HEAD W - MINISTRY OF TRANSPORT

Column No : 738

Head W - Ministry of Transport

The Chairman: Head W - Ministry of Transport. Mr Ong Kian Min.

Land Transport

Mr Ong Kian Min (Tampines): Sir, I beg to move,

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

Sir, 2005 was another excellent year for Singapore's transport sector. On the land transport front, the Land Transport Authority continued with its mission to develop Singapore's land transport infrastructure. The Punggol LRT east loop and Sengkang LRT west loop were opened on 29th January 2005, boosting our rail network by 8%. Construction on the Circle Line is well underway, while plans for the downtown extension and the Boon Lay extension have been announced.

During 2005, the road network was also expanded by more than 100-lane kilometres. In addition, adjustments have been made to several land transport policies, regulations and schemes and the outcomes have been positive. As part of the Government's commitment to foster a more inclusive society, I am happy to note that wheelchair-accessible buses have been introduced in Singapore.

Sir, I will now go into details on some issues regarding our land transport system. Our total vehicle population has grown by 44% from 509,000 vehicles on our roads in 1989 to 735,000 that we had last year. This steady vehicle population growth over time, accompanied by lower ARF and COE prices, has enabled many more people to own cars. I would like to ask whether this vehicle growth rate is sustainable over the long term and what is the allowable rate of increase going forward. In connection with the new growth rate, will there be an increase or reduction in the COE quota for 2006?

Sir, although there are now more vehicles on our roads, we can still be proud of a well-managed and generally congestion-free road system. With ERP, we manage well under normal circumstances. But, if for some special ad-hoc reasons and occasions, many more drivers decide to descend or converge in a particular area, a massive jam or gridlock can occur. We cannot really control how many cars come for a particular occasion and we cannot impose ERP on short notice. One example is the Investiture ceremony last year, where for the first time the ceremony was delayed. Most of the special events can be predicted, for example, Kreta Ayer, Chinatown, during Chinese New Year, Orchard Road during light-up and other major events and festivities. But some can happen without warning. I would like to ask the Ministry of Transport and the Land Transport Authority to work closely with other agencies like the Traffic Police to foresee and cope with such situations effectively.

Statistics and key performance indicators of the Ministry of Transport. A desired outcome of the Ministry of Transport is to have a quality integrated and efficient land transport system. One of the key performance indicators (KPI) is the percentage of expressways and arterial roads which are congestion-free during peak periods. By congestion-free, it means expressways where traffic can move at a speed above 45 kph and arterial roads with speed above 20 kph. I observe that using this KPI, the percentage of expressways with speed above 45 kph has dropped from 99.2% in FY2003 to 97.9% in FY2004, to only at least 95% in the revised FY2005.

I am puzzled by this steady decline over the last few years, especially since during those years the ERP was implemented and rolled out along many stretches of expressways to ease and smooth out traffic flow.

On the other hand, the percentage of arterial roads above 20 kph has increased marginally, from 94.7% in FY2003 to 95.5% in FY2004, and it is hoped to maintain at at least 95% in the revised FY2005. I would have thought that congestion along arterial roads worsened as motorists avoided the ERP along the expressways, and used other roads instead. Could the Minister clarify and explain these figures?

Sir, I would think that these figures and statistics, which I have just quoted, would sound rather academic and meaningless to the man-in-the-street. What do these figures translate to or reflect in the actual situation he is facing day to day? To the average motorist, these figures are meaningless because, to him, the actual traffic situation that affects him every day is more important. At least, 95% of expressways above 45 kph may sound very impressive on paper, but the motorist would be most unhappy if he were to be caught in the remaining 5% of expressways every day.

Sir, next, managing traffic jams. I think it would be most meaningful to motorists if we introduce a code for the different levels of congestion. We need not be too specific or exact as in the system which informs us of the number of minutes required to arrive at a certain point along the expressway. I would like to propose, for example, "green" can mean that the expressway traffic is smooth flowing and moving at above 45 kph; "yellow" means slow moving traffic at between 30-45 kph; "red" means crawling traffic at between 20-30 kph; and "black" means drivers are stuck in the traffic, at standstill, and most of them have black faces! This will be easier to interpret and give the drivers a clearer mental image of the situation than mere speeds expressed numerically in kph.

Sir, on our early warning displays, I observe that, at present, the early warning LED displays along the expressways do not tell us much about the actual traffic situation. "Accident on Lane 1 after Kallang" or "Jam after Kallang" does not give motorists a sense of how bad the jam is. It does not tell you how long is the tail-back. How long would the driver need to take to pass through that section? I only know that if it says "Massive Jam", I better give it due respect and avoid that section at all costs. I would like to suggest that the severity of the traffic jam be represented by similar colour codes. So motorists can see at a glance and be better informed of the situation, so as to decide whether to join the jam or to take an alternative route.

Sir, on "clean" vehicles, I would like to ask about the amount of incentives granted to encourage the use of "clean" vehicles. Hybrid vehicles are still more expensive to buy and the cost benefits still do not add up. It is also a question of infrastructure and demand - chicken and egg. Take compressed natural gas, for example. One major complaint is the lack of convenient refuelling stations. But private companies would not want to take such a big risk to invest large sums of money to build the infrastructure and the network of refuelling stations unless the demand can be assured. And without convenient refuelling stations, few motorists will be prepared to own and use a compressed natural gas vehicle.

Mr Wee Siew Kim (Ang Mo Kio): Sir, I would like to declare that I am a director of SBS Transit. One of our policies for the mass public transport system is to avoid duplication of services. Hence, in areas served by the MRT, bus routes are carefully planned to minimise duplication of the MRT routes. This policy has reduced the number of point-to-point bus services. In spite of the predictability, speed and comfort of the MRT services, a significant segment of commuters still prefer point-to-point services. They do not like the inter-modal transfers for a number of reasons. Some dislike the additional waiting times; others find transfers confusing and inconvenient. Singaporeans want choice. I think the time is ripe to give them greater choice by allowing competition between our MRT and buses. The MRT system is now quite mature, except for the Circle Line, with a well-established commuter base. Competition would drive our operators to provide better services and add flexibility and robustness to our system. The ultimate winners will be the Singapore public.

Public Transport System

Mr Ong Kian Min: Sir, adverse feedback has been received from the public about the quality of our bus service. The dissatisfaction centres around unreliability of service, long waiting time and overcrowding. This may stem from commuters' rising expectations. I would like to ask how this adverse feedback can be addressed, whether any new requirements or standards are to be imposed and whether their compliance would lead to an increase in cost of operation, leading to increase in fares.

Sir, in imposing any new service standards, I would like the authorities to be mindful of the fact that while operators can ensure that the buses leave the bus interchange according to the schedule, unreliability, long waiting time and overcrowding further down the route could also be due to unpredictable traffic conditions along the way. Traffic congestion along the route can cause uncertain arrival and bunching. I think complaining against the bus operators would not solve the problem, because traffic condition is beyond their control. Also, penalising the operators is not the solution. I would like to ask what measures will be taken to enable our buses to ply their routes with more certainty.

Sir, next, on public transport concessionary fares for the lower-income group. When there is a downturn, the transport operators, NTUC and other organisations may volunteer to come up with a few million dollars to start a transport fund for that period. I think we should have a more permanent Government-supported transport fund to give those from the lower-income group the mobility and ability to travel further, whether for work or leisure. For example, why should a low-income resident from my constituency, Tampines, be prevented from taking up a job in Tuas just because, for him, the transport cost of getting to and back from his workplace would be prohibitive in relation to his income.

Sir, as a poor student in London, season passes allowed me to travel to college and visit places of interest that I would otherwise not been able to. There were London Transport season tickets, Brit Rail passes, Inter Rail, EU Rail and in the US, Greyhound bus passes, etc. Our public transport operators are not issuing season tickets because they say that would result in them collecting less revenue. They dictate that commuters pay on a per trip basis.

Sir, there are only two public transport operators here. If SBS and SMRT do not offer, then commuters have no choice but to pay for every trip. I think the Government should step in to provide for the lower-income group to give them more mobility to get to their place of work and earn a living to provide for their families.

A season ticket can also serve as a cap on their transport expenses, help them in their budgeting and allow them to take their families out of the neighbourhood to visit other places of interest.

Sir, my next point relates to Tuas Industrial Estate. We still have thousands who are structurally unemployed. There are jobs available for them in Tuas. There are companies there that cannot find workers to fill vacancies. The present situation which has existed for many years is unsatisfactory. We have spent millions of dollars developing that industrial estate. We should not allow poor accessibility and inadequate bus services to prevent us from realising its full potential. We need to adopt more creative solutions to tackle the present shortcomings.

I observe that there are not many pedestrians walking along the roads in Tuas. This is understandable. The roads there are dusty and unsheltered from the elements, and workers spend most of their time working within the compound of the factories. Unlike the CBD and Orchard Road, factory workers there do not have to come out of their factories to visit other factories for meetings. Even for lunch, workers do not venture far on foot. Many of the factories have their own canteens or food is brought there for the workers.

Sir, it does not make sense to subject the public transport operators to the universal service obligation that they must and can only ply approved routes and pick up and drop off passengers at designated bus stops.

Tuas needs a rethink and a different system. We should carve Tuas industrial estate out, exempt it from the universal service obligation and try something different. For example, how about adopting some variation of the mini-bus service that one finds in Hong Kong? These mini-buses can wait at MRT stations and, when a sufficient number of passengers have boarded, make shorter loops into minor roads in the industrial estate. Instead of only being allowed to stop at designated bus stops, they could be allowed to stop, drop off or pick up passengers at the factory gates. Instead of being required to run most hours of the day, they should have the flexibility to adjust their operating hours according to the passenger demand.

Companies could also be encouraged to band together with other factories in the vicinity to organise these mini-buses to pick up their workers at specified times and to take them back to the MRT station.

Mdm Cynthia Phua (Aljunied): Sir, the business of moving people rests on two main factors: it must be safe and reliable, and affordable and accessible. Our public transport has travelled a long distance from the early days of the Hock Lee and STC bus companies. Then, safety and reliability of services were a great challenge. Today, we have moved beyond that phase and we would like the Ministry to review and set out performance standards for our public transport at present and in the future.

We need to assess the performance standards of our public transport system. Every time when there is a fare increase, the main attention is on whether the transport company is financially able to absorb the increase in the operating costs. Many users are not looking at other performance standards. For example, are our transport system operating efficiently and what is the utilisation rate of our public transport system? All these will work its way out into the fares eventually. The people do not know how well our public transport companies are performing. Are we maximising our infrastructure which the Government has built and provided over the years? The people need to know what are the benchmarks for our public transport system.

Sir, these are the related questions. What is the utilisation rate of our public bus system and MRT system as compared to other cities in the world? How many people have we served in our peak hours? Have we reached our maximum capacity, or must we do more to encourage our people to use the public transport system so as to lower the fares, as in the case of the North East Line? What are our fares as compared to, say, Asian cities like Hong Kong and Taipei? How are our public transport companies' financial performance as compared to other transport companies in similar cities, given that the Government gives them the monopoly to run the public transport system with the provision of first-class infrastructure by the Government? And what other public transport performance benchmarks that other cities are using to ensure that the standard of their public transport system is performing satisfactorily?

Sir, I would like the Ministry of Transport to look into the following areas of concern on the ground:

When we decided to privatise our public transport system, the belief was that in doing so, it would give the operators greater flexibility to offer the best at the most competitive prices. Unfortunately, they are privatised. Routinely, these companies put up proposals to the Public Transport Council for fare revisions. It is almost a cyclical motion that every other year, they will be knocking on the door to ask for fare revisions. Knowing that oil prices will remain on the high side, these companies should look at how to meet these challenges and not taking the easier route of increasing fares.

Take the example of our Government using our reserves for our people over the five years to offset some of their expenses. Why can we not use some of the reserves of the bus companies to reduce the fares for our people as well?

The other area I am very concerned with is our vehicle population which is on the rise. We are increasing our vehicle population at 3% a year. Even in our main arterial roads, like the CTE and the PIE, there is a lot of congestion, especially at the Braddell Road exit. Although we are building a lot of underpasses as well as flyovers, we are still facing a lot of congestion. Can the Ministry look into this as well?

3.15 pm

Mr Wee Siew Kim: Sir, in Singapore, three out of every four public transport passengers use the buses. Close to three million trips are made on buses every day. The top three complaints are long waiting time, slow travel time and crowdedness. The main culprit is adverse road traffic condition. More than 70% of the time

it prevents buses from travelling on schedule. Less than half a percent of all buses leaves their terminals, deviates from their schedules by more than 10 minutes, but by three quarters into their journeys, almost 20% of these buses suffer a deviation of more than 10 minutes.

In the last five years, our bus lanes had been reduced from 120 kms in year 2000 to 113 kms today, and bus speeds had fallen by 10% from 19.3 kms an hour to 17.5 kms an hour. We must give more road priority to buses since they are used by the vast majority of Singaporeans. Can I ask the Minister what measures are there to improve travelling conditions for buses?

Bus Fares

Mr Chiam See Tong: Sir, I have only one point to make and that is to ask whether the Minister is agreeable to recommend to the transport company to reduce the one flat rate for feeder bus services and the LRT. I understand that the feeder service is now charging 80 cents per passenger and for a transfer passenger, it is 65 cents. In the case of the LRT, it is 90 cents flat. This is unfair for people who want to catch only one stage of the travel, especially for workers who have got two or three children and they wish to travel only one stage. If the fare could be reduced, say, for the LRT from 90 cents to 60 cents, for a worker with three children, he can save as much as $1 per day. This certainly will be a great help to him. I wonder if the Minister is agreeable.

Wheelchair-accessible Buses

Mr Ang Mong Seng (Hong Kah): ( In Mandarin ): Sir, in order to look after the handicapped people, the Ministry of Transport has announced that all buses will be fitted with wheelchair ramps to enable wheelchair-bound commuters to board and alight from the buses. When this news was first released, these people were very happy and appreciative. However, when the details were announced, they had the following worries:

Firstly, at present, there are 3,500 buses and the bus company needs 17 years before they could complete the fitting of wheelchair ramps to all the buses, and they are going to be manually, and not mechanically, operated. So, whenever they board or alight from the buses, the bus drivers will have to get down from the bus to help them, and the whole process will take three minutes. During the peak period, this would cause delay to other commuters and traffic jam. I hope that the Ministry of Transport will consider asking the bus company to fit the buses with automatic or mechanically-operated ramps so as to improve efficiency.

Secondly, during the long period of 17 years, some buses may be fitted with this facility and others may not. On some routes, there will be buses with this facility, while some will not. This would cause confusion and inconvenience to the handicapped people. Since the Government is allocating $21 million to help the bus companies make the buses wheelchair accessible, may I suggest that, during the interim period, some 10% or $2 million be set aside to enable voluntary welfare organisations for the handicapped to purchase a number of mini-buses to transport the handicapped people, and taxi drivers who transport handicapped people be granted some form of concessions, until such time when all the buses are fitted with wheelchair ramps. I hope the bus companies will accelerate the process of fitting these wheelchair ramps. This should be completed in seven years, not 17 years.

School Buses

Dr Tan Cheng Bock (Ayer Rajah): I move this amendment to ask the Minister what is the Ministry's stand on seat belts to be made compulsory for primary and kindergarten buses. I heard over the radio that the Ministry is reviewing the case. There are two issues here, question of cost and question of safety. I think safety has a higher weightage over cost. So I am wondering when the Ministry is going to review. There are only two issues, very straightforward, and the Ministry should quickly make a decision for our parents who are now very concerned. Recently, Members must have read in the papers about a school bus which overturned. Fortunately, no students were injured. But this has created a lot of awareness among parents on the importance of seat belts in buses, especially for kindergarten children. So I am hoping that the Ministry will quickly come up with some answers and do not just keep the parents waiting for a reply.

Certificate of Entitlement

Dr Wang Kai Yuen (Bukit Timah): Sir, since its implementation in 1990, the Vehicle Quota System (VQS) was reviewed only once when Mr Mah Bow Tan, the then Minister, appointed the VQS Review Committee in November 1998. The Committee was chaired by Mr Chay Wai Chuen, with Dr Michael Lim as Deputy Chairman. The other Members were Mr Goh Chee Wee, Dr Tan Cheng Bock, Prof. Toh See Kiat, Mr Yeo Guat Kwang and Mr Ong Ah Heng, all very eminent Members of this House. The Committee submitted its report in March 1999. The report recommended that the merger of the then four car categories into two, namely, Category A and Category B, a recommendation accepted by the Government.

In coming to that conclusion, the Committee recognised that, from the transport point of view, there should only be one quota category for all vehicles, in particular for cars. However, since the Committee was concerned that those who can afford bigger luxury cars will outbid the smaller car buyers, it proposed that the merger of car categories be done gradually. Thus, the recommendation of the Committee back in 1999 was supposed to be an intermediary step. Apparently, the Committee felt that ultimately, there should be only one car category while recommending that the Open Category be maintained. In my view, the Committee's recommendations are sound.

Sir, since 1999, we have experienced several business cycles. LTA has adjusted the number of quotas for the vehicles. The demand for cars has also changed with time. In fact, over the past 12 months, the quota premiums of the two categories, Category A and Category B, tracked each other very closely. With the price of oil hovering around US$60 with a little chance of coming down, the desirability of gas guzzlers has dropped while the demand for fuel efficient cars has increased, so much so that, in fact, over the past year, Category B premiums are often-times lower than that of Category A. In extreme cases, it was $4,398 lower in January 2005, and in December 2005, it was $3,080 lower.

Sir, the concern that luxury car buyers would squeeze out the smaller car buyers seems to be misplaced. In fact, it turned out to be the other way round that the big car buyers are now being protected by the quota system. If anything, the segregation of the Vehicle Quota System builds in distortion in the allocation of car quotas as buyers adjust to the changing driving habits, fuel costs as well as awareness of global warming. Therefore, the VQS, as implemented today, does not encourage Singaporeans to buy smaller cars which are more fuel efficient and more environmentally friendly.

Sir, I urge the Minister to constitute another review committee to see whether it can merge the two categories into one.

The Minister for Transport (Mr Yeo Cheow Tong): Sir, let me thank Members who have spoken on my Ministry's budget. I thank them for their views. Let me now proceed to answer the points that were raised. Mr Ong asked about the outcome of the vehicle growth rate review. Since the introduction of the VQS in 1990, our vehicle population growth rate, as Mr Ong stated, has been set at 3% a year. The rate was last reviewed in 1999, when we decided that it should be maintained at 3%. My Ministry has completed its latest review, and we have agreed and decided to retain the vehicle growth rate also at 3%, but only for the next three years. In reviewing the growth rate, we took into consideration our ability to further expand the road network, the traffic conditions on our roads, the extent of road charging, the planned development of public transport infrastructure and the need to allow more people to fulfil their aspirations to own cars.

Sir, the vehicle population grew by 44% from 1989 to 2005, a period of 16 years, while the road network only expanded by 17%. Although the roads are fairly free flowing today, Members will agree that the traffic has definitely become heavier over the years. We have controlled congestion through the use of ERP, coupled with road expansion and improvement works. This has resulted in better utilisation of the overall road network capacity.

Sir, however, our road expansion will slow down in the years ahead as we become more built-up, especially in the city areas. We envisage that, at the most, our roads will increase by another 8% over the next 15 years, half the rate of the previous 15 years. Having weighed the various considerations, we have decided to maintain the vehicle growth rate at 3% for three more years. We will monitor the impact on traffic conditions closely and we will review the rate again in 2008. But I would urge Members to realise that in view of our land constraints, it is not possible to maintain the 3% growth rate indefinitely.

Sir, Mr Ong asked what is the COE quota for the coming year. I am pleased to inform him that the total COE quota for 2006 is 131,127. This quota is just marginally lower than the original quota announced for quota year 2005, which was 132,581. The reduction is due mainly to a lower number of adjustment to COEs introduced for this year.

Mr Ong also expressed concern that the KPIs for expressways seem to be declining. Let me explain. The KPI is an average figure derived from both the morning and evening peaks. Therefore, his observation that the KPI for expressways has dropped is correct. This is because the ERP system is managing the morning peak traffic very well. However, the traffic situation during the evening peak has been deteriorating. I am sure many motorists, including Members here, would have also experienced this. The percentage of expressways with speed above 45 kph in the morning peak was 100% in FY03 and 99.1% the following year. On the other hand, the percentage for the evening peak period has fallen from 98.8% in FY03 to 96.8% in FY04. This is quite a big drop. Overall, this has led to the average KPI declining. So without the ERP on most expressways during the evening peak, we can expect the average KPI to further decline in line with the growth of our vehicle population. That is why on 1st August 2005, we implemented the ERP along the north bound CTE during the weekday evenings, from 6.00 pm to 8.00 pm. Since the introduction of the evening ERP, traffic speeds along the north bound CTE have definitely improved. LTA will therefore be studying how to improve the expressway speeds during the evening peak.

Sir, Mr Ong also commented that while 95% of the expressways are above 45 kph, the other 5% are below the threshold and a motorist would be unhappy if he is caught in the 5% of the expressway every day. I would like to explain that the traffic speeds are measured during the peak hours over the entire stretch of all our expressways. Even for the stretch within the 5%, the traffic speed is only marginally below the optimium speed range, ie, from 40 kph to 44 kph. Otherwise, the ERP would have been increased. Since the average motorist's journey would go beyond the affected stretch, he will be driving along stretches which are quite

free-flowing and he will hit certain stretches that are congested. And since 95% of the roads are quite free-flowing, that 5% would only constitute a small part of his entire journey.

3.30 pm

Mr Ong suggested colour-coding roads according to their travel speeds to better manage traffic jams. Sir, the colour-coding of roads according to different levels of congestion is already being done in the form of an interactive map on the one.motoring website. The different colours represent the different speeds the road will be operating at that point in time. Therefore, we would encourage motorists to consult the map before they start their journey. But for motorists along the road, LTA currently makes use of the electronic signs above the expressways to convey information on the on-going traffic conditions along the expressways and some major roads. I agree with Mr Ong that the messages could be more informative and helpful, especially in giving motorists an estimate of the time it will take them to clear the traffic congestion. I will ask LTA to follow up on Mr Ong's suggestion.

Sir, Mr Ong may also like to know that LTA is working with interested service providers to make traffic information available to motorists on a personalised basis, ie, the driver can find out exactly what to expect while he is driving, about the traffic conditions on the roads that he is going to be travelling on. Whether such a service will eventually be available will depend on the demand and, hence, its viability. This is because the service provider will have to make some investments and will therefore have to charge for such personalised information.

Mr Ong also asked how LTA and the Traffic Police manage public events. When there is a major public event that is being planned, the current procedure requires the organisers to consult the relevant agencies, ie, LTA, Traffic Police and others, to identify the impact on road users and to implement the appropriate mitigation measures to minimise the impact. This would include traffic control plans at key road junctions and advance publicity of the event so that the participants and the general public are aware of the event and the potential traffic impact. Motorists are also advised to use alternative routes. I think Members would have noticed in recent months that there have been a lot of advisory messages on our signboards. I can assure Mr Ong that LTA will continue to work closely with the Traffic Police and event organisers to manage public events so that they do not congest the island too much.

Sir, on green vehicles, Mr Ong has observed that the hybrid cars are still more expensive than conventional petrol-driven ones, and they are not that convenient to use because of lack of fuel points. As Members are aware, the Ministry of the Environment and Water Resources (MEWR) has been enhancing the incentives for green vehicles. From 1st January this year, buyers of new hybrid cars can now enjoy a tax rebate equivalent to 40% of the car's open market value, an increase from 20% previously. This further narrows the cost differential between the green cars and the conventional ones. With the enhanced rebates, the annualised total cost of some green vehicles is similar to, if not lower than, those of conventional cars. But even though their upfront prices may be a little bit higher, green vehicle owners enjoy savings in fuel costs. Green vehicles tend to be more expensive than conventional ones as they do not enjoy huge economies of scale at the present moment. But I think this is likely to change in the years ahead.

Firstly, more people are becoming more environmentally-conscious. Coupled with high oil prices, more motorists are therefore likely to go green. As a result, car manufacturers are responding with a greater choice of hybrid and other green vehicles. We are hopeful that more environmentally-conscious Singaporeans will also find green vehicles more attractive in time to come, especially if fuel prices remain high. My Ministry will continue to work with MEWR to continue to monitor the developments in the green vehicle market and to review the policies on a regular basis.

Sir, Mr Wee Siew Kim asked for more competition between the different modes of transport in the public transport sector. Now I know why he was so interested, being on the Board of SBST. Yes, I think it will help SBST if there is more competition. Definitely. But I think we have to look at it on a national basis. We have, as a nation, invested a lot of money on our MRT lines, and we owe it to the people from whom the funds came from that we optimise the use of our MRT system. That is why we have regulated the PTOs to ensure that there is minimal duplication of services along the parts of Singapore where the MRT line runs. But it does not mean that everything is cast in stone. There are some places where the MRT lines are already operating near to maximum capacity. At those places where the MRT lines are already quite fully utilised, I think there is scope for us to introduce bus services to complement the MRT services, and I will ask LTA to examine that.

Sir, Mr Ong Kian Min asked about the priority measures to smoothen bus travel, and I think Mr Wee also asked about that, ie, the congestion on the road does not allow the buses to keep to their schedule. So what are we doing to help smoothen the bus travel? All bus systems in heavily built-up cities face the same problem of variable arrival times at the bus stops and bunching of buses due to congestion. Therefore, our experience in Singapore is not unusual or unique. To improve the general traffic flow, LTA will continue to carry out road improvement works, such as road widening where space is available, and improvements to the junctions and traffic light timings, etc. It will also work with PTOs on various traffic schemes to improve the reliability of bus services. The most common and effective one, which Mr Wee also mentioned, is the provision of the dedicated bus lanes along heavily-used roads during peak periods. Another measure is the "B" traffic light signals which ensure that buses are given priority at suitable traffic light junctions. These "B" signals go green before the rest of the usual traffic light, and therefore the buses are able to move off before the rest of the traffic. This allows the buses a head start, to weave through the different traffic lanes, especially if they have to cross the road to make a turn later on.

Sir, as an example of the new approach that LTA has taken, LTA conducted a trial for a full-day bus lane along Orchard Road recently. This helped to improve bus speeds by 15% from an average of 13 kph to 15 kph. As a result of the positive results, we will be implementing full-day bus lanes permanently along Orchard Road. LTA will look into the feasibility of extending this to other roads. LTA will also be deploying traffic wardens to ensure that bus lanes are kept clear during operational hours, complementing the Traffic Police's efforts of enforcement against illegal parking in the bus lanes.

Sir, Mr Ong talked about his happy experience in London as a student when he was able to use the heavily subsidised concessionary passes. I would not join Mr Ong in extolling the virtues of the London system. This is because the low concessionary fares enjoyed by Mr Ong was a result of heavy government subsidies. The financial subsidies to cover operational deficits in London continue today, but it is under better control because the operation of buses and the maintenance of trains have been contracted out to private operators who undertake to manage the system more efficiently. But they are still running at a big loss and, therefore, have to be subsidised.

Let me give an example. Last year, the subsidy for the London bus operations alone amounted to S$1.65 billion and the subsidy for the London Underground system amounted to S$2.25 billion. These are huge figures. But they were even much higher before. In Singapore, the Government is committed to helping low-income earners. This is well reflected in the Prime Minister's announcement in his Budget Statement of the $2.6 billion Progress Package. As Members know, we also have a host of financial support measures for low-income earners. In addition, MCYS adopts a many-helping-hands approach by partnering VWOs and community organisations, such as the CDCs, in reaching out to identify those genuinely in need of help and reaching out to help them. This system of general assistance focused on the low-income earners is a better way, instead of giving out subsidies to the entire population or by targeting subsidies at particular services. This allows recipients' discretion on how to use their financial assistance; it also prevents distortion of consumption patterns and avoids misallocation of resources. To take Mr Ong's example, I think it is better for us to provide financial assistance to his lower-income worker living in Tampines and let him decide whether to spend it on additional transport costs by taking a job in Tuas on the other side of the island, or to use the money on worthwhile things, such as a computer for his children.

This way, we neither distort his travel patterns nor his needs. But when special circumstances require additional help to be given, we are ready and able to rally such support. For example, when transport fares were increased last year and the economic outlook at that time was still uncertain, the transport operators, together with the community organisations and the unions, were able to provide additional financial support targeted at the lower-income groups. But this should be one-off measures to tide the lower-income earners over a difficult period and should not be relied on as a systemic or on-going measure.

Sir, Mr Ong lamented about the reluctance of the PTOs to widen the use of travel concessions and season tickets. These are granted by the PTOs to various groups of individuals, such as pre-school children, students and senior citizens, to help lower their cost of travelling. These concessions remain the prerogative of the PTOs, and they are actually cross-subsidised by the majority of full-fare-paying commuters. The PTOs have, therefore, been very prudent about extending the travel concessions beyond the present groups, as it would ultimately result in other commuters paying higher fares.

Sir, Mr Ong also talked about Tuas. First, let me assure Mr Ong that Tuas today is already adequately served by public transport. There are now four public services serving Tuas with a total fleet of 41 buses, and they link Tuas Industrial Estate to Boon Lay MRT Station and the Boon Lay Bus Interchange which are located together. SBS has planned its bus schedules to match the ridership, which is concentrated during the morning and evening peaks, with very low demand during the off-peak period. PTC has periodically checked and found that the bus services to Tuas are quite adequate. By 2009, the public transport to Tuas will further improve when we have completed the Boon Lay Extension. This will extend the East-West MRT line westward into the Jurong estate into the Joo Koon Circle area. There will be a new MRT station and bus interchange there. Workers will find it a lot more convenient and accessible when the facility is ready.

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Sir, Mr Ong suggested that we

carve Tuas Industrial Estate out of the Universal Service Obligation (USO) and allow other players to come in to provide mini-bus services. We have actually considered this before. Our conclusion is that this is not likely to lead to better service level at today's fares. This is because the bus ridership pattern is very peakish in Tuas, like in most industrial estates, and the travel time also coincides with travel time elsewhere, ie, whoever operates there cannot be using free capacity freed up because the buses are lying idle, and therefore be able to offer a low-cost service.

Sir, without the USO, the bus operators will only ply during the peak hours, with very little coverage during the off-peak hours, in fact, little or even no coverage. Also, the bus operators operating mini-buses may not be able to enjoy the same economies of scale as SBS and SMRT do. So, in short, the workers in Tuas may be worse off than today, as there will be no guarantee that fares will be the same or lower than the current level, and the service may not be available throughout the day.

Sir, I must admit that the employers in Tuas do face a bigger transport challenge and, therefore, the workers there face a bigger transport challenge than many other places in Jurong. For example, the travel time for bus commuters can be very long, in view of the sheer physical size of Tuas. Let me give an example. The four bus services that ply Tuas Industrial Estate take between 50 minutes to more than one hour just to go from the Boon Lay Bus Interchange to the end point of their service in Tuas, that means, that one-way trip can take almost an hour or more. This makes it less attractive for our workers to work there and, therefore, employers there have had to compensate them in some other ways for this inconvenience. Some employers pay a higher salary. Others offer a dedicated company bus shuttle for their employees because these shuttle services are faster, they are more direct and flexible, and can be customised to cater to their special work arrangements, like their shift hours.

Sir, at the end of the day, the employment market in Singapore is an open and competitive one. Workers who are structurally unemployed will need to be re-trained for the jobs that are available, whether these are in Tuas or elsewhere in Singapore. And employers will need a competitive remuneration package if they wish to attract the right worker, in keeping with the demands of the job, their workplace, and the skills required. This applies definitely to employers in Tuas too.

Sir, let me now move on to the points made by Mdm Cynthia Phua. She asked about the quality of service, whether we are setting QoS standards which are relevant to the commuters. The existing QoS standards, which were first developed in 1994, have been evolving in tandem with the service demand and the increasing expectations of commuters. To this end, PTC recently reviewed the existing standards, and they have come up with a new set. The revised set is now being refined by the PTOs for implementation later this year. The existing bus standards used to measure averages over a period of time, usually on a per week or per month basis. This does not really reflect the everyday experience very well. The new QoS standards will be more sensitive to individual incidents of, for example, overloading and long waiting times, and will better reflect the experience of commuters. One of the things you can measure, for example, will be how the individual bus services comply with the scheduled headways. At the moment, we lump them altogether, so it all looks very good. But there could be a few services that are actually having a very poor compliance. This will allow PTC now to identify exactly where are the problem areas.

Mdm Cynthia Phua also asked whether we benchmark. Sir, yes, we do benchmark the operators regularly to ensure that they offer a quality service that is convenient, efficient and affordable to Singaporeans. Sir, let me explain how they have measured up.

First, we do opinion surveys. The opinion surveys showed that the vast majority of the public is satisfied with our public transport system. That is the silent majority. The survey showed that more than 80% of the public respondents agreed that Singapore's overall land transport system provides adequate choices, and is well-integrated and efficient. In addition, our system is also rated very highly by foreigners when compared to Hong Kong, London, New York, Paris and Tokyo, which have very good and well-developed public transport systems.

Besides the surveys, LTA also carries out benchmarking, which I have mentioned, and let me go into this. The four areas of benchmarking are: firstly, system utilisation, which measures how well the assets are used to generate revenue, without compromising on service quality and safety; secondly, fares, which give an indication of cost to the commuters and affordability; thirdly, productivity, which refers to how efficiently the resources are being used; and fourthly, financial performance, which in our case is important because, unlike most other cities, we do not subsidise operating cost of the operators.

Sir, when compared with 10 rail and 10 bus operators from cities in Asia, Europe and North America, our two operators, SMRT and SBS, came up amongst the top in each of these four areas. For example, SMRT's rail system was consistently ranked the top three in the KPIs. For buses, the KPIs showed that SMRT Bus and SBS Transit came in either first or second in the KPIs. In terms of fares, which are normalised using the purchasing power parity or gross national income per capita for comparability, Singapore's public transport fares are amongst the lowest.

Sir, our strong ratings are an affirmation of the quality of our public transport system and the operators. But I think our challenge is not what happens today, but how do we keep pace with the rising commuters' expectations. My Ministry, together with the PTC, would therefore continue to engage the key stakeholders to ensure that we continue to have a public system that serves the needs of most Singaporeans and that remains affordable.

Sir, Mdm Cynthia Phua also asked how do we make sure that the PTOs do not just ask for fare revisions but use their reserves to reduce fares. Sir, let me clarify that, as the KPIs have shown, our system is among the most cost-effective and most affordable. This is well borne out by the past fare adjustments. Let me give her some data. If you look over the past 18 years, wages have gone up by an average of 182%. Our fares have gone up by only 17% for the buses and only by 33% for the MRT. That is because we deliberately kept the MRT fares very low for the first couple of years when the MRT started.

So I can say that the bus operators have done our commuters a world of good, by keeping their operations very efficient and by keeping the fare increases very low. So are they having an overly high rate of return? The answer is no. Actually, their rate of return has been very modest. I do not have the figures here but the rate of return is in the region of about 4%-6%, which, I think, for an operation with such an heavy capital investment, these are quite modest figures, as I am sure, Mdm Phua, being from the private sector, would appreciate.

Mdm Phua asked about traffic congestion along Braddell Road. I would advise her to communicate with LTA and we will look into it.

Sir, now, let me move on to Mr Chiam's questions. He has asked for the feeder service fares to be reduced. He quoted a fare of 90 cents for the LRT and 80 cents for the trunk service. Actually, the feeder fare is exactly the same as the fare for the trunk bus services. That means that for the feeder fares and the LRT fares, for people with the ez-link cashcard, the fare is 64 cents today, not 80 cents or 90 cents, as quoted by Mr Chiam. But if they pay by cash, the cash fare is 90 cents, and this is the same for both feeder services as well as for the trunk services. The cash fares are higher. For those who do a transfer, they enjoy a 25-cent rebate, that means those who take the feeder bus, they pay 64 cents, but when they transfer, they get a 25-cent rebate from that 64 cents. So, in actual fact, they pay only 39 cents. So the fares are already very low. And the advantage for those on the feeder services is that it is a flat rate. So even though they may travel a longer distance than the first bus fare band, they do not have to pay additional fare, like what those passengers on the trunk service have to pay. I think they are already treated very well, and they are paying a lot lower than what Mr Chiam had feared.

Sir, Mr Ang Mong Seng talked about wheelchair-accessible buses. Sir, let me assure Mr Ang that the pace of introduction of the new wheelchair-accessible buses is already very rapid. There is no way that we can change all the buses today, because it would be very wasteful. To try and retrofit the ramps on existing buses would also be very costly. What we are doing is we are going to fit the new buses as they come in with the ramps. The figures show that about 40% of the entire bus fleet will be replaced by those with ramps in the next five years. This works out to about 1,500

buses. We will be introducing 1,500 buses with ramps over the next five years.

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Sir, LTA is working with the bus operators and the relevant VWOs to ensure that we have an effective deployment or plan for the limited number of WABs for the initial years. We will also enlist the help of the VWOs to publicise the bus services where these buses are being deployed. Every WAB will have a special wheelchair label prominently displayed at the front of the bus for easy identification so that the wheelchair-bound riders would know which bus to get on to.

The Chairman: Mr Yeo, you have to give enough time for the other replies.

Mr Yeo Cheow Tong: Dr Tan Cheng Bock asked for seat belts to be required on school buses. Sir, if Dr Tan had been here a few days ago, he would have been able to take part as this was raised and debated. Sir, let me assure Dr Tan that LTA is reviewing this and we will have the decision in due course. We will definitely and carefully balance the need for safety versus the cost impact.

Sir, Dr Wang Kai Yuen felt that the current segmentation of categories A and B distorts the allocation of car quotas and it is timely now to amalgamate them into one. Sir, I think the rationale for the current segmentation is still relevant today. The conversion of the COE prices for the two categories in recent years means that actually there is no great benefit to merging them now. There may be a variation of a few hundred dollars, usually. The times when the gap was so big, I think, are very rare. This is because it is hard for us to predict the future preferences for car sizes. For example, consumer preferences may change as fuel prices move up or down, or as big cars become more fuel-efficient, driven by the high fuel prices. More importantly, if the economy booms again, on a sustained basis, the demand for bigger cars may grow. As such, I think preserving the separate categories will safeguard the interest of smaller car buyers and there is, therefore, no immediate need to merge them. But let me assure Dr Wang that my Ministry will continue to monitor the trend and take his views into serious consideration should the recent trends of lower category B prices persist over the long term.

International Maritime Centre

Mr Ong Kian Min: Sir, on sea transport. We achieved good port and maritime growth in the year 2005, setting new records in areas like shipping tonnage, container and cargo throughput and bunker sales. Efforts to grow Singapore as an IMC have also gained momentum. I am especially pleased to note MOT's and MPA's continued efforts in reviewing and fine-tuning existing incentive schemes and introducing new ones, where appropriate, so as to be responsive to industry needs. For instance, as Prime Minister and Minister for Finance announced in the Budget Speech last week, the Government will be introducing a Maritime Finance Incentive Scheme to encourage the development of ship financing activities in Singapore. As for the Approved International Shipping (AIS) scheme, the maximum incentive period for qualifying companies will be increased to 30 years from 20 years previously.

I would like to ask the Minister for an update of the performance of our port and maritime services cluster. Sir, in promoting and providing incentives for new activities in this cluster, I hope we will not neglect the traditional players and the small and medium enterprises in our maritime sector.

Mr Andy Gan Lai Chiang (Marine Parade): I remember some years back seeing the loading and unloading of cargoes at the wharf of the port at Tanjong Pagar. Movements of cargoes involved a lot of manual labour and most of Singapore's early migrants found employment opportunities there. Many shipping lines from all over the world called at the port and the economics evolved around it. However, when it came to complex shipping laws and ship financing, as well as insurance, London was the ideal choice for shipowners and those working in the maritime industry. To develop Singapore's international maritime status, the Singapore Maritime Foundation was set up on 5th March 2004. This was established with the assistance of the MPA, with funding from the Government. The SMF is a public-private partnership set up to serve as a forum for the Singapore maritime industry players to exchange ideas, proposals and projects, which the MPA would then follow up with the relevant Government agencies to bring these ideas to fruition. In short, the SMF will serve as Singapore's maritime ambassador, partnering MPA, in promoting Singapore.

I would like to ask the Minister on the result of these initiatives, in particular the following: who are the new shipowners and operators that we have attracted to Singapore since 2004? What are the milestone achievements of the Singapore Maritime Foundation so far and how will the IMC help to strengthen the economic growth of Singapore and place the country firmly on the shipping map of the world?

The Senior Parliamentary Secretary to the Minister for Information, Communications and the Arts (Encik Yatiman Yusof): Sir, Singapore is known as among one of the biggest and busiest ports in the world. We succeeded in becoming among the best by not only exploiting our geographical location, building our strength from an entrepot trade by plugging ourselves into the world economy and using every opportunity presented to us to make ourselves relevant to the world, but also in applying modern technologies and the latest management philosophies.

We are now in the process of enhancing our standing by making Singapore an important international maritime centre. To achieve this, we used a three-pronged strategy. First, we have to attract a core group of shipowners, operators and managers, to base their operations in Singapore. Second, we need to develop the breadth and depth of maritime ancillary services. Third, we have to enhance the operating environment for the maritime business through conducive and responsive regulatory and fiscal policies.

However, as in other business enablers and service providers, our objective can only be achieved if we are able to convince the shipowners that, apart from the conveniences offered, they stand to benefit financially by coming to Singapore. This means that Singapore must also offer financial incentives, develop our manpower capacity and market our services world-wide. In this connection, I would like to ask the Minister the following questions.

First, to what extent has MOT succeeded in creating the conducive fiscal environment so that more shipping and insurance companies and more shipowners will use Singapore as their base? Second, our approach to manpower development to meet the projected growth in this sector seems to be based more on the demand side. We work hard in stimulating growth for this sector and then work towards providing the manpower needed either by bringing in talent and expertise from abroad or training them locally. The problem with this approach is that it may put our people at a disadvantage as there is always a time lag between the increase in demand and our ability to provide the local manpower. As we may take some time to train our people, an increase in demand for workers in this industry will encourage companies to opt to headhunting or hiring ready-made talent and expertise from abroad, thus depriving our locals from benefiting from it.

May I ask the Minister what plan his Ministry has in ensuring that the setting up of the International Maritime Centre would also provide Singaporeans with a fair share of the employment opportunities? What lesson can we learn from other more successful ports in the world in providing the manpower requirements for their IMC and in marketing our services?

The Chairman: Mr Wee Siew Kim, you have two cuts. Take them together. Total of two minutes.

Mr Wee Siew Kim: Sir, three years ago, MOT announced a plan to develop Singapore into an international maritime centre. Financial incentives were announced. I have heard good things about the Approved International Shipping Scheme. I hope the Minister could describe the progress and contributions made so far to our local economy.

There was also a slew of initiatives that accompanied the IMC development. One was the move to attract shipowners to register their ships in Singapore. Another was the development of locally trained talent. I have heard that we face an increasingly difficult task attracting our young men and women to a sea-faring career. Have we made progress on these two fronts? Also, we should make it more attractive for shipowners to build and finance ships in Singapore. It benefits both our financial services as well as our shipyards. Can the Minister also share his thoughts on this?

Lastly, what does the development of the IMC mean in terms of port competitiveness, job creation, GDP growth and to Singapore's stature?

Port Capacity

Sir, it is commendable that the Singapore port achieved a new record for container throughput, shipping tonnage and bunker sales in 2005. As a sign of our confidence, and the bold steps that we are prepared to take in order to secure our place as the premier port of the world, Singapore will increase its total capacity to about 50 million TEUs by around the year 2018 when all the berths at the Pasir Panjang Terminal are operational. This is about double today's capacity. The spin-offs to the economy are well-known. Just several years ago, we were rocked by the departures of Maersk and Evergreen. 2005's performance certainly provides relief that we have not only recovered but actually pulled way ahead. However, there should never be a moment of complacency as so much is reliant upon our port doing well and growing. Can I ask what new strategies and additional measures are being implemented to ensure that we stay ahead of our competition and can the Minister give us an outlook of the challenges and opportunities ---

The Chairman: Mr Wee, your time is up.

Sea Ports

Mr Andy Gan Lai Chiang: Sir, in August 2000, the Port of Tanjong Pelapas enticed away from the Port of Singapore Authority, Maersk Sealand, which was once Singapore's largest operators. In 2002, Evergreen Marine Corporation, then the world's second largest shipping company after Maersk, shifted its operation from PSA to PTP. These moves are not the only threats to our ports as there are others in the region as well as Hong Kong which are ready to replace PSA as the premier port.

During a tour around PSA last year, I saw the hive of activities at the container port. I was impressed with the improvements done to enlarge the port handling capacity and improvements made to the efficiency of the port operation. I was thus not surprised that for the first month of 2006, PSA overtook Hong Kong as the No. 1 container port in the world. As competition remains high, our port must continue to be sensitive to the needs of shippers so that it will work as a partner with them to serve their customers whose cargoes need to be delivered safely and timely.

Could the Minister inform the House whether PSA has repositioned itself further to attract more shipping lines to Singapore and what are the measures taken so far? Has the unsuccessful venture to purchase P&O ports affected PSA's ability to expand its operation world-wide?

The Minister of State for Transport (Mrs Lim Hwee Hua): Mr Chairman, Sir, I would like to thank the many MPs for their questions and suggestions on our maritime and port sectors. I will now provide an update on our performance as well as what the Ministry is doing to remain competitive.

First, let me begin with the Port, which is an essential pillar of our International Maritime Centre (IMC).

Sir, Mr Andy Gan asked about PSA's performance. The departures of Maersk in 2000, and Evergreen in 2002 were, indeed, lessons well learnt. Since then, PSA has enhanced its competitive position by continually restructuring cost, raising productivity and, most importantly, responding proactively to its customers' needs. Their efforts have resulted in tangible achievements.

Between 2001 and 2005, PSA's throughput increased by some 40% and PSA has just reported a healthy profit of over S$1.2 billion for the financial year 2005. The Singapore port operations, which contributed the majority of the group's profit, registered a strong increase of 21%.

Sir, we have retained our position as the world's busiest port by vessel tonnage, with total tonnage rising 10% to 1.15 billion gross tonnes. Singapore is also the top bunkering port with bunker sales growing 8% to reach 25.5 million tonnes, double that of our nearest rival. And, notably, Singapore overtook Hong Kong to regain the position as the world's busiest container port, having lost the lead since 1998. The Singapore port itself handled 23.2 million TEUs of containers in 2005. Our throughput growth of almost 9% compares well with the 2% recorded by Hong Kong, 4% by the Port of Tanjong Pelapas and 6% by Port Klang.

If world trade continues to boom and fuel container shipping growth of about 6% per year, we estimate that throughput will probably double in about 12 years' time. For planning purposes, we have therefore made preparations for our ports to have the capacity to handle 50 million TEUs by 2018.

Sir, despite our favourable market position, we cannot take our customers nor our good performance for granted. Regional ports are competing hard to increase their share of the container transhipment business. It is therefore critical that the Marine and Port Authority of Singapore (MPA) and our port operators work hard to remain competitive. To ensure this, we have adopted three main strategies.

First, we must continually build on and improve our port infrastructure to meet the needs of shipping lines. As mentioned, we are doubling capacity by 2018. Besides reclaiming more port land at Pasir Panjang Terminal over the next few years, we are also looking at a number of options to raise capacity beyond the expansion of Pasir Panjang Terminal to meet the longer term growth needs of our ports.

Second, we need to ensure that we maintain our edge in operational efficiency, connectivity, as well as cost. For instance, Singapore has launched an integrated platform called the TradeXchange that will provide a single common access to existing trade systems, such as

TradeNet, Marinet, PortNet, from October next year.

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Third, our terminal operators must continue to keep in close touch with their customers and remain responsive to their needs. For example, more shipping lines are now keen to co-invest in dedicated terminals to gain assurance of capacity. Our port operators must allow for this. PSA has already entered into joint ventures with major shipping companies like COSCO and the Mediterranean Shipping Company to operate dedicated terminals.

Mr Andy Gan also asked about the impact of the purchase by Dubai Ports World of P&O ports on PSA's internationalisation efforts.

Sir, P&O operates some 29 ports around the world with a strong presence in South Asia, Australia and the US. Acquisition of P&O would have helped PSA expand overseas in new markets amid growing competition in the industry.

However, as the bidding for P&O intensified, PSA, after careful consideration, decided that it would not be to its interest to make a higher counter-bid for P&O. There are still many opportunities in the global marketplace of ports. I am sure PSA will continue to be on the lookout for attractive projects to increase its international footprint.

On the Government's part, we will continue to closely monitor key industry trends, such as consolidation and vertical integration in the global port and shipping sectors. And where necessary, we will adjust and adapt quickly and flexibly to maintain our port's competitiveness.

Sir, let me now move on to the International Maritime Centre (IMC) itself. Mr Ong Kian Min, Mr Andy Gan and Mr Yatiman Yusof have asked about the progress of the IMC, and I am pleased to report that we have made some noteworthy progress.

Sir, shipowners and operators are the cornerstone of an IMC and they are the primary generators of demand for other maritime ancillary services, such as ship management, shipbroking, marine insurance, finance and legal services. Our fiscal incentive schemes, such as the Singapore Registry of Ships (SRS) and the Approved International Shipping Enterprise (AIS), are therefore designed to encourage a core group of shipowners and operators to set up here in Singapore, and both schemes have had some measure of success.

The Singapore Registry of Ships is now the fifth largest merchant fleet in the world with more than 3,200 vessels totalling 33 million gross tonnes flying the well-respected quality Singapore flag. This is an improvement from our seventh position and an increase of more than 40% since 2002.

Under the AIS, we have a stable of 68 international shipping groups. In 2005 itself, we registered a strong 50% increase with reputable global players like Norgas Carriers, Teekay Shipping and J Lauritzen joining our cluster. With more reputable names in our maritime fold, our cluster has increased in prominence. AIS companies have committed to generate business spending in excess of $2.5 billion annually.

It is therefore fitting that the Minister for Finance should announce in this year's Budget that the AIS scheme will be extended by a third 10-year term, bringing the maximum incentive period for qualifying shipping companies to a total of 30 years. This extension will provide shipowners and operators with greater certainty to develop their business in Singapore for the long term.

The surge in the Registry tonnage as well as the rise in the number of AIS participants can only mean multiplying effects for the maritime ancillary services. These are, however, uneven across the different ancillary services. Sir, there are some services which are sticky and more resistant to relocation to Singapore, which include financial, insurance and legal services. Nonetheless, the Government will continue to direct more efforts at attracting such services here by working closely with industry partners to identify gaps which we can fill.

Mr Wee Siew Kim asked about the promotion of ship financing structures. Singapore's growth as a base for shipping companies has also spurred the growth of ship financing activities here. We have already a number of major foreign ship finance banks, but with the slew of new buildings, especially from Asia-based shipowners and an already well developed financial sector in Singapore, there is clearly an opportunity for us to do more and aspire to be Asia's ship financing hub.

The new Maritime Finance Incentive (MFI) will target alternative ship financing structures such as shipping funds and shipping trusts. It provides tax exemption for ship investment vehicles and a 10% concessionary tax rate for ship investment managers. This incentive can bring ship ownership and investment beyond the traditional shipowners to institutional investors and even the investing public. Beyond just adding to the growth of our economy and, in particular, the financial sector, the MFI will make Singapore a more comprehensive one-stop location for all the stakeholders.

Since the Budget Speech announcement, I am glad to inform the House that we have received positive feedback and strong industry interest in this scheme.

Mr Yatiman Yusof also asked about manpower development. Indeed, this is an integral part of our IMC strategy. In 2002, the MPA had set aside $50 million over five years under the Maritime Cluster Fund to give maritime training a boost. To date, we have spent about $24 million on various manpower development programmes and tie-ups with universities and institutions. I would like to assure Mr Yatiman that these are opportunities open to both Singaporeans and foreigners.

Also, our position as a leading port and maritime centre can only be sustained if we build up capabilities in the area of commercial and technical research. To this end, MPA and NUS have set up the Centre for Maritime Studies to focus on research on maritime business issues in June last year. Maritime R&D received a further boost with the launch of the NOL Fellowship Fund to fund research in key transportation and logistics issues.

Sir, Mr Ong Kian Min raised a question on how our local shipping SMEs will fit into the plan to develop Singapore as an IMC. I wish to assure Mr Ong that both SMEs and global shipping groups are very important complementary components of our IMC strategy. SMEs in fact make up the majority of companies in the maritime services sector performing critical functions in areas such as ship agency and crewing, bunkering and ship chandling, just to name a few.

As the IMC in Singapore grows, SMEs will also benefit from the larger market and expertise brought in by international shipping groups. Singapore shipping SMEs are therefore well placed to grow into world-beating companies. One such example is Pacific International Lines (PIL).

Indeed, as we strive to develop as a world-class maritime centre, our aspirations must be greater than just being fast followers of others, but leaders in research, industry development and public-private collaboration and partnership. In this regard, the Singapore Maritime Foundation plays an extremely important role in terms of facilitating networking amongst different sub-sectors, profiling the industry as well as leadership in marketing and promotion efforts overseas.

We have the advantage, Sir, of being along a major maritime trade route between India and China, and in the heart of South East Asia with a first-class hub port and a growing and vibrant maritime community. Singapore is well known for being a predictable, efficient and quality business environment. These are qualities which appeal to the maritime business, given the capital intensive requirements and the long term and cyclical nature of the industry where players seek to minimise sovereign risk arising from the changes in tax or regulatory policies. Singapore would be well placed to be the maritime hub of Asia.

Air Transport

Mr Ong Kian Min: Sir, on air transport, I am pleased that, notwithstanding Changi Airport's record performance last year, the Civil Aviation Authority of Singapore continues to be proactive in anchoring airlines at Changi through various incentives. These include generous financial incentives for airlines, a dedicated Budget Terminal and upgrading of our existing passenger terminals, just to name a few. All these moves put us in good stead to capitalise on the rise of China and India, the growing trend of budget travel in the region and ASEAN's progressive move towards open skies.

Against this backdrop of liberal civil aviation policy and open skies, many Singaporeans are extremely disappointed, to say the least, by the Australian government's decision to defer Singapore Airlines' entry to the Pacific route. I would like to ask the Minister whether we had been misled by the Australian government officials during the negotiations on our Free Trade Agreement, the Air Services Agreement or otherwise and had given away too much. Secondly, had we gone out of our way to accommodate the Australian airline, Qantas, by granting it all the necessary operating freedoms in Singapore? Thirdly, what other ammunition or leverage do we have to force an opening of the Pacific route in the near future?

Sir, regardless of Australia's decision, I believe we should continue to adopt a liberal aviation policy to grow Changi's hub position and not succumb to the temptation to engage in a tit-for-tat. To protect our national carrier in the way Australia has decided to do would work to our detriment rather than to the benefit of Singapore's economy in the long term.

Air Rights

Mr Andy Gan Lai Chiang: Sir, in the Addendum to the President's Address in Parliament on 12th January 2005, the Ministry of Transport stated that it would push for freer skies and of special importance are the ASEAN countries, Australia and emerging markets like China and India. How are the plans progressing on exploring the possibility to negotiate for open skies agreement with these countries and others?

On Australia's rejection to allow SIA permission to fly beyond its eastern states to the United States of America, what is the Ministry of Transport's next move to overcome this set-back? This disappointing and inward-looking decision by Australia to block SIA from its Pacific route does not bode well for good business relationship between the two countries built up over years of goodwill and friendship. While Qantas and Jetstar have the right to fly to and beyond Singapore, this advantage accorded has obviously been ignored by Australia to the detriment of its bilateral relationship with us where fair play and free competition are the cornerstones of good economic relationship.

Singapore has given the fifth freedom rights freely while others seem to be guarding theirs jealously. Our generosity in offering the fifth freedom rights to Qantas has been taken for granted and unfairly taken advantage of, especially when half of Qantas' flights travel beyond our shores. It is noteworthy that Singapore is Australia's largest trade and investment partner in South East Asia. And in the year 2005, bilateral trade between the two countries was worth A$8 billion. Changi Airport's Terminal 3 refurbishment costing S$2 billion was designed by an Australian architect firm, Woodhead International. All these do not seem to matter when it comes to SIA seeking to fly and compete fairly along the routes from Australia.

Sir, I urge the Australian government to rethink its stand on blocking SIA from this route, as the flying public of both countries will benefit economically from having more choices of airlines and prospect of competitive fares.

Sir, I would appreciate the Minister's comments on these views.

Assoc. Prof. Chin Tet Yung (Sembawang): Sir, I am very indignant, not at our Minister for Transport or our Government, but at the Australian government and their Minister for Transport for turning down Singapore Airlines' air rights to ply the trans-Pacific route between Australia and the US. The manner in which it was turned down was also very suspect. According to Australian Senator, Kerry O'Brien, who is the Labour's spokesman for transport, there was no transparency. It was a closed-door review and it was described by him as "shambles".

The reasons given were far from convincing. Truss, who is the Minister for Transport, for example, said that it would be better to allow their own budget airline, Virgin Blue, to come in, and that would increase competition. Sad to say, Virgin Blue, as the name suggests, is still untried when it comes to flying the trans-Pacific route. Truss himself said that the carrier might be ready to fly in 2007. At the moment, it lacks planes; it has absolutely no infrastructure and it was last reported in the Australian that it was going to come up with a concept plan for flying this route. Qantas probably prefers competition of this type.

4.30 pm

Sir, I am sure that many Members of this House

have expressed their indignation at something which is anti-competitive, unfriendly and certainly inconsistent with the principles of free trade. It is remarkable that in February 2003 we signed the FTA, but in February 2006, they gave the FTA a slap in the face. I would like to ask the Minister very quickly whether he could get the decision to be reviewed as quickly as possible.

Changi Airport

Mr Wee Siew Kim: Sir, Changi Airport is thriving because of its efficiency, excellent connectivity and high standards of services by all service providers. However, competition is intensifying. Can I ask what are the hardware, infrastructure development and other improvement initiatives that will ensure the airport's competitiveness?

Having a vibrant aerospace service supporting industry is important. A growing pool of supporting maintenance companies would be beneficial as this would help to improve Changi's competitiveness as well as appeal to the carriers. Hence, may I ask the Minister if there is a multi-agency effort to ensure that there are adequate levels of incentives for companies to be set up as well as expand in Changi? While EDB and MTI are leading the charge in attracting more OEMs and service providers to Singapore, CAAS plays a role too. Here, there is a win-win possibility for Singapore-grown companies. They need a home market to cut their teeth and thrive and grow. Their commitment to Singapore is probably unquestioned and their presence reassuring. I would like to ask ----

The Chairman: Thank you, Mr Wee. Mr Yeo Cheow Tong, you have about eight minutes to answer all these questions.

Mr Yeo Cheow Tong: First, let me thank Mr Ong Kian Min, Mr Andy Gan and Prof. Chin Tet Yung for their remarks on our attempts to get an open skies agreement (OSA) with Australia. Sir, I fully understand and appreciate their strong disappointment over Australia's decision to continue denying SIA the right to fly the trans-Pacific route.

Sir, as Members are aware, we have been holding talks with Australia on the OSA for the last 10 years. Despite the delays and postponements that took place during this extended period, we have reasons to be confident, especially over the past three years, that we would be able to achieve progress on this. At the same time, the Government has, in good faith, unconditionally facilitated and encouraged the growth of Qantas Airways and its associate in Singapore, Jetstar Asia, at Changi Airport.

Mr Ong and other Members have asked whether we have been misled by Australia. Let me explain the developments in our discussion with our Australian counterparts. On more than one occasion, there were clear indications by senior Australian leaders that both sides would work towards concluding an OSA. Our understanding was that the issue was largely one of working out an acceptable roadmap for the OSA to be phased in, taking into account the impact on Qantas. This was in fact agreed between the then Australian Deputy Prime Minister, John Anderson, and I when we met in Canberra in February last year. This was also widely reported in the mass media. We had, therefore, in good faith, expected the Australian government to honour its words and were hopeful that this issue would be resolved within a reasonable timeframe. However, this latest decision suggests that the Australian government has abandoned any commitment to work towards an OSA with Singapore.

Sir, Singapore and Australia share very similar strategic and economic outlooks. We cooperate extensively in many areas, including education, trade, defence and security. We signed a Free Trade Agreement in 2003 which has augmented our trade relations and people-to-people flows. It was also affirmed in the FTA the commitment of both countries to achieve an OSA within a reasonable timeframe.

Sir, the bilateral relationship is therefore a close and mutually beneficial one. We are confident that it will strengthen in the years ahead. However, the absence of an OSA means that the full potential of this partnership may not be realised.

Mr Ong has asked whether we have done the right thing in being helpful and generous to Qantas in Singapore, and what leverage remains for us. As some Members have observed, we have already granted Qantas substantial fifth freedom rights in Singapore and no longer have this as a bargaining chip. But what we have done is the right thing. We must not lose sight of our main goals, which are to grow the Singapore economy and our Changi aviation hub. This means placing national interest over the interest of any Singapore carriers. SIA has had to compete openly against all the foreign airlines that we have opened our doors to. This policy has forced SIA to constantly improve its service quality, product offering in order to stay ahead. In the process, its customers have benefited immensely, and so has SIA.

Sir, open competition is always in the consumers' interest. For instance, the entry of low-cost carriers and the competitive response of full-service carriers have reduced airfares and widened travel choices. This contributed to our record nine million visitor arrivals last year, a 7% growth. They generated close to $11 billion in tourism receipts. Had we adopted a protectionist stance, our economy would have lost out, fewer jobs would have been created and Singapore would not be the vibrant tourism and business hub it is today.

Sir, the Australian government has made its decision. It is a decision we have to respect. And we have to move on. We will continue to hold discussions with other partner countries to enhance our air links with them. In the meantime, we already have a reservoir of available air rights with many other countries that SIA and other Singapore carriers can make use of to achieve future growth.

Sir, Mr Gan and Mr Ong asked whether we are negotiating for more routes and air rights for SIA and our other carriers. Let me assure them that we are. For this year, we will be discussing with several countries, and with our ASEAN partners, on additional air rights. In addition, the ASEAN Transport Ministers at our last meeting agreed on a roadmap that includes the lifting of all restrictions on passenger flights between ASEAN capitals by 2008. We have asked our senior officials to study this further and to accelerate the milestones of the roadmap and extend the proposal to go beyond capital cities to other points within ASEAN. Our aim is to have an open skies in ASEAN to realise the full vision of the ASEAN Economic Community.

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

4.36 pm

Sir, Mr Wee asked about what we are doing to help the maintenance and repair and overhaul (MRO) industry in Singapore. As Mr Wee has observed, the promotion of such industries comes under MTI. But we do work with MTI and EDB very closely on developing the whole sector as an industry that we want to develop in Singapore. My Ministry performs a regulatory role and what we do is that we try to ensure that we have a conducive regulatory environment for the growth of this industry in Singapore. Let me tell him what we are doing in some areas.

Firstly, CAAS helps to open the overseas markets for the MROs by entering into agreements with other aviation authorities, to mutually recognise the work done by the MROs on foreign aircraft and aircraft components.

Secondly, CAAS has been working with SIA and our other MROs on the servicing of new aircraft types, including the Airbus 380 and the Boeing 787. This will further expand their potential customer base.

Finally, we will earmark additional airport land to support related activities such as airframe maintenance, business and general aviation, and small aircraft assembly. This will enable our aerospace industry to ride on the growing demand from low-cost carriers and the potential growth of business aviation in Asia.

Mr Ong Kian Min: Sir, on behalf of Members who have spoken on this Head, I would like to thank the Minister for Transport and the Minister of State for their comprehensive replies and clarifications. In view of their answers, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn .

The sum of $293,495,270 for Head W ordered to stand part of the Main Estimates.

The sum of $1,793,307,400 for Head W ordered to stand part of the Development Estimates.