BUSINESS AND FINANCIAL CENTRE (Launch)

Column: 3304

BUSINESS AND FINANCIAL CENTRE:

(Launch): 14.

Mdm Ho Geok Choo asked the Minister for Trade and Industry (a) with the launch of Singapore's Business and Financial Centre (BFC) already postponed twice and with weak investment sentiments in the BFC, what steps will the Government be taking to make BFC a reality; (b) what is his Ministry's reaction to the recent A T Kearny's FDI Survey, where the Confidence Index for Singapore was off the range of major global investors; and (c) what are the plans or

Column: 3305

steps being taken to improve this Confidence Index.

The Minister of State for Trade and Industry (Dr Vivian Balakrishnan) (for the Minister for Trade and Industry): The BFC is an important project in the new Downtown that will provide financial institutions and companies with comprehensive integrated facilities. It complements our efforts to attract more of such businesses to invest and grow down here in Singapore.

The Government earlier decided to defer the release of the BFC site due to the acute economic uncertainties induced by the September 11 incident, the Iraq war and the outbreak of SARS.

MND has refined the configuration and phasing plan for the site after consulting both local and overseas developers. In view of the scale of the BFC development, the Government will be structuring the terms of sale of the site to provide the developer with the flexibility to phase the development according to market demand. There have been signs of growing interest from investors in the BFC project. The Government plans to release the BFC site in the first half of 2004, barring any unexpected adverse shocks to the economy.

The A.T. Kearney FDI Confidence Index Survey, which the Member referred to in her question, is based on an annual survey of CEOs, CFOs and other top executives of Global 1000 companies, conducted by A.T. Kearney, which is a consulting firm. This survey measures their feedback on the likelihood of direct investment in a market in the next one- to three- year period.

Singapore's ranking on the index fell below the top 25 in 2003, compared to our 22nd position achieved last year and

Column: 3306

13th position achieved in 2001. According to A.T. Kearney, the SARS outbreak and weak economic growth contributed to Singapore's poor showing.

I want to move on to discuss our steps to improve FDI confidence, not so much on the survey itself but on the concrete steps which we are taking to improve and make ourselves more attractive to foreign investors. Firstly, we have to strengthen our competitiveness

and improve our value proposition to investors. We need to keep our costs competitive. Besides ensuring, for instance, that our land prices are not out of line with international norms, we have also liberalised the energy market, which has resulted in lower electricity prices for large users. We are also progressively lowering our income tax. And as manpower cost is the largest single cost component for most businesses, we have also made some changes to our CPF system recently, including reducing employer CPF contribution rates.

Secondly, besides managing cost competitiveness, we need to improve our capabilities. We will continue to invest heavily in education, as well as to step up workers' training and skills upgrading. In addition, we are also raising our science and technology capability through R&D and the development of scientific talent. We are also helping to build strong clusters of supporting industries and supply chain networks, which will provide added draw for investments.

Thirdly, to overcome the constraints of our small domestic market, we are enhancing our economic linkages with other countries through our network of Free Trade Agreements (FTAs). Our FTAs with the US, Japan, Australia, New Zealand, ASEAN and the European Free Trade Association (EFTA) will enable companies located here to enjoy tariff-free access to a much larger international

Column: 3307

market of $16 trillion and 1 billion people. We are also working towards a bilateral FTA with India, while an ASEAN-China FTA is being negotiated. These will give us preferred access to two of the world's fastest growing markets. Together with the ASEAN Leaders' recent declaration to build an ASEAN Economic Community, these will improve the attractiveness of ASEAN and of Singapore, in particular, as an investment destination.

Mr Speaker, Sir, we are confident that we will continue to remain a viable and attractive investment destination. Our recent successes in landing major new investments from companies, such as Hewlett-Packard and Panasonic, are a testimony to our continued attractiveness for high value-added activities. Hewlett-Packard recently moved its networking hardware R&D division from California to Singapore. It will invest $55 million over three years in a new facility which will make Singapore the sole global hardware development and manufacturing centre for its ProCurve line of networking products. Panasonic will be upgrading its existing DVD manufacturing and R&D operations in Singapore with $160 million worth of new investments over the next three years. The EDB expects to attract $7.5 billion worth of manufacturing fixed asset investment commitments and $1.9 billion of services total business spending commitments for 2003 alone. We will, nonetheless, address our weaknesses while building on our strengths in order to continue attracting a steady stream of investments to Singapore.

Mdm Ho Geok Choo: I would like to thank the Minister for a very comprehensive reply. I would just like to comment here that Singapore's data on trade shares was also not impressive.

Mr Speaker: Mdm Ho, do not make any comment, just ask the question.

Column: 3308

Mdm Ho Geok Choo: Yes. Our own merchandise export has actually risen only by a mere 0.3% to 1.7%, while our exportable services have only increased by 0.1% to 1.8%. During the same period, 1992 to 2002, other service exporters in Asia, such as China, India and South Korea, have almost doubled their respective share of world services exports. Can the Minister kindly comment on this?

Dr Vivian Balakrishnan: Mr Speaker, Sir, these are figures which are cause for concern. But they are not in themselves surprising. We know that our economy has gone through a tough patch over the last couple of years. I want Members instead to focus on what we can do and what we should do in order to improve and get ourselves out of this current trough. I want to urge Singaporeans and Members of Parliament not to indulge in, what I would term, as irrational despondency. We know we have problems. We are aware of our problems. We know the solutions. Some of these solutions are painful. We need to get on with it, do whatever is necessary and then we need time for these measures to bear fruit, and at that appropriate time, we will have proof of the pudding. It is no point now looking backwards and say, "Wah, we haven't done well. We should have done this. We should have done that." Let us focus on what we need to do, get on with it, do it and move on. That is something I would urge all Singaporeans and all Members of Parliament to focus our minds, our energies and our efforts on.