HEAD V - MINISTRY OF TRADE AND INDUSTRY

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Head V - Ministry of Trade and Industry: (cont.) - _

Resumption of Debate on Question [7th March, 2005].

"That the total sum to be allocated for Head V of the Estimates to be reduced by $100." - [Dr Ahmad Mohd Magad].

Question again proposed.

Research Scholarships

Assoc. Prof. Ong Soh Khim (Nominated Member): Sir, according to the 1st February 2005 issue of the Straits Times, in an article entitled "A Star's million-$ stars", A Star offered 73 scholarships last year for study in biomedical-related fields, of which 43 were for the full eight-year programme, each costing approximately $900,000, which is about $40 million, and the rest were for post-graduate studies only. These scholars are paid a salary during the course of their post-graduate studies, according to this article.

Quoting Mr Philip Yeo from an article of the 4th January 2003 issue of the Straits Times, entitled "Ph.D pool to be expanded with new scholarships", he said, "This is an investment in our future. Eventually, they [the scholars] will become a key attraction to multi-national companies to move their high-end research projects to Singapore."

Sir, the availability of research expertise, such as Ph.D talents, is only one of the many factors that will influence a foreign MNC's decision in moving their high-end research projects to Singapore. Each MNC will have its own individual needs and requirements, which include political/economic environment, logistics factors, tax incentives, industrial factors,

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infrastructure, etc. Hence, I wish to ask the Minister the following questions:

First, the Minister has earlier in the House on 28th February explained the cost breakdown of the $900,000 investment in each young scholar. However, the Minister has not replied on whether it is justifiable to commit and invest $900,000 on each scholar. How does the Ministry justify this investment? What is the cost benefit analysis of this investment?

Second, does the Ministry consider the many risk factors involved in this investment, namely:

(a) After the 8-year period, the research climate and labour market might have changed so drastically that there is no avenue for the employment of these scholars;

(b) the risk of these scholars failing their courses and having to repeat an entire semester and increasing the length of the scholarship period; and

(c) the risk of the foreign scholars refusing to take up Singapore citizenship upon graduation, or the scholars might migrate to elsewhere after finishing the bond.

Third, will it be more cost-effective to use the same amount of scholarship to train more A*Star scholars at NUS and NTU?

Fourth, is it justifiable to pay each scholar a salary during his post-graduate studies at the taxpayers' expense? Sir, Ph.D scholars are not productive assets and do not earn any cash returns for the country while doing their studies.

Hence, the caption of this article which was published on 3rd March 2005 which the Minister earlier replied in this House should really read as "Each talent

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costs $1 million" instead of "Each talent is worth $1 million bill".

The Minister for Trade and Industry (Mr Lim Hng Kiang): Sir, first, let me thank Members for their thoughtful comments. I would like to address some of the key issues raised and then I will ask my Minister of State, Mr Heng Chee How, to help me out in dealing with some of the specific queries and suggestions put up.

I think that there are a few things that we all agree during this discussion. First, I think all of us agree that it is very important to nurture our local enterprises. Enterprises create wealth and jobs, and Singapore's economic success hinges on competitive enterprises. Enterprise development is therefore a very key focus of our economic strategy.

Dr Ahmad Magad, Mr Gan Kim Yong, Dr Tan Boon Wan, Mr Lawrence Leow, Mr Inderjit Singh and Miss Penny Low have all commented on the need for the Government to better assist and grow the Small and Medium Sized Enterprises (SMEs). I agree that we should help the SMEs, and indeed the Government has been putting a lot of effort and resources to this end.

Members have also asked for a single Government agency to champion the cause of the SMEs, and that such an agency be given more resources. Let me, first, explain how we help our local enterprises to grow and convince Members that we are indeed doing quite a lot already.

First, how do we grow our local enterprises? There are three dimensions in our strategy, from the general to the specific. The first dimension is that we foster a pro-enterprise environment, so that the enterprises can develop and grow. Second, we provide broad-based assistance programmes, and enterprises can then tap into these programmes

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depending on their needs. The third dimension is that we develop vibrant industry clusters, and focus the needs based on the specific requirements of the industry clusters.

On the first dimension of fostering a conducive environment for businesses, we do so by keeping our taxes low, by cutting red tape, by providing excellent infrastructure, as well as developing an educated and productive workforce. Singapore is currently ranked the third best business environment in the world, and the top business environment in Asia by the Economist Intelligence Unit. We discussed how to maintain and improve on this during the debate on the Budget. I assure Members that we take this exercise very seriously and will continue to make sure that we maintain this competitive position.

The second thrust of our enterprise development strategy is to provide broad-based assistance to enterprises so that they can build up their capabilities and expand their market.

The Government has in place various programmes to help companies gain access to financing and upgrade their productivity and efficiency, as well as develop core capabilities in key areas such as technology, distribution, manpower training and branding. These programmes cater to the different capability needs of the enterprises at various stages of their business life-cycles, from starting up to venturing overseas.

Just to give Members an example, over the past five years, some $600 million has been devoted to SME assistance - about $200 million in interest subsidies for $3.3 billion worth of loans extended to SMEs, and about $400 million in the various technical assistance and capability development programmes. This $600 million does not include the cost incurred in delivering these programmes by our various statutory

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boards and agencies. It also does not include the tax incentives given to local enterprises. We estimate that more than 26,000 SMEs have benefited from these programmes over the past five years. As Members can see, the resources devoted to the SMEs are not small, and the number of SMEs that have benefited from these programmes are also not small.

Dr Ahmad Magad, Mr Inderjit Singh and Miss Penny Low spoke about the demand side for the SMEs. Dr Ahmad Magad suggested that the Government should actively encourage its agencies to buy the products and services of local enterprises. The Government has indeed simplified its public procurement rules to make it easier for SMEs to compete for Government tenders by removing the track record requirement, and also by allowing SMEs to jointly bid for contracts. This will give SMEs a fair chance in supplying to Government. However, Government procurement is not a significant component of domestic demand. If Members look at the Government expenditure, if we take away the expenditure by MINDEF, if we take away the expenditure in the development programmes, the amount of money the Government spends over and above manpower cost is really not very significant. When I was in the Ministry of Finance, most of the contracts that came up to the Ministry of Finance were really joint procurement for IT services. This is a big item for Government. If we strip away all these, the Government does not procure very significantly from the domestic market. In fact, I would argue that the private sector accounts for the bulk of domestic demand, and therefore we welcome the business community to take the lead in promoting the purchase of products and services from the SMEs. I think the local business community can band together and mount a "Buy

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Singapore" campaign and the Government will support this campaign.

We all know that our domestic market is small. So to grow their businesses, many Singapore enterprises will need to venture overseas. Several MPs have asked how we can better help local companies tap overseas market opportunities. Mr Heng Chee How will later elaborate the various initiatives that we have put in place to help companies internationalise, including take advantage of the many Free Trade Agreements that we have signed.

The third thrust of our strategy is helping local enterprises to grow into vibrant industry clusters. In developing industries in Singapore, we have always adopted this cluster approach. EDB not only anchors the "queen bee" MNCs and the large local enterprises in Singapore, but EDB also actively develops around these "queen bees" a community of supporting industries comprising mainly the SMEs. This cluster approach creates opportunities for local companies, as well as strengthens the competitiveness of our industries.

Let me give Members an example. The hard disk drive industry in Singapore started with Seagate's arrival. EDB worked closely with Seagate, our first "queen bee", to identify and nurture local suppliers to support its operations. This spawned the development of our precision engineering industry and, in turn, attracted more hard disk drive manufacturers to Singapore. Today, not only are we the world's top producer of high-end hard disk drives, we also have a strong supporting industry with an annual output of $4.5 billion, and strong capabilities to support process and product innovation in Singapore.

Many companies in the disk drive supporting industry are local players. Success stories include First Engineering, Jurong Tech and Metalform, and several

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of them have since grown to be sizable public-listed companies. In fact, over time, we have also nurtured our own local "queen bees". One good example is Venture Corporation Limited. From a start-up founded in 1984, it has grown to become a leading global electronics services provider, offering world-class manufacturing technology and testing capabilities. Today, top Fortune 500 companies like Agilent, HP, IBM and Motorola have chosen Venture as their strategic partner for their long-term manufacturing needs. Venture has helped strengthen Singapore's position as a leading electronics hub, create spin-offs for the logistics sector and promote the growth of the local precision engineering industry.

I think we can illustrate with other examples. One of the best examples that I can think of is our marine engineering industry where the "queen bees" are our local shipyard companies - Keppel Corporation and SembCorp Marine - and around it there is a whole cluster of local SMEs providing supporting capabilities and, in turn, making our whole industry one of the most competitive in the world.

While we have put in much effort to develop our enterprises, I agree with Members that we can and, in fact, should do more. Here, I would like to highlight two key directions that we are moving towards in our enterprise development efforts. The first is in response to Members' suggestion about a single agency. Even though we may not have decided on a single agency, I agree with Members that our approach and our assistance programme to SMEs should be better integrated and should be more seamless. That is our first strategy.

The second strategy is that when we are dealing with the SMEs, I do not think a one-size-fits-all approach works. Therefore, we will modify our approach to work through the industrial associations,

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because every industrial sector has its own characteristics, and it is more sensible for us to look at the needs of the industry sector and work through the industrial associations.

On the approach of making sure our assistance is integrated and seamless, we have made several changes. The two key agencies dealing with the SMEs are SPRING and IE Singapore. We have made an assessment not so long ago and we have decided to keep them separate with specialised roles to look after the many diverse needs of our many SMEs.

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Notwithstanding all this, let me make it clear that SPRING is the overall champion for SMEs. I am indeed very happy to hear from Mr Lawrence Leow yesterday, coming from ASME, that he recognised and indeed had seen SPRING to be the " de facto champion of SMEs." SPRING recently underwent a corporate restructuring exercise to refocus its mission to "enhancing the competitiveness of our SMEs". Mr Inderjit Singh is on the Board of SPRING, and I am sure he will be able to contribute to SPRING's new focus on its mission. And I would like to assure all Members here that SPRING will be given the right level of resources to carry out its mandate effectively.

Let me explain why it is not possible to have a single agency. Let us take the example of the food industry. We work closely with the food manufacturers in Singapore. There are about 300 such companies which are SMEs. SPRING is the focal point, and it gathers all the other agencies to support the food manufacturing industry. In fact, the key agencies that the food manufacturers have to deal with are AVA, NEA, WDA, and so many other agencies over and above SPRING and IE Singapore. Therefore, to envisage a single agency

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that can totally meet the needs of the SMEs is not realistic. I think our approach of making sure SPRING is the champion and it coordinates all the various Government agencies, so that we give a coherent and integrated package for each industrial sector, is a more workable solution.

Let me give a few examples of how we are approaching this closer collaboration of the various agencies.

The first example is the BrandPact programme which will be launched next month. This is a joint initiative by IE Singapore and SPRING to assist local enterprises in building up their capabilities in branding. They do so locally as well as overseas. Going forward, we can expect more of such joint programmes and initiatives. By breaking down inter-agency boundaries, we hope to address the enterprises' needs in a more customer-centric manner.

Another initiative that we are embarking on to serve SMEs better is the Enterprise One Stop service that Miss Penny Low has enquired about. Let me give an update on this. SPRING has recently concluded a survey of over 400 SMEs in January to better understand their needs, and what they want out of this one-stop centre. It will conduct a pilot test of the service with a select group of SMEs some time in the middle of the year, before launching it by year-end.

Knowing that we have this large client base of more than 110,000 SMEs, Enterprise One Stop will therefore have to rely heavily on technology to deliver its services. The primary mode of access will be through a web-portal. Nevertheless, it will not merely be a virtual one-stop centre. This will be supplemented with a call centre and also face-to-face consultation services for SMEs with more complex issues. More importantly,

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Enterprise One Stop will be backed by a network of Government agencies, which will work together to provide quick and easy access to information, as well as to help resolve issues that SMEs face.

The second approach that I mentioned is to work with the industry associations. We have always been working closely with the business chambers and the various industry associations. We believe that these private sector organisations, being in close touch with their members, are in a better position than the Government to reach out to the SMEs. They are also better able to identify the problems that their members face, and to deliver assistance and help their industry upgrade.

As Mr Lawrence Leow mentioned yesterday, SPRING is collaborating with the key business chambers and trade associations to set up Enterprise Development Centres (EDCs). These EDCs will provide advisory and consultation services to enterprises. The Association of Small and Medium Enterprises (ASME) will launch the first EDC at the end of this month.

Let me illustrate how we have worked with the various industry associations. We have worked closely with the Food Manufacturers' Association and with people in the precision engineering sector. The latest example which we can illustrate is the Singapore Furniture Industries Council (SFIC). As Members know, when the furniture manufacturers in Singapore face competitive pressures, many of them have to relocate overseas, because the cost structure in Singapore is just too high. And they banded together and went to Kunshan in China. They negotiated with the local authorities for a joint package. A total of up to 25 of their members were prepared to relocate to the same industrial estate. So far, I believe more than 14 have already set up operations there.

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So this is an illustration of what Mr Lawrence Leow mentioned yesterday about co-location in a Singapore industrial estate overseas. We can do so Singapore-wide or we can do so through the industry associations. I believe doing so through the industry associations is a better vehicle because the needs of the various industries are different. As the Singapore Furniture Industries Council has illustrated, this is one way in which we can relocate overseas and, as Mr Lawrence Leow described it, "hunt or work in a pack".

The SFIC has also collaborated with the Government in its plans to set up the International Furniture Centre in Sungei Kadut. In this International Furniture Centre, they will house export showrooms, a design resource centre with prototyping facilities for young designers and a learning centre to train workers and various grades of executives.

Generally, I think we need more proactive industry associations like the SFIC. SPRING and IE Singapore will be jointly launching a programme soon to help the industry associations build up their capabilities, and to take the lead in implementing programmes to upgrade and improve their industry. We, therefore, welcome industry associations that are ready and willing to step forward.

The second area that I would like to touch on is this whole issue about the future of our manufacturing sector and the role that R&D will play in our plans to upgrade the manufacturing sector.

Mr Alex Chan is concerned about the hollowing out of the manufacturing sector, especially the electronics industry. Let me reaffirm that even as we grow our services sector, manufacturing will continue to be an integral part of our economy, contributing 20% or more to GDP over the next few decades. This

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intention to keep manufacturing as the key sector of our industry is not something new. It has always been an integral part of our economic strategy. Recently, I was very gratified when I met the Dutch Economic Minister, and he told me that Netherlands also wants to keep between 20% and 25% of their economy in manufacturing. So this is not a unique strategy. I think many economies see the value of keeping manufacturing as a very important part of their economy.

So, let us look at the electronics sector. I think we have gone through a whole series of restructuring exercises in the electronics sector. There have been a spate of electronics companies relocating to other lower cost countries in recent years. But these are mainly in the area of commoditised products like radio, low-end PCs and low-end consumer electronics assembly, the most recent of which would be Maxtor's relocation of low-end desktop drives to China. For the higher end products, we continue to hold our own against stiff global competition, for example, in high-end server drives where we still command more than 50% of the global volume. Companies like Maxtor intend to maintain Singapore as their manufacturing hub for high-end drives. We remain an important electronics manufacturing hub - we have in Singapore the world's top three wafer foundries, top three semiconductor assembly and test companies, three of the world's top four hard disk drive manufacturers and four of the world's top five electronics manufacturing services.

We have also seen expansions and new investment commitments in the electronics sector. In December last year, ST Microelectronics announced that it will invest another S$2 billion by 2006 to expand its production capacity. Seagate will invest another S$200 million in a new media plant and will develop and manufacture its state-of-the-art one-inch

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drive for the global market here. SMEs in the electronics industry have also put in new investments. Autron Corporation Ltd, a regional integrated supplier of assembly equipment and services, will set up a S$50 million new Global Solutions Centre here. Home-grown Eastgate Technology is also setting up a new plant which can produce 1.5 million mobile-phone organic LED displays a month.

In fact, an independent report by Credit Suisse First Boston (CSFB) in January this year concluded that the "doomsday scenarios over the last few years indicating that the manufacturing sector is dead in Singapore and that most activities were all going to move to China and other emerging markets are clearly unfounded." In fact, our Revealed Comparative Advantage Index shows that our global market share in key electronics and electrical goods sectors is now rising. The CSFB's report also said that CEOs and other corporate executives from around the region have indicated that they want a diverse production base, and Singapore remains one of the top destinations for outsourcing and investments.

However, with intensifying competition, we need to stay ahead, and we need to continuously upgrade our electronics and other manufacturing sectors. To do so, we will have to move up the technology ladder and go into more sophisticated manufacturing. We also need to promote the full value chain of activities here - from R&D to design, production, supply chain management and regional and global headquarters functions.

Let me now turn to the cost of doing business in Singapore in order to remain internationally competitive.

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I think Members would note that over the last few years, we have taken several measures to make ourselves more cost competitive. We have cut our corporate taxes. We have reduced the employers' CPF contribution rates. We have lowered industrial land rentals, and we have improved the flexibility in bringing in foreign workers. Also, by our competitive adjustments to the electricity market, the efficiency gains have caused electricity prices to fall by 11%.

Mr Chiam See Tong asked about the high cost of piped natural gas from Malaysia and Singapore. Today, we have three gas importers. Senoko Power Ltd imports from Petronas, Malaysia, for its own use. Both SembCorp Gas Pte Ltd and Gas Supply Pte Ltd import from Pertamina, Indonesia. These are commercial companies and their gas sales agreements were commercially negotiated. However, as their gas prices are indexed to High Sulphur Fuel Oil (HSFO), so whether the gas that we get is cheap or expensive will depend on this high sulphur fuel oil index.

Mr Chiam quoted the article where it was indicated that our gas costs about 35% to 40% higher than what the Koreans were able to negotiate. There are several reasons why the Koreans were able to negotiate a very competitive price for their contract. First, it was a very big contract. They were talking about a 10-year contract

with a value of US$20 billion. So once you negotiate a big contract like that, I think you have more bargaining leverage. Second, their contract was from LNG suppliers. And, again, when you are able to negotiate with several or many potential LNG suppliers, you have more bargaining leverage and can get a better price.

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In Singapore's context, we have to recognise that we only have two

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suppliers, either Malaysia or Indonesia, and these supplies come in the form of pipelines which require quite a heavy investment upfront. So these companies that negotiated have to take these factors into consideration. Mr Chiam noted that the Government is looking into the viability of setting up a LNG terminal in Singapore. This would bring in more potential suppliers and we think that this would give us greater leverage to bring in more competitive prices for our gas supplies.

The next area that I would like to cover is the importance of R&D in the upgrading of our manufacturing. As we move into the next phase, a strong R&D base will give us the intellectual wherewithal to undertake more sophisticated and higher value-added manufacturing in Singapore and anchor key projects here.

Members would have known the various R&D facilities that we are able to attract here over the last five years, as we develop our R&D capabilities. We do so through the science and technology (or S&T) plans. Prof. Ivan Png asked about our S&T 2000 and our S&T 2005 plans and their outcomes. Basically, we are moving into the next stage. In the early stage, when we were attracting MNCs to set up manufacturing base in Singapore, our main attraction was the availability of skilled manpower, engineers, technicians and mechanics. As we move to the next phase of the brain industry, our new competitive advantage must be in the higher level of talents that we can attract and this would mean more research scientists and engineers.

If you look at the progress that we have embarked on, I must confess that we are a relatively latecomer in the R&D scene. In 1995, we barely spent 1.15% of our GDP on R&D. Through our various S&T efforts, the gross expenditure on R&D has risen to 1.88% in the year 2000, and then to 2.15% of GDP in

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2003. I think Dr Tan Sze Wee has given the figures for the other developed countries. And Members will observe that we are on the lower end of this R&D scale. In terms of the manpower development, we have also made some improvements in the number of research scientists and engineers per 10,000 labour force. This has increased from 48 in 1995 to 66 in 2000 and further to 79 in 2003. About half of our research scientists and engineers are postgraduates.

Members will agree with me that if we want to upgrade our economy, one of the key strategies we must pursue more vigorously is our S&T capabilities and our need to raise the level of expenditure on research, and target this research expenditure in selective areas where we can take full advantage and build up our competitiveness. So last year, the Government set up a Ministerial Committee on Research and Development, headed by DPM Tony Tan. This committee was formed to review the strategic direction for R&D in Singapore. From its deliberations and visits to research organisations, both locally and overseas, the committee has identified a few areas in our R&D landscape which can be improved upon. For example, in niche areas of strategic economic importance to Singapore, we need to deepen and broaden our research capabilities. We also need to help our local enterprise enhance their competitiveness by improving their technological capabilities. In addition, we need to intensify our efforts to further engage the private sector in R&D.

The Ministerial Committee will conclude its study in June this year and its recommendations will set the broad strategic directions for Singapore's R&D landscape for the future. MTI would then use this to draw up the science and technology plan for 2006 to 2010. The S&T 2010 Plan will identify the plans and

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programmes that we should undertake to carry out the R&D strategies for our economy. In preparing the S&T Plan, there will be extensive consultations with the various Ministries, universities, research bodies, economic agencies and industries. The plan would be made public in due course.

Let me just summarise what we are planning to do. First, we need to raise the level of expenditure in S&T. That is the only way to compete. In the past, we have been fairly frugal, in fact to the point of being stingy in developing our R&D capabilities. Now, we realise that if we want to compete, we have to be bolder and be prepared to invest more. But we have to make sure our investments are better targeted, that means, (1) if we want to set up and build up the research institutes in Singapore, we cannot do everything. Therefore, we have to identify certain areas where we are likely to have a competitive advantage; (2) we should not do it all by ourselves in the Government. We should work with the industry. If the industry is prepared to put in the money, I think that points the direction of where we should be investing and, therefore, our programmes in R&D will be directed towards gearing the industry to also spend and invest more in R&D; and (3) to build up the talent and the people to be able to support the R&D effort.

As I mentioned at the last sitting, it is not inexpensive to train research scientists. It costs about nearly a million dollars. But it is an investment that we have to do. Prof. Ong Soh Khim listed out all the risks in our investments. I must say that we have to take these risks. If we do not invest and build up our talent, we cannot expect people to set up R&D facilities in Singapore. So the Ministry fully supports A STAR's efforts to build up this flow of talent. A STAR has done

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a very good job in identifying these people to take up a research career. If at any point, especially after the first degree, we find them unsuitable or they do not perform well, then of course they will not continue to the PhD segment of their studies. But this is something that we have to do.

Let me round up with a few specific responses. First, the Economic Development Assistance Scheme (EDAS). Prof. Ivan Png asked about the return on investment on the EDAS. Let me clarify that EDAS is not an equity fund and therefore there is no ROI. The EDAS is a range of programmes which comprise both grants and loans. Therefore, we do not use ROI to measure these programmes.

Let me just summarise. As we go into the next stage of our economic development, it is very important for us to make sure we build up enterprises in Singapore, both local and foreign. That is the key to generating wealth and employment. The SMEs play a very important part in our strategy. We have a range of programmes. I am sure we can do more.

Both Mr Inderjit Singh and Mr Lawrence Leow suggested some adjustments to the financial schemes that we have for the SMEs, even though we are extending practically about $600 million worth of assistance to SMEs. I am prepared to review these schemes to make them more effective. And I welcome the suggestions by Mr Lawrence Leow to make them both flexible so as to be able to be more effective to the wide range of SMEs that we face out there.

Can I now ask Mr Heng Chee How to help clarify some of the other issues raised by Members?

The Minister of State for Trade and Industry (Mr Heng Chee How): Sir, I would

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like to thank Members for their comments. Minister Lim Hng Kiang has earlier talked about the broad strategies behind enterprise development. I will now share more details.

Miss Penny Low asked for an update on the SME21 Plan launched in the year 2000. The vision of SME21 was to create vibrant and resilient SMEs that would enhance Singapore's competitiveness and economic growth. Three goals were set for the year 2010. First, we wanted to treble the number of SMEs with sales turnover exceeding $10 million from a figure of 2,000 to 6,000 by the year 2010. According to the plan, we should have 4,000 such SMEs exceeding the $10 million sales mark by the year 2005. I am pleased to report that we have achieved that amount in early 2004 with more than 4,200 SMEs generating turnover in excess of $10 million. Second, we wanted to quadruple the number of local SMEs with e-commerce transactions from 8,000 to 32,000 by the year 2010. This target was surpassed by 10th March 2002 with 33,000 SMEs having done so. Third, we wanted to double the productivity of the retail sector from $28,000 to $56,000 by the year 2010. In 2002, the value-added per worker in the retail sector was $30,600. Preliminary figures for 2003 had indicated only slight improvement, due to SARS and other reasons. We will continue to address the key challenges of the retail scene and monitor the progress.

Dr Tan Boon Wan asked about Government's assistance to HDB retail shops. Both the Prime Minister as well as the Minister for National Development have addressed the situation in this sector of the HDB retailers, particularly those in older estates, and the challenges that they face. With the change in consumer demographics and emergence of suburban malls, such retailers cannot continue to operate the business as they have done in the past and they need to look for new

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ways to improve. For example, Tampines Street 11 is one HDB neighbourhood where the Hawkers and Merchants' Association has decided to collectively do something to address their common problems. With the help of SPRING and the grassroots organisations there, they will be forming a management company that will oversee the overall marketing strategies for their neighbourhood. They aim to improve the trade mix, boost traffic flow into the neighbourhood and upgrade the latest retail skills of their members. These include training of financial management and selection of products that appeal to customers.

These activities are 50% co-funded by SPRING under the Domestic Sector Productivity Fund Scheme. And I welcome fellow Members to encourage and help the Merchants' Association in your respective constituencies to participate in this programme, and you may apply to SPRING for assistance.

Most of the initiatives under the SME21 Plan, such as the Singapore Quality Class, or SQC, programme and the Technology Incubator Programme, or TIP, have been implemented. Other programmes have since evolved. In particular, we have stepped up efforts to promote entrepreneurship through the Action Community for Entrepreneurship (ACE). We have also intensified efforts to help our companies internationalise through the formation of IE Singapore.

Let me now move on to another aspect of entrepreneurship, namely, access to financing. Here, I would like to mention the role of ACE. ACE is a private-public sector partnership to champion entrepreneurship in Singapore. We have members, like Mr Inderjit Singh and Dr Loo Choon Yong, amongst others in this movement. One key area that ACE has been focusing on is to improve the access of startups and SMEs to financing. This is an issue that Dr Tan Boon Wan

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and others have raised. Over the past few years, the Government has worked with ACE and the private sector to enhance existing schemes and to launch the new ones to make funding more accessible. I agree with Mr Inderjit Singh that it is timely to review and simplify the schemes to make it easier for local enterprises. We will support ACE in the exercise to redesign and simplify the schemes

for SMEs.

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Basically, the various schemes fall into two broad categories, namely, equity financing and debt financing.

In the area of equity financing, the Government has two schemes to co-invest with third-party investors. The Start-Up Enterprise Development Scheme (SEEDS) was introduced for innovative technology start-ups in 2001 and was extended to non-technology companies last year. The Growth Financing Programme was started in October 2003 as a follow-up investment scheme after SEEDS. It provides equity financing for the development of products, processes and applications.

Dr Tan Sze Wee asked about the performance of SEEDS. Since its inception, SEEDS has supported 124 technology start-ups. To date, 13 of these start-ups indicated that they have posted profits, and 12 start-ups managed to secure a second round of private sector funding. SEEDS was extended to non-technology companies last year. It has already helped two innovative start-ups. One of them is this company called Fuzzy Billies, which is an F&B outlet specialising in bread-based products that come in different shapes, flavours and colours. The other is Play! Entertainment, which rents out movie DVDs through automated dispensers that are equipped with

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biometric fingerprint authentication for member registration and identification.

Dr Tan raised the concern that SEEDS is inadequate for many bio-technology companies. So far, seven bio-technology companies have obtained more than $1.8 million worth of SEEDS equity funding. Admittedly, this amounts to a small portion of funds that bio-tech companies may need. SEEDS is a broad-based scheme to support innovative start-ups in general, and is not meant for the development of specific industry clusters. For bio-tech companies, they may also tap on other grant or financing schemes, and I will talk a little bit more about that later on in my speech.

Mr Inderjit Singh suggested reviving the Business Angel Fund (BAF) or equivalent in order to encourage and enlarge angel investments. The BAF programme was discontinued at the end of 2001, shortly after the SEEDS programme was implemented, and the reason for that was that the feedback from the third-party business angel investors and entrepreneurs at that point was that they found SEEDS to be more attractive. Notwithstanding that, in the overall area of trying to improve access to financing and the role of angel investors, if not under the precise conditions of the BAF, I think we would still encourage discussions.

Besides co-investing directly into companies, we also seek to encourage investments in start-ups and SMEs through tax incentives and facilitation.

The Enterprise Investment Incentive Scheme (EII) allows investors to offset their investment loss against their taxable income. The scheme, which was formerly known as the Technopreneur Investment Incentive (TII), was renamed and extended to non-technology companies in 2004. In total, 75 companies have been granted either EII or TII status.

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ACE is also facilitating the setting-up of an Over-The-Counter (OTC) private-equity exchange. The OTC market will create a platform where shares of unlisted SMEs can be traded, thus allowing SMEs more access to equity financing. Some private sector companies have come up with specific proposals and, we understand, are in the final stages of consultations with the MAS.

Moving on now to the second category of assistance which is debt financing. Much has been done on this front. For example, the Local Enterprise Financing Scheme (LEFS) and the Micro Loan Scheme have provided more than $3 billion worth of loans to 10,000 SMEs since 2000. We have also in recent times introduced the Loan Insurance Scheme, the Variable Interest Loan Scheme (V-Loan), and the Loan Securitisation Scheme. These are other avenues of loan financing for SMEs. At the backend, they are structured differently, with a common purpose to increase the amount of loan financing in the market. ACE has been very proactive in offering proposals to address gaps in the financing landscape, and we will continue to work very closely with ACE to look into these and other suggestions.

Mr Lawrence Leow suggested that LEFS adopt a flexible risk-sharing ratio between the Government and the financial institutions, with corresponding sharing of loan budget and interest earnings. As Mr Leow mentioned, the 80/20 risk-sharing ratio was part of a temporary enhancement to LEFS made during the economic downturn from 2001 to 2004, to encourage the financial institutions to continue lending to SMEs. As the economy rebounded, the ratio was reverted to 50/50 from 1st January 2005, to ensure financial prudence on the part of the financial institutions in approving LEFS loans. Mr Leow has suggested a variable risk-sharing loan scheme for LEFS. My

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Ministry will look into this, together with the overall review on access to financing.

Mr Inderjit Singh asked about Government support for private sector volunteer groups that help to promote entrepreneurship. Currently, we fund and provide secretariat support for ACE. ACE involves private-public sector partnership, and it is an effective umbrella body through which to engage other entrepreneurship interest groups. One of the areas that ACE will be looking into is how it can better engage and work more closely with other non-profit organisations to promote entrepreneurship. ACE supports the SCCCI's Entrepreneurship Education Programme and helps to invite entrepreneurs to be speakers. ACE is also a partner of the Spirit of Enterprise on the upcoming "StartUp" reality TV series, and that will showcase the entrepreneurship journey of eight start-ups. The series will be aired at the end of March. I suppose after "Singapore Idol", this will be our version of the "Singapore Apprentice".

Apart from addressing financing issues of enterprises, another important thrust is to help Singapore-based companies access the global market. Since the formation of IE Singapore in 2002, we have made more concerted efforts to help such companies grow and to internationalise successfully.

Dr John Chen asked about the type of Government support for Singapore companies venturing overseas. IE Singapore supports companies through a "3C" framework - Connections, Competencies and Capital. Last year, IE Singapore helped some 30,000 companies through its various services and activities. I will highlight some of the key initiatives under each of the three Cs.

"Connections" involves connecting our businesses with overseas markets. In 2004, IE Singapore increased its outgoing business missions and trade fairs by over

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50% to 248. Destinations included new markets like Brazil, Uruguay, Iran and the Eastern China provinces to enable Singapore companies to reap early-mover advantages. I am glad to say that SMEs with less than $50 million worth of turnover made up over 70% of the participating companies.

IE Singapore also organised 13 "reverse missions" which benefited some 430 companies and brought about $4 billion worth of potential sales. A reverse mission is an innovative strategy which brings key buyers, like LG and Siemens, to Singapore-based companies. Given its success in 2004, IE Singapore will step up its reverse mission efforts this year.

Through the iPartners programme, IE Singapore also assists Singapore-based companies with complementary businesses to form strategic alliances to venture overseas. In 2004, IE Singapore approved three iPartner alliances comprising 19 companies. An additional nine alliances involving 47 companies are in the pipeline. They are expected to generate close to $660 million worth in sales when fully realised. Mr Gan Kim Yong suggested that the more successful GLCs hand-hold SMEs through joint ventures when going abroad. This has taken place. For example, CET, a subsidiary of ST Electronics Limited, is spearheading a consortium of smaller companies, namely, RUSC Systems Engineering, iFocus, and Applied Systems (Singapore) to market and implement jointly developed train communication systems in China. So, I suppose the question is: how do we further expand on such efforts?

The second "C" is Competencies. This involves helping our companies develop capabilities in branding, design and international manpower development.

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Dr John Chen touched on the lack of branding expertise among local companies. Through the programme called "Branding for Internationalisation", IE Singapore assists internationalising companies to understand their branding needs, identify opportunities, and bridge the gap between brand awareness and investment. Support is given by co-funding consultancy costs for brand strategy development and by organising training workshops to build internal capabilities.

Sin Hwa Dee FoodStuffs Industries is an example of a company that has forged ahead in its branding efforts with assistance from IE Singapore. Founded in the 1970s, the company has since come a long way. It embraces branding as a key strategy to differentiate its products from its competitors, and to create appeal in both local and overseas markets. Sin Hwa Dee has done well and has won several awards, including the Most Distinctive Brand Award in the Singapore Most Promising Brand Awards 2002 and Singapore's Superbrand. Today, the company continues to dedicate between 6-8% of its sales revenue to branding.

Sin Hwa Dee has shown that a strong branding image is vital in both domestic and overseas markets. Therefore, on Miss Penny Low's point that there should perhaps be a "Buy Singapore" campaign, we believe that a more sustainable approach would be for our companies to strengthen the appeal of their products and services, and we will work together with them on those.

The third "C" is Capital. Dr John Chen asked about the Government's support for Singapore companies in trade expositions, especially for the cost of rental of exhibition space. The International Marketing Activities Programme (IMAP), administered by IE Singapore, contributes towards the participation fees, cost of space rental

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and stand construction. In 2004, IMAP supported 32 trade associations and chambers in over 95 activities, benefiting some 1,400 companies resulting in $260 million of overseas sales.

Besides IE Singapore, STB has also been organising trade participation at key overseas travel shows, like the ASEAN Tourism Forum Travel Exchange. They have also been leading industry partners on trade missions and road-shows, especially for new markets and segments, like the Singapore Medicine road-show ongoing in the Middle East.

For SMEs setting up offices overseas, Mr Lawrence Leow would be pleased to know that IE Singapore provides fixed interest loans through its Regionalisation Finance Scheme. Such loans are available for SMEs to acquire fixed assets on the condition that these projects generate economic spin-offs to Singapore. IE is also developing a programme to encourage the use of trade credit insurance, which is a point that Dr John Chen touched on. The aim is to enhance our companies' risk management capability and their access to financing.

Let me now move on to Free Trade Agreements. Mr Inderjit Singh asked how successful our FTAs have been in helping local enterprises penetrate the global market. To date, we have concluded bilateral FTAs with the United States; European Free Trade Area, which consists of Switzerland, Liechtenstein, Norway, and Iceland; and New Zealand, Japan, Australia and Jordan. Many more are in the pipeline.

These FTAs have enabled our local enterprises to be more competitive in tapping the global market. Specifically, FTAs led to an increase of 11.8% in Singapore's domestic exports to Japan and a 40.6% increase of exports to Australia in 2004. Over 200 local companies have benefited from lower

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tariffs resulting from these two FTAs alone. For example, this company called GN Packaging Industries, which exports 40% of its plastic packaging materials, now enjoys 5-10% tariff savings in the Japanese and Australian markets.

We will continue to monitor the effectiveness of our FTAs. Moving ahead, we will proactively engage the private sector and the chambers to solicit inputs for upcoming FTAs and to review existing agreements. This is in order to realise the value in these FTAs. We will also be stepping up our efforts to increase the awareness of FTAs and how to take advantage of them through various channels.

I now turn to R&D programmes under MTI. Public funding for research is strongly driven by economic considerations, with the end goal of enhancing Singapore's long-term economic competitiveness. To be effective, we must concentrate on developing our R&D capabilities, maximising the opportunities to commercialise intellectual property (IP), and building up the pipeline of high quality researchers who can adopt and adapt new technologies to generate further growth.

Dr Tan Sze Wee asked about our R&D expenditure for FY03 and FY04. In FY03, A _STAR spent $395 million on R &D at its 12 public research institutes, and contributed $98 million to extramural research collaboration with external parties, such as our universities and hospitals. It spent a further $271 million on manpower development and broad-level programmes. In FY04, A_STAR spent $480 million on R&D at its research institutes, $70 million on extramural collaborations, and $149 million on broad-level capability development.

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In response to Dr John Chen, we actively seek to commercialise technologies and intellectual property

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created by our public research institutions. This ensures that the new knowledge created will be used to spawn new economic activities

and generate growth. A STAR has a commercialisation arm called Exploit Technologies. Exploit Technologies actively markets the A STAR's technologies and capabilities to the industry through trade shows and conferences, roundtables and company visits. Technology offers are also posted on Exploit Technologies' website. Over 80 cutting-edge A*STAR IP and technologies have been made available to companies. These have helped companies develop new products, move up the technology value chain and fuel business growth. Some SMEs have also leveraged on the licensed technologies to enter new markets and establish business opportunities with MNCs.

Exploit Technologies adopts a flexible and pro-SME approach in licensing its IPs for companies. It is prepared to waive or defer upfront licensing fees; and in turn, the enterprises have to commit to investing in developing the IP, and use the IP to generate economic activity in Singapore. Exploit Technologies also facilitates the creation of spin-off companies with A*STAR technologies, and actively engages the local venture capital (VC) community to assist potential spin-offs in fund-raising. It has a small fund that provides financial support to its spin-offs in the early or seed stage.

While a framework to encourage technology transfers and start-ups is necessary, equally critical is the development of a deep reservoir of well-trained R&D manpower to receive and create economic value out of such intellectual capital. Hence, a very important part of A*STAR's mission is to build up a strong pipeline of top R&D talent for industry. Prof. Ong Soh Khim asked whether it is a worthwhile

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investment to send our young people to top universities overseas to get the training and exposure. I think the answer is yes. Singapore has reached where it is today because we have a deep and enduring commitment to investing in our people. We provide public scholarships so that our best and brightest have the best education possible, and in turn, when they return, they contribute back to society. It is the same for A*STAR's scholars. They will come back after their Ph.D and they will make up the pool of high calibre research talent that will underpin our economic transformation. The tangible and intangible benefits of investing in our young will benefit Singapore many times over and, ultimately, will determine our continued growth and prosperity. Like what Mr Lim Hng Kiang had also elaborated earlier, we are now competing in a different league and in a knowledge-based economy, we have to invest in this. It is not a question of whether it is something that is worth doing, it is something that we believe we cannot afford not to do.

In addition to sending scholars to top overseas universities, A STAR also has a Graduate Scholarship Programme with NUS and NTU to provide local Ph.D training for Singaporean undergraduates which could be followed by a one to two-year overseas post-doctorate fellowship. On the issue of nationality, over 80% of A STAR scholars are Singaporeans. Foreign-born scholars are given Approve-in-Principle (AIP) Permanent Residence status and are required to take up Singapore citizenship before the completion of their Ph.D programme. In this way, we again tie back the benefits to Singapore.

The Biomedical Sciences (BMS) sector is a good example of how we have focused resources to build R&D capabilities and human capital to develop a new industry. Dr Tan Sze Wee asked about our BMS R&D expenditures and the

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sources of funding available to private biomedical companies. The Government provides support to both public and private R&D in the BMS sector via A STAR and EDB. In FY 2003 and FY 2004, A STAR spent $226 million and $287 million respectively on biomedical research. This is complemented by EDB's co-funding of private sector's R&D, through its Research Incentive Scheme for Companies (RISC) and Innovative Development Scheme (IDS). These two schemes provide funding support of up to 30% of project costs, and can be tapped by research-intensive BMS companies and start-ups, in addition to any SEEDS funding they may have qualified for.

The Biomedical Services Group (BMS Group) in EDB also strives to promote Singapore ventures and the commercialisation of indigenous research. Last year, EDB's investment arm, Bio*One Capital committed a total of $95 million in investments in 16 projects. 90% of the investments were made in Singapore-based companies to help build and grow the companies, and in overseas projects with linkages and activities in Singapore.

The BMS group started the Proof of Concept Scheme in 2003 to provide pre-seed funding to support the development of early ideas that are patentable, and which could lead to new start-ups or licensing deals. Bio*One also has an Innovate 'N' Create scheme which provides seed funding to nurture home-grown biomedical start-ups. For example, there is this new company called ProTherapeutics that was seeded under this scheme, jointly with Exploit, to commercialise the delivery of protein-based treatment drugs. The BMS group also supported the formation of BioSingapore, which is a trade association representing the interests of local BMS enterprises. BioSingapore will play an important role in helping local BMS companies engage the financial community.

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Assoc. Prof. Ong Soh Khim: Sir, I have three points of clarification. On the part of IP, the patent which was raised by Dr John Chen, I would like to know how many IPs have been registered. What is the percentage that has actually been commercialised?

The second question I have is, just now, the MOS has stated that it is something that we have to do and not whether it is justifiable or not. I would like to know how many scholarships have been awarded in 2002 and 2003 in the biomedical-related area. How does A STAR project the research trend? As a researcher myself, I know research is dynamic. It will not remain the same after eight years. Can A STAR safely say that after eight years, the biomedical-related area will still be a hot area?

My third point is on the foreign scholars who are obliged to take up Singapore citizenship upon graduation. Could I have the statistics on how many of these foreign scholars who have since migrated to elsewhere after taking up citizenship here?

Mr Heng Chee How: Mr Chairman, Sir, I do not have with me the figures of the patents. I will revert to her with the information.

She asked whether or not it is worthwhile to invest in our people and given the changes in the research climate, it might be wasted if the people, having learned something, find that, in the end, the tides move in a different way. I would say, first of all, as elaborated by the Minister, Singapore's research is not just to throw money everywhere. It is trying to see in this area that we are going to compete in, how do we place our investments in such a way that will build on our strengths and what are the areas that we have a competitive advantage in.

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In this way, although there are no guarantees, we try to minimise our risk. But that we cannot eliminate. And it is the same, whether you pursue a Ph.D or you take up a skill in the ITE or the polytechnic, there is no guarantee that, in future, there will always be a need for it. That is why we are saying, let us be prudent and focused on what we should invest in, be bold, and once we have decided, let us go forth. Because if you do not have that, how do you go and compete with the other countries, talking to these companies and so on, to set up business over here and make ourselves into a hub and build that virtuous circle? So we have to be able to provide that together with all the other things that the Member has talked about in terms of infrastructure, stable Government, and so on. That is the reason why I believe that, notwithstanding the fact that there cannot be guarantees in this area, since we know that the next lap for us cannot be doing commodity-type, like electronics, we have to go up. When we go up, then let us scope it up, and let us invest.

On the other conditions of A*STAR scholarships and trying to make sure our investments are not taken advantage of, by giving in-principle PR for non-Singaporeans so that they can take up citizenship, these are well-known. These are really very explicit conditions to make sure that we treat the use of taxpayers' money very seriously. So every intention of ours is aimed at putting the money to generate growth, with all the benefits accruing to Singapore as far as we can plan for.

I did not anticipate the Member's question on how many scholars have migrated, but I can provide that information for her later.

Dr Tan Sze Wee (Nominated Member): Just a point of clarification and some

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additional questions. I am actually heartened to hear that the Ministry has acknowledged that in the landscape that we are competing globally, the expenditure for R&D has to increase to compete in the next phase of our economic growth. In fact, I am looking forward to the R&D report coming out in June. The new thing I am going to be interested in looking at is the involvement of local enterprises in the whole R&D landscape of Singapore as well.

I would like to just ask the Minister for clarification with regard to two points in my questions that I brought up in the COS. One is the point I brought up on the SEEDS grant for start-ups for biomedical companies, of which $600,000 under SEEDS is actually quite limited. You basically only have the money to buy the equipment, and that is it. You cannot even start anything with $600,000. That ceiling was the feedback that I received from Bio-Singapore, the trade association, that we cannot use a one-rule-fits-all. We may have to review that for biomedical companies because it is a very high capital industry.

The second point is that, for the funds under the BMRC which is administered through A*STAR, can I seek a clarification whether private local companies are able to apply through BMRC for research work, which can be done in their own premises and through contract researchers in public research institutes as well? That is how the model is being played out all over the world, in my company as well. For example, we are part of a NIH programme which is from US and Australia, where we participate and apply for funding from the Australian Government through my Australian subsidiary as well. The main point is that you must understand the BMRC's funding fulfils a certain ---

The Chairman: Can I advise Members to make their clarification short or else we will have no time for further clarification?

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Dr Tan Sze Wee: The third question I want to ask is for the number of companies that have obtained SEEDS funding. The MOS has mentioned 124. I read in the round-up Budget speech that, it was 126 up to 2004, ie, last year, there were only two companies which got SEEDS funding. Does that mean there is a slowdown in the programme? If that is the case, why is that so?

Mr Lim Hng Kiang: Before I answer the question in detail, it is worthwhile for us to try and understand how do we envisage Singapore's economy developing, going forward. If you look at the economy today, we have one of the best diversified economies in the world. Manufacturing takes up about 25% of our GDP. Our traditional roles - trading, wholesale, retail plus the trade functions that we do - take up another 20%. Financial sector is about 11% and growing strongly.

Related to the financial sector, we have the business services sector, which is another 20%, both for local business services, as well as regional business services, RHQs, etc. Then we have the infocomm and transport services.

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By and large, we have a fairly diversified economy. Our best strategy going forward is to try and keep these diversifications. One of these diversifications is, of course, manufacturing, 20-25%. Even within manufacturing, we are reasonably well-diversified. But we have to recognise that we are a very small economy with a GDP of US$100 billion. We could not spread all our eggs so thinly that it would not get any core competence. So, it is a judicious balance that we have to take, between concentrating our effectiveness in certain key areas, but not so concentrated that we are vulnerable. Let us take manufacturing. We have electronics,

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which takes up about 8-10% of the GDP and, even within electronics, we are fairly well diversified - semi-conductors, consumer electronics, infocomm equipment, computer and PC peripherals. Even that is quite diversified.

The second area that is now growing very rapidly is biomedical sciences. Today, it constitutes about 5% of GDP. Petrochemical constitutes another 5% of GDP. Over the next 5-10 years, I think petrochemical will be very strong. Then we have our traditional sectors - transport engineering, marine and aviation engineering, which constitutes another 3-4% of our GDP, and the others, furniture, food, printing - and so many other SMEs. So, even within manufacturing, 20-25%, we are fairly diversified. So where do you place - I would not say "place your bets" - but where do you develop your capabilities? We look at biomedical and we think this is an area that will be with us. Why? Because the population everywhere will be ageing and the demand for healthcare and biomedical services will increase. Today, we are spending 3% of GDP on healthcare. But other developed countries are spending 9% of GDP. In US, it is 15-17% of GDP. Therefore, the trend is greater expenditure on healthcare, and this is the area where it is worth our while to invest in capabilities and build up the talent pool. I would not say this is an investment that will definitely give us returns but, if you look at the landscape, going forward, if you have to develop your capabilities, I think this is an area where it behoves us to develop. We have done so since the year 2000. I must say that in just five years, A*STAR has done remarkably well in building up the biomedical sector to contribute 5% of our GDP.

Again, the strategy we take is a very diversified and sensible strategy. One, we bring in the pharmaceutical companies to do their manufacturing here. Two, we

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build up an eco-system that allows new bio-tech companies to sprout out. This is not easy, but it is something that we are growing, and I think Dr Tan Sze Wee will realise the difficulties of growing bio-tech companies. Three, we try to anchor some of the research facilities of the big pharmaceutical companies here in Singapore. And, for that, our strategy is to have biopolis, which gives them the facilities to come in, plug and play, so that they do not have to invest so much in setting up the infrastructure. I think we have had several successes.

So when we look at the investments that we have put in, and the progress that we have made in five years, I think we have done reasonably well. Part of this is greater investment in R&D. If one looks back, I think we were a bit slow. If one looks at countries like Taiwan and others, I think they have invested more heavily in their people and research talent pool. I think we are a bit slow but, as I have said, we have caught up somewhat over the last five years, but I do not think we should be complacent. We still have a long way to go.

On Dr Tan's question about SEEDS and the grant being limited, I agree with him. Bio-tech research is a very expensive enterprise. If we want to encourage new start-ups in bio-tech, we have got to find a way in which the environment allows them to do so. But we have to be quite realistic. Most bio-techs, beyond a certain stage, have to be bought out by the big pharmaceutical companies, and they could latch on to big scale clinical trials and major production. I think that has to be the evolution process of the bio-tech companies. Therefore, we will look at the quantum of SEEDS. If $600,000 is not effective, we will have to see how this could be done.

Similarly, for the DMRC grants. Again, we have to be realistic. Clinical

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research is a very difficult and long-drawn process and essentially it has to be done primarily in a hospital setting or in a specialist centre setting. But if this is too restrictive we will review the programme and extend it also to the private sector, especially if our private sector grows in capabilities and there are more private sector facilities or organisations that are able to band together and have a greater capability to undertake such a research.

So the number of scholars that we are providing nowadays, 100-150 A*STAR scholars, is not a very big investment. $40-100 million a year is a drop in the ocean. I think one of the conclusions which I hope will come out in the June review by the R&D Committee is to give us a boost in our R&D efforts.

Prof. Ivan Png Paak Liang: On SMEs, in his response during the Budget Debate, the Prime Minister mentioned that, in fact, the Government is one of the major purchasers in tenders under $100,000 and SMEs are one of the major suppliers to the Government. I asked that the Government uses the public-people-partnership to outsource projects. I wish to ask again that the Government insists that all these PPP outsource providers use GeBiz for their procurement, because, when the Government outsources big projects, we do not want the opportunities for SMEs to become providers to the Government of goods and services to be closed out, because the outsource providers may not use such a transparent system as the Government is using now.

My second point is to thank the Minister for agreeing to publish the R&D 2006 Plan. That is a very good move. I only urge the Ministry, in planning R&D, to slice R&D into two parts. We must have pure R&D, as well as applied R&D. Let us not forget an important layer of R&D capability will be pure R&D, not necessarily tied to any particular industry

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or project. This is of overall importance to R&D capability.

Mr Lim Hng Kiang: The R&D Committee, chaired by DPM Tony Tan, will cover the full spectrum of R&D, both the pure R&D undertaken by the universities and the other research institutes in the academic setting, as well as the applied R&D, which is really the responsibility of MTI, through our research institutes and collaborations with the industry. So it covers both areas. But we have to realise that in Singapore, our priority must be on applied R&D. That is my view because, whatever funds we have, I think a greater portion of that fund must be leveraged towards industry applications, economic development and generating jobs.

On the PPP, I accept Prof. Ivan Png's point. But let me again explain that the PPP that the Government promotes will be for some of the big projects. One of the best examples will be, say, an incinerator plant. I could not realistically see how that PPP project of an incinerator plant could be packaged, whether it is mandatory or not, that it makes itself available to local SMEs. As Heng Chee How explained in his speech, the best way forward for our local SMEs is to improve their capabilities, establish their own brands and compete, based on price, quality, competence and product delivery. To try and favour SMEs through a buy-local policy by the Government is not the way to go.

Tourism

Miss Penny Low (Pasir Ris-Punggol): Sir, Tourism Vision 2015 sets bold aims to double visitor arrivals, triple tourism receipts and add some 100,000 jobs to Singapore. I wonder how MTI intends to achieve this vision. To quote the Minister, "Where do we place our bets?" Sceptics would say, "Perhaps integrated resorts." However, having travelled to

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some 45 countries, I ask myself what makes a place memorable. What makes me revisit it? Without a doubt, Eiffel Tower or Tower Bridge alone, will not lure me back. But it is the people, action and stories along the way that create the magic in the air. Does Singapore have that magic?

Sir, "Awe-struck by Chingay" was the Sunday Times headline that described our tourist experience. Lights, colours, sounds, festive cheers and, most of all, the kaleidoscope of races and styles coming together to celebrate a historically Chinese festival impressed tourists of our unity in diversity. Many wanted to learn more about Singapore's culture and racial harmony. People remember less of concrete skyscrapers, but more fondly of events and people. The event leaves a lasting memory with many stories to tell their friends and relatives back home.

Sir, this is the colour of our nation and our strength. Could we showcase this unique face of Singapore to the world? Should we capitalise on the very colours? In fact, could we go one step further and have a major fiesta every other month and make Singapore a cultural and fiesta capital of the world? With the $2 billion Tourism Development Fund, I urge that we develop Singapore as an international fiesta capital city, which leverages on our people, city energy, hub concept, location, already world-class infrastructure, travel safety, kaleidoscope of culture, food, shopping, and mix of old and new, to give tourists a uniquely Singapore experience and leave them wanting more.

In fact, the advantages of a fiesta capital concept is aplenty. In terms of economic contribution, I have distributed an addendum, and I quote two examples. One, the Edinburgh International Festival in Scotland - three weeks of sizzling music, opera and dance. It attracts 2.6

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million visitors and generates some $419 million in revenue, producing some 2,900 full time jobs. The Oktoberfest in Munich, Germany, gives 16 days of beer, attracts some 6 million visitors and $1.9 billion in revenue, producing some 12,000 full time jobs.

It will also help us to product differentiate. In fact, what do tourists identify Singapore with? Perhaps we could ink Singapore as a unique fiesta capital in the minds of international travellers. It may also give us the X-factor that Minister Mah spoke about yesterday. More skyscrapers and mega-malls add only diminishing marginal utility. A fiesta could create a unique visitor experience, enhance the quality of life and encourage more people to come and live here. It could also help build community. Festivals pull people together and add a spark to their lives in the communities. It is a useful social bonding and community development tool. In total, our diversity in unity is a call for celebration. We need to theme our somewhat disintegrated event landscape and leverage on what we currently have to make our celebrations bigger, louder, last longer, in fact, romanticise them and involve tourists in our city action. This is what would leave them asking for more.

I have also provided another list of addendum as examples of existing festivals. A fiesta concept will raise our profile internationally as a cultural capital and add a buzz of excitement, colour and drama to the city that is enjoyed by both residents and visitors alike.

Integrated Resort

Mr Gan Kim Yong: Mr Chairman, Sir, the Government has by now received all the proposals from the potential investors. I hope MTI will, in due course, release some details of the proposals on the

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integrated resort and the basis of its decision to proceed, or otherwise. However, before making the final decision, I would like to urge the Government to carry out a comprehensive study on the long-term social and economic impact of the proposed casino. The result of this study should be made public so that we are all aware of the implications and so that the issue could be addressed adequately.

While it is not a life and death issue, the decision on the casino will nevertheless affect many Singaporeans. Perhaps it is not a subject that requires a referendum or the lifting of the Whip, as it is a policy that is well within the Government's ambit to decide. However, I feel that it is an issue that has sparked much talk and debate among ordinary Singaporeans. It would seem odd that this subject is discussed everywhere else, except in this House. I think a full debate in this House on this issue is necessary. At least it will allow Members an opportunity to express their views and concerns and give the Government a platform to specifically deal with the issue involved.

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Sir, what surprises me was that after almost a year since the issue was first raised, the Workers Party said a few days ago that it still did not have a position on this issue, according to media reports. Apparently, it held a forum recently to solicit feedback. Maybe they wanted to see which way the wind was blowing before forming its position.

Mr Low Thia Khiang, however, declared that his own stand was that it was better for Singapore not to have a casino. The question is: what if his party decides to take the opposite position? Is he going to change his stand against his own conviction? What intrigues me more is that despite not having a clear position between him and the party, he has decided that this

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issue should become an election issue at the next general election. This is like deciding on the menu of the wedding banquet before deciding which lady he should get married to. In any case, if he thinks that this is a crucial issue - which I agree it is - why did he not raise it during the Budget debate or submit a cut on this subject? Sir, I think it is time for Mr Low to stop confusing everybody and take a clear position on this issue instead.

Per Capita Income

Mr Steve Chia Kiah Hong (Non-Constituency Member): Sir, I find it hard to reconcile the statistics given by the Prime Minister at the Debate on the President's Speech this year that Singapore's per capita income has risen over the last 10 years. Considering the fact that there is record unemployment, high number of retrenchments, constant pay cuts, CPF cuts and, at the same time, problems of those above 40 who find it hard to get a decent job, many Singaporeans, including myself, wonder how the Ministry of Trade and Industry had arrived at the reported statistical figures. I hope that the statistical calculations do not take into account the earnings of PRs, expatriate staff and foreign workers working and earning good pay in Singapore into the average income calculation and computation. Otherwise, we will be giving a false impression to our citizens that our income is indeed rising faster than imagined.

Finally, of what benefit or good in showing an increase in the per capita income to Singaporean men who have been retrenched and unemployed for more than half a year? What we need is finding more good jobs for them, not about how the average income of Singaporeans has risen because of foreign talent contribution to the GDP.

Mr Lim Hng Kiang: Sir, let me take Mr Steve Chia's question. First, he must

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understand how to interpret statistics. When the statistics show that the incomes have risen, it does not mean that there will not be 3% people who are unemployed, and therefore their incomes have dropped. This is the per capita gross national income which looks at the average numbers.

The Prime Minister, in his speech on 19th January 2005, mentioned that the overall per capita income has increased since 1998, and indeed it has increased. The per capita income is a widely used benchmark in international comparisons. So we are using internationally accepted statistics and the method of measuring such statistics.

The per capita income is obtained by dividing the gross national income (GNI) by the population. Therefore, the gross national income which is the income receivable by all residents of the economy will include both Singaporeans and foreigners. Mr Steve Chia claimed that this will distort the numbers because it will include the high-earning expatriates. I think he will realise that the number of expatriates and people with employment pass is, in fact, a smaller percentage compared to the larger pool of other types of foreign workers. If anything, the foreigners' element of the calculation in Singapore's context would tend to drag the number down. Anyway, even if we exclude foreigners, the latest statistics show that the average income of Singaporeans in 2004 was 10.1% higher than in 1998. And compared to 10 years ago, the average income of Singaporeans has increased by 25.1%. As I have explained, this is the average number. We all realise that over the last five years, the unemployment in Singapore has risen. The latest number is 3.7%. So if we look at 3.7%, this means over 80,000 Singaporeans are unemployed, which means nearly 1,000 per constituency, and these are the people who come and visit us every other week, and all of us as MPs

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realise that. But that does not change the hard facts of the ground, which is that the average Singaporean, the 90 over per cent who retain their jobs, have had good income. And for most of them, their incomes have grown even in the most difficult years that we faced in the last five years.

Let me now turn to tourism. I agree with Miss Penny Low that the targets we set ourselves for the next 5-10 years are very high targets. We want to double the number of tourist arrivals. We want to triple the tourist receipts and we want to make tourism an important component of our GDP. This is not an easy task but it is something that I think we can achieve. Why? Because the tourism flow in this region and for the world is growing. If we are intelligent and hardworking enough, there is no reason why we should not capture our share of that growth.

I remember many MPs have raised this, including Mr Tan Soo Khoon, and I agree with him that over the last 5-10 years, we have indeed under-invested in our tourism capability. Even though our tourism receipts and the tourist arrivals have been quite decent and remain fairly steady, as a percentage of GDP, the contribution of tourism has, in fact, dropped over the last 5-10 years. What we want to do is to try and redress this. I am not saying that it is an easy task but I think it is something that we have to do.

The suggestions that Miss Penny Low raised about having fiestas and activities, this is in fact a key component of what we plan to do. As I explained in the press conference some months ago, there are three elements. The first element which we cannot avoid is tourist attractions. We must invest in tourist attractions, and this means quite heavy investments. The second is events. We must have things happening in Singapore - some buzz -

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so that when tourists come, they have something to look forward to. On the many suggestions that Miss Penny Low put out, we will look at them. In fact, STB is even more ambitious. STB sets for itself a target of having 52 events. This means that at every weekend, there must be something happening in Singapore. There must be some buzz. So the tourists who come just for the weekend will have something attractive to look forward to.

The third area is capabilities. We must develop the industry - the promoters, the event organisers, the guides, the waiters, the sales people. People must feel happy coming to Singapore and they must have a good and delightful experience when they come to Singapore. So these are the three key elements.

On the issue of the integrated resort, this is an issue which has been debated many times. There are a lot of views put out. We have had this discussion for over a year. I disagree with Mr Gan Kim Yong. In fact, Members have used this House on many occasions to express their views. And even though we may not have a direct debate, the Government has listened to these views and will be taken into consideration when we make our decision.

The Prime Minister has explained that we intend to make a decision before the middle of April. The Government has been elected to govern, and it has the full mandate to decide on many important issues. For example, the GST increase, the CPF contribution changes, all these are issues that, after having gone through discussion and taking into consideration the views of people, the Government then has to make a decision, and this is the same for the casino.

I agree with Mr Gan Kim Yong that the Workers' Party and Mr Low Thia Khiang have been conspicuously silent for this entire one year. Like him, I am a little

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perplexed why Mr Low thinks that this ought to be an election issue. As Mr Low Thia Khiang knows, the election is not due until 2007. And if he is suggesting that we do not make any decision and wait until the election comes around and to treat this as an election issue, we have to wait at least another two more years. Mr Low Thia Khiang is a teochew. So I will use the phrase, by that time, mui sek already. In other words, the porridge would have been cooked. So the Government intends to make the decision. Whatever the decision, we will make a Ministerial Statement in Parliament and use the occasion to explain our decision, whether we are proceeding or not proceeding. This will then give the MPs the opportunity to state their views and also to seek clarifications on whatever the decision may be. So there will be an occasion for MPs to be able to clarify and express their views when we make the statement.

I agree with Mr Gan Kim Yong that even though Mr Low has been quiet all the time, that will be the occasion for him to state his views. I also notice that he has not filed any cut during the entire session of the Committee of Supply. And when he spoke on the debate on the Budget, this did not feature at all in his speech, but there will be an occasion for him to do so.

Consumer Protection

Mr Yeo Guat Kwang (Aljunied): Sir, the introduction of the Consumer Protection (Fair Trading) Act (CPFTA) in March last year is a major step for consumerism in Singapore. It helps shape both consumer behaviour and business practices, and bring about a consumer-friendly business environment. However, to enhance its effectiveness, as the President of the Consumers Association **** of Singapore (CASE), I would like to request that MTI review and consider extending the scope of the CPFTA.

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First of all, the Ministry should consider extending the list of the 20 unfair practices. The unfair practices proposed to be added are:

(i) Forfeit of consumer's deposit if a purchase transaction does not go through. Take the motor car industry as an example. In many car dealers' transactions, the current practice by dealers is to forfeit the consumer's deposit when the purchase of the car or transaction does not go through. Such an action should be deemed as unfair practice, as it unreasonably penalises the consumers.

(ii) Practice of asking consumers to sign blank or uncompleted forms. A common practice in the motor car industry when applying for financing on behalf of the consumers, for example, is to require them to sign a blank form. This, again, should be regarded as an unfair practice under the CPFTA.

The consumers also hope the legislation could protect them from unfair practices, when companies, such as travel agents, spas and beauty centres, which collect deposits or fees with no intention of providing the service but closing down immediately after having a special offer and collecting a substantial amount from the consumers.

Sir, besides extending the scope and the coverage of CPFTA, I would also like to ask MTI to consider setting a notice period of voluntary compliance agreement under the CPFTA. Currently, the CPFTA does not state any specific deadline or time limit for the traders to respond to the voluntary compliance agreement proposal put up by CASE or STB. We propose that a specific timeframe be mandated, eg, 10 days or two weeks.

1.45 pm

On the issue of opt-out practices, there is a common tendency for retailers

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to adopt an opt-out practice for their transactions. This means that unless

a consumer specifically signals his intention to opt-out, he is deemed to have agreed or to accept the contract. Consumers see this as another form of an unfair practice, and we propose that the concept of opt-out practices for business transactions, except for national healthcare schemes, for example, should be included as unfair practice under the Act. Consumers should be given a right to exercise a choice.

On the issue of legislation of product liability, what I would like to suggest is that we would like MTI to consider how we could better safeguard the interest of consumers in this area. Currently, they are protected under the contract law, Sales of Goods Act and tort of negligence and duty of care. The loopholes of the above, in terms of legal ambiguities, are that under contract law, the consumer has to produce proof of the contract between the consumer and manufacturer. But most of the time, a consumer purchases a product from the retailer, and the retailer is only the middleman. So what I would like to propose is for the Government to consider other alternatives for consumers to seek redress by maybe looking into the examples of the English Consumer Protection Act 1987.

Singapore Brand

Miss Penny Low: Sir, as the economy moves up the value chain, a premium can only be extracted from business activities, if innovation and branding occupy centre stage. Branding, however, represents a set of expectations and values which identify the product or a company. Hence, while we brand Singapore and Singapore companies and products, we would need a robust national accreditation scheme that builds trust and rapport between business entities and customers.

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Trust therefore is key for any business relation. One such scheme is the revamped CaseTrust Scheme which belongs to a non-profit organisation, the Consumers Association of Singapore. Please allow me to declare my interest here as the Chair person of CaseTrust Advisory Council and the DP of CASE.

CaseTrust has repositioned itself as a national trust mark, and we have achieved some quick success. In fact, recently, CaseTrust has also attracted enquiries from as far as China and India. It is looking at the possibility of linking up with some regional accreditation scheme to cross recognise the Singapore brand as well. Local businesses would stand to benefit from an enlarged market and Singapore can, in fact, become a brand leader. This is really exciting. But this can only be achieved if MTI invests in the efforts via some methods of funding or facilitation like linking up with the regional and international markets, more direct marketing of accreditation schemes in countries where IE Singapore, EDB and STB have established offices and, in fact, to include a boost for our accreditation schemes whenever EDB and STB go on a roadshow overseas. Would the Minister support the path to building regionally recognised accreditation schemes, like CaseTrust, as the branding and co-branding for Singapore products, services, both in Singapore as well as overseas?

Warehouse Retail Scheme

Mr Chay Wai Chuen (Tanjong Pagar): Sir, I would like to declare my interest as I am working in the field of warehousing and retail.

The Warehouse Retail Scheme, as announced last year, essentially allows the use of industrial land for retailing. Industrial or warehousing land is a fraction of the cost compared to commercial land. For example, industrial land would be 50

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cents to $1, whereas warehousing rent may be four or five times.

This scheme was introduced to facilitate many foreign retailers who have found it difficult to compete in the market for the kind of space to play out their so-called retail formats in Singapore. In countries with big land space, like US or Europe, the so-called retail formats require big areas and are, hence, located outside the city areas and started by locating at intersection points on main highways. The French word for crossroads is "Carrefour".

Under the Warehouse Retail Scheme, local retailers submit their proposals to SPRING while foreign retailers who have been here even for decades submit their proposals to the EDB. Naturally, the treatment is uneven. Many Members have expressed this view earlier. Foreign retailers are also granted land outside the announced patches. The Government has always said it believes in competition and transparency. With something so different as the Warehouse Retail Scheme involving the alienation of land and variation from announced policies, should the Ministry not ensure transparency and equality in treatment of all local and foreign owned companies in Singapore? This is particularly so when competition in this field is so intense.

Since there are so many anomalies administered by the two agencies up to now, and because so many retailers will be affected, I urge the Ministry to freeze this scheme and review the procedures and policies entirely and put up the designated land for tender to be administered by one agency.

Mr Heng Chee How: Sir, I thank Mr Yeo for his suggestions. The Consumer Protection (Fair Trading) Act is principally designed to accord better protection to consumers by allowing them to seek civil redress against traders engaging in unfair

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practices. The primary focus is on small consumers who may lack the expertise and the resources to fend for themselves against unfair practices. However, we recognise the importance of consumer protection, especially protecting the small consumers. We must be careful to do it in a way that does not load too much onto businesses, in terms of compliance cost. And indeed, in the entire exercise of enacting the legislation, this was a primary concern. How do we balance between safeguarding the interests of consumers and not imposing unnecessary and too high regulatory costs on businesses? And it is something that we would have to continue to reassess as we go along to strike a delicate balance.

As this Act came into force only on 1st March 2004, MTI is monitoring market developments to see how well it is working. This will help us review whether and how it needs to be fine-tuned. And we will certainly take into account the points that Mr Yeo has raised. We plan to review the Act after three years of implementation experience. Meanwhile, our immediate focus is to continue to support and work with CASE and other agencies to reach out to consumers and businesses to raise awareness and understanding of the Act. Because there is a lot in the Act that the consumers can actually use to already advance their interest and this should be fully realised.

I also commend CASE for its very proactive and effective role in educating consumers on ways to spot and avoid being shortchanged when they buy goods and services.

Sir, moving on to the cut by Miss Penny Low, Minister Lim Hng Kiang, in his speech, highlighted that the Government will help enterprises, core capabilities and branding and tap overseas market opportunities. Earlier, I have also listed the initiatives that IE Singapore has embarked on to assist companies in their

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branding efforts. As Miss Penny Low rightly points out, the successful branding of Singapore products can enhance their identity in overseas markets and allow them to command a premium.

I also agree with Miss Low that the use of internationally recognised trust marks can help improve the branding of our products. In particular, trust marks backed by a robust accreditation scheme can encourage our producers to meet high standards and, therefore, strengthen consumer confidence in our products. The Government is and will continue to be supportive of organisations, such as CASE, that issue robust trust marks and aim to widen international recognition of these marks. STB and EDB promote the adoption of CaseTrust by education service providers and tourism establishments. CASE is also welcomed to discuss with IE Singapore to see how we can work together to enhance the branding efforts of internationalising Singapore companies.

Sir, finally, I move on to the comment by Mr Chay Wai Chuen. I thank him for the comment. The Warehouse Retail Scheme is aimed at encouraging companies to make a sizeable investment in Singapore by allowing greater flexibility on industrial land use so that companies can adopt an integrated business model for industrial and retail activities, and it is not limited to foreign companies. It is open to both local and foreign companies, as pointed out by Mr Chay.

For this scheme, there are clear quantitative criteria for evaluation and these will include annual turnover, direct employment created, total business spending on investment. The final approving authority for this scheme is MTI. So even though SPRING Singapore being the champion agency for local enterprises, it is the one that helps to

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process such applications by local companies and EDB helps with those by foreign companies. Ultimately, all these applications are channelled to a common place, namely MTI, for common assessment and decision.

Therefore, I assure Mr Chay that all applications and proposals, regardless of their origin of the companies, that is, whether they are local or foreign, and regardless of which of these two agencies, whether it is SPRING or EDB, that help to process and move the applications forward, they are all assessed and evaluated in a consistent manner using the same set of evaluation criteria by MTI. We have a policy of ensuring that there is no preference treatment for any company and we definitely do not prefer foreign applications to local applications. So we evaluate them on common criteria.

Mr Inderjit Singh (Ang Mo Kio): Sir, on this issue of Warehouse Retail Scheme, as I recall, this was driven by a foreign company that was pushing for this scheme to be made available, and EDB was only championing this for the foreign company.

Back to my basic point about local agency championing local enterprises, SPRING does not have the same clout as EDB has in trying to push these things through, and I think this is probably the root cause of the problem. In the same token, when the Minister talked about SPRING being the primary agency that is going to focus on local enterprise support, I welcome this. But I ask again that we look at how the resources are allocated. Today, there are some resources, for example, certain research grants, innovation development scheme, certain equity funds that are primarily controlled by EDB, and SPRING could apply through EDB for local enterprises. I ask that these be reallocated so that SPRING, who is going to be the local champion agency,

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will have the primary responsibility and control of these funds. It is only then that we can find equalisation of the treatment of foreign and local enterprises.

Mr Lim Hng Kiang: I really do not want to get into the details of all these. But let me assure Members that MTI treats foreign and local enterprises equally. We do not favour or discriminate either one of them. If you talk to the foreign companies, some of them will say that we discriminate against them, we favour local companies, which is the natural instinct of all countries. But I would like to share with everybody here that we treat everybody the same.

On the Warehouse Retail Scheme, if I may give the background, since this has been raised. In case other Members start forming opinions based on misperceptions, let us get the facts out. The Warehouse Retail Scheme is intended so that companies, whether foreign or local, can try out new business concepts, integrating warehousing with retail, and also distribution to the region. So it was proposed that, with this objective in mind, it is not for local retail. So we are not favouring foreigners coming to retail to Singaporeans, neither are we encouraging our local retailers to use this scheme to distribute to Singaporeans. The idea is to have a new business concept that amalgamates warehousing and distribution, not just to locals, but also to the region.

We originally wanted to allow such a concept to be tried out in industrial estates, away from the housing estates in Singapore where we already have an established retail distribution through the HDB shops. But, at the same time, we want to be flexible. And so when the companies propose other locations which are not in the approved areas, I think the various Government agencies try to be flexible and see whether or not we can accommodate them, and we found that

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we were able to do so. So this does not prevent local companies from looking at other sites which fit this objective and coming to the Ministries, whether MTI or MND, to see whether or not such a concept can be tried out in areas beyond what we originally stipulated as approved areas.

So let me, again, establish the facts. It is not meant to favour anybody. The location which a particular consortium or foreign retailer selects is done on his own accord. We are quite happy if Singaporean retailers also identify other sites not from the original approved list, and which meet the objectives and have the approval from MND.

Mr Yeo Guat Kwang: I would like to ask the Minister of State whether he agrees that the list of unfair practices is, in fact, not exhaustive. What I have been suggesting actually is not a major review of the mechanism. I think the mechanism is working very well and it is to protect consumers. The question is: why can we not extend the list to cover and protect more consumers for other unfair practices? I cannot understand why we need three years. Does it mean that we have to wait until

more consumers fall victim to unfair practices and to see more casualties before we make a move? Why can we not be a bit more proactive?

2.00 pm

Mr Heng Chee How: Sir, I will try to explain it this way. Under the current Act, although there is an explicit list of 20 unfair practices, there are also other ways of understanding what an unfair practice is under the definition, and there is a provision under the current Act where a body, such as CASE or STB, can take up the case on behalf of victims or consumers who have been dealt an unfair practice by a trader through the civil courts and, before that, to actually offer them an option of voluntarily ceasing such

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unfair practice. So, if you look at the provisions of the current Act, it allows you to already take action to protect the interests of these consumers, notwithstanding the fact that it might not be explicitly listed under the 20 practices.

For the additional instances that Mr Yeo has given in his list, we have also got to be careful in terms of evaluation. For example, the one on opt-out, even Mr Yeo himself also realised that there are occasions - he mentioned, eg, the national medical opt-out schemes - where it probably is justifiable and there are occasions where it is not. So, to have something like a blanket ruling to outlaw it one way or the other, sometimes you might actually create unintended consequences. So, each of these things, even if you want to go into them, they have got to be very carefully evaluated. Other instances where the person is, for example, given a certain condition of purchase and the question is really whether or not that person already knew that there was such a condition before he entered into the purchase and, if he did, again you will have to evaluate whether or not in that circumstance it should be treated as a case of cheating or unfair practice, or is it that a person entered into it knowingly and then subsequently regrets. So, these are the things that we would need to study rather than rush into.

As I mentioned earlier, the important point is really to educate our consumers for their protection, so that they know how to make full use of the provisions of the existing Act so that they can really protect themselves against these practices. Then, as we gain the experience of how things are working out, and at a suitable point, we will review all these, taking into account the points made by Mr Yeo.

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Mr Low Thia Khiang (Hougang): Sir, I would like to thank Mr Gan Kim Yong for his interest on the Workers' Party, and the Minister soliciting views from me. In Mandarin, it is called shou cong rou jing .

Sir, the fact is that, whether or not I had spoken in this House or have moved any cut on the casino issue, obviously, the view at the forum is heard. Unfortunately, I had an interview after the forum on Saturday, but I think it was not aired, so perhaps the Minister may not know my view on the casino. And why the PAP chooses to bring out this issue at this point is perhaps because I called for the casino issue to be made an election issue, which I think made the PAP sit up.

Sir, the question is: why is it that the WP has not had any official position on the issue so far? I wish to clarify that we realise that the casino issue is not an easy issue, because of diversity of views. Also, we have to consider it from a pragmatic point of view rather than from the emotional position, which is very difficult to deal with. Nevertheless, we have had quite intense discussions between ourselves, both at the party level and at the CEC level. We also receive a lot of feedback from the public.

Currently, there is insufficient information or survey on what is the impact. We have a lot of surveys and studies done overseas but these may or may not apply locally. So, we are quite cautious in how to approach the matter. This is a matter of responsibility, being a political party. I have said at the interview, after the forum, that it has to be assessed in terms of cost-benefit analysis. If it is a matter of "we must have it or else we will have problems economically or in the future we might lose out", then I think we have no choice. But if it is a matter of "may or may not have economic benefits in the future", then why should we take the risks? And the question is whether it is a manageable risk. Mr Chairman, Sir, I

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do not think it is a manageable risk in the future, and I have stated my position at the press conference that I am against it.

Yes, the party has not made a decision, because we are still discussing it and, after the consultation process, the CEC will make a decision some time in April. What happens if the party were to make a decision which is contrary to my belief? Sir, if I fail to convince the party of my position not to go ahead, well, I will have to follow the party line. This is party discipline. The same goes with the PAP. I think even the Cabinet is also split.

Now, let me move on to why I decided to say we should make it an election issue. Yes, the Minister has explained the PAP has the mandate. Yes, you have 75% of voters who voted for you at the last elections.

The Chairman: Mr Low, we have other clarifications to be made.

Mr Low Thia Khiang: Sir, I wonder whether the 75% includes also the mandate for the Government to go ahead with the casino, which will have profound effect on the future of Singapore. The question is whether it is fair that you take the mandate and you say, "Ok, I have the mandate, and I can do whatever I want."

The other perspective is that whilst the Government has allowed people to discuss and encourage people to debate on the casino issue but, at the end of the day, there must be some avenue enabling the people to express whether they are for or against it. I understand that a referendum can cost a lot of money. Perhaps we can tie it in with the election as an issue and see how people vote. At least they get a chance to vote to express their views. So, a vote for the PAP is a vote for the casino.

The Minister said, why wait for so long because the election will not be due

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until 2007. In Teochew , we say, muay sek liao ! But my question is: what is the hurry? Are we going to run into economic difficulties if we were to delay the decision on the casino issue? If you were to go ahead now and decide, then people will say that perhaps you have already made up your mind to decide to go ahead with it, thereby you cannot wait any further. I do not see why we cannot wait.

The Chairman: Mr Low, do you want to give enough time for the Minister to reply?

Mr Low Thia Khiang: I would like to tell the Minister: let the people have a chance to vote and to decide on what they really want for society and for the future. And I think you can wait. As the Teochews say: " hor leo tim toi, mun mun lai ".

Mr Lim Hng Kiang: Sir, this is the first time in my many years here that I have heard Mr Low Thia Khiang going round and round, and I am not sure whether he has clarified the issue or he has made us more confused.

The reason why we are proceeding with a decision whether to proceed or not by the middle of April is already stated by the PM. We have had a discussion on this issue for almost a year. We have invited developers to come in. We have got 19 proposals, and we are on record to say that we will look at these concepts and then we will decide, and we intend to do so by the middle of April.

So, we have given people plenty of notice and I do not see any reason for us to postpone this decision by another two more years and make this into an election issue. Whether it can be an election issue or it will be an election issue, we would not know. It is up to the issues of the day when we go for elections. But the Government has to make decisions, based on information available to us, and this

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Government has been elected to govern, and this Government will do what is necessary to make the right decisions for Singapore, having heard the range of views, both for and against.

My point earlier was that, while all this discussion has been going on for one whole year, the Workers' Party and Mr Low Thia Khiang have been conspicuously silent. Then they had this seminar, I believe, last Saturday or last week. I wonder how many turned up for the seminar. I wonder whether the Workers' Party has formed a position on that issue. Apparently not, from the explanation given by Mr Low Thia Khiang. Therefore, there is no reason for us to wait just because the Workers' Party has not made up its mind.

MTI will be looking at the proposals submitted. We will make an evaluation and we will put up our recommendation to the Government. The Government will assess it and decide before the middle of April. And, as I mentioned earlier, whatever the decision, we will come back to Parliament, make a Ministerial Statement on the decision whether to proceed or not to proceed, explain our decision, and give MPs the opportunity to state their views to and seek clarifications on the decision that would be taken.

I think that is that. Then we go on to other issues of economic development.

The Chairman: Miss Penny Low. Last clarification.

Mr Low Thia Khiang: Sir, a further clarification.

The Chairman: No, Mr Low. You have had your chance. Miss Low.

Miss Penny Low: Sir, two points of clarification. The Minister of State, Mr

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Heng Chee How, mentioned that the opt-out scheme could be relevant in certain situations. I agree with that, where there is a social dimension to it. But where it is pure commercial interest itself, an opt-out scheme should not be allowed.

On my cut on the fiesta capital itself, what I was suggesting really was to give a boost to the festival industry and group some of these events that we are currently having, because they are too disintegrated and it is really difficult to identify Singapore with a particular culture or fiesta event itself. What we need to do is to really cluster them and give them an identity, whether it is monthly or alternate months.

Mr Lim Hng Kiang: I think we have many events. For example, the Singapore Arts Festival is growing in stature. But, beyond the Singapore Arts Festival, we are looking at other events throughout the year. The strategy whether to put them together or make sure there is activity every week, that is something that we have to examine.

The Chairman: Yes, Mr Low. You have one minute.

Mr Low Thia Khiang: Sir, would the Minister agree to move for a full debate in Parliament on the casino issue, and would the PAP agree to lift the Party Whip so that its Members can vote freely based on their conscience?

Mr Lim Hng Kiang: I have already stated many times that we have one whole year of discussion. Members have used the opportunity here in the House and outside the House to give us their views. We have called for the proposals. We will make the evaluation and make a decision. After we have made a decision whether to proceed or not to proceed, we will make a statement, and then we will give MPs the opportunity to seek clarifications.

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The Chairman: Yes, Mr Heng. You have 30 seconds.

2.15 pm

Mr Heng Chee How: Sir, just to take up Miss Low's point. We will take the comments into account in our

review. But the main point is that we have to balance between protecting the consumer versus not overloading regulatory compliance cost on the businesses. It is how we always look at these two things and balance them.

The Chairman: Since Dr Ahmad Magad is not here, I have to put the amendment to a vote.

Question on the amendment put, and negatived.

The sum of $421,430,240 for Head V ordered to stand part of the Main Estimates.

The sum of $4,568,451,300 for Head V ordered to stand part of the Development Estimates.