RETUNING THE CPF

Debate resumed.

Mr A Nithiah Nandan (Nominated Member): Mr Speaker, Sir, first, allow me to thank the Prime Minister and his Cabinet colleagues for having a lower CPF cut by just 3%, and not all the way to 6%, and bringing progressive changes to other components in the CPF scheme.

Sir, we have to accept the fact that under the current economic uncertainty and the increase in unemployment, any measure taken by the Government in order to save jobs and maintain our competitiveness and, in this instance, to cut wage costs through the CPF component, is done out of necessity. The workforce is fully aware of the volatile situation in the job market. We understand and fully comprehend how crucial it is to act now and, therefore, I sincerely endorse these recommendations.

Yesterday night we had a discussion and a dialogue with our group of union leaders. We had a very frank discussion for two hours. At the end of the day, everyone realised how bad the situation was on the ground, and they realised that changes needed to be brought immediately, and they supported unanimously the changes. But they also highlighted a number of viewpoints.

I wish to express some of my viewpoints and their concerns too:

(1) It must be accepted that any cut in CPF would cause pain and hardship to workers. Workers are required to make sacrifices to save jobs and to help increase competitiveness. Workers understand these reasons and support the steps taken. But workers' sacrifice should not go to waste or just to increase the employer's profitability. Workers wish to see a drastic drop in the number of workers retrenched. To this end, the Government-linked companies and large MNCs must set an example in not resorting to retrenchment as far as possible.

(2) The Government must go public on the full package of cost-cutting measures and introduce additional measures, if necessary, that it needs to put in place in order to maintain our competitive edge and not just highlight on wage cut, CPF cut and retrenchment only. The ground must be given a full picture, only then can they be convinced.

(3) Employers, on the other hand, must not take advantage of the situation. They must acknowledge the sacrifice made by the workers during these hard times by compensating them equitably during good times. Employers who are currently profitable and accumulate additional gains because of the CPF cut, should give back to workers part of the additional gains in the form of special bonus or other methods. Profitable MNCs and Government-linked companies should publicly support this call, rather than giving lame excuses. In this context, I support and fully appreciate the Prime Minister's call for such companies to come forward to reward such workers in these industries.

(4) The Government must give a clear signal to MNCs that they are really operating in our island state and to potential investors that it is prepared to look at all possibilities to help the companies maintain their competitiveness and that they have a stake in Singapore.

Mr Speaker, Sir, it is very reassuring to hear that the Government expressly states that no Singaporean will lose his or her home or be denied of medical care because of the cut in CPF contributions, and that the banks have also stated that they will be flexible if it affects the servicing of the housing loans. The Government must introduce long-term help to those with mortgage loans rather than deferring the payments. Any deferment would cost additional expenditure in the form of interest. Government should consider the reduction of interest rates to mortgage loans of HDB, and I think this is within the capacity of the Government. The Government has always shown a lot of concern for our Singapore citizens.

Sir, I now come back to the announcement made by the Prime Minister earlier on on contributions rates, especially for workers aged 50 to 55. In fact, at the National Day Rally, the Prime Minister had again made a call for employers to employ older workers. But I do not like to use the term "older workers" because sometimes that puts off a lot of employers also. And I also belong to that age group. So I would rather use the term "workers aged 50 to 55 and beyond". The problem here is not just cutting CPF. Because if you can cut CPF and bring results, we will support it. If you want to bring it lower, that is a three-step reduction for such workers. And if it brings the desired results, we will definitely go all the way. It is better to have a job than not to have a job, and a lower CPF does not matter.

But the problem here is because a lot of employers have a cheaper alternative, that is, foreign workers. They give all kinds of excuses in employing them. One of the excuses is that they say the workers are choosy. That is not true for every worker. We should not just across-the-board label all Singaporeans as being choosy. There are many workers who are desperately in need of a job, and I have come across many in my work as a unionist. And it really pains me because there are a number of people requesting and pleading for jobs, and they are even prepared to work for $800 to $900. But many employers just give all kinds of excuses, and they just give them a very political answer, "We will definitely call you back." The answer is actually they are not going to call them back.

So, I think Government needs to do something drastic rather than just make statements. I really support the Prime Minister's call. I know he feels for such workers. But feeling alone is not enough, he must do more than feeling. So we hope that he would do more than that.

Coming to the Minimum Sum and Medisave Minimum Sum, I have a quick look at it. By year 2013, a lot of lower-income workers will not be able to draw any sum when they reach 55 - it looks like that - unless there is a hefty wage increase. For such workers, they depend a lot on age 55 to withdraw for their essential needs, and they actually postpone these essential needs until 55. So maybe the Government should look at how it could help them. I am not suggesting help for those who are going to Batam or squandering their money with another family. I am talking about those who really need the help. So I think they have to take a look, and maybe the Government can give projection figures - in 2013, how much will such workers be able to draw out. That will give them some level of comfort. So just figures alone would not be enough. I hope the Government will come up with more information in these areas.

Sir, Singapore workers have stood by the Government through a number of crises, and that has been our greatest advantage in attracting investments and keeping investments in Singapore. And we will continue to do so. There is no reason that the workers will react differently. We have the ground feel and we know that the workers will rally behind us. But, at the same time, the workers would also like the Government to do whatever it can to ease their pain. It must look at the current costs of essential goods - medical cost, public transport, and the cost of education - and see how best it could be adjusted to defray the day-to-day expenses of the workers in taking care of themselves and their families. To what extent is the Government prepared to absorb such costs? This is what the public expects the Government to seriously think about.

Sir, in conclusion, this is a very painful adjustment and Singaporeans will definitely rally behind the Government and the Government must equally give all the support. The employers must not be providing lip service but really clear-cut support to workers who are employed under their hands.

Mrs Lim Hwee Hua (Marine Parade): Sir, I would like to make two general comments relating to the CPF changes and discuss two specific implications.

Firstly, as a supply-side measure - the CPF changes are blunt but effective. The PERC survey and other job data comparisons, regardless of how one would like to interpret or qualify the results, with anecdotes, such as what Mr Chiam has done, point to the reality that we have indeed priced ourselves out of the global market. Because of this reality, there are really no two ways about it in that we do not have the luxury of time. These changes would have an immediate impact on wage costs unlike tax cuts, which are contingent on corporate profitability. Yet, we must be fully conscious that this move to retune the CPF scheme is no panacea for the unemployment challenge; it merely seeks to mitigate further loss of both blue and white collar jobs from uncompetitive wage levels.

Sir, as many of my colleagues have emphasised, we must also recognise that a holistic approach is needed, not just a restructuring of wages, which is inevitable, but a concerted effort to lower all components of business costs, including Government levies and charges and real estate costs, to complement the CPF changes and the tax cuts that have already gone before them. Specifically, the Government needs to address the rigid, seniority-based wage system for the public sector, beyond these CPF changes, since, firstly, the public sector competes with the private sector for manpower during tighter employment situations and, secondly, expenditure on manpower is a significant component and affords room for cost cutting by the Government itself.

Secondly, dipping into reserves. Sir, many Singaporeans have asked why does the Government not dip into the reserves - does the present situation not constitute a rainy day? The Government needs to explain more. Having said that, unlike Mr Chiam, I recognise that the current unemployment challenge is more structural than cyclical. Hence, changes are needed rather than a dip into the reserves to help ride out the downturn. However, it is still necessary to have the package of measures to help cushion the otherwise harsh impact, especially for mortgage servicing.

Sir, many Singaporeans have accepted the need for CPF cuts not because they are not going to be adversely affected but because they see the wisdom of taking short-term pain for a long-term benefit, which is ultimately the survival of Singapore. But they are also asking, if these changes are not sufficient and do not help to lower the unemployment rate, what is next? Another three percentage point reduction to 30%, and then what else? What other levers can we pull? Sir, it is important therefore to rally Singaporeans behind every effort and for the Government to continue to instill confidence through a clarity of purpose for each and every move.

Let me, Sir, talk about two of the more significant implications of these changes for Singaporeans. Firstly, the threat of negative equity for property assets and, secondly, financial sufficiency for old age.

Negative equity and structural erosion of affordability. Sir, unfortunately, many Singaporeans have based their property investment decisions on assumptions which were drawn up during the heady growth phase of the 1990s, where we had a steady 5% to 10% wage increase every year, continuous employment and frequently more than one income stream. We now know that for any of these assumptions to fail, some Singaporeans may no longer be able to hold on to their property. Wages have not only not risen, many have actually been cut - and these lower CPF contribution rates would aggravate the situation. Besides, with retrenchment and contract work being increasingly the norm, Singaporeans now have to factor in periods of no income in between contracts.

The measures that the Government would be announcing would hopefully help many, even if they have currently negative equity on their property, that is, where the loans they have taken out far exceed the current market price, if they were to sell the property on the market now. However, the larger issue is whether there is a real threat that we would end up with negative equity for property, like Hong Kong or Japan. If so, these are not just problems for the affected Singaporeans, they also spell challenges for our banks as well.

Sir, what about those who have made the wrong assumptions and who have found their purchasing or servicing ability so impaired that they simply cannot continue with ownership? For those who have borrowed from banks, I guess this is an issue that banks have to address. I hope the Deputy Prime Minister will address the situation for those who have, for example, purchased bigger HDB flats from the resale market at the peak and who have simply no means of servicing these loans right now.

Secondly, the implication on financial sufficiency for old age. Sir, before these changes, we were already concerned with there being financial insufficiency post-retirement, especially in the context of our ageing population against a longer life expectancy. These changes would simply mean even less CPF contributions on an overall basis, be it in the Ordinary or the Special Account balances, unless income levels climb substantially. But we know that that is unlikely because competitiveness will always check any steep rise in our income level.

Despite all the radical changes to the CPF scheme, we have, if I may suggest, one more sacred cow to be slaughtered, that is, the management of the CPF balances.

Sir, the Government has shied away from managing CPF balances, preferring to allow individual Singaporeans to decide their own risk levels and allocation strategies, down to picking their own stocks. Thankfully, we no longer allow investment gains to be withdrawn. But there are still some gaps and I would like to elaborate on these.

Firstly, by guaranteeing a minimum interest rate on both Ordinary and Special Account balances, the Government is already managing CPF monies by default. Secondly, there is sufficient anecdotal evidence to suggest that a balanced portfolio, including all the different asset classes, would generate, on average, a higher return in the longer term. Sir, we need to grow the nest egg, not through higher contributions in good times, or distributions of New Singapore Shares, but through the compounding effect of a higher rate of return.

In addition, a diversification across different markets would reduce the incidence of double jeopardy in the event of a slowdown in Singapore. Currently, individual Singaporeans do not have the motivation to attempt any diversification as they have a risk-free alternative and they simply have no scale. And neither do fund managers have the scale to mount such aggregated products as they have no assurance that CPF members would want to take the risk.

Hence, I am proposing once again that Government seriously consider, firstly, managing CPF on behalf of members, enlisting the help of fund managers where necessary, and, secondly, over time, to have the minimum interest rate more reflective of prevailing market trends. If we do not proactively ensure that CPF balances return attractively, lower contribution rates would almost certainly aggravate our ageing challenges.

To conclude, Sir, I am optimistic that the changes will send the right signals, boost Singapore's competitiveness and investors' confidence in our resolve to tackle economic challenges. Already, analysts have applauded the move and are expecting on average an encouraging 1%-3% point boost in margins, to as high as a 10% jump in profits for the manpower-intensive industries. The move will also better position Singapore for the economic recovery, signs of which, though patchy, are nonetheless encouraging.

On that note, Sir, I support the overall intent of the CPF revisions.

Mr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Speaker, Sir, the scenario painted by our Prime Minister a moment ago at the introduction of his speech in this House and also the report in yesterday's Straits Times where DPM Tony Tan registered his alarm about the PERC report citing Singapore's labour costs being ahead of the United States and Australia are clear indications that we really have a wage cost burden that needs to be very quickly addressed. Not taking immediate action will be irresponsible on our part as it would mean that more jobs would eventually be lost as our cost competitiveness further erodes.

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

5.26 pm

Mr Ahmad Mohd Magad (Pasir Ris-Punggol): I am therefore of the view that a number of drastic measures need to be taken quickly to bring down our overall business costs, including wage costs, to remove rigidity so that the market can more flexibly find its equilibrium. This understandably includes retuning our CPF contribution rates along the lines which the Prime Minister has outlined. Based on several dialogue sessions which I attended and also conducted, I believe this message has sunken in among Singaporeans and they understand that we must act quickly to prevent more job losses.

However, Sir, Singaporeans have been nervously and keenly awaiting for the final prescriptions of what they are expected to swallow, the extent of bitterness and how this is going to impact on their livelihood. It pains me to think about citizens who have gone through thick and thin with us all these years, perhaps more of the thin side of things these last few years who will be impacted by the CPF changes. As we act for the collective good of Singapore and all of us, it is imperative that we provide lifelines and help for those who are particularly going to be affected by what the Government finally decides.

Since there are many MPs who are speaking on this subject, allow me to just focus on two points with respect to the imminent changes to the CPF model. My first concern is the ability of Singaporeans to meet the obligations of housing loans as a result of the changes. The measures proposed are a necessary requirement in our quest for competitiveness internationally. However, the trade-off on a social scale would be quite onerous.

Our Government must balance its move with one that will help reduce the hardship our residents might potentially face. As mentioned by the Acting Minister for Manpower earlier in this House today, a large number of our active workforce, 577,000, or approximately 45% of them, service their housing loans through CPF contributions. From this, there will be a sizeable number that will find it difficult to meet their monthly obligations although the 3% imminent cut is not as drastic as anticipated.

I would like to suggest, Sir, that a tax relief be considered for home owners on interest paid on mortgages on homes used as a primary residence. This will supplement the burden on existing home owners affected by the CPF changes while encouraging potential buyers to also not distance themselves from the market. A tax relief would not only encourage home ownership but also help spur growth in the property market. Tax relief of such nature is not new and exists in countries, such as the United States.

In implementing the CPF changes, our society should gradually move from dependence on a managed retirement plan that was started in the late 50s to one that is tailored individually. Perhaps, there is a lesson from our early years of self-government and nationhood when the CPF rate was a mere 10% as we struggled to find a balance between savings and competitiveness. Times have changed, but our commitment to our citizens remains steadfast.

In helping them overcome the double blow of lower CPF rates and higher Minimum Sums, I would like to propose the consideration to include monies saved in individual retirement schemes as part of the overall pool of savings to meet the requirements of retirement and old age. Doing so could perhaps justify a review of the need to progressively raise the Minimum Sum from the current $80,000 to $120,000 by 1st July 2013.

The Supplementary Retirement Scheme (SRS) is a part of our Government's multi-pronged strategy to address the financial needs of a growing population, which was highlighted in the report of the Inter-Ministerial Committee on the Ageing Population released in November 1999. As it stands, the SRS complements the CPF. As we know, the CPF savings are meant to provide for housing and medical needs and for basic living needs after retirement. Unlike the CPF scheme, however, participation in the SRS is voluntary. Participants can contribute a varying amount to the SRS, subject to a cap at their own discretion. The contributions may be used to purchase various investment instruments, and it also offers attractive tax benefits as it defers tax payment upon retirement.

In addition to this, there are retirement plans that are offered by insurance companies, banks and independent financial advisers that work on the same principle. Unfortunately, awareness of the SRS is low. As of December 2002, there were less than 17,000 SRS account holders. Our citizens have depended excessively on the CPF to finance their retirement needs and have not seen the incentive for alternative planning. We can do more to encourage this and other schemes to highlight the benefits along with the risks of independent financial planning. With the change in our CPF model in the push to encourage greater self-reliance, I suggest going further to fine-tune the SRS as well, to enable greater participation.

On that note, Sir, I support the Government's proposal to retune the CPF.

Dr Wang Kai Yuen (Bukit Timah): Mr Deputy Speaker, Sir, Singaporeans intuitively understand that their wages are high in comparison with the countries that are competing with us for the same investment dollars. Singaporeans are a rational lot. They travel to the neighbouring ASEAN countries, China and India. They know that, like water seeking the lowest point, investments go to the location yielding the best returns. They know that we have a high standard of living not simply because Singaporeans are by nature somehow better or cleverer than others. We managed because we have a better Government in Singapore. The Prime Minister had earlier mentioned about India and China, and why these countries were not competing in the world a decade ago. Now that these countries have adopted identical strategies that we had pursued successfully in the past, the competitive scene has changed completely. So, Singaporeans accept that, one way or another, the cost base for doing business in Singapore must be reduced.

This is reflected in the findings of the Feedback Unit. 70% of a group of respondents, representative of the Singapore population, supported the idea of restructuring the wage system for Singapore to remain competitive. 71% supported the idea of setting a range of CPF rates to allow for flexible adjustments in response to changing economic conditions. 61% agreed that the CPF system should be changed to help Singapore remain competitive. 64% agreed to the retuning of the Singapore CPF system to save jobs. Only 56% agreed that in order to keep business costs low, CPF should be cut. In other words, Singaporeans are in support of retuning the CPF to remain competitive and to save jobs. However, to keep business costs low, most believe that more than just a cut in wages is needed.

The need to go beyond a CPF cut has been raised by those who have spoken ahead of me. They have also touched upon how to deal with the difficulties Singaporeans will face in their housing mortgages as a result of these cuts. I am confident that the Government would have considered all these and would have counter-measures in place to deal with them.

Sir, I would focus instead on the question of what we are trying to achieve in this cost-reduction exercise. Are we, firstly, attempting to stem the tide of job losses? Or are we trying to turn around the job losses and try to entice industries that have already left for cheaper locations to come back to Singapore? Or are we trying to prepare ourselves to catch the wave of the recovery when it surely would eventually come?

In any event, the proposed reduction in the employers' CPF contribution rate from 16% to 13%, an effective reduction of only 2.6% of the payroll burden, is, by itself, unlikely to swing things one way or another. While this small reduction is a relief to all workers in Singapore, I must confess that I am not too clear what the Government is trying to achieve with this reduction.

Let me paint a scenario. Consider a gymnast on a trampoline. In order to reach a higher point, I think the gymnast would press the spring harder, go down lower, so that, on the rebound, he would reach higher. So, let us assume that Singapore needs a system-wide reduction of at least 10% to make the world sit up and take notice. Where would the balance come from? That is a billion-dollar question.

Could we have done something about land cost, which is of course, as we all know, a major cost of doing business in Singapore? The Government has already indicated that if we were not careful in our attempt to reduce land cost, we could bring about asset deflation. As we know, more than 80% of Singaporeans are home-owners. Asset deflation would surely adversely affect all of us. Already, bankruptcies have hit an 18-year high, as reported in the news media. If asset deflation were to happen, the evaporation of billions of dollars in the value of assets will surely put our economy into a tailspin.

Sir, while we profess that we could not readily reduce high land cost, I thought it would be useful to point out that the Government's land sales in the past have actually accumulated some surpluses from the high value of land. In fact, if we recall, Government land sales were timed to maximise revenues. By our budgetary process, the proceeds from these land sales are below the line when the Budget is presented to Parliament every year. Therefore, it becomes part of our reserves. After the dissolution of every Parliament, these land sale proceeds could no longer be touched without the second key. However, the impact of these sales at a high value lingers on, as leaseholds of these lands are either 30, 60 or 99 years. Thus, we pay in advance for the use of land and we are now living with the aftermath of high land cost.

Sir, it is my view that the way we manage our surplus from the land sales puts an unnecessary constraint on the way we manage the economy. The life of every government is at most five years, but property cycles are typically 10 years. The economic cycles are shorter at three to four years, but they are not in sync with our political cycles. Thus, what we put away in boom times, we cannot use in lean times. Even if there is a willingness today in the Government to explore means to help businesses to deal with high land cost, the Government might not have the means to do so, as it is reported in the press that we are encountering a Budget deficit of close to $3 billion for the first six months of this year.

Sir, this Government is known to loathe using the second key, unless the situation is truly desperate. I would like to ask the question: is it possible that we have forsaken some policy options that could help in this recession because of this budgetary constraint? For instance, have we considered capital allowance for commercial properties? Capital allowance is now only granted to plants and machinery that generate income for a company. Except for hotels, most commercial properties do not qualify for capital allowance. On the other hand, if a company uses a commercial property to operate its business, then it claims rental expense as a reduction in its tax computation.

Furthermore, Sir, recent corporate governance guidelines also require diminution of the value of commercial properties be provided in the profit and loss statement. With the decline of the property market since 1997, this has been a drag on the performance of all companies owning commercial properties. In this respect, if we do not deal with the drag of high land cost on our economy, we are like a boxer jumping into the boxing ring with one arm tied behind our back.

I must hasten to add that I am not suggesting that we raid the reserves the moment we run into trouble. I am just pointing out that the unnecessary constraint we put ourselves into by locking away the reserves every four or five years while the other components affecting our economy have longer life cycles. During the times when our economy enjoyed 8-10% per annum growth, that was not an issue. But, today, I believe, it stares us in the face.

Sir, the Prime Minister has also touched upon the various aspects of changing the CPF scheme affecting older workers. At this point in our recession, an immediate issue of addressing how we can help the long-term unemployed, ie, people who have been unemployed for nine months or more and have very little prospect of finding a job in the immediate near term, we might have to face the fact that jobs would be hard to come by for a while, especially for these older workers, even though there are those who do not like the words "older workers". At the moment, our assistance to these long-term unemployed is through providing training opportunities and, if they do show up at the MPS of PAP Members, we will provide them through some cash disbursements using our welfare schemes.

The question many of these affected persons have been asking is: why can they not draw on their CPF money to make ends meet if they have already enough savings in their accounts to look after their old age? Since we are changing the CPF scheme - quite drastically I must say - maybe we should consider this one change. There is this provision of a Minimum Sum in the CPF scheme and which is being adjusted upwards year by year. For those few individuals - I am not sure if there are many of them - but for those few who have amounts larger than the Minimum Sum, maybe we should look at the possibility of allowing them to withdraw the balance from their CPF scheme before reaching the age of 55 years old. This will alleviate their pressing needs when they hit a long period of unemployment. To prevent abuse, we could put a limit to the amount withdrawable or consider this withdrawal as deferred income from previous years and render them liable for income tax. If we are truly prepared to let Singaporeans take greater ownership of their own lives, as the Prime Minister has urged in his National Day Rally speech, perhaps we should consider this one option. I do not think it is a withdrawal of their old-age savings if they have met their Minimum Sum requirement.

Sir, even as the world recovery takes place and the Singapore economy returns to positive growth, together with this recovery, we should take the challenge that we face today as the harbinger of things yet to come. The world has been changed by IT and the Internet. The historical hurdles preventing free flow of knowledge and services such as time, distance and geography have been rendered irrelevant. By allowing the individuals to tap into the world market, even Government is becoming less of a consideration. Witness the success of the Indian IT industry despite the same old Indian political system that hampers the other aspects of the Indian economy. So, in the case of Singapore, while having a good Government allows us to enjoy a premium, I believe that the quantum of this premium is reducing and diminishing rapidly.

Good government remains important, but in exploring new frontiers, the individual is now the key motive factor. I am glad to note that the Prime Minister, in his National Day Rally speech, has indicated that his Government is now prepared to change to a new mindset. He said that only what is prohibited in the future is not allowed. Everything else is fair game. While the Prime Minister did not use the term "No U Turn Syndrome" or NUTS, in effect, this is what he was talking about.

However, Sir, in my view, we must go beyond getting rid of NUTS. We must become a fun city with creativity and vibrancy. Only then would the Singapore goods and services command a premium in the world market. I think the Government must relax and allow our people to have more fun. The uncertain response of the various regulators on the issue of bar-top dancing indicates that the old mindset dies hard. I call this old mindset of the civil servants, the "NO VOWels After S (NOVOWAS) on licence plates syndrome". Let me elaborate.

Did Members notice that as our car licence plate numbers changed, running through the series of "SDZ", the next series actually started with the letters "SFA"? What has happened to the "SEA" series? The answer is that years ago, we changed from the SY series to the SBA series, skipping the SAA series. This was presumably because someone in the decision-making position had decided that there should be no vowel after "S" on our licence plates. The question is: why? No reason was offered except perhaps the civil servant in charge, or even the Minister in charge, looked into the future and decided that it was no good to have "SEX" on the Singapore licence plates. So to avoid the fuss of having to deal with SEX, it was decided to do away with all the vowels after S. In so doing, the decision has deprived Singaporeans some opportunities to have fun with our licence plate numbers and it has also deprived the LTA some opportunities to make some money from selling some interesting licence plates. For instance, some vehicle owners will be very willing to pay a high price for a licence plate such as SEX 999.

Sir, while this is not a life and death issue, it does represent the mindset in the civil service and maybe even ultimately, in the Cabinet itself. Is it possible that this mindset in our decision-makers has deprived Singapore of innumerable opportunities to take our place in the sun, because we do not want to deal with one or two possible occurrences of unpleasant events? If we truly want a breakthrough into the next phase of our development, not only do we need to get rid of NUTS, we also need to get rid of this "NO VOWels After S (NOVOWAS) syndrome". Let us start by putting back the vowels in our licence plates and have SADs, SEXs and SOBs on our vehicles running around in our city roads. When that happens, we could shake off the straitjacket that we have strapped on ourselves and truly liberate the creativity and energy in our people.

Mr Deputy Speaker, Sir, this recession presents daunting challenges to the Government. On the other hand, it is comforting that the same Feedback Unit survey indicates that eight out of 10 Singaporeans believe that Singapore can overcome the current challenges. 67% have faith in the new team of leaders and 69% are upbeat about the Singapore future. Therefore, Sir, if this Government could provide the leadership, our people would rally around and Singapore will come through this valley of gloom. The retuning of CPF is just the first step in this journey of recovery.

Ms Indranee Rajah (Tanjong Pagar): Mr Deputy Speaker, Sir, thank you for the opportunity of allowing me to participate in this debate.

When I considered the CPF cuts, I asked myself: would I support it? After some thought, the answer was yes. The reason is that doing nothing is not an option. If doing nothing is not an option, then the question is: how do we move forward?

My position on the CPF cuts is that I support it, but wish to sound a cautionary note and to say that CPF cuts are not the be-all and the end-all. There are other things that have to be considered and I would touch on that in a moment.

Just coming back to the cautionary note, when we started off with the CPF scheme, its original purpose was for social security - savings for retirement, home ownership, medical expenses and, to some extent, education. That was its original purpose and remained so for a long time until the mid-1980s when we had to make the first CPF cut. In the 1980s, because of the difficulties of remaining competitive, we had to do a cut and, more recently, in the late 1990s, we had done it again twice.

But the significance of the Prime Minister's announcement today actually marks a fundamental shift in what we have done before. By saying that CPF rates would be a range between 30-36%, we are formally endorsing the use of cutting our CPF rates or using CPF rates as a macro-economic tool. It may move from its original purpose of purely social security to an economic calibrator. The two purposes are very different and they serve different purposes.

I do not oppose the usage in the new way simply because circumstances have changed and we are plugged into the global economy. And because the global economy moves so quickly and it is so volatile, we have to be able to react quickly. But what these changes mean is that, in good times, the savings function of CPF takes precedence because you put in more, but in bad times, the macro-economic function takes precedence because you try and retune the economy.

These have certain consequences for the average Singaporean in the street because he is at the receiving end of this. At the Government level, when we tune the economy using CPF, we can see from an economic level why it is necessary. But from the poor guy in the street, it is very difficult for him to adjust to this because, going forward in the long-term, it is difficult for him to plan. So the consequences would be the difficulty in long-term planning. It also means that when a Singaporean buys a property, he should never use the maximum amount allowable because he must always provide for a buffer, as he cannot tell, going forward, whether or not this rate is going to go up or down. That message needs to go out to Singaporeans because for decades, they have planned on the basis of a reasonably certain rate. But now, going forward, he is not certain and he must allow himself a buffer.

The next consequence of this is that, given that the rate is fluctuating and given that in 10-20 years, the amount that you have in CPF is subject to inflation, the $30,000 today would not be worth $30,000 in 10 years' time. There is then an urgent need for Singaporeans to understand the importance of financial planning. In the past, they have depended on their CPF and looked to that as something that would take them through their old age. Now, this is no longer possible. CPF would take care of some part of it, but they certainly have to see how they can provide for themselves in terms of financial planning. We would think that this is an obvious thing and that Singaporeans understand that. Let me tell you that some Singaporeans understand it, but many Singaporeans do not see the importance, or understand the urgency or need for it. All Singaporeans are equal citizens. All Singaporeans have equal rights under the law, but not all Singaporeans have equal understanding of the economy, the financial consequences of what we do, or the importance of financial planning.

It is very important, therefore, for the Government to get this message out, especially to younger Singaporeans, and make them aware of the importance of it. I would go so far as to suggest that the Ministry of Education actually look to introducing this as a subject, but not as an examinable subject, as students have enough on their plate, to make students understand the importance of this, going forward, so that we educate an entire new generation of Singaporeans on the need to supplement their CPF savings.

I move on now from the consequences of this to some of the feedback that I have received in respect of the proposed CPF changes. I spoke with my grassroots leaders a couple of days back in anticipation of this debate. The first and most important piece of feedback that came in was that it is really the middle income group, especially the lower-middle income group, that would be affected. I think my Parliamentary colleagues have already touched on the points about housing loans and repayment of mortgages. So it would not be necessary for me to elaborate on that. But I would just like to highlight that this is a strong feeling on the ground.

The other strong feeling on the ground is the cost of living. Singaporeans, as a whole, can accept the need for CPF cuts. As a general rule, when faced with a problem, Singaporeans will rally round together. But in order for them to feel that they are really part of the team, they also need to feel that if we are asking them to accept the pain of CPF cuts, why is it, at the same time, the cost of living is not going down but, in fact, it seems to be going up? A few days back, in the Straits Times and, I think, in Streats, it was reported that the Consumer Price Index has reported a jump. One of them reported a 0.4% jump in prices and the other a 0.6% jump in prices. I am not sure which indicators they were referring to, but it is clear that there has been a jump in prices.

The feedback from the grassroots leaders is whether the Government can look at the costs of utilities, transport and rentals to see whether these can be brought down. When we talk about the cost of doing business, there is also an urgent need to see whether the cost of rental of commercial properties can be brought down.

Generally speaking, at the end of the day, if Singaporeans feel that they are being asked to make a sacrifice, they can appreciate that, but they would also appreciate it if something can be done to alleviate the pain. In this connection, I would like to mention that I applaud the announcement by the Acting Minister of Health, Mr Khaw Boon Wan, about cost cutting measures for the Ministry of Health in order to reduce the cost of providing healthcare. That was a very important message to send to Singaporeans that at least one Ministry is looking at reducing costs. What about the other Ministries? We have not heard anything from them. It may well be that the other Ministries are looking at cost cutting. If they are, Singaporeans need to hear it, and if they are not, then they should hurry up and do it straightaway.

There is an urgent need to have intelligent cost cutting that would translate into savings that can be passed on to the average Singaporean in the street. Not all cost cutting is good. If a Ministry spends on a project which results in a contract being awarded, the contractors get the job, the contractors' employees get jobs and they get their salaries, income is generated, that is fine. That is why I say there is an urgent need to look into intelligent cost cutting.

It should not just be the average man-in-the-street who pays this price because it should be a collective effort. Employers, obviously, need to play their part. They should pass on the savings that they get from the CPF cuts. The banks and HDB should seriously look at what can be done to either convert payments to only interest payments or deferment of repayment of instalments in cases where there is difficulty in making repayment.

Going forward, I would just stress that the CPF cut is only one part of a much wider issue and a much wider debate. The wider issue really is how to make Singapore more competitive, how to generate business, how to generate jobs. The CPF cut is not, by itself, going to be the magic formula that immediately solves all our problems.

There are obviously many other things that we have to do. And one of the things that I would suggest is that there be a new policy introduced across-the-board for all the Ministries, which I call the common sense policy. Basically, how it works is: when in doubt, use common sense.

Let me just take an example. I read in the newspapers the other day that there was this company called Wash Wash that had applied to the HDB for a corporate licence to do car washing in a HDB multi-storey car park. When they first broached the idea to the HDB, it was reported that HDB rejected them giving, among the list of reasons, "no such licences have been given before." What kind of reason is that? If we use that kind of reason, we will never be able to do anything new. And there was also, "car washing is only permitted at the car washing bay." I really like this one, "the detergent run-off will weaken the concrete". It was only after the owners of Wash Wash appealed to their MP, Dr Vivian Balakrishnan, who is also the Minister of State of MND and the Government pro-enterprise panel, that they eventually succeeded in getting their licence.

My point is this. It should not take all this convulsion of effort in order to get a licence. The bottom line is: every Ministry, every statutory board, every Government agency should have a policy that if an idea generates jobs, if an idea can generate business, if an idea can do something to boost the economy, it should be given serious consideration. Do not make the poor guy jump through so many hoops and hurdles before he eventually gets to it. But, of course, we are happy to say that in that case, there was a happy ending. And I read in the newspapers that 128 licences have been issued.

At the end of the day, CPF cut is only one part of it. There are many other things that we have to do. Singaporeans need to feel that we are all part and parcel of the common enterprise. When we fought the battle against SARS, everybody had their part to play. I think the average Singaporean in the street needs to feel that he is not the only one bearing the brunt in the battle to revive the economy. The average Singaporean needs to feel that he is part of the team. He will feel that he is part of the team if we hear that the Ministries are doing various things, if we hear that Government and other agencies are doing various things, if we also know that employers are on board, if the banks are on board, if the property owners are on board. And if we can do this, there is no reason why we cannot pull ourselves out of our economic doldrums.

Mr Ahmad Khalis Bin Abdul Ghani (Hong Kah): Mr Deputy Speaker, Sir, thank you for allowing me to speak. Looking at the number of speakers, I would just deal with two or three points.

Sir, understandably, many employers I spoke to welcomed the CPF cuts, although I am sure they were hoping for a 6 percentage point reduction as opposed to 3. But to them, I have this message. I urge employers to utilise the forthcoming savings in a responsible manner. To companies who are doing well, I urge them to return their savings, or at least a part of their savings, to their workers - this return made in the form of bonuses, higher budget for upgrading or retraining or other schemes that suit the peculiar needs of their workers.

Sir, with such savings, I also urge companies to refrain from resorting to retrenchments. I do appreciate that some companies do have to downsize notwithstanding the CPF retuning. But I do hope that retrenchment is done only where it is truly unavoidable. I believe these points were raised by speakers before and, in fact, even by the Prime Minister himself.

Sir, I think employers owe it to the country and to the workers to do their part in this exercise. If employers do not act responsibly by utilising the savings in a responsible manner, they would undermine the efforts of the Government and the sacrifice of the workers. We need to remind employers of this obligation.

According to a report in a recent edition of the NTUC News, union leaders call on employers to share the benefit of savings with their workers. And I understand that union leaders would continue to remind employers of this call. I applaud this effort and I ask the Government to use its influence and good office to remind the employers of their role in this process.

To the workers, I have this message - the unions hear you, your MPs hear you, your Government hears you. And I am sure the Government and all of us will do all we can to help where it is proper to do so. But such help does not mean that all the workers' problems will be solved. That certainly is not the intention and it should not be. In this exercise, no one escapes completely unscathed.

The reduction of the CPF contribution by 3 percentage points is not that devastating to most people. And even as of now, various schemes are already in place to assist Singaporeans who are in need, and I urge the Government to ensure that these schemes continue. In addition, there is the HOPE scheme, which will be of great help to poor small families to get out of an otherwise intractable poverty situation.

Sir, I also urge workers to maintain their productivity in spite of the CPF retuning. If workers respond otherwise, ie, they slacken because their CPF contribution by employers is reduced, then it renders this exercise futile, as there would be no real advantage for employers or investors to come in. All workers - and, of course, this includes those working in the Government - have to moderate their expectations and adjust their lifestyles. Already we are reconsidering our attitude towards work. We are replacing the concept of life-long employment with life-long learning. With this CPF retuning, we have to rethink our retirement plans.

Sir, the CPF retuning is perhaps the most widely and drastically felt among a slew of reforms undertaken by the Government in the last couple of years. The rapid changes strike fear and worry among the people. The uncertainty is quite disconcerting. Speakers before me have elaborated on the kinds of uncertainty that workers face.

The people need to be reassured that although there are many things uncertain, that in spite of the rapid changes, many things will remain the same. Ironically, perhaps many things need to be changed so that we can ensure the more fundamental things remain the same. And among the things that ought to remain the same and have to remain the same and are intended to remain the same by these steps are:

(1) That our system of governance and Government will remain, ie, we have a Government that listens, that has foresight and that acts responsibly.

(2) That the future of our country and our economy remains in our hands, even though it is hot at times. There is a Malay saying that goes: gengam para api, biar sampai jadi arang. It means that when we hold burning ember, we have to hold it until we snuff out the fire, until it returns back to charcoal. If we let it go, it will continue burning and become ash, which will not be of much use to us anymore.

(3) Our country will remain a safe and peaceful place for us to live in, even if we are going to be less cash rich.

(4) Our families will remain strong and that pro-family policies are firmly upheld.

(5) That we will continue to help those in need and there will be policies remaining in place to ensure that every Singaporean matters and every Singaporean is cared for.

On that note, Sir, I am in support of the proposals tabled by the Government.

Dr Chong Weng Chiew (Tanjong Pagar): (In Mandarin): Mr Deputy Speaker, Sir, I support the retuning of our CPF system. Although the medicine is bitter, it has to be swallowed. The proposed changes to the CPF may bring financial pressure to our people. But if we tighten our belts, this new system will help us to maintain our competitiveness, save jobs, and even create more job opportunities. Because of the high labour cost in Singapore, even higher than that in the United States and Australia, we must make quick adjustment to adapt to the investment changes in the international market.

However, I hope that the Government will avoid making too many changes to the CPF system in future. Although flexibility in the CPF system will enable us to deal with the investment trend more nimbly, frequent changes to the CPF system will send unclear signals to the business community and the investors, making it difficult for them to make long-term plans. This would also cause confusion to the investors, and give them an unfavourable impression of Singapore. As a matter of fact, our CPF system has been subjected to many rounds of adjustments over the past few years.

Ultimately, salaries and remuneration should be decided between the employers and employees. The CPF contribution rates do not make any distinction in the industries and companies. The performance of each industry, company and employee is not uniform. If you cut the contribution rate of employers, it will amount to a pay cut to the employees. This is unfair to the workers. Not many employers will tell the employees who have performed better that, "This time round, your CPF contribution rate is reduced, let the company pay you cash every month to compensate your losses." Whatever the CPF contribution rate may be, the employer has already provided for it in his budget. Any change to the contribution rate can only bring more procedural work to the employers. I would suggest that the CPF contribution rate should be maintained at a low but reasonable level, so that the employees will have enough savings to look after their retirement and healthcare needs in their old age.

I also hope that the Government will encourage those companies which have done well to give more bonuses to their employees, through the grant of some tax incentives. The persuasive power of our leaders is not enough. To many companies, the appraisal of their shareholders on them is of paramount importance, and the remuneration of workers is secondary.

To make sufficient provision for old age is the responsibility of the individuals rather than that of the Government. Although I understand that the Government wants to maintain relatively high CPF contribution rates to ensure that every citizen has enough savings for his old age, this has caused our labour cost system to be inflexible.

Let me give you an illustration. A long time ago in ancient China, there was a rich merchant who made every effort to cultivate his son and prepared him thoroughly for the Imperial Examination. Unfortunately, when this son of his sat for the examination, he failed to make the grade. The rich merchant asked to see his son's answer sheet, and was shocked to find that there was no writing on the sheets, except for some watermarks. It happened that in the past the father would always grind the ink slab to make the ink for the son to write with his brush-pen. At the examination, the father was not there to grind the ink slab, so the boy did not know how to generate the ink from the ink slab, and he simply wetted his brush with water and wrote his essay. Thus, a blank paper was submitted as the answers were illegible.

Singaporeans should set aside part of their monthly salary as savings, and not depend solely on the CPF savings for their old age.

I believe the package to buffer the impact of the CPF retuning exercise will be adequate to help our people deal with the changes. I hope that the Government will help the poorer Singaporeans, particularly in their housing, transportation and healthcare needs.

I would like to take this opportunity to express my appreciation to Minister Khaw Boon Wan for his announced intention to cut healthcare costs in Singapore. I hope that other Ministries will also do their best to cut down the various charges to lighten the burden of the people in meeting the high cost of living. 6.15 pm

Mrs Fang Ai Lian (Nominated Member): Sir, since the Prime Minister is here, let me first congratulate him on an outstanding National Day Rally speech. It was very heart-warming and inspiring and, indeed, many had commented that it was his best speech ever. As was like good wine, he gets better with age!

Businesses and investors, of course, wanted to hear the Prime Minister's views on the economy and the signals that he was trying to send out. So, it is not surprising that the PM concentrated much of his speech on the present economic difficulties. Yes, very true, our landscape has changed dramatically. Yes, we took away jobs from others. But, today, that fantastic economic strategy is increasingly and ferociously being followed by even more lower cost regimes in the region, and specially India and China. Their economies are so large that they can impact other economies in such a big way and in a very adverse way as well. Being a small economy, we just cannot escape the onslaught. Other skill gaps and advantages have also been eroded. We seriously need to address our competitiveness and revive our economy.

Therefore, the warnings of multi-national corporations, like IBM, cannot go unheeded because they are very real. In my business too, I see our global clients disappearing, either scaling down their operations or just pulling out. It is not because they do not find us attractive anymore. It is just that globalisation has made it unnecessary for them to be here. This tide of globalisation is very real, very strong and very powerful. And those of us who can ride this tide will prosper with this trend, and those of us who cannot will simply struggle against the current. Therefore, we need to change, and the business community really welcomes the proposal to retune our CPF.

Up until the Prime Minister's National Day Rally speech, the business community thought that it would just be a maintenance of the rate. And after the PM's announcement, there has been great debate - how far will this go? Of course, everybody has expected a 6% reduction but the PM has just announced that it will be a moderate 3%. We respect the decision, and we appreciate that move. The Prime Minister also touches on the part of home-owners, what will this do for their mortgage payments. And then there is also the worry about consumption and its effect on other sectors of the economy, calls for cuts in Government fees and taxes, and also even for the size of the civil service to be reduced. I think that all these are not frivolous comments, and I am sure the Government will take all these in its stride. And, in fact, the PM had said that the CPF cut is just part of a large package of business costs which the Government will be seeking to reduce.

I do not wish to add to this debate. But I think it would be helpful and valuable to recognise that the PM's proposals are really steps in the right direction, and we should fully support the proposals which have been made. The Prime Minister did mention Jack Neo twice in his National Day Rally speech. So I might paraphrase Jack and say, "Prime Minister and the Government not stupid".

Indeed, the Prime Minister's track record has been a very excellent one, although we cannot say that it is entirely flawless. It is not possible to achieve a flawless track record as well. This move to modify the CPF system is, in fact, a recognition that the high wage policy has contributed to our present economic difficulties. Also, many commentators have remarked that the Government has played too big a role in our economy, too big a role in our society, and that is why Singaporeans are by and large very reliant on the Government and run to it for solutions to all problems.

But, of course, this is easy to say with the benefit of hindsight. The high wage policy did serve us well for a long time, many aspects of it, and benefited many Singaporeans as well. Likewise, many Singaporeans feel very comfortable to be hand-held, to be led and to be molly-coddled by the Government. But the circumstances, as said by so many people, have changed dramatically, and it is also time for us, Singaporeans, to assume new mindsets, new attitudes and really be much more entrepreneurial, much more self-reliant and also to understand the real meaning of adding value.

It is also enlightening to note that the Government too has changed - heeding feedback, looking at shortcomings and being ready and willing to correct them. I am quite amazed at how quickly the PM changed his stance on bar-top dancing. A lot has been done - undoing red tape and bureaucracy; taking away cumbersome and stifling regulations. Of course, we continue to gripe that it is not far and fast enough. But it will be fair to say, at least, all these measures are being taken seriously and there is no pretending that it does not exist.

This CPF retuning is a classic example of a good solution - breaking down the rigidities, making it flexible, and taking away the statutory burden on businesses and also not putting our older workers at risk. Of course, it will produce uncertainty, but we live in a very uncertain world. Just the last six months alone, we had been wrecked by so many crises, SARS included. So, we need just to recognise that certainty is a luxury which we cannot take for granted. But the CPF retuning will produce a lot of adverse results because it is so linked to many aspects of our lives. We are glad that the Prime Minister has said and recognised that this retuning is just not about re-scaling of dreams but it will bring about real and considerable hardship to many. We are all looking forward to hear additional assistance measures that DPM would be announcing.

Just a few remarks about the HOPE programme which has been said to be comprehensive, and yet there was a Straits Times' report about a family with an income of $680 who was not able to qualify because they had two "0" levels too many. So, here again, because we live in exceptional times, it is important that the bureaucrats exercise flexibility and, as Ms Indranee has said, common sense in the implementation of policies.

A lot has been said, but I would like to commend the Government for the courage shown, to take on difficult and unpopular decisions, and this retuning of CPF squarely falls into it. It will cost you votes if you have an election tomorrow. Fortunately, we are not having an election tomorrow. It will not be until a few years' time, by which time, the benefits of all the changes which are being proposed would have been felt.

We have used a lot of tools already, but these tools have to be relooked, like the tools relating to taxes, levies and so on. But the CPF is one far-reaching tool that will have immediate effect. On hindsight, again, perhaps we were too hasty in restoring the CPF cuts which were introduced before. As I said, it is a blunt instrument but it is a very effective instrument. It will produce a whole range of adverse effects and new solutions have to be found. I do not think we can tackle all problems at the same time. Some have to be put in the parking lot. The main thing is that there must be a recognition that we have a problematic situation here and there is a need to change, and new solutions got to be found. The original objectives of the CPF cannot be fully met by the old model. So there must be a transition from the old model to the new model and help needs to be injected here.

The future is never going to be certain. But there have been a lot of debates already, and a lot of time spent on debating about what our future should be and the solutions needed, like the Remaking Singapore, the ERC, and the debates in this House. I am confident we do have a blueprint for the future which looks promising. In businesses, we always say that our competitors are also not stupid. We all have the same strategies. At the end of the day, the team that comes together, the team that executes well, is the team that wins. So, let us execute together and support the Prime Minister and the Government.

Dr Warren Lee (Sembawang): Mr Deputy Speaker, Sir, thank you for allowing me to join in the debate.

The CPF cuts are bitter but necessary medicine and, in some ways, I believe that we can take this bitter medicine analogy a little further. The challenges we face are not going to be a simple flu. Recovery can only come when the patient, that is our people, acknowledges the problem and takes steps to address the problem. After acknowledging the problem, the bitter medicine may need to be taken over a period of time, and there may need to be more than one medicine with a bitter after-taste, no matter how sugar-coated. And after that, the patient may still need rehabilitation and physiotherapy to recover the use of flabby muscles, stiff joints and maybe a flabby mind. Some medicine may appear to be less painful but may not be so effective. Just as no physician can do a good job if he has an uncooperative patient, I fear that the Government's fiscal measures and CPF retuning will not bear fruits unless Singaporeans acknowledge that we as a people and a country need to recognise we have a problem in competitiveness and take all necessary steps to address the matter.

Other MPs have spoken about the steps that the Government may need to take, but I would like to focus a little bit differently and say that the onus is now upon our people - our workers - to recognise the steps that the Government has done and to take their own steps to recognise the problem. My grassroots leaders still keep telling me how difficult it is to recruit waiters and waitresses, even when the pay is $1,200 a month. Singaporeans, it seems, are not prepared to put up with split shifts and having to work on weekends. Other grassroots leaders tell me about difficulties with recruiting for shipyards, even when they are prepared to offer training. And when our Town Council decided to employ more Singaporean workers for cleansing operations, residents started complaining that actually local workers were spraying water and not scrubbing, unlike some of the foreign workers. When the water dries up, the corridors are still dirty.

As we upskill the younger and more educated workers, I think the only way for us to maintain low unemployment for older and less educated workers is for them to accept the manual service and less convenient jobs that are currently being taken by some of our foreign workers. I think we need to relearn the dignity of honest manual labour. We can outsource a lot of jobs, but certain jobs cannot be easily outsourced and have to be done in the country and onsite. I do not think there is any shame in honest labour, even when some aspects of the job may be a bit demeaning. As doctors and healthcare professionals, this is the creed which doctors and nurses have to learn to accept - unpleasant sights and smells, and sometimes unreasonable behaviour of people who are ill and need our help. I do not think people think any less of our profession for the fact that we have to deal with all these unpleasant things.

I call upon the Government to have a campaign to change societal values, to re-emphasise the dignity of labour, the principle that any job is better than no job, and it is better to be at least partially employed and to receive some help financially than to look out for handouts alone. We manage to change Singaporeans' attitude to a military career, and I think we can do the same for manual labour and service sector jobs. Having misplaced pride and a handout mentality would not be good for us in the long term.

The effect of CPF cuts would be to lower our labour cost and make our labour more competitive. However, cost alone is not only the issue. Our products, as a whole, as a country, have to be cheaper and better, or at least give better value for the price. Factories in China, India and the former Eastern bloc have found out that when cheaper and better quality foreign goods started appearing in their markets, discounting obsolescent product lines alone did not ensure sales.

As a potential employee, if what you have to offer is a set of old-fashioned and limited skills do not expect an easy time on the market for new jobs. Singaporeans like ai pea ai chi. Your potential employer is also looking for a better, cheaper, more reliable labour product, just as you want to have it cheaper and better. Many of our citizens decry the fact that many employers would like to have people to have facility in Chinese or other languages. Others find that employers want to have good looking frontline staff. Instead of complaining that people are discriminating against you, perhaps we should learn to give employers what they want. If you read in today's papers, people in the call centres are now learning how to speak American English so that they are actually able to do a better job even when they are far away from sight.

In the same way that many older workers embrace computers to deal with marketplace realities, I think the CDCs can help non-Chinese Singaporeans get a working knowledge of Mandarin to make them more employable. The MPs who are not so good in Mandarin manage to learn a bit more too.

If you want a frontline counter job, you might want to attend a course that helps you project the pleasant personality and good inter-personal skills and also gives tips on dressing right. If you look frumpy and you sound grumpy, do not blame people for not giving you the job. Again, CDCs can help in this regard.

The last bit is just a suggestion for HDB. As we have asked the people to cut their cloth as they are able to afford it, and cut their clothes according to what they can afford, perhaps now we are actually asking people to live more within their means. People who are downgrading and unable to service large housing loans need to be looking at cheaper alternatives. Between a highly subsidised rental market with arguably lots of necessary restrictions and the free market, I think a lot of people in distress would really look forward to an alternative where HDB will have minimally subsidised rental flats which are maybe a bit bigger but which would fill the need or gap, much in the same way that NTUC FairPrice supermarkets manage to moderate prices. Perhaps, that is one practical measure that would help many hard-pressed Singaporeans.

On this note, Sir, I support the statement.

Dr Tan Boon Wan: Mr Deputy Speaker, thank you for allowing me to join in this debate. We were geared up this afternoon to hear drastic changes to CPF. It was thus a great relief to hear from the Prime Minister that the changes would be phased in.

It is very reassuring that the Government leaders understand and acknowledge the pain and sufferings attendant with the CPF changes and have taken these concerns into consideration and ameliorated them. Although the pain and sufferings are reduced, they are not entirely eliminated. I therefore urge the Government to look into ways to help those who are affected to overcome these problems.

Bear with me while I repeat a point made by other hon. Members. The CPF is used by many to pay their housing loans. I hope that the Government can, for instance, work with the banks to extend the repayment period and lower the monthly repayment in line with the reduction of the CPF contributions. I look forward to hear the measures that DPM Lee Hsien Loong would announce shortly on how they can help the people who are affected.

However, this should not distract us from the seriousness of the challenges that we face as a nation. We must therefore brace ourselves for the needed changes to remain competitive in a very fast changing world. It beholds us to realise that Singapore is a small place where the margin for errors is also small. If we miss the boat, it may be a long while before the next arrives or, worse still, it never comes.

I thus urge all Singaporeans to understand the gravity of the problems that confront us, to support the Government and to do whatever needs to be done to ensure that Singapore continues to prosper so that Singapore will have a home not only for us, but also for our children and their children as well.

Sir, on that note, I support the proposed changes to the CPF.

Mr Ang Mong Seng: (In Mandarin): Mr Deputy Speaker, when the Prime Minister made the announcement in his National Day Rally that the CPF rates would be reduced, many Singaporeans were worried. When I spoke to my grassroots leaders, they said jin cham meaning "Terrible!" But today, having heard what the Prime Minister announced, I called them up and they said heng-ah, or "Phew, lucky!"

Generally, Singaporeans understand the purpose of the CPF reduction. I believe this would be supported and accepted by the people in general.

Sir, the reduction in CPF contribution rates, I hope, would help to reduce the business costs in Singapore. On the one hand, this would help save our jobs and prevent further retrenchments. On the other hand, we would be able to attract more foreign investments here, and thereby creating more jobs for our people.

Sir, a policy may be good, but it has to be implemented effectively so as to obtain the best results.

First, I would suggest we set up a nation-wide unemployment register. We can make use of all the community centres and community clubs in our 84 constituencies to effect a nation-wide unemployment registration exercise. By so doing, we would be able to better understand how many people are genuinely unemployed and what are their needs and requirements. Then, we can make a study of it and come out with the appropriate measures to effectively help them. The unemployed will have better chances of getting jobs that are available and suitable to them. In this way, we can achieve the best results in combating unemployment.

We should also help those unemployed workers who are in financial difficulties. We could perhaps give them a once-off unemployment benefit of, say, $2,000 or $3,000. Apart from that, we should also try to reduce the other costs of living, such as PUB charges, and rentals. Only then, can we effectively help our workers to settle their problems while making every effort to attract foreign investors to come in and create more jobs for them.

Secondly, we should step up our efforts to promote Singapore overseas. Here, we must commend our Minister for Trade and Industry, BG George Yeo. Under such a gloomy global economic climate, he has still managed to attract a lot of foreign investments to Singapore. We should have some good incentive packages, and encourage more civil servants to go overseas to promote them to the prospective foreign investors. Nowadays, a lot of people go to China to invest. The reason is that many leaders from China came to Singapore to promote the various investment opportunities in China. I think we should learn from them, and encourage our senior civil servants to go overseas, particularly to China and India, to promote our incentive packages to the entrepreneurs so that they will come to Singapore to invest. Then we will be able to create more jobs for our people.

We should work like the bees. Even when the weather is bad, the bees do not stop working. If the immediate vicinity is no good, they will fly further away to collect more pollen from the flowers there to make more honey. I think we should also learn from them. We should go overseas to promote our incentive packages. Only then, can we link up with the foreign entrepreneurs, persuade them to bring their investments here, and create more job opportunities for our people.

Thirdly, we should adapt to changes. No industry can prosper forever and in every industry, there will be ups and downs. Prior to the 60s, Singapore's main output was in farming and agricultural produce. In the 60s and 70s, we promoted industrialisation and concentrated on labour-intensive industries. In the 80s and 90s, we moved towards high value-added industries which paid higher wages, and our people enjoyed better standard of living. That has resulted in a very high wage level in Singapore today, where the labour cost is significantly higher than the other countries in this region. I think we should make use of this period of economic downturn to change the mindset of our people. In the meantime, we have to seek avenues for our businessmen to expand overseas.

Next, we should look into the field of education. We can promote our universities so that we can become a hub for higher learning and cultural activities. Our educational standard is the envy of many countries in the world. I think our NUS and NTU should cooperate to provide more opportunities for students to study here. According to a report, the President of the Singapore Management University, Mr Tan Chin Tiong, mentioned that it would cost a Singaporean some $70,000 to $80,000 a year to study in a university in the United States, whereas he needs to pay just $6,000 if he studies in either NUS or NTU in Singapore. At this time of economic recession, we should encourage more Singaporeans to study in Singapore. That would help to solve the financial problem.

Secondly, attraction of foreign students. We should develop Singapore into a hub for higher learning and attract foreign students to study here. In this way, we can earn more foreign exchange too. Recently, I was in Ganzhou City, Jiangxi Province. I had the opportunity to speak to some high school students there. I asked them where they would like to go for further studies after their graduation. They named four destinations - Canada, United States, England and Singapore. Singapore has a very good brand that is well known overseas. We should make use of this foundation to expand and improve our university education. We should seize this opportunity. We should not wait. I think for our economy to prosper, we should resume the old name of Nantah for our NTU. The Nantah spirit is very important. With the new President, Prof. Su Guaning at the helm, we should be able to make further progress.

Now, let me turn to tourism. Tourism is a very important component of our economy. The development of tourism will bring more business for the hotels, restaurants, transport and retail business. These are all inter-linked and tourism will provide more job opportunities for Singaporeans. The Government should try to establish more tourist attractions in Singapore, make use of our surrounding environment and improve the service quality of our workers in the tourism industry.

Fourthly, with this announcement of CPF cut, some people will naturally be worried. Now, the repayment period for HDB loan is for only 30 years, and the lessees have a rather short repayment period for the mortgage loan they took. I think we should grant them longer repayment period, say, 35 or even 40 years. With this downturn, many HDB lessees could not service the loan for their present flats. Many of them wish to downgrade to smaller flats. The HDB should consider building more 3-room flats to satisfy their needs.

As mentioned by the Prime Minister just now, the 3% cut in CPF amounts to a hefty $1.3 billion for the employers in Singapore. If we convert this to Renminbi, it amounts to five Renminbi for every one of the 1.3 billion people in China. This is indeed a huge sum of money. Those companies which are doing well, the 3% saving in the employer's CPF contribution is a windfall. They should make full use of these windfall savings to help their workers. So, I suggest that those companies which are making profits should set aside at least 1% as a training or welfare fund for the workers. This would enable the workers to share the windfall.

Fifthly, we should change the work attitude of our workers so that they can keep up with the times. According to the Ministry of Manpower, some companies are still having difficulty recruiting workers. For example, now there are about 4,600 jobs where there is no taker. Yet, we have 80,000 people who are unemployed. I think we should change the attitude of our workers. In any job, there is always dignity and professionalism in it. Nowadays, there is still a good number of jobs which are shunned by Singaporean workers. As a result, the companies have no choice but to employ foreign workers. For example, more than 30% of our bus drivers are foreigners. Most of the Town Councils' conservancy works are also taken up by foreign workers too. Even in the hawker centres and factories, it is the same. So, I think our workers should be more realistic. They should enrich themselves and make some compromises and be more flexible. Only then can they survive in this ever-changing environment and be self-reliant.

Let me quote an example. When I completed my secondary school, I wanted to go to the university. I was worried that my family could not support me for my university education. So, I worked in a provision shop in Taman Jurong to earn some money before I joined the university. While in the university, I spent my vacation working in a plywood factory. My employer told me that the only vacancy was in the sawmill which was the most dirty and dusty part of the factory, and I had to do night shift. I took the job. My nightshift was from 11.00 pm to 7.00 am. The proprietor of the plywood factory was a Taiwanese. He was in the habit of visiting the factory in the middle of the night to check if the workers were working. At that time, I was a young man who needed the money desperately, I dared not play truant and was always working. The proprietor saw that I was a conscientious worker and was also an undergraduate. He recognised my efforts and promoted me to be a quality inspector, and my wages were raised from $2.50 to $3.50 an hour.

So, if you are prepared to work hard and earn our keeps, there is no need to feel ashamed. As the Prime Minister said, we would not die when we lose face. It is only when we cannot breathe that we will die. So, when a job is given to us, we should take it. We should not think that it is a lowly job and refuse to take it. Every job is sacred, so long as it is a good and proper job. This is what we call the "Nantah spirit", the spirit of self-reliance.

Mr Deputy Speaker: Order. I intend to stop here. Mr Wong.