman and Mr Ong Kian Min have expressed deep concerns about the competitiveness of our port and our ability to retain the shipping lines in Singapore.

Sir, such concerns are understandable. As I informed the House on Monday, the port sector is a very competitive one, not just in our region, but all over the world. This is because new ports are being developed, and existing ones are always striving to upgrade their services and capabilities. For example, Hong Kong faces stiff competition from the new ports in Yantian, Shekou and Chiwan. In such a dynamic environment, with so many competing ports, we must expect shipping lines to adjust their ports of call from time to time.

Sir, I want to assure Members that PSA is no stranger to competition. As Members know, PSA is largely a transhipment hub. Transhipment containers can be handled anywhere along the route of the container ships. They need not be transhipped here.

Despite the competition, PSA continues to do well. Its container terminals handled 1.42 million TEUs (Twenty-foot Equivalent Units) in March 2002, the highest throughput in 17 months, and this is despite the loss of a major customer. Its container volume grew by 8.5% for the first quarter of this year. It has an extensive network of 250 shipping lines connecting to 600 ports in more than 100 countries around the world. All these shipping lines are PSA customers, because PSA offers them a highly cost-effective value-for-money service and a shipping connectivity that few ports can match.

But as Members have noted, the competitive environment is constantly changing. PSA recognises this. It also recognises that it cannot afford to be complacent. PSA is now reviewing all facets of its business strategy, with the aim of partnering and anchoring the customers here for the long term.

Sir, PSA knows that many shipping companies are facing low profit margins. As such, the shipping lines would be shopping for lower prices. PSA understands this and is committed to remaining price competitive and remaining responsive to the needs of the customers.

Mr Ong expressed worry about PSA's overseas operations and that these operations may divert management attention away from their operations in Singapore. He proposed that PSA splits into two companies, one to manage the Singapore operations, and one to manage the foreign investment. Sir, as Members are aware, PSA has been investing in ports abroad that have a high growth potential. It now has significant port operations in China, Europe, India and Brunei. The container volume handled abroad now totalled about 8 million TEUs a year, and is expected to grow rapidly. The overseas operations give PSA greater economies of scale. Even more important, they enable PSA to provide an international, rather than just local service to the shipping lines. And, this is important, because shipping lines operate internationally. So, PSA must be in a position to serve them in as many places as they go to. 3.00 pm

These advantages and synergies would be lost if PSA were to be split into two companies, as Mr Ong has suggested. But I can assure Members that Singapore will remain PSA's largest and most important operation for many, many years to come. Because of the strategic value of the port to Singapore, not only will PSA management be fully focused on it, but also that of the Government leaders and, as we have shown here, the Members of the House as well. So, PSA's management cannot afford to divert its attention from the operations in Singapore.

Sir, Mr Chay mentioned about the dedicated terminals, whether PSA will be prepared to look at other options, including the dedicated terminals. As I have mentioned, PSA is doing a complete review of its business strategy, and nothing should be discounted. It will be talking to all its customers, and it will be as responsive as possible in meeting the needs of the customers.

Sir, let me conclude by saying that these are challenging times for our port. PSA is acutely aware of the ever-changing competitive landscape. I can assure Mr Chay and other Members of the House that PSA is not about to give up its position as the number one transhipment port in the world. It will, therefore, do all that is necessary to partner its shipping clients and help them to compete effectively and to grow. This, in turn, will enable PSA to continue growing and to remain as a top transhipment port in the world.

Mr Tan Soo Khoon also asked about the Kra Canal. Sir, contrary to the newspaper reports, we have not been consulted or approached about investment in the Kra Canal, and we are, therefore, just learning from the newspaper reports what is going on in Thailand with regard to the canal.

Sir, let me now move on to the remarks of the MPs on airport competition. What I have said about the port applies generally to airports as well. Inevitably, airports compete with one another, especially within the region. As Mr Ang has pointed out, countries such as Thailand and Malaysia have recognised the economic importance of a hub airport, and are investing heavily in this sector. The competition faced by Changi Airport in the years ahead can, therefore, only get more intense.

But, despite the competition, Changi Airport is still making good progress. Let me quote Members some figures. For the two months of March and April this year, passenger and cargo traffic at Changi Airport grew by 1.5% and 8.9% respectively, compared to a year ago. SIA's load factors are up by five percentage points in March and, what is more important, airlines are adding new or additional flights into Changi. For example, SIA will start new city links to Las Vegas and Chicago later this year. Qantas has started a new service to Rome through Singapore, while China Eastern Airlines has doubled its flights to Shanghai to 14 a week from seven a week. In the next few months, Changi will welcome Australian Airlines, which is the new subsidiary of Qantas, and it will be starting a new service to Cairns in Queensland. And Swiss International, the new airline that replaced Swissair, has also started operations from Changi to Zurich. Changi's air cargo network has also expanded, with CargoLux and Northwest starting links to Budapest, and to Cincinnati in the USA, respectively.

These new city links and services are part of our never-ending efforts to improve Singapore's connectivity. Presently, 58 scheduled airlines serve Singapore, connecting us to 139 city links in 50 countries. This high connectivity is a key reason why 28 million passengers used Changi last year.

But, while the prospects for the aviation sector are improving, we have to continue upgrading our facilities and improving our services, in order to keep ahead of the competition. So, what will we do?

First, we will continue with our policy of enhancing our infrastructure to cater to the ever-increasing needs of airlines and passengers. When Terminal 3 (T3) opens at the end of 2006 or early 2007, we will have a state-of-the-art terminal that will increase Changi's capacity by about one-third. The other two existing terminals will not be neglected. Expansion works for T1 will be completed in September this year, and we will be investing some $240 million after that to improve T2, to make sure that all our facilities are really up to scratch and are at the forefront of service and technology.

Sir, in building the new infrastructure, we are aware that we have to cater to the latest technologies that might come along and, therefore, works are underway to ensure that our runway and terminal facilities will be able to accommodate the new Airbus A380, which can carry 555 passengers, and which should be the largest passenger aircraft in the world. SIA and other airlines have ordered this aircraft and they will be flying this aircraft through Singapore and, therefore, we must be ready to accept this aircraft.

Sir, Members have also mentioned the need for Changi to be cost-effective and cost competitive. We have, indeed, always been conscious about the need to provide value for money to our airlines and to our passengers. In fact, we do this without demands being placed on us. For example, CAAS extended the off-Budget measures, such as a 10% rebate on landing fees, 15% rebates on office and warehouse rentals, and a 15% rebate for concessionaires until the end of this year. The rebates cost CAAS about $17.4 million. But what is more important is that the rebates have brought Changi's landing fees close to 1981 levels, ie, what we were charging 20 years ago.

CAAS also has several schemes that enable new airlines, or airlines that start new services, to enjoy heavy rebates on landing fees and grants for several years. Since their introduction in 1998, about $7 million has been awarded under these schemes to 18 airlines. I can assure Members that CAAS will continue to review these incentive programmes and partnership programmes with the airlines, and we will tailor them further to suit the needs of the individual airlines and anchor them here in Singapore.

Sir, several Members have also expressed concerns about the pricing policy of SIA and how it is forcing passengers from Singapore to fly elsewhere to obtain better deals. As I have told the House before, CAAS does not intervene in the pricing policies of SIA or any other airline that operates through Singapore. Airlines are free to set their own airfares. But what is important to note is that the aviation sector in Singapore is very open and very competitive, with multiple airlines competing on many of the routes. Air travellers can, therefore, choose the airline that best suits their requirements in terms of service, price and flight times. Many airlines offer fares for direct flights to popular destinations that are, in fact, much, much lower than SIA's. With such attractive and competitive choices, there is really no need for Singaporeans to transfer at other airports, en route to their destinations.

Let me give Members some examples. Let us say to Bangkok. There are 11 airlines that fly to Bangkok from Changi, and the price of an economy class return ticket can range from only $200 to as high as about $400. So, passengers have a full range to choose from. Similarly, passengers flying to Jakarta can choose from 13 airlines, with ticket prices ranging from $580 at the high end, to as low as only $160. So, tremendous choices are available. And Singaporeans, especially Singaporean businessmen who are looking to cut costs, should actually shop wisely. They will be rewarded if they do shop around.

Sir, my Ministry will continue to work with CAAS to attract as many airlines as possible to Changi, so that Singaporeans can have a wider range of choices and more competitive prices.

Sir, Mr Chay touched on the logistics area. He mentioned the existence of trucking depots or dry depots in Europe, where trucks can then exchange their load in order not to have to return empty. This concept is very, very applicable to countries with large land mass, because then the distances are huge, and that is why we see such dry ports or land depots in the USA, Europe and even in China. They are sprouting up in many parts of China. The potential for such "land hubs" in Singapore is not that good, because we are too compact.

Nevertheless, there is merit in helping industry players better deploy their assets as best as possible, within the company and between companies, as this will then help to ensure better asset utilisation and help to lower costs.

I understand that, at present, there are two Vehicle Scheduling and Tracking Systems (VSTS) in place to help companies better optimise their truck usage. These are provided by Transnet and Sunray, and these systems are linked to PSA's IT systems as well. So, not only can they use it for their own usage, but they can link it to PSA, so that, for cargo that is going through PSA, it helps to make the data exchange seamless and electronic. We will definitely encourage more of such systems to be developed, so that they can help our companies better deploy their assets.

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

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

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.35 pm.

Sitting accordingly suspended at 3.15 pm until 3.35 pm. Sitting resumed at 3.35 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head W (cont.) -

Mr Yeo Guat Kwang (Aljunied): Sir, it has been more than six years since the LTA published its White Paper on World Class Land Transport System. Have we achieved what we spelt out in the paper? Let us take a brief close look.

We have expanded our MRT network to serve the heavy transit corridors. We have built the LRT system in Bukit Panjang. We have improved our road network system, linking the major parts of the island with expressways. It seems, however, as the Chinese say, "lei sheng da, yu dian xiao" - much said and little done. Those projects completed are also not perfect. There were breaches and breakdowns. Some examples were: the many breakdowns of the LRT system, the problems with the MRT trains, cutting down the frequency of the MRT service to Changi Airport, etc.

I am glad that the authorities and agencies took immediate steps to address the problems when they surfaced. But could they have been prevented in the first place?

The Government has made changes to the vehicle registration and tax system. We can expect to see that car ownership will rise and more vehicles will be on the roads in the future. What are LTA's plans to absorb this increase in the number of vehicles?

The transport infrastructure is like the blood circulation system in our body. It connects our residents' homes, workplaces and places of recreation. It must remain healthy and free flowing so that our nation can grow. What are the Ministry's plans for the future development of our roads and transportation infrastructure?

Sir, although the Ministry has announced its intention to put in place a comprehensive Rail Transit System (RTS) network, there has not been a firm commitment on the date when the network will be in place. With the plans to increase car population and with the fact that most of our people today have to spend more than one hour taking public transport from home to the workplace, it is critical that the RTS network be expanded more expeditiously, so as to make the public transport an attractive alternative to the private transport. When can we expect the RTS to link up all our housing estates? If the Ministry is unable to put in place the RTS network quickly, it should consider alternatives, such as maybe, the mini-bus scheme in Hong Kong to make the public transport in Singapore more attractive.

Mr Chay Wai Chuen: Sir, in the latest Budget, the Government has reduced the duties and registration fees on buying cars and re-peg the Preferential Additional Registration Fee (PARF) to the ARF component instead of to the OMV component. The rationale was to shift the ownership cost to usage cost. In adjusting this rate to peg ARF a bit lower, from 140% to 130% of the OMV and reduce the excise duty by 11%, the total upfront savings on taxes on new cars is about 21% of the OMV. This benefits new buyers, although I hasten to add I am not sure how it will be negated by the bidding on COE prices.

The shift to more usage cost, as proposed, will mean that previous car owners are unduly penalised by having to suffer a lower resale value of their cars because new cars now cost lower, because of the reduced cost, and have to bear the likely increased usage cost as well. In our legacy structure, the cost of owning a car has to be shared between ownership and usage cost. With the lowering of the excise duty and the ARF, I am afraid the Government is signalling another round of increase in ERP and usage cost, including increased recovery rate for car parking. I hope that the Minister can assure the House that even as he is now relying more on usage, he should be wary of letting more cars on the roads in order to tax them more as they crowd the roads. There is a trade-off between the pain on one-time high price of purchase of a car versus the daily grind and pain of high ERP and parking charges as more cars clog the roads with lower ownership cost.

I urge him to be more cautious in dismantling the current parity, even as the carrot of lower upfront cost is dangled.

Mr Chiam See Tong (Potong Pasir): The Government uses two ways to control congestion on our roads. One is the control of car population, and the other is to control their usage. We have heard that the Government is switching its emphasis of car control from that of ownership to that of car usage. I believe that whatever method the Government uses, the car population in Singapore shall be at a fairly high level because motorcars are a good source of revenue for the Government.

Almost everyone in this House, I would say, drives a car and we all know that our roads are not entirely congestion-free. In fact, there are perpetual traffic jams in certain of our roads. Prominent examples that come to mind readily are the CTE towards Braddell Road and at Toa Payoh PIE and Upper Serangoon Road. I must say that the quota system, imposed by the Government, supposedly to control car congestion on our roads, to me, is more a system for collecting revenue than the control of traffic.

Under the so-called quota system, the cost of motorcars in Singapore has escalated to levels where the costs of motorcars in our country are the highest in the world. The Government does not seem to be unduly concerned or worried of the high car prices in Singapore. Why should it? High car prices are good business for the Government. The prices of COE shall be higher when the car prices are high and the Government can rake in more money.

The Government intends to reduce taxes on motorcars. I say to car owners, "Do not be too elated", for this reduction of revenue, most likely, shall be made good by the increases in revenue from car usage. More ERP gantries shall be constructed, like those which have already gone up along Dunearn Road, the cost of HDB car park lots and car park lots outside HDB estates throughout the island shall be quickly increased. As far as I can see, car ownership in Singapore shall never be cheap. The Government has used motorcars as a phenomenal revenue source and it shall continue to exploit that source for revenue with more creative means. The Government has earned a lot of money from motorcars and I think the Government should plough back some of those revenues to the people in the following ways:

Firstly, the Government should build bicycle lanes in all HDB housing estates so that residents there can safely cycle in their estates, whether to go shopping or to visit community centres, or whether to go for a swim, visit friends or whatever.

The people in other countries like Denmark and Holland use the humble bicycle extensively as a mode of travel. When costs of motorcars remain so prohibitively high and beyond the reach of the ordinary HDB heartlanders, I am sure that the construction of safe bicycle lanes shall be gladly welcomed by the people there. I hope the Government shall look into the possibility of constructing safe bicycle lanes in all HDB housing estates. 3.45 pm

The second suggestion I would like to make is the Government should persuade bus companies to use low-capacity buses to ply in private housing estates to pick up passengers to bring them to bus-stands or to the nearest MRT stations.

The Chairman: Mr Chiam, could you please finish your second suggestion quickly?

Mr Chiam See Tong: I have one more suggestion. I wish that the park-and-ride idea be revived as land costs are high. The Government can construct high-rise parking lots near MRT stations so that car owners need not drive into town. They can park their motor vehicles in those high-rise parks and ride the MRT or bus to town. In this way, traffic problems in town can be abated.

Encik Yatiman Yusof: Mr Chairman, I am sure that following the review on the car tax announced by the Finance Minister on 3rd May, 2002, many car owners and potential buyers will have to recalculate the cost of owning cars.

Sir, the new tax on cars gave upfront reduction in terms of excise duties and ARF. As the time-line value of the car is being moved from OMV to ARF, private car owners who scrap their cars before eight years can get more benefit. But the same cannot be said for taxis. While it costs more to car owners because the PARF is lower, it costs more to taxi drivers when the burden of tax is shifted from ownership to usage. This means that the taxi drivers will have to pay for the increase of the ERP charges and GST. On the one hand, the taxi drivers are concerned over the possible impact this must have on them, while on the other, the commuters are worried that they may have to pay more taxi fare for the use of taxis. Could the Minister clarify that this is not the case?

Also, in the light of this development, I would like to ask the Ministry whether there is an overall package to minimise the cost to commuters using taxis.

Mr Ong Kian Min: Sir, I share Mr Chay's concerns. With the change in motor vehicle taxes, the PARF rebate is now pegged to the ARF actually paid on each car. I would like to ask if the Minister could clarify whether this new way of calculating the PARF rebate applies to existing motor vehicles which were registered before May 2002. When an existing car registered before May 2002 is scrapped, is the owner entitled to PARF rebate, calculated based on the car's OMV, which was the case at the time when he bought the car, or is it based on the car's ARF?

Sir, the move to reduce ARF and excise duties and extend ERP is a double whammy for existing vehicle owners. Apart from having to bear a drop in the value of their cars, they would also be subject to higher usage charges. At least 43 gantry points have been set up, the latest addition is at Dunearn Road. What is the Ministry's plan for the roll-out of ERP and in doing so, will it take into consideration its impact on existing vehicle owners?

Encik Yatiman Yusof: Mr Chairman, the car tax structure has been shifted from the burden of tax from ownership to usage. As the vehicle population grows, there is a strong possibility that our roads would be more congested. I could foresee more ERP gantry points being built. Many motorists have discovered that despite the imposition of ERP charges, some highways, eg, the CTE, ECP and the AYE, are still congested at certain times of the day. In addition, some fringe roads have also experienced increase in the volume of traffic.

What is the prospect of these fringe roads being imposed with ERP in the next five to ten years? What can be done to reduce the burden of usage on motorists? Apart from the imposition of the ERPs, may I know whether the Ministry is considering other options such as constructing double-decker roads or flyovers similar to the one along Telok Blangah Road and Keppel Road, to ease the traffic jam, instead of imposing ERPs.

The Chairman: Mr Ong Kian Min, you have 3 cuts back to back. You can take them altogether.

Mr Ong Kian Min: Sir, I would like to take the 3 cuts together, but to tackle the 2nd one on bus services first as this is more important, in case I get "guillotined".

Sir, as MPs, when we do our rounds of block visits and meeting residents, one issue that attracts a lot of complaints is bus service. Currently, there are only two companies, SBS and TIBS, providing scheduled bus services in the housing estates. Whenever there are requests for new routes, the common reason for rejection by SBS is that the proposed route would not be commercially viable. But who determines that the proposed service would not be commercially viable? It is SBS, based on its own, and perhaps inefficient, or archaic method of operations. Is the SBS way the best, or the perfect way of doing things? Surely not. Surely it can be improved. But how do we improve it? Can someone else with a new idea, a different mode of operations or business model, come up with a better way of running that service? I am quite sure it can be done.

Please allow me to offer a few suggestions as a layman. First, why should feeder bus services be operated by SBS? I would suggest that the public bus service be restructured into two or more smaller networks. SBS can operate the trunk services, and be like NOL, the main shipping liner calling on hub ports and have smaller vessels feeding to it. In shipping, it does not make commercial sense for a main liner to run feeder services. Smaller feeder vessels can be operated by smaller operators who are more familiar with the local conditions. This can be done without much loss of efficiencies or integration. In any case, there is not such a high degree of integration in the first place between feeder, trunk and MRT services. It is not as if a passenger can time it so precisely to catch the 7.45 am feeder, which will bring him to the station to catch the 8.03 MRT train.

Second, I have an RC Zone, whose residents have been complaining, and I have been complaining, for many years that the SBS feeder bus service for that area is bad and inefficient. At times they have to wait 15 minutes for the bus to arrive, and then it goes on this circuitous route before reaching the bus interchange. There has been little improvement over the years. The feeder bus fare is 65 cents. If you take a taxi from that zone to the bus interchange, it costs $3. So, if five persons come together and share a taxi, they would have broken even. Of course, it is difficult for them to get five persons together at the same time. But if you operate a mini-bus and make small loops between the interchange and the zone, picking up, say, 10 passengers at a time, I think you can make money. The math is quite straightforward. Taxis are considered expensive to operate. But if a taxi can charge $3 per trip, and the mini-bus collects more passengers, it should do better. Would not it be better to have buses of a suitable size and making smaller loops, instead of a big bus making a long circuitous route?

Third, SBS runs its services in a hub and spokes manner, the hubs being the bus interchanges and MRT stations. This looks good on paper. This assumes that every commuter wants to take a trunk service or the MRT to get out of the estate. But how about intra-town travel? Could not a neighbourhood centre be a hub? Could not there be more mini-hubs within the estate?

Fourth, SBS started intra-town feeder services that basically connect two feeder services together. They bring commuters from one end of the estate to the centre and it goes on to the other end of the estate. Now, how many passengers actually need to go from one end of the estate to the other end? SBS told me, "actually not many". I think residents are more likely to want to travel to an adjoining precinct if there is something like a neighbourhood centre or school there. Sir, I think this goes to show that it is not one-size-fits-all and we need local operators who are more familiar with the conditions, with the needs of the residents, to be able to provide a better service.

I would like to suggest that we reorganise feeder services into smaller geographical regional hubs and allow for more competition so that new methods of running a service for that area can be implemented. If an entrepreneur is convinced that he can find lower cost solutions that can meet the needs of the commuters and is prepared to put his money where his ideas are, why not let him try it? If we worry that he may not be viable and fold up, thus causing disruption to commuters, should not the same worry also apply to electricity suppliers and telecommunication providers? If we worry about him cherry-picking the profitable routes and neglecting the less viable ones, then may I suggest that maybe the incumbent operators can be given a call option to buy over the route at a pre-determined valuation. So if the entrepreneur takes the risk, proves that the route is viable, the commuters would be happy and he would be happy to be rewarded for the risk taken. This is already happening in other industries, where the nimble small boys try it, prove that the idea works, and cash out by selling to the bigger boys.

I think we should liberalise and allow new players, with creative ways of running a service to come in to compete. Liberalising the public bus services can help raise service standards and serve commuters better. Maybe even Virgin is interested and wants to bundle with its mobile phones. This would be in line with the liberalisation of services in other sectors. In today's economy, when virtually everything from legal services to telecommunications to banking, and even the provision of basic utilities, are opening up to promote competition and consumer choice, I am not convinced that more players cannot be introduced to provide better public bus services. This must be one of the last bastions of protectionism. There is not even direct competition between TIBS and SBS as they serve different routes.

The Chairman: Mr Ang Mong Seng.

Mr Ang Mong Seng: (In Mandarin): Sir, MRT is providing an excellent service, making it very convenient for Singaporeans to travel rapidly from one part of the island to another. However, it generates some problem of noise pollution too. Residents always complain about this, especially those who live by the side of the tracks.

In Bukit Gombak, near the Guilin View, residents are frequently complaining to me about the noise generated by the train when it goes past the track. I have referred the matter to the Ministry of Transport. May I ask the Ministry whether it has any plan to reduce the noise level and improve on the situation. Is there any regular monitoring and review to ensure that the noise level is within the permitted level, especially when the trains travel within the housing estates?

May I also ask whether there will be an overall plan for our nation-wide public transportation system, upon completion of the North-East line.

Assoc. Prof. Low Seow Chay (Chua Chu Kang): The Bukit Panjang LRT is designed to provide people from Bukit Panjang and Chua Chua Kang a rapid and reliable means to access to the MRT service in Chua Chua Kang. After the LRT has operated for almost three years, one would wonder whether the LRT is reliable. Based on a newspaper report that the LRT services had been interrupted 50 times in its less than three years of operation, it worked out to be one failure in every three weeks. This is highly unacceptable and could not be considered as a reliable service. It has caused inconvenience to the residents as they could not rely on the LRT to get them to work and to school on time.

The frequent breakdowns imply that the LRT system selected does not meet the objective of providing a reliable service at a high commuter volume. As far as reliability is concerned, the unmanned system is not based on well-tested and proven technology as otherwise it should not fail so often.

I would like to ask the Minister, what are the actions his Ministry will take to ensure that the LRT would be free from breakdowns in the future. As we are building a new LRT in Sengkang, is the new one going to be more reliable? We know that the LRT is a rapid link from the place of population catchment to the MRT stations. In no way should the LRT play the role of internal feeder service because of its rigid route. From my understanding, after the reshuffling of the existing bus services and the introduction of the LRT, I realise that the LRT built for Chua Chua Kang and Bukit Panjang has many shortcomings. One, there is no coordination between the road design system, the LRT route and the bus services, right from the beginning of the design stage. Two, the LRT tries to take in as many commuters as possible, even though the LRT route is not ideal for a certain particular population catchment. Three, the decision makers are not hesitant in sacrificing the commuters' interest for the sake of increasing ridership of the LRT.

4.00 pm

The popular reason given is LRT's viability and the avoidance of duplication. A typical example is bus service 307 in Chua Chu Kang. Ever since it was withdrawn, it has caused a lot of problems for the people - shopping centres lack business, people's style of travel has been changed, people go less often to the park where they normally do their morning exercises, and they do not patronise our six coffeeshops in Teck Whye Shopping Centre anymore. As a result, it has caused a lot of discontent and unhappiness among the people. After two years of withdrawal of this feeder service, I am happy to note that the Ministry has eventually decided that they have to look after the interest and convenience of the people and reinstated bus service 307 just last weekend.

The lesson learned from the social impact of the first LRT system in my Constituency will be a very valuable lesson for the next LRT in Sengkang. Will the Minister ensure that in any future LRT development, there is a good coordination between the road network design, LRT route and the bus service, before any intention of building a new LRT? The interest of the commuters must be ---

The Chairman: Prof. Low, I will give you another 30 seconds.

Assoc. Prof. Low Seow Chay: I am coming to the end. We must not sacrifice the commuters' interest for the sake of increasing the ridership of the LRT. The LRT is a rapid link for the people and in no way should it serve as a feeder service.

Mr Yeo Cheow Tong: Sir, Mr Yeo Guat Kwang commented on the White Paper that much has been said but little done. I seek to disagree with him. In fact, much has been done. And more has been done than what has been set out in the White Paper. In terms of the rail network, we expect to have a much wider rail network than has been laid down in the White Paper. It is going to be more than two-and-a-half times longer than what was set out in the White Paper. In terms of road building, we are, in fact, ahead of what was stated in the White Paper. So, actually it is little said, much done.

Sir, let me touch on the key point which most of the Members have spoken about, which is on the shift in the car policy towards more usage restraint measures, rather than on ownership cost.

Ownership cost affects all car owners, regardless of how much they drive and how much they actually add to the road congestion. Usage restraint measures are more focused, more efficient and more equitable. Car owners pay according to what they use and how much they add to the road congestion. ERP has been found to be able to divert car traffic from the congested roads during peak period and shift the traffic to the less busy period. So the shift to the usage restraint measures will therefore bring about a more effective utilisation of our limited roads.

Sir, Mr Chay has asked that we be aware of the impact of having more cars on the roads because this will then increase the usage cost. We are indeed aware of that, which is why we are introducing the shift gradually so that the car population will still be kept under control and not be allowed to expand significantly. The 5,000 COEs that we are adding should be seen in the context of the overall vehicle population. We have a total vehicle population of about 700,000 vehicles on the roads. So the additional 5,000 that we are adding will only add 0.7% to our overall population, and I do not think this will increase the congestion very much.

Some of the MPs have asked about the expansion of the ERP system. With regard to the expansion of ERP coverage, LTA had announced in May 1999 the Phase 2 expansion of the ERP system. This will form a second ERP cordon along the outer ring roads. Existing car owners have therefore been given ample notice that the ERP coverage will be expanded in due course. A total of seven gantries were implemented under phase 2A in September 1999. Gantries at the remaining 10-12 locations will be erected as and when traffic conditions warrant it, ie, it is a congestion control and we will only implement ERP at those spots when the congestion on those spots warrants it.

Mr Yatiman mentioned that there are heavy traffic jams at certain roads - and I think Mr Chiam said the same thing - at CTE and Toa Payoh PIE interchange. Based on our studies where there are ERP gantries, the traffic along those roads may be heavy, but they are still within the optimal speed range established by LTA for the efficient use of those roads, ie, they are above the speed of 45 kph. I think where the roads are heavily congested now are really in the evenings. CTE is almost like a parking lot in some stretches and this is because we do not have ERP during those evenings. I would like to inform Members that my Ministry and LTA are now looking seriously at how to relieve the congestion on those roads. Where there is no scope for us to further expand those roads, one alternative is to introduce ERP there in the evening hours as well. That would help to shift traffic to those roads that are not so congested.

Some Members have expressed concern about the impact on existing car owners when ERP is expanded, ie, when we shift more to usage restraint, the existing car owners have not benefited from the lower upfront costs, and therefore they have not benefited from the change. It is true that these owners did not benefit from the lower ownership costs. But they will still benefit when the road tax for all cars is reduced by about 20% from September this year.

Also, as Members will recall, when ERP was introduced in 1998, the Government had announced that road tax rebates would be given for a period of five years. The final instalment of the 5-year rebate package is due in September this year. I am happy to inform Members that we will be giving a road tax rebate of $100 per passenger car unit (PCU) this year. This rebate is the same as last year's and together with the coming road tax reduction, this will help motorists adjust to the progressive shift to the usage restraint measures.

Mr Ong asked about the PARF for cars registered before May 2002. I am happy to inform him that cars bought with pre-May 2002 COEs will enjoy the PARF rebate calculated based on the OMV. This is only fair as they bought the COEs under the old ARF and PARF rates.

Mr Yeo and Mr Yatiman asked about our plans for upgrading the road network in view of the growing vehicle population. There are numerous road projects underway today. These projects include the Braddell Road/Bishan Road Interchange, PIE/Adam Road Interchange, upgrading of Upper Bukit Timah Road, the Telok Blangah Semi Expressway, and the CTE/Braddell Road Interchange, which will also help to relieve the traffic on the CTE when all these are completed. Also, the 12-km Kallang/Paya Lebar Expressway (KPE), which is a very important project, will be completed in 2007. This project, when completed, will also help to relieve a lot of the traffic from the CTE. All these on-going projects will cost almost $2 billion. In addition, LTA will embark on several road upgrading and development projects worth $570 million over the next few years.

Sir, I must also alert MPs that there is a limit to what we can do, because we have a limited amount of land in Singapore. Already, roads take up 12% of our total land area, and this is the same amount of land used for residential purposes. Going forward, we will have to increasingly rely on ERP to manage road congestion and ensure that our limited roads are used optimally. But we all need to travel for one reason or another. The Government will therefore ensure that commuters have an efficient alternative to cars. Our priority, therefore, is to continue to expand the rail network, as this will be the backbone of our public transport system. SMS Khaw Boon Wan will shortly update Members on the development of the rail network.

Sir, let me move on now to Mr Chiam's remarks. Mr Chiam went on a very convoluted argument about car ownership and revenues. With our limited land, I think even Mr Chiam will agree, we have no choice but to control car ownership. If he is able to give us a better alternative on how to control car ownership without imposing a cost on the owners of cars, we will be very happy to review his suggestion.

Sir, the system we have for controlling of car ownership is not a revenue-generating system. Yes, we do generate revenue from that, but that is not the primary interest. The primary interest is to make sure that, firstly, we have an efficient system for transporting people around Singapore. Private cars is one element of that system. But the public transport system is an even more important element of that policy. Having allowed the people to meet their aspirations to own cars, how do we make sure that our roads do not become giant parking lots that we see in many countries? The only way is to have congestion control which, in our case, is ERP. The ERP has worked and we will continue to have to rely on the ERP.

Sir, he has made three suggestions. First, he brought up the issue of people in Amsterdam using bicycles. I have been to Amsterdam before and if I were living in a climate as pleasant as Amsterdam, I will be very happy to ride a bicycle to work too. But, unfortunately, the reality is that Singapore is too hot a place to be riding bicycles. Yes, people do ride bicycles for leisure but I think few people would want to ride to work and arrive at work sweating away.

He has asked for bicycle lanes to be built in the HDB estates. Sir, already we are so land short. We are already struggling to find spaces for parks, recreation usage, and residential usage. It would be very difficult for us to put aside land for bicycle lanes. In any case, in the HDB estates, during the day time hours, or during most of the day, other than the peak hours in the morning and evening, the roads are actually quite sparsely used. Therefore, it is very safe for people to be riding bicycles. In fact, many of my senior citizens do ride bicycles around, and they have never complained to me about the dangers of riding bicycles around. But they do not use it as a form of transport, even though they have bicycles. They use it as a form of leisure and they ride it during the cooler hours, rather than at noon time when they have to go out to get their lunch.

He has also asked us to persuade bus companies to use low capacity buses for private estates. Private estates are, in fact, free to set up their own cooperative and hire a bus to run a shuttle service from the estate to the key amenities. In fact, some condominiums are already doing that. They hire a shuttle bus service that shuttles the residents to either the shopping centres or to the MRT station. So they are free to do that. 4.15 pm

He also asked us to expand the Park-and-Ride location. Sir, we do have the Park-and-Ride locations. The feedback we have is that they are still not well used. If there is additional demand, we will definitely be very happy to look into that. So if Mr Chiam has got suggestions as to which Park-and-Ride carpark is overly utilised, do let us know, we will definitely look into it.

Sir, Mr Yatiman talked about the impact on taxi drivers and that taxi drivers will not benefit and, in fact, they have to pay more from the increased ERP. It is true that if there are more ERP gantries, and if the ERP rates still go up because of the increased congestion, the taxi drivers may have to incur more expenditure on the ERP charges. But this is because of the driving patterns of the taxi drivers. Today, taxi drivers tend to cruise around even when they are empty looking for passengers. Increasingly, the taxi companies and taxi drivers will have to review their driving habits and driving patterns. They may have to rely more on the call service and wait for the passenger to call them, rather than cruise around and pay for the increased ERP charges.

Let me now move on to Mr Ong Kian Min's points on the feeder bus service. Sir, he proposed that we review the possibility of introducing competition into the feeder bus service because quite often he gets complaints from residents that the existing bus companies are unable to meet their expectations. First, let me explain to Members a little bit about the public bus framework. The current bus industry framework allows the basic bus operators, ie, SBS Transit and TIBS, to achieve economies of scale. This enables them to maintain affordable fares, while complying with the bus service standards set by the PTC. The service standards set by PTC include quality of buses, service frequency and the maximum number of transfers allowed on a particular trip.

More importantly, PTC imposes universal service obligations on the operators. This means that they have to provide a comprehensive network of bus services, including regular bus services, to the less populated areas, even though these routes may not be profitable. The bus operators therefore have to balance between the profitable areas and routes that are not profitable. People living in sparsely populated areas, or working in newly developed areas, are therefore not penalised by having to pay higher fares, or to be deprived of a public bus service. But that does not mean that we do not see a role for private bus operators, and we do not have private bus operators operating in certain niche areas and on the Scheme B services.

Sir, bus routing is a very complicated business. There is a certain amount of ridership and the ridership can be best met by a certain deployment of bus resources. If you deploy more bus resources, yes, the residents will get a better service. But more bus resources with lower ridership per bus must translate into a higher fare. It cannot be having fewer passengers and being able to charge a low fare unless the fares are being subsidised. I do not think private bus companies are in the business of subsidising ridership.

But having said that, let me inform Members that we are open to the idea of introducing competition in the bus industry. As Mr Ong has mentioned, one possibility is to allow private bus operators to operate a feeder service on a pilot basis. Unlike trunk routes, feeder services are confined to a certain geographical area and therefore it is easier to monitor them and to see how they are performing and to get feedback from the commuters. I would be happy to invite Members who are not happy with their current feeder bus service, if they are willing, to volunteer his or her estate for this pilot project. Just let me know and I will ask PTC to explore this option with him or her. Perhaps, Mr Ong may be the first guinea pig for this project. But please make sure that our GRC members agree with you.

Sir, I think I have replied to all the questions. I will now ask SMS Khaw to reply to the questions on the trains.

The Senior Minister of State for Transport (Mr Khaw Boon Wan): Sir, Mr Yeo Guat Kwang said that transport infrastructure should be free flowing like the blood circulation system. I totally concur. To achieve such an outcome requires careful planning and sound execution. Mr Yeo is again correct to say that an efficient Rapid Transit System (RTS) network is an important part of our transport infrastructure and its timely expansion is critical to making public transport an attractive alternative to private transport.

Today, our RTS network has reached 100 km. We are increasing it by 50% to about 150 km by 2006. This would be achieved when we complete the following projects. First, the North-East Line and the Sengkang LRT by the end of this year. Second, the Punggol LRT by the end of 2004. And third, the first two stages of Circle Line by 2006. Beyond that, our plan is to further expand the network by another 60% to about 240 km by 2015. By then, almost 90% of our City Centre and practically every job or employment would be within 400 metres of the nearest MRT station. This is an ambitious project and requires tens of billions of dollars.

An ambitious plan of this kind will need to be executed in phases. First, we will complete the remaining stages of Circle Line by the year 2010, at the end of this decade. Next, we will build several new lines which are now at various stages of planning. They are, first, the Bukit Timah Line to serve the Bukit Panjang, Upper Bukit Timah and Bukit Timah areas. Second, the Eastern Region Line, to complement the existing East-West Line in the East and, finally, the Jurong Region Line, which is a light rail system to serve the residents in Jurong as well as NTU.

Mr Yeo Guat Kwang suggested that we expedite the expansion of the network. We will do our best, provided the economy performs well. We can realise these plans within the next 15 years or earlier.

Let me now talk about the noise created by trains. As we build more rails and bring them closer to the people, we cannot avoid some degree of noise pollution. To eliminate it, we have to stop building apartments near to the roads, or MRT tracks. In that case, then there will be no Guilin View in Mr Ang Mong Seng's constituency. In Singapore, we know this is not practical. So we have to accept that some apartment blocks will be subjected to some noise pollution. But we must certainly do our best to cut down the level of pollution.

Mr Ang spoke specifically about the noise level created by MRT trains around the Bukit Gombak Station. He wrote to me. I went there to take a look. Within 200 metres of this station, there is this Guilin View, a private condominium, and about a dozen HDB blocks located near there. We have tried to cut down the noise levels by adopting several measures. First, LTA sets very strict criteria when they select trains so that the noise emission limit is subject to certain guidelines which are set by the Ministry of the Environment. Secondly, LTA designs and constructs the MRT tracks to allow them to absorb noise better. That is why ballasted tracks on timber sleepers are used on all our MRT viaducts. Third, and this is a very important point, we require our MRT operators to properly maintain their trains and their tracks. Good maintenance will ensure that noise levels are kept within environment guidelines.

LTA has taken noise measurements near Bukit Gombak Station, and those measurements indicate that the levels are still within ENV's guidelines. But, nevertheless, we will continue to work with Mr Ang and his grassroots leaders to find if there are better and practical solutions to bring the noise level down.

Let me now touch on the frequent breakdowns of Bukit Panjang LRT when it first started. Prof. Low stressed the need for us to minimise disruptions and make it a reliable system. I totally agree. Breakdowns inconvenience commuters. They are therefore not welcome. That is why we impose a very high performance standard on the LRT operator. What is our expectation? We set a standard, what is called service availability standard of at least 99.7%. What does this mean? This means that everyday, over a daily operating period of 20 hours, the maximum down time should not exceed four minutes. This is a very demanding standard. But it can be achieved. Unfortunately, the Bukit Panjang LRT did not perform to standard initially. During its first two years of operation, there were a number of occasions when it could not meet the standard. We share the frustration of the Member and his residents. We had not sat on our palms. A lot of efforts and resources were mobilised to first understand the problem and then to fix them. We have made progress.

Since last September, for a continuous six months period, the Bukit Panjang LRT system succeeded in achieving this very high standard of 99.7%. Unfortunately, this very good record was interrupted by two incidents. One, last month, and a second one, this month. Detailed investigations are ongoing but the preliminary assessment confirms that the LRT system is robust and, in fact, is functioning as designed. On both occasions, the system was shut down automatically because the IT system detected some faults which were eventually traced to wiring problems at the termination panels. Given an experienced operational and maintenance crew, the wiring faults at the panels could have been identified and rectified speedily. But as it turned out, the operator took longer than necessary in troubleshooting the faults, resulting in prolonged shutdowns. 4.30 pm

We will, therefore, continue to stress on staff training and retraining, and, particularly, in troubleshooting skills. Towards this end, the operator, SLRT, intends to engage Bombardier Transportation, which is the original system supplier, to help in its staff training programme. No efforts will be spared by SLRT to ensure compliance with the 99.7% service standard.

On hindsight, could the initial teething problems of the BP LRT system be prevented? Yes. What are the steps that can be taken to ensure that we avoided it?

First, the LTA applies stringent criteria when selecting a system. We take into account the experience of the designer and supplier, their reliability and their track record. This is done at the tender evaluation stage.

Second, the selected system is put through rigorous trials and tests before we put it into service.

Third, involve the operator early. The LTA brings the appointed operator on board at an early stage to be closely involved in the system's development. Such early involvement enhances the operator's knowledge and appreciation of the system, and it allows him to build up expertise, so that they are operationally ready before the start of service.

Then why did Bukit Panjang LRT system fail to perform as expected? First, on selection. I think we did well. The BP LRT system is a sound system, based on proven technology. It is a mature system, has been running for more than 20 years in other parts of the world and in many cities. So, we got an "A" there.

Second, we did put it through rigorous tests before we started commercial service although, on hindsight, perhaps we could have allowed more time for trial running.

Unfortunately, I think we did not do as well on the third step. We did not appoint the operator, which is SLRT, early enough. So, this is a very important lesson which we have learnt, and that is why for the North East Line, for Sengkang LRT and Punggol LRT, LTA has stepped up efforts to involve the operator, which will be SBS Transit, to prepare it, to gear it up for its tasks ahead.

Prof. Low also stressed the need to integrate the LRT with bus routes. I totally agree. LRT and bus routes are different components of a system. They should synergise to bring maximum benefits to the majority of residents, and that is why each time a new LRT system is put in, we have to do some rationalisation of existing bus routes. It cannot be a simple add-on. But, in any rationalisation, we will take into account the interests and concerns of the residents. And, here, the Member of Parliament plays a significant role, in articulating the interests, feedback and suggestions of the residents. This was a role which Prof. Low played wonderfully. And in the recent general election results, there was clear evidence of that.

Mr Yeo Guat Kwang: (In Mandarin): The Government introduced a rebate on green vehicles in January 2001 for a period of three years to encourage the use of electric and hybrid cars in Singapore. Is this measure effective? Some 67,000 cars were registered in Singapore last year, out of which only 13, or less than 0.2%, were green cars. There seems to be no attraction in this. From the pricing point of view, after the rebate, a 1.5 litre Toyota hybrid car costs $134,488. That is about 60% more than a Toyota Corolla of the same engine capacity, even after the rebate. Another example is that a 995 cc Honda hybrid car costs about $141,000. For less than that price, a motorist can buy a 2.3 litre Honda Accord, which is much bigger. There is a huge difference in prices. How do we expect people to switch to green vehicles?

I would urge the Ministry to look at the rebates again to make the green cars more attractive to buyers and to extend the 3-year rebate period. In Sweden and Britain, they have already provided bold incentives to encourage people to switch to green cars. I think we should go in the same direction. We can further lower the cost differential between petrol-propelled vehicles and the green vehicles, so that, car for car, motorists can be drawn towards the greener choice.

Last month, we saw the launch of Compressed Natural Gas (CNG) buses and taxis in Singapore. I would like to know whether the Ministry of Transport has any plan to introduce the CNG vehicles in Singapore. We should have more green cars in Singapore, for the sake of a green and clean environment.

The Chairman: Mr Iswaran is not present. Prof. Chin is also not present. Mr Khaw, do you want to reply?

Mr Khaw Boon Wan: Sir, Mr Yeo Guat Kwang spoke in support of green vehicles. He felt that our current tax incentives were inadequate and, as a result, we do not see many of them on our roads. As pointed out by him, we first introduced the rebates for hybrid and electric cars in January last year. Then, in October 2001, he may not have noticed, we extended the rebates to natural gas vehicles.

Our rebates comprise two components. First, a one-off rebate to reduce the upfront cost of purchase. For cars, this is 20% of the Open Market Value (OMV). For buses, the rebate is 5% of OMV, so, fully offsetting the ARF of a bus, ie, green buses do not have to pay any ARF.

Second, there is a recurrent rebate on the annual road tax payable. For green vehicles, the rebates amount to 20% of road tax. For hybrid vehicles, a lower rebate of 10% is granted.

Together, these rebates lower the upfront and annual running costs of green vehicles, and reduce the cost differential with the conventional vehicles. With these rebates and the lower fuel costs, the total cost of owning and using green vehicles should be comparable to that of conventional vehicles of equivalent OMV.

But the take-up rate is, indeed, very low. To-date, only 15 green vehicles are on the road. Why is this so? Obviously, there are many other factors, apart from cost and rebates, which affect a motorist's decision on whether or not to buy a green vehicle. For example, how many models are available? Is it a limited range? In the market today, there are only three models. And, for some of the young buyers, what is the design like? Is it cool? And there are other factors, eg, what is the subsequent maintenance support by the dealers? All these are very important considerations.

Like all new technology, the rate of uptake would initially be low, due to consumer inertia. Green vehicle technology is still new, and it will take time for it to earn consumer acceptance. In fact, our low uptake here is not unique. In Japan and the US, their take-up rates are also very low. Last week, I read a Business Week article on green cars which drew the conclusion that the technology is still evolving, and they made the point that, realistically, green cars are not going to be a big thing for another 10 years. So this is a crucial point. What does it mean? It means that it will remain a niche product for quite some time. Therefore, the economy of scale, which is enjoyed by conventional cars, will not benefit green cars. So, despite whatever rebates we may give, green cars will remain expensive.

But, like Mr Yeo, my Ministry supports the intent to reduce car pollution, and we will continue to promote green vehicles, and lean in their favour. But, at the same time, I do not think we should go over-board and, certainly, not too much ahead of consumer acceptance. But, meanwhile, we will monitor the development, and we can always review the rebates at the end of next year. We will then see if further changes will be necessary.

The Chairman: Mr Chay, would you like to withdraw your amendment?

Mr Chay Wai Chuen: Sir, I would like to thank the Minister and his Senior Minister of State for their comprehensive answers, and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. 2, Dr Chong Weng Chiew.

Dr Chong Weng Chiew (Tanjong Pagar): Sir, I beg to move,

That the sum to be allocated for Head W of the Main Estimates be reduced by $10 in respect of Code WA 1500.

(In Mandarin): Yesterday, the Comfort Group announced their results. The results show that business profits have improved by 15%. Comfort Group is the largest taxi operator in Singapore. The high turnover is because they have more taxis available. I understand that many people have already registered themselves with CityCab, and are waiting for taxis to be allocated to them to drive. I believe when people lose their jobs, one of the options is to become a taxi driver.

[Mr Deputy Speaker (Mr Chew Heng Ching) in the Chair]

4.42 pm

Dr Chong Weng Chiew (Tanjong Pagar): Mr Chairman, taxi drivers are subject to very great pressure. At the time of an economic slowdown, people would avoid taking taxis, and hence less passengers. At the same time, many unemployed people are switching over to taxi driving. So, the competition for passengers is invariably intensified.

Secondly, with this recent stepping up of the Traffic Police action against non-conformity with the safety-belt rules, the taxi drivers are the first to be victimised. If the rear-seat passengers do not belt up, the taxi driver will be fined and penalised with three demerit points. Of course, the taxi drivers can turn down passengers who refuse to belt up, but if the passengers complain to the authority about the taxi driver's refusal to service them, the taxi driver will be penalised all the same. If the taxi driver chalks up 24 demerit points within two years, he loses his driving licence, and consequently, his job. What if he is the sole breadwinner of the family. Many are!

In these circumstances, these taxi drivers will complain and seek the help of the MPs. Of course, we cannot do very much to help them. Mr Chairman, I would like to make two suggestions:

First, the Traffic Police could be more sympathetic and lenient towards the taxi drivers;

Secondly, for taxi drivers who have accumulated 24 demerit points within two years owing to the fault of their passengers, they should be given an extra six points. Perhaps, these six points may be for a period of six months. In this way, taxi drivers will not be penalised unduly, just because of the non-cooperation of some unreasonable passengers. These are special circumstances which warrant sympathetic consideration.

Mr Ong Kian Min: Sir, the in-vehicle unit was introduced into our cars with the implementation of the ERP system some years back. Since then, there have been many cases of thieves breaking into vehicles to steal the cash cards that were exposed to view. I would like to ask whether it is time, after all these years, for an upgrade model to be designed and introduced.

Mr Khaw Boon Wan: Sir, I thank Dr Chong Weng Chiew for his feedback on the effects of the current economic slowdown on taxi drivers, and he asked if we could assist them in some way. 4.45 pm

Sir, the economic downturn affects everybody, so taxi drivers are not exempted. I have looked at their earnings data and I notice that their average earnings for last year have indeed come down by 10% in the second half, compared to the first half, something like from $2,300 per month on one shift operation to about $2,100. But there are signs of recovery. This year's data, in fact, show steady increases, month by month, in their earnings. Their average earnings in the first few months of this year, $2,500 for one shift operation, is now much higher than the average of $2,150 recorded in the last quarter of last year. This trend, I think, should continue as the economy recovers.

As compared to other workers, taxi drivers have done much better. That is why, as Dr Chong noticed, there is a long queue outside waiting to join this profession.

The Government is alive to the economic hardship of Singaporeans during the current recession. That is why we have implemented various schemes to help Singaporeans cope with the hard times - New Singapore Shares, rebates on HDB service and conservancy charges, utilities rebates, etc. Most taxi drivers are able to benefit from such schemes.

Dr Chong mentioned the safety belt problem experienced by taxi drivers. We have checked with the Traffic Police because this is enforced by them. Traffic Police said that they do not encounter much problem with taxi drivers and their passengers during enforcement. But certainly, we will take a sympathetic approach, as suggested by Dr Chong, if indeed taxi drivers have uncooperative passengers. I am sure that will be a factor that we will take into account.

Dr Chong Weng Chiew: I thank the Senior Minister of State, Mr Khaw for his wonderful reply. Thus, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Miss Penny Low (Pasir Ris-Punggol): Sir, I beg to move,

That the sum to be allocated for Head W of the Development Estimates be reduced by $10 in respect of Code WH 5200.

Sir, the efforts by the Ministry to solve some of the transport woes of Sengkang Town have been most impressive.

While this time last year, there was only one road, the very famous Punggol Road that connects Sengkang Town residents to the rest of Singapore, there are now two additional roads and a total of five exits from Sengkang Town. In fact, by the end of this year, the LRT and MRT would be ready and my residents would enjoy the option of a sky route out of Sengkang Town.

However, as Assoc. Prof. Low has expressed earlier on, the experiences of LRT riders have been less than heavenly. The much publicised breakdowns and accidents have caused much worry among my residents and I am pleased to say that I am very happy with Senior Minister of State, Mr Khaw Boon Wan's reply on that. I would like to ask if there are any specific measures that are taken to ensure the safety and the smooth functioning of the LRT in Sengkang in particular.

In addition, I also urge that the rationalisation of the public transport system, especially since the operator this time round is SBS Transit, be slower to implement their plans, to rationalise the entire system, to reduce the feeder service and trunk service. Perhaps, it could be put on hold until there is some certainty that the LRT is indeed reliable.

Sir, while the development in the Sengkang Town has been impressive, the same cannot be said of the road and transport development across the Tampines Expressway (TPE). Here, I refer to Punggol 21. While Punggol 21 has been heralded as a model town, residents there have been battling long jams in a less than good public transport system. In fact, the very same old Punggol Road remains the only link that Punggol 21 residents have to the rest of Singapore. I would like to show a photograph here that was given to me by a resident of mine. He claims that he would need at least half an hour just to move a few hundred metres to get out of Punggol Road into Tampines Expressway. I quote him, "The situation is getting worse over the months as more Punggol residents are moving into their new homes. It is beyond my understanding how a major town like Punggol can have only one road out to the rest of Singapore." In addition, he said, "Imagine what would happen if a major traffic accident closes Punggol Road. Tens of thousands of Punggol residents would not be able to leave or return to their beloved home."

In my constituency, Punggol North, while about 5,000 of my Sengkang households would enjoy the convenience of the LRT at the end of this year, my 6,365 Punggol 21 residents and two schools in Punggol 21 will have to make do with only one trunk service, which is Service No. 83. Meanwhile, as the LRT is being built, dual carriageways are converted to single lanes, and public transport operators like SBS Transit, have claimed that both the LRT and HDB developments in Punggol 21 have caused some of the roads to become unusable. As such, they too have been reluctant to bring in more service routes to serve the population heartland of Punggol 21.

Sir, this is a growing problem as Punggol 21 is a fast-growing town. In addition, I have one good news and one bad news. The good news is, together with the North-East line, Punggol MRT station will be ready by the end of this year. The bad news is, it is surrounded by vacant land at the west side of Punggol Road, while the population centre is located on the east side of Punggol Road. To make things worse, the other two long distance service routes that ply along Punggol have frequently rejected the residents' call to turn into the growing Punggol 21 estate because they have engineered the roads to go and serve the future population around Punggol MRT station.

I hope that the Ministry would look into hastening the development of the LRT in Punggol 21. I have confidence that with the new testings and the measures that have been put in place, this LRT will be different. Of course, it is left to be seen. In addition, I would also hope that there will be an increase in the number of exit routes from Punggol 21 and an overall improvement in the transport system in Punggol 21.

Sir, my residents are eagerly awaiting the new facilities.

Mr Gan Kim Yong (Holland-Bukit Panjang): (In Mandarin): Mr Chairman, since the Bukit Panjang LRT was launched in 1999, it has encountered a lot of problems. The Senior Minister of State has already explained why these problems occurred. But these problems have yet to be resolved.

Moreover, a number of bus service routes have been withdrawn in Bukit Panjang, and the residents there have to rely more on the LRT service. As such, the frequent interruptions of the LRT service have caused them a lot of trouble and inconvenience. Students who have to go to school by LRT will be late, workers depending on LRT to go to work will be late and, worst of all, those who have examinations to take will lose precious time when they turn up late for the papers. This is certainly cause for concern. If we do not take immediate steps to rectify the situation, very soon people will lose confidence in LRT, and the LRT will be deemed to be an unreliable form of transport.

I am glad that the Senior State of Minister has acknowledged that the Bukit Panjang LRT service has not been performing satisfactorily. But I would like to ask the Land Transport Authority whether it has got any plan to improve the LRT service. I know that at the moment, there is some fine or penalty imposed on the service provider if their service is not up to the mark. But such penalty does not help ease the problem faced by the residents. I know that the operator does provide a back-up shuttle bus every time there is a breakdown. This is good but not entirely satisfactory. It is no replacement for reliable and efficient service.

Therefore, I would like to suggest to the Minister or the Senior Minister of State that unless and until the operator is able to provide a reliable service, regular bus services should be restored to service the area.

Secondly, should there be a major disruption to the LRT service in future, the operator should be asked to compensate the commuters, say, by providing free rides for a week, or even for a month. In this way, more pressure will be exerted on the service operator to improve their services.

Thirdly, I would suggest that if the operator is unable to resolve the problem, and frequent disruptions continue, the operator should be replaced if they are unable to comply with the requirement to rectify the problem within a prescribed period of time. If there are more interruptions, I think we should terminate their contract and get a new service provider to replace them.

Mr Khaw Boon Wan: I have noted Mr Gan Kim Yong's suggestions on the Bukit Panjang LRT problem. As I explained earlier, let us have some confidence. The period of teething problems is over and the last six months' record gave us that confidence that they have been able, continuously, for six months, to achieve that 99.7%, which is a very high service standard despite the last two incidents a few weeks ago. But those two incidents merely confirm that there is nothing wrong with the system. This is not rocket science. LRT has been around for decades. Like all systems, it requires to be properly maintained. You can have the best of systems, but if it is not maintained, then it creates problems. Having identified that this is the problem, and I think that is the efforts the operator is committed to do, we will make sure that the operator delivers on this one. It can be done. It has been proven for six months since September last year, and I see no reason why it could not continue that way.

Likewise, I can reassure Miss Penny Low that the problems of Bukit Panjang LRT of the past will be contained in the history book there. It will not spill over to Sengkang or Punggol. 5.00 pm

As to the point about Punggol roads and so on, and the various possibilities, I must confess I am not too familiar with the Punggol area. The last time I went there was many years ago. But I took her feedback, I have to see what does it mean. But she did talk about the gap period between the opening of the Punggol MRT station and when the LRT opens, and there would be a need for service to be delivered during that period, and this is something that we will sort out with the operator of the MRT which happens to be SBS Transit. So certainly routes have to be rationalised, once we open Punggol MRT. And, as I have reassured Prof. Low just now, we would fully take into account the interests and the concerns of the residents. The role of the MPs in coming forward to give us that feedback will be crucial, and I will be happy to facilitate a discussion between SBS Transit and Miss Penny Low, and her grassroots leaders, to show them our plans for the whole Punggol area, and I think in that way we can have a more productive discussion.

Miss Penny Low: Sir, I thank Senior Minister of State Khaw for assuring the residents of Sengkang Town of the efforts that his Ministry has put in. I also want to thank him for agreeing to look into the developments of the Punggol

21 Transport System, and I would be most delighted to take him on a personal tour of Punggol 21, if he so wishes. With that, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $410,843,100 for Head W ordered to stand part of the Main Estimates.

The sum of $1,232,635,200 for Head W ordered to stand part of the Development Estimates.

Head S -

The Chairman: Head S, Ministry of Manpower. Mr Yeo Guat Kwang.

Mr Yeo Guat Kwang: Sir, I beg to move,

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

Sir, in his Budget Speech, DPM Lee gave the assurance that any changes we make will be done very carefully, after full consultation, and without causing disruption, either to CPF members or to the property market. This assurance was timely because there have been many discussions on the possible changes to the CPF system and such discussions can be easily misunderstood, if not seen in the full context of the discussions and consultations. I would like to raise the following concerns based on feedback I have received from discussions with union members and leaders.

First, the CPF Minimum Sum. The Minimum Sum helps CPF members set aside sufficient savings to support a modest standard of living after retirement and enables them to remain self-reliant. I would like to know how, and on what basis, does the CPF Board determine the adequacy of the Minimum Sum. Based on the current CPF Minimum Sum of $70,000, a CPF member would have $537 monthly from age 62. Is this sum adequate? One concern is that the sum will be much lower if a member pledges part of the Minimum Sum in property.

Second, because of the CPF system, we have one of the highest saving rates in the world. Yet many are still worried that they do not have enough cash for retirement. Recently, many have raised the concern that one of the possible causes of this is because CPF members invest too heavily in property. They become asset rich, but cash poor. However, there was also recently an analyst's report in Business Times on 1st of May that there is no over-investment in housing. I would like to ask the Ministry of Manpower for its assessment. Does the present system lead to an over-consumption or over-investment in property? If this is the case, then should the Government review our housing policy and consider granting Singaporeans with other housing options, such as rental flats?

Another idea hotly debated, in public and the media, is to have a lower CPF contribution rate for older workers so that they remain competitive. I would like to ask the Ministry of Manpower for its assessment of the situation. Should the CPF contribution rate be cut for older workers, what will be the impact? Can the Ministry share with the House the different extent of impact should the CPF contribution rate be lowered at various rates for workers of different age groups, for example, 40, 45 and 50? For example, should CPF contribution rate be reduced for workers above 40, 45 or 50 years old, how many of them will have difficulties servicing their housing mortgages? Would they be able to save enough CPF for their old age and medical needs?

Sir, CPF is fundamentally for old age, medical expenses and basic housing. We have to continue this system around these core objectives. We have to be extremely careful in suggesting changes to such a system.

Dr Tan Cheng Bock (Ayer Rajah): Sir, is too much CPF money tied to housing, and not enough cash for retirement? This was raised by Minister Lim Boon Heng, and this kicked off a debate among Singaporeans who are worried that something is going to happen to their property, their prized asset. But is this true or not? Too much CPF money in housing? The Business Times and New Paper carried a report by CapitaLand to show otherwise. They say, "No such thing. Only 25% for public housing and 15% for private housing." Who is right? Singaporeans want to know. So in the New Paper, Dr Money asked CPF, "Is this true?" CPF kept silent at first, but when they were pressed, they said they had no such data available. This is all in the New Paper dated 6th May, 2002. Of course, I know CapitaLand's vested interest. But surely CPF should come out and challenge the report. But apparently it did not, or I could have missed it as I was away. Perhaps the Minister could provide the answers. Is too much CPF money in housing?

Later Labour Chief, Lim Boon Heng, went further and floated the possible 40 years and above CPF cut kite. This was echoed by the Minister for Manpower, Lee Boon Yang's call to study CPF cut for those above 40 years seriously. I quote him. He was concerned by the over-priced older workers in the market. When both Ministers concur, one Labour Chief, and one Manpower Chief, then Singaporeans better sit up and listen carefully. They had better go back quickly and re-examine their financial commitments to their home, their children's education, their mortgages and their loans, because it would probably turn out to be so.

However, when I listened to DPM and Finance Minister Lee Hsien Loong's strong commitment to restoring the CPF to 40%, at the last debate, and I presume restoration also applies to the 40 years and above, I wonder how Singaporeans will feel. This time, the talk is restoration, and not cut.

So many conflicting messages for the employer and employee. When you talk about 40% restoration, employers sit up and look at the bottom line, but employees are happy. But when you tell employees that when you reach 40 years, their CPF would be reduced, they are going to be more than sad. So if you float so many kites, you better bring all the kites down soon and ease the anxiety of those concerned. We must remember, when deciding on this CPF change, that at age 40 and above, many Singaporeans are at the height of their financial commitment - at their peak. Remembe, at this age group, the children have grown up. They are either in the higher secondary school, in JC or in the university. They are also committed to their mortgages, insurance, and loan repayments, and many must have planned to settle, or hope to settle, all these before they retire.

Manpower Minister's reason for support of this idea is his concern that Singapore's seniority-based wage system could have over-priced older workers in the market, that has become more demanding, and where high-skilled and innovative workforce is key to the country's prosperity, and changes must be made, including CPF, to be in line with new economic changes. So said the Minister.

I am not so sure which category of the labour workforce has many older over-priced workers. I have no data. Perhaps the Minister can enlighten the House on this. I would suggest not to hurry with this because of the low morale of many workers in the present downturn. Perhaps, since we have made a commitment to the present workforce, on their CPF, when they first joined the labour market, we should start this, if we have so decided, with those entering the workforce for the first time. I think acceptance would be better as they would know how to plan with the new changes. However, whatever CPF changes you want to do, we must bear in mind the very fundamental objective of our CPF, ie, for housing, health and retirement. You can refine this, but do not change this too much. As Matthias Yao said, and I fully agree with him, stick to our three fundamentals - housing, medical and retirement.

Mr Ong Kian Min: Sir, I filed this as a $10 cut on a matter of detail, but it has been elevated.

Sir, my question is a simple one. When an employer is late in paying the employee's contribution, the CPF Board charges interest at the rate of 18% per annum on the amount outstanding from the due date until the payment is made. Who should be entitled to this interest which, at the rate of 18% per annum, is quite close to the exorbitant 24% charged by credit card companies? Should it not be paid over to the employee, who, after all, is bearing the risk of not being paid the CPF contributions, which, in some cases, can add up to a few months' worth, if his employer becomes insolvent and goes under?

Dr Lily Neo: Sir, I would like to request that the Minister for Manpower consider the use of the Medisave part of CPF for the purchase of portable medical insurance (PMI). This is to allow employees to use the Medisave to buy individual portable medical care products to cover illnesses because their employers are not providing for this type of medical coverage, while they are still working, and also when they are in-between jobs.

Sir, PMI can help to ensure guaranteed long-term coverage for the employees when they are in-between jobs and in retirement, and to ensure that the accepted coverage will not be cancelled for subsequent ill-health, provided premiums are paid. I would like to augment my request with the following reasons:

(1) Medical expenditure, especially for old age, is the concern of many Singaporeans. They are always worried about falling sick and having to end up incurring unmanageable, huge hospital bills. Many fear that the $26,000 savings in their Medisave may not be enough should they need hospitalisation and surgery, when they are no more employed, or become unemployed. Many people also fear running the risk of financial hardship in the end as medical treatment becomes more expensive.

(2) Many want the peace of mind by ensuring for better hospitalisation and surgical coverage as MediShield is for the masses, and the benefits are limited.

(3) Help risk pooling through insurance, a risk-transfer mechanism, is a better method than just depending on the Medisave alone.

(4) The use of Medisave to purchase medical insurance will stress the principle of individual responsibility for one's own healthcare needs. It also encourages Singaporeans to better plan and save when they are younger. This is better than to just depend on Medisave alone.

(5) Portable medical hospitalisation and surgical cover will take care of the subscribers in their old age and they need only pay low premiums in their younger working days. This is certainly better than to depend solely on the savings in their Medisave account.

(6) There should not be any fear of encouraging the buffet-syndrome, or of driving up healthcare cost, as long as they are accredited insurance companies and carry co-payment and deductible elements in their policies.

(7) Lastly, there should not be fear of unrestricted medical and insurance schemes using Medisave as long as there is a mechanism in place that prevents frivolous premiums and coverage by requiring the insured to pay any difference with cash.

May I also ask the Minister for Manpower whether more insurance companies can be accredited for usage of Medisave from the present three, so that Singaporeans can have more options.

Mr Inderjit Singh (Ang Mo Kio): Sir, my points have been raised and so I will not speak.

Dr Amy Khor Lean Suan (Hong Kah): Like my colleagues before me, I also know from feedback that many Singaporeans, especially those above 40 years, are very apprehensive ever since the Government raised concerns that Singaporeans are putting too much CPF money into housing, and subsequently, also suggested that CPF contribution rates for those above 40 years may have to be reduced to make them more employable. This is despite the assurances that have been subsequently given.

It is thus good that the Senior Minister of State for Trade and Industry has said that changes to the CPF system will be announced next month. This will put to rest unhelpful speculation and uncertainty. However, I would like to ask the Minister, if his Ministry, together with the ERC's Sub-Committee on CPF, could endeavour to seek the views of a wide cross-section of the community and comprehensively assess the impact of the proposed changes before finalising and announcing the proposals. This is because the issues involved are complex and changing the CPF rates may not be the only, or the best, way to resolve the problems. 5.15 pm

While many Singaporeans may now realise and agree that too much CPF money has been ploughed into housing, they worry that any reduction in the amount of CPF that can be used for housing will impact on their ability to service their outstanding mortgages. This is in addition to the fact that many have suffered pay cuts, which have yet to be restored.

Cutting employers' CPF contribution rate for those above 40 but below 55 is an even greater cause for concern as many of them still have heavy financial liabilities. In fact, the 40s are also likely to be the years when housing consumption is at its maximum in the family life cycle, and hence any tinkering with the CPF would impact them most severely.

Furthermore, for this group of workers who are supposedly in the prime of their working lives, cutting their employers' CPF contribution is viewed by many as an indictment of their economic worth. Many experts have also expressed doubt that this would spur employers to engage more older workers since the key issue with most of these people who have lost their jobs is that they suffer from outdated skills. For this category of workers, it would be better to focus on skills upgrading and job retraining and changing the mindsets of both the employers and employees.

Since the Minister for Finance has announced that the CPF rate will eventually be restored to 40%, may I therefore suggest that one way to start mitigating the problem of inadequate retirement savings would be to consider channelling the yet to be restored remaining 4% of employers' contribution to the Special Account, leaving the Ordinary Account intact when the rate is restored to 40%.

Additionally, the Minimum Sum could also be increased in the future beyond the targeted $80,000 to keep pace with the cost of living.

Admittedly, there appears to be a problem and we should fix it. However, we should avoid breaking a host of other things in the process. I would thus again like to appeal to the Ministry to carefully consider the ramifications of any proposed changes to the CPF, as instead of the Singapore Dream, many Singaporeans are now nervous about the prospect of a possible Singapore Nightmare.

During the heady asset enhancement days in the early 1990s, many Singaporeans then believed that they would become asset rich and cash rich. Since then, many Singaporeans have realised that they are asset rich but cash poor. More recently, with the downturn in the property market and suggestions that changes would be made to the CPF scheme, many have lamented that they are now asset poor and cash poor, and some may perhaps even find themselves assetless and cashless!

The Chairman: Mr Tan Soo Khoon is not here. Mr Seng Han Thong.

Mr Seng Han Thong (Ang Mo Kio): Sir, the proposal to reduce the CPF rate at 40 has annoyed many Singaporeans. However, I have observed that at least there is a group which is "bo chap" (can't be bothered) to the proposal - the self-employed group. They are the insurance agents, housing agents, hawkers and taxi drivers. They also own public housing flats, like other Singaporeans, but they pay by cash, not CPF. Thus, they are not caught by the ups and downs of the CPF rate.

The argument on the issue, in fact, has developed from rational public discussion to emotional appeal, although nothing has firmed up.

While many agree that we need to review the CPF rate to help older workers to become more employable, many become emotional when the age is set at 40. This is because they are either on the wrong side of 40 or on the right side of 40. They thought they were right the last time and discovered that they are wrong this time, that is, putting too much CPF in housing. Many, in fact, have confessed that when they signed up to buy a flat, it was like signing a credit card. Even when they needed just a 4-room flat, they would sign for a 5-room flat.

Thus, too much CPF in property at the individual level is an issue. We need to resolve their predicament. Whether we should reduce the rate at the age of 40, 45 or 50, I believe, is a political decision, and I trust the Government's political wisdom.

I would like to urge the Government to move fast to come up with a decision not only on the rate of CPF for older workers but also to set a cap on the use of CPF for housing.

Dr Chong Weng Chiew: The fact that we are a nation of savers is through no accident. It is through the sheer political will and prudent policy that we are where we are today. Our people are able to go to bed in comfort with the knowledge that our hard-earned reserves would not be foolishly squandered away. It is also comforting to know that our workers' hard-earned money in our Central Provident Fund are well managed and closely guarded.

In fact, it is so closely guarded that members are allowed only very limited utilisation until retirement. Rightly so too that our CPF is not allowed for liberal uses.

Sir, allow me to present another angle of looking at our CPF savings. CPF's primary role is for "retirement, health care and housing". After you have taken care of your housing and bought enough health care insurance, the next time you may use your CPF monies is upon retirement. You may also, in a limited amount, use them for investment purposes and withdraw the capital gain, if any, at the end of the year. Even that is being slowly taken away from you.

Now, we are in a different world. Many people out there are facing very different types of problems. Many are facing bunching financial problems. There are those who previously held high-earning jobs. They are also highly leveraged with house and car mortgages, and other financial demands. After having lost their jobs, they are pressed by banks to top up their monetary differences to the deflated value of their property, cars and other investments. They will grow more frustrated as their problems mount and bunch while they watch helplessly at their huge CPF balances in their Ordinary Accounts. It is not uncommon to see an unemployed person, who previously may be a bank manager, having $500,000 balance in his Ordinary CPF Account.

To this group of people, CPF for retirement, they say, "I may not get to retirement at all!"

Would the Minister thus consider allowing this group of people flexible and limited utilisation to help them tide through these difficult times?

Mdm Ho Geok Choo: Sir, an immediate concern over linking a cut in CPF rate to the age of employees rests on the issue of equal remuneration for equal job performed.

There is a group of the over-40s whose skill levels may be roughly comparable to those who are younger. If this group of over-40s are doing the same jobs as their younger counterparts, and yet have to suffer a pay cut in the form of a reduced CPF rate, then, we may find ourselves endorsing a discriminatory precedent in the compensation system of our employees.

In this knowledge-based economy, knowledge, skills and intellectual capital of our human capital puts a premium on the value of the job. If we say, as a matter of principle that since older workers need to make themselves employable by accepting a CPF cut, irregardless of their contributions, then would this practice not be extended into other areas of compensation as well? Employers may then justify all types of remuneration cuts to older workers in the name of making these workers more employable.

If we really want to move towards a compensation system that rewards employees for what they do, and not for their age, then this proposal for a reduction in the CPF rate may actually set a dangerous precedent by endorsing age-based discrimination. This, Sir, would then constitute an instance of reverse discrimination.

In Article 12(1) of the Constitution of the Republic of Singapore, it states: "All persons are equal before the law and entitled to the equal protection of the law." If all persons are equal before the law, we should not make laws that discriminate against persons in different age groups. Having different levels of CPF contributions for different age groups is therefore discriminatory.

Reducing CPF contributions for the 40s age group tends to send the wrong signals to this group of employees, particularly managers, executives and professionals, that they are not being recognised for their contributions to society. In fact, in this age group, they are in the prime of their working life with plenty of experience and skills to give to their employers in particular, and society in general. Reducing CPF contributions as a solution to encourage employers to continue keeping these people on the payroll is an insignificant solution, and a knee-jerk solution. In fact, it is not unknown that a few employers have seen the need to increase the CPF contributions for the over-50s to be in line with the younger employees where they see that these employees' services are required.

If we are true to regarding our workers and executives as human capital, then why do we zero in on wages as a cost of doing business? Why do we not look at wages as an investment in building our human capital? There are existing mechanisms that can be fully explored to achieve the same result. For example, we can use the MVC mechanism to the fullest. Why bother to tinker with the CPF again when there is another option?

By all means, we should do what we can, and expect older workers to do what they can, to make themselves employable. But, Sir, the proposal may not be an entirely fair nor effective means by which to achieve the goal of employability. As such, I would urge the Minister and all those concerned, to seriously consider the long-range implications of the proposal before even thinking of passing it into law.

Mr Yeo Guat Kwang: Sir, the problems faced by older workers have come under much spotlight and discussion lately. Employers, it seems, are less willing to hire older workers. Why is it so? One key reason is because of the higher medical costs. Employers are not willing to incur higher medical costs associated with the older workers.

One possible solution that has been suggested is that of the medical benefit system. The system can provide a worker with portable and continuous coverage during his working years, and extending into even his retirement. It can complement and build on existing schemes such as Medisave and MediShield. It helps workers to save for future medical needs. Most importantly, under the scheme, the worker does not lose out when he changes jobs, even if he develops medical conditions. At the same time, there will not be unnecessary cost burdens to his employers as he ages. The scheme can be multi-tiered to provide a compulsory basic level of coverage at the national level with affordable premiums.

The NWC has advocated that Singapore move towards a portable medical benefit system. As a labour MP, I can clearly see that such a portable scheme will benefit workers, as it provides all workers with continuous medical coverage without affecting their employability. In fact, with the economic downturn, many older workers realise the hard reality of the existing employer-based medical benefits that they have. It is more like a cheque that, when they need to cash it, the supporting account could have been terminated. It is something that is unreal.

Therefore, "a bird in hand is worth two in the bush". Thus, more and more union leaders have accepted that portability is a more effective way to retain the workers' medical benefits. However, the response from employers is not forthcoming. One reason is that employers perceive that such a system would be more costly. I would like to remind the employers to treat workers as stakeholders. Companies have an obligation to stakeholders and should not reduce its corporate responsibility to enhance the welfare of their employees. I would like to ask the Ministry of Manpower what more can be done to push for a more widespread implementation of a portable medical benefit system in Singapore.

Mdm Ho Geok Choo: Sir, I would like to raise an issue with respect to the proposed increase in the Medisave component of our CPF to cover insurance premiums that will ensure the portability of medical insurance for Singaporeans.

In the report outlining the preliminary recommendations for a portable medical benefit scheme, I note that there is a two-tier scheme being proposed, one covers basic medical insurance, which is supposed to be compulsory, while the second-tier provides for an enhanced and optional medical insurance coverage.

The issue that I would like to raise with the Minister pertains to the first-tier basic medical insurance that is supposed to be compulsory.

In the proposed scheme, employers will have to pay an additional 1% of the employee's monthly salary as additional contribution to the employee's Medisave account, subject to a salary cap of $6,000. To offset this additional charge, employers will get to enjoy an additional 1% tax deduction of payroll.

Could the Minister enlighten the House on whether he thinks the proposed 1% increase in monthly salary is enough to pay for premiums that will ensure a coverage that is sufficiently comprehensive in scope in the event of hospitalisation? May I ask if the CPF Board will come out with a scheme that will ensure that premiums are not only kept affordable, but that they will ensure sufficiently comprehensive coverage for basic medical services?

Further to that, on what basis will the deductible and co-insurance elements be calculated? Will it be sufficiently low enough for lower income workers to pay if and when the need for hospitalisation or other needful medical expenditure arises? 5.30 pm

The Minister for Manpower (Dr Lee Boon Yang): Sir, may I respond to the Members who have spoken on the CPF issue. Eight Members have spoken on this question of possible changes to the CPF system. I would like to address their concerns now.

First, a quick word by way of introduction. I am sure all Members are very familiar with the CPF system. We started out in 1955 as a very basic retirement saving plan. Over the years, it has evolved into a comprehensive social security scheme to enable workers to save for their homes, to save for old age and also to meet healthcare expenditure. The system has served us well over the years since its inception in 1955. The question is, going into the future, will the same system continue to serve us as well as it had in the past?

Sir, today, we are facing more competition. In fact, competition is so fierce that the Malaysian Prime Minister recently publicly spoke about skinning Singapore in more ways than one. If we are complacent, we may well end up decorating somebody's trophy wall. So we should not just be complacent and depend on an institutional system that has worked for us in the past, to carry us on to the future. It is in fact timely for us to take a hard look at our economic institutions, including our CPF system, in preparation for these new challenges.

But let me make it absolutely clear right from the beginning that the fundamental objectives of the CPF system, home ownership, retirement and healthcare, are still valid and relevant and will remain so for the future. As DPM Lee said, we do not intend to muck around with these fundamentals. However, we do need to examine whether the CPF can be refashioned to better cope with the new economic challenges. While the 40% total contribution remains our target, we must still try to see whether we can fine-tune and seek a new balance for the CPF system to help our workers stay ahead and employed.

What are some of these areas or issues that we must examine with a critical eye? Mr Yeo Guat Kwang has asked whether CPF for older workers should be lowered and, if so, what would be the impact and how serious is the problem of unemployment amongst these older workers. As at December 2001, the unemployment rate for older workers aged 40 and above was 4.9%. This may not appear exceptionally high. But what is of greater concern is that, once retrenched, they face more difficulty in securing re-employment compared to those who are younger. Their re-employment rate last year was 62% compared to the younger workers' re-employment rate of 70%. It also took older workers longer to get another job. The median duration of unemployment for workers aged 40 and above was 14.2 weeks. For those aged 50 and above, it was 21 weeks. This compares very unfavourably to the 11.5 weeks for younger workers below 40 to get re-employment.

Sir, with continued economic restructuring, we must expect this trend to worsen. There are a number of reasons for this trend. Older workers may not have the right skill-set for the new jobs. Dr Amy Khor mentioned that outdated skills may well be a very important factor for the difficulty confronting older workers in seeking re-employment. I agree with Dr Khor. So we have introduced many programmes, such as the Skills Redevelopment Programme, the People-for-Jobs Traineeship Programme, even basic training, such as critical skills and skills in IT, to help the older workers acquire relevant marketable skills. More needs to be done in this area. Let me assure hon. Members that my Ministry is constantly exploring how to better help older workers bridge this skills gap.

However, skills upgrading alone may not be sufficient. Under a seniority-based wage system, the higher cost of older workers can be an impediment. This puts older workers at a greater risk when a company is forced to downsize. It also makes it more difficult for older workers to seek re-employment because of their higher wage expectations.

Sir, we could leave it to market forces to make all these adjustments. But our experience with promoting the monthly variable component, for instance, since 1999 shows that the wage structures cannot be changed readily just by market forces alone. Furthermore, for an unskilled worker, the take-home pay, net of CPF, may well be too low to be attractive. And this is one reason why some unskilled workers stay without regular jobs. They prefer to do "odd jobs" for cash without making any CPF contributions.

Mdm Ho Geok Choo said that any change to the CPF contribution rate on the basis of age would be discriminatory and unfair. Let me point out that currently, employers' CPF contributions are lower for workers who are more than 55 years old. Workers below 55 receive a total CPF of 36%, the employer contributes 16%, the employee contributes 20%. Workers from age 55 to 60 get a total of 18.5%, the employer contributes only 6% and the employee contributes 12 1/2%. In fact, the CPF rates for workers above the age of 60 is even lower. When we moved to make this change, there was no allegation that it was unconstitutional, or that it was discriminatory. In fact, everybody understood when we introduced this change that it was to help the older workers aged 55 and above to remain employed. And everybody accepted that it was a good move. We discussed it thoroughly with the unions and it was accepted that this was a good move. In fact, over the years since we made these changes, the labour force participation of the group of workers aged 55 and above had increased year by year which shows that it had achieved its purpose of helping the older workers stay employed. So I think the allegation that it is unconstitutional, or that it is discriminatory, is not valid.

But what we have to consider is whether some adjustments in the CPF rates for workers who are approaching 55 will complement the effort to retrain and reskill workers to enhance their employability. This is a separate issue from the CPF rate in general, which we still aim to restore from 36% to 40% as soon as feasible, as soon as the economy is able to bear this additional cost.

Dr Amy Khor was concerned that if we change the CPF contribution rate, it would cause bigger problems than benefits and urged the Government to look for some other measures as it may not be the best way. Mdm Ho Geok Choo said that the workers aged 40 are still in their prime working years and should not be considered as senior citizens or liabilities. I agree with both Dr Khor and Mdm Ho. The CPF is a very entrenched system. Changes to contribution rates for any group of workers will have far-reaching impact. The Government would certainly not make any change without careful consideration. If any adjustment is needed, we will certainly try to zero in on the group of workers whose employability we are trying to enhance, in other words, the older group of workers approaching age 55.

Dr Tan Cheng Bock, Mr Yeo Guat Kwang and Mr Seng Han Thong are concerned that reducing the employer's CPF contribution for older workers will affect their ability to service their housing loan. Mr Yeo also asked whether older workers would then have enough savings for old age and healthcare needs. Sir, the Economic Review Committee and its Sub-Committee on Wages, CPF and Taxation are currently assessing the impact of various CPF changes on the ability of mortgagors to service their mortgages, and the accumulation of savings for old age and healthcare. We will certainly continue to adopt a very careful approach in this study. We will not disregard the needs of CPF members, especially those with housing commitments. Let me assure hon. Members that surfacing of these issues for discussion, at this juncture, is not indicative of a decision.

Dr Tan Cheng Bock said that with two Ministers speaking about it, Singaporeans think that the decision has already been made and will be implemented. Let me assure Dr Tan and hon. Members that a decision has not been reached. We are still studying this issue. The Economic Review Committee and its Sub-Committee are looking at the data, looking at the statistics. We will study carefully what could be the impact from the changes that are being considered.

Mr Yeo Guat Kwang has also asked whether Singaporeans have over-consumed or over-invested in property. Sir, today, 86% of Singaporeans live in public housing flats and 92% of HDB residents own their own flats. Without the CPF and the HDB, it would not have been possible for Singapore to attain one of the highest home ownership rates in the world. Is this good for the nation? The answer is an unequivocal "yes". Home ownership added to our sense of belonging, rootedness and share of economic progress.

But if we ask a further question: have some Singaporeans over-consumed or over-invested in property, the answer is less clear. For those who are prudent and bought properties appropriate to their income to house their families, the answer is "no". They have not over-invested or over-consumed. But for those who rush into the property market for speculative gains, especially at the top of the property boom and over committed themselves, the answer is a painful "yes".

Sir, as in everything else, prudence is very important. CPF members should be prudent in their property purchases and not over-stretch themselves financially. They cannot assume that their wages will go up year after year, they cannot assume that they will never become unemployed during their whole working lives. Otherwise, they may find themselves vulnerable to sudden shifts in the economy and the property market, such as the recent recession.

Sir, we also need to ask another question. Having reached practically full home ownership, going forward, how do we refine the CPF system? There are two aspects worth considering. First, we have announced in year 2000 that we will gradually increase the contribution to the Special Account to reach 4%, 6% and 8%, depending on the age. Today, the rates are 4%, 6% and 6%. It would take us some time to reach 4%, 6% and 8%, the ultimate target that we have announced two years ago. Beyond that, over the longer term, will this target rate be sufficient?

Secondly, currently, it is not uncommon for a CPF member to withdraw up to 130%, or even 140%, of the valuation price of a property to service a mortgage. This obviously eats into the saving that he needs for old age. By the end of the mortgage, the CPF member may find that, even though his property has appreciated in value, it is still worth less than the total amount of CPF that he has used up. Over the longer term, is this prudent, or is this sustainable? 5.45 pm

Mr Seng Han Thong has asked whether the Government should consider setting a cap on the use of CPF for housing. This is related to the question of whether it is prudent or not to allow such a high level of withdrawal to service the mortgages. The ERC is, in fact, at the same time, also reviewing CPF housing schemes to ensure that we do not, willy-nilly, end up doing what Mr Yeo Guat Kwang and other hon. Members are concerned about, ie, encouraging over-consumption in housing. However, we are well aware that this is a very sensitive area, tied to the assets of many Singaporeans and the health of the property market. The Government has no intention of spooking property prices and hurting practically all Singaporeans. We are talking about fine-tuning a basically sound system, and not making emergency repairs to a broken-down system. If any changes are necessary, we will implement them cautiously and gradually, and we will phase them in over an extended period, probably lasting several years.

Mr Yeo Guat Kwang asked for the basis that the CPF Board uses to determine the adequacy of the Minimum Sum. The Minimum Sum is pegged at a level that would enable an individual to maintain a modest standard of living, somewhat higher than the subsistence level, upon reaching the prevailing retirement age. The CPF Minimum Sum was not intended to be the only source of income for retirees. CPF members would have withdrawn part of their CPF at age 55 and, hopefully, invested these CPF savings either in the form of an annuity or some other investments to generate additional income when they finally retire at age 62. They may also have their own private savings to supplement the monthly income from the Minimum Sum. I agree with Mr Yeo's observation that the cash amount that members set aside would be much lower, if they pledge their property for part of the Minimum Sum. The property itself may not generate cash for the CPF members. Of course, it could, if they are prepared to sublet part of their property, eg, a room, if it is a 4 or 5-room HDB flat, or, in a more drastic case, maybe willing to downgrade to a smaller property or find a reverse mortgage for the property. But let me reiterate that the CPF Minimum Sum is what its name implies: the bare minimum, adjusted for inflation, to see us through retirement. It was never intended to maintain one's standard of living before retirement and after retirement.

Dr Chong Weng Chiew requested that needy CPF members, who have financial difficulties, be allowed to withdraw their CPF savings to meet their current financial problems. This is a very well-intentioned plea. While I do sympathize with those who face such difficulties, I am also fearful of the consequences when we rush to unlock the CPF savings. No doubt, if we face a prolonged recession with very high unemployment, the CPF will have to be unlocked to bail Singaporeans out, and the Government is prepared to do so. But, our present situation is not so grave as yet. Premature unlocking of the CPF can do us more harm than good. I would like to suggest that we make use of other Government and community assistance schemes, eg, the Economic Downturn Relief Scheme (EDRS), the many programmes that we have in my Ministry for training and job placement assistance, before we turn to prematurely unlocking the CPF for this group of people.

While some Members are asking for the CPF to be opened up, I note that Dr Tan and Mr Yeo argued that the CPF should be re-focused to its original objective of providing for CPF members' home ownership, retirement and healthcare needs. This clearly illustrates the tension in our different objectives. The more liberal we are with CPF withdrawals, the harder it is for Singaporeans to accumulate enough for the core objectives of the CPF. So, I agree with both Dr Tan and Mr Yeo, that we should go back to the fundamentals.

Sir, in conclusion on the CPF issues, Members of the House will appreciate that what I have sketched out are not straightforward issues. I may not have given all the answers to the questions that Members have raised. But, these issues are interconnected. Each has an implication on the others, and we need to look at these issues as integrated and part of the same solution. Let me reiterate that no decision has been made at this point in time. While Members and the public are understandably anxious about the outcome of the CPF review, let us wait for the Economic Review Committee to thoroughly review and debate the issues before making its recommendations. I would like to assure Members that our intention is to help workers cope with future uncertainties and to enhance employability.

Sir, may I now turn to the points that have been raised by Mr Yeo and Mdm Ho on the medical benefits system. Mr Yeo has asked what is the progress and prospect with regard to the implementation of the portable medical benefits system. I would like to update Members of the House that the Tripartite Committee, chaired by former Minister of State, Mr Othman Haron Eusofe, had concluded its study on the portable medical benefits system. In a nutshell, it recommended that a medical benefits scheme, based on the principle of portability, co-payment and affordability, be introduced. The scheme will cover both inpatient and outpatient benefits supported by a medical insurance structure - deductibles and co-payment features, and allow accumulation of the unused medical benefits to meet future medical needs.

Sir, the proposed system will ensure that employees are covered by medical insurance not only during employment but also when they are in between employment and even after retirement. By enabling younger workers to start putting aside more savings in their Medisave for their later years, the proposed system could also help to improve cost competitiveness and employability of older workers. With the element of deductible and co-payment, the scheme will encourage individuals to take greater personal responsibility for their own health, and this will help to contain the rise of medical costs in the long run.

Concerning the points raised by Mdm Ho on whether an additional 1% Medisave contribution will be sufficient for employees moving on to this portable medical benefits system to buy their health insurance, our experience with a similar system that has been in operation in the civil service since 1994 is that, with an additional 1% Medisave contribution, most of the employees should be able to buy an adequate level of health insurance. Of course, this will have to be reviewed over time, and they should also be given options in the choice of the level of insurance health coverage that they want.

I would like to inform the House that the Economic Review Committee's Sub-Committee on Wages, CPF and Taxation is also reviewing the recommendation of the study report by the Tripartite Committee, and it will then recommend a mechanism to implement such a portable medical benefits system. So, we will have to wait for the ERC to complete its review of this proposal before I would be able to inform the House on what else we need to do and how we should implement this recommendation.

Dr Lily Neo has also asked whether we could allow CPF members or workers to use their Medisave to pay premiums for private health insurance. The answer is yes. We do allow CPF members to use their Medisave to buy health insurance from private-sector insurance companies. In fact, I understand that, currently, there are five approved private medical insurance schemes, namely, Income Shield and Managed Healthcare from NTUC Income Cooperative, Health Shield from AIA, Supreme Health from Great Eastern Life, and Max Health from the Overseas Assurance Corporation. These are the companies that have approved health insurance which CPF members can purchase using their Medisave savings. They can use their Medisave to buy this health insurance, not just for themselves only. They can also use Medisave to buy insurance for their spouse, their children, parents or grandparents, up to the withdrawal cap for every policy. There is a withdrawal cap of $660 per year, and this has been set to prevent premature depletion of the Medisave savings. Private-sector insurance schemes also have to be designed with co-payment and deductible, to moderate demand and over-consumption of medical services, which Dr Neo also mentioned as to be important points to consider.

Of course, over and above this private-sector health insurance, CPF also offers members the basic MediShield insurance, which is a catastrophic insurance scheme, and also MediShield Plus. Later this year, when ElderShield, a scheme under which senior citizens can be insured by private insurance companies, is launched, CPF members can also use Medisave to pay for their ElderShield premiums, not just for themselves, but also premiums for their spouses, children, parents or grandparents. As and when we implement the portable medical benefits system, the Ministry of Health and the CPF Board will also allow workers to use their Medisave to buy appropriate health insurance for themselves and their family members.

Last but not least, let me respond to Mr Ong Kian Min's point. He asked what happens to the interest that the CPF Board charges or levies on employers who are late in paying their employees' CPF contributions. He mentioned that the CPF charges a penalty interest at the rate of 18% per annum on such late payments. Let me explain. Currently, the CPF Board gives employers a 14-day grace period, from the end of the month, to make the CPF contributions for their employees. If payment is not made at the end of the 14 days' grace period, a penalty interest is charged. The purpose of this penalty interest is to ensure that the defaulting employers make the payment as quickly as possible, and to deter them from paying CPF contributions late again in future. It is not true that CPF keeps all the penalty interest. The penalty interest is 11/2% per month - that is where we get this 18% per annum - but very few employers delay their payment for such a long period of time. Whatever penalty interest that the CPF Board collects from the employers, at the end of the day, the first charge goes towards restoring the lost interest, the interest which would have otherwise been earned if the CPF contribution had been paid on time into the employee's account. That is the most important portion of the penalty interest collected that will be credited back into the member's account immediately and, what is left over, is used to defray the expenses incurred by the Board in collecting this overdue payment.

The penalty interest is necessary to ensure that employers are on time in paying their employees' CPF contributions. After all, the majority today, 20% comes out of the employees' wages and only 16% comes out from the employer. So it is part of the employee's wages and any delay is unfair to the employee. We have to impose a sufficiently effective deterrent to ensure that employers pay their CPF contribution on time. I am glad to say that the majority of employers do pay their CPF contribution for their employees on time. It is only a small percentage of cases who are delayed in such payment. 6.00 pm

Dr Tan Cheng Bock: Sir, can I just seek a point of clarification from the Minister? I think he did not answer my question as to how much of CPF money is tied to housing. Somebody in the private sector has given a figure of 25%. I want to know whether this is correct or not.

Dr Lee Boon Yang: Sir, I do not have the figures with me. I understand that the CPF Board does publish such figures on the use of CPF in public housing and private housing. It is not such a big secret. It is all published in the annual report.

Ms Irene Ng Phek Hoong (Tampines): Sir, structural unemployment has arrived in Singapore and looks set to stay for some time. Over the last five years, those with secondary and below secondary qualifications made up an average of 75% of unemployed Singapore residents. It did not matter if it was a good year or a bad year. In 1998, when our growth rate was minus 1%, this group made up about 77% of unemployed Singapore residents. In a good year, in 2000, when the growth rate was a whopping 10.3%, they made up about 74%, just a minimal drop. These figures are culled from the Labour Force Survey of the Manpower Ministry.

Sir, it seems clear that economic growth has had little effect on the lot of these workers. In good years or bad, jobs are not coming their way. This is despite the array of training programmes rolled out over the years, and the millions spent on these initiatives. They are victims of the restructuring process. My Parliamentary colleague, Mr Khaw Boon Wan, once talked about the Singapore Cause. He was referring to the core ideals of this society - meritocracy, fair play and equal opportunities. This structural unemployment is the Singapore Cost. We cannot allow an under-class to develop and harden in Singapore. There are social costs associated with unemployment. There is a need to change the employment system to bring it in line with socio-economic changes that make structural reform necessary in the first place. We restructure the economy to create more jobs for Singaporeans. The problem is that in the short-term to the medium-term, structural reform will create more unemployment for this particular group of workers. It is the responsibility of the Government to deal with the emerging employment problems resulting from these structural reforms.

Our present measures may not be effective enough to help these low-skilled workers find jobs going by the rate of job-matching. We need to foster the informal economy which can provide jobs for these workers. I would urge the Ministry of Manpower to work with our Community Development Councils (CDCs) to expand job opportunities for these workers - not on an ad-hoc basis, as some CDCs do now, but in a structured way all over the island. These jobless people may, otherwise, be susceptible to engage in illegal activities or rely on public assistance.

I would like to ask the Minister how the Government intends to deal with the problem of structural unemployment.

Mr Yeo Guat Kwang: Sir, in August 1999, the Manpower Ministry launched Manpower 21, a blueprint to transform our workforce to meet our future manpower needs, enhance our competitiveness and minimise structural unemployment. Many developments have happened in these three years. We see record numbers of workers losing their jobs.

However, a close study of the Manpower 21 blueprint again shows that its objectives are as valid today as when the blueprint was launched. For example, the vision of Singapore as a talent capital is still relevant.

An area that I wish the Government to strive to do better is the accurate projections of future manpower needs in the various sectors. This is crucial, as otherwise, workers may not choose the right skills to be trained in.

I would like to ask the Ministry of Manpower for its assessment of the implementation of the Manpower 21 blueprint. How has the economic recession affected the implementation of the plan? Is the Ministry satisfied with the progress of lifelong learning? What more can be done?

The latest preliminary estimates by the Ministry show that total employment contracted by 16,100 in the first quarter of 2002. It was the third consecutive quarterly decline in employment. The seasonally adjusted overall unemployment rate was 4.5% in March 2002.

The Ministry has stepped up its employment assistance programmes such as People-for-Jobs Traineeship Programme, Work Skills Training Programme and the Self-Employment Training Programme. All these will help, but I think we need to do more.

Such efforts should also continue even as the economy recovers in the near future, as the jobs that were lost might not come back. In the Manpower Minister's own words, it could be a "jobless recovery". How will the Ministry further strengthen our efforts to help the retrenched workers and the older workers?

Mr Low Thia Khiang (Hougang): (In Mandarin): Mr Chairman, I know the Ministry of Manpower has set up employment assistance centres to help jobless people to find jobs. I also know that the Government has set up a National Employment Task Force to coordinate and strengthen the assistance given to the retrenched and unemployed people.

But from my meet-the-people sessions, I know that although the Ministry of Manpower has been giving this kind of assistance to the unemployed people, many job applicants have called the companies recommended by MOM, only to be told that no vacancy was available. Some may be called up for interview but, at the interview, they were told that the vacancies had already been filled. Time and transport expenses were wasted for nothing.

Many of these unemployed people have already lost confidence in MOM. They told me that seeking the assistance of MOM and the CDCs was merely some form of self-consolation. The result is that their hope of getting a job is dashed, and they have still to wait for a job opportunity to come.

On 17th January, the Straits Times reported that a certain CDC had misplaced the application form of a job-seeker, and the information of companies listed by another CDC for the reference of job applicants was outdated.

I feel that the Government should re-assess whether the present mechanism to assist the unemployed people is still effective, and is there room for improvement. Assessment of the effectiveness of this mechanism should be based on the number of people who are successful in getting a job through the assistance of the Government agencies concerned.

On 17th April, Lianhe Zaobao reported that out of the 1,600 unemployed people who sought help from MOM every month, only about 6% were given referrals for jobs. The question is: out of the 1,600 unemployed people per month, how many people were successful in getting a job? The Minister for Manpower said in Parliament a few days ago that about 15% of the people were successful in getting jobs. Is he happy with the 15% success rate?

Moreover, when MOM recommends jobs to the people, what is the ratio between the number of vacancies and the number of applicants? If there are only 10 vacancies, do they recommend these 10 vacancies to some 100 applicants, and consider itself as having helped these applicants?

On the other hand, the Ministry of Manpower must have systematically collected information on the people who have been unemployed for a long time and conduct further analysis on the profile of these prolonged unemployed, so as to follow up and resolve their unemployment problem.

If it is ascertained that a certain category of unemployed people is no longer able to secure suitable jobs that they would want to undertake in the market, then MOM should consider providing employment counselling to these people, to advise them to switch over to other suitable lines of employment, so as to prevent them from being perpetually unemployed in the face of economic restructuring.

Mr Yeo Guat Kwang: (In Mandarin): I am glad that Government expenditure in the Economic Development sector will continue to emphasise worker training and upgrading. This year alone, there will be 100,000 training places provided under the Skills Redevelopment Programme.

The workers who are most vulnerable to retrenchments during an economic downturn are the older ones. They are most at risk of remaining unemployed even when the economy recovers, because some industries which they were working in may be relocated to other countries where the business cost, particularly labour cost, is much lower.

Fortunately, over the past few years, quite a lot of older workers have started to accept the concept of retraining, and have actually put in efforts to upgrade or re-skill themselves. The increase in training allowances for older workers could have helped to a certain extent. However, the important consideration is not so much on how many workers have undergone retraining, but more on how many have gained re-employment or have escaped retrenchment because of their retraining. This is what matters.

Has MOM any plan to encourage our employers to identify the new skills or the fields of work that would be required in the future, so that we could match the workers' training with the relevant skills and know-how to ensure that the retrained workers would not be wasting their time and our resources on acquiring skills which are irrelevant or obsolete?

While we urge our workers to adapt to change, we must not forget also to get the employers to change their mindset and be more positive towards the older workers.

In what way can we strengthen our efforts to help our workers to enhance their employability? Since employability and skills are inter-related, I would like to suggest that we allow our workers to accumulate and bring forward the unused portion of their 4% employer-based annual training budget, like the way we bring forward our unused annual leave entitlement.

I would propose that MOM look at other countries' best practices. We could tie up with our polytechnics and Institutes of Technical Training, to work out some training possibilities. Many countries are constantly searching for new ways to do things better, and some of them have already gone ahead of us.

For example, in the case of Sweden, the government sets up an Individual Training Account (ILA) for each of their workers. The individual worker can decide how much he wants to put into this account and how much to draw from this account and for what purpose. Employers are encouraged to contribute to their employees' ILAs. Such contributions are tax-deductible, and amount to 10 percentage points of their payroll tax.

It may be useful for us to consider adopting other countries' measures if they are applicable to our local situation. We need to find ways and means to enhance our global competitiveness.

Mdm Halimah Yacob (Jurong): Sir, there are many training schemes in place to assist the unemployed workers, generously funded by the Government. In fact, in this year's budget allocated to MOM, a high percentage, 28%, I note, will be allocated to lifelong learning, skills upgrading and other training programmes.

However, based on the feedback which I have received, individual workers still find it difficult to find out what programmes are in place and are confused on the objectives of the different schemes, as well as how they are funded. Also, those wishing to prepare themselves for other jobs because their own jobs are at risk do not know where to find such information.

Hence, there appears to be a gap between the information on training and other labour market information that are available and workers' understanding and knowledge of it. I am aware that MOM has set up a website to assist workers called CareerLink. But, Sir, we have not reached the level yet where everyone in Singapore is IT-literate so that they can easily access such information.

My first question to the Minister is what more can be done to ensure that important labour market information, such as training, job opportunities and new job areas are accessible to all workers.

Sir, secondly, there is a need to link training to jobs. If people still cannot find jobs, even after they are trained, over time, they will get very disillusioned and the value of training and skills upgrading will diminish. This is particularly problematic for older workers because of employers' strong bias against them. No matter how well-trained the older worker is, he may not be employed simply because of his age. I am aware that there are fussy workers but, on the flip side, there are also many discriminatory employers although the older worker may be prepared to take lower pay, work shifts or work in 3D jobs. A unionist in the banking sector told me about a retrenched bank worker who went for a job interview, but was told that he did not qualify because he was simply too old, despite the fact that he was prepared to take a huge pay cut. 6.15 pm

I am aware of the People-for-Jobs Traineeship Programme, but this programme appears to have limited reach and application. So my second question to the Minister is whether there are ways of enhancing this programme to strengthen its reach and application. Also, whether there is a way that we can facilitate employment for our older workers in some jobs in the non-trading sectors, for instance, in the schools, hospitals and other Ministries. I remember in the early days of Singapore's development, we did reserve hawker licences for the needy and poor. The objective then was not just economics, but social considerations also played a part. It may not be necessary for the Ministry to outsource some jobs, which many Ministries are currently doing, probably to save cost, when these jobs could then be left for the older workers to do.

My third point is that no matter how much we train people, if employers still insist on imposing non-job related conditions for employment, such as language, then it would be difficult for those retrenched to find employment. Hence, I would like to suggest that the Minister consider putting in place a more proactive mechanism to enquire into such practices, and to do more to educate employers not to impose non-job related requirements for employment. In this respect, MOM could even consider coming out with guidelines on what constitute good human resource management practices, one indicator of which could be whether or not an employer has imposed a non-job related requirement for employment. I would appreciate the Minister's reaction on my suggestion.

The Parliamentary Secretary to the Minister for Education (Mr Hawazi Daipi): Sir, generally I would like to commend the Ministry of Manpower for initiating programmes to help our workers to be employed and better trained, particularly for those who have lost their jobs.

Based on the Ministry's Report, and as has been widely known, older workers, ie, those 40 and above and those who have lower educational qualification and skills level, have greater problems to find re-employment. There are a lot of opportunities for retrenched workers to get help, as both the NTUC and Community Development Councils have intensified their efforts to match them with available jobs. Here, I would like to make two points to help such workers to get jobs and enhance their employability. First, workers who have problems getting re-employed need help in managing their expectations in terms of salary level and the nature of available jobs. This calls for counselling. MOM and CDC officers who help workers in job matching are in a good position to advise retrenched workers about the need to keep some perspective in their choice of jobs, in terms of salary, working hours, distance from work-places, etc.

These officers can also advise them about the skills training courses that workers should take up in order to take advantage of the available jobs. The question is: are such officers trained to counsel workers? Will these officers, who are likely to be younger than the retrenched workers, be able to communicate with the workers and empathise with them? I hope the Ministry can look into the training of such workers, including the CDC staffers, so that we can help our older and less skilled retrenched workers manage their employability better.

Second, there is a need to have a closer link between job training and job placement. I would allude to the point earlier raised by Mdm Halimah. The People-for-Jobs Traineeship programme is a good effort to ensure employment for those who are willing and able to take up relevant skill courses. I believe this programme, which I understand has been able to emplace 2,000 workers, should be expanded. The number of retrenched workers, who have problems getting re-employment, could grow in future. So I urge that we widen these training for job schemes. Even though the DPM has earlier this week advised that we should try out existing programmes to help retrenched workers before venturing into new schemes, I would urge that MOM look into the possibility of engaging employment agencies in the private sector to help in this effort.

Sir, before I end, may I ask the Minister to update the House on the success of the Skills Redevelopment Programme and the SRP's Facilitators Scheme, and his plans for the future of the People-for-Jobs Traineeship Programme.

Mr Zainul Abidin Rasheed: Sir, I do not need to belabour the point, but I would like to echo the sentiments expressed by Mr Hawazi that the Ministry of Manpower, in fact, has done a very creditable job in terms of handling situations. I work with Dr Ng Eng Hen on the Task Force for Manpower, and they are very much on the ball.

On my cut, Sir, mindsets have often been said to be the cause for the lack of readiness for training and retraining and life-long learning. How the children are brought up to think about choice careers is one such mindset. Will the Ministry look into this phenomenon and, if need be, work with MOE and other non-formal educational institutions, including civil organisations, VWOs and CDCs, to help alleviate the endemic problem?

Sir, when I was in school, my parents wished that I had done medicine. When I failed to get a place in one, a mentor teased me by saying not to worry, I should make a good nurse. I clearly ended up with humanities - working as a journalist, later doing social work, and later as a politician - and it gave me the opportunity to nurse the community. I am happy, and I am sure many other parents too wanted their children to be doctors, engineers, lawyers, and at one time, in fact, Business Administration was the choice. They are good professions, but the whole world is so wide open for different roles to contribute to, and to earn a living.

Sir, look at how the profile of work and professions has changed, not commensurate with what parents were used to. There are workers who wanted to be policemen or firemen their whole life, as with my experience serving with the Port Workers' Union in PSA. Some of them refused to be retrained, thus making themselves inflexible, and not employable for long.

On a final note, Sir, to continue to be employable, we need to be nimble. We need life-long learning, in other words, training and retraining. As some experts say, perhaps eight or even more times, during our whole work life. MOM needs to help create more awareness, and make easily accessible information with regard to alternative career opportunities.

Mr Heng Chee How: Sir, almost all our current training schemes that are significant are employer-based. This means that these schemes subsidise employers who send their workers for training.

Employer-based training incentive schemes remain relevant and important, but I believe that they are no longer sufficient. Sir, as our economy restructures, the employment structure will also change very fundamentally. So instead of a lifetime employment with a single employer, workers are more likely to have to work in several different jobs during their life. And with shorter expected stints of employment with each employer, the incentive for any given employer to train their workers may be further weakened. Yet, in this new setting, as so many of our colleagues have already mentioned, updated skills are so important for lifelong employability. So what this means is that the existing policy of funding training, mainly through employers, is likely to miss out on an increasing number of workers who are caught in the churn.

Sir, traditionally, I understand that the concern about funding, the employee-initiated or individual-initiated training, is a fear about wasteful expenditure, a fear that perhaps both trainees and training providers may pursue irrelevant and unproductive learning and training.

Sir, I agree that steps must indeed be taken to minimise such risks and waste. But, given the changed situation, we must not let such fears deter us from doing what is necessary to help workers remain employable in this changed setting. The Government has taken the first step in this direction by supporting the NTUC Education and Training Fund, which allows individual union members initiate training under an approved course list, and then claim for subsidy from this Fund. And the experience, in the last three years since the Fund's inception, has shown that workers are indeed very keen to do so. Last year, for example, more than 40,000 training places were supported under the scheme.

Sir, in view of the changed operating environment, I would like to ask the Minister what additional measures will the Government be taking to assist individuals who take the initiative and make the effort to upgrade, to do so. Some other countries, such as Britain and Sweden, have already taken the step of setting up individual training or learning accounts for their workers. The question is: will our Government also consider the setting up of such accounts for our workers?

Mdm Ho Geok Choo: Sir, I would like to raise an issue with respect to whether enough money has been set aside to train our professionals, executives and managers above 40 years of age who have lost their jobs.

There are various funding or training funds and schemes, such as the SDF, SRP, Education Endowment Fund, available for workers. On the other hand, except for some pockets of training fund available under the MOM Work Skills and Self-Employed Training for unemployed executives, there seems to be a dearth of such initiatives for the professionals, executives and managers. For them to survive and progress in the new economy, they must continually upgrade themselves and acquire new knowledge and skills through higher education. While requests to use the CPF fund for such purposes, except only for studies at NUS and NTU, have understandably been frowned upon by Government, especially when the CPF money could be easily lost through poor academic course, we should also not be averse to exploring alternative ways by which funding can be made available to help train our professionals, executives and managers.

I would therefore like to propose that the Government facilitate the setting up of what I call a HEED Fund, which stands for Higher Education Endowment Fund, for professionals, executives and managers. The Government can help to encourage employers, employer groups, professional bodies, charitable organisations, foundations and individuals, to donate to the fund and to match such donations, as they have done for the endowment fund for workers. The HEED Fund will help to empower professionals, executives and managers, with relevant skills which, in turn, will help to increase their employability and ability to fend for themselves, through self-employment, part-time and flexible work arrangement. The availability of such resource will also help to attract investments towards making Singapore an educational hub. My question really is whether the Government will be positively disposed towards the idea of matching donations for this proposed fund, and whether it will lend a hand in facilitating the setting up of this fund.

The Minister of State for Manpower (Dr Ng Eng Hen): Mr Chairman, on behalf of my Minister, I share the concerns brought up by the hon. Members, Ms Irene Ng, Mr Yeo Guat Kwang, Mdm Halimah, Mr Hawazi, Mr Ong and Mr Zainul Abidin, regarding unemployment and how we can better help Singaporeans find jobs. This Government ran the General Election on the platform of "Jobs, Jobs, Jobs". An overwhelming 75% of the public voted for us, based on that pledge. We are honouring that commitment. The Jobs Task Force was formed in January, 2002, to oversee the national effort to help our workers cope with the downturn. Thus far, we have some impact, albeit limited.

Mr Low Thia Khiang asked how successful have our efforts been together with the job centres and the CDCs, NTUC, SNEF, SPEM and other self-help groups. We are helping about 1,200 Singaporeans to secure jobs each month. About 70% of jobs seekers at our Career Centres receive referrals for interviews, and 15% of them are successfully placed. Many workers continue to harbour misconceptions about certain industries and are unwilling to take on jobs offered. We are highlighting some of these industries, like marine industry and hotel sector, which have been chronically short of workers, and where jobs are available. We are trying to change mindsets. We need, and will continue, to work harder to increase the number of job placements.

I agree completely with Mr Hawazi that more counselling and training are required. In part, our limited success has been that there are a limited number of jobs. If the well has a little water, no matter how many times you throw the bucket in, you will draw little water. It is not that the well is completely dry, but there are little returns. The other limitation is that Singapore has never had a protracted time of unemployment, so that the expertise in terms of job placement, job counselling, never had the opportunities nor the length of time to develop. I am not ashamed of this. I am quite happy that we do not have the expertise. But we have learned as we go along. We will continue to try to do better. 6.30 pm

As many of the MPs will rightly accept, the solution to unemployment is not job placement but job creation. Mr Yeo Guat Kwang rightly pointed out that even if you train someone and there are no jobs, it is a futile effort. The MTI economists report that every 1% of GDP growth translates into 14,000 jobs. So we need the economy to grow. It is Government's responsibility to create the conditions for growth. But each Singaporean must equip himself or herself with the necessary skills so that when the uptake in the economy arrives, he or she can be employed.

In this regard, equanimity is in order. This is not the first recession Singapore has faced. Severe as it is, this recession would not last forever. Neither would it be the last. All countries face business cycles. So the pessimism in some quarters of our society is overdone. Yes, China is a formidable challenge. But the Singapore worker is no pushover. As Minister George Yeo rightly pointed out, the Washington-based Business Environment Risk Intelligence rates our workforce of the highest quality. We had uninterrupted growth for the last decade and our surpluses were ploughed back into infrastructure development and education. These continue to remain competitive advantages. There are adjustments to be made. But if we are to emerge stronger, we have to learn lessons from this current recession. We should move forward with our chins up and our confidence intact.

The most important lesson to be learned is that life-long learning is here to stay. Mr Yeo Guat Kwang asked what has happened to the Manpower 21 plans. They are very much alive. I agree fully with Mr Zainul Abidin and Mr Heng Chee How that life-long learning is a strategic capability necessary for our survival. Lifelong learning must permeate the air we breathe, the way we think. It is no longer a choice, but an imperative for both workers and employers, without which we would not be able to secure further prosperity.

Business cycles are shorter and growth sectors may change quickly and completely. Companies, like Philips and Matsushita, that have relocated their production operations may never come back. Workers will have to be more nimble and expand their skill sets. It is Government's role and responsibility to create jobs and provide training for workers. But no one can promise jobs that will always fall within the comfort and familiarity zones and expectations of Singaporeans.

Mr Hawazi wanted to know the progress of our Skills Redevelopment Programme. Mdm Halimah also echoed these concerns and wanted to know how effective our training schemes have been in helping workers cope in this transition. Some are heeding the call for more training and benefiting. To-date, about 80,000 workers have taken up our Skills Redevelopment Programme since its inception in 1999. Of these, 70% of the employers noticed an increase in productivity. 65% were able to find jobs within six months. MENDAKI, one of our surrogate employers, conducted a survey last year among the retrenched. 70%, after attending SRP, secured employment in three months, and 80% said that the training they received was useful in helping them secure employment. But I agree with Mdm Halimah and other MPs that more needs to be done.

A survey in 2001 showed that three out of 10 firms did not provide employees with training. So we have an arduous task to convince employers and workers. These are current issues that the Jobs Task Force and the ERC are grappling with. How do we accomplish this? Is it a question of insufficient funds? I do not think so. Government has set aside about $200 million for its various schemes and for various training programmes - the Manpower Development Assistance Scheme, the Lifelong Learning Endowment Scheme, the Skills Development Fund, the SRP. Deputy Prime Minister Lee has publicly committed more funds, if required.

Mr Heng Chee How and Mr Yeo have suggested that if we individualised these funds - in other words, each person gets his own learning account - then the user may be more likely to use them. If we did, individualise these accounts, will more people take up courses? Perhaps. But there will be significant drawbacks. Even if we say 40% of account holders use their funds, the remainder would be wastage. Even if more went for training so that they can use up the money in that account, we might not achieve our ultimate goal, which is to enhance employability.

The individualised learning account is not an idea which we summarily dismiss, but we should try other options first. Other countries, like Denmark, have had more success, even without these individualised accounts, in getting their workers to accept further training as a way of life. We will continue to learn from them. One recurring impression gleaned from their successes is that specific and different approaches, quite different from student teaching, are required for adult learning. I guess that is intuitive. We all realise that as we grow older, we tend to learn differently, and our motivations also change.

I agree with Mdm Halimah and Mr Hawazi that the more targeted train-and-place scheme might be more effective. MOM launched such schemes with NTUC and EDB for training of aerospace technicians and core centre operators. We will try to expand on these schemes.

Ms Irene Ng made a similar point that we need to do more, rather than the ad hoc training and matching. Mr Yeo Guat Kwang echoed these sentiments. Indeed, to expand and deepen the effectiveness of these training initiatives, the ERC is considering the need for a national continuing employability and training body, including a centre for adult learning. These bodies can then work more closely with industry employers and professional associations to identify new and emerging skills and needs.

We need to create a training and education system for working people that is seamless so that prior learning and work experience can contribute to the acquisition of formal qualifications. We have to study and understand why and how adults learn. We have to, as Mr Low Thia Khiang says, deepen our capabilities in career counselling so as to help our workers plan for alternative careers.

I also agree with Mdm Ho Geok Choo that more attention needs to be paid to our professionals, executives, managers and technicians. They now form 40% of our workforce. So if we exclude our foreign workers, which constitute about 25%, PEMs form the majority of our workforce. It has by virtue of its composition become a strategic advantage. It would be shortsighted not to enhance this asset. We must oversee, guide, facilitate the strengthening of our middle-management capability.

We have some schemes in place, together with EDB, in terms of enhancing new technology with IDA, in terms of the critical infocomm technology, and with MAS in terms of the financial sector development, and for the strategic manpower conversion programme with MOM. But we can and should do more. I welcome the idea that Mdm Ho brought up in terms of her HEED. Government will facilitate, but whether we will donate is something that we will further consider.

Sir, Mdm Halimah brought the point across of older workers, which I will touch perhaps tomorrow when more Members bring up the subject. But she also brought up another aspect, ie, to eliminate discriminatory job advertisements. I would like to inform her that a Tripartite Committee, comprising representatives from employers, trade unions and the Ministry of Manpower, was set up in 1999 to study these issues. The Committee recommended that an educational, instead of a legislative, approach be adopted. In line with the promotional approach in dealing with this issue, there have been guidelines introduced on non-discriminatory job advertisements to guide employers on how job advertisements should be presented without discriminating factors, such as age, language requirements or other criteria. The Tripartite Committee's guidelines have been implemented effectively. To-date, only a small percentage of job advertisements stipulate discriminatory criteria such as gender, age, race, religion or language. Notwithstanding that these discriminatory advertisements are no longer a serious problem, we will continue to urge employers to put into practice selection of candidates based on their merits and capabilities.

Sir, at the end of the exercise, the message we want to send to investors is that when they set up shops in Singapore, the Singapore workforce has got skills, training and attitudes that far surpass that of our competitors. Yes, we cost more, but the Singapore brand worker is well worth it. When we can do that successfully, we will then be able to create jobs, jobs and more jobs.

Mr Low Thia Khiang: Sir, do I have your permission to seek a clarification from the Minister of State?

The Chairman: Yes.

Mr Low Thia Khiang: Sir, I would like to know from the Minister of State whether he is satisfied with the way his Ministry offers employment assistance. Secondly, I would like to ask him whether or not he is satisfied with the success rate of job-matching at 15%, as he mentioned in his speech.

Dr Ng Eng Hen: Mr Low would clearly know that is rhetorical and obviously none of us are satisfied. How can we? That means 85% are unemployed. Until they are all employed, then we will be satisfied. Can we do more? Obviously. Even if we did more, would we be more successful? Perhaps a little bit. But if there are no jobs, no matter how much we do it, that is not a permanent solution. The solution to unemployment is not more job placements but job creation.

Mr Hawazi Daipi: Sir, our workers have contributed immensely to the development and growth of Singapore and the companies they work for. They are generally well-disciplined, hardworking, loyal and productive. In the face of economic globalisation and the resulting keener competition for investments, jobs and markets, our workers now know that they have to change, and this has caused anxiety as they fear that they may join the ranks of the retrenched and the unemployed. They have to make adjustments to the new work environment where employment structure has changed and where the types of jobs have changed, the pattern of work has changed and where there is no more certainty of lifelong employment with the same employers.

Sir, despite all these changes, we should ensure that the relationship among the social partners - employers, unions as representatives of workers and the Government - must prevail, and be improved especially as we are undergoing unprecedented changes. Our hope to see a new social compact must include an even stronger cooperation among the three partners. This relationship can be best demonstrated at the company level. But this is where it seems we have to work the hardest.

As a union adviser to four unions, I have received feedback that some employers tend to be intolerant, and even more intolerant now, to simple mistakes among their employees, especially during these difficult times. When workers fear that they may lose their jobs, such attitude among employers creates even more fear among them. I would like to know from the Minister if there has been an increase in the number of complaints by workers of the intolerant behaviour or attitude of employers, and how are these problems between employers and employees resolved.

Mr Gan Kim Yong: Sir, as many of my parliamentary colleagues have highlighted, job security is one of the top concerns of our people today. Minister George Yeo mentioned yesterday that while our economy will recover, the job situation is likely to deteriorate further before it improves. The problem is more acute even for the older workers. Manpower Minister Dr Lee said on 13th May that only 8% of the job seekers aged above 40 who approached his Ministry for help was successfully placed. This situation is rather worrying. Workers aged between 40 and 50 are likely to be at their most productive age. At the same time, they are also most likely to be at a point where they have the heaviest financial commitments. Being out of job at this age will pose great pressure not only to the workers themselves but to their families, including their children. 6.45 pm

The Manpower Minister also said that one of the main reasons commonly cited includes high wage costs resulting from our seniority-based wage system. Sir, I would like to ask the Minister what plans his Ministry has to encourage our employers and employees to shift away from the seniority-based system to one that is based on workers' productivity and contribution. I know that there has been some talk about possible reduction to the CPF rate contributed by employers in order to help employers lower their cost of hiring older workers. While the details have not been announced, I would like to urge the Minister to consider these changes very carefully because any reduction in CPF will have far reaching implications and may affect the workers' ability to service their housing loans.

Furthermore, these changes will not only affect those who are retrenched, but will also affect those who are currently productively employed. Worse, it may deal a double blow to those who have taken a voluntary pay cut in order to find a job, or just to stay in their current job. Sir, I would like to suggest to the Minister that it may be useful to consider promoting greater use of a flexible wage system, instead of cutting employer's CPF contribution for older workers. Some years ago, the concept of monthly variable allowance (MVA) was introduced. It may not have been as widely accepted as we wish because of the recession. But as Senior Minister of State Mr Khaw said just now, let us have a little faith, give it time, let us give it a try and it may work after all.

So instead of the across-the-board annual increment in our seniority-based wage system, perhaps the MVA concept can be modified and extended to deal with the seniority issue. For example, workers can be given a lower annual increment just to reflect inflation while additional increments should be given in the form of MVA, and this will be adjusted from year to year to reflect the productivity and contribution of the individual workers. This means that the wages of older workers may go up or may go down, or may stay the same, depending on the individuals. Workers who can contribute more due to their experience and maturity can continue to be rewarded through higher MVAs as they get older. On the other hand, those who have been doing the same job all the time will not become costly as they get older because the MVAs can be reduced.

I believe the greater emphasis on a flexible wage system, such as MVA, is a more effective long-term solution than cutting the employer's contribution to the CPF. Therefore, Sir, I would like to urge the Minister to consider the use of MVA, or a modified form of it, to help older workers before deciding on cutting the CPF rate.

Mr Heng Chee How: Sir, when Singapore met with a recession in 1985, an important lesson was learnt, and that was that business cost, including wage cost, cannot be too rigid. Otherwise, companies will not be able to adjust to changing conditions and may go bust prematurely. And when that happens, workers lose their jobs.

Arising from that, the first component of flexibility in our wage system, namely, the idea of having mid-year or year-end bonuses, as an adjustable quantity, was encouraged. Thus, when a company does better, it must reward its workers with better bonuses, and vice versa. That flexibility was adequate in a fairly stable environment. But as product cycle shortened and the pace of change increased, then the more refined instrument of flexibility is needed and, by "refined", I mean that it should not be an across-the-board national move, like a national CPF cut, or an annual move that you can only do so with, say, a year-end bonus. Something more timely and company-based was needed. And it was exactly for this reason that the National Wages Council recommended the monthly variable component (MVC) since its deliberation in 1999.

Sir, I would just like to ask the Minister for an update on the progress of the implementation of MVC and what additional measures the Government is taking to promote its adoption so as to minimise the need for retrenchments and also to minimise the need for any future across-the-board CPF cuts. Sir, I particularly want to mention this because, whilst we are all very much caught up in the discussions about proposed changes to our CPF system, I think we should also remember some of the other systemic adjustments that have earlier been proposed and are in the course of being implemented and we should not be distracted from putting in place the necessary structures in order to safeguard the long-term cost effectiveness and prospects for our workers.

Ms Irene Ng Phek Hoong: Sir, the Manpower Minister earlier told us about the problems faced by older workers to find jobs in today's market. It is true that one reason older workers find it harder to get a job is our seniority-based wage system. First of all, I would like to put on record that I do not support the idea of lowering the CPF contribution for older workers. You may be older, but if you can do the same job just as well as a younger person, why should you take a CPF cut for it? What is needed is not a cut in the employer's CPF but a change in the compensation system under which workers are paid - make sure that they are paid not according to their age but according to their specialised skills and their contribution to the company. Like my colleagues before me, Mr Gan Kim Yong and Mr Heng Chee How, I would urge the Manpower Ministry to look at the flexi-wage system and see how it can be implemented and restructured, rather than cut the CPF rate for older workers. The result would be that companies would no longer assume that they have to pay older workers more. Our older workers should also get used to this. But the employers must give them that chance.

Sir, it is a misconception to say that older workers are reluctant to take on new challenges or harder work. Let me cite an example of my office colleague, K.C. Vijayan. K.C. Vijayan was a Prison Officer for 24 years and he retired when he was 50, about two years ago. Conventional wisdom would say that, well, most people would want to take it easier after retirement. But, no, at the age of 50, he became a crime reporter for the Straits Times. Those of us in the news business know that the job of a crime reporter is quite demanding and to write for a daily newspaper is also very taxing, with tight deadlines to meet. And he is working next to younger reporters eager to prove themselves. I asked him why he wanted to take on such a daunting challenge. He replied that he wanted to be relevant to society, and the way to be relevant is to be around people who are younger and who are at the centre of things. Then you would know how you can contribute and the role you can play.

Sir, negative attitudes towards older adults are a major barrier to moving forward. Many employers view them as problems to be solved, rather than resources to be tapped. Older adults themselves often believe these stereotypes and are consequently fearful of making changes and seizing new opportunities. The employment system should change and so should the compensation system so that, as much as possible, age is not a factor in employment.

Mr Seng Han Thong: Sir, two years ago, when we talked about older workers, we referred to workers 60 and above. Last year, when we talked about older workers, we referred to workers 50 and above. Now, if you are 40 and above, you are considered as older workers. And if you lose your job, it is very difficult to find re-employment.

So we always cite McDonalds as a model employer which employs older workers. I believe we can come out with an incentive scheme to help some local food chains and coffeeshop chains to re-employ older workers, like McDonalds. Many coffeeshops and food courts are employing a large number of foreign workers even, at this point of time, when we are facing a high level of unemployment.

Lastly, I would like to urge the Ministry to come out with a creative, generous incentive scheme for food courts and coffeeshops to implement work redesign and flexible working arrangements for 40 plus workers. We should also review the existing work permit policy which has been very liberal in allowing foreign workers to work in coffeeshops and food courts.

Mr Ong Ah Heng: (In Mandarin): Many of our colleagues have talked about the problem of older workers. As a labour MP, I would like to raise my concern for the older workers. Our main concern is the worsening unemployment situation of our older workers, many of whom are lowly-educated. Although we have been urging them, from time to time, to upgrade their skills, we still read in the newspapers that many of these older workers are turned away at job interviews, despite having taken up our advice to upgrade their skills.

In many cases, it is not that they do not possess the right skills or mindset, but more often than not, it is their age that prevented them from getting the job they want. Even in many Government departments and statutory boards, we find that many mundane jobs, such as sweepers, car park attendants, cleaners, etc, are farmed out to contractors. As we all know, many of these contractors operate on the basis of maximising profit. So they would like to employ the cheaper foreign workers rather than local workers. Although our local workers are not as nimble or young as the younger foreign workers, they have more than made up for this with their experience and maturity in handling difficult situations.

So if given the opportunity, they will be able to put their talents to good use. In certain industries, for example, in day-care centres and hospitals, we can find ways to make use of our local workers and put their talents to good use. Our Ministry for Manpower has said that the Government would give the companies that employ local workers some form of relief for six months. However, in the event that the period of six months is insufficient in testing out the local workers, can the relief be extended? Under this scheme, older workers can continue to work in these companies. This scheme has not been given much publicity and most employers are not aware of the existence of such a scheme.

Our Government Ministries and statutory boards are the largest employer in Singapore. I wish the statutory boards and the Ministries would take the lead and set an example in recruiting our older workers so that other companies could follow suit. We often read in the newspapers that some Singapore employers were giving ang pows on certain festive occasions to senior citizens as a form of charity. I hope these employers can also employ the older workers. This is also some kind of charity.

The Chairman: Order. It is 7.00 pm.

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

Dr Lee Boon Yang: Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2002/2003, and ask leave to sit again tomorrow.

Mr Deputy Speaker: So be it.