1ST APRIL 2003 TO 31ST MARCH 2004 (Paper Cmd. 4 of 2003)

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

[Mr Speaker in the Chair]

Head S (cont.) -

Resumption of Debate on Question [15th March, 2003],

"That the total sum to be allocated for Head S of the Main Estimates be reduced by $100." - [Mr Yeo Guat Kwang].

Question again proposed.

The Chairman: I would like to remind Members that the amount of time allocated for each cut includes the reply by the Ministers. Therefore, what it really means is that Members actually have much less time than the 4.6 minutes allocated for each amendment. Dr Amy Khor.

Dr Amy Khor Lean Suan (Hong Kah): Sir, I would like to applaud the MOM for aggressively and tirelessly launching a slew of programmes to help retrenched workers and groom Singaporeans into an adaptable workforce with portable skills.

In fact, one of my grassroots leaders with business in China and Australia, recently remarked, half in jest, that compared to other governments in the region, we may have taken skills upgrading and retraining much too seriously. He mused cynically that perhaps the Government has done too much, so much so that when workers cannot get a job after retraining with Government funds, they blame the Government who kept nudging them to go for retraining in the first place.

But, on a more serious note, despite the plethora of skills upgrading and retraining programmes launched, some Singaporeans at the ground have the impression that what had been done so far are ad hoc and disjointed. Some feel that the large number of schemes, as well as the multiple agencies organising these schemes, is confusing and that there is also some degree of duplication. Rightly or wrongly, the suspicion is that all the money on retraining may not have been well spent and the results less than sterling.

For instance, are there enough job opportunities for the course participants after they complete the programme? Otherwise, some could become even more dejected. This calls for a programme of career counselling to help workers match their skills and interests with the job opportunities available.

Have the most relevant and useful training programmes been organised? Has the training helped them find employment? What is the job retention rate of the trainees after they complete the programme? I hope the Minister can enlighten us on these questions.

Sir, due to these issues, I am pleased that a body to further develop, promote and coordinate Continuing Education and Training for adults and their placement will be formed. The new CET body should work closely with all relevant private and public sector organisations in identifying, planning and organising the appropriate CET programmes and inculcating the habit of lifelong learning in a Singaporean workforce at all levels, including the professionals and executives who have not been spared from redundancy and retrenchments. The CET body should confine itself to policy and promotion and champion the involvement of the private sector to supply services to realise its mission. It should try to outsource as many courses as possible to the private sector who has the capability to conduct these courses and not directly compete with them in course delivery. This would prevent the CET body from becoming another behemoth that some members of the public are wary of. It would indeed be ironic if there comes a day when the CET body, which oversees training and placement of the unemployed, has to retrench employees themselves.

The CET body should ensure that minimum standards are complied with. Finally, it should also track the success and effectiveness of all programmes implemented, benchmark itself against an internationally accepted set of educational Key Performance Indicators (KPI) and report these periodically.

The Chairman: Dr Gan See Khem is not here. Ms Irene Ng.

Ms Irene Ng Phek Hoong (Tampines): Sir, let me start by relating the experience of a man who has been retrenched three times and he is only 39 years old. His first retrenchment was in 1982. He worked as a pipe fitter and he got retrenched after about 11/2 years. Then, he worked as a marine assistant in Jurong Island and after 13 years, he was retrenched. His third retrenchment was last week, from a paint factory where he worked as a warehouse assistant.

You would think that, after being retrenched twice, he would have been better steeled for his last one. But no. For him, his last retrenchment was the most traumatic. This was because of the way the exercise was conducted. He went to work, like any normal day. Then, after lunch, a dozen of them were asked to go to the boardroom, and they were told that they were retrenched. Just like that. They were given their cheques on the spot, told to pack up, return anything that belongs to the office and leave that very day. He was so upset that he threw his company uniform into the dustbin in front of his supervisor.

Sir, his experience holds some lessons. No, not only that you have to be prepared to be retrenched several times in your working life, but also that some companies just lack the experience and knowledge on how to conduct retrenchments in a humane and proper way.

With retrenchments on the rise in Singapore, I feel that it is necessary to lay down some guidelines on what constitute good industrial relations practice on conducting retrenchments.

Sir, we do not want to make it so hard for companies to retrench in so hard a way that would affect the flexibility of our labour market and our attractiveness for investment. But we cannot allow it to be so freewheeling that companies can discard workers like so many expired canned food on a shelf.

An example of a good retrenchment practice is that conducted by Beecham Pharmaceuticals in 1996, where it gave about one year's notice to staff of its impending retrenchment exercise. The time allowed them to make alternative plans regarding their financial commitments and to look for a job.

Indeed, Beecham and the union, the Chemical Industries Employees' Union, arranged for staff to attend courses during their working hours. Nearer the retrenchment date, the company provided counselling and even allowed its workers time-off to go for job interviews. By doing this, it treated the departing employees with dignity and respect, and kept morale high among the remaining employees.

A question that arises from the recent PSA retrenchment is that it is an example of a good retrenchment exercise or a bungled one. People are divided on this issue. Some say yes, this is a good example, because PSA management made a general announcement on the estimated numbers to be retrenched on 17th February and gave a notice period of about one month so that unions could start formal negotiations with management to work out a fair package. This was better than to spring it suddenly on the unions and workers, which would then have no time to consult each other and to find ways to help the workers.

Others, including some in the media, say no. The media reported that many workers had been anxious to know who would be retrenched and that morale was down because of the uncertainty.

The Chairman: Ms Irene Ng, you are nearing the end of your speaking time.

Ms Irene Ng Phek Hoong: This led PSA to expedite the process and conclude the negotiations as soon as possible. But it raises the question of what makes a good practice in terms of giving a notice of retrenchment. How long should it be?

To clarify the matter, I would urge the Manpower Ministry, together with its tripartite partners, to work out guidelines on how to deal with retrenchments, including the matter of giving appropriate notice. This could form a Code of Practice on good industrial relations for retrenchment exercises.

Assoc. Prof. Ngiam Tee Liang (Nominated Member): Sir, I would like to add on to what hon. Member, Irene Ng, has said. As retrenchment is generally a painful and traumatic experience for affected employees, it is the manner in which employees are retrenched and the attitude of some employers that I wish to raise.

As Ms Irene Ng has informed us, some organisations are very caring. They go beyond their statutory responsibilities in providing whatever retrenchment benefits are required of them to the employees. They take pains to inform and prepare the workers. They arrange for MOM and the trade union to be present at the workplace during the period when retrenchment notices were served, to help with alternative employment opportunities and to offer comfort and support. They make referrals to social service organisations, for example, Family Service Centres, for those who need counselling and advice on personal and family matters. A few conscientious employers would even invite Family Service Centres or other social service organisations to the workplace during that period to offer on-site information, referrals and counselling service to their retrenched staff. Unfortunately, as we have just heard, the majority of retrenchment exercises do not go that smoothly. Only a handful of the employers bother to provide such an arrangement.

Sir, the anxiety and despondency of being retrenched, especially for those who have heavy family responsibilities to worry about, can affect their social, psychological health. .Hence, bringing in the assistance of professionally qualified social workers and counsellors, for instance, as part of the overall process during their retrenchment exercise is to be strongly encouraged. The helping professionals can listen to the employees and offer them comfort. They can work out with the retrenched employees on how to mobilise social support and community resources and how to make necessary changes and adjustments in their lives. In this way, the unwelcome blow of retrenchment can be mitigated and a heavy burden lightened. This would also help boost the psychological state of mind of retrenched persons and help provide the necessary motivation, among other matters, for them to press on with finding jobs or to go for training.

Sir, my query to the Minister then is: how can MOM encourage more employers to provide counselling and social service assistance to their retrenched staff, either through their own human resource department or by inviting Family Service Centres and the CDCs, for example, to be on site at the workplace, during the time when the retrenchment exercise is on?

Mr Low Thia Khiang (Hougang): Sir, I am concerned that our structural unemployment is on a rising trend. According to the World Development Report 2001, our structural unemployment stands at 17.7%, as compared to Korea's 2.5% and the United States' 8.7%.

The percentage of structural unemployment is rising among the highest educated segment of the workforce as well. According to the IPS report, the share of secondary educated structural unemployment increased to nearly 30% as at 2001. What is more worrying is that the share of the higher educated, which means post-secondary, diploma and degree holders who were structurally unemployed, increased by more than three-fold, from 7% to nearly 24% between 1986 and 2001.

I believe this is partly due to our education system being too rigidly or artificially designed to meet the needs of MNCs in the past. Many graduates cannot find jobs that match their training as those MNCs who need their knowledge have left Singapore. It is ironic that while our Government is constantly stressing on producing high-value added products and services, high-value added human resource could not find any jobs.

There are also people who think that the foreign talent policy is another factor contributing to the high rate of unemployment. These so called foreign talents are merely cheap replacements for our high-educated workforce. Many people also started to wonder whether they have been short-changed by these so-called foreign talents.

The Government has been talking about training and retraining. My question is: how successful has this strategy been in solving the structural unemployment problem? Maybe the Government should be reminded that skilled workers are also facing a rising trend in structural unemployment, from 10% in 1986 to more than 30% in 2001, as shown in the Institute of Policy Studies' report. Just blaming workers for not accepting jobs of lower pay or status will not help in the long run. The social and economic cost of workers having their potential under-utilised will be huge in the long run for a small resource-scarce economy like Singapore.

I am also concerned about the social and psychological impact of prolonged structural unemployment. I would like to know whether the Government has commissioned any studies on the social and psychological impact of structural unemployment. According to statistics, again provided by IPS report, the percentage of older workers, from age 40-49, rose from 17% in 1984 to 40% in 2001. The social and psychological impact on this group of workers, who probably has the most heavy burden of their life cycle with children to support, would be great and far-reaching. It would lead to problems like mental instability due to stress, stress on marital status, marital relations, social polarisation between the haves and have-nots, reduce social cohesion, etc.

Sir, I would like to know what is the Government's assessment of the seriousness of structural unemployment. Besides urging people to lower their expectation, to sail through the rough waters, training and retraining, etc, are there any other plans to help mitigate the pain of those suffering under the situation of structural unemployment? 11.15 am

The Minister for Manpower (Dr Lee Boon Yang): Sir, I thank the many hon. Members who have spoken on the manpower challenges, employment market and job assistance measures and also on continuing education and training.

Before addressing the specific queries raised by hon. Members, I would like to make some general comments to put in perspective the situation and challenges confronting us today. First and foremost, the poor employment market reflects the weak global economy. Major economies such as the US, the European countries and Japan are down. We cannot expect to be immune from the global downturn. There is also a radical shift in the global environment. Globalisation and the relentless pursuit of corporate competitiveness are pushing companies to be more mobile. They scour the world for locations that can offer them a competitive edge in terms of cost, productivity, infrastructure and talent. Previously, labour-intensive operations such as manufacturing of toys, radios and TVs were transferred to the less- developed countries. Later on, more sophisticated products, such as disk drives and computers, followed. But the current round of globalisation is seeing even skilled and knowledge type of jobs moving offshore as well. This is not just happening in the United States or the European countries, but also affecting Singapore, with the emergence of China and India as major economic competitors. With the Internet, knowledge tasks can be undertaken or done almost anywhere in the world. Many MNCs are shifting their back-room operations and even call centres to India. Others are shifting to China and eastern European countries which have ample highly skilled, well-educated workers willing to work at competitive salaries in areas like chip design, software engineering, even auditing financial statements and drafting architectural plans.

Singapore has to compete for investments and jobs in this global environment. To remain competitive, we have to move up the value-added and technology ladder. This is not the first time that Singapore has had to change gear. From making shoes and garments, we went into making hair-dryers, typewriters and radios. Later on, we went into printed circuit boards, disk drives, semi-conductors and precision-engineering. Today, Singapore continues to attract investments in growth industries such as specialty chemicals, high value electronics products such as network storage devices, advanced display devices, photonics, digital media, and biomedical industries.

In short, Sir, we have stayed ahead and remained competitive because we have successfully adapted our economy to suit global trends. What is different today is that the pace of restructuring is accelerating and so we need to adjust faster than before. And this time, Sir, there are more competitors in the market. Displacement, or job losses, is also affecting the entire spectrum of workers, from lower-skilled blue-collar workers to professionals, managers and executives.

So how do we address the concerns of those who are vulnerable to economic restructuring and to structural unemployment, as Mr Low had just mentioned? First, we must have more investments, so that new jobs can be created. To do this, we must transform Singapore into an even more attractive location for businesses that come here because they can leverage on our excellent economic infrastructure. That is the strategic thrust of the Economic Review Committee's Report. And, Sir, Singapore is attractive. Despite the gloomy global economic environment last year, EDB attracted $9 billion worth of fixed assets investments in manufacturing and $2 billion worth of business spending in services. And, as the Minister for Trade and Industry told us on Saturday, these investments will add 20,000 new jobs when operational.

Sir, EDB's investment promotion efforts will receive a boost with our network of FTAs with different countries, especially the upcoming FTAs with the United States. For example, recently ST-Microelectronics - by the way, "ST" is not "Singapore Technologies", it is a European company - just announced that it would invest S$436 million over the next three years to expand its semiconductor production capacity in Singapore. ST Micro expects this to create some 800 new jobs. Another company, AFPD's Liquid Crystal Display plant, launched at the end of last year, is an example of the advanced display industry which we believe has growth potential. AFPD's investment of some S$3.14 billion over the initial two years is expected to generate 700 jobs. These and other investments will create many skilled jobs and also some unskilled ones along the way.

At the same time, IE Singapore is helping our companies to seek out new markets and export opportunities. As our companies grow their businesses abroad, they will have to build up management capabilities at home to help to run the business in the region. This will create more jobs for our professionals and managers.

To bring more investments here, we need workers with the right skill sets for the jobs. If workers lack skills or if they cannot pick up the relevant skills, they will not be employable. Then we will suffer growing structural unemployment. So, the answer is in skills upgrading. Many hon. Members - Mr Yeo Guat Kwang, Mrs Yu-Foo Yee Shoon, Mdm Halimah Yacob, Mr Heng Chee How, Mr Ong Ah Heng and Dr Amy Khor - have spoken in support of Government's effort to upgrade the skills of our workers or retrain them for the new jobs. I thank all the hon. Members for their endorsement.

Sir, skills upgrading is not new to our workforce. It is not new to Singapore. As all Members know, the Government has been promoting skills upgrading for decades. Over the years, we have, in fact, established a very strong system of employer-based training in Singapore. Members will recall that we set up the Skills Development Fund in 1979. Since then, the Skills Development Fund has supported some 8 million training places for our workers. That has kept our workers productive and competitive in the past two decades.

Mr Yeo Guat Kwang pointed out that we should use the present slack period to prepare our workers for recovery. I agree wholeheartedly. In FY 2001, the Government contributed $500 million as a one-off payment to the Skills Development Fund (SDF) to sustain its effort to train the workers.

The Manpower 21 Plan launched in 1999 highlighted the importance of promoting lifelong learning. Since then, we have achieved some success with new programmes introduced to build up skills in various segments of the workforce.

Mr Yeo Guat Kwang, and I believe Dr Amy Khor, also asked how many workers were helped through this programme. We have exceeded the 5-year target of 100,000 training places under the Skills Redevelopment Programme administered by the NTUC. Over 150,000 people have been trained in IT skills under the National IT Literacy Programme and also the Infocomm Competency Programme. Over 20,000 people have been trained under the WorkSkills Training Programme. And, over 4,800 professionals have been trained under the Strategic Manpower Conversion Programme and Self-Employment Training Programme. This does not include professionals, managers, executives and technicians who were trained under different programmes run by EDB, MAS, Infocomm Development Authority and IE Singapore.

Sir, the annual Lifelong Learning Festival has also reached out to some 75,000-100,000 Singaporeans each year. But more can be done. The Economic Review Committee recommended that a Continuing Education and Training statutory board be formed to provide more comprehensive and effective national Continuing Education and Training. Government has accepted this recommendation. The Ministry of Manpower will establish a statutory board to focus on CET and employment facilitation by the end of this year. The mission of this new statutory board is to enhance employability and competitiveness of Singaporean workers. It is to prepare our workers, young and old, skilled and unskilled, professionals and blue-collar, for the restructured economy. I thank the many hon. Members including Mr Ahmad Magad, Mr Seng Han Thong, Mdm Halimah Yacob and others for their comments and suggestions for the CET statutory board. We will be considering all of these ideas and suggestions in the months ahead as we go about setting up the statutory board.

Mdm Ho Geok Choo and Miss Irene Ng seem particularly worried that when the ERC Report, or my Ministry officials, or even myself mentioned "workers", we are only thinking of blue-collar workers. Let me assure all of them, once and for all, that when we use the term "worker" or "workforce", we use it in the broadest sense. We use it in an all-embracing manner. We are all workers - working for our families, for Singapore - regardless of the actual job that we are engaged in. However, we will still need to prioritise and target our training assistance. As Mdm Halimah pointed out on Saturday, the lower-skilled workers are more vulnerable to structural unemployment. Yes, we are seeing structural unemployment, and growing unemployment even among the professionals, managers and executives, but the lower-skilled and lower-educated are by far the most vulnerable. So they needed a little extra help.

Sir, briefly, I see the statutory board doing the following:

(1) promote workforce skills upgrading;

(2) build a comprehensive Continuing Education and Training infrastructure;

(3) enable sustained Continuing Education and Training with employers' involvement and support;

(4) develop the Continuing Education and Training and Human Resource industries;

(5) last, but not least, regulate the standards of Continuing Education and Training.

Sir, the statutory board's objective is very specific - the employability of our workers. But its mandate is broad because it will serve the mainstream of adult workers, not just the lower skilled or the unemployed. It will reach out to our workers, including the professionals, managers and executives. I see it helping these groups to meet their skills and job needs through:

(1) continuing skills upgrading for all levels of the workforce, including professionals and executives;

(2) helping our workers to develop new skills so that they can get jobs in growth industries;

(3) providing employment assistance programmes which will be packaged together with skills training for new jobs and, in some cases, with some career counselling and guidance.

Mrs Yu-Foo, Mr Ahmad Magad and several other hon. Members have highlighted the need to strengthen the nexus between training and industry needs. In particular, Mrs Yu-Foo would like to see better planning to train workers for incoming industries so that jobs would not be taken by foreign workers because Singaporeans are not available. This will be the statutory board's modus operandi. This will be how we will approach the task. The statutory board will collaborate closely with the EDB and all industries to ensure that training programmes will meet the industries' needs, including the needs of the new investments coming into Singapore. It is important that we identify the current skill gaps and future skill needs of the industries, so that training programmes are industry-relevant. Besides providing appropriate pre-employment training in our ITEs, polytechnics and universities, we should also have continuing education and training for workers to equip them with job specific skills for the new jobs that are being created. 11.30 am

To address Mr Ong Ah Heng's concern about training that is not recognised by employers, we have already established the National Skills Recognition System, which provides for portable skill certification. The Continuing Education and Training statutory board will certainly promote skills certification and recognition to enhance workers' portability and also employability of our workers who have undergone such training.

Ms Irene Ng suggested that we should make sure that trained workers are given jobs. She suggested getting employers to guarantee to employ the workers after they have gone for training. I understand the disappointment suffered by a diligent worker who had invested much time and effort to upgrade himself but, at the end, could not get a job. It is very disappointing. No doubt, this has happened, especially when our job market is shrinking. I agree with her, and that is why we have already started to introduce Place-and-Train programmes. In other words, the unemployed is placed with a company and after the company signs him on as an employee, that is when we send him for training. After the training, he goes back to the job. Examples are the Aerospace Reskilling for Operations Programme, Call Centre Programme, Hospitality Programme - hospitality in our hotel industry - and, the recently announced, Intellectual Property Professional Programme. All these programmes are place-and-train programmes. This requires participating employers to sign up the worker before they are sent for training. My Ministry pays for most of the cost of training and also provides full-time trainees with allowances.

But even with the best of intentions, we still encounter disappointments. For instance, in the Hospitality Programme in the hotel sector, in one case, 62 out of the 81 who were offered jobs accepted. Out of those who accepted, a full 40% left their jobs within three months after training. They cited unwillingness to work shifts, dislike for working on public holidays and even dislike for the place of work. We have spent so much money to train them, paid for the training course and, in some cases, even gave them allowances. So, maybe I should take Ms Irene Ng's suggestion seriously. Members may remember that on Saturday, she suggested the "money back guarantee". Maybe I should take her seriously. In other words, those who have been trained, placed in a job, and did not stay on the job will have to pay back. I do not know if she will support that idea.

Sir, Mr Heng Chee How and Mr Ong Ah Heng spoke of the need for enhancing adult training methods and curriculum. This is indeed a very important area. The statutory board will certainly strengthen our continuing education and training system based on professional design of adult curriculum and also adult teaching methods. It is not quite the same as getting a 14-16 year olds into our ITE and train them in trade skills or into our polytechnic and train them in a discipline. After they have worked for 10-15 years and they have to come back to the classroom, the whole approach is totally different. The CET statutory board will be looking at how to improve the methodology of providing adult training.

Mdm Ho Geok Choo asked, in this connection, what happened to the idea of a Centre for Adult Learning which was suggested in the ERC Report. We have considered this idea and concluded that, for the time being, we do not need to set up a specific institution for research into methods of training adults. The CET statutory board will develop in-house expertise in this area by working with researchers in our universities, polytechnics and also international experts in this area.

Mr Ong Ah Heng stressed the importance of regulating the quality of the CET industry. I believe Dr Amy Khor also touched on this. I agree totally. Since the Government is investing large sums of public money in training, we will establish training standards and assess more critically and more rigorously the effectiveness of the national CET programme. Private training providers that participate in our CET effort and receive Government subsidies for their programmes will also be subject to the same rigorous standard of assessment. . Mdm Ho Geok Choo asked how will the CET statutory board relate to SPRING Singapore. Human capital development programmes under SPRING and several other economic agencies - I mentioned some earlier on, EDB, IDA - will complement the effort of the CET statutory board. Of course, we will not want to duplicate or waste resources. We will improve coordination and cooperation. She also asked whether the statutory board will encroach on the private sector's training providers' role and compete for business opportunities or, as Dr Amy Khor mentioned, it becomes a behemoth swallowing up the small private sector training providers. The answer is no. We expect private sector continuing education and training providers to continue complementing training to be provided by industry-led entities, like industry groups, and also the public sector educational institutions. We will, in fact, work harder to encourage more private sector participation and facilitate their entry into the market.

Let me assure Members that the statutory board does not intend to take on the role of a sole training provider in Singapore. We will work with the private sector providers. We want to encourage a vibrant and dynamic training industry to grow. Where the statutory board will undertake training, this will be very specific instances under very special circumstances where it needs to be involved. One that comes to mind could perhaps be the training of the trainer type of programme, where the board may, in order to ensure quality control, want to be involved in the training of the trainers.

On tackling unemployment, several Members have spoken on this. I like to add that a statutory board is not on its own going to be the magic bullet that will solve all our employment problems. If we have a highly skilled, highly productive, disciplined and hardworking workforce, more investors will come to Singapore. Yes, our wages may be a little higher or may be a lot higher, for instance, compared to places like China and India. But we offer value for money. And the investors who come here make more money by locating their business in Singapore. Hence, Mr Jean-Claude Marquet, ST Micro's Corporate Vice-President and Chief Executive for AsiaPacific said "We are satisfied with the way the Singapore team is making use of the investment and see no reason to relocate". Mr Hiroshi Kawai, Managing Director of Matsushita Refrigeration Industry, said "It is cheaper for us to produce here than in China, at least for the next five years". So, it is not a simple chicken-or-egg conundrum.

Clearly, a skilled workforce comes first. With a skilled workforce and a good supporting infrastructure, the EDB will have greater success bringing investors here and more jobs will be created for Singaporeans. But we must also heed what Mr Hiroshi, Managing Director of Matsushita Refrigeration Industry, said. He had a caveat when he said, "at least for the next five years". So, we must make good use of the time for us to resharpen our competitive edge and restructure the economy, so that when the time comes, we will be in a new and stronger position. We will not be left stranded high and low.

So, Singaporeans must make the effort. The statutory board will help, but it takes two hands to clap. Through the statutory board, the Government will provide opportunities for skill upgrading, but our people must be willing to learn and take jobs at competitive wages. It remains the personal responsibility of each job seeker to seek out a job and to keep the job. Otherwise, we will not be able to overcome structural unemployment.

Mdm Halimah suggested on Saturday that it is time to tighten the foreign worker quota. She thinks that if we send the foreign workers back, all our unemployed Singaporeans will immediately have a job. She may have seen the numbers, and sometimes numbers can be misleading. So, they say there are statistics and there are statistics. We have more than 200,000 foreign workers in the key manufacturing and services industry. I will discount the domestic workers and those in the construction workforce Let us assume we send back 100,000 of them. Then, obviously, the 89,900 unemployed Singaporeans at the end of December 2002 should have no problem getting jobs. Right? If only it were that simple, I would have fewer white hairs on my head! Not only are we lacking jobs for Singaporeans today, we also have a very serious mismatch in skills, wages and expectations. If we tighten access to foreign workers, can we be sure that the 89,900 unemployed Singaporeans will go out there and take on the jobs that are being done by all these foreign workers?

Let me give Members a personal example. I used to go to a hairdresser long before I became an MP. When she first started out her business, I was one of the early customers and saw the business grow. She used to cut my hair very efficiently, 20-25 minutes at the utmost, minimal waiting, very well done. It went on for more than 10 years. Even when I became an MP, I went back to her. It was still 20-25 minutes. Then, in 1991, the Prime Minister appointed me Minister for Labour. I went back to her for a haircut. It went on for 35-40 minutes. It was not just for a hair cut. I kept getting ear bashing besides having my hair trimmed. Her business had grown. She needed more workers. She recruited Singaporeans. They worked for a week and they went away - high turnover. They asked for higher pay all the time. She said, "Can I have more foreign workers? Can I have work permits? You are the Minister for Labour", seated there in the chair. And she snipped, snipped, snipped. Then one day, it was more than a year after I became Labour Minister, the same thing happened. Snip, snip, snip. I do not think it was her fault. I do not think it was intentional. She was perhaps getting a little excited, arguing for more work permits. "Chk", she snipped my ear. I told myself, "This is getting dangerous." I stopped going to the hairdresser. My wife does the job for me and I have to thank her for that.

So, what I am saying is that not only are we lacking jobs for locals, we have this mismatch. We cannot just assume that if we fire all the foreign workers, Singaporeans will take on all the jobs. If we send all the foreign workers who are in the hairdressing industry in Singapore, many hairdressing salons may have to close down. All our people will have bigger problems with their hair grooming, especially our ladies. So, it is better not to work on that assumption. 11.45 am

Let me give Members a more serious example. If we tighten the foreign worker quota, can we assume that locals will take on the job? Last week, Members mentioned in the debate on the Budget Statement one of the famous Singapore brands, Tee Yih Jia, famous for its popiah-skin and roti-prata. Do you know that, today, they cannot run their factory 24/7; in other words, 24 hours, 7 days a week. Why? Is it because they do not have enough orders or business to run it 24/7? No. They have good orders; they have good business. Business is booming. But they cannot run it 24/7 because they lack workers. Instead of running the production plant into the night, they have to shut down some of their lines and machineries because Singapore workers want to go home and will not work the late shifts. Without foreign workers, there will be even more difficult problems. They may even have to shift out completely from Singapore, if they do not have some foreign workers to help them to run the late shifts and to moderate their wage costs downwards.

If they shift out, who lose? More Singaporeans will lose, not just the foreign workers. And not only those who work for Tee Yih Jia but also all the other supporting industries, service providers, material suppliers, the ones who send the spices, the oil, the flour that they need to make their popiah-skins and roti-pratas, the transport companies that carry all these things around, the equipment maintenance companies that come and fix up all the machineries in the factory, and even PSA Corp, because of the dozens and dozens of container loads of their products that they ship out every month. All these will lose business. And there are, in fact, many other companies facing similar problems. So, let us not believe that the problem can be solved by just telling the foreign workers to go home, and Singaporeans will take on the jobs. We will not just lose the foreign workers; we may well lose the company and the remaining jobs that are being held by Singaporeans. In administering the foreign worker policy, we have to maintain a very, very judicious balance between Singaporeans, foreign workers and the needs of the employers. My Minister of State will have more to say on this subject later on in the debate.

Sir, we must develop an enterprising attitude and a determination to learn new skills. We must adapt quickly to the changes that are taking place around us. Mdm Halimah and Mrs Yu-Foo asked about the employment prospects and where are the growth areas. At the end of December 2002, 72% of those who were retrenched in the first three quarters were already re-employed. That is an improvement; some good news. Because, last year, it was, I think, around 65%. It has gone up to 72% this year. We also have about 12,900 job vacancies with the service sector accounting for 59% of the vacancies. These came mostly from transport and communications, wholesale and retail trade, business and real estate services and community and personal services. Manufacturing contributed a smaller proportion, 34% of the vacancies mainly from transport equipment and electronic products. Vacancies for professional managers, executives and technicians were 30% of the total vacancies; for production operators and labourers, 45%; and another 26% for clerical, sales and service workers. But, in view of the uncertainties gripping the global economy, we should prepare for some worsening and deterioration of the labour market. This year may not see sharp recovery in jobs and improvement in the unemployment rate.

Because of these difficult times, workers must be even more determined to compete and fight for jobs, especially older workers. Mr Heng Chee How urges MOM to start the Continuing Education and Training statutory board as soon as possible. We will try our best to speed up the process, but we think six to nine months is what it will take to get an organisation of this scale up and running. But I should clarify that while we are in the process of setting up a statutory board, we are not sitting around doing nothing. All our programmes are on-going, and we will continue to add to the existing programmes and build up new capabilities within MOM instead, so that as and when the statutory board is up and running, these programmes can be passed on to the statutory board. It will be a seamless transition. As I have said, the programmes that are already on-going will continue. We do not need to wait for the official launch of the statutory board to initiate new programmes.

Mrs Yu-Foo suggested working with the community organisations. I fully agree. My Ministry has been working very fruitfully with the Community Development Councils and self-help groups and other professional groups, like SHRI through SPEC, to bring skills upgrading and job assistance closer to the people. This will remain our strategy. The statutory board will explore new avenues for cooperation with all our existing partners and interested parties. She also suggested that we should pay more attention to career counselling. I agree too, and we will explore ways of providing career counselling especially to the lower educated who may not be able to get the job and training information that they need. And I think this is very relevant to the remarks made by Prof. Ngiam earlier about the plight of the retrenched workers. Some career counselling, some more concerted hand-holding to get them through, help them to navigate the intricacies of job change and also the intricacies of the changing job market, would be useful and helpful.

Mr Seng Han Thong pointed out that despite the Government's effort to promote lifelong learning, there is no queue or mad rush for our training programmes, unlike when McDonald's was selling Hello-Kitty dolls. Yes, he is right, and this is a disappointment. For instance, in the People for Jobs Traineeship Programme for older workers, we have, till today, already more than a year from its launch, about 9,000 older workers signed up for this programme. We had originally targeted to help 20,000 workers when the programme was launched. But up to now, only about 9,000 workers have signed up. And this programme is a very generous programme. It provides jobs with on-the-job training and up to 50% wage support for the employers. Yes, the CET statutory board will have to work harder to motivate workers to go for skills upgrading.

Mdm Halimah asked how we could help the "untrainable" workers. I do not think we should call people "untrainable". I disagree with that approach. That would not help us to address Mr Seng's concern of getting more people to join the queue. We want to create a buzz for CET, and we cannot go around saying, "You are untrainable. You are out of the action." No. I would take a more positive approach and try to look for appropriate training even for the lowest educated and lowest skilled workers. As long as they are willing to make the effort, as long as they are willing to go and try, as long as they are realistic in their job expectations, we should be able to help them. For instance, the Centre for Cleaning Technology - I think it was in the newspapers last week - started with MOM's financial assistance and encouragement. It has proved to be very useful in training many older and lower skilled workers for gainful employment in the growing commercial cleaning industry. Many of their trainees went in without much expectation. But when they left, they were snapped up by these cleaning companies. And because of their training, many have also progressed beyond just trainees to become supervisors, earning much higher than they had expected in the first instance.

But, admittedly, all of us involved in job placement - whether it is MOM, NTUC, Community Development Councils with their Distributed Career Link network - have had numerous disheartening encounters with workers who turn down job offers or refuse to go for skills upgrading. On the other hand, we hear stories of workers in Vietnam and China enthusiastically learning new skills to get on in life. They sign up for night or weekend classes. They rush from work to their night classes, be it to learn English or some new computer skills. That is lifelong learning in action. That is what we should have in Singapore - a buzz on lifelong learning. In the Philippines, I was told that doctors move into nursing. Why? Because they recognise that the worldwide shortage of nurses opens up many new opportunities for them overseas where, perhaps, maybe their professional qualifications may not be recognised. But, at least, if they take up nursing skills, they can go overseas, and they get better jobs. We need to be equally flexible and adaptable. As the labour market changes, we have to be flexible and adaptable.

Mr Low Thia Khiang said that it is not an answer to tell people to be prepared to take on a job, any job, even if it is at a lower pay, to solve our structural unemployment problem. But if there is scarcity of jobs, a realistic solution must be to take what is available, make the best out of it, until better times come around. Fortunately, not all Singaporeans are totally apathetic to retraining or skills upgrading. We do have some fine examples. Streats, on 17th January 2003, reported a Mrs Karen Wong who lost her job as a HR executive at an IT consulting company. She recognised that she was not likely to find a job in the same field and enrolled in a childcare training course under the Skills Redevelopment Programme. Today, she is happily teaching children at a PAP Community Foundation kindergarten. Likewise, Mr Chen Guo Hua, who was retrenched from his salesman job, decided to sign on for MOM's Place-Train-Adjust programme, one of those programmes where we assign them to an employer first. The 52-year old Mr Chen completed his training and is now a commis cook in Ritz-Carlton and enjoying his job. So, I thank the media for featuring such stories of enterprising, adaptable Singaporeans who are learning new skills and trying their hand at new ventures or new jobs. I am sure there are many, many more such examples out there waiting to be highlighted.

Sir, I must reiterate that it takes two hands to clap. I agree with Mdm Halimah that employers also have to play their part. I therefore call on employers to change their mindset. Nominated Member, Dr Jennifer Lee, gave the example in last week's Budget debate of how KK Women's and Children's Hospital was successful in hiring older workers. I commend Dr Lee for her willingness to give older workers a chance and urge other employers to follow her lead. In my Ministry's efforts to place older workers, we have found that many HR managers in various companies are not receptive. Some have become used to hiring foreign workers in the days when we had a tight labour market. They refuse to consider new options and just want to carry on doing things the way they are comfortable with - just hire foreign workers.

Mdm Halimah was concerned that employers will lay off workers hired under the People for Jobs Traineeship Programme after the wage support period, which can go up to nine months, has ended. Under this programme, we provide very generous wage support for employers to take in older workers. The wage support can amount to $12,000 or more. Participating employers should not just lay off workers at the end of the wage support period. They should continue to employ these trained workers and, in fact, help them to continue to upgrade their skills, so that they can make bigger contribution to the company. Otherwise, these companies or employers will continue to lay off workers after training and they will not be able to participate in the programme and derive the benefit of the wage subsidy that Government is giving. So all our companies must also adjust their mindsets, starting with the Chief Executive Officers. 12.00 noon

Sir, in conclusion, to round up all the remarks made by the Members and my response, we are facing difficult times but there is no need to be despondent. There will be an economic rebound. We are not sure when this will be. If the US economy picks up, if a war between the US and Iraq erupts, when and how will it end. If there is a war, what will be the impact on the price of oil. There are so many "ifs" and all of these "ifs" are well beyond our influence. But what we can do, and must do, is to make preparations for the rebound. As Mr Yeo Guat Kwang pointed out right at the beginning of this discussion, take advantage of this slack period to prepare our workers for the future. So we can make preparations for the rebound.

We have the resources to revamp the economy. The ERC Report has pointed out what we can do to advance our competitiveness. But we have more than just resources to revamp the economy - we have the people with the gumption to face challenges directly and make the changes that are necessary for survival and continued prosperity. In this way, when the global economy rebounds, we will be in a good position to take advantage of the new opportunities. Let us, therefore, work together and turn today's adversity into tomorrow's advantage. Our parents had laboured to build Singapore from scratch since 1965 with much less resources than what we have today. We owe it to them to make the effort to transform our skills and capabilities through Continuing Education and Training to provide the impetus for future economic growth.

Mdm Halimah Yacob: Point of clarification, Sir. I would like to ask whether or not the Minister will agree that the foreign workers quota was set at a time when the economic growth was good, structural unemployment was not an issue and the long-term unemployment rate was much lower. Now, with the changed environment, higher long-term unemployment, slower economic growth and structural unemployment, whether or not the quota ought to be revisited. I have never asked for the large number of foreign workers to be sent back because it is completely unrealistic. But I did ask for the quota to be revisited, the issue to be relooked, and not to send back the hundreds of thousands of foreign workers, just to provide jobs for 90,000, because that is not possible.

The Chairman: It was a rather lengthy clarification, Mdm Halimah. Would you like to reply, Dr Lee?

Dr Lee Boon Yang: Sir, I am grateful to Mdm Halimah for her clarification that she does not see the need to send large numbers of foreign workers back deliberately. The foreign workers quota operates in different industries. There are different quota levels. We have found it useful to balance the needs of employers and creating employment for local workers using this quota mechanism. For instance, in the construction industry, we are very liberal - 1 local to 5 foreign workers. We are slowly adjusting that. We are bringing that down now because of the over-dependency and low productivity in the construction industry. In the marine sector, we have a quota of 1:3. And despite this adverse economic situation, the marine industry is one of our bright spots. They have lots of vacancies. And if we were to lower the quota for the marine industry today, we will be causing the companies enormous difficulties, not just in competing for jobs, they actually have obtained jobs already, but they need the workers to do the work. So since Singaporeans are still reluctant to take on these vacancies in the marine sector, I think it would be foolhardly for us to revise the quota in the marine industry.

In the manufacturing service industry, as I have explained just now, many companies still face difficulties operating within the present quota. But we will continue to review all of these mechanisms to regulate the entry of foreign workers. And the Minster of State will reply on this subject. Could you refresh my memory on the last point?

Mdm Halimah Yacob: I asked whether there is a need to revisit the quota because of the changed circumstances. That is all. I am not suggesting that we send back the foreign workers.

Dr Lee Boon Yang: Whether we have to revisit the question on quota, I have to say that we do that all the time. We review the quota. We look at the needs of the industry all the time, and we will do what is necessary. But I just want to point out that we must maintain a judicious balance.

The Chairman: I would like to remind Members not to ask questions or make lengthy speeches in the guise of clarifications. Mr Inderjit Singh is not present. Dr Wang Kai Yuen.

Dr Wang Kai Yuen (Bukit Timah): Sir, I have been wondering why Singaporeans are so despondent, to use the word of the Minister, about the economy when our unemployment rate was 4.2% in December 2002, having dropped from a high of 4.6% in September 2002. This has translated to about over 80,000 unemployed workers in Singapore, bearing in mind that even in boom time, the unemployment rate was about 2%. So based on unemployment figures alone, our economy should have been much better off than Hong Kong with its unemployment rate of 7%. But in terms of the people's psyche, I believe our people do not seem perkier than those of Hong Kong.

So my question is whether the statistics tell the full story. I browsed through the published figures of MOM, paying particular attention to the table of change in employment in the Government press release on 31st December 2002. Change in employment, Sir, refers to the change in the number of jobs in our economy compared to the previous period. This figure shows that the Singapore economy has had five consecutive quarters of net job losses from third quarter 2001 to third quarter 2002, totalling 63,000. However, I was unable to match this change in employment figure with the employment rate of the corresponding period. If we were to add 63,000 to the number of workers already unemployed at the end of second quarter 2001, which was 60,000, or 3%, of the total workforce of close to 2 million, the total number of unemployed workers should be around 123,000 by third quarter 2002. But we have a lower number. So it seems that some 40,000 workers who have lost their jobs have simply disappeared from our radar screen. I really could not reconcile these numbers and would like the Minister to elaborate.

Part of the reason could be that those are foreign workers. If, indeed, this is the case, then the unemployment rate figure is not giving a true picture. So we might be lured into a false sense of comfort if policy makers were to just look at the unemployment rate alone.

With regard to the unemployed workers, I am particularly concerned about those with little hope of finding a job after being unemployed for nine months or more. To help these people back to the job market, would the Minister consider changing the CPF contribution rate for these structurally unemployed people? For those facing long-term unemployment, it is indeed futile for them to plan for retirement when they cannot even take care of their current needs.

The Chairman: Could you finish with your question, Dr Wang?

Dr Wang Kai Yuen: I would like to find out whether for those who are unemployed for one year or more, would the Minister consider phasing in the CPF contribution rate starting from zero to the full contribution rate over, let us say, nine months or so?

Mr Low Thia Khiang (Hougang): Sir, during the good years in 1995 and 1996, what we heard was the problem of workers job hopping and employers unable to get enough workers. Since the financial crisis in 1997, the table has turned against the workers. Now is the employers' market.

At the last general elections, the PAP had promised to give top priority to providing jobs for Singaporeans. The trade unions even showed its support to the PAP by taking UOB to task when it announced its intention to retrench its workers due to merger and restructuring.

Two years have passed, but unemployment remains a problem. It is a clear fact that the PAP Government could not create enough jobs for Singaporeans. Ironically, Government controlled entities, like GLCs and statutory boards, are the ones now starting a new round of retrenchments. This time - I suppose it is because this is not an election year - Chartered Semiconductor, PSA and HDB had already done their bit.

Sir, to add salt to injury, the Singapore Government is still putting out Contact Singapore advertisements on CNBC to attract foreign talents to find jobs in Singapore. If the PAP Government could not create enough jobs for its own citizens, how could it offer Singapore jobs to foreign talents? I would like to ask the PAP Government what types of jobs it could offer to foreigners that our local talents could not do.

The Chairman: Mr Low, you are asking the PAP Government, or you are asking Dr Lee?

Mr Low Thia Khiang: I am asking Dr Lee. The last check on Contact Singapore website showed that SIA is putting up advertisements for the positions of Administrative Officer and Business Development Manager. The question to the Minister is: do our citizens not have the talents to take up jobs, such as Administrative Officer and Business Development Manager?

Sir, it does not make sense at all to keep recruiting the so-called foreign talents for jobs that Singaporeans can do, especially in this period of high unemployment. We have some Singapore graduates selling noodles, taking up part time jobs and giving tuition to make ends meet. But our Government is offering jobs to foreign talents. I want to remind the Government that it is Singaporeans who have voted them into power, not foreigners, talented or not. I think it is only fair and right that the Government puts Singaporeans' interest, jobs and welfare as its top priority, and not foreigners.

The Minister has just said that, not so long ago, EDB has attracted new investments. But I would like to know specifically what is the number and nature of jobs that the Government, or the investments, have created for Singaporeans as well as foreigners. And what jobs have been offered to foreigners that our locals could not do?

The Chairman: Mr Hawazi is not speaking. Mr Nithiah Nandan.

Mr A Nithiah Nandan (Nominated Member): Sir, unemployment is expected to hit the highest level this time and this is further aggravated with retrenchments. During such a time, what we should not do is to create confusion on the ground or, worse still, instill fears in the minds of the workers with loose talks. Such acts will only lead to the loss of morale and confidence. Then half the battle is lost in the process of repositioning Singapore. Employers should not take retrenchment lightly. Retrenchment should be carried out only when it is absolutely necessary, that too after exhausting all other avenues. I say this because the current unemployment situation is bad and it should not be further aggravated as far as possible. The social and psychological impact caused by unemployment could lead to other negative and sometimes tragic circumstances. So we should exercise care and, at the same time, help retrenched workers to find new jobs.

Sir, during this bleak unemployment situation, the hardest hit are the old and the less educated. These are the workers who have contributed immensely during our formative years of nation building. I am glad to hear the Minister saying earlier that they are trying to do a lot to help these workers. I hope the Ministry will do more in helping them get jobs, especially by helping or giving a certain amount of subsidies to employers who hire them. We could also create some employment opportunities or reserve certain categories of jobs for such workers besides training them.

The Ministry should also encourage more employers to use the People for Jobs Traineeship scheme. Would greater incentives be introduced to enthuse more employers? Sir, I do agree that workers should not be choosy. But, at the same time, more should be done in the area of redesigning jobs and multi-tasking, so that locals could do jobs, such as cleaning and others mainly done by foreigners, and earn decent wages. I am pleased with MOM's joint efforts with NTUC in helping retrenched workers, but more needs to be done during this difficult time. 12.15 pm

I do not wish to dwell further on placement and training schemes, as the Minister for Manpower has adequately covered it. But one other area in training which I need to highlight is the training of shift employees. They have great difficulties attending training programmes, and this needs to be addressed by CET. Today, the challenges are different and daunting, and it needs more efforts. I do agree with Mdm Halimah Yacob that we should monitor the situation very carefully. We are not suggesting that all the foreign workers should be sent back. A lot of concerns have been raised. Workers are interested to carry on with their jobs.

The Chairman: Mr Nithiah Nandan, can you end your speech soon, please.

Mr A Nithiah Nandan: So we should take extra effort in monitoring the situation.

Another concern which needs to be addressed is that the unemployed are told that there are still jobs available, some of which are reflected on the MOM website. Unfortunately, this does not square with the perception on the ground. A number of unemployed workers have indicated that after many tries, they are still unable to get jobs. MOM needs to identify the reasons, whether it is skills mismatch, employers' preference for certain age groups of workers, or other reasons. MOM should put in place appropriate measures to resolve this issue of perception.

The Chairman: Mr Ahmad Magad, you have three cuts. You can take them all together.

Mr Ahmad Mohd Magad (Pasir Ris-Punggol): Sir, we have heard during the previous three days and also from the Minister for Manpower a moment ago about unemployment which is currently affecting Singaporeans, there were also calls by some to slow down the flow of foreign workers, so that Singaporeans can be given priority to bid for the scarcer jobs available in our job market.

While I, too, am sympathetic to the plight of unemployed Singaporeans, we need to be pragmatic and think about the needs of employers too. Notwithstanding the weak employment market, there are in fact many good high quality jobs available in the job market. But many of these jobs require intense training and application of thinking skills on the job. Regrettably, I dare say that many Singaporeans shun such jobs. They are still hoping for the high-paying routine-type easy-to-do jobs coming on to their laps. Unfortunately, such jobs are few and far between, and many of these are gone forever.

A few months ago, I led a group of unemployed residents to consider employment in the Wafer Fab Park in Pasir Ris. After being explained the nature of the job, only about 30% said they would consider applying for the jobs. The primary reasons are the requirements to put on clean-room attire and 12-hour shifts. I later learned that, of the 40 people or so who attended the briefing, less than 10 actually applied. I have a similar sad experience in my own organisation where clean-room technicians' jobs requiring operation of sophisticated thin-film high vacuum systems and application of thinking skills are refused by Singaporeans. As a result, 70% of my employees working in this department are Malaysians.

The key question is: where do we go from here? I believe, Sir, employers do want to give priority to Singaporeans to fill vacancies. But, often, they cannot wait for the right candidates to come by. I ask that MOM and our labour movement continue to drum into the ears of Singaporeans that these jobs have to and must go to foreigners, if they continue to refuse them.

What choices do employers have? The multi-billion dollar factories and expensive equipment needed to be manned to recover investments. Singaporeans must therefore understand that we have no choice but to maintain a barrier-free employment system, and that they have to face competition from foreigners and foreign talents who are more than willing to grab such high-paying and stable jobs. Unless they wake up to the reality of the situation, we are going to continue to give away such high-quality jobs to foreigners.

Sir, on my next cut, it is an established fact that as an economy matures, such as what is observed in the United States and many European countries, a corresponding contractual manpower supply industry typically evolves with it. Organisations operating in such economies need to be lean and trim in order to be competitive on costs. A readily available manpower supply industry fills the gap whenever there are temporary surges in work. We are inching towards such a stage as we restructure and position ourselves into a knowledge-based economy. Although there is already a skeletal presence of a contract manpower supply industry to supply contract manpower to serve industry needs, most companies doing so operate as job matching agencies and earn commissions from successful matches rather than maintaining staff on their payroll for immediate deployment whenever there is a need. I see it as beneficial if we could formalise the presence of a contract manpower supply industry to supply manpower for professional assignments as well as satisfy the requirements of an evolving service industry, and would like to ask the Minister to take a hard look at my proposal.

There are two advantages I see in such an approach. First is the creation of additional employment, as companies in such industries will maintain a pool of professionally trained employees and have them ready to be deployed for contractual assignments. The second advantage is the enhancement of professionalism of individuals which companies are expected to invest in, in order to project a professional image of their respective organisations.

Sir, I move on now to my third cut. I am glad that the ERC, among others, has also placed emphasis on our growing services sector, recognising our potential to become Asia's leading services hub. A key consideration to realising this vision is to first ensure that we develop and fully understand what service excellence means. While I believe Singapore is quite ahead of regional countries, such as Thailand, Malaysia and, to some degree, Hong Kong and Taiwan, in terms of service excellence ranking, we pale considerably when compared to more sophisticated markets, such as the US, UK and Japan.

To differentiate ourselves from our neighbouring countries, we need to carve out a strategy to develop the ability to provide differentiated or high-contact service. Our domestic enterprises must learn to work around the disadvantage of limited labour supply and high labour cost, and turn this into a competitive advantage. As a cosmopolitan city, we have many people with high purchasing power who are constantly looking for such differentiated services. I am confident that we can succeed to position ourselves as a leading services hub, if we can master the art of showering service upon our customers and make them a satisfied and happy lot.

Beyond customer satisfaction and customer delight, Sir, we should learn to romance the customer. We should ride on Romancing Singapore and propagate this message to all local service providers. The imagery of the Singapore Girl immediately comes to mind when one thinks about service excellence. The great service one enjoys on board a Singapore Airlines flight has not only made the airline one of the world's leading airlines, but also impressed upon the world that Singapore has the ability for service excellence.

The SIA experience shows that setting and processes are as important as the employees of an organisation. The secret is to take the customers' experience seriously, create an emotional connection with the customers, and ensure that the right experience is delivered to the customers. It is this interaction that counts, and this is what companies renowned in service excellence have put in place.

I suggest, Sir, that apart from creating a service excellence movement to instill among Singaporean service providers the importance of service, we should also seek out effective training models of companies with outstanding service and develop affordable programmes for the service industry. In regard to training, there are a few local organisations, such as Singapore Airlines, the Raffles and Ritz-Carlton hotels, which provide outstanding service, from which training models could be crafted and initially used as kick-start training programmes. Upon laying the appropriate foundation, each industry should develop an academy to raise the professionalism of its workforce, such as what the hotel industry has done in Shatec. With an enhanced service profile, workers can acquire the appropriate service skills standard.

Sir, the ultimate goal should be the creation of a Singapore brand service that is unique and where people will rave about. We already have some form of service excellence, such as the Excellent Service Awards. We now need to make it more widespread and universal.

Dr Ong Seh Hong (Aljunied): Sir, much has been said about the concern of unemployment and long-term unemployment in Singapore. The increasing trend of long-term unemployment actually stood at 1.4% as of December 2002, compared to about 0.3-0.5% in the early half of the 1990s. This is very worrying, because mainly those with below secondary education and those 40 years and above are the most affected group.

On the other hand, employment prospects are not very good. With 28 jobs for every 100 job seekers, even when we fill up all the vacancies, many of them will still be out of job. I agree with the Minister that attracting more investments is the way to create jobs. But with 28 jobs for every 100 job seekers, what are the Ministry's specific plans to boost the number of jobs for Singaporeans? Has the Ministry actually considered maybe promoting and facilitating employment creation in the informal and semi-informal sectors of the economy?

While I agree that it is the individual's responsibility to look for a job, retrain himself and try to keep the job, we must also know that many of them, after retraining, still could not find a job. So, what are the Ministry's specific measures to help this group of people who are willing to change but are unable to find jobs? For those who still refuse to change their mindset, what are the specific measures that the Ministry is taking to help to change their mindset so that they will be willing to take up different jobs and have more realistic expectations, and so on?

Sir, looking into the longer horizon, I think that structural unemployment would be a problem that we are going to face. What steps is the Ministry taking to prepare ourselves for that challenge?

Mr Steve Chia Kiah Hong (Non-Constituency Member): Sir, as the Minister has explained earlier, many older workers are finding it hard to retain their jobs. Many are getting retrenched as their companies resize or relocate. Once jobless, they are likely to remain jobless for a very long time. Retaining jobs is thus more important than creating new ones. To retain jobs, we need to look at the two biggest components of business cost: wage and land costs. Since this pertains to the Ministry of Manpower, I will just touch on wage cost.

If we have high CPF contributions from employers, the fight to retain jobs will be hard. While the Government takes the ERC proposal to cut the employers' contribution by 4%, it is not going to help much in retaining jobs. It is also unfair to those aged workers who are still highly valued by their companies. Instead, the Government can be more flexible and stop micro-managing, and free up the CPF contribution rates for employers and employees to negotiation between themselves. If he is a valuable employee, the company would be more than willing to offer him a higher contribution rate. But if the wage cost is still too high, the employer would have the option to negotiate with the employee for a lower or even no employer contributions at all. It is still better to have a job than going jobless for a very long time. Some employees would be more than willing to forgo their employers' contributions, if they can retain their current jobs. So, the Government should not make it mandatory for them to be retrenched by forcing a standard contribution rate. Let the employer and the employee negotiate.

Mr Heng Chee How (Jalan Besar): Sir, as Singapore's economy restructures, workers with higher skills and enterprising attitudes would be more able to stay employed or to move on to new employment should they be displaced. But the key challenge socially is to help the lower skilled workers, many of whom are older workers as well, to earn a living, because there is a segment among such workers who would not be able to upgrade fast enough or adapt fast enough in tandem with the requirements of economic development. So, even if we have the lower skilled or semi-skilled type jobs coming in with the new investments, there is a segment that might find it quite difficult to access those kinds of jobs. In this connection, I hope that concerted efforts can be put into identifying and highlighting suitable job areas and opportunities and on creating areas of work suitable for them.

To my mind, one good area to look at is in the non-export sector, on the services side, where the areas of work tend to be more labour-intensive. When I say labour-intensive here, I do not mean that you have many headcount within the company, but rather that in the content of work, it is labour-intensive.

I would like to suggest some areas for consideration. I consider the life cycle area, such as those relating to birth, and that would include infant care as well as childcare, eldercare, healthcare or even services relating to death. Those are necessary services that any society and every society would need all the time and certain areas within that would offer prospects. Recurrent everyday needs in the areas, say, retail, food, housing, transport, again, there might be certain areas within that that can be designed for workers in this category to take on; public needs, such as public cleanliness, hygiene, public health, security. Then, there could be areas of status needs, such as home care, housekeeping, errand running. And there would be informal sector activities, including home-based work.

To open up opportunities in these areas to such workers require new and different ways of organising them because these workers are individually unlikely to know how to organise themselves. Sir, in this regard, I hope that more encouragement can be given to efforts to organise them for full-time, part-time and contract work, and in this way, to render them competitive as a group with, say, foreign labour.

Ms Irene Ng Phek Hoong: Sir, I fully support the Manpower Minister's emphasis earlier on personal responsibility on the part of workers.

The key responsibility must be on the worker to find jobs, to identify the right training and to make the necessary adjustments. I know the Manpower Minister has tried very hard to help older workers to stay employable, but no matter how much personal responsibility the older worker takes in applying for jobs, those above 50 continue to find it hard to get a job.

As the latest labour market survey shows, more than half of the retrenched, aged 50 and above, could not find re-employment within six months last year. This is really quite alarming. Even the employed, those who have jobs, above 45, are now beginning to feel insecure. They are worried about losing their jobs because they know it would not be easy to find another job again. They feel that they are at the mercy of employers and of the harsh market which discriminates against older workers. They have to fight the battle of proving that they are still productive workers, capable of giving many more good years of service, and that they are worth their salaries.

Sir, we need to help employers understand that older workers can be a plus in their operations. If I may cite an example. One of my grassroots leaders runs a restaurant business , the Village Wok. One restaurant is in Thomson, the other in Geylang. In his recruitment advertisements for workers, he would always state that he prefers workers above 40. So I asked him why. He cited three reasons and these are based on his own experience.

First, they have a good attitude to work. They are more committed to the employer and they will not leave at the whiff of a better opportunity. Second, they have more experience in skills that the employer does not need to spend too much time or money to train them. And third, they have more realistic expectations when it comes to wages. This is his own experience because he finds that the older workers have gone through a lot in life, so they know the value of a secure job.

Sir, we need to highlight more of such enlightened employers who hire older workers, not because of good-heartedness or charity, or because there are so many out there that need to be absorbed for the nation, but it is because it makes good business sense.

Sir, the Government said that the move to lower the employer's CPF contribution rate for those in the 50-55 age group is to enhance their employability. I would like to ask the Manpower Minister to conduct a study to find out if this would indeed help older workers to be more employable. If not, we might want to consider reviewing it. If they only just reduce the pay of all those above 50 without any effect on their employment situation, as the experience of my grassroots leader highlights, the affected older workers will learn, can learn and must learn how to adjust their salary expectations, without the Government giving a blanket pay cut via the CPF for all workers above 50. This will indeed hammer home the message of personal responsibility.

The Chairman: Mdm Ho Geok Choo, you have got two cuts. Take them together, please.

Mdm Ho Geok Choo (West Coast): Sir, there are two issues that I would like to raise with regard to preparing for self-employment and nurturing entrepreneurship.

First, on preparing for self-employment. I would like to submit some suggestions to facilitate a more ready mindset and to help these unemployed to be more self-reliant. Experience of the last two years have woken up several jobless among the PMEs that their once corporate career life is never to return again.

How can we help the unemployed continue to feel a sense of usefulness and purpose? To be suddenly thrown out of work, one can be very disorientated and feel a sense of loss. One way is to enable them an association with a surrogate employer who can then nurture their confidence and equip them with skills and knowledge and connect them to potential project work.

Sir, I would like to declare at this point that I am the founder member of SPEC and serves as the Honorary Deputy Chairman. SPEC was set up two years ago as a self-funding cooperative to provide a mutual self-help environment for these people. SPEC has a mindset change and career counselling module under WSTP and more than 3,000 Singaporeans have benefited from this programme. Both employers and employees, who have gone through this module, are better prepared for the parting of ways. I would encourage employers to tap on the services of SPEC and these include: employment and small business advisory, job and business counselling, writing business plans and proposals. On a regular basis, it runs seminars, showcasing the success stories of self-made Singaporeans. This is to encourage economically inactive PMEs to learn from others and take on self-employment and entrepreneurship in the portfolio economy.

My questions are: will the Government be disposed towards the idea of encouraging employers to consider SPEC membership as a step-down caretaker benefit for the employees? MOM can encourage via endorsement statements in their publicity materials. My second question is: at the same time, will the Government consider a tax rebate for such step-down care benefits that employers take up for their PMEs?

Another issue is the idea to set up a community of learning and sharing so as to better transfer, manage and retain knowledge. This is particularly so for projects that are given to foreigners. There have been calls by several MPs for civil servants to be less bureaucratic and to be more customer-centric.

Sir, we can say that it is all perception issues but perception, we know, is reality. I wish to highlight another perception which reinforces that anything foreign seems better. Such perception undermines the experience and expertise of our local Singaporeans. It has been observed that often times, our Ministries, statutory boards and GLCs award contract for services to foreign service providers and bring in overseas speakers at hefty fees. This is desirable where locals lack the experience and expertise. In many instances, foreign entities pull out when the going gets tough. Neither do we see a transfer of knowledge or expertise and experience to Singaporeans. We all know for Singapore's longer development, capabilities, knowledge and experience must be managed, captured and retained for the KBE. This is a sure way to go to nurture self-employment and entrepreneurship. We should therefore facilitate the set-up of a community of learning and sharing.

To begin with, I would like to propose that in the award of contract for services, a Singaporean entity should be included to work with the foreign entity as partners. In this way, Singapore will begin to develop specific icons in the area of knowledge management. This will then further spur the entrepreneurial spirit among Singaporeans.

On PMEs, Sir, I would like to raise two issues. The first issue relates to job match for PMEs. The retrenched are having a tough time getting back to work. The economy picked up a little bit last year but jobs coming back and new jobs created were mainly for blue-collar and lower skilled workers. FTAs concluded will create 20,000 jobs, so EDB said. But EDB also said that it would take about three years to materialise for each investment. And where high job skills are created, they appear to be too highly skilled for many Singaporeans. For example, there are jobs created in the biomedical sector which require a PhD.

Another possible industry in which this group may be able to find gainful employment is with MOE. But we know that even in polytechnics, contracts for lecturers are not renewed. The truth of the matter, Sir, is that even with new jobs created, it is likely the graduating cohort and the younger ones who are going to fill up the gap first. This is because, all things being equal, the potential employer will prefer to employ a younger one.

The questions I would like to raise are as follows:

First, can the Minister enlighten the House on the extent of job mismatch among the PMEs, ie, they do not have the right skills for the jobs available? Second, how many have gone through the job conversion programme at MOE and gained a foothold as their teaching staff? And third, how can we ensure that given the right attitudes, skills and qualification, PMEs above 40 can gain equal opportunities for employment?

The second issue relates to an endowment fund for PMEs. Last year, I have asked for such a fund. I called it the HEED fund as I was trying to persuade the Government to heed the need for such a fund. Since the Government has paid no heed, again this year, I am bringing it up.

Sir, the need to reskill and retrain this group of PMEs is also important. In time to come, we know that this cohort of employees will constitute the bigger workforce. Sir, this fund will help the retrenched PMEs, or those who are to be retrenched, to pursue higher skills and education. This will help to increase their employability and also enable them to fend for themselves through self-employment, part-time work and flexible work arrangements. This group is growing by the day. Yet, we seem to put our own mindset that they can fend for themselves - they do not need help at all. The likes of Olivia Lum are testimony that they should be able to make it if they try hard enough. But, Sir, how many Olivia Lums can there be? For every one Olivia Lum who makes it, there are hundreds out there who just need that booster. Call it luck or providence intervention. It only touches a few out of the hundreds. And when they are in droves out there, a civic cautious society would want to mobilise and organise some form of assistance. This is to ensure that we contain the possible energies that they are capable of generating back to the economy if we organise and harness them well.

Sir, the set up of the endowment fund can develop and equip PMEs for the future economy. Otherwise, we may face the same sort of structural unemployment for the sandwich PMEs as we are facing today for the workers. My question is: will Government be disposed to facilitate the set-up of such a fund by encouraging employers, employer groups and professional bodies to start such a fund and the Government will match such donations, as it has done for the endowment fund for workers?

Dr Tan Boon Wan (Ang Mo Kio): Sir, many jobs are lost during the current difficult economic crisis. One reason is the global economic slowdown. But a more profound reason is a change in the structure of the Singapore economy. The new economy jobs require a different set of skills and competencies. Do our people understand this? Do our people understand the dynamics of the new economy and implications that it will have on us? Despite the economic slowdown, many jobs are still available in the market. At first, Singaporeans were not prepared to take them. They made many excuses. They were reluctant to take on new, difficult, unfamiliar, lower paying jobs. They were reluctant to learn new skills. However, today, many of the same people have changed their minds. They have taken on these jobs. They have gone for training and to learn new skills. But not everyone has done so. Some are still waiting for the old jobs to come back. What is really important is not that merely everyone takes the new jobs offered to them, but they need to understand why they have to do so. Hence, more needs to be done. People change more readily when they are faced with a problem. We must turn the present difficulties into an opportunity to get our people to understand the new economy and accept the needed changes. We must inform and educate them. We must convince them to accept and adapt to the new economic environment. Our future prosperity depends on successfully making this transition. 12.45 pm

I would thus like to ask the Government what has been done to change the mindsets of our workforce for the new economy. What progress has been achieved? What more can be done? What are some of the future plans? We must not stint on time, money and effort, in this vital task.

The Minister of State for Manpower (Dr Ng Eng Hen): Sir, let me thank Members for their suggestions to assist retrenched and unemployed Singaporeans as well as cogent recommendations to improve our unemployment situation. Sir, the points they have brought up are indeed important, as many analysts predict that this more disruptive economic climate may persist for some time. In other words, how globalisation will pan out, the backlashes, how our economic conditions would be, even following the impending war if there is one, remain uncertain. These are fundamentally turbulent times and we are not quite sure when visibility will improve and what the climate or the scenarios will be, after visibility has improved. Therefore, it would be important for us to examine our fundamentals for policy decisions.

Our responses to existing challenges are underpinned by prevailing principles and, if you like, philosophies. Through our meetings with other Government officials and comparison with other systems, we consistently subject our beliefs to scrutiny. Singapore, if you believe in equal commiseration, is not the only country facing unemployment. Others have had it much tougher and for a longer time. Recently, I led a delegation to some European cities to study how they address their problems of unemployment and assistance. The trip shed much light and I will share some main take-away lessons.

The first lesson is that temporary assistance schemes, indiscriminately applied and started with the best of intentions, degenerate very quickly into permanent schemes and hurt the overall economy. Please note that these are systems in developed countries run by seasoned bureaucrats with their armies of think-tanks and policy makers. Even with their vast intellectual resources and the realisation that change has to be made urgently, they find it a stupendous task to ameliorate, let alone reverse, the increase in spending on assistance related to unemployment. So, in some countries, they end up spending as much as 3% of their GDP on social assistance schemes. This is more than three-quarters of our Education budget, which caters for 550,000 people, but they spent it on social assistance schemes. Their corresponding cost of government is about 40% of GDP, compared with 19% in Singapore currently. GST, in these countries, is in the double digits and corresponding marginal personal and corporate tax rates twice that of ours, as they have to raise by taxes and revenues 40 cents just to generate one dollar of turnover. Predictably, these countries lose their competitiveness and the negative spiral begins, and continues. Sir, if we ever choose to follow suit, this will be a load that will sink us all. Perhaps, some MPs might say that we can benefit from the wisdom of hindsight and avoid the excesses that these economies have been encumbered with. Are we so certain? Should we venture into the water when there are many signs telling us to beware of the strong undercurrents?

There have been a number of suggestions, both from the speakers during the Committee of Supply and the Budget debate, in terms of Government loans, retrenchment, endowment, and `heed' funds. Sir, they are well-meaning, but I would caution, eg, loan funds and retrenchment funds, how would Government enforce repayments if we use their houses as collaterals? For borrowers who are at default, Government would not be keen to repossess their houses. Alternatively, if we allow members to use their own or future CPF funds, they would deplete their retirement savings. I would caution us moving that way.

Like MPs who have weekly meet-the-people sessions, I share Members' concern over the plight of retrenched workers, and our more targeted approach to assist them is the right one. We have many benefits as enumerated by Deputy Prime Minister Lee as well as financial assistance schemes in our CDCs and CCCs. Deputy Prime Minister Lee spoke on the sensitivity of our grassroots schemes. We should not underestimate the effectiveness and value that our various grassroots schemes have.

My CCC welfare committee, like yours, I am sure, is a veritable fount of local knowledge. I have one particular lady who has lived in the estate for over 20 years. Sometimes, I almost believe that she knows every elderly or down-and-out constituent. She knows, for example, in detail what cars their children drive, what they eat and how much they eat. Occasionally, she will bring hardship cases to my MPS with specific details of family feuds and how the appellant has suffered. Other times, she will disagree on certain persons that we have chosen to help. "They use the money to treat their friends at coffee shops", she tells me. Or, "her son drives a big car and they are still getting PA allowance." Their local knowledge in our community-based assistance scheme is invaluable. They serve as brakes or lubricants, to be appropriately applied. And, these schemes are better than any other bureaucratic schemes I have seen today.

Secondly, we should be prudent that in our efforts to help those retrenched, we do not unwittingly undermine the efforts of the willing. What do I mean? Yes, the unemployment rate was 4.2% in the last quarter. Let us not forget that 96% of those that have jobs will themselves to work. Sir, work is not fun and glamorous every day. There are days for every person, and I am sure for all Members in this House, where you choose to work whether you feel you like it or not. There is no fanfare or stardust outside your door. It is a conscious choice we make.

I mentioned my study trip and the lessons learned, and one particular poignant vignette was obtained from a senior official who has been helping the unemployed for decades. He has lots of experience as their unemployment rates were in the teens for many years. Those requiring employment assistance, he has concluded from years of experience, fall into three groups. The first group has skills and attitude, and are self-starters. Many of them get information on their own and need little, if any help, to get re-employed. The second group needs training indeed for new skills to get jobs. The third group, he graphically portrays, needs to be reminded that they have an interview the next day. Indeed, officers in his agency actually call on the day of interview to wake this third group of members to remind them! He did not recount his conclusions with bitter cynicism or disillusionment. He said so with a matter-of-fact tone and with a sense of acceptance and equanimity. His realistic appraisal would help his organisation to be more effective in their role, he added.

Mr Low Thia Khiang has asked what has Government done to create enough jobs. He has said whether they were the right types of jobs. Sir, other Members have expressed, despite jobs being present, as Dr Wang Kai Yuen has said, whether Government has underestimated the extent of the problem. In these times, it would be prudent for us to look inwards as well as outwards. Our figures are very robust. They are from figures that we take from about 25,000 households and they are trend lines as well which convince us that they are indeed robust. In fact, last year, our local employment grew by 1.3%. It did not shrink. Yes, there was a net loss in unemployment, the amount of which was due to foreigners leaving, both with Work Permit and Employment Pass, but our local employment grew by 1.3%. Should we start saying that there are not enough jobs, that the situation is imperfect? Where should we place our efforts and resources? Do we deprive those who have a good attitude or do help those who place themselves `furthest from the job market' - this was another term we learned on this trip? Do we pile even higher the table for those who feel that the existing food on their table is not appetising? Do we take away food from the table for those who by their own efforts feed themselves? There are no easy answers, but we cannot be naive. It will undo us. In all our asking and angst, we should first get wisdom.

The third lesson was that those who fail to plan and provide for the future have planned to fail. I know it sounds axiomatic but, nonetheless, remains true. Governments all around the globe are grappling with the adequacy of pension funds as life-expectancy increases and populations age. First generation Singaporeans build up substantial reserves which have created stable conditions and a strong currency. In October 2001, Deputy Prime Minister Lee indicated that the Government would consider the withdrawal of CPF in extremis, but now is not the time. The recent ERC has concluded that the CPF system should be refocused on the three basic needs of retirement, housing and healthcare. And, the CPF system stay focused.

Sir, there are jobs available. Yes, workers have to adjust their mindsets and expectations but it can be done. My Minister mentioned that for year 2002, 72% of those retrenched in the first three quarters of the year found employment by December. Seven out of ten Singaporeans proved that it can be done by finding work six months after retrenchment. Therefore, our approach has been that we should enable those who want to remain employable through reskilling or to counsel them in job opportunities. But let us not mistake and say that we need to give guarantees. There are no guarantees. The only person who can guarantee success is the worker himself. All schemes come to nought without the determination and effort of the individual. So I welcome the endorsement and the support of Members for the CET board which is the right direction we are taking.

I also fully agree with other Members that we should facilitate more the take-up of jobs. Mr Steve Chia asked whether we should allow employers and employees to negotiate their CPF contributions. Sir, the ERC recently recommended that we should raise the employee CPF wage bands for lower income workers from $200-$363 to $500-$750, so that lower income employees, especially part-time workers, will be able to take home higher salary while their employer's CPF contribution remains unchanged. This would increase the incentive for more people to re-enter the workforce, particularly to do part-time work. However, we would not want to completely waive the contribution requirement for this group, nor waive the employer's CPF contributions.

There is a need to strike a balance between building up sufficient CPF funds for old age, on one hand, and encouraging more people to enter the workforce. However, I agree that there is room for review, if need be, as to where the base salary level should be. And I am also not keen on this idea because I think there is more to it than just fundamentally CPF contributions. For example, our PJTP scheme that my Minister spoke about provides very generous wage adjustments, if you like. We sponsor 50% of those salaries in the first six months and, even with those generous schemes, people are not hiring. I suspect that many employers are reluctant to hire because of the uncertainty. First came September 11, then the current Iraq crisis. Until visibility improves, we will have to stick to this situation and not adjust precipitously.

Mr Ahmad Magad has suggested that we increase efficiencies by formulating or formalising contract manpower industry. He will be happy to note that indeed it has already happened without any of our measures and that there is flexibility in our labour market. In 2002, 70% of contract workers found employment through this industry.

I thank Members, among which Mr Heng Chee How, Mr Nithiah, Dr Ong Seh Hong, who have given suggestions on how we should help those with lower skills and at higher risk of structural unemployment. I know that they speak from experience, having personally helped the retrenched, and they are realistic proposals. They have suggested the potential of non-tradable jobs. MOM agrees. Several sectors - healthcare, hospitality, infantcare, eldercare, public cleaning, domestic cleaning, restaurants and retail - have already been identified by MOM, EDB and SPRING because they have either good growth prospects or great propensity to absorb local workers. These sectors have existing vacancies, but locals are generally not keen to consider them for a variety of reasons, like low wages, perceived poor image, long training periods and structural impediments like shift work and work conditions. We will slowly tackle the problems, one by one, deliberately. 1.00 pm

For these sectors, MOM is currently looking at the whole value chain of the workforce development. We agree that there is potential here and, therefore, we want to focus on this. This is one of the efforts of the CET board. The aim is to ensure better coordination of industry development with manpower development strategies and, hence, better match between the skills of our workers and industries' needs, as some Members have said.

In fact, as of December 2002, there were some 5,000 job vacancies in goods-producing industries, while there were another 8,000 job vacancies in services industries. All in all, MOM, EDB and SPRING have identified employment opportunities in 12 sectors that we will focus on, and we will engage key stakeholders.

Mr Ahmad Magad suggested that we should focus on the service industry - he indeed has a point - and we are doing that. We have sponsored NTUC Fairprice training, and we are working with the Retail Academy as well as some healthcare providers like HMI.

Mdm Ho Geok Choo has asked what aid is given to professionals, managers and executives. We have not neglected them. For workers who are keen to set up small businesses and be self-employed, the existing Self-Employment Training Programme, which was launched in April last year, will equip them with the knowledge and pre-requisites. In fact, 4,000 places were taken up last year. And 56% of the participants who completed training indicated that they would like to start small businesses.

We will continue to provide job matching services to retrenched executives complemented by industry and community job fairs. There are nearly 1,000 jobs available in MOM's job bank for professionals and executives.

She asked what are the programmes in terms of the strategic manpower conversion programmes. Indeed, there are many. We have started training in sectors of infocomm, logistics, community and social services, healthcare nursing, intellectual property and internationalisation sectors. It is not that we did not heed. We did heed. It is just that the fund is not called by the name she suggested. It is called the Strategic Manpower Conversion Programme. We may try to think of how we can change it to suit her acronym, but it might take us some time.

However, other economic agencies such as EDB, MAS, IDA and IE Singapore have also provided training support to professionals. In 2002, these agencies helped train over 13,000 executives and professionals to support the industry capability and developmental thrusts.

I do agree with Dr Tan Boon Wan and Dr Ong Seh Hong on the need to change mindsets. We need to help Singaporeans transit their mindshifts, and we will do that. We have had 15 good years. It takes some time and we will continue to emphasise this. Many Members would have come across our Jobs Task Force's public education programme. It is a 9-month programme, and we will continue to spend time on it. Has it worked? Yes. The fact that 72% of retrenched workers found re-employment in 2002 indicates that we have some limited but early success.

Ms Irene Ng spoke about the mature workers. To encourage and incentivise employers, we talked about the People-for-Jobs Traineeship Programme (PJTP). The Minister said that as at February 2003, the programme has some 4,000 participating companies. In other words, employers are responding and this has benefited some 9,000 mature employees.

The Ministry understands and appreciates the difficulties faced by older workers. Together with the employer organisations and trade unions, we are stepping up our efforts to assist Singaporeans who have difficulty seeking employment, including the implementation of the tripartite guidelines on Non-discriminatory Job Advertisements and the Code of Responsible Employment Practices jointly issued by NTUC and SBF/SNEF to change the mindset of employers on older workers.

I fully agree with Members. I think the elderly and the mature workers, which Members here also fall in the group, are getting a bad rap. Many employers, I feel, will rue the day they did not capitalise on this soft labour market to employ such workers. And I agree with Ms Irene Ng that this is a business aspect, not an altruistic bent. There are some enlightened employers like Jennifer Lee and Ms Irene Ng's example of an owner who understood that mature workers have a cachet of experience and networking and they are likely to stay with the company longer. The image and fear of mature workers falling ill more compared to younger workers is over-rated. Statistics show that the majority of medical consumption occurs in the last 10 years of life, ie, it occurs in the majority after our mandatory retirement age.

Sir, Mr Low Thia Khiang tells us not to forget that Singaporeans voted the Government in and, therefore, we have a responsibility to find them jobs. I would reiterate to Mr Low that we have never forgotten. It is particularly because of that that we have created schemes that will help us to be competitive in the long run. He implies that if we only restrict work opportunities to Singaporeans our economy would do better and the problem solved. My Minister dwelt on that a long time, but it seems that the point needs reiterating.

Which nationality would he exclude? In every industry, there are ample examples, without me having to name them, of luminaries - there are many in this House - that the vitality, the verve, the competitiveness, the ability to attract investments is because of our multi-national representation. Would we be better served by having a company full of Singaporeans with a limited talent pool diminishing the pie, equal misery? The pie shrinks, salaries drop and more are unemployed.

Sir, a quote from The Wealth and Poverty of Nations will be suitable at this point. This is a book written by David Landes, Emeritus Professor of History and Economics at Harvard. For those who want to refer to it, it is in pages 225, 229-230. He was trying to compare and ask himself why some countries progress and others did not. In this particular chapter, he asked:

"Why no industrial revolution in India? After all, India had the world's premier cotton industry in the 17th and 18th centuries, unbeatable for quality, variety and cost."

Among the many reasons, one which was a closed mind, he cites one particular poignant example and I quote:

"The British engineers who built the Indian railways understood that Indian labor, cheap as it was, would move earth and rock by hand; but they also took for granted that the Indians would use the wheelbarrows. Not at all: the Indians were used to moving heavy burdens in a basket on their head and refused to change. We even have one report of Indian laborers placing barrows on their head rather than wheel them. Presumably such resistance reflected a desire to spread the work and increase employment [to their locals], especially to women and children."

This is self-serving; this is self-diminishing. Among all our efforts, there is one thing that we should not do and, indeed, would prove futile, ie, to hold back barriers and erect barriers. We are in an open export-driven economy. We depend on free trade to thrive and, with that, we expose ourselves to international standards of productivity, processes and practices. Mr Low's suggestion that we keep our markets closed would diminish us all.

Sir, we must ride this wave of progress and globalisation, and we will come on top, as we have before.

Mr Low Thia Khiang: Sir, may I seek clarification?

The Chairman: Yes.

Mr Low Thia Khiang: Sir, I am not saying that we should close and we should not welcome foreign talents. My question really is: are there jobs which Singaporeans are talented enough to do that are offered to foreign talents, instead of Singaporeans, especially with a high unemployment rate? Is that fair?

Dr Ng Eng Hen: Sir, in direct answer to Mr Low whether Singaporeans can do the job, my answer is that Singaporeans can do any job they chose, and they have the ability. But we will let the markeplace decide and we will not erect barriers to distort the market. Because example after example have shown that when countries close their doors, whether it is the celestial empire or the Ottoman empire, they ended up losers in the long run. Is it fair in the long run? Indeed, it is, because it creates jobs for our economy.

Mr Yeo Guat Kwang (Aljunied): (In Mandarin): Sir, DPM, in his Budget Speech, announced that the Government had accepted the various ERC recommendations on CPF changes. Specifically, they are: deferment of CPF restoration for two years; progressive lowering of CPF ceiling for employer contribution; lower CPF contribution for workers aged 50-55; and increased contribution rates to Medisave and Special Accounts.

These are major changes that impact workers. I know that much has already been debated on these CPF changes in public, the media and in Parliament. But I wonder what will the Government do to help Singaporeans adjust to the impact of these changes.

Singaporeans understand that the CPF is fundamentally for old age, medical expenses and basic housing, and that the Government will continue the CPF system around these core objectives. But with these changes, Singaporeans' savings for old age will be eroded. We must ensure that our workers' CPF savings will have stable and reasonably good returns. Allowing individual CPF members to invest their savings seems not a preferred choice these days where the stock markets world-wide are underperforming. There have been on-going discussions that the Government is considering privately-managed pension funds as an alternative to CPF savings. I would like to ask the Minister whether he could provide the House greater details and insights.

Mr Ang Mong Seng (Hong Kah): (In Mandarin): Sir, the long economic recession all over the world has resulted in our unemployment rate remaining very high. I think we have about 100,000 people who are unemployed in Singapore. Now, with our economic restructuring, even the higher educated are affected. The Minister has given some examples of how jobs were created in the new economy. But for those older workers who are 50 and above, if they are unemployed, they are unemployed forever. It is very difficult for them to get another job. Our economy has grown significantly since our independence. We have transformed from an old village into a cosmopolitan city. It shows that we have moved in the right direction. Otherwise, we would not have progressed. But there are some who are unable to cope with the changes, they are entangled in a trap and they cannot help themselves.

In the old kampong days, when people were unemployed, they could just plant some tapioca or potatoes, and still survived. But now if you do that, you will get a summons from the authorities. Nowadays, if you are unemployed, it would not be easy to get another job. Some residents came to see me. I introduced them to a job. One week later, they came back and said that they wanted to work but the employers would not employ them. This is an employers' market now.

Secondly, if the pay is $1,000 and after CPF deduction, the take-home pay is only $800. It is not enough to maintain the family. The Teochew people say tan chiak, which means to earn and eat. After eating, there is nothing left. The only saving you can have is in your CPF, but you cannot get the money until you are 55. It is like in a desert, you see the water in an oasis; you want to drink the water but you cannot reach it.

Sir, I would like to ask the Minister whether, in this difficult time, special consideration can be given to those who are 50 and above, unemployed for more than two years, with no savings and no financial support. They look seriously for jobs but could not get a job. Under such circumstances, can they make some advance withdrawal from their CPF accounts? If they have $50,000, let them withdraw, say, 5% a year or about $200 a month, just to tide over this difficult time.

Dr Ong Seh Hong: Sir, first, please allow me to quote the CPF Board's mission statement:

'We aim to provide our members in a cost effective manner the widest range of quality services possible.'

Sir, the size of our CPF members' reserves as of December 2001 was over $90 billion. Our CPF members are allowed to invest their savings in a range of financial instruments including shares, bonds, gold and professionally managed products. Here, I feel that the CPF Board may not have discharged its duties adequately in providing its members cost effective investment options to enhance their long-term savings. 1.15 pm

Sir, since most of the average Singaporeans are not investment savvy, many got their fingers burnt when investing their CPF savings in the markets themselves. Why are they not investing through professional fund managers who will provide them portfolios, reduce their investment risks and enhance their returns? One of the biggest obstacles is the high management fees imposed by the fund managers. On average, you have to pay about 3-5% front-end fees plus an annual fee of between 1-1.5%.

As of December 2001, a total of $44 billion of CPF members' monies were invested. If they all invested these monies through fund managers, a mere 3% fee would be $1.3 billion. This is enough to build, I think, a new MRT line.

Sir, whichever way you look at it, this is a huge amount of money. But as individual account holders, our average CPF members are like ikan bilis. They have no bargaining powers. It is just like when you go to the bank, you have to queue up if you are an average retail market customer, and you have to pay all the fees that they ask you to pay.

While we want to attract foreign fund managers to be based here, we must also make it attractive for our citizens to park their money with them. In this regard, I feel that the CPF Board must do its part for its members. It is in the best position to negotiate the best deal for its members. Size in business does matter. As a big fish, you are more likely to be wined and dined than an average guy on the street. With the clout of over 40 billion investment dollars potentially there, the CPF Board should negotiate and even dictate ---

The Chairman: Your time is almost up.

Dr Ong Seh Hong: --- terms favourable to its members. This would be a win-win-win situation for all three partners. If the management fee could be lowered, more CPF members would be persuaded to let the professionals manage their money and enjoy better returns in the long term. The fund management industry would have the boost of extra monies for them to manage. The CPF Board, in the end, would have fulfilled its mission to provide a cost-effective quality service to its members.

Mrs Lim Hwee Hua (Marine Parade): Sir, even as we are dealing with the implications of not providing enough finances for old age, we have every motivation to increase the rate of return on CPF savings. Also, I disagree with Mr Steve Chia's proposal to render CPF contribution rates negotiable for certain workers. I think there is some evidence, say, in the US for the 401K, that there will always be a reason not to contribute at all. We should, therefore, not be too quick to dispense with the forced savings feature of the CPF scheme.

The Minister has recently stated that the Board is studying ways of assisting in the establishment of an appropriate pension plan within the CPF framework. The objective is to achieve a higher, longer term rate of return through a well-diversified portfolio to be managed by one or more reputable pension plan providers. Sir, diversification is the right strategy. But I would like to raise a few questions regarding this initiative.

Firstly, the role of the CPF Board. Unlike the administration of mandatory pension schemes elsewhere, the role of the CPF Board has hitherto been limited to the collection and disbursement of members' monies within a well-prescribed framework, ie, ensuring that employers have made the required contributions on the one hand, and making sure that members meet mortgage instalments on the other. The Board does not explicitly manage members' funds. Yet it guarantees a minimum interest rate of 2.5% on Ordinary Account and 4% on the Special Account balances. This is, in essence, an offer of a risk-free rate by an institution, ie, the CPF Board, familiar to all CPF members.

Given this deposit-like facility, it is therefore conceivable that we would need a huge dose of public education to convince members to buy private pension plans. The ability of these providers to quote lower management charges is linked directly to the scale or size of the aggregate amounts under management. So, it is a bit of a chicken-and-egg situation that we have here. Short of mandating that all funds must be allocated to providers which incidentally is the scenario elsewhere where there is no CPF rate alternative, it could be a real challenge to get enough takers. I would like to ask the Minister how the Board will ensure that there is sufficient scale for a meaningful outcome.

Secondly, the accountability for performance. I would also like to ask the Minister what are some of the reservations for the Board itself to be the manager, instead of the facilitator. As it is, it is already providing a risk-free return for balances. Furthermore, in the event that the take-up rate by members is such that the scale allows for the selection of only one or two managers, the accountability of the Board will extend beyond that of a facilitator anyway.

The Chairman: Mr Inderjit Singh is not present. Mdm Ho.

Mdm Ho Geok Choo: Sir, there are two main issues that I would like to raise with regard to the CPF funds. The first issue refers to the use of a portion of the CPF funds as an advance loan for a limited period. We know that in households where the sole breadwinner has lost his job and where the spouse is sick and unable to work, and where they have children to support and bills to pay, the financial burden can be a very heavy one. I would like to know whether the Minister would be prepared to consider the release of a portion of the CPF funds as an advance loan to help tide over the period of unemployment, especially if it is a prolonged period. Sir, such amounts are to be treated as temporary loans, which the unemployed will have to return when they have found jobs subsequently. The CPF loan should be used for living expenses and meeting financial obligations such as study loans for themselves or their children, and for payment of the insurance premiums covering medical and hospitalisation eventualities.

The second issue relates to reviewing the restoration of the CPF for those above 50 years to the same rate as those below 50 when the recession is well behind us. The main concern behind the policy of a lower CPF rate for those who hit 50s will ensure that mature Singaporeans are able to find jobs in the future. Most of these concerns centre around the observation that employers perceive mature workers to be more costly than their younger counterparts and less productive as well. Sir, we have yet to obtain data to show that the mature workers do not represent value for money when compared to their younger counterparts. A lower CPF contribution rate for this group would insignificantly reduce the overall cost of doing business in Singapore. Therefore, it will not help to increase the employability of the mature workers. The point is how many mature workers who have lost their jobs have gotten back into employment, because their CPF rate has gone down. The problem of employability may have its cause elsewhere. It is, therefore, a double whammy blow for this group of people. Adopting a measure of reduced CPF contribution rate to increase the employability of mature workers has not been effective. It may be more prudent to educate employers to change their perception concerning mature workers.

Sir, we can appreciate the difficulties that many among this group of workers face in ensuring that they have sufficient funds in their CPF for their retirement and do not have to depend on the state for their upkeep. While it is laudable to try to enhance the employability of this group of workers, it is also important that we keep other objectives in mind before implementing the policy. This is to ensure that the mature workforce does not suffer undue hardship in years to come.

Mdm Halimah Yacob: Sir, starting from 2004, the contribution rates for the Special Account and the Medisave Account will be increased, in line with the ERC recommendation to refocus our CPF to meet the basic financial needs of Singaporeans. I support this move. But in implementing the new rates, I urge the Ministry of Manpower to be mindful of the needs of Singaporeans who are between the ages of 50 and 55 years. This is the group that will have their CPF capped at 36%. When the CPF is restored for Singaporeans below 50 years of age, they will be affected the most, as the higher contribution rate to these two accounts will be transferred from their Ordinary Accounts. By 2006, for instance, their Special Accounts will increase from the current rate of 6% to 9%, and their Medisave accounts will increase from the current rate of 8% to 9%. This means that by 2006, Singaporeans between the ages of 50 and 55 years will have a total amount of 4% transferred from their Ordinary Accounts and deposited into the Special and Medisave accounts. Many Singaporeans in this age bracket are still paying for their homes and so will feel the pinch. The situation will be particularly hard for those earning more than $5,000, as the salary ceiling would also be reduced in 2004. They will suffer a double whammy.

The ERC has recommended that we allow CPF members aged 50 to 55 to continue using their Special Accounts to meet shortfalls in mortgage repayments for a longer transition period. I urge the Ministry to heed this call and exercise flexibility in implementing the new rates, so that older Singaporeans will not suffer undue hardship as a result of the change.

Sir, I would also like to urge the Ministry to monitor the situation of the low wage earners. With the recent change, those earning below $500 do not have to contribute to the CPF. While this is a good idea as it gives them more take-home pay, nevertheless, the flip side is that they may not have enough savings to purchase a house or retire. So, I am concerned about this group and I ask MOM to monitor the situation.

Sir, on a final point, I also hope that the Ministry can throw some light on this issue of the retirement age. Many calls have been made in this House to abolish the retirement age. This has given the impression that we have a mandatory retirement age forcing people to retire at 62 years. The Retirement Age Act, to my knowledge, does no such thing. On the contrary, what it does is to create a right for people to work until 62 years, that is, they cannot be retired before 62, but, by mutual agreement with the employer, there is nothing to prohibit them from working beyond this age. Sir, a confirmation on the part of the Ministry on this point will be useful.

Mr Steve Chia Kiah Hong: Sir, as I said during the Budget Statement debate, Government must correct the perception - it may not be a statutory requirement but a perception - that one must retire by age 62 or 65, as what Mdm Halimah has said earlier. Otherwise, people like Senior Minister Lee Kuan Yew and Chief Justice Yong Pung How are way overdue for retirement. But this has not been the case, and will not likely be the case with an increasingly knowledge-based economy.

In Singapore, one can only retire if one has money and can afford it. We read of successful individuals who decided to retire at the age of 40 or so. They can afford it. But for many others, life will need to go on after 65, and to continue working helps to keep them mentally alert and to keep illness away. As such, the concept of retirement at age 65 needs to be dropped.

I ask the Government not to force compulsory retirement on those who can, who want or who need to work, especially those in the civil service. This can be done by adopting a flexible wage structure and moving away from a seniority-based wage scheme to one that is more economically viable. And if this proposal is adopted, the concept of CPF savings for retirement can be revised to CPF savings for rainy days, where members can draw on their savings on difficult days, no longer just for retirement purposes. This will allow the Government to free up the compulsory CPF contribution for older workers to something that is negotiable between the employer and employee, as I have explained earlier in my speech. The objective is to help save jobs for older workers and reduce the unemployment rate. If the Government is prepared to free up car loans totally for consumption, then it should not worry unnecessarily about the problems of retirement savings or 401K, as highlighted by Deputy Speaker, Mrs Lim Hwee Hua. Remaining employed is more important than having enough retirement savings for the moment. 1.30 pm

Dr Jennifer Lee (Nominated Member): Sir, many of my colleagues have already spoken on various aspects of the CPF system. I would like to touch on just one current deficiency of CPF as the primary means of addressing financial needs of Singaporeans in their old age, namely, it does not cover homemakers whose contributions in the home and in attending to their family needs are not attributed economic value.

The IMC on the Aging Population recommended in 1999 that this be addressed. But sadly, the ERC, in all its studied modifications proposed to the CPF system, did not follow up on this particular aspect. Although the female labour force participation rate is currently 54%, there are over 700,000 women who are homemakers - not holding a CPF account, not holding a job that draws a salary and, therefore, either having an inactive CPF account with minimal amount in their balance, or not having a CPF account at all. As these women will, in all probability, outlive their spouses, their financial situation will be precarious as it is uncertain what their husbands will have left them as remaining balances in their CPF account, or other savings or, indeed, if they will have left their CPF balances to them at all.

The work women do in attending to the responsibilities in the home are what enable their spouses to be productively and gainfully employed in the workforce and the upbringing of children prepares the next generation of citizens. It is surely then not too much to ask that this contribution be acknowledged by factoring into the system measures that will help to protect the women's financial situation in their old age.

I would like to ask that, as we proceed to refine the CPF system, as recommended by the ERC, we consider, in addition, dividing the Special Account contribution into two, one half being in the name of the non-working spouse in a single income household. Women in Singapore are very fortunate in that the strong protection that family law here provides them in acknowledging the contribution of a non-working spouse in the division of matrimonial assets in the event of a divorce. There is no such provision in inheritance law and we have sad stories of widows left high and dry when their deceased husband's assets, including any CPF savings, are willed to other parties.

In line with our promotion of strong family units and both partners in a couple, working together, raising children together and preparing for old age together, could we therefore consider, in addition, that, on the death of an account holder, the balances in the Special Account and the Medisave Account be transferred automatically to the surviving spouse since these two accounts are particularly meant to cater for one's basic needs in old age?

Dr Lee Boon Yang: Sir, I thank all the Members who have spoken on the CPF system. Before I go into the specific response, I would just like to remind hon. Members that the CPF system was exhaustively studied by the Economic Review Committee. They picked up the stone, they gave it a good dusting. They looked at the top, they looked at the side, they looked underneath. At the end of the day, the ERC concluded that the CPF system serves us well. One of those stones they decided not to throw away, but put it back. Yes, they did not put it back in exactly the same position. They repositioned the stone a little bit. The repositioning was to enable us to better meet the future challenges. The details of the repositioning were covered by DPM Lee, both last year and also, again, in the Budget Speech. So I would not go over them again.

But the basic point I want to make is that the CPF system has served us well, and it continues to be relevant to the needs of Singapore and to Singaporeans, if we refocus it on the key or core objectives of the CPF, namely, retirement, savings, housing and healthcare expenses. I do not think there is any question in the minds of hon. Members that we should do away with it or to make even more radical surgery. I think there is, of course, room for improvement as we go along.

Let me assure hon. Members that we will continue to see how we can provide better service, make improvement to the system, make it even more responsive to CPF members.

Let me now turn to Mr Yeo Guat Kwang's question. He mentioned that the idea of allowing CPF members to invest money in the share market has not turned out to be a good idea because, as a result of the fall in the various share markets, CPF members have lost money. Yes, it is true. CPF members who have gone into the share market on their own have lost money as a result of the market conditions. Let us remember also that if we had not liberalised, if we had not enabled Singaporeans to utilise some of their CPF savings for their own investment, we will also stand accused of being unreasonably rigid and of unfairly locking up hard earned savings of the workers.

So when we did liberalise and created a CPF Investment Scheme, we cautioned all CPF members that they invest at their own risk. They have to take responsibility. They have to learn how to invest their retirement savings so that they do not get caught. Over the years, we have also refined the investment system to better adjust for this risk exposure. We started out, I believe, by allowing them to use 80% of the investible savings to make personal investment. This was then reduced to 50% and, currently, only 35% of the investible savings can be invested personally. Whereas the rest, they can invest in unit trusts or managed by a fund manager.

So, in fact, we are responding, we are adjusting, we are learning from the experience. But, at the end of the day, when you make investment, everybody must know, including CPF members, that there will always be an element of risk and you have to do your calculations, do your sums and make sure that the risks are acceptable to you.

Dr Ong Seh Hong was concerned with the high management fees levied by fund managers on CPF members who place their CPF savings in these fund management accounts. It is correct to say that the fees are high and, in a sense, it does discourage CPF members from going into such fund management accounts.

Let me point out that these high management fees apply both to cash investors and CPF Investment Scheme members who are investing in unit trusts or other fund management accounts. I think it is not right for Dr Ong to say that CPF Board has not discharged its duty or to provide effective services to CPF members. The fact that fund managers charge a high fee applies to both the CPF Investment Scheme investors and also cash account holders, and it is also related to the small fund size of the Singapore market. We are a very small market compared to the global fund management market. Therefore, with a small market, the overheads tend to be higher. So the fees will be higher. That is unavoidable.

Of course, the Board will continue to look for ways to bring down the cost of investment for members. For instance, in September 2002, last year, the Board allowed foreign unit trusts, registered under the CPF Investment Scheme, in other words, approved for investment by CPF members, to be offered directly to CPF investors without the need to go through an additional feeder structure. So we shorten the retailing chain. We do not have to go through a further intermediary. Foreign unit trusts can be offered directly, once they meet certain criteria. So that will help to lower the cost for CPF Investment Scheme members.

Mrs Lim Hwee Hua asked some questions with regard to the proposal for a private pension plan which is intended to help CPF members get a higher rate of return over a longer term. This was one of the recommendations of the Economic Review Committee - to study an option by introducing low-cost privately-managed pension plan for CPF members. The belief is that with this privately-managed pension plan, investment cost could be lower and it could also, over the longer term, achieve a higher rate of return for CPF members. The Board is now studying how best to operationalise this idea of privately managed pension plan within the CPF framework.

Based on our preliminary studies, scale is a critical factor - I think Mrs Lim mentioned this too - to ensure low cost. The pension plan design should be simple and low risk. This will attract more members, including those who are not investment savvy and who do not want to take unnecessary risks with their retirement savings.

Other desirable features would be globally well-diversified portfolios and reliability of the pension plan operators themselves so that CPF members can have greater confidence that they will be able to return higher interest over the longer term. Members would be able to invest their savings in both their Ordinary and Special Accounts in approved privately-managed pension plans.

The Board recognises that, under the current CPF Investment Scheme, agent bank's charges add to the cost of investing and this will be taken into account when designing the pension plan.

Mrs Lim also asked what will be the Board's role in this privately-managed pension plan. This is an area that the Board is also studying, ie, whether the Board should act as an intermediary, or be more actively involved. In this connection, I overlook Dr Ong's other point about the Board negotiating on behalf of all its members to invest, or to place funds with fund managers or unit trusts. I had addressed this question before in this House. This will put the Board in a moral hazard of having to make the investment decision for and on behalf of individual CPF members. If the Board makes the right decision, of course, all will be well. But, as I said earlier, all investments come with some risks. And if the Board were to make a wrong decision, then I think it would be held accountable. I do not think it is desirable, in the way the CPF Board is structured, to impose this responsibility on the Board. We would prefer very much that, when it comes to the CPF Investment Scheme, the Board would act as a facilitator or expeditor, rather than making the decision on behalf of the members.

Mr Ang Mong Seng, Mr Steve Chia and also Mdm Ho Geok Choo would like the CPF Board to consider releasing some of the CPF savings for workers, particularly those who are out of job for quite some time and are in financial hardship. We sympathise with all workers who are out of job and who are facing financial difficulties. That is why the Minister for Finance, in his Budget Speech, announced measures to help particularly lower income Singaporeans with additional rental rebates, service and conservancy rebates and extension of the Utilities Save rebates. We have also granted the New Singapore Shares and Economic Restructuring Shares. All these measures will provide some financial assistance to those who are hard hit by the economic downturn and rising unemployment.

1.45 pm

But if we turn to the CPF savings for early relief, we may be barking up the wrong tree, I would say. We may be taking a wrong turn because, with the CPF, it is a zero-sum game. The more we take out today to spend, the less we have for our retirement, the less we have to pay for healthcare needs in our old age. Even if it were considered as a loan that would have to be put back in future, we would have imposed greater difficulty on the worker to repay CPF savings that had been consumed in advance. It would not help him to accumulate what is needed. Already today there is concern that, at our existing contribution rates, a significant proportion of the workers would have difficulty accumulating sufficient cash savings when they finally retire. So, if we open up the CPF to allow people to use it to meet current financial difficulties, we are guaranteeing that they would have much less savings in their old age. Yes, we may be alleviating their hardship now, but we will be imposing massive difficulties for these people and for the Government in the future.

So, I think it is unwise to do so. But, of course, as we have always said, if we go into a prolonged recession, eg, a depression where we have hundreds of thousands of Singaporeans who are completely out of work and there is no light at the end of the tunnel, then we will have to consider. It is the last option. But we are not in such a parlous state yet. So, we should not rush into it.

Mdm Ho Geok Choo also referred to a point which I think Ms Irene Ng touched on earlier, ie, cutting of the CPF for those who are aged 50-55 by freezing employers' CPF contribution at 16%. She asked, if the economy should turn around, whether we would restore it. This was the recommendation from the ERC study, to reduce employers' CPF contribution rate for older workers, as a way to moderate and overcome rigidities in our wage structure, which presently is based on seniority, ie, the older the worker is, the more he gets paid, regardless of whether his productivity has improved year by year. And it is a measure to enhance the employability of older workers.

Mdm Ho asked whether it has created the result or not, and how many older workers have been re-employed as a result of this measure. I would say that we have just introduced it and it is too soon to give numbers on the impact. But what we know for a fact is that, through our labour market survey - in fact, the report of labour market survey for 2002 was released last Friday - last year, 72% of those aged below 30 managed to secure re-employment within six months after retrenchment, compared to 47% for those aged 50 and over. So, obviously, re-employment rate for the younger workers is far better than that for those who are older. We believe that part of the reason is the seniority-based wage scale, which works against the interests of the older workers. Therefore, we have made this adjustment to the employers' CPF contribution for the older workers. It is not related just to the state of the economy and I do not think that we should look at it as a temporary measure. The idea here is to reduce the mandatory statutory contribution of CPF for this older group of workers.

But that does not mean that older workers are, in the words of Mdm Ho, not value for money. I do not think that she is suggesting that. She is just questioning whether this refinement implies that older workers are not value for money. Certainly not. We want to help them to get jobs and stay in jobs. It does not mean that, because we have reduced their CPF, they cannot deliver or perform. In fact, I would encourage employers to reward the older workers who do well or make great contributions to the companies through the variable wage system. There are many ways we can reward a good worker, both young and old. We can give them additional bonuses, we can give them a higher performance bonus, and that would more than make up for the loss in the statutory contribution. As far as the mandatory statutory contribution is concerned, what we need today is to reduce this cost item.

Mdm Halimah Yacob was concerned with the impact of the changes on the increasing contribution rates to the Special Account and to Medisave introduced recently, especially for those in the 50-55 age group. Let me explain that we are also concerned and we are aware of the possibility that this transfer from the Ordinary Account to the Special Account and to Medisave would impact adversely on those workers, particularly the older workers who are still servicing mortgages and with outstanding loans to repay. That is why we are making this adjustment gradually over several years. CPF members who purchase their properties before 1st January 2004, when these measures take effect, will be allowed to continue to have access to their Special Account to help top up the shortfall in their mortgage payments to the extent these payments are affected by the transfer. In other words, if they have a shortfall, we will open up access to the Special Account. But, remember, for the vast majority of others, this refinement will immediately mean that they are putting aside more money for Medisave and their Special Account, which is their long-term retirement savings. So, it has its advantage, although we are also able to accommodate the concerns of those who have to service their mortgage.

Mdm Halimah Yacob also made this point about retirement which Mr Steve Chia touched on also. Mdm Halimah Yacob is absolutely correct. There is a gross misunderstanding over the Retirement Age Act. The Retirement Age Act does not compel workers to retire. The Retirement Age Act provides workers with additional protection by imposing on the employer a responsibility and a duty to employ the person until the minimal retirement age. We must remember that without the Retirement Age Act - I think it was before 1994 or so, when we did not have such a legislation - employers were retiring their workers at the age of 55. But with the Retirement Age Act in operation, the retirement age first went up from 55 to 60, and then to 62. So, workers gained another seven years of work as a result of the operation of the Retirement Age Act. The Act does not say anywhere that a worker cannot work beyond the age of 62. So, I think Mr Steve Chia is quite mistaken. We have never said that you cannot work beyond the age of 62. We welcome everybody to work. In the civil service, even those who are 62, if they are doing well, can contribute, are in good health and able to discharge their duties, I would expect that they would continue to be re-employed even though they can retire and may already be retired.

I do not understand the connection between freeing up car loans and freeing up CPF for negotiation between older workers and their employers. As far as the CPF is concerned, while we should reduce the statutory contribution to provide a minimal level of protection, I do not think freeing up the CPF for open negotiation is the way to go. What we have done, though, is that we have gradually, over the years, reduced the CPF contribution for the older workers, to reduce the burden on employers and to make older workers more employable. That is why when we introduced the Retirement Age Act to raise the retirement age from 55 to 60, we lowered the CPF contribution for those aged 55 and above, and they still continue to contribute much lower CPF than others. Of course, more recently, we are now saying that for those aged 50 to 55, the employers' CPF contribution rate will remain at 16%. I think that is the way to go, rather than to open up a free-for-all in this sector.

Dr Jennifer Lee is worried about the homemakers who have been left out. I am afraid that while we want everybody to participate in the CPF system, the homemakers do have a difficulty, although we do open up the CPF system for voluntary contributions. So, there is really nothing to stop homemakers to have an account to contribute to CPF to build up a nest-egg for themselves. It is with this in mind that we have allowed the topping up of the Minimum Sum scheme under the CPF Minimum Sum Top-up Scheme to encourage CPF members to top up their spouse's or parents' CPF account through transfers of their CPF savings into the latter's retirement account, if they have more than twice the current Minimum Sum in their own account. Members can also opt to use cash top-ups for their family members' CPF accounts, and the amount of the top-up in the CPF account will then be paid to the recipient by monthly instalments from age 62 onwards. The recipient can also choose to buy a life annuity with the Minimum Sum which has been topped up by family members. Spouses and children who contribute to the CPF accounts of homemakers would be allowed tax relief on the cash amount that they contribute.

In addition, whenever the Government is able to provide for CPF top-ups or New Singapore Shares and the Economic Restructuring Shares, for instance, we have always required co-payment and the opening of a CPF account. So, homemakers who do not have a CPF account, we would expect that their spouses would immediately open up an account and put in the co-payment, so that the Government can credit the contribution to this account. Over the years, we hope that they will continue to voluntarily make such contributions and, in the good years when the Government has surpluses, we will top up, and this will help them to build up a small nest-egg.

Whether we should legislate to ensure that, upon the demise of the CPF member, a certain amount should go to the spouse, this was an issue that was studied some years ago, and debated in this House. The conclusion was that we should not interfere with the nomination system and, in fact, by and large, most CPF members already do nominate their spouses and children as beneficiaries of their CPF savings.

Mr Steve Chia Kiah Hong: Sir, the case about $41,000 and the car loan is about empowering the individual to be responsible for their decision.

I will move on now to the role of NTUC. I speak with concern regarding the role of NTUC. It is a highly respected national institution, and receives funding from taxpayers for its work, through the Ministry of Manpower. Yet, it engages in politics, and publicly declares its symbiotic relationship, not as a principle with the Government of the day, but with the governing political party, the PAP. This symbiotic relationship implies that, if the ruling PAP party were to lose in a general election, the NTUC will set itself up to go against the government of the day, and go against the express wishes of the citizens in a democratic election. This is terrible. This is political subversion.

The role of NTUC is to care for union workers, elect good people who can represent them to negotiate with the employers and not to play politics. By removing democratically elected leaders who are not with the PAP, it is playing politics. It is shameless of NTUC for being unprofessional in carrying out its charter. Until it repents and retracts its stated symbiotic relationship, it should not continue to receive any financial aid from the Ministry of Manpower. Also, our motion on the role of GLCs last year, when it was agreed that the Government and GLCs should not set up companies that can be found in the Yellow Pages, should be extended to all NTUC cooperatives. We have NTUC cooperatives running coffeeshops, casket agents, contractors, print media, sound systems, entertainment business, property development, etc, other than the more commonly known and accepted NTUC Fairprice, Comfort taxi and bus services. 2.00 pm

Other than the last three mentioned, the Government should rein in these business cooperatives before they start killing our smaller local businesses and increase the unemployment figure.

Mdm Halimah Yacob: Sir, first, I would like to comment on what Mr Steve Chia had said. I must say that I am quite disappointed in the use of his language because I think they are extremely unparliamentary - words like "political subversion", "shameless" and so on. I think those are highly ---

The Chairman: Mdm Halimah, that is for me to decide.

Mdm Halimah Yacob: Yes, Sir. I want to address the point that Mr Steve Chia said that we are receiving funding. The funding that we receive is very nominal, but the purpose of that funding is actually to address the imbalance between the employers and the labour movement, in terms of ensuring that the labour movement can continue to employ professionals and credible people to serve the members and to serve the public.

Sir, with regard to the issue of the symbiotic relationship, I think that is an open relationship. That is an open secret, everybody knows about it. And the reason why we have a symbiotic relationship is also known to everyone and, that is, we share common objectives between the PAP and the NTUC. That objective is to take care of the welfare of the people and workers. Sir, I think the workers are not stupid. Every worker in the labour movement, right down to the shop floor level, gets to elect his leaders once every three years. And if he does not agree, he does not think the symbiotic relationship between NTUC and the PAP works, he will vote out the people who support this policy on symbiotic relationship. I would like to say clearly that the symbiotic relationship is a purely objective and practical one which benefits the workers, and there is nothing sinister in that relationship.

On the second point ---

The Chairman: Mdm Halimah, I thought you are talking on flexible wages.

Mdm Halimah Yacob: Yes, Sir, I am coming to that point. Just one more point and that is on the NTUC's involvement in cooperatives. I want to stress once again that the NTUC Cooperatives gave out $52 million in the year 2001/2002 to help workers who were affected by the downturn and, therefore, we are in all these cooperatives and business ventures for a social objective, and that is very clear. Even without NTUC's involvement, the GLCs and the SMEs will be under severe competition.

Let me now get to the issue of flexible wages.

The Chairman: At last!

Mdm Halimah Yacob: The ERC has strongly endorsed the importance of keeping our wages flexible. Sir, I strongly support this call as flexibility is the way ahead in ensuring greater job stability.

To help jumpstart the setting up of the monthly variable component, ERC has recommended that companies, in consultation with their unions, transfer a portion of the basic wage into the MVC. This recommendation is timely. Up to 2001, only 4.8% of companies have implemented MVC, although in the unionised sector, the figure is close to 34%. Since the announcement of the ERC's recommendations, I am glad to note that the banking sector and the Singapore Press Holdings have set aside a portion of their basic wage to build up the MVC.

Sir, I call upon companies to do their part in implementing the MVC. Instead of cutting jobs, this is certainly a better way to weather the uncertain economic times. With the MVC, we have another means to make our wage system more flexible to deal with future business downturns. We have seen some promising moves after the ERC's recommendation, but more can be done.

Companies should not give examples, such as adopting a wait-and-see attitude or that it is too complicated to implement. I suspect quite a number ---

The Chairman: Your time is almost up, Mdm Halimah.

Mdm Halimah Yacob: Yes, Sir, let me just wind up on this point. Most companies are not making serious efforts to implement it in the hope that when there is another downturn and they need help, they can get another CPF cut. I am afraid that this will not be simple the next time round as workers will be reluctant to have another CPF cut.

The Chairman: Sorry, your time is up, Mdm Halimah.

Mdm Halimah Yacob: Let me just ask a question. My question is: what more can be done?

Mr Gan Kim Yong (Holland-Bukit Panjang): Sir, let me continue where Mdm Halimah has left off.

Sir, as we tackle the current unemployment problem, we must not lose sight of the long-term strategic move to deal with the fundamental issue of wage structure. It has been argued on many occasions, including Mdm Halimah just now, that the need to revamp the present seniority-based salary system is fundamental to our economic restructuring efforts. I shall not repeat these arguments. I would just like to ask the Minister to elaborate on the Ministry's plan to push ahead with this revamp.

The monthly variable component, for example, was first mooted some two years ago and progress to date, as I understand it, has been painfully slow. My own company has introduced the MVC, with some modifications, and the scheme has worked well. Today, about 5% of our basic salary is in the form of MVC. We hope to achieve 10% in another year or two.

Sir, if we do not forge ahead with wage reform quickly, I am afraid that it will become a major bottleneck in our economic restructuring efforts. Therefore, I would like to urge the Minister to consider launching a major campaign this year to persuade employers and employees to do away with the fixed annual increments and replace them with the reward system that is linked to productivity and performance. We must convince the employers that this is good for them, as it provides greater flexibility and enhances their competitiveness. We must convince the employees that this is also good for them as it improves their employability and helps them to save jobs in bad times.

Some of the residents who came to me for help to find jobs are willing to take as much as a 50% cut in their salary. It would be unrealistic to hope for fixed increments year after year. The Ministry should draw up a clear schedule with specific milestones and targets so that we can monitor our progress and achievements in this respect. Other than providing assistance, will the Ministry consider offering some carrots or incentives to employers and employees to help them to overcome their inertia? For example, if we want to promote the MVC, could we consider exempting certain portions of the MVC from tax or CPF contribution for a limited period of, say, 2-3 years?

Sir, it is imperative that we do not waste valuable time in reforming our wage system. A flexible wage system tied to productivity rather than seniority is integral to our economic restructuring programme. Given the weak job market, Sir, this is perhaps the best time for us to persuade people to accept it. We must not miss this opportunity.

Mr Yeo Guat Kwang: Sir, while all workers face retrenchment and unemployment in an economic downturn, the older workers bear the heaviest brunt. The statistics clearly show that the older workers are likely to be retrenched during an economic downturn. At the same time, employers are also less willing to hire older workers. Why is it so?

One key reason besides the seniority-based wage system is higher medical cost. Employers are not willing to incur higher medical costs associated with the older workers, particularly those who may have developed medical conditions as they change jobs. The way to address this problem is the portable medical benefit system (PMBS). Under the PMBS, a worker can get portable and continuous seamless medical coverage during his work life and even extend into his retirement. Under the scheme, the worker does not lose out when he changes jobs, even if he develops a medical condition. At the same time, it will also not unnecessarily add on to the cost to the employers as he gets older.

Sir, for PMBS to firmly take root, I see a compulsory basic national insurance scheme as the clear way to go. The national scheme can be a multi-tiered one. It provides a compulsory basic level of coverage for all workers at the national level with affordable premiums. Then, it can allow optional enhancement coverage to be added on later.

I would like to ask the Minister how many companies in the private sector have implemented PMBS. I would also ask the Ministry to step up its drive for more widespread implementation of PMBS in Singapore.

Mr Heng Chee How: The Economic Review Committee has given its support to the portable medical benefit scheme and I thoroughly welcome that.

It advocated that for a start, at least, that it be left to negotiations between companies and the unions and there are also further studies to be done with respect to the portable medical benefit scheme which was earlier proposed, as well as a transferable medical insurance option.

Whilst all these further studies are going on, I would like to share my views as to how I would like to see a portable medical benefit system taking shape for Singapore and Singaporeans. I would like it to be a national system covering all workers because that is the best way to ensure that, as a worker moves between jobs, there is true portability from employer to employer.

I would like it to be compulsory because that would ensure that we have the biggest possible base, and that would keep the premiums payable to the minimum for everybody. I would like it to be basic, so as not to push the premiums up because of these additional features. I would also like to see that the premium of the insurance under such a scheme be pre-funded so as to equalise the premium across the system, and in this way, remove one more hurdle from the employers having to look at older workers as being more expensive to them in terms of medical cost.

Sir, I say all these because I am really keen to see the portable medical benefit system implemented as soon as possible in Singapore, because of the increasing churn in our labour market. Every day of delay exposes our older workers to greater risk.

Mdm Halimah Yacob: Sir, I strongly support the ERC's recommendation on portable medical benefits. It has also agreed to raise the tax exemption limit for additional Medisave contributions for private sector employees from 1% of an employee's monthly salary at present to a lump sum of $1,500 per employee. What I meant is that Government has agreed to this recommendation.

Sir, I would like to request that the Ministry of Manpower consider two refinements in order to encourage more workers to opt into the scheme. Firstly, Sir, I would like to suggest that the Ministry of Manpower or the Government consider providing incentives for older workers to entice them into the PMBS. This is important as older workers would otherwise not find the scheme too attractive, as the PMBS is essentially a savings scheme. For older workers, because they have less number of years to work before retirement, they may find the scheme less attractive as they would not be able to chalk up enough savings and might as well continue with the existing scheme. Having any support from the Government in this regard would therefore be very helpful.

Sir, secondly, I would also like to ask the Government to consider pegging the additional 1% contribution to be put into the Medisave account to the median wage. This would ensure that lower income workers have a minimum floor. Otherwise, the contribution that they receive will not be meaningful enough to encourage them to adopt the portable medical benefits.

Sir, a worker earning $1,000, for instance, will get $10 a month, whereas a worker earning $5,000 will get $50. These are basic salary floors. Low income workers will have greater incentive to opt into the scheme as the amount will be sufficient for them to purchase an insurance policy to cover their medical needs. In the absence of such a floor, Sir, many may prefer to remain on the existing medical benefits scheme and this would affect our effectiveness in adopting the PMBS.

The Chairman: Dr Wang Kai Yuen is not present. Ms Irene Ng is also not present. Mr Arthur Fong? 2.15 pm

Mr Arthur Fong (West Coast): Sir, it has already been pointed out that our current unemployment rate is at 4.8% and is likely to get worse in view of several uncertainties, such as a war that may begin in hours or in days, and its impact on the global economies. In the event that war breaks out, the price of crude oil will skyrocket, causing whatever economic recovery that we hope to see towards the end of this year, retard. It is bad enough that we are experiencing high unemployment, but we also have to contend with structural unemployment. When we view structural unemployment against the backdrop of the profile of some 660,000 of our workforce having a Secondary Two and lower education, and getting older, Sir, we have a serious problem.

Granted we have taken steps to help our unemployed and needy through these hard times with a slew of programmes, like the New Singapore Shares, ERS and assistance programmes availed through the CDCs, the problems we are facing over the last two years or so have never been experienced before.

Sir, we need an alternative that addresses both these problems, ie, create work opportunities such that more people can be gainfully employed and, at the same time, provide family-friendly options for the existing workers. Sir, as the Minister for Manpower has said, the Ministry cannot be the magic bullet to solve unemployment. It takes two hands to clap. Sir, I propose that we encourage employers to explore job sharing in the workplace. This is not something new. It has been successfully deployed in many developed countries with problems similar to what we are facing now, with excellent results. For example, the US Federal Government actively promotes job sharing in the different agencies. It had recognised the need to come up with a solution that took full advantage of personnel flexibility and resources available.

Sir, I propose that we implement a one-year trial. During this trial, we can test how effective this alternative is in providing continued employment for those who will otherwise be retrenched. This will allow some of these workers to spend some time at home with their children, whilst still fulfilling the goals of their station. Indeed, teams comprising two or three workers can undertake a single job. Firstly, it will provide employment to a team of workers who would now fulfil the functions of the job. Secondly, companies would be able to retrain workers they would otherwise lose, as job sharing will allow flexibility for both employees and employers, or union-sponsored training to upskilling or retrain outside of the work time.

Sir, the results of job sharing in countries like the United States and UK show that this flexibility has addressed the growing problems of unemployment and, at the same time, created family-friendly workplaces. Our workers should be given this option so that we can keep them gainfully employed, albeit at wages which are commensurate with the number of hours they work. At the same time, a family-friendly schedule would provide more flexible working arrangements for those workers who want to start a family or have young children to care for. This may even reduce dependency on domestic maids for some families, as well as possible savings from child minding services. Job sharing can present a win-win situation for everyone concerned.

Dr Lee Boon Yang: Thank you, Sir, for exercising a sharp knife, otherwise we will all be delayed.

Let me first take up the point raised by Mr Steve Chia. I notice that he has just stepped in. It is very good for him to be here to hear the response. In fact, he has already got the response to his question. Mdm Halimah has adequately rebutted his unjustified and totally unfair allegations against NTUC. That is an example of NTUC and the PAP Government working in a symbiotic relationship. The reason why we should be supporting the NTUC is quite obvious, and Mdm Halimah has made it clear that the funding that NTUC receives from the Government is a small part of its total budget. It signifies Government's desire and concern in supporting a strong and vibrant labour movement so that the NTUC, through its affiliate unions, will be able to better serve our workers.

He also questioned the benefits of having NTUC cooperatives. Mdm Halimah has also addressed that point. I just want to add that, in fact, NTUC cooperatives are doing very good work, serving members of the NTUC and workers in general. The fact that they have NTUC FoodFair is a measure to help moderate the price of food for many of our workers. They set benchmarks. If you do not have such a cooperative in the market place setting benchmark prices, you could have runaway prices, and workers will suffer. So what does he prefer? I think having the NTUC cooperative in the business helps to moderate price increases in many sectors, and they do serve a useful purpose.

Mdm Halimah and Mr Gan Kim Yong both spoke about the importance of the monthly variable component. I agree with them completely. This is a very important step. The ERC has recommended that we push harder on this. We will promote the monthly variable component to companies and we will move away from the seniority-based wage structure, which is too rigid. We should be adopting a more flexible wage system, where the monthly variable component could form 10% or even more of a person's monthly pay. This will allow companies to make adjustments, as and when business environment changes and, in the process, help the companies survive and hopefully reduce the need for retrenchments.

The monthly variable component was first suggested in 1999. Yes, we have not made very dramatic progress in the interim. Overall, progress has been slow, except for the unionised companies, where in 2002, about 39% of the unionised companies have already implemented the monthly variable component. This is an increase from 29% in 2000 and 34% in 2001. However, in the non-unionised sector, the implementation has been rather slow, only about 3.9% of the non-unionised companies are using the monthly variable component.

To speed up the implementation of the monthly variable component, ERC has recommended that for companies that have yet to implement the monthly variable component, or where the monthly variable component is presently less than 2% of the worker's basic wage, up to 2% of the basic wage can be set aside gradually to build up the monthly variable component of about 10%. This is a very significant recommendation, because, if you remember, in 1999 when the idea of monthly variable component was first mooted, the assumption was that we would use future wage increases to build up a monthly variable component. But since then we have gone into a roller-coaster ride in the economy, up and down, and there has been very little wage increase. So it was difficult to build up a monthly variable component. But now that we have decided, in the course of the ERC's discussion, and we have also got the support of the union movement to use the existing basic wage to help to build up a monthly variable component, I am confident that we will be able to move faster on this implementation.

Mr Gan Kim Yong asked whether there are clear schedules to achieve a widespread application of the monthly variable component. As I said, with this change, we hope to move a lot faster than what we did before. But, nevertheless, it is difficult to now state a deadline when we would want to convert all the companies onto monthly variable component. He also asked whether we could exempt certain portions of the monthly variable component from tax or CPF contributions. It would be unwise to introduce more distortions in this sense. The monthly variable component should still remain as part of the wages of the worker, and that we should not treat it differently. All it means is that it is a portion that could be adjusted in times of need - easier to adjust - than to resort to CPF reduction or other tax cuts.

Mr Yeo Guat Kwang, Mdm Halimah and Mr Heng Chee How spoke about the portable medical benefit system. Mr Yeo asked how many companies have so far implemented the portable medical benefit system. From what I have got here, as of now, about 100 companies in the private sector had already implemented the portable medical benefit system. Of course, Members will remember that in the case of the public sector, the civil service has already implemented this portable medical benefit system since 1994 because many civil servants, especially those who were recruited post-1994 were placed on what is known as the Medisave-cum-Outpatient Scheme, and that is a form of portable medical benefit.

The idea of this portable medical benefit system is that, in lieu of an employer-provided medical benefit, the employer will make additional contribution to the employee's Medisave every month, which will allow him to purchase medical insurance to cover his in-patient needs. The ERC also recommended an alternative which is called transferable medical insurance scheme, whereby employers will sponsor group insurance for the employees. But this group insurance will have a special feature, an enhancement whereby even if the employee is retrenched or laid off, the coverage will continue for at least another year, as long as the employee is able to continue to service the premium on his own. As far as the transferable medical insurance scheme is concerned, the insurance industry is working with my Ministry and other agencies to develop this product to meet the needs of the employers.

Implementation of the portable medical benefit system and the transferable medical insurance scheme, as Mdm Halimah has pointed out, will be voluntary. The Government has decided to encourage employers to take this route, instead of remaining with the present system of employer-provided medical benefit. The way we have done it is to adjust or to refine the tax system with regard to employers' medical expenses. From 1st April 2004, employers who implement either of the two portable medical benefit systems will continue to enjoy a 2% tax deduction on their expenses, in other words, on the contribution to Medisave or on their contribution to the transferable medical insurance scheme, and any other allowable outpatient expenses. However, employers who choose to remain status quo, in other words, do not join any of these schemes, do not adopt any of these schemes, and just continue to offer to their employees medical benefits, they would only be allowed to make a deduction of 1% for their expenses. We hope that, with this tax change, more employers will shift to the portable medical benefit scheme.

Mdm Halimah also asked whether we should have a floor with regard to the additional 1% Medisave contribution. I agree with her. It is a concern because if you say 1% and you earn $600, then it is only $6. It is very low. So what should we do? We should provide for a minimum amount that allows them to buy a reasonable insurance coverage. These are details that will be worked out. But you will note that in making the tax refinements, the Minister for Finance has generously agreed not to fix it at 1%, but at a cap of $1,500 a year. With the $1,500 tax deductible cap, the employers will find it much easier to adopt a floor wage for contribution to Medisave.

Mr Yeo Guat Kwang and Mr Heng Chee How mentioned the need for a basic medical insurance scheme that will cover all workers. We already do have such a basic medical insurance scheme operated under MediShield by the CPF Board on behalf of the Ministry of Health. Already, I understand about 90% of our workers are covered under MediShield. So, once we move towards the portable medical benefit system, there is an opportunity for us to enhance the MediShield coverage. Of course, premiums will have to be adjusted accordingly. But with the additional Medisave contribution made by the employers, I believe, most employees would be able to afford this enhanced MediShield scheme. If we have 90% or so of our employees covered by it, that would meet the requirement of having a broad-based nation-wide basic medical insurance to cover all our employees. 2.30 pm

Mr Arthur Fong suggested job sharing as an option to deal with this present economic downturn and hardship imposed by the lack of employment opportunities. I agree with him. Job sharing is one way. Some companies have implemented such ideas of job sharing and part-time work. It is not new. We have actually actively encouraged companies to do so. We have a group in the Ministry of Manpower which advises companies that have indicated that they may have to downsize by retrenchment, to look at alternatives. One alternative is to put workers on part-time employment instead of outright retrenchment. I understand that some hospitals have already introduced job-sharing. In fact, NTUC Fairprice is another major employer who offers part-time or job sharing options for people who want to work in the supermarket retail sector. So, this practice is already in existence. If need be, we will, of course, publicise it more widely, so that more employers are aware of the opportunities available to have workers who can come in on a part-time basis, maybe help them to meet their demand for workers and yet, at the same time, keep costs manageable.

Sir, I think I have addressed the points raised by the Members.

Mr Steve Chia Kiah Hong: Sir, a point of clarification. Can the Minister clarify whether nominal funding is no funding at all or still a small bit of funding? By his words, are GLCs not doing a good job too? So, that is why the Yellow Pages rule is imposed on the GLCs and not on the NTUC cooperatives, because the NTUC cooperatives are doing a good job.

Dr Lee Boon Yang: Sir, I do not have the numbers with me as to how much exactly we provide to NTUC each year by way of funding, but the number is not large compared to NTUC's annual budget. But it is an important, and not insignificant, gesture of the Government's support to our workers' movement. Our labour movement plays a very important part.

Sir, with your permission, let me give Mr Chia an example. In our negotiations for Free Trade Agreements with many countries, the issue of labour standards comes up all the time. In order to secure agreement, we have to show to our counter party that we have excellent labour standards. And what better way to show them than to have our NTUC, the leaders of our labour movement, stand up and speak to explain to our counter party that, yes, in fact, in Singapore, high labour standards are maintained, and this Government is serious about upholding the rights and interests of workers. For that little investment of financial assistance to NTUC, we have developed a group that is very capable, very articulate and able to explain the situation to important parties whom we are negotiating Free Trade Agreements with. What is wrong with it? I think it is the essence of the symbiotic relationship. We help each other and they support our efforts to bring in even more investments, so that our workers will have more employment opportunities.

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: I suspend the Sitting and will take the Chair again at 2.55 pm.

Sitting accordingly suspended at 2.35 pm until 2.55 pm. Sitting resumed at 2.55 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head S (cont.) -

Mr Yeo Guat Kwang: Sir, the Ministry of Manpower has plans to monitor and help the construction industry as a major employer of foreign workers in Singapore to reduce reliance on foreign workers. I hope that the Ministry can do more in this direction, not just in the construction industry but also other industries where there is high foreign worker dependency.

Let me share one experience I had in Australia. I was driving along a narrow two-lane two-way traffic road where one of the lanes was closed for road works. To control the two-way traffic, I saw a worker putting up two mobile traffic lights. He could control the direction single-handedly. But here in Singapore, we have two workers on each side holding a stop-and-go sign at each end. There is a third worker coordinating. So, altogether, there are three workers doing the job. This is a very simple example of how simple technology can actually improve productivity and how it shows that more can be done to reduce the dependence on low-skilled foreign workers in Singapore.

Sir, let me now turn to the well-being of foreign workers. This House has debated previously the plight of foreign workers in Singapore. I have asked the Minister questions on housing for foreign workers and actions taken against errant employers who do not pay foreign workers. The Minister has assured the House that the Ministry will monitor the situation closely and it will take errant employers to task. I would like the Minister to give us an update.

I also want to ask the Minister about the problem of maid abuse today. Although maid abuses get very widely reported in the media, often getting front-page news, I know that the vast majority of Singaporeans, however, are responsible ones and who do not ill treat their domestic maids. Can the Minister provide statistics on the number of employers involved in maid abuse cases against the total number of domestic maids in Singapore?

Having said this, again, I must stress that each case of maid abuse is one case too many. I would like to ask the Minister on the outcome of such initiative, and what is the Ministry's plan to do more to address the problem of maid abuse.

I would also like to ask the Minister two additional related questions on employment pass holders. First, how many employment pass holders were affected by the economic downturn? Second, what is the impact on the change of the minimum salary from $2,000 to $2,500 for employment pass holders? Does it help to level the playing field for our young graduates vis-a-vis foreign talents?

Mdm Halimah Yacob: Sir, over the last few days, we have heard a number of comments that are very critical of Singapore workers. In fact, I think the tendency is for us to be too critical of Singapore workers. I fear, Sir, that if we continue to criticise Singaporeans all the time, this will be counter productive. In this House alone, over the last few days of debate, I have heard about the need for mindset change among Singaporeans so many times that I think if we were to patent the words "mindset change", we will probably make a lot of money.

This debate about Singaporean workers is similar to what we had some years ago about Singaporeans who job hop. That debate went on for some time until it became clear that it was not doing Singapore any good, and may even affect investors' perceptions about our workers. Sir, if, indeed, our workers have such a terrible mindset, they will not be ranked as the number one workforce by BERI. Surely, that counts for something. So I do ask that when we talk about mindset change, we spare a thought for the effect this will have on investor confidence. I am saying this because I came across a newspaper report where even a foreign MD was making a comparison between local and foreign workers, and repeating the same mantra about negative traits of local workers. If indeed our workers have such serious mindset problems, then we will never have made the leap from a third world to a first world country within a record period of just four decades. 3.00 pm

Sir, sometimes, I wonder whether mindset problems have become a convenient excuse to cover other more significant underlying issues that need to be addressed. One that comes to mind is job redesign. Our workforce has grown older, but if the jobs that our workers are asked to do have not changed, if it still requires them to stand up to eight to 10 hours a day, or there are no equipment to help move heavy objects so that they will have to use their physical strength, over time, these jobs will be too onerous for them. Even in the service sector, there are jobs which over time can be quite onerous for older workers. For example, the job of a chambermaid which requires heavy beds to be lifted when bedsheets are changed. A 30-year old can do the job easily. But a 55-year old may find it harder. Sir, we need to have a closer look at this issue of job redesign. And I call upon MOM to give greater priority to this.

Sir, another problem is, of course, pay. Many of these jobs pay low salaries, even with training and attempts to upgrade cleaning jobs through training, for instance, the starting pay of $700 to $800 is not likely to excite Singaporeans. I am not sure how far we can further upgrade cleaning jobs so that we can improve productivity and therefore our workers can earn better wages. But I am sure there are other jobs where this can be done.

In the old days, in the hotel industry, for instance, different persons do the cashiering, ordering and table cleaning. But, today, all this can be done by one person - multi-skilling, multi-tasking and working across functions are the norms now. And more can be done so that with higher productivity, pay can go up. Sir, the third underlying ---

The Chairman: Mdm Halimah, could you wind up your speech now, please?

Mdm Halimah Yacob: The third underlying problem is the image of some jobs. Certainly, there is a need to change image, for example, jobs in the shipyards are relatively safe and you do not hear of people getting injured or killed every day. But nothing much is done to counter the negative impression that jobs there are very unsafe. So Singaporeans sometimes may not want to work there. Sir, I would like to urge MOM to seriously look into these underlying issues.

The Chairman: I would like to urge you to stop your speech too. Next speaker, please.

Mdm Ho Geok Choo: Sir, I support Mdm Halimah's point about not just the workers need to change their mindset but, at the same time, would like to urge employers to also change their mindset. The first issue I would like to raise is with regard to the retail and hospitality sectors where most Singaporeans are shunning these sectors. I support that we take in foreign workers and talents where we are lacking in the skills and expertise, or we cannot find Singaporeans to fill these jobs.

So long as the foreign workers or talents compare better than our locals and make up for what we lack, there is no good reason for us to reject them. But where jobs can be filled by Singaporeans, we must continue to educate Singaporeans to be less picky and employers to adopt flexibility in managing the needs of the local working population.

And I would like to support what Mr Arthur Fong has said earlier regarding job sharing. I came across a case recently. An Indian beauty salon owner came to apply for a work permit for an Indian national trained in beauty therapy. The reason is that the foreign talent will be willing to work on weekends, long hours, and accept a lower salary. I had to convince the owner to explore job sharing which may make it easier for him than to look for a local who needs to look for a job with normal work hours because of domestic arrangements.

The newspapers, as Mdm Halimah has said, have carried articles on the attitude of Singaporeans leading to eating houses and the like, preferring to opt for foreign workers. The issues I would like to raise are: one, it would appear that the terms and conditions of the job offered have made this job less attractive to Singaporeans. I would like to ask MOM whether there is any educational programme for employers with regard to mindset change on work flexibility and terms and conditions of work for local Singaporeans in this sector. Two, in order to encourage businesses to engage Singaporeans in jobs traditionally shunned in restaurants and hotels, what schemes does the Ministry have to encourage more Singaporeans to join these sectors?

A second issue concerns the recent change on foreign workers policy in the construction industry. The primary consideration in this change is to allow multi-skilling to qualify for lower levy and to encourage businesses to employ Singaporeans. Now, it is important that we also encourage Singaporeans to be multi-skilled in the construction sector. This is survival for Singaporeans in the construction industry, otherwise they may find themselves levelling down, while the foreign construction workers will level up with multi-skills training and tasking. My questions are: how does the Ministry propose to encourage more Singaporeans to take up multi-skills training in the construction industry? I would also like to know why the recent policy on the rationale and criteria for the foreign construction workers is not extended to the other sectors where there is a high demand for foreign workers.

On the third issue, it concerns the lowering of income tax for foreign talents. Sir, one reason why the Government has lowered the personal tax rate is to attract foreign talents into the country. I would like to ask the Minister whether there is sufficient reason to lower the income tax rate for this group of people, given that the personal income tax in this country is considerably lower than in other parts of the developed world. How much lower should we cut our personal income tax rate in order to attract foreign talents? Are there other better ways to appeal to them besides undertaking a measure that may not be effective?

Ms Olivia Lum Ooi Lin (Nominated Member): Sir, I declare my interest as the CEO of Hyflux Limited. Yes, we do need to focus on creating jobs for the locals. However, this should not be at the expense of enterprise.

We must also protect the interests of some promising SMEs. One of the sunrise sectors, for example, is in the environmental technology sector. Some of these companies require workers with specific skills, such as manufacturing of membranes, and assisting in research and pilot plant trials for reclamation of waste water. Locals with such skills are very hard to find because the demand for membrane-based treatment facilities in Singapore has taken a quantum jump only in recent years. If we succeed in grooming a group of people in Singapore, then in that case this might become a very viable alternative for Singapore being an environmental hub for the region.

Foreign workers with the necessary skills for such jobs often do not have professional paper qualifications. Instead, they acquire their skills through years of on-the-job training and experiences in overseas projects. At the moment, the Ministry of Manpower does not have the appropriate classification for this group of workers. Hence, this group of workers is normally brought in under the classification of construction industry and they are subject to rules relating to this classification, which can be quite irrelevant.

With effect from next year, MOM requires new foreign workers to obtain two trade certificates before they can qualify for lower levy. Since there is no appropriate classification for this group of skilled workers, and for the fact that they are brought in under the classification of construction industry, the trade certificate must be from construction related subjects, such as tiling, water proofing, painting, piling, etc. While such skills are necessary for construction workers, they are not relevant to this group of skilled workers. As a result, the workers would choose courses, such as painting or brick laying, just to satisfy this requirement, though they have no need for such a skill in their jobs. And companies would also have to incur unnecessary business cost, just to qualify for lower levy for the renewal of permit.

I recognise that it is difficult for institutions to structure specific courses to suit the needs of a small niche market. In this regard, I want to ask if MOM would accept on-the-job training in place of the set skills test for such qualification. Of course, one may argue that we will train our local workers, instead of depending on foreign workers. Yes, we can. But changing the mindset of the locals will take time and business cannot wait. Such skills also need time to develop. If these businesses cannot survive because of a lack of workers here, these companies will relocate and more Singaporean jobs will be lost.

In view of the above, I would like to further ask if the Ministry of Manpower would review the foreign workers classification and terms of engagement so as to keep pace with changing times and industrial needs.

Mr Steve Chia Kiah Hong: Sir, there are genuine international talents and there are skilled and unskilled foreign workers. Except for the high bonuses paid for their early departures, our population generally has less objection to bringing in good international talents, if it is to help build our economy, nor do they have any objection to bring in the unskilled workers to do the jobs that most Singaporeans do not want to do.

However, most working citizens are having objections to the entry of lower paid skilled foreign workers. The Government should make an effort to differentiate skilled foreign workers more clearly instead of lumping them together as international talents, for they are not. These skilled foreign workers are just workers on a lower pay and come in to compete with the majority of our Singapore workers for their jobs. In view of the high level of unemployment that we have, the Government must clearly justify why it is advertising aggressively overseas for these skilled foreign workers to come in and compete with our citizens and allowing them to displace our workers in the process. Will the Government allow and encourage foreign politicians, like Bill Clinton, to come and compete with them for their political jobs? I do not think so.

In any way, I hope that the Minister can address the concerns of working Singaporeans on the aggressive recruitment of skilled foreign workers to come to Singapore. To reply to Minister Ng, it is not closing our markets to foreign workers, but about proactively recruiting skilled foreign workers, or talents overseas, to come here and compete with our locals.

Mdm Halimah Yacob: Sir, there are about 140,000 foreign domestic workers employed in Singapore. Most come from neighbouring countries and have contributed significantly to Singapore's growth and prosperity. Without the foreign domestic workers, it will be difficult for many Singapore women to work, and the economy will suffer as a result.

For foreign domestic workers, work in Singapore is attractive as the remittances that they send home help their families and contribute significantly to their country's GDP. According to ILO's estimates, migrant workers' remittances represent the second largest international monetary trade flow, exceeded only by petroleum. But US$600 million flow through official channels and another US$15 million in various unreported ways. So foreign domestic workers serve a mutually beneficial need both for the sending country as well as the receiving country, such as Singapore.

Sir, I have asked before whether there is a need for some regulatory framework for foreign domestic workers as, unlike other foreign workers, they are not covered under the Employment Act. I must stress that foreign domestic workers are not singled out for specific treatment. In fact, all domestic workers, including Singaporeans, are excluded from the scope of the Act primarily because of the nature of their work. Hence, I would like to ask whether there are any proposals to review our current position on foreign domestic workers because foreign domestic workers tend to be more vulnerable than other foreign workers, as they work within the confines of the home and are more isolated compared to other foreign workers. Is it possible to consider providing some legal minimum standards for them and a mechanism for them to legally enforce these standards? For example, the standards can cover things like rest days, payment of salary, sick day and annual leave, some of the very basic and core benefits. In order to enforce these standards, the foreign domestic workers can be allowed access to MOM's labour courts to make claims and to enforce these standards. In this way, they have access to a speedy and inexpensive method of dealing with their claims. I am aware that MOM has done quite a lot to help foreign domestic workers. But I think there is scope for us to further refine our existing rules to better protect them.

Ms Braema Mathiaparanam (Nominated Member): Sir, thank you, for allowing me to speak on this topic. As employers of domestic workers, they pay about $345 a month to the Ministry of Manpower as levy. There are about 140,000 domestic workers today and this amounts to about $47 million a month in levy. I am here today to ask the Ministry of Manpower to consider whether a portion of this levy could be used for three purposes. Firstly, domestic workers do fall ill. This is apart from the accident insurance policy that employers do take out. A check with doctors in private practice as well as hospitals does show that at least one domestic worker needs hospitalisation and sometimes is whisked away by employers who do not want to pay for the hospitalisation. Is it possible then perhaps that we have a premium with some insurance company to take care of hospitalisation for certain illnesses? 3.15 pm

Secondly, another use of the levy that I am asking is whether it is possible to consider a certain portion to be set aside, such that domestic workers can be trained in basic skills. This can be part of the Skills Development Programme. A check shows that some of the courses that domestic workers take on their days off cost about $60-120 for 12 sessions of dress-making, etc, or even using home appliances.

Thirdly, can a portion of this levy be set aside in a modified scheme, such that when the domestic workers go home they get some little substantial amount of money over the months accumulated that they can take home and develop their own course of living back in their home countries?

Having said all that, I think with $345 - I do not know what the calculations can be, if we are serious about these three schemes - if let us, say, we were to keep aside $45, that amounts to $6 million a month to be kept aside for things that can benefit and improve the relationship between the domestic worker and the employer. As such, I would also like to ask the Ministry of Manpower if it is possible to know what exactly is this amount of almost $50 million per month put to. I have looked through the Budget Book, and I grant that it is used to cover operational costs, the investigation processes for certain cases, and to maintain a very efficient Work Permit Department. But it would be good to know where else the money goes to.

The Chairman: Mr Ang Mong Seng is not present. Mr Yeo Guat Kwang.

Mr Yeo Guat Kwang: (In Mandarin): The number of industrial accidents and occupational diseases is steadily declining over the years. This is primarily due to the efforts put in by the Ministry of Manpower, unions and workers.

While the number is falling, each case is still one case too many. We must do whatever we can to bring down the figure even further. It saddens me to see that the number of fatal accidents and that of accidents which led to permanent disability and injuries to hands and fingers of the workers over the past three years has not improved. On the average, there are about 60 fatal cases per year, of which 60% occurs in the construction sector. In fact, fatal cases in the construction sector have increased despite the industrial slowdown. In the past five years, there were, on average, about 100 accidents per year, which led to permanent disability. Out of this number, 35 were from the construction industry and 30 from the metal industry. Has the Ministry any plans to step up efforts in this area?

Looking at the statistics in the past few years, two trends are visible. The most common type of occupational disease is noise-induced deafness, and the most common type of industrial accident involves hand and finger injuries. In fact, if we add them up together, they account for 45% of the total. If something can be done on these two areas, our industrial safety record could have been much better.

Sir, according to statistics, about 70% of accidents were caused by the following three factors:

(1) Fall from high places;

(2) Struck by falling objects; and

(3) Stepping on or hit by stationary objects.

I urge the Ministry to focus on these key causes and recommend effective measures to prevent such incidents.

The Chairman: I would like to remind Members that we are rather behind time on this cut since Members are making such long speeches. Mdm Halimah.

Mdm Halimah Yacob: Sir, on worker protection, I have a specific concern. It seems to be obvious that the employment structure is changing very rapidly. There are more part-time, temporary and casual jobs. In short, jobs have become more short-term. But if we look at the Employment Act, most of the benefits are tied to length of service.

A case in point is our sick leave, where we have to work for six months before we are entitled to paid sick leave. Unionised workers are covered under the collective agreements, where benefits are extended from the first day of work, but non-unionised workers have to depend on the discretion of the employer.

Another case in point is the retrenchment benefits, where we have to work for three years before we can ask for the benefits. Even then, we will be paid only if the benefit is stipulated in the contract of service, otherwise payment will be at the discretion of the employer. For unionised workers, this is not a problem, as the union will negotiate on behalf of the workers, regardless of whether this is stipulated in the contract of employment or the collective agreement. But workers who are not unionised are not so protected.

In view of the changes that are taking place, I would like to ask the Ministry whether it considers it feasible at this point of time to consider legislating a minimum quantum of retrenchment benefits for all retrenched workers. I would like to request that MOM look into this issue to ensure that our employment legislation keeps in tandem with the changes in our economic and employment structure.

Finally, Sir, our labour standards are good and up to par with international standards. As a member of the ILO governing body, I am proud of our standards and, hence, I would like to ask the Minister whether our Government would consider ratifying more ILO conventions.

Dr Ng Eng Hen: Mr Steve Chia asked whether we would allow foreigners to come to Singapore to compete with us in political office. We indeed do. There are Mr Khaw Boon Wan, Ms Irene Ng and Ms Olivia Lum.

Sir, a number of speakers have alluded to our foreign worker policies, and I think it is important to address it, because it is a fundamental pillar of our labour market policies. Many of the Members' comments - and these are comments from Mr Steve Chia and Mr Low Thia Khiang - assume that the mathematical model for foreign workers and Singaporeans is one of displacement, ie, if we disallow one foreign worker into Singapore, we create one job for Singaporeans. This is flawed thinking. Indeed, on a net basis, the entry of foreign workers is additive, ie, it creates more jobs for Singaporeans and, correspondingly, their exclusion would result in even more unemployment. My Minister has touched on this but I will elaborate.

Foreign workers help to fill manpower gaps within our economy, which locals are not willing or able to fill. They also help to moderate the cost of business and improve the international competitiveness of our companies and allow them to function, win more contracts and employ more Singaporeans. For example, the transport equipment industry, which includes the marine industry, grew rapidly in 2001, and saw an increase in employment of over 20,000 jobs. Given the sudden upturn in the industry, the sector had to turn to foreign workers to quickly ramp up its workforce. Without this ready source of foreign workers, the companies would not be able to take on new orders, thus losing the opportunity to create jobs for Singaporeans as well as foreign workers.

Members might ask why did the marine industry not turn to Singaporeans. Last year, many Members, including many of the Mayors in the CDCs, profiled the marine industry, together with me. We went on a roadshow to say that it had one of the best safety records, wages were decent despite what Mdm Halimah says about low wages. We said that in the marine industry they can earn up to about $2,000 with overtime and a stable career path. We donned hard hats, walked up ramps, got hoisted onto ship decks, and toured their shipyards. Particularly memorable was Mdm Yu-Foo Yee Shoon in a yellow pantsuit and hoisted up onto the ship deck. We had excellent press coverage. We continued those efforts for about a year. The result? Less than 300 workers signed on for an industry that has 2,000 vacancies even now. We will and we must continue these efforts, but we need to be realistic. It will take some time before mindsets change.

Likewise, hotels have had to hire foreign workers to ensure that they are able to operate smoothly over peak Christmas, Hari Raya and Chinese New Year holiday periods. And there is no shortage of schemes profiling the opportunities and the better image of workers in the hospitality industry. If they do not have ready access to willing workers, customers like you and I complain and may not patronise their restaurants again. Similar examples exist for technical jobs in the aerospace and petrochemical industries.

Sir, even in our present high unemployment situation, many locals are not willing to take up available jobs in industries. It is not, as Mdm Halimah says, that we are castigating or selective. I have already mentioned that the unemployment rate is 4%. 96% of the willing take up jobs. It is these select few that we must not allow to tarnish the whole industry. If the Government makes it difficult for companies to find sufficient manpower, they will lose contracts or, worse still, may relocate their operations to other countries, and locals employed by them would end up losing jobs as well. Supporting industries would see their businesses decline.

In this light, Mr Steve Chia's definition of talent is an artificial one. Would not an employer consider a hardworking worker, whether local or foreign, willing to learn, helping to meet deadlines, talent? Restricting access to foreign workers through stricter quotas with more rigidities to our labour market, as suggested by some, would only hurt us in the long run. Therefore, the Ministry takes a judiciously calibrated approach in balancing between helping unemployed Singaporeans to find jobs and meeting business needs for foreign workers.

Nevertheless, while we continue to manage this inflow of foreign workers through an appropriate levy and quota, we must simultaneously help Singaporeans to compete. And this is the gist and thrust of our Continuing Education and Training statutory board. We must help Singaporeans to be more competitive by re-adapting mindsets, retrain, re-deploy as well as redesign industries, as Mdm Halimah has also suggested.

I fully agree with Mr Yeo Guat Kwang that ultimately it is the competitiveness of our industries, with their mix of local and foreign workers, that will determine our overall productivity and value-add. Indeed, the recent changes in the construction manpower policies were made with this very end in mind, and we will extend this policy and the measures to other industries.

As to the possible changes to the foreign worker levy, there is no need to increase the levy at this point, as the numbers have not escalated. Dr Wang Kai Yuen earlier asked whether we were certain that our figures were correct. If we look at our figures in the last year, local employment actually rose. There was a net decrease in overall employment but, for local residents, the number employed went up by 20,000. For foreigners, there was a loss of 60,000.

However, I agree with Members that the current $30 skill levy is too low to regulate inflow. It was set in 1999 when the Government substantially reduced the foreign worker levy to help business tide over the Asian financial crisis and, as Deputy Prime Minister Lee has announced, the Ministry will review this later this year.

Mr Yeo Guat Kwang has spoken about welfare of our foreign workers. He has asked for the number of maid abuses. I will give just two figures. In 1997, it was 157 offenders. It has dropped to 43 last year, on the back of an ever increasing population of foreign domestic maids.

In terms of housing, we have said that by mid-2004, all foreign workers who are housed off-site would have to be accommodated in proper and authorised accommodation. We will continue these efforts to treat our foreign workers with decency.

With regard to Employment Pass holders, Mr Low Thia Khiang and Mr Steve Chia implied that our policies disproportionately discriminate against locals. The most recent change was in the raising of the salary criterion for Employment Pass holders from $2,000 to $2,500, from 1st December 2001. Since then, we have witnessed a sharp decline in the number of Employment Pass holders over the past year, from 90,000 in 2001 to about 70,000 by the end of 2002, a 25% reduction. I assure Members that we did not have a similar reduction in terms of our local graduates. The unemployment of our graduate degree holders is still around 4%.

What this shows is that, under difficult conditions, our policies were not weighted against our own professionals. Indeed, foreigners have suffered retrenchments even more so, and were not spared from the adverse labour market conditions.

This gives us no joy for commiseration. When expatriates leave, the service sector suffers too, even though the expatriates may be in the manufacturing sector: rents, the restaurants they patronise, the shops they buy from, there is a knock-on effect. So, this is no cause for joy for any of us. We need to view our global workforce in its entirety: both local and foreign workers adding value and competitiveness to our industries.

I agree with Ms Olivia Lum that technological changes will blur industry boundaries, and she is quite right. It is difficult to have cut-and-dry industry classifications or qualifications because of these changes. However, there must be opportunities for Singaporeans to fill these jobs too because, if the sector does well, it is an employment creation sector that we want to focus on. Therefore, we have the Manpower Development Assistance Plan, which is a scheme that helps companies and organisations develop training programmes, project forward for critical skills in industries, and especially growth industries, where there is a lack of training, to try to help Singaporeans become competitive. 3.30 pm

Nevertheless, I have taken note of her concerns and MOM would be happy to work with these industry players like her in the environmental technology and water treatment industry, to address the specific needs of the sector.

Mdm Halimah has asked for better regulation of foreign domestic maids. As I have said in this House before, it is not practical to regulate domestic work in regard to hours of work, rest day and overtime work in a home environment. It is difficult to do. Notwithstanding this, the Ministry encourages employers and their foreign domestic workers to work out the terms and conditions of employment based on mutual agreement. With the help of their embassies or employment agents, most foreign domestic workers do enter into written employment contracts with their employers, covering core employment terms such as salary, rest day, medical benefit and a description of their duties. The Ministry of Manpower is happy to conciliate if there are disputes. It is not uncommon for employers to provide at least one rest day in a month and to purchase the medical insurance policies for their foreign domestic workers.

Ms Braema Mathiaparanam has spoken on foreign domestic worker levy to be used for other purposes. The purpose of the levy is to regulate the demand for foreign domestic workers and should be used as such. However, employers who feel that their maids deserve higher pay and benefits are encouraged to do so. We would encourage employers to reward them, including paying them bonuses, air fare, paying for their courses, if they choose to.

She asked what happened to the $50 million that the Ministry collects and what it is used for. My answer to her is that it goes into the consolidated fund and it is returned to the public in terms of ERS, utility rebates, rental rebates. There is not one-to-one correlation. It does not go straight into the pockets of our Ministry officials or Ministry members. It goes back to society at large.

Mr Yeo Guat Kwang has spoken on safety at construction sites. We share his concern. There are about 38 fatal accidents in construction work sites last year. MOM will continue its concerted efforts to improve safety and we will continue to launch a number of initiatives.

At the same time, on enforcement and regulation, we will take contractors who flout the rules to task and those with poor safety records will be barred from employing foreign workers from non-traditional sources for one year.

Safety training for personnel will be made compulsory in a number of sectors and new regulations to address safety concerns, such as poorly erected scaffoldings, will be implemented.

He spoke about hand and finger injuries. He is quite right. They are the most significant reasons for injuries - about 2,200 cases in 1993. But it has dropped to about 1,600 cases last year. The metal-working industry intuitively does indeed suffer more injuries and we have introduced new provision to require all supervisors and workers in this industry to undergo proper safety training. This will take effect on 1st June 2003.

On noise-induced deafness, it has declined in 2002 to the level of that in 1998 as a result of our enforcement and promotional efforts, including the Noise Control Awards. We will set a new Singapore Standard: Code of Practice this month.

Mdm Halimah has asked for retrenchment benefits. In 2002, a total of 18,900 workers were retrenched. In that same period, 193 retrenched workers sought the Ministry's assistance to secure payment of retrenchment benefits. Of these, 40% was successful in their claims and the remaining 60% settled on their own. In general, companies do pay retrenchment benefits to their laid-off workers. This is reflected in a study involving 58 companies which notified the Ministry of their retrenchments. 97% of the 2,405 affected workers from these companies received retrenchment benefits, the majority receiving benefits about a month per year.

Mr Low Thia Khiang: Sir, may I seek clarification from the Minister of State? He said in his reply that the definition of foreign talent is an artificial one. He also said that a hardworking person valued by an employer can be considered as talented.

Sir, I am a bit confused about this. What exactly is the difference between attracting foreign talents and the foreign worker policy? Does it mean that the policy for foreign talent is to attract foreign workers who are highly educated and skilled and thereby introducing competition to Singapore workers to depress their wages, as we are overpaid?

Dr Ng Eng Hen: Sir, Mr Low starts with an assumption of his own making and ends up to a position that he himself makes.

Talent is best decided by the employer and this has to be so. But he has said: do we protect our workers enough? Let us take the point that we are making in terms of professionals. Indeed, the greatest protection is the restriction we have already imposed on the market. In terms of salaries, we have raised it from $2,000 to $2,500. That, in itself, is the industry's nation-wide measure which regulates the entry. And as I have mentioned, when the economy went down, the EP holders were reduced by 25%, a dramatic reduction, which shows that it is enough of a protection for our local workers. So it is not, as he has implied, that we do not protect our professionals and that we use them to depress wages. The salary criterion of $2,500 is a very effective regulator. And if you look at our job surveys, in terms of NUS and NTU graduates who have recently come out, they suffer salary decrements of about 5%, and measured on a global scale, in terms of this economic climate, that is not something that is way out in terms of international benchmarks.

If you look at our polytechnic graduates, some of them have pay rises. I will dispute the point very strongly with the facts, that we are not protecting our professionals. But I would also say that protection needs to be calibrated because foreign workers, whether at the unskilled or skilled level or EP level, add to our vigour, our vibrancy and our competitiveness.

Mr Low Thia Khiang: A further clarification. So what is exactly the definition, or is there no definition of foreign talent? Is an EP holder considered as a foreign talent or just a foreign worker?

Dr Ng Eng Hen: Sir, "foreign" means not local, and "talent" means the opposite of non-talented.

The Chairman: Yes, Mr Chia. Make it short, please.

Mr Steve Chia Kiah Hong: Sir, the Minister has not answered my question regarding the advertisements overseas to recruit all these so-called foreign skilled talents to come to Singapore to work. Why are we doing that?

Dr Ng Eng Hen: Sir, we are doing it to attract talent.

Mr Yeo Guat Kwang: Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. (2). Mr Seng Han Thong.

Mr Seng Han Thong (Ang Mo Kio): Sir, I beg to move,

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

(In Mandarin): Sir, last year, the Lifelong Learning Festival was very eventful and very extensively covered by the media. The most spectacular event was the fish-tossing demonstration by the foreign experts who were specially invited to perform at the festival.

In Singapore, our people are saying, "Why toss the fish? You keep tossing the fish at the fishmonger's stall, and you would end up tossing away your rice bowl!"

Indeed, in Singapore, we do not toss the fish, but we toss durians. I often see some workers tossing durians from the lorry to the people standing on the ground, who catch the durians and, in turn, toss them to the stallholder. You need to be skilful to toss and catch these thorny fruits, because if you miss any one of them, it will hit you on the face. It is not only painful but shameful too.

So I think this year, in our Lifelong Learning Festival, we should have more local flavour in it. Last year, we awarded some scholarships to Singaporeans who exhibited good learning attitude. Perhaps, we should award some scholarships this year to people who have shown good results in acquiring new skills.

Recently, Lianhe Wanbao launched a new series called the "Roll of Heroes" where they introduced a series of Singaporeans who had been unemployed but then, because of their determination and courage, they started to learn a new skill in a new territory and then created economic miracles. According to the journalists in Lianhe Wanbao, there are in fact many, many people who deserve to be featured but many of them declined because they felt embarrassed to be featured as the so-called "rags-to-richness" heroes. Those who are courageous enough to be interviewed and featured are real heroes. They really have the guts.

In the present situation, with jobs being so hard to get, people would say, "Well, there is no choice. Give me a job, I will take it even if I have to work seven days a week. Even if the salary is halved, I will still do it. If what I earn is just enough for me to eat, that is good enough for me. The Teochew term for beggar is kit jia (beg to eat). Now, you beg for a job, earn your salary so that you have enough to eat."

Ministers and MPs have asked the people to change their mindsets. I think that is not good enough. We need to have the workers themselves to come forward and be the spokesmen for this change of mindset. This will appeal to the workers as they can identify themselves with the spokesmen. They are "fellow sufferers commiserating with each other."

I think MOM should learn from the commercial advertisements. If you are advertising a hair-growing tonic, you would get some botak or bald guys to promote the products, by saying how they have applied the tonic and how their hair began to grow again. You do not get a long-hair beauty to sell the hair-growing tonic. She is better used in selling hair shampoo.

I hope that we can have more local characteristics and a change of style in this year's Lifelong Learning Festival.

Dr Ng Eng Hen: Sir, the new CET statutory board will also work more closely with community-based organisations, such as the CDCs, to bring lifelong learning to the heartlands. Nevertheless, I think the only point that I, and probably this House, will want to take home from Mr Seng's question is that we should incorporate him in next year's Lifelong Learning Festival. We will invite him to be on our festival.

Mr Seng Han Thong: Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. (3). Mr Heng, you have got about three minutes.

Mr Heng Chee How: Sir, I beg to move,

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

On individual-initiated training, I am happy that the Government has accepted the ERC's recommendation that individual-initiated training be supported as a complement to company-based training. This shows our Government's recognition that companies will generally not train workers for other jobs. Companies may actually prefer to employ directly-trained people from the market rather than train their own, that SMEs will, over time, employ a larger percentage of the workforce, and that SMEs, generally speaking, have a lower propensity to train their workers. In this connection, I would just like to ask the Minister what are the specific plans that we have in mind to initiate more specific support schemes for individual-initiated training.

Sir, on purposeful training, in a downturn, the number of unemployed increases and you find that as more people go for training, some may not get jobs immediately and therefore, the question arises whether training is purposeful. I completely support MOM's approach which is to target training that can help people find jobs as soon as possible. That is purposeful and, therefore, schemes like place-and-train is the way to go.

However, I want to highlight that we also have got to prepare for the rebound. Every time there is a rebound, we will find that there are pockets of skill shortages that will drive up costs. Therefore, in order not to have this cost rise to the detriment of competitiveness and workers' employment prospects, I urge that MOM continue to work closely with industries to anticipate areas of skill needs and be prepared to train in advance of recovery.

Mr Seng Han Thong: While some Singaporeans are facing difficulties in finding jobs, many unemployed Singaporeans shun away from certain jobs available. One observation is that the moment a certain job is performed by mainly the foreign workers, Singaporeans will see it as jobs by foreign workers. As such, it has become more and more difficult for employers to get local unemployed to take up a job and the employers will press for more and more foreign workers. I think one good example was mentioned by our Minister just now that when he has his hair cut, he has his ear cut, because the employer was pressing for more foreign workers.

May I ask whether the Ministry will look into ways to come up with an incentive scheme to attract more unemployed Singaporeans to this kind of jobs.

Dr Ng Eng Hen: My answer to all three questions is: yes, yes and yes.

The Chairman: Mr Heng, do you want to withdraw your amendment?

Mr Heng Chee How: Sir, I thank the Minister for such positive responses. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $145,372,980 for Head S ordered to stand part of the Main Estimates.

The sum of $53,845,600 for Head S ordered to stand part of the Development Estimates.

Head T -

The Chairman: Head T, Ministry of National Development. Amendment No. (1), Dr Teo Ho Pin.

Dr Teo Ho Pin (Holland-Bukit Panjang): Sir, I beg to move,

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

With the fast ageing population and higher aspirations of Singaporeans, there is a need to review the role of HDB. Over the last 30 years, HDB has fulfilled its role to provide affordable and quality homes to Singaporeans. Today, 85% of Singaporeans own HDB flats. If we were to achieve the long-term goal of having a 25:75 ratio of private and public home ownership, we need to restructure the HDB housing programme. At the same time, we must allow more flexibility and options for some Singaporeans to rent HDB flats.

Sir, although the HDB upgrading programmes have rejuvenated some older estates, there are some setbacks. Residents were inconvenienced for two or three years during the upgrading process and there are limitations to improve the design of the upgraded precinct. There is also less intensive use of the land to provide more housing units in these well-located precincts.

Sir, I wish to seek the following clarifications from the Ministry:

(1) What is the rationale for restructuring HDB?

(2) What are the new roles of HDB?

(3) How can HDB continue to provide quality and affordable homes for Singaporeans?

(4) Will HDB review its Main and Interim Upgrading

Programmes?

[Mdm Deputy Speaker (Mrs Lim Hwee Hua) in the Chair]

3.46 pm

Dr Amy Khor Lean Suan (Hong Kah): Madam, since its inception in the 1960s, HDB's role and reach have grown far beyond the mere provision of low cost housing. It has a huge multiplicity of roles - public housing authority, developer, financier, lessor, builder, supplier, estate manager, and so on. The ERC Report called for a review of the HDB's role in public housing, but it stopped short of making recommendations. Madam, I deduce that unlike streaming in education, the home ownership policy is not a sacred cow that cannot be slaughtered. As more than 85% of Singaporeans own and live in HDB flats, any change in public housing policies stands to have wide ramifications on the private housing market and the economy as a whole. This has been witnessed many times over in the past. Reviewing the role of HDB is a tremendous challenge and requires much careful thought and consideration.

I am pleased that HDB has already begun to remake itself with the announcement to corporatise the Building and Development Division. Madam, I would like to ask the Minister whether the HDB plans to become even trimmer by shedding some of its non-related public housing functions, such as developing and managing industrial and commercial projects. I would also like to make the following two suggestions for HDB to consider as it reviews its role.

Firstly, increasing the ratio of private to public housing. Over the years, HDB has scope-crept from low cost to middle income housing, and perhaps even higher middle income housing. The recent economic downturn has shown that the demand for 5-room flats has dwindled to a trickle. On the other hand, 4-room flats have remained the most popular. There are, in fact, already a significant number of 5-room HDB flats available for sale, both in the new and resale markets, which can cater to those who wish to upgrade to such flats. HDB's attention is thus better focused at the lower end mass housing market, where the housing needs are more acute because of lower affordability. HDB should shrink its target market at the higher end completely. It could stop building 5-room flats and instead sell more executive condominium sites as a step towards increasing the proportion of housing types.

Secondly, low income housing and rental flats. HDB should make more rental flats available to allow Singaporeans the option to separate their housing investments and consumption decisions. Increasingly, in line with the call for more entrepreneurial spirit, many Singaporeans may not wish to be tied down by a housing mortgage. They may wish to invest their money in a business instead of a house. To allow this, HDB could relax the qualifying criteria for renting flats, by, amongst others, increasing the gross household income ceiling, which now stands at only $800 per month. The present rules are too stringent and will not release any significant amount of rental housing into the market. The optimal mix of home ownership and rental would, however, need to be studied to strike some balance between the effect of an entrepreneurial risk appetite, rate of family formation, and having a tangible stake in the nation.

Mdm Cynthia Phua (Aljunied): Madam, with the present scenario of a built-up city, I just have three questions. What is the new role of HDB in view of the already high build-up of HDB public housing? And, in view of the proposed big set-up of 1,000 staff and 800 contract clerks-of-works, does the new HDB Corp expect to play any role in the Singapore market, although the stated objective of HDB Corp is to foray into overseas markets, like India and China?

I support Dr Teo's call for a review of Singaporeans' need of the interim, main, lift upgrading, and selective en-bloc redevelopment programmes, and their cost effectiveness and benefits to residents versus the inconvenience faced by residents. Although the various upgrading works have served the objective of enhancing the living environment of the older estates in the various phases, the residential development may still not be intensively built to take advantage of the plot ratio of 3.5 for residential development in the new Master Plan 2003.

Mr Othman Haron Eusofe (Marine Parade): Madam, like the other speakers before me, I would also like to ask the Minister about the new role of HDB. With the HDB Corp now taking over as the developer and builder of public housing, how will it be monitored in terms of the quality and cost of housing development? The next point I would like to ask the Minister is whether he would review what I have asked before, ie, to allow older Singaporeans a chance to monetise their flats. Some of the older Singaporeans have purchased 4- and 5-room flats. Now their families have grown up and they do not need to live in such big flats, but they do not want to sell their flats. They want to rent them out. But because they have bought them as subsidised flats, they are not allowed to rent them out. Perhaps, the Minister could review this again.

Mr Zainul Abidin Rasheed (Aljunied): Madam, the role of HDB now carries a different meaning. HDB has, metaphorically and literally, been a household word. HDB's role has been, for a long time, synonymous with public housing. With it come the social sensitivities connected with different public housing needs, not just commercial interest. With corporatisation, and HDB farming out more and more public housing to the private sector, how would MND and HDB ensure that public interests are not compromised? Would MND and HDB consider setting up an advisory board to handle grievances from the public, especially when HDB is corporatised?

Madam, today's Berita Harian highlighted some of the predicaments faced by HDB applicants following the new rules introduced by HDB, eg, when applying for loans through commercial banks, they were subjected to the tightest scrutiny, so much so that those who have problems with credit balances, or loan repayments, were not allowed loans by the banks, although they claimed that they had cleared those loans or credit balances. Would HDB explain why the need for corporatisation and what more changes can the public expect following this major shift in HDB's position?

Mr S. Iswaran (West Coast): Madam, just a few quick points. Firstly, I would say that I welcome the move to corporatise some aspects of HDB's functions, which I believe will contribute to a leaner and more focused HDB, allowing other aspects of its work to be run on a more commercial and private sector basis. Having said that, the questions that I would like to pose are these:

Firstly, the residual HDB, which is the core organisation, continues to have certain aspects of its functions, which, it seems to me, logically belong more to the private sector as well. This includes, as Dr Amy Khor has also mentioned, the areas of industrial properties and commercial properties, for example. The question then is: are there plans to also corporatise these and subject them to private sector discipline?

Secondly, and perhaps more importantly, is the question of what will shape HDB's focus in the years ahead. There are many imperatives and driving forces that are going to reformulate the challenge that HDB faces. These include not just the reduced volume of development of public housing, but also changing demographics, and also the proportion of private developments is increasing. So is there a case for HDB's focus to be sharpened, perhaps, to focus its planning and development efforts primarily on those Singaporeans who need their first home, or those Singaporeans who are in financial need of a loan, and allowing the private sector to take up the slack in other aspects of public housing demands in Singapore? Madam, I would appreciate it if the Minister could clarify.

Dr Teo Ho Pin: Madam, with a more mature public housing market, building of new flats will gradually slow down. Thus, there is a need to restructure HDB, especially the Building and Development Division (BDD). The announcement of the corporatisation of HDB's BDD has raised concerns both within HDB and the industry. Those affected will have to consider whether they will be compensated or re-employed by the new HDB Corporation. This has generally affected morale, especially during this uncertain market situation. Madam, with HDB Corporation, many practitioners are concerned about losing market share in the future. Many private building consultants who are presently working on public projects have put in investments to satisfy the requirements of various Government agencies. If the workload for public projects declines, they will suffer much loss.

Madam, I wish to ask the Minister the following questions:

(1) What is the cost of corporatising HDB?

(2) What are the principal business activities of HDB Corp?

(3) What is the estimated value of HDB contracts to be allocated to HDB Corp for the next five years?

Dr Amy Khor Lean Suan: Madam, HDB's revamp is inevitable because the large bureaucratic organisation it has grown into over the years is clearly not suited to the rapidly changing economic and social landscape. However, this has given rise to some concerns from the private and people sectors.

Firstly, scope of HDB Corporation. I would like to ask the Minister what would be the scope of HDB Corp's business? Would it extend beyond the provision of professional services and consultancy work to property developers when it is eventually allowed to compete in the local non-HDB market?

Secondly, a level playing field. An increasing proportion of HDB's projects will be outsourced to the private sector from 2006. This is, of course, welcomed by the private sector. However, there are apprehensions from them that the HDB Corp, being wholly-owned by HDB, will not be competing on a level playing field. I am quite certain that the Temasek Charter will be religiously and fully applied to this entity and it will not enjoy special privileges beyond what is already announced by the Minister. But the fact that overnight, a Government-linked behemoth, capable of competing for the shrinking housing pie, has surfaced is sure to give rise to grave concerns over unfair competition. I urge the Minister to consider, at least, a tentative timetable for HDB Corp's divestment into private hands to reduce some misgivings.

At the same time, focusing its energy on overseas market instead of competing in the local market will help to allay the fears of the private sector and simultaneously help to achieve the objective of expanding our second wing. Madam, I notice that both these issues have already been mentioned by the Minister. But I urge the Minister to ensure that these thrusts to minimise direct competition with the domestic enterprises and to increasingly focus beyond the shores of Singapore will not be diluted in any way. 4.00 pm

There have been some eyebrows raised by the press as well as some members of the public who have written to the press regarding the generous compensation package dished out by HDB to its staff, especially those who will be transferred to HDB Corp. In a reply to the press, HDB has noted that these HDB staff will not be automatically given a job in HDB Corp and that they will be on a new pay structure. This is hardly convincing. Could the Minister let us know if some or all of the staff to be transferred to HDB Corporation have already been identified? What percentage of the staff in HDB Corporation will not be former HDB employees? I know, for instance, that HDB Corporation already has a CEO designate who is presently a staff of HDB. Also, while HDB Corporation is technically a different entity from HDB, it is wholly owned by HDB and, hence, a job in HDB Corporation, which if offered to an HDB employee, could very reasonably be viewed as a transfer, instead of a retrenchment. There is public outcry over what is deemed to be an unnecessary double bite of the same cherry. This matter should not be allowed to fester as, otherwise, it will undermine confidence in the Government's wisdom to make such decisions.

Mr Ang Mong Seng: (In Mandarin): Madam, since its establishment in 1960, HDB has a glorious history of about 40 years. Under the home ownership scheme, they have already built some 800,000 flats. About 85% of Singaporeans are living in HDB flats, and about 96% own their own flats. I think this is the highest record in the world.

HDB has already accomplished its mission, and many of its staff had an early retirement and received compensation. For them, I think it is a good reward for what they have contributed to our nation-building.

Sir, HDB is now going to set up a company. Many of the local developers are worried. Will this HDB Corporation be competing with them for construction work in Singapore? With HDB's history of 40 years, it has a very good track record and famous brandname. I think they should go into foreign markets, maybe in China or in India. They should venture over there instead of competing with the local companies in our market.

I like to ask the Minister what is the main aim of the corporatisation. Will HDB Corporation be leading our local developers and builders to venture and develop in the foreign markets? If they can give this assurance, it will certainly boost the confidence and morale of our local developers.

Mr Iswaran: Madam, as one of the advisors to the HDB Staff Union, I know the HDB's corporatisation process has created a lot of uncertainty and angst amongst the staff. Having said that, I think the management of HDB and the Ministry have been very fair in their treatment of the staff affected, and I would like to record my appreciation on that score.

Having said that, I think the core issue today is: what is the nature of the relationship between HDB and the newly established HDB Corporation? As I understand it, based on the releases made to the media, it is a wholly owned subsidiary of HDB. What that means is that HDB Corporation's financial performance will have a direct bearing on HDB's financial performance. Then, can we expect the relationship between HDB and HDB Corporation to be one at arm's length?

The nature of the outsourcing programme also creates additional questions on this score. For the first three years, all HDB projects will be given to HDB Corporation; thereafter, 10% and then I understand it is 30% in the fifth year and 50% in the sixth year. And the pace of outsourcing, thereafter, will be reviewed at the end of year six. There are naturally questions in the minds of those in the private sector as to how transparent and level the playing field will be in this regard.

Many of the staff in HDB Building Development Division today will be divided. Some will be in the HDB at the parent level, and some will be at the subsidiary level. Can these relationships truly be at arm's length? Should we not accelerate the process of outsourcing and decoupling the relationship between HDB Corporation and HDB? The question is particularly pertinent because having come out with a fair package, which is equivalent to a retrenchment package, the position of an early retirement scheme, we are now endowing the newly established HDB Corporation with the flexibility to set terms and establish itself in a manner that it deems fit in order to compete in the new environment. I would appreciate it if the Minister could clarify this point.

The Chairman: Dr Teo, you can take the next two cuts together.

Dr Teo Ho Pin: Madam, on HDB branch office. With the delegation of the maintenance of HDB estates to the Town Councils, the functions of the HDB branch offices have been reduced drastically. In the past, the HDB had adopted a decentralised approach to build area offices all over Singapore to better serve Singaporeans. To date, these branch offices are providing a range of services, such as purchase of season car park coupons, and lease and tenancy management matters. With the formation of the five Community Development Councils, there is a need to review whether the HDB branch offices can be better synchronised to provide a one-stop service to residents. Many of the CDCs are located at convenient and accessible locations to residents. As such, a rationalisation of these branch offices may be necessary to ensure better outreach of the branch office services to residents.

Sir, I wish to ask the Ministry the following questions: first, are there plans to rationalise the branch offices to better support and advise CDC? Second, will the HDB carpark services be corporatised? Third, can the URA and HDB carpark sections be merged into a single entity?

My next cut is on Build to Order (BTO). The BTO scheme was introduced to replace the Registration of Flats system for HDB flats last year. The main purpose is to ensure a better match of demand and supply of HDB flats. What is more important is that it allows flat applicants to choose specific locations when applying for HDB flats. However, to achieve this, HDB must allocate more sites for BTO and provide a wider mix of flats, maybe from studio to 5-room flats, for each BTO site. If demand for a particular mix of flats is below 75%, HDB must readjust the mix of flat types so as to attract new demand. In this way, there will be no abortive BTO sites, resulting in disappointment among flat applicants and wastage of resources. Like private developers, HDB must be prepared to reduce the sale price of unsold flats for those with less desirable attributes, such as facing bin centres or poor view.

Madam, I wish to ask the Minister the following questions: (1) does BTO provide better matching of demand and supply of HDB flats? (2) can HDB consider providing a better mix of flats for each BTO project?

Mdm Cynthia Phua: Madam, my concerns are with the changing demography of the Singapore population. The new HDB could work towards being more responsive to the public. Many of the post-war baby boomers will be reaching the senior citizens age group. Many may need to downgrade their living standards in view of the smaller families that they have, and many, in view of the economic downturn, may just want to be economically independent and free of their assets. HDB should take an active review in the provision of suitable housing types for the future change in the demography of the people.

In view of the advancement of information and communication technology, the HDB should review its provision of basic facilities within the flat, eg, the provision of broadband and wireless network, to meet the future needs of Singaporeans who are growing up with the computer and Internet world. These facilities and amenities would become the basic necessities than luxuries. This would also provide the backbone for the home office concept.

In view of the small number of flats to be built and sold by the HDB, HDB could relook into the various policies for the sale of HDB flats. HDB, presently, has the most complicated policies and guidelines in the sale of HDB flats.

With a surplus of about 9,000 flats as at 31st December 2002, HDB should look into the selling of the flats on a daily basis, rather than on a monthly basis currently. This is the standard in the private sector. I am told that, recently, Wing Tai also sold their flats and houses during the Chinese New Year holidays and gave away ang pows to prospective buyers. Would HDB, possibly, consider selling the 9,000 excess flats in the open market at market price without subsidy and without the usual HDB restrictive conditions for occupation and resale?

As an incentive, HDB could do some accounting on the holding cost of its built-up HDB flats. For example, some of the surplus flats under the SERS redevelopment programme are not let out to the public promptly. Some blocks were ready at least for two years before take up by residents, and many of these flats are in superb locations where demand is very high. The timing for the occupation of the flats could be better scheduled if the holding cost of the built-up flats is taken into account.

The Chairman: Dr Warren Lee is not here. Dr Teo Ho Pin.

Dr Teo Ho Pin: Madam, in order to encourage home ownership, HDB should review the resale levy, especially for 3-room flats. Many 3-room flat dwellers are working class families and need more space as their families grow. Today, some are living in congested flats and are unable or cannot afford to upgrade to a 4-room flat. With grown up children, some of their children have to sleep in the kitchen or living room, as there is not enough bedroom for them. The crowded living conditions are also not conducive for their children to study at home. The 10 years time bar imposed by HDB for upgraders has further aggravated this problem, resulting in more families staying in congested 3-room flats.

I wish to ask the Minister the following questions: (1) can HDB consider reducing the resale levy for 3-room flat owners who wish to upgrade to a 4-room flat? (2) can HDB waive the resale levy for those who sold their flats below their purchase price?

Mdm Cynthia Phua: Madam, on affordability of HDB flats. Presently, HDB policies are geared toward Singaporeans upgrading their flats. This is natural, as most Singaporeans, when they can afford, would want comfortable and bigger sized flats. And most of us have also grown up with the aspiration of owning our flats, as big as possible. We are the only country that has the highest home ownership, and when the economy changes, most Singaporeans would be tied down to their assets, difficult to make a vertical move for their housing, unlike some who rent a house or a flat. In view of such scenarios present and in the future, HDB should review its present housing policy to allow for downgrading and the need to build smaller flats. Presently, the purchase of 3-room HDB flats is only for first-time applicants, earning an income of less than $2,000. Will HDB review its policy to allow existing flat owners who need to downgrade to 3-room flats and meet the income criteria of below $2,000 another chance to purchase directly from HDB the 3-room flats? The reasons are that some of these households staying in bigger flats just simply cannot afford to buy a 3-room flat in the open market, since they still have large outstanding loans of their present bigger flats and could not maintain the present flat. Does the HDB have a sufficient supply of 3-room flats to cater to families who require them?

Mr Zainul Abidin Rasheed: Madam, Singaporeans are indeed very lucky to have the CPF scheme to allow home ownership to be made affordable. That is definitely true for the first generation of homeowners in the first 20 years of our independence. Indeed, following the significant jump of property prices, many Singaporeans sold their flats ending up cash rich, yet upgrading into a second flat, continuing to use the CPF scheme as a second bite of the HDB cherry. I was told that the number of Muslims who went on Haj, for example, during property prices boom time, showed a direct correlation to sales in HDB flats. But, unfortunately, no more.

In fact, many of those who upgraded, while hoping to sell again later, are now caught. If they are among those retrenched or unemployed, their problems get worse.

The question of affordability of public housing arises in the context of new flat prices, retrenchment, the passing of the high wage policy and, possibly, reduced CPF contributions. The question now is: is HDB housing still affordable? How would MND and HDB keep public housing affordable, especially when they would want to keep housing of first-world quality? 4.15 pm

Dr Mohamad Maliki Bin Osman (Sembawang): Madam, the new HDB loan financing policy took effect on 1st January this year. The banks have reassured us that it will not be too quick to repossess the flats of borrowers who have defaulted payment. I am glad to note this and I hope we will not face the problem later on. While the issue of repossession may be far fetched, other issues are beginning to emerge.

Madam, I would like to discuss the plight of two groups of people who may face difficulty with the new financing policy. One, is the failure to obtain loan by those with poor credit standing. The banks are not likely to extend the loan to those who were assessed to have poor credit standing. There are about 15,000 undischarged bankrupts as at September 2002, and thousands more are waiting at the doorsteps of the High Court to be declared bankrupt. Some are trapped with credit card and other bills. These people will not stand a chance in obtaining housing loans from the banks. Worse, what happens when they cannot afford their current flat any more and want to downgrade to a smaller flat but they are not eligible for any more concessionary loans from HDB, thus forced to borrow from the bank? They are likely to be rejected due to their poor credit worthiness. What will happen to these individuals? They probably cannot rent the HDB flat either, as they would have to serve a 30-month ban. If they remain in the current flat, they are just going to accumulate more arrears with interest. They are stuck.

Madam, they are the products of our own system. When times were good, we encouraged them to upgrade. We are proud to tell others that we have 85% of our population that own their own flats. But when they are stuck, what do we do? I would like to ask the Minister to share the Ministry's position with regard to such cases.

The second group involves those whose composition of family nucleus changes. Madam, many Singaporeans appreciate the Government's offer of concessionary rates to their mortgage loans. However, sometimes, family circumstances change and render it necessary for families to have to change the names of co-lessees due to different circumstances. Quite unfortunately, when such circumstances arise, HDB considers the next loan negotiated as separate and renders the family not qualified to enjoy concessionary rates any longer. The new policy forces them to get "refinancing" from the commercial banks as it would have been considered as a "market rate" borrower with HDB previously.

Madam, lay persons often find it difficult to understand such processes. How can changing a name of a co-lessee mean that their monthly instalments will have to increase? They do not understand that they are actually signing a new lease agreement. HDB will argue that it is the same as selling the current flat and buying another flat with different people as co-lessees. Will HDB consider on a case-by-case basis, depending on the circumstances of each case, allowing for concessionary rates to continue even after the names of co-lessees were to change as long as the main lessee remains? Madam, I think the problem is that the two concessionary rates are granted to each family nucleus. But the problem is that the composition of the family nucleus may change, that is, sometimes circumstances force one to change course and direction without one's own deliberate intention. Such cases may be rare, but it does test the flexibility of the system in its place. I would like HDB to relook at this policy in the light of such cases.

Dr Warren Lee (Sembawang): Madam, Dr Maliki has covered my points. I withdraw my cut.

The Chairman: Ms Irene Ng is not speaking. Mr Othman Haron Eusofe.

Mr Othman Haron Eusofe: Madam, recently, the HDB introduced an option period to enable purchasers of resale HDB flats time to reconsider their purchases. I would like to ask how effective this will be, especially when some housing agents can impose conditions or manage the transactions on behalf of the purchasers, giving them little room to reconsider their purchase. This is particularly so for those who are not so well educated.

Let me just highlight an example which came to my MPS which I have written to the HDB to investigate. This is the case of a person who is a cleaner earning some $800 per month. She sold her 3-room HDB flat and wanted to rent a HDB rental flat but was not able to do so. She was in a desperate state. Therefore, when a housing agent approached her, telling her that he could help her purchase her 5-room flat, she took the bait. What happens is this. The agent made her sign a declaration that her income was something like $2,500 per month. Then the agent made her sign documents to allow another person to be her power of attorney, which means effectively taking the decision of the purchase from her. As a result, she bought a 5-room flat and now she has seen me saying that she has difficulty servicing the loan. I am wondering how this case was processed at the HDB.

I think we should take steps to inform housing agents that they should be careful in the way they help in the purchase of flats and we should not allow unscrupulous housing agents and their associates to take advantage of poorly educated residents who can be unsuspecting of things. I hope that HDB will look into this case and see how they can tighten up the resale regulations.

Mr Ong Kian Min (Tampines): Madam, although the local residential market has declined over the last few years, rental of premises from private owners is still out of reach for many low income families. The going rate for a single room in a HDB flat is about $300 per month. Families who have low income can hardly afford to pay this kind of rent and have enough to sustain the household expenses of a normal family. Such families naturally look to HDB and its current stock of heavily subsidised rental flats. To qualify, at least two eligible tenants must come together, their income must not exceed $800 per month and they must not have owned a HDB flat in the last 2 1/2 years. However, there are many families out there who fall between the cracks, that is, they cannot afford to buy and own a flat for various reasons and yet do not qualify for a HDB rental flat.

Families that fall within this category requiring rental premises are those who have to sell their flats, especially in divorce cases and financial hardship cases, those who cannot afford to pay the 20% cash lump sum downpayment to purchase a flat, those who do not qualify for housing loan from HDB or commercial banks, and those who have lost their income and need some temporary help to adjust and sort out their financial commitments. At the same time, I understand that HDB plans to scale down or totally withdraw from providing subsidised rental flats. HDB has just renovated the interior of most of its present stock of rental flats, upgraded them and will be offering to sell them to sitting tenants. This is a one-off exercise that will benefit the existing tenants and help them to own their flats.

But these existing tenants are not, and will not, be the only ones needing affordable rental flats. Many other families needing such help will emerge from time to time as the product of the circumstances at the material time. I would like to ask the Minister whether HDB will be helping to provide a roof over their heads.

Ms Irene Ng Phek Hoong: Madam, going by the appeals I get from my meet-the-people session, there seems to be a rise in the demand for HDB 1- and 2-room rental flats from three groups. First, the elderly who want to live apart from their children for various reasons, chief of which is that they could not get along, causing much unhappiness within their family. Second, the single parents, especially those who are recently divorced and need a home of their own as their matrimonial flat will have to be sold. And third, those hit by the economic downturn and who have to sell their flats to downgrade to rental flat.

Often, these are urgent cases requiring an affordable roof over their heads. I would also foresee that, as more lower-educated men stay single and as they age, they too will look for rental flats. As we know from statistics, for the men, it is the lower-educated above 40 who make up the majority of men who are still single and who are likely to remain single. But HDB policy for rental flats is presently quite strict. To qualify for a rental flat, the total household income must not exceed $800, and those who have sold their flats in the open market will be debarred from renting a HDB flat for 30 months from the date of the sale. Also, there needs to be a family nucleus.

I am aware that HDB exercises flexibility on a case-by-case basis, and I am grateful for the occasional positive responses from HDB to my appeals, on behalf of my residents. But I do think that there is a case for reviewing the criteria, especially the income ceiling which is presently I think too low. I would suggest raising it to at least $1,000 to capture those, as my colleague Mr Ong Kian Min said, who fall between the cracks.

The trends I cited stem from social problems, for example, marriage break-ups or family problems, but they are often not in the control of those affected. For instance, it is no good telling the divorcee that she should have stayed married, or telling those hit by the recession that they should not have bought such a big flat in the first place. They need solutions to their housing problems. The more readily the rental flats are available, the more it would help them. We do not want a society where Singaporeans, especially those who cannot afford it, need to have their cash tied up with property, leaving nothing for their old age. If they want to live prudently and if that means living in rental flats, we should give them that option more easily.

I would urge MND to review the criteria, especially the income ceiling. Also, can the Minister review the situation of rental flats to see if there are enough flats to meet the demand?

Mr Ong Ah Heng (Nee Soon Central): (In Mandarin): Madam, the Singapore Government has been very successful in implementing its "Home for Everyone" policy. There are now about 85% Singaporeans who own their own flats. However, I observe that there are still many flats in the western part of Singapore which are unoccupied. They have been completed but for more than two years, they are still not being occupied.

I think the HDB should make some good use of these flats by renting them out to those who need these apartments, particularly those who have to move from other parts of Singapore to the west in order to be near to their work place. This would make it more convenient for them.

Many fresh university graduates and young couples have just joined the labour market. They cannot afford to buy their own flats because they have not enough CPF to meet the downpayment. Why should we force them to buy the flats? Why can we not have more rental flats available to them near their places of work? They can rent the flats from HDB and it would be convenient for them to go to work. If they were to buy a flat in one part of Singapore and later on find a job in another part of the island, they would have to either sell their flat and buy another one nearby, or to pay through their nose to rent an apartment from a private landlord.

In my view, HDB has succeeded in providing some 85% of our citizens with their own flats, a record which is not achieved by any other country in the world. In other countries, the majority of their citizens are renting their accommodation. Having already achieved such a remarkable record, we should not insist that our people buy their own flats. If a worker lives in Tampines and works in Jurong, why can we not allow him to rent a flat in Jurong? Next time, if his work is relocated to Woodlands, he can give up the tenancy in Jurong and rent a flat in Woodlands. He does not need to sell one flat to buy another one, and then sell the second flat to buy a third one, just to be near his place of work.

I am sure many of my colleagues would agree with me that we should raise the income ceiling for the rental flats. I think the current ceiling of $800 is not realistic. Imagine a worker earning $1,000 gets only $800 take-home pay which is hardly enough to support his family, yet he is not qualified to rent a flat from HDB. I suggest that the Government should review this. We have already been successful in our home ownership scheme. It is time for us to build more rental flats so that the young couples would benefit.

Mr Heng Chee How: Madam, current HDB rules allow only households with income of not more than $800 a month - which I think is roughly the bottom 10% or so of households - to rent flats from it. For the segment of the population just above that level, the next cheapest option for them would be to buy an entry level 4-room HDB flat.

An estimate of the proportion of average monthly household income, including the employer's CPF contribution, spent servicing a typical 4-room mortgage for this segment can be large, ranging somewhere between 15% and 34% by one estimate. This results in pressure, not only felt by the worker, but also in his expectation on nominal wages that he would seek from his company. It also raises the reservation wage for those unemployed within this group. Yet, as we know, the global wage for persons in this group would be low. Therefore, this is a cost issue that we should help address in order to aid the process of tackling structural unemployment. 4.30 pm

Aside from help with housing purchase subsidies, the option of providing affordable rental public housing for a larger segment of the lower middle income population should also be considered. Besides reducing the household expenditure for this segment and while acknowledging the importance of the home ownership programme, it is beneficial, in my view, to allow for greater flexibility at the lower middle end of the market, in view of a more uncertain future economic environment.

To execute such a move, related administrative policies defining eligibility for housing rental, such as the $800 income ceiling, various forms of debarment rules, as well as assistance that can be offered in facilitating these kinds of moves and transfers, would have got to be reviewed. I hope that MND can consider these suggestions.

Dr Mohamad Maliki Bin Osman: Madam, HDB rental flats have always been seen as a haven for our low income families. They are meant for those deserving, and thus HDB has set out clear and stiff rules that govern the operations that allow people to rent HDB flats.

Like many of my colleagues before me, I would like to highlight one of the groups that is affected by the current policy, ie, the plight of the single parents with their children. Often times, these are the single mothers and their children who are affected. Because of the 30-month debarment period, they have little option; often times, the woman is left with her children with nowhere to go.

I have seen several cases of my residents who live like nomads, moving from one relative's home to another, sometimes squatting at friends' homes and, after a while, they would have just exhausted their options of informal support providers. In fact, I just saw one last week when I was doing my block visit. She has three children and she has been moving from one place to another, often relying on the sympathies of others. The impact on the children is negative and undesirable. The irregularity and instability will affect their development. Can we be more sympathetic to the plight of such women and children?

Madam, we all know that they receive little or no maintenance from their ex-husbands. Because of the lack of education and skills, they face difficulty in looking for jobs and, even if they have jobs, these jobs pay very little. Certainly, they will qualify for the rental flats based on their income. But they are stuck, due to the 30-month debarment period.

I can anticipate HDB's response. It does not want to encourage people to abuse the system as it will encourage people to see divorce as an easy option as housing is readily available after that. This argument will stand only if people's sole motivation to divorce is to enable them to rent a flat. Madam, divorce is complex and does not happen overnight. Social workers, family and marital therapists will tell us that sometimes it is better for an acrimonious couple to separate than to live together. While we want to strengthen our families, sometimes couples are better off divorced. I do not think that making the rental policy more flexible to accommodate the single mothers and their children will lead to higher divorce rates. Certainly, reasons for divorce vary. I am asking for some flexibility to be exercised for the genuine cases who do not have any means of purchasing their own flats. The open rental market is just too expensive for them. Let us do a little to lighten the burden of these families, to allow their children to experience some stability in their lives.

I am sure HDB will also say that the number of rental flats is limited and that there is already a long waiting list. As of March 2002, I understand that there were more than 55,000 rental flats, most of which are 1 to 3 rooms. This is not a small number. One of the criteria, as mentioned previously, is the $800 income ceiling. Since rental flats are heavily subsidised, I would like to find out what proportion of the tenants are those who really deserve these rental flats. There are those who earn less than $800 per month. They may have qualified initially, but their economic circumstances have improved over the years and they are still staying in those rental flats.

Does HDB check their incomes regularly and determine if they are still suitable tenants of the rental flats? If the supply of rental flats is considered limited, perhaps HDB should do regular monitoring of the income levels of its tenants to ensure that only those who really are low income families are allowed to rent flats, because of the heavy subsidies, and encourage those who can afford to actually purchase their own flats, thus freeing the flats for more deserving residents.

Mr Othman Haron Eusofe: Sir, there were five speakers on rental flats. They have raised all the points which I wanted to raise. So I will join them to ask the Minister to review the criteria for rental flats, especially the income ceiling, and also to ask the Minister to consider providing more rental flats, especially bigger rental flats.

Mr A Nithiah Nandan: Madam, I do agree with what Mr Othman said. Otherwise, I would be doing something totally unique.

I do support all the other speakers. The number of speakers indicates the criticality and severity of the problem on the ground. I hope that the Minister, who has rejected it earlier on, will reconsider again the eligibility criteria and having more rental flats. I also wish that he would give more flexibility to those who still want to own their homes but have difficulty in paying.

The Minister for National Development (Mr Mah Bow Tan): Madam, I thank all the Members who have spoken on the topics under this cut. Members have raised a very broad range of issues on HDB, and many of them, in particular, have spoken on the restructuring of HDB and its role thereafter.

Madam, let me, first of all, respond to their concerns about the role of HDB and the restructuring. Last year, during the Committee of Supply debate, I announced that, as part of our review of the roles and functions of HDB, we were looking into the feasibility of corporatising HDB's Building and Development Division (BDD). Last month, I announced our plans for the restructuring of HDB, ie, from 1st July this year, BDD will be reorganised and a new company to be called HDB Corporation Pte Ltd (HDB Corp) will be set up. HDB will focus on its role as the public housing authority.

It is a major change for the organisation. The HDB was set up in 1960 to tackle the acute housing shortage facing Singapore at that time. There was a very interesting piece in yesterday's Sunday Times by Susan Long, entitled "The HDB Story". It was a fascinating story of HDB's early days as told by its first Chairman, Mr Lim Kim San. As Mr Lim recalled:

"At that time, when the HDB first came into being, only 9% of Singaporeans lived in low-cost Government housing. The rest subsisted in overcrowded slums and squatter colonies which were breeding grounds for crime and gangsterism."

Madam, this was not too long ago - in fact, certainly within living memory - and I am sure many Members of this House would have had personal experience of such conditions. I myself recall at various times of my childhood sharing a room with eight or nine others in a shophouse in Bugis Street, later on in an attap hut in Lorong Ah Soo in Hougang without running water or electricity and, finally, growing up in an SIT flat in Kim Keat Avenue. By the way, all these three places have disappeared, replaced by a shopping centre in the case of the Bugis Street shophouse, and by new HDB flats in the other two cases.

Madam, the challenges faced by HDB were formidable ones. It had to build thousands of flats in record time. It had to acquire land for housing estates, making many landowners very, very upset. In fact, some of these landowners were PAP supporters. But, despite their loss, many of them today still remain loyal to the PAP. It also had to resettle people from squatter huts in kampongs to high-rise flats. Again, in this article, Mr Lim was quoted as saying:

"When HDB first relocated 80 squatter families along Kim Seng Road to brand-new flats in nearby Queenstown, more than half of them moved back to their squatter huts in less than six months because they were not used to living in high-rise apartments."

Under the leadership of Mr Lim, HDB overcame the odds and succeeded in breaking the back of the housing problem. The Senior Minister, then Prime Minister, who appointed Mr Lim as Chairman of HDB in 1960, paid him this tribute:

"It was crucial, life and death. If we failed, we would not be re-elected. This was the first year of office of the PAP."

Madam, it was as much a tribute to Mr Lim as it was to the many men and women who worked in HDB.

Slowly, over time, HDB housing became more widely accepted. For the first time, many Singaporeans became proud home owners. Older MPs recalled how they would officiate at ballotting exercises for allocation of flats, and residents who were successful in the ballot thanked them profusely for their good fortune. With home ownership, people began to have a tangible stake in this country. Today, almost nine in

10 Singaporeans are HDB dwellers. Almost all of them own their own flats. These are not tiny flats either. If we compare the flats in Singapore with those in, say, Hong Kong or even in Tokyo or Seoul, our flats are luxurious by comparison. Each Singaporean has about, on the average, 20-25 square metres of living space. This is double what a resident would enjoy in Tokyo or Seoul, or three times what a public housing resident would enjoy, say, in Hong Kong.

The quality of HDB towns has also won international recognition. Among the many awards, I am particularly proud obviously because Tampines Town was conferred the UN World Habitat Award in 1991, and this was against very strong competition from places like Vancouver and Boston. We received many, many foreign dignitaries. They visit us, our housing estates and the HDB. They come from China, India, Mauritius, Mozambique, Pakistan, South Africa and the UK. Without exception, they have all been impressed by our public housing achievements. By housing the large majority of Singaporeans in quality and affordable flats, HDB has contributed significantly to our nation-building efforts. Madam, Members may well ask: if that is the case, why are we tinkering with something that is not only not broken but has been extremely successful in what it does? I think this is a valid question. Let me assure Members that this decision to restructure HDB was not taken lightly. The fact of the matter is that the world has changed, and Singapore has changed with it. The Singapore of today is different from the Singapore of the 60s, 70s, 80s or even the 90s. Inevitably, this must affect our public housing programme in many ways. 4.45 pm

I see three reasons why the HDB has to change. Firstly, economic reasons. We have seen dramatic shifts in the demand for public housing over the last 5-10 years. For example, in April 1997, at its peak, the waiting list for HDB flats under the Registration for Flat System (RFS) was 146,000. About half of them were first-timers. In January 2002, slightly over a year ago, the waiting list fell to 12,000, slightly less than 10%. In 1997, HDB was building more than 13,000 flats a year. Last year, its building programme was zero. HDB did not build any flats as it focused on clearing the excess stock. No organisation which faces such changes in demand can say that it does not want to change, that it can afford to stay the same. The volatility in the demand makes it difficult for any organisation or developer, including HDB, to manage its staffing or its resources properly.

Is this drop in demand temporary, one might ask. I do not think so. The demand from first-timers is likely to remain fairly constant, in tandem with the household formation rate. But the days of hectic churning, I believe, are over. The demand from second-timers is not likely to return to the levels of the mid-90s. This is due mainly to the various policy changes that we have introduced. These include revisions to the resale levy and also the imposition of that 10-year time bar before households can apply for their second subsidised flat. Today, the property market is more stable, generally in line with economic growth. And with the switch to the Build-to-Order system which I will elaborate later on in my speech, it can be more responsive to certain shifts in demand from HDB flat buyers.

The second reason why I believe HDB has to change is because of social reasons. As Members are well aware, HDB is already housing 85% of Singaporeans. We have already far exceeded what we first set out to do when HDB was formed in 1960. Can we do more? Should we aim to, say, house 90-95% of the population in public housing? Such a target is not realistic. We must expect that, as our population becomes better educated and as incomes rise, most Singaporeans will aspire to private housing. In terms of housing stock today, the public-private housing mix has fallen from about 86%:14% in 1990 to about 81%:19% today. It could fall even further to 75%:25% in the medium to long-term. Even for public housing, it is timely to consider how we can allow the private sector greater participation, provide more choices for HDB flat buyers.

Third, political reasons. As our economy and society mature, we need to encourage entrepreneurship and risk-taking. We need to promote greater self-reliance and responsibility among those who can fend for themselves. This brings me to the third main reason for change.

Public housing is a significant part of the Government's social safety net to provide a roof over our people's heads. We should ask ourselves, however, whether we have created too big a safety net and inadvertently encouraged a dependency mindset amongst our people.

I get worried when I come across cases, either at my own meet-the-people sessions or when other MPs bring their cases to me, of elderly parents who are thrown out of their homes by their children and told to go and look for HDB to solve their problem. It is not because that there is not enough space in their flats. In some cases, the children are staying in 4- or 5-room or even Executive flats. There are some in financial difficulty who can help themselves but, again, insist that HDB break the rules for them. Then, there are those who expect and demand HDB to repair the spalling concrete in their flats, even though their flats are 20 years old. When ceilings leak after 10 years, flat lessees insist that HDB fix it free-of-charge.

I recall a resident who bought a flat from the resale market and then demanded that HDB rectify all the defects in his flat, even though they were due to wear and tear. I read the letter twice to make sure that I had got it correct. He had actually bought a resale flat.

Over the years, HDB has developed a culture of compassion and concern and it instinctively seeks to help its residents whenever it is required to do so. Members of this House have acknowledged this. Last year, Mr Ahmad Khalis told this House, and I quote, "We have the HDB bending backwards, sideways, forward, in all directions, to help accommodate the awkward positions that the HDB flat owner is in". Even Mr Low Thia Khiang, in one of his questions during Question Time, acknowledged that HDB does, on compassion grounds, help residents who are in financial difficulties.

This does not mean that every MP's appeal is successful. Indeed, I still remember Ms Indranee Rajah telling this House that it is easier for a camel to pass through the eye of a needle than it is for her appeals to succeed. The truth is somewhere in between. The issue is how to distinguish between the genuine appeals and the not-so-genuine. HDB will continue to hone its instincts in this regard.

But we must ask ourselves: is it healthy to have a safety net that catches everyone regardless of need? Can we afford this in future when increasing demands are placed on our resources by an aging population? What does it do to our drive for self-reliance and risk-taking? We need to change this mindset among Singaporeans. It will take time, but we must start somewhere. It is a fundamental part of our remaking of Singapore.

The Government will continue to provide a public housing social safety net. We will help Singaporeans own their first home. We will make sure that it is a good home, a quality home. We will make it worth their while to upgrade to new homes, or else, we will upgrade their homes for them. But this safety net should be refined at the edges to focus on those who are in genuine need. For those who can look after themselves, they must start to do so.

Madam, let me now turn to the restructuring of HDB. Going forward, we need to make HDB more focused on its core functions and also make it more flexible in meeting the changing housing needs of our people. The HDB still has a major role to play in planning and executing our home ownership policies. It has to ensure that public housing subsidies are disbursed equitably. It has to ensure that quality and affordable flats are built, even though it does not build it itself. It has to make sure that leases are properly administered and that towns with good supporting amenities are planned and developed to meet demand. Finally, it has to make sure that older estates are systematically renewed and revitalised so that cohesive and vibrant communities will continue to evolve.

Madam, when I announced plans for restructuring HDB last year, I had two main concerns. First, the quality of service must not suffer. If anything, it should be enhanced. And second, the morale of the staff must not suffer. The two are inter-related. The quality of staff service will suffer if staff morale is poor.

We considered various options in the restructuring of HDB. The first option was to do the minimal, to carry on with HDB's present structure but to retrench surplus staff in the Building and Development Division (BDD) to match the building programme. But this option is not a long-term solution. HDB staff will need to be retrenched each time the building programme slows down. When private sector participation in public housing is stepped up, there will be further retrenchments. There will be a lot of uncertainty. Staff will be thoroughly demoralised.

The second option was to corporatise BDD, turn it into a company, unlock its value. BDD has talented people, with years of experience, whose skills would be in demand in many other countries. It has a track record that few organisations around the world can match. Corporatisation of BDD will allow it to leverage on its strength and capitalise on the HDB's brand name to venture overseas, especially in rapid growing countries like China and India. We decided on this second option, ie, to corporatise BDD. 5.00 pm

Next, we had to decide how to corporatise BDD. Again, we had two options, two ways of doing it. One way was for the new entity to hire the staff on HDB's existing terms and conditions. Under this option, staff joining BDD would not be retrenched, they would not get the SRS, but they would be guaranteed a job, with no loss of pay or seniority or other benefits. This option would create problems down the road. The new corporatised entity will be saddled with high cost and it would not be nimble and flexible in reacting to changing housing preferences.

The other way was for HDB to offer voluntary early retirement to all its staff through the Special Resignation Scheme (SRS) of the civil service. Those who remained, would be redeployed within HDB's new organisation structure, based on its new role. Those who opted for SRS and decided to join the new corporate entity of BDD, ie, HDB Corp, would do so on new terms and conditions. In other words, HDB Corp would start off on a clean slate. It would not take over HDB's cost structure. It would not take over terms and conditions of service that HDB used to offer. We decided to adopt this method. This is a more complicated option, more effort and time are needed to retrain and to redeploy staff, but it is a win-win for the staff and the organisation. It is fair to HDB staff. It shows our appreciation to them, for their years of service. It is fair to HDB as it allows them to cut cost, streamline, refocus. And, finally, it is fair to the new company as it gives them and their staff a fighting chance to succeed, with no guarantee of success, but with every confidence that they will succeed. And, if they do succeed, they would once again bring value to Singapore.

There has recently been some public discussion on whether we were actually too generous towards HDB staff, especially those who leave HDB under the SRS and are subsequently re-employed. A few Members have also raised this. Let me explain why I believe these concerns are unfounded.

HDB staff are public service officers, with tenures until retirement. The SRS recognises this reasonable expectation of employees of statutory boards and civil servants. In previous public service restructuring exercises, eg, in the case of the hospitals, all staff were given the option to join restructured hospitals on terms that were no worse off than what they were getting. However, in the case of HDB Corp there is no guarantee of a job for all. Ex-HDB staff who are accepted by HDB Corp would be employed on fresh terms. They would be no different from others who receive benefits, leave HDB and join another company. So, whether they join XYZ or HDB Corp they would be getting their retrenchment benefits and then they would be joining the new company, if they agree to those terms and conditions. So the offer of SRS is not unreasonable, nor is it unduly generous.

As I mentioned earlier, one of the considerations in this exercise was to maintain the high morale of the organisation and the high level of service to the staff. So we took a decision to keep staff informed, as early as possible, as openly as possible, and as fully as possible, to dispel any uncertainty and quash any unnecessary rumours. The CEO met all 8,000 staff, in groups of 500, 16 sessions in all, to explain the restructuring process. HDB management worked closely with the HDB Staff Union. There were various communication channels open to staff to provide feedback. During the briefings, via direct emails, there was even a dedicated staff hot-line. A counsellor was made available for staff who were affected by the changes and needed assistance. As a result of a combination of early retirement and redeployment, HDB's staff survey indicates that there may be no need for HDB to retrench anyone. Madam, in a major restructuring exercise such as this, I believe this is an outcome which both management and staff of HDB would welcome.

Dr Teo asked about the cost of the restructuring of HDB. I am afraid that I am not able at this point in time to give a definitive answer because the exact number of staff leaving under the SRS would only be confirmed by the end of May, and it is only at that point in time that we will be able to determine the cost of this exercise. But, in any case, let me make this point. This cost will eventually be recovered through a reduction in HDB's manpower cost in subsequent years.

Let me now go on to address some of the other specific issues regarding HDB Corp that Members have raised. The HDB Corp will focus on four strategic business areas, namely, building and infrastructure consultancy work, including architectural and engineering works and project management; integrated township development; property development and the acquisition and marketing of construction technology solutions. Some MPs, eg, Dr Amy Khor, Mr Ang Mong Seng, amongst others, have raised the concern that HDB Corp will compete with firms in the private sector and take away their business. I do not think there is a need for private developers to be unduly worried. In fact, the corporatisation of BDD paves the way for private developers to be more involved in the development of public housing.

The public housing building programme will be gradually opened up to the private sector - 10% in year 4, beginning July 2006, 30% in year 5 and 50% in year 6. HDB Corp, through its subsidiary CESMA, will only be allowed to compete with the private sector for non-HDB projects in year 5. The volume of projects in the public housing sector is large, compared to the volume in the private property sector. So private companies are more likely to gain from the outsourcing of HDB projects than HDB Corp would from being allowed to compete locally in the private sector. But, in fact, the more important market for HDB Corp is not in Singapore, but overseas. So HDB Corp's focus will be on the overseas market. This phased approach that I mentioned earlier will ensure that there is minimal disruption to the public housing programme in the initial period of liberalisation.

Mr Iswaran asked, for example, whether the pace of outsourcing can be accelerated. My answer is that we will monitor this outsourcing programme and, if it is going well, I do not see any reason why we cannot accelerate the programme. In any case, my Ministry has made it clear to HDB Corp that there is no moratorium and that this outsourcing programme may be varied, depending on policy dictates.

Madam, in the longer term, such a move, I believe, is a big plus for Singaporeans. With greater competition, it will result in greater choice and variety, more innovation in building and design, and better value for money for flat buyers.

Mdm Cynthia Phua asked about private sector participation in the implementation of estate renewal programmes. The formation of HDB Corp will not change the level of private sector involvement in our estate renewal programmes, at least in the beginning. For example, for precincts that are selected for MUP, the adviser can continue to choose between HDB or private sector architects to design their upgrading package. But, over time, as the implementation moves forward, we will study how we can outsource more of such works to the private sector.

Dr Teo Ho Pin also asked about the value of the contracts to be allocated to HDB Corp in the next five years. Again, I must apologise that I cannot give him a specific answer because HDB's building plan really depends on the actual demand for flats, and the number of upgrading projects is dependent on the economic situation. So, it is difficult, at this point in time, to estimate what that number will be.

Madam, let me assure Members that the restructuring of HDB will be implemented carefully. I do not want this to create unnecessary upheaval on the ground, so, therefore, this should have minimal impact on the public. The new HDB Corp will continue to carry out HDB's building programme in the initial years. HDB, the statutory board, will continue to serve the public in areas such as the sale of flats that needs administration. We will ensure that the fundamentals of public housing are preserved, and that Singaporeans will continue to enjoy high quality public housing at affordable prices.

Madam, let me now turn to the issue of bank origination and the financing of HDB flats. To enable HDB to focus on its core functions, we reviewed and implemented the bank origination of HDB market rate loans, which took effect from 1st January this year. I explained to this House last year why we needed to go for bank origination. It is in line with our move towards greater self-reliance and responsibility on the part of individual flat buyers. Of course, at the same time, those who take bank loans can also expect greater flexibility in the use of their flats. So we relaxed some of the rules and regulations regarding the use of their flats. Flat buyers who take bank loans, of course, would be subject to the bank's mortgage financial policies. And, that is why I have cautioned flat buyers who are taking bank loans to exercise financial prudence and to buy a flat within their means.

With bank origination, the Government is pulling back the safety net a little bit, at the fringes, for those who should not need that safety net in the first place, in other words, the financially better off, or those who already own a flat. At the same time, bank origination has given HDB flat buyers, who take market rate loans, greater choice in their mortgage financing. They have greater flexibility and leeway in the resale and the use of their flats as we have recently relaxed the rules. So those taking bank loans, for example, will have a shorter minimum occupation period, one year instead of two and a half years, before they can sell their flat, and they will also be allowed to sublet their whole flat after occupying it for ten years.

Madam, I wish to inform this House that the bank origination scheme has proceeded smoothly, with banks and financial institutions offering attractive packages to flat buyers and lessees. To-date, HDB has received nearly 3,000 resale applications and new flat bookings with bank loans, and another 2,000 HDB market rate mortgages out of about 100,000, who have refinanced their loans with the banks.

Feedback from the banks indicates that many flat buyers are still adopting a wait-and-see attitude. They want to see whether there are better offers available before committing to a flat purchase. As such, I expect the volume to pick up as the situation in the loan market stabilises. I would like to assure Members, like Dr Maliki and Mdm Cynthia Phua, that bank origination of HDB market rate loans does not detract from our policy of providing subsidised housing for the majority of Singaporeans. HDB will continue to provide subsidised loans to eligible flat buyers. Indeed, Members may wish to know that this is the bulk of the loans that are granted for the purchase of HDB flats. About 60% of the mortgage loans last year, for example, granted by HDB were concessionary rate loans.

Dr Teo Ho Pin and Mdm Cynthia Phua asked whether the review of HDB's functions will cover other areas, such as car parks, industrial properties, commercial properties and so on. Madam, this restructuring exercise is a major milestone in HDB's history. We do not expect to make any more changes of this nature. But HDB cannot remain a static organisation. We will continue to review HDB's rules, its role and functions as circumstances change. 5.15 pm

To give Members an idea of the review that is ongoing, take the branch office, for example. Branch offices play a very important role on the ground. They coordinate between residents, Members of Parliament, the Ministry and HDB. We recognise the value that they add on the ground, and this is the reason why the operations and functions of the branch office are constantly reviewed in order to improve the level of service to HDB residents.

HDB carparks are planned and built to serve HDB residents. They are heavily subsidised and, currently, there are no plans to corporatise HDB's carparks.

Madam, let me now move on to the sale of HDB flats. As I have mentioned earlier in my response, the demand for HDB flats is volatile. In 1997, there were 146,000 on the waiting list. The waiting time for new flats could be four or even five years. Last year, we had the reverse situation. There was an overhang of unsold HDB flats, and we had to implement a walk-in selection scheme where people could just walk in and buy a flat off the shelf. There is an overhang which we are now steadily clearing.

The queuing system has worked well. When demand was high, it provided applicants with greater certainty in applying for new homes. But it was not sufficiently responsive to sudden shifts in demand. So, we have now switched from the RFS to Build-to-Order (BTO) system.

The BTO system better matches the flat supply to buyers' needs and preferences in terms of the location, the flat type and the design. Under this system, the HDB will call tender for construction only if a sufficient number of flats have been booked. If the take-up is too low, HDB will not award the contract. Instead, it will redesign the contract according to the needs and preferences of applicants. And, if necessary, it will also make adjustments to the flat mix. Dr Teo Ho Pin asked, for example, whether HDB can consider providing a better mix of flats for each BTO project, eg, 5-room flats, studio apartments and so on.

In the more recent BTO offer in December last year, we only offered 4-room flats, because that was where the demand was. We still have an excess supply of 5-room and larger flats. But once the supply and the demand of HDB flats have reached a steady state, we will certainly consider offering other flat types, such as 5-room flats under the BTO. As for studio apartments, HDB has recently announced that it will pilot the integration of studio apartments with other flat types in a few sites where there is a high proportion of the elderly. So, we can also similarly consider including studio apartments in BTO projects.

Mdm Cynthia Phua asked whether HDB can sell surplus SERS replacement flats more quickly. Let me explain that SERS replacement flats are still needed to rehouse affected lessees from other SERS sites. Nevertheless, I would like to assure her that HDB will release these surplus units for sale as soon as it is practical.

Mdm Phua has also asked whether we can sell flats on a daily basis. I will ask HDB to consider this suggestion. She asked whether we can sell flats without subsidies - sell all the surplus flats, put them on the market at market price. Is that correct? Was that what she said?

Mdm Cynthia Phua: Yes.

Mr Mah Bow Tan: I am not so sure whether the private sector developers are going to be very happy with this suggestion. But, in any case, I am positive and confident that the surplus flats that we are seeing today - the huge overhang that we had, say, two years ago, which has been slowly whittled down - will be sold off in time. We now have slightly less than half the number of flats left from the time when we first started, and I am sure that, over time, in the next two years or so, such flats will be sold. So, I do not think Mdm Phua's suggestion is a tenable one.

On the resale levy, Dr Teo asked if we could waive the resale levy for various categories of flat lessees, eg, those who sold their flat below the purchase price. Let me explain why we have the resale levy in the first place. When second timers sell their first subsidised flat, they would have cashed in on the subsidy that they enjoyed on their first flat. So, they are required to pay a levy on the selling price of their first flat, but only if they purchase a second subsidised flat from HDB. This is specifically meant to dampen the demand from second timers. If Members recall, before this levy was in place, lessees would sell off their first flat and queue up for the second flat, without any penalty. And why not? Flat prices were going up. They could cash out and enjoy themselves and do many things with the money, including, as Mr Zainul Abidin said, go on haj. But we need to ensure that housing subsidies, which are not unlimited, are fairly distributed between first timers and second timers. Obviously, we have to favour the first timers, because they have more pressing needs.

Economic circumstances have changed. We do not see huge amounts of money being made from the sale of the first flat, as in the halcyon days of the early 90s, but the resale levy is still necessary to ensure a fair allocation of subsidies. Yes, there are lessees of smaller flats who have a need to upgrade. That is the reason why we calibrate the resale levy rate, so that those who upgrade from smaller flats - the 3-roomers - actually pay a smaller resale levy. In this way, the subsidy from the second flat that they enjoy is still attractive compared to the resale levy they have to pay, and that is the reason why quite a lot of 3-roomers still return to HDB for a second subsidised flat.

What about those who are in financial difficulties or need to downgrade to smaller flats? They can use part of their sales proceeds to finance the purchase of a second subsidised flat. Alternatively, they can use their sales proceeds to purchase a smaller flat in the resale market so that they do not have to pay the levy at all.

Most Members may not be aware that we operate a much more generous system compared to, say, in Hong Kong. In Hong Kong, flat owners are eligible for only one housing subsidy, the first flat. There is no second housing subsidy. In addition, when they sell their first subsidised flat in the open market, they have to pay a levy straightaway. The government creams back their housing subsidy once they sell their flats. There is no deferred payment, and there is no second subsidy. In our case, flat owners who do not purchase a second subsidised flat need not pay the resale levy, and they can keep the full amount of subsidy realised from their first flat.

Madam, let me now turn to the many requests for rental flats. Many Members have asked whether, as part of the public housing review, we should revisit our policy towards home ownership vis-a-vis rental, and perhaps allow a larger rental class to avoid tying too much of Singaporeans' money on property assets - Dr Amy Khor, Mr Heng Chee How, Mr Ong Kian Min, Ms Irene Ng and many others.

Some Members have questioned whether HDB flats are still affordable in the current economic downturn and whether we should relax our rental flat eligibility criteria, so that more can benefit from subsidised rental housing. The end result of both requests is the same - more rental flats. But I think there are two separate issues here. The first is a philosophical one, whether home ownership or rental. The second is whether there is enough housing assistance for those who are affected by the economic downturn.

Let me address the first issue - the philosophy of home ownership. Public housing in Singapore comprises both home ownership flats and rental flats. But as home ownership is a key objective, we have deliberately priced our new flats such that 90% of Singaporean households can afford their own homes. This policy has been a success so that, today, 85% of Singaporeans stay in HDB flats, and 95% own their homes. Should we now deliberately restructure our public housing subsidy so that a higher proportion live in subsidised rental housing permanently? Have we really built too many home ownership flats? To me, public housing in Singapore is more than just providing a roof over people's heads. It plays a critical social role in promoting rootedness and a sense of belonging among Singaporeans. To own a home is to own a part of Singapore. It makes Singapore worth contributing to and worth defending.

Government remains committed to home ownership, notwithstanding the restructuring of HDB or any other policy changes, such as bank origination, etc. Social cohesion is critical, especially for a young small country like ours. Giving Singaporeans a stake in the nation through home ownership is the bedrock upon which we have achieved social stability and engendered a sense of community and belonging to Singapore.

Even for low-income families, HDB has several schemes to assist them to buy their flats. We have the Special Housing Assistance Programme, the Sale of Flats to Sitting Tenants Scheme, the Rent and Purchase Scheme for 3-room flats and so on and so forth. Why? It is important that we keep this dream of home ownership alive for as many Singaporeans as possible, especially lower income Singaporeans. By giving them a helping hand to own their homes, we give them a stake in Singapore now and in the future. And as our society develops, as our economy restructures and as income disparity widens, this becomes even more crucial in order to maintain social stability.

Having said that, I recognise that there will always be room for rental. For some, rental is the better and probably the only option. Here, I would like to assure Mr Ong Kian Min that HDB does not intend to stop its rental flats scheme.

Today, the monthly household income ceiling for subsidised HDB rental flats is $800. Most of the lessees in rental flats are in 1- or 2-room flats. And some Members have asked whether we can relax this eligibility criterion. At $800, we are talking about the 12th household income percentile - the bottom 12% of Singaporeans. Yes, we will study whether this current income cut-off is still relevant today or whether it should be raised. But even while we are doing the study, let me assure Members that we are always mindful of the fact that there will always be some people who will fall in between the gaps. And for such cases, HDB will see how it can help on a case-by-case basis. But we should be careful not to make subsidised rental housing so comfortable that people are quite happy to remain in these flats even when they no longer need such assistance. If you go to Hong Kong, for example, they will tell you and show you many middle to higher income families who stay in subsidised rental housing throughout their lives - very comfortable rental housing, no intention of moving out, whatsoever. 5.30 pm

Madam, some Members have questioned whether the HDB flats are still affordable, especially during this current economic downturn. Let me assure them that it is, and will continue to remain so. Last year, those who bought 4- and 5-room flats of HDB needed to use, on average, around 18% of their total gross monthly household income which includes their CPF to service their mortgage loans.

Mr Heng Chee How mentioned just now a figure as high as 34%. I am not too sure where the figure comes from. But it may be interesting for me to have some indication from Mr Heng so that we will be able to verify those figures. But what HDB tells me is that, on average, 18% of the monthly household income is being used to service the mortgage which is certainly well within the 40% guideline which most financial institutions used as a tool of credit assessment.

Just to give some specific numbers. For a 3-room buy-back flat which HDB offers, a family would need to spend less than $300 on the mortgage instalment. And for those who opt for cheaper flats, they will pay less than $200 per month. Notwithstanding this, there may be those who wish to rent temporarily, like what Mr Ong Ah Heng has described - newly-married couples, young mobile workers, and so on. They want to rent before they buy a flat, or they want to rent one nearer to their place of work, or whatever. I suggest that they can do so, even today, by renting from the open market. This is something that the Government can and will continue to facilitate.

We have already taken the first step by relaxing the subletting rules. First of all, a few years ago, we allowed elderly lessees to sublet their whole flat, subject to certain conditions. We can relook at those conditions, if need be. We have relaxed the subletting rules since 1st January this year for lessees of non-subsidised HDB flats, who are taking bank loans and who have not taken any loans from HDB. This will increase the supply of rental flats in the market and, if need be, we can relook at the rules and relax them even further.

So if you take all these schemes into consideration, inclusive of flats that are sublet under the elderly scheme and those under special circumstances, for example, those who are overseas, there are more than 30,000 HDB flats that can be sublet. So I believe that there are sufficient HDB flats available for rental on the open market. Of course, as I said, we will continue to monitor and, if necessary, we can liberalise further. But we have to do this consciously and gradually because we do not want to disrupt the rental market or cause disamenities for other residents.

Let me now move on to those households which are in financial difficulties due to the economic downturn. I think many Members have spoken about this and have made appeals on their behalf. We all know that HDB has a comprehensive package of financial assistance measures, whether it is reduced mortgage, loan instalments, extension of loan repayment periods, etc. Yes, there will still be those who are in financial difficulties and may have no choice but to sell their flats. There are rules which have been formulated to make sure that there is no abuse of the system, for example, the 30-month debarment rule. When you sell your flat, you are not eligible to come back to HDB to either rent a flat or to buy another flat for 30 months. As I said, this is to minimise abuse of the system, generally speaking. But I assure Members that for those in genuine difficulty, HDB is prepared to consider waiving this 30-month debarment rule on a case-by-case basis.

I think Dr Maliki asked specifically about the treatment of single parent families. As he knows, the Government's public housing policy is pro-family in orientation. We do not want to inadvertently encourage divorce. But as he says, there are many reasons why people divorce. So for those who are divorced, or who are separated, again, I say that HDB will consider waiving the 30-month time bar if divorced or separated parents meet certain eligibility conditions, such as custody of a child and other eligibility conditions.

Finally, Madam, Mr Othman asked about the newly introduced option to purchase scheme. He asked whether it can prevent buyers of resale flats from being cheated. It goes without saying that we would like to see all buyers and sellers adequately protected. There have been many reviews of the resale procedures by HDB to make sure that they are more simplified and people are able to understand them. But the latest introduction of this option to purchase by HDB replaces the current sale and purchase agreement because HDB has discovered that many times, people make purchases and want to opt out, or want to cancel the purchases because of one reason or another. So this option to purchase provides buyers with an option period during which they can reconsider the purchase, they can verify various aspects of the purchase and, if they change their minds, they can withdraw from the purchase with minimal financial loss.

Mr Othman mentioned a case where one of his constituents was cheated. I will ask HDB to investigate this case, check the information, check the documentation provided by the buyers and the sellers and, if necessary, we will follow up with the relevant authorities.

Madam, we have reviewed the role of HDB. We have implemented major changes in our public housing policies over the past year. I have explained why these changes are necessary. I also assured the House that there is no change to our commitment to public housing, to home ownership and the provision of quality and affordable housing. We will constantly review to do whatever is necessary to ensure that our public housing policies and programmes remain relevant to the needs of our country and our people.

The Chairman: Mr Chiam, just a quick clarification.

Mr Chiam See Tong (Potong Pasir): Madam, can I get a clarification from the Minister with regard to HDB Corp? Does HDB Corp take the place of HDB in building public housing? Does HDB Corp operate only like a private company? And if it does, can the HDB Corp still sell public housing at a subsidised rate?

Mr Mah Bow Tan: Madam, the answer to both of Mr Chiam's questions is yes. It will take over the building of public housing and it will operate as a private company. As far as subsidies are concerned, that is a separate matter, and the management and the administration of public housing subsidies will remain with the statutory board, the public housing authority called HDB.

Dr Tan Cheng Bock (Ayer Rajah): Madam, upgrading, in the form of interim upgrading, main upgrading and lift upgrading, has changed many of the HDB estates into somewhat like condominium style living environment. Those who benefited in the early batches enjoyed the fruits of these upgrading exercises. But, today, the situation has changed because of the economy and changed situations.

Some upgrading exercises, especially the major upgrading programmes, no longer appear that attractive because the Government is providing less money for these upgrading programmes and payment for flats has become a very heavy commitment for many of the flat dwellers. In the past, when times were good and there was no history of upgrading to learn from, I believe there were excesses in our upgrading programme. We built elaborate entrances, signages, walkways and pillars. So we have made mistakes, but we gained experiences.

We have learnt from such mistakes and with the experiences gained, we have improved. So, now, we see our HDB estates better upgraded and more functional. Still, we must continue to better the upgrading programmes. So my purpose in moving this cut is to ask the Ministry to have a relook at these upgrading exercises to make them more practical, more affordable, with less wastage and duplication.

What is it that a flat owner wants? From all the grumbles and frustrations brought to us at our MPS and the feedback sessions, I think they want special attention to be paid to very practical needs. They want changes made to the piping system, the water pipes, the sewer pipes, old electrical fittings for safety reasons, toilets to make sure they do not leak so that they have a clean environment, spalling concrete to prevent accidents. These are what they want. And they hope we can use the funds for all this major upgrading to take care of the wear and tear within the flats. This is like a one-off thing. Many of these practical needs cannot be seen. They are all hidden, like the piping system and sewer pipes, which you cannot see them. But these are actually the areas where you should upgrade, not so much the external facade.

And, of course, another area that they really want upgrading is the lifts. They want the lift to stop at every landing, which is very practical, and we should support that. The next thing they want is to make sure that these upgrading programmes are affordable and within their means. The reason again is simple - economy is bad, there is uncertainty of jobs and loss of jobs in some cases.

Although the HDB has a very well structured payment programme, the truth is that, at the end of the day, they still have to pay. So an item like additional space does not attract their attention as it costs a lot more, some about $20,000. We should pay attention to how best to fund these needs, perhaps taking away some of the funds allocated for external use for these internal changes. This is because town councils also do a good deal of external works, landscaping ---

The Chairman: Dr Tan, can you please wrap up your speech?

Dr Tan Cheng Bock: Okay. So I was wondering perhaps we should leave some areas of the upgrading to the town councils and some to HDB. Maybe we could work out a formula, in terms of funding and areas of responsibility, so that we can fulfill the four conditions that I have mentioned, that is, more practical, more affordable, less wastage and less duplication. 5.45 pm

Dr Tan Boon Wan: Madam, residents of Ang Mo Kio GRC are very appreciative of the upgrading of their flats. Residents have voted strongly in support of upgrading.

The Lift Upgrading Programme (LUP), which was introduced recently, is very popular with the residents. Those with aged parents and relatives and young children are most happy, as the lift on every floor increases the mobility of their loved ones. Many have expressed their preference for the LUP over IUP and MUP, as they see more benefits in the programme to them and the community. If we have seen the amount of efforts that the loved ones of low-mobility residents have to put in to help them to get in and out of the flats, we can empathise with their request. I would therefore join Dr Tan Cheng Bock in urging the Government to allocate more money for the LUP, and to hasten the timeframe to introduce it to all the flats in Singapore.

Under the existing plan, blocks of flats less than five storeys high are excluded. If we have difficulty walking, even a step is excruciating, not to say a flight of steps. Residents with aged parents and relatives in these flats are appealing to the Government not to shut them out of the LUP. I am aware that lifts are expensive facilities to install, operate and maintain. Hence, I would like to suggest that the HDB consider smaller and lighter lifts for these low-rise blocks of flats. Presumably, such lifts would be less costly to install, operate and maintain. If necessary, we can impose restrictions to confine their use to the old, the infirm, the very young and the accompanying persons.

Mr Ang Mong Seng: (In Mandarin): Madam, the Interim Upgrading Programme is meant for blocks which are at least 17 years old. Originally, the fund allocated for the IUP Plus scheme was $7,000 per unit which included covered walkways, improved mailboxes, senior citizens corners, study corners, etc. All these improvements will give the residents a better living environment. After the upgrading, some estates appear to be as good as, if not better than, private condominiums.

When the Interim Upgrading Programme was first introduced, the residents were all very excited and happy about it. But now HDB has reduced the fund from $7,000 to $4,000, and this year it is further reduced to $2,000. With this reduction in the fund, we are unable to afford comprehensive renovation works. We can only afford to put up covered walkways and new mailboxes. I think we should not cut down the provision so drastically. I hope that more funds can be given to the town councils so that we could undertake better IUP for our residents.

I also support Dr Tan Boon Wan's appeal for the Lift Upgrading Programme. The LUP is very popularly supported by the residents. I have two blocks of 4-storey HDB flats in my constituency which are undergoing IUP. The residents are very anxious to know whether they would also be included for LUP. But, according to the present policy, they are not eligible for LUP. May I ask the Minister, if the residents are prepared to bear part of the cost, whether HDB would consider extending the LUP to them? When we are implementing the LUP and IUP Plus, these 4-storey blocks of flats should not be treated as second-class flats. We should treat them equally.

Ms Irene Ng Phek Hoong: Madam, I am glad to note that the HDB has conducted a survey recently to find out if the Studio Apartment Scheme has met its objectives. It shows how responsive the HDB seeks to be to its target groups.

The original target group of the Studio Apartment Scheme, when it was launched in 1998, was the elderly. But in his National Day Rally Speech in 2001, Prime Minister Goh Chok Tong widened it by announcing that a housing option being considered for singles is studio apartments. Studio apartments, customised for the elderly, have always been offered only to Singaporeans who are at least 55 years old. After the Prime Minister's announcement, singles thought that there was hope at last for more affordable housing directly from HDB for singles aged 35-54. Presently, their housing options are limited to resale flats, private housing and rental flats.

But, recently, after the review, HDB announced that the Studio Apartment Scheme would not be extended to singles aged 35-54. This is because, after polling about 300 singles aged 35-54, only 12% picked the studio apartments with the current 30-year lease as their first choice for housing, but about 30% preferred a longer lease period. So, HDB has decided not to extend the Studio Apartment Scheme to singles of this group.

But has the HDB paused to consider why the Studio Apartment Scheme is not the first choice of most singles polled? Presently, it comes with elder-friendly features, such as support handbars and the 30-year lease. If you are a 40-year-old single, you may well expect to be around after 70, and I think that is a reasonable expectation. And if we are 35-54, I do not think we need support handbars yet. So, instead of shutting the door of the Studio Apartment Scheme on singles, can the HDB consider modifying the studio apartments for singles above 35? This would mean building a certain number of studio apartments without the elder-friendly features. This would also mean offering a longer lease period.

The HDB announced that it would pilot integrated studio apartments to encourage greater integration and interaction among the elderly and younger residents, and also to achieve a better mix. Singles also want to live in a block where there are families and a mix of flats to promote more interaction between the old and the young. The not-so-old singles can also be a ready source of volunteer help to look out for the elderly in the block. One of the greatest fears of singles is dying alone and nobody finding it out until there is a stench. But if we can build more such studio apartments to allow middle-age singles to grow old in an integrated block with other families, it will make for a more cohesive community and a better Singapore. It will also increase their sense of belonging to Singapore.

I would urge the Minister to relook at the Studio Apartment Scheme to modify it to attract another rising target group that has already been identified by the Prime Minister, ie, the singles.

Dr Jennifer Lee: Madam, the Ministry of National Development has, in recent years, implemented various very good programmes towards making housing and the physical environment in Singapore more elder-friendly. Examples of these include the introduction of the Lift Upgrading Programme in 2001 - referred to by Dr Tan Cheng Bock and Dr Tan Boon Wan before me - and the Studio Apartment Scheme referred to by Ms Irene Ng just now. My NMP colleague, Mrs Fang Ai Lian, I know would be speaking later on retirement villages.

I would like to refer to the Code on Barrier-free Accessibility in Buildings which was first published in 1990 and has been revised twice since, which prescribes features to help the wheelchair-bound and, now, the visually-impaired, the aged and families with young children negotiate their way around our buildings. The Code imposes both mandatory requirements as well as recommends good practice guidelines which are non-mandatory requirements. The most recent revision to the Code, in July last year, included four sets of guidelines on non-mandatory requirements to cover groups with special needs, including one set directed at older persons.

To pre-empt the Minister, let me state that I am in full agreement with the philosophy that the less rules the better. So, I am not asking for all the good practice guidelines to be summarily made mandatory. However, I would ask that the Ministry regularly monitor the progress - developers are responding to the guidelines - and review, if necessary, the balance between the mandatory "shall" statements and the recommended "should" statements in the Code, and whether there should be a shift in balance that might be good over time.

Next, Government buildings are exempted from the provisions of the Code and, instead, follow internal directives. For Government buildings, I would be less reticent in asking for more rigorous implementation of the good practice guidelines, and I hope that the Ministry of National Development will use its good offices to push its fellow Ministries and Government agencies in this direction.

Finally, I believe that some objections to the mandatory requirements come not only from developers, based on cost concerns, but also from some architects who want to preserve more leeway for creative design. I would like to encourage our architects that their creativity can be directed instead to how to incorporate elder-friendly features into building design at a minimum additional cost.

Dr Warren Lee: Madam, the HDB has, as part of its plans to help homeowners, encouraged the inclusion of more co-owners of existing flats when the original lessees have gone into financial difficulties. Often, these so-called new co-owners would be young adults helping out their parents.

I foresee a problem in the future, as many of these young people eventually want to set up a family, or as family differences cause a falling out and the sale of the flat. This family nucleus could then set about eyeing another flat even before they get married, as one parent and child, in order to have a roof over their heads and some place to live. When it comes to the turn of the young person to apply for a flat, these people would be counted as second-timers, even when applying for what amounts to the first flat of their own. These people, arguably, would not have had a first bite of the cherry per se with regard to HDB subsidies in terms of their own families. Rather, they would have been pulling together to help each other out as a family.

I understand the concept of fairness in terms of not wanting to have granted too many subsidies to these people. But should these young people, pulling together to help their families in a time of need, be penalised for helping their parents or siblings during a rainy day? I hope the Government could think of a creative solution to this problem.

There has been this push for everyone to own a flat, and I think this has been a very successful Government policy. But if we look around, in other countries, many of the young people actually rent before they buy. In fact, our Ministers have mentioned something about this possibility of young people getting smaller flats before getting bigger ones. But what happens to some of these people who are already stuck, living in a flat that they cannot afford to continue to pay? Is it possible then for the young people to rent in situ, instead of having to move everybody out and get a new flat? Is it also possible for the lease term of these flats to be changed, in such a way that the lease becomes shorter and the young people are then not deemed to have taken a second subsidy? Perhaps, a creative solution could be found.

Dr Chong Weng Chiew (Tanjong Pagar): Madam, HDB headquarters moved out from Bukit Merah Central to Toa Payoh around June last year. Till now, the Bukit Merah buildings are still left vacant.

I had raised this subject six months ago in Parliament and was reassured then that the Ministry would look into this matter with urgency. In the meantime, the retail sector in the area continues to suffer in silence, with a severe drop in businesses, especially in the area of Bukit Merah Central. All the while, the buildings remain in deep silence, awaiting their next occupants - not even a trickle all these six months - whilst the shopkeepers and hawkers there watch with envy the booming businesses in Toa Payoh Central brought about by the move of HDB headquarters. 6.00 pm

I cannot help but sympathise with the retailers in Bukit Merah Central whenever I visit the place, and I think that poor planning of the HDB has contributed to their present woes.

The worst complaint that I have heard is that the HDB did not care very much and still moved out, despite knowing that its vacation would spell disaster for the shops at Bukit Merah Central. They expressed unhappiness and wondered how was it that after eight years, since 1995, when HDB had planned to move out, HDB is still now unable to find a suitable occupant, where all this while, there are many, many more Government buildings being built. How could HDB answer to the rest of Singaporeans with the loss of potential rental income of as much as $1 million per month? I would like to take this opportunity to find out the Ministry's plan for these Bukit Merah buildings and also raise the question of whether the soon-to-be formed HDB Corp would be invited to set up shop there.

Mr Wee Siew Kim (Ang Mo Kio): Madam, wet markets have improved over the years. Now the environmentally-friendly, cleaner new markets have taken shape. The neater, cleaner and drier appearance is a welcomed departure from the wet markets of old.

However, a market continues to fulfill its roles from time immemorial. It is primarily a place where fresh and inexpensive foodstuffs are purchased. It is a key node of community life. A market gives character to the locality. In many cities and towns in many countries, there are old market streets. We have our own - Whampoa, Kreta Ayer and Tekka are characterised by their markets.

For many of the less academically-inclined Singaporeans, the market is a source of livelihood. In short, a market is a key feature of any community. Hence, I ask that the Minister consider building new markets to meet the demands of residents in new towns. In Anchorvale and Fernvale, parts of Sengkang, they are constantly inundated by requests for a market. From such interactions, I begin to challenge the assumption that as Singapore continues on its inexorable modernisation drive, the new generation of younger Singaporeans eschew the wet markets for other shopping experiences. Like their grandparents and parents before them, even career-minded and professional men and women continue to view the markets as fulfilling the needs that I have mentioned earlier, especially so with the success of our drive to make these markets hygienic and less messy.

Even our ingenuity in co-locating markets with multi-storey carparks or as part of a shopping facility has alleviated the concerns that wet markets suffer from poor land utilisation. Can I then ask the Minister to consider the need for such markets to be available and accessible to residents in new towns and to consider favourably building one for those towns that suffer from a lack of such a facility?

Mr Zainul Abidin Rasheed: Madam, I am speaking on this cut on rejuvenated public housing estates. Just before that, I would like to join hon. Member Tan Boon Wan to also express our thanks to HDB and Ministry of National Development for the Lift Upgrading Programme at Eunos, Aljunied GRC.

I think one of the HDB success stories is also in the way they have rejuvenated their housing estates. Geylang Serai is due for SERS. We would have read in the papers and the media that there has been a very positive response from the residents of that area. I think we also know that the MP for that area, Mr Mohamad Maidin, has been working very hard towards that end.

As we all know, Madam, Geylang Serai is very well-known for its deep histo- rical, social and political roots. Singapore would be the loser if the rejuvenated Geylang Serai would lose its special place as far as the hearts of the Malays are concerned. In fact, no Malay in Singapore would feel complete if he has not gone to Geylang Serai during Ramadan in preparation for his Hari Raya. For that matter, ask any Bruneian or Malaysian Malay who has come to Singapore. I think he will be able to regale us with his stories and experiences in visiting Geylang Serai.

I, for one, actually enjoy the vanishing food which you can still find in Geylang Serai today. Just to share an experience with you. Even our Member of Parliament, Mr Yatiman Yusof, got married in Geylang Serai. I was there during that wedding.

Madam, my question about Geylang Serai's rejuvenation is: what are the plans of HDB to ensure that the new Geylang Serai would not lose that ethnic culture and historical attraction that it has?

Mdm Cynthia Phua: Madam, in view of the development of new sites within existing estates, especially with the new MRT routes, such as the North East Line and also the Circle Line, many of the older neighbourhood centres have given rise to new neighbourhood and town centres next to the MRT stations. These are generally good news to residents who benefited from these new neighbourhood and town centres, but not the shopkeepers who have been operating in the old centres for many years and who have bought their shops and could not move out at all. They see a drop in the number of residents going to these centres without the essential Government agency services, such as HDB branch offices, bus interchanges, and even banks followed suit, which is understandable.

All the Government agencies have valid reasons to shift out, such as efficiency, productivity and cost-saving for them. Can the Minister clarify which agency is responsible for the planning of the alternative use of the existing neighbourhood and town centres and ensuring the survival of these old neighbourhood and town centres?

Three such sites come to mind. One of them is the former Woodlands Town Centre, vacated since 1998. We have just heard Dr Chong's vivid description of the woes of the existing shopkeepers in Bukit Merah and his appeal for his constituents. The landowner had shifted out, knowing full well that the neighbourhood shops depended so much on the HDB's customers and its 8,000 strong staff to survive and, yet, no plans for its alternative use were activated before the shift.

As for the Kovan Centre - here I must declare my interest as it is within my division - the branch office had just shifted out in December 2002. I have just appealed to Minister Yeo Cheow Tong to consider retaining at least a few of the feeder services so as to retain the existing bus interchange and bring in the residents to the 350 shops and offices and over 80 market and hawker centre stalls, and the shopping complex in the neighbourhood. Just to give you the impact of the shift of the essential Government services and the transport hub from a neighbourhood centre, NTUC Fairprice is doing about 50% of the business it was doing in pre-1998 in Woodlands Centre.

If there is no one agency taking charge, could there be an inter-ministry committee to ensure that the shops in these old towns and neighbourhood centres survive, before allowing any shift of the essential Government services, like the HDB branch offices, the CPF branches, the libraries, the post-offices, into newer locations and, most importantly, the interchanges which bring people to the centres? As we appeal to each Ministry, each would look at its own operation and would not consider other agencies' operations. However, the withdrawal of all the relevant agencies' operations would have a tremendous impact on the old centres and nearby estates. It is common knowledge that, as with any new transport hub, the value of the commercial property will increase because of the human traffic. For new sites, ie, MRT stations, the Singapore Land Authority (SLA) should ensure that the land surrounding these sites is acquired so that no property owner will benefit from these new locations of the MRT stations or bus interchanges. It can be seen here the importance of a transport hub to a neighbourhood or town centre.

Mr Mah Bow Tan: Madam, let me first respond to Dr Tan Cheng Bock's questions on the upgrading programme. Dr Tan suggested that the HDB review the upgrading programme, especially the MUP, and to concentrate on the more practical and affordable and less of those aspects which are wasteful and duplicated. Similarly, Dr Tan Boon Wan and Mr Ang Mong Seng made the same point and asked about the Lift Upgrading Programme (LUP).

Madam, upgrading is a long-term programme. This is a programme that the Government is committed to. It is an expensive programme and is heavily subsidised. For this reason, it is necessary for us to continue to review the upgrading programme, one, to make sure that it continues to stay relevant to the needs of HDB residents; and two, to make sure that we get the best value for money, bearing in mind that resources are limited.

In fact, Members will know that we have completed quite a few rounds of review of the upgrading programme over the last few years. I think Mr Ang Mong Seng has mentioned specifically a review of the IUP programme. In 1999, we revised the upgrading programme to scale down the improvement works that were considered less essential, for example, things like amphitheatres, water features, fountains, and so on. Then, we reviewed further the scope of the upgrading programme last year to focus on improvement items that the residents would value more, mainly improvement items within the flats, like the change of pipes, spalling concrete, toilets, changing of the windows, and so on.

Then, in 2001, we revised the age criterion for the MUP and IUP programmes so that more HDB flats can be considered for upgrading. In 2001, we also introduced the Lift Upgrading Programme because there were a lot of requests from MPs for lifts to stop at every floor, and also we recognised that the population was aging. Last year, we implemented IUP Plus. Under IUP Plus, we can have more lift upgrading works to enable more residents to have access to the lift upgrading works earlier at the same time as they enjoy the IUP works.

Yes, Mr Ang is correct to say that under the IUP Plus, we have actually revised the budget from $4,000 to $2,000 and this is for the IUP component. Why do we do this? The rationale is because we want to divert more resources to the lift upgrading works. The Lift Upgrading Programme is a much more sought after programme by Members of Parliament, as well as by residents, and for this reason, we diverted the funds to what we felt would be more appreciated and more valuable to the residents. However, within this IUP budget, the working committee, which is usually chaired by the advisor, would be able to select from a list of improvement works. It is like a menu. So whether it is repainting of the blocks, new letter boxes, covered linkways, improved lighting, or whatever, advisors and residents choose what they think will bring most benefit to the residents. What we have done is to keep the budget lean, divert it to areas where they are more appreciated and for the remaining budget, allow a list of things that residents would want to choose from. 6.15 pm

As for the selection of blocks for upgrading, we do so after very careful consideration. After we have selected the blocks for upgrading, it is ultimately the residents themselves who decide, through a polling process, by voting, whether they want their blocks to be upgraded or not. Based on the polling results so far, it is clear that many residents are in favour of upgrading, in spite of the inconvenience, the noise, the dust and so on, that they face while the upgrading works are in progress.

Last year, for example, we polled ten precincts for MUP and every precinct voted "yes" for the standard package. 85% "yes" votes, on the average, is a resounding approval for the MUP programme. For the Lift Upgrading Programme that was implemented in 2001, out of 68 blocks that were polled in the demonstration phase, 67 voted in favour of the programme. Remember that there is a co-payment element in the lift upgrading programme, and why the one block did not agree to the lift upgrading programme could be because the co-payment amount was on the high side. As for the space-adding item, yes, I agree with Dr Tan that it does cost more to have a space-adding item included in the upgrading programme. But, again, this is subject to approval of the residents. If the residents do not wish or they do not feel that it is good value for money, all they have to do is to say so. Some precincts have indeed voted "no" for the space-adding item (SAI), especially the 5-room flats. I think this is quite a pragmatic position. They already have a large flat. They do not wish to have an additional storeroom or an additional balcony, and they say, "Thank you very much. I do not need it." We say, "Yes, fair enough." We move on and offer it to another precinct. So it is not true that the upgrading, especially MUP, is no longer attractive.

As far as payment for the upgrading is concerned, again, I would like to inform Members that so far, HDB's data indicate that there are 48,000 households that have been billed for the upgrading work, and more than 95% have paid up, either in full or by instalments. The rest can opt for either a longer repayment period or even defer their payment until their flat is sold, and this accounts for the rest of the residents. So, again, it is not true that the residents are not able to afford upgrading.

As for lift upgrading, I am glad that we have been able to implement the lift upgrading programme because it is indeed a very highly appreciated programme. But there are many blocks that are eligible for lift upgrading. In fact, to date there are some 3,500 high-rise blocks which still do not have lifts on every floor yet. So, I do sympathise with the call for lifts for four-storey blocks from Mr Ang Mong Seng, Dr Tan Boon Wan and others. But, as I said, there are many other high-rise blocks which still have not had their lifts changed. And in view of the funds that we have available, we need necessarily to continue to prioritise this lift upgrading programme. So, I do not have good news for Mr Ang Mong Seng at this point in time. We do not intend to implement lift upgrading for four-storey blocks as yet.

Let me now move on to Mr Zainul who asked about the SERS programme for Geylang Serai. I did not know that my parliamentary colleague, Mr Yatiman, was married in Geylang Serai. Maybe if he tells me which particular place, we might find a way to preserve that - put a plaque there or whatever. It is something that has been very well received by the residents and I agree with Mr Zainul that the atmosphere and the unique character of Geylang Serai are something worth preserving. So, in the redevelopment plans of Geylang Serai, I will ask the relevant authorities, HDB, the National Environment Agency and others to bear this in mind. Geylang Serai market, for example, serves a very important purpose. It is, as I understand, an anchor facility for festivities during the Ramadan period, and it is a social gathering point for many people. So, we will rebuild the Geylang market at a prominent location, fronting Changi Road, and, in this way, together with retaining many of the merchants in that area, we hope that the character and the vibrancy of that area will be reinforced. Mr Mohamad Maidin, the MP for the area, has, I believe, also set up a task force to gather feedback from all the stakeholders - from the residents, the stallholders and shopkeepers and from the Malay community generally - on the redevelopment of Geylang Serai. I assure Members that the Government will take note of the feedback and ensure that their needs are taken care of and the character of the place is retained.

I turn now to the issue of housing for singles. Ms Irene Ng advocated passionately for singles to be allowed access to the studio apartments. Let me just go one step back and explain what is the purpose of the studio apartments.

When we introduced the Studio Apartment Scheme (SA Scheme), we really wanted it to be a customised housing option, another housing option for the elderly. To make sure that they were affordable to the elderly, we purposely sold it on a short 30-year lease, with option for extension, the idea being to keep the price affordable. Then, we thought, why not consider it also as a housing option for singles? We considered this very seriously. We conducted a survey on the SA Scheme last year, and we found that, in fact, younger singles considered the studio apartments (SAs) as just one of the many options. And, indeed, the majority indicated non-SA housing options as their first housing choice, such as resale HDB flats and even private housing. So, for that reason, we decided we would not extend the SA Scheme at this point in time because they have viable alternative options to meet their housing needs. They can stay with their parents, they can buy a 3-room flat, loan from the open market, or they can buy a bigger flat if they apply together with another eligible single. And, of course, they can rent rooms. So, the SA Scheme has worked well as a housing form for the elderly. It has been well received. Almost all the SAs that we offered have been snapped up. And, in view of our ageing population, it is important for us to continue to focus on the SAs as a means to meet the housing needs of the elderly. We will build more SAs, new SAs, and we will integrate them together with other blocks and offer them to elderly persons. So, at this point in time, again I say that we do not have plans to open these up to singles.

Dr Jennifer Lee asked about the housing for the elderly, especially apropos the Code on Barrier-free Accessibility. Yes, she is right to say that we have implemented several initiatives to make living in HDB flats more elderly-friendly. In fact, one of the strategic thrusts of the Inter-ministerial Committee on the Ageing Population that I chaired, was to encourage "ageing in place". In other words, to enable our elderly to continue to live in their homes, their communities, in places that they are familiar with. Dr Lee has already enumerated some of the initiatives - the flats with elderly-friendly features through the upgrading programme, the lift upgrading programme, and so on and so forth.

I would just like to address her concerns about the Code on Barrier-free Accessibility, especially the voluntary guidelines. Yes, we will monitor the implementation of this Code in so far as the public housing estates are concerned. I would like to inform her that HDB, for example, under the Main Upgrading Programme, will provide ramps for the mobility of elderly residents - ramps leading up to the blocks and also ramps leading to other facilities, like recreational facilities and so on. I thought that I should mention one other amenity that we had implemented, and that is, under the project to Improve the Living Conditions for the Elderly, apart from just improving the physical environment, non-slip tiles, hand-bars, alert systems and so on, it is also important to put in place some of the more community-based care and support services for the elderly. And, in this regard, we have worked very closely with MCDS to make sure that there are VWOs who are in place to provide such support to the elderly. So I just want to reassure her that we have a policy framework in place to deal with the challenges posed by the ageing population. We have made progress in implementing some of the IMC recommendations, but, as in all things, while the Government can provide the infrastructure and the policy framework, it is the individual, the family and the community that have to play a part in sharing this responsibility of making ageing in Singapore more fulfilling and rewarding.

Dr Warren Lee posed a question on children who helped their parents to pay for mortgage instalments and, as a result of that, they lose out on their entitlement to a housing subsidy. Yes, we recognise that there are such situations. Parents have difficulty to repay their mortgage and children are invited to become co-owners so that they can make use of their CPF. When the children get married and they want to set up their own homes, they are, in certain circumstances, tagged as first-timers already and are therefore not eligible for another subsidy. I would like to inform Dr Warren Lee that, under certain circumstances, they can still be considered as first-timers, eg, if they relinquish ownership or co-ownership of their parent's flat by way of transfer. In this case, the parents must agree to be tagged as having enjoyed the housing subsidy and they will have to be liable for the resale levy. I also want to inform Dr Warren Lee that although we have a ten-year time bar on lessees before they can apply for a second subsidised flat, this requirement will be waived for children who are in this situation.

Very quickly, I would like to respond to Dr Chong on HDB Centre. I do sympathise with the shopkeepers in the Bukit Merah Centre. Any major move of this nature is bound to affect them adversely. I just want to assure him that HDB is actively looking at marketing HDB Centre for rental. It has appointed a panel of five marketing agents to lease out the premises. The panel of agents has conducted many show arounds but, ultimately, whether HDB can rent that particular premises depends on the demand for office space. The demand for office space at the moment is very, very weak, not just in HDB Centre, but island-wide. There is a major oversupply of space in the market. Nevertheless, HDB will continue to actively look for tenants to occupy the vacated premises and it will be prepared to offer competitive rent, especially to anchor tenants. But, having said that, I do not think it would be tenable for HDB to substantially undercut the market or just give away the premises almost for free, because this would have serious repercussions on the market. As to whether HDB Corp will set up shop in HDB Centre, it is really up to HDB Corp. When it is set up in June this year, it would be run as a private company. It will have to make up its own mind where it wants to set up.

The Chairman: Order. It is 6.30 pm. Mr Mah, you can continue tomorrow.

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

Mr Mah Bow Tan: Mdm Deputy Speaker, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2003/2004, and ask leave to sit again tomorrow.

Mdm Deputy Speaker: So be it.