The following question stood in the name of Mr R Dhinakaran \t–
1 To ask the Acting Minister for Manpower (a) whether the Progressive Wage Model will be rolled out to other sectors besides the cleaning and security industries; and (b) if so, which sectors will these be and when it will be rolled out.
\tMs Foo Mee Har West Coast): Question No 1.
\tThe Senior Parliamentary Secretary to the Acting Minister for Manpower (Mr Hawazi Daipi) (for the Acting Minister for Manpower): Madam, introducing the Progressive Wage Model in Government regulation is a targeted approach that we have taken for select low-wage sectors such as cleaning and security. These sectors are prone to cheap-sourcing, and low and stagnant wages are prevalent, justifying the need for Government intervention.
We will share more details on Government's approach for progressive wage models in sectors beyond cleaning and security at MOM's Committee of Supply debates later this week.
Mdm Speaker: Order. End of Question Time.
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\tPage: 8
related amendments to certain other written laws\", (proc text)]
[(proc text) presented by\tthe Senior Minister of State for Law (Ms Indranee Rajah); read the First time; to be read a Second time on the next available Sitting of Parliament, and to be printed. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Proceedings on Estimates of Expenditure for FY 2014/2015","subTitle":null,"sectionType":"OS","content":"[(proc text) Resolved, (proc text)]
[(proc text) That notwithstanding the Standing Orders, the proceedings on the Estimates of Expenditure for FY 2014/2015 be taken till 8.00 pm on the days allotted to the Committee of Supply on the Estimates for FY 2014/2015. – [Mr Gan Kim Yong]. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Debate on Annual Budget Statement","subTitle":null,"sectionType":"OS","content":"[(proc text) Order read for Resumption of Debate on Question [21 February 2014], (proc text)]
[(proc text) \"That Parliament approves the financial policy of the Government for the financial year 1 April 2014 to 31 March 2015.\" – [Deputy Prime Minister and Minister for Finance]. (proc text)]
[(proc text) Question again proposed. (proc text)]
Ms Faizah Jamal (Nominated Member): Mdm Speaker, it has been said that a mature society desires a lot more than to save itself physically and economically. A mature society, in the words of Thomas Berry, \"experiences the world, not as a useful collection of objects, but as the sacred communion of subjects\".
In the two years that I have been a Member of this House, I have called for policies that think with the heart and not the head. I believe that this year's Budget had sought to do just that.
Mdm Speaker, I join my colleagues in this House in supporting the Budget and applauding Deputy Prime Minister Tharman and the Government for acknowledging, honouring and rewarding our esteemed Pioneer Generation for their contributions in building this country though the special feature in this year's Budget, the Pioneer Generation Package (PGP).
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I also welcome the fact that Budget 2014 took pains to focus on building a fair and equitable society. It underscores that while we all have different gifts and talent, and have different starting points in life, social mobility is what we aim for. I am also heartened by the move away from cheap-sourcing, which has the consequence of demeaning the work of certain groups of people, stripping them of their dignity and making the relationship a purely transactional one.
Madam, there is just one concern that I have with the Pioneer Generation Package, which is that it may unwittingly give the impression that we reward our Pioneer Generation when they are sick and not so much on what I consider the preferred basis – that we take care of our elderly regardless.
Mdm Speaker, in the two years that I have been in the House and now, participating in my third and last Budget debate, raising issues specifically on what has been and still are considered non-mainstream issues – that of the environment – and sometimes, feeling like that strange character in the book by Dr Seuss called The Lorax, speaking for the trees and those that have no tongue, it has always been my inclination to question fundamentals and the philosophy behind policies by asking these three questions: does it educate; does it engage; does it empower?
So, it is in this spirit of educate, engage and empower that I speak on the Budget. Much has been said about how prudent fiscal policies and productivity are the keys for Singapore to continue to thrive in this globalised world.
Much is also made of how and why our record of productivity has not been a sterling one in the last few years.
As I listen to the concerns raised by some of my colleagues in this House that Singaporeans are said to have low self-esteem, lack motivation and pride in their work, reluctant to go beyond the call of duty, not taking ownership for the cleanliness of their living spaces and leaving it instead to the legions of foreign cleaners, I pause to ask why. And I would like to offer some views to overcome these attitudes and how that productivity can be enhanced in a way that is empowering and sustainable for the highest good of all concerned.
Along with the first \"E\" of educate are my concerns on healthcare.
Mdm Speaker, among the many issues relating to healthcare, recently some Members of this House had raised the bed crunch issue in our hospitals and were given the assurance by MOH that such needs will be adequately met.
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There have also been several calls to make medical cost affordable through the various schemes. In the Pioneer Generation Package itself, there is substantial financial support for our senior citizens for their medical needs.
With due respect, Mdm Speaker, this is not healthcare. This is sick care.
Mdm Speaker, in my Budget speech last year, I had made reference to a report in The Straits Times of the increasing suicide rates among older people. Late last year, I filed a Parliamentary Question (PQ) on the rise of suicide rates among the youths. Very recently, I have been very disturbed by the rise in the number of animal abusers which has prompted the Minister for Law to promise more severe punishment for the guilty. Many of us are also familiar with videos taken by ordinary citizens of road rage and road bullies, as well as fights in our trains in full public view.
It would seem as if we are a society wrought with pent-up emotions.
Have we not questioned enough the underlying reasons on such pent-up emotions? When we increase the severity of punishments for animal abusers, do we also recognise that underlying those disruptive acts are unresolved emotional issues that make it easy for someone to take it out on others deemed weaker than they, whether be it an animal, a child, a spouse or the elderly?
When the elderly are driven to suicide, could the loss of familiar places, spaces and faces, and the bewildering change around them have something to do with it? Have we considered that all these may well be symptomatic of a society that has emotional issues which are not given the chance to react in a safe non-judgemental way?
Could all these pent-up emotions be one reason why we are not productive at work and at home, not motivated and have such low self-esteem, as mentioned by some Members in the House?
Mdm Speaker, for a very long time, it has been widely known that a physical ailment is really a result of an emotional imbalance, as a result of suppressed emotions. Science is only beginning to recognise that in fact there is a mind-body connection between how we think, what we feel, and our physical thesis.
It is interesting to me that on Monday's The Straits Times, there was a report on the increasing popularity on what is termed \"mindfulness techniques\" in the private sector as people turn away from pills and pharmaceuticals
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towards a non-chemical based way of dealing with stress.
It is also interesting to me that in a school in North Thailand, students are taught relaxation techniques, resulting in a more composed outlook towards life. It is clear today that an emotionally-centred society is a healthier society, and I would venture to add, a more productive one.
At this point, I declare my interest as a facilitator of self empowerment workshops, supporting people as they navigate their way through emotional challenges. It is when people are given the space and skills to express and release their emotions, and channel them constructively that real personal transformation happens. Often, for such people, they no longer see themselves as victims, but rather as empowered people able to make life-affirming choices.
I would argue, therefore, that beyond exercise, diet and discouraging smoking, our Healthy Lifestyle campaign should provide these lifeskills because real healthcare is about dealing with the underlying causes, and not just the symptoms through the provision of pharmaceutical and hospital services.
I, therefore, call for the kind of healthcare that places as much, if not more, emphasis on the lifeskills that support Singaporeans manage their emotional challenges beyond the physical rewards and the extra sick beds.
Now, onto the second \"E\" of \"engage\".
Mdm Speaker, in my maiden speech in 2012, I had given anecdotal evidence of how my 19-year old students felt a sense of awe and wonder when they discovered that in the nature reserves of this tiny red dot we called home, is also home to a whole range of wildlife some of which cannot be found elsewhere in the world.
For some of my students, this was a defining moment in their lives – what I call a \"National Geographic\" moment. For many of them, this experience led to a feeling of a sense of place, identity and pride in their country. For others, it gave them a sense of repose, peace and calm.
Could this exposure to our national spaces be one way in which we restore and regenerate the sense of pride in ourselves and our country, leading to more interest, care and concern to look after ourselves and our public spaces – both
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built and natural?
Could the common effects of our nature spaces lead people to want to do better at work and with their families?
In response to the Government's proposal to the land used plan to build an MRT line cutting through the nature reserves, enthusiastic young people calling themselves such diverse names as \"Toddycats\", \"Naked Hermit Crabs\", \"Green Beans SOTA\" have joined forces with veterans of the environment scene, like Nature Society, to offer walks in our forest for their friends, families and public in a bid to show Singaporeans just how much treasure there is in our natural world.
Apart from giving rise to a whole generation of aware and conscious young people – eager to volunteer, share their passion, and proud of what their country can offer – I know many of these young people have also chosen studies and careers in the environment field so that what was once a hobby, is now a paid vocation.
There is no better way to produce a more productive society than young people who, in the words of Joseph Campbell, \"had followed their bliss\". We can thank our wild spaces for that.
Further, the fact that registrations for public walks filled up really quickly shows how Singaporeans feel about the need to reconnect with nature, and how much they value these places.
Mdm Speaker, in my maiden speech, I had also asked that we do not focus overly on the built economy without, at the same, accounting for the loss of what is called \"natural capital\" defined as land, water, air, living organisms, and all that provide us with eco-system, goods and services imperative for our survival and well-being.
Mdm Speaker, Deputy Prime Minister Tharman had used the word \"transforming our economy, changing how we grow\". I would argue that taking into account our natural capital would go a long way in changing how we grow in a fuller sense of that word.
Yet, in the name of development, more of such places, which have been around longer than even the pioneers of our Pioneer Generation, have been taken away or, in the case of the Chek Jawa on Pulau Ubin, in danger of being
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chipped away.
Late last year, a commercial sports enterprise was allowed to encroach upon our nature reserves for a night time high-impact sports activity even though the custodian of our nature reserves knows that night times are downtimes for the animals in our forests, which for the most part are nocturnal and highly sensitive to human presence.
We have allowed private housing to be built right at the edge of our nature reserves. And when the natural world in the form of long-tailed macaques come a-calling into these private spaces, we indignantly call this as an intrusion into our space, warranting a culling of 500 of these animals last year, as clarified by AVA in the PQ I filed just last month.
Mdm Speaker, this percentage in effect makes up a hefty 25% of the entire macaque population.
This is part of the natural world I am talking about – the natural capital that is not reflected in our Budget.
How should we be account for the loss if future generations may no longer get to see these animals in the wild?
Mdm Speaker, I call for a national nature conservation policy that emphasises the sanctity and inviolability of our nature reserves.
We laud our Pioneer Generation for having been prudent in the stewardship of our national resources. Should we not, by the same token, be prudent in our stewardship of our natural resources?
Fifty years from now, can we look at our grandchildren in the eye and explain to them why there are no more natural and wild spaces in Singapore? Fifty years from now in this House, will our children and our grandchildren be able to say that they are as proud of us as we are of our Pioneer Generation?
I quote the words of poet Drew Dellinger. He said,
\"It is 3.23 in the morning,
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and my great, great grandchildren will not let me sleep.
My great, great grandchildren ask me in my dreams,
‘What did you do,
once you knew?'\"
I, therefore, call for a future Budget that reflects the balance with the natural assets not just with our fiscal assets. After all, in the end, the only Budget that we need to balance is that with Mother Earth.
Now, for the last \"E\" – of \"empower\".
Mdm Speaker, when I was asked by the Nature Society to put my hat in the ring, and later I accepted the call to be nominated, amongst one of the things I committed to do is to call for a transparent, open and consultative form of governance to call for more public accountability on the part of the Government, where civil society is seen to be an asset, not a hindrance, in my belief that this will result in an educated, aware and empowered citizenry which will bode well for the country as a whole.
Last Saturday, I was able to manifest my wish to share with my fellow environment advocates, the vital role that Parliament plays and how it is a powerful channel for environment advocacy. I believe that by understanding the parliamentary process, including the Budget debates, we get to be more aware and conscious citizens, empowered not only about our rights but also recognising our obligations and better able to engage with policy makers.
At the end of that session, it is gratifying to know that participants found a new sense of empowerment with what they have learned – the desire to know more about the parliamentary process and how they can do more to engage with the people whom they voted into office.
In line with my call questioning fundamentals, for transparency and for an empowered citizenry, I am now making a call that the Budget process itself be more transparent, more open.
Mdm Speaker, Dr Noeleen Heyzer, a Singaporean who is an Under Secretary at the United Nations said, \"Budgeting is no longer an exclusive
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exercise reserved only for ministries of finance but rather, a process that entails aligning national development plans and goals and human rights commitments with Budget policies in a transparent and coherent manner.\"
Typically, MOF offers pre-Budget public consultations in November, which then last till January, through its website and the REACH portal. However, considering that in a typical Budget cycle, Cabinet approves the consolidated Budget in late January and announce to the public in late February, I would like to ask how meaningful and how substantial is the public feedback and how is it really reflected in the Budget?
An international advocacy group called the International Budget Partnership that tracks 125 countries, ranks countries on budget transparency based on whether government provides the public with timely access to comprehensive information contained in 80 key documents. It turns out that Singapore is not included in the list of countries, and so we do not know what Singapore's international standing is.
Some countries, for example, New Zealand, have a practice of releasing a pre-Budget Statement at least one month before the Budget is introduced in Parliament for more time for analysis and debate.
Mdm Speaker, as part of my call for transparency, I had called for a compulsory environment impact assessment which is open to public scrutiny and study.
That opportunity to repeat this call came with the Population White Paper and Land Use Plan when the proposal to put a train line cutting through our nature reserve drew strenuous objections by nature activists like myself.
Much to the credit of LTA, in an unprecedented consultation with nature groups lasting eight months – ably led by Senior Minister of State Josephine Teo – what used to be an unmentionable word in Government agency parlance, the dreaded word, \"EIA\" is now in the consciousness of at least one Government agency, LTA.
More than that, and I am sure Senior Minister of State Josephine Teo would agree with me, is the fact that the openness, the transparency and the discourse between the parties had enabled both sides to understand each other much better. Imagine what that can do for greater productivity. Such consultations
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bode very well for public-people engagement in the future.
Mdm Speaker, from my experience at last Saturday's session, explaining the parliamentary process to environment advocates, I realised what an asset it is to have an informed citizenry – discussions are more robust, more substantial and ultimately more empowering.
A Budget process is likewise a powerful channel for engagement between people and the public.
In fact, no less than the Office of the Auditor-General itself stated in its 2011 Public Accountability Publication that \"The citizens of Singapore are the ultimate owners of our nation's financial resources. It is important that they understand and support the process and the systems that ensure public accountability\".
I look forward to seeing this call for greater openness come to fruition in the near future.
To end, Mdm Speaker, in my work both in and outside the House, I have found how powerful it is when people engage in real conversations, face-to-face dialogue, seeking only to educate, to engage and to empower. That, to my mind, is the real meaning, the full meaning of Deputy Prime Minister Tharman's words, \"Quality Growth for Singapore\".
Mr Ang Wei Neng (Jurong): Mdm Speaker, please allow me to speak in Mandarin first.
(In Mandarin): [Please refer to Vernacular Speech.] This year's Budget, especially the Pioneer Generation Package (PGP), was applauded by all the Members who have spoken. In my view, there are three main reasons why this unprecedented PGP received such strong support. Firstly, the $9 billion package could be funded totally by the 2014 Budget without burdening our future generations. Secondly, the Package is able to cover a major part of the Pioneer Generation's medical expenses for their entire life span, which is a big relief to them. Thirdly, the inclusiveness of the Package is a surprise to many. The Package covers the Pioneer Generation, regardless of whether you are a
Page: 17
millionaire or a pauper.
Soon after the announcement of the Package, a few Members and many Singaporeans started to ask, \"Can we have other packages similar to the Pioneer Generation Package?\" The second generation of pioneers may say, \"While it is difficult to start a business, it is harder to keep it going; therefore, we also deserve a package for the generation who keep things going\". In the end, how many packages can we afford?
There is a need to manage people's expectations after we implement the PGP. Otherwise, we will fall into the same trap as Greece and Italy where the governments are having deep financial troubles. So, how do we manage the people's expectations? I want to lay out three principles as a basis for further consideration.
Firstly, we need to be prudent and use our Budget surplus to pay for any new packages, similar to the PGP. We should not spend the money of our future generations. In this way, Singaporeans can better appreciate the importance of economic growth and see the need to transform our economy so that we can enjoy sustainable growth.
Secondly, future packages need to adopt the principle of targeted approach. If we divide the $9 billion PGP by the 450,000 pioneers, every pioneer is entitled to $20,000 on average and it is sufficient to pay for most of their medical bills in their lifetime. If we decide to spend the same $9 billion equally on all Singaporeans who are above 25 years old and there are 2.3 million of us, then each of us will only receive $3,850, not very significant. Hence, it is wiser to spend our financial surplus on people who really need it, so as to achieve the maximum impact.
And that leads us to the third principle. That is, future packages should not be as universal as the PGP. The Pioneer Generation is quite a homogeneous group. Most of them are not well-educated, have had lower income and thus do not have much savings in their CPF accounts. Hence, it is understandable that the PGP has to be inclusive.
The younger generation is more fortunate. We have gone through a period of rapid economic development. The income gap of the second-generation Singaporeans is much wider and quite a significant number of them manage to make a fortune from the property market. The wealthier Singaporeans could afford to be gracious and let the less well-off Singaporeans enjoy a bigger share
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of the future packages. The wealthier Singaporeans do not have to insist that everyone receives the same benefits. I will speak more about the issue of how property appreciation has only benefited a small number of Singaporeans in my English speech later.
In conclusion, I hope that the PGP can help to improve the bonding among Singaporeans, rather than divide us. Some who are aged 55 to 64 years old need not fret because you are not included in the PGP. You will still enjoy the Medisave top-up every year. In addition, many of you who are in this age group are still independent and able to work. To this end, I agree that employers have to treat older workers fairly, as advocated by hon Member Mr David Ong.
More importantly, I hope that the PGP will remind Singaporeans of the importance of economic growth. It is unwise to advocate zero economic growth as what a small group of people have done. We must stand united, grow our economy and practise prudent fiscal policies so that all of us can share the fruits of economic growth. We should not let down the Pioneer Generation who had worked so hard to build the Singapore we have today.
(In English): Mdm Speaker, let me now turn our attention to the plight of Small and Medium Enterprises or SMEs, like what eight Members had done yesterday. SMEs are facing higher manpower and rental costs amongst others. It is inevitable that manpower costs will rise as we strive to pay local workers more. I agree that we should pay Singaporeans workers more, especially the low-wage workers. In addition, companies have to pay higher foreign workers' levy due to the Government's effort to reduce reliance on manpower growth to grow our economy. To assist SMEs to improve productivity, the Government has offered schemes like PIC, PIC+ and so on.
To some SMEs, these schemes may not be enough. SMEs are also facing pressure from rising industrial land costs. According to the information on the URA's website, the price of multiple-user factory space has increased by about 100% between 2010 and 2013, which is alarming.
The increase in commercial property prices has enriched a few parties, such as the developers, REITs, speculators and so on. However, for the majority of business owners who cannot afford to own industrial properties, they are at the mercy of the rising rental costs. To relieve SMEs of such cost pressure, Government might want to consider once again, getting JTC to play a more active role in developing factories for SMEs, instead of selling industrial lands
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to private developers.
Remaining on the topic of property prices, I would like to shift the focus to the commercial space around transport nodes such as MRT stations and bus interchanges. The heavy human traffic at the transport nodes makes it very attractive for firms to sell their goods and services within the 400-metre to 800-metre radius of MRT stations or bus interchanges. If we leave it to pure market forces, firms with the highest profit margins will snap up commercial spaces around the transport nodes. Social services providers such as childcare centres with lower margins will not be able to afford to lease the spaces near to the transport nodes but these services are essential if we want to improve our fertility rate.
One classic example is how legal moneylenders and pawnshops with high profit margins have taken over a significant number of shops at a town centre beside a major MRT station. At the same time, there is a long waiting list for childcare places at the same town centre but most childcare centre operators cannot afford the high rent near the MRT station.
If we leave it entirely to market forces, we would be faced with the above situation. Hence, I propose that the Government take steps to reserve commercial spaces near MRT stations for social service providers, such as childcare centres, library, social service offices and so on, to provide better conveniences for the residents.
As we build new MRT stations and there are more vacant lands surrounding these stations, the Government could consider providing incentives for the developers to reserve floor spaces for social services providers without affecting the plot ratio meant for commercial uses.
Mdm Speaker, the Government has taken bold measures to honour the Pioneer Generation by covering a significant portion of their medical needs. It is a departure from previous Budgets whereby the Government used to devote more resources to drive the economy. Budget 2014 also aims to spread the fruits of our economic success and our economic growth to a larger segment of the population. We would not want to reach the same situation as the US, whereby the top 10% of earners took in more than half of the country's total income. This is not desirable.
In a similar fashion, we do not want the benefits of land appreciation to profit a small minority of individuals. In particular, we hope that the
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Government would consider spreading the positive externalities of transport nodes to residents who need the social services such as childcare centres near MRT stations. With this, I strongly support the Budget.
The Deputy Prime Minister and Minister for Finance (Mr Tharman Shanmugaratnam): Mdm Speaker, I would first like to thank Members of the House for the very rich debate over the last two and a half days.
We have discussed a wide range of topics, but a few themes stick out from the Budget. Everyone agree with the need for us to transform our economy, and everyone agree that we need to build a fair and equitable society and that we are taking important steps forward.
The Pioneer Generation Package was spoken about by virtually every Member of the House and you all lent strong support for the Government's plans to honour the Pioneer Generation. We heard many heart-warming stories that brought the spirit of our pioneers, vividly, to life.
There were also many specific issues which are going to be taken up in the Committee of Supply (COS); specific issues to do with protection of low-wage workers, raised by Mr Zainal Sapari for instance; issues to do with benefits for the self-employed, raised by Mr Ang Hin Kee; some issues to do with the specifics of particular sectors, for instance prefabrication in the construction industry, raised by Dr Teo Ho Pin; issues to do with arts and heritage, by Ms Janice Koh; issues to do with the preschool sector; issues to do with work-life balance, green vehicle schemes and so on. Many specific issues have come up which I am sure will be taken up in the COS debate.
What I would like to do is to concentrate on the three main themes that have come up in the debate and which are also, in fact, the three main themes in the Budget.
First, how we can move towards a higher productivity, higher income society; one with a productive and vibrant SME sector; and one with good jobs and good futures for all Singaporeans.
Second, how we are honouring our Pioneer Generation and beyond our Pioneer Generation, how we are building a system of quality and affordable
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healthcare for all Singaporeans.
Third, importantly, I want to talk about how we would have to balance our Budget for the future, as our infrastructural and social needs go up over time.
There are three important themes. One is often thought of as economic, although at the heart it is also social; second has to do with social spending, particularly healthcare; and the third has to do with how we balance our Budget over the long term.
Before we go into the first main theme – the economic challenge of restructuring – let me first deal with the issue of cost, which many Members have raised; and rightly so. First, the issue of cost of living. And second, the issue of business costs, particularly for our SME sector. I will speak about each of these two aspects in turn.
First, cost of living. Some Members – Mr Nicholas Fang and Assoc Prof Eugene Tan – mentioned the latest EIU report which ranked Singapore the most expensive city in the world. I know this is floating around and is attracting a lot of attention. I do not particularly want to focus on this report in its own right, but to explain a couple of very basic things about the reports that will come out from time to time, whether it is EIU or Mercer, which are really aimed at measuring expatriates' cost of living in different parts of the world. They are useful tools for HR managers and corporate HQs as they decide where to place their people. When they are placing them in a particular place, they need to know how to compensate them adequately based on the cost of living. It is a useful tool.
These are basically aimed at comparing cost of living for expatriates in different cities or different countries in the world. What this means, therefore, is two things make an important difference in these surveys; and two things in these surveys are quite different from factors that affect the cost of living for locals or Singaporeans. Quite different.
First, exchange rates. An important reason why, in fact, we have become an expensive place for expatriates is that the Singapore dollar has strengthened. Indeed, the EIU report pointed this out. The Singapore dollar has strengthened over the years. And it means this is an expensive place for someone who is paid in a foreign currency or for a corporate HQ abroad whose earnings are in a foreign currency. As the Singapore dollar strengthens, it becomes more
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expensive.
The reverse is true for Singaporeans. A stronger Singapore dollar improves purchasing power both in Singapore – because imported goods become cheaper, and for us, food and everyday items are all largely imported – and when Singaporeans go abroad. You can see that from the latest travel fair last week. So, a stronger Singapore dollar – not a sudden sharp appreciation but a steady appreciation – has been good for Singaporeans, but it does mean it becomes a more expensive place for expatriates on foreign currency earnings.
The second important difference has to do with what goods and services are being measured as part of the cost of living basket in these surveys. The EIU consumption basket – I would not knock it; it would have to be subjective, but they are trying to put together a basket of what they think are expatriate costs, perhaps a little on the high end, but expatriate costs. And it is quite different from the goods and services consumed by ordinary Singaporeans which our CPI basket, for instance, measures.
For example, the EIU basket includes imported cheese, filet mignon, Burberry-type raincoats – not very common in Singapore – and the four best seats in a theatre, three-course dinners at high-end restaurants for four people. These are the items in their cost of living basket. I do not think they are irrelevant to an expatriate's cost of living basket but it is quite different from the cost of living basket for Singaporeans.
Indeed, for some of these items, Singapore is expensive. Transport is also part of the cost of living basket for these expatriate indices, but no mass public transport. It is just cars and taxis. Our public transport, as Members know, is significantly cheaper than most other cities – New York, London and Tokyo. We are comparable to Hong Kong but significantly cheaper than most other cities. Even our taxi fares are cheaper. But our cars are expensive because we are a small place. So, for an expatriate, if you want to own a car, it is expensive in Singapore. But if you are talking about an average Singaporean taking public transport, it is, in fact, much cheaper than many other cities.
I highlight this just to point out the differences. It is not that these surveys are wrong. It is not that they are misguided. But they are measuring something quite different from the cost of living for an ordinary local in different cities around the world.
Page: 23
Unfortunately, there are, in fact, not very many surveys that truly try to measure the cost of living for ordinary residents. We have a good study that was done by the Asian Competitiveness Institute in 2012, which compared purchasing power in different cities. They specifically distinguished the cost of living for expatriates and cost of living for a typical resident household. They looked at all sources of data, including the EIU study, World Bank's International Comparisons Programme, and they constructed consumption baskets for expatriates and for ordinary residents. They found that Singapore was indeed quite expensive for expatriates compared to other cities. At the time of their study, Singapore was ranked fifth out of 109 cities in the index in terms of costs for expatriates. But costs for Singapore residents were very different. We were ranked 61st out of 109 cities when they compared the cost of living for residents. Quite similar to other Asian cities like Hong Kong, which was ranked 58th or Seoul, which was ranked 60th.
That is the basic difference. From time to time, these surveys will come up. I know some people will give it a spin, but they are measuring something quite different from the cost of living for our residents. What is important for us is that Singaporeans, and particularly, low- and middle-income Singaporeans, have incomes that grow faster than the cost of living. That is what is important and, in fact, that is what we have fortunately been able to achieve.
In the last five years alone, if you take our middle-income households, our median households, their incomes have gone up faster than the cost of living as measured by the CPI index. In fact, income has gone up by about 10% in real terms; similar rate of growth for the low-income households. For the low-income households, if you exclude from the CPI index the imputed rentals for those who own their homes – they do not have to pay rent – then the increase in real incomes of the 20th percentile household was 19% over the last five years. There is thus significant improvement. We keep our eyes focused on that, on how the average Singaporean and the low-income Singaporean is doing with regard to their incomes relative to the cost of living.
Let me move on now to the issue of business costs and competitiveness. Expatriate costs are part of that equation. We should keep our eye on expatriate costs as well, because it is part of the overall business cost equation.
The key challenges we face were raised by Mr Inderjit Singh, Mr Dhinakaran, Mr Teo Siong Seng, Mr Yeo Guat Kwang, Mr Ang Wei Neng and several Members. Ms Jessica Tan had highlighted this as a challenge in her opening speech. There is the challenge of business costs. It has gone up. It has gone up fundamentally because we have not been doing poorly as an economy. Wages
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have therefore gone up. Rentals have gone up because the demand for industrial, retail and office space has been very strong. Demand has been very strong from businesses. And because supply was short of demand, rentals have gone up. Wages will go up as long as there is a tight labour market and there is a demand for labour. Demand in the economy is strong; demand for resources, and especially, labour and space. That is why costs have picked up, fundamentally.
The wrong strategy will be to weaken our economy or make ours a less vibrant economy. And we can think of many cities not so far from where we are which are less vibrant and the cost of living is significantly lower, because you do not have wage pressures and rentals are cheap. But that is not what our business community wants and that is not what Singaporeans want.
We have to keep this a vibrant place; keep a check on costs to make sure they do not rise persistently faster than business profits or wages. That is our strategy, except that we are not going be a cheap location for businesses.
How then do we address the challenge of business costs? If I can use a contrast that was in Mr Yeo Guat Kwang's speech between two countries. A very interesting contrast. Mr Yeo spoke about the difference between Hong Kong and Japan. In Hong Kong, retail rentals have gone up very sharply. The cost of land and the cost of all properties, including homes, have gone up very sharply. Prime retail rentals in Hong Kong today are more than seven times higher than the prices in Singapore. Their property cycles are sharper than ours. They have on a trend basis, gone up much more than we have in terms of the cost of space.
In Hong Kong, they leave it to the market to restructure. As rentals go up, business costs go up, businesses have to restructure. They leave things much more to the market than we do. And as a consequence, businesses have been restructuring. The example that Mr Yeo gave was of how retail rents are now so high, businesses have shifted away from traditional clientele and traditional services towards catering to the high-end Chinese. Some Hong Kong residents are not very happy about this loss of services, but that has been how their businesses adjust.
This was contrasted to Japan, where rents are cheaper. In Japan, strict rules on redevelopment and land uses have enabled lots of little very charming ramen shops, crafts shops, mom-and-pop shops, to survive. That is a strategy quite different from Hong Kong in another regards. It is not just that rents are
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cheap, but wages are stagnant, and opportunities for the young are very limited, as we all know. Japan's economic growth has stagnated. Those are two quite different approaches and I think we should avoid either extremes. Do not just leave it to the market but neither can we fix rents and keep prices low and expect that the standard of living goes up at the same time. It does not work like that anywhere in the world.
What we have done is to try to mitigate the property cycle. When you look at industrial land, and at retail space, like the residential market, that is our approach. Supply is catching up quickly. In the next three years, as I mentioned in the Budget Statement, just for multiple-user factory space, the amount of new supply coming on-stream is going to be double the demand that we saw in the last few years. Demand is not going to suddenly double, but supply is going to double. So, I expect that that will have a moderating influence on rentals. Indeed, we have already seen industrial rentals fall by 1.4% in the fourth quarter of last year. Likewise, for shop space, we are expecting a very substantial increase in supply that is going to be coming on to the market.
That is our strategy. We do not have perfect foresight, but when we see the market heating up, we take action to boost supply and find other ways to help businesses to mitigate costs. One of the ways is what Ms Jessica Tan, Dr Teo Ho Pin and some other Members spoke about – which is to help companies to save costs through the sharing of services. We are doing it through JTC's cluster industrial spaces like the Food Hub and Tuas Biomedical Park. There will be more such cluster concepts which enable companies and especially SMEs to share services. This means reducing upfront investment costs that they would incur otherwise if they do it on their own. It also means lower maintenance cost over time.
Miss Penny Low spoke about having more clusters for start-ups like Block 71. She wanted more of those. That is also a good idea. Mr Zaqy Mohamad spoke about retail malls, helping retail SMEs to share services. These are useful ways in which we can mitigate the rise in cost and help companies to have more efficient business models and more efficient ways of using their manpower and getting more value out of the space they occupy.
Transport, again, an important business cost issue. That is why we had not just given road tax rebates last year but we allowed for further five-year COE extension for vehicles that already had COEs renewed once. It is really to help our smaller businesses. This year, we enhanced the Early Turnover Scheme to
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lower the replacement cost for old commercial diesel vehicles.
These are important ways in which we can mitigate the cycle, mitigate business cost increases and we are open to any other suggestions, any other practical and effective ways in which we can help. Mr Inderjit Singh had asked for a permanent solution. The permanent solution to address rising business costs is to raise productivity. That is the only permanent solution. We have got to upgrade our economy fundamentally. As long as we remain vibrant as an economy, our costs will basically approach that of an advanced country. A little higher in some areas and a little lower in some areas, but basically, we will have costs similar to that of an advanced economy.
The only way for our businesses to survive in that environment is to have advanced country capabilities: in innovation, in the commercialisation of R&D, in managerial skills and in investing in employees so that they develop deep skills. That is the only way. We summarise it with a measure called productivity, but it is actually about those things. It is about skills; it is about workplace culture; it is about automation; it is about innovation. That is the only fundamental solution. We have got to raise productivity.
This brings me now to the first main theme of the Budget as we look to the future: how can we achieve this higher productivity, a higher income economy.
First, it is useful to take a step back. It is not as if we are a failing economy when it comes to productivity. It is useful to see where we have come from. I will show Members a chart on the journey we have traversed over the last 30 years. [Please refer to Annex 1.]
In 1980, this is the level of productivity compared to the US. I am using the US here for simplicity as it is a major advanced country and, in many aspects, a leader in productivity. If we take the US as 100, Singapore was about 40% of US' productivity level in 1980, or 30 years ago. We were very much a developing country then and recorded 40% of the US' productivity levels and well below most developed countries.
Fast forward 30 years, where are we now? We are basically at about 70% of the level of the US; so, quite a major shift in 30 years, from 40% of the US, to 70% of the US. We are almost at the level that the UK is at now; and in fact, because of low service sector productivity in Japan, overall, we have the same level of productivity, or slightly higher, compared to Japan.
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It is not a bad achievement that Singapore has taken this journey – our SMEs, our people, everyone. We have come a far way in 30 years.
There is a second challenge, however, as we go forward, that is not just about productivity. As Mr Yeo Guat Kwang emphasised, it is about raising productivity while maintaining full employment because that too is extremely important. One of the unique things about what we have been able to achieve is that we have increased our employment rates, giving everyone an opportunity to have a job.
In the last decade, if you look at Singapore, I will have to explain this chart. [Please refer to Annex 2.] If you just focus on it one step at a time. It looks at the employment rate on the horizontal axis; and on the vertical axis, it looks at the level of productivity. Ten years ago, our employment rate was around 65%. Since then, our employment rate has increased. If you look at Singapore last year, our employment rate has increased significantly to over 70%. It is not the highest in the world, but it has caught up with some of the advanced countries. It is a little lower than where UK was 10 years ago, but we have caught up in employment rates.
It is a very important challenge: for us to be able to raise productivity while providing jobs and opportunities for all our citizens. It is a much bigger challenge than raising productivity by shedding jobs. That is what has happened in many countries.
If you look for instance at the US over the last 10 years, employment rate has come down significantly. Productivity has risen but employment rate has come down significantly, same thing as the UK. When they talk about employment rate coming down, it is the lowest-skilled workers who are put out of the workforce.
We have found a way in which we can have an economy where everyone has a role to play. The easy way to raise productivity is to go through some shock treatment, shed firms, shed jobs, but the ones who will suffer, in our case, are the lower-skilled and especially our older workers.
We have taken a more inclusive approach. We should retain this inclusive approach as we go forward which makes it a special challenge. Do not do it the way that some countries have done – take a segment of your workforce out and you get higher productivity almost automatically. We want to keep everyone in the workforce, and as Mr Lim Swee Say said, make every job better. It is a
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difficult challenge but one which we can achieve.
I wanted to highlight this fact that it is about productivity in a full employment economy. That is our particular challenge. That is what we have set about.
How do we go about it? No one is satisfied with the rate of our productivity growth in the last few years. It has been dismal. How do we go about it? What has the Government's approach been? First, we have tightened foreign worker policies. Second, we have provided very substantial assistance for our businesses to upgrade. That means, principally, providing our SMEs with assistance because all our schemes, whether it is the PIC or the Transition Support Package, have been tilted in favour of SMEs because we know they are the ones who need the most help. The large firms are able to adapt to the market much more easily. They have got the resources upfront to invest and it pays back over time. It is the SMEs who need more help. So, most of our schemes are tailored to the SMEs.
If you look at the Transition Support Package, this is the second year, and it is a three-year package, estimated at $7.3 billion, and about 80% of that goes to the SMEs. That is about $5.8 billion, which is a very substantial amount of assistance. As I explained in the Budget Statement, it is not lathered equally across the whole system; not everyone is getting the same. Some SMEs are getting a lot more than others, because they are taking the initiative to put their own money in the game, to invest, to innovate, to upgrade the skills of their people. It is substantial assistance that we are providing.
That is what we are doing – tightening labour market policies and providing strong support for businesses to upgrade. But productivity cannot just be summoned up. You can tighten the labour market, you can provide assistance, but you cannot summon up productivity. That requires entrepreneurial energies and business leadership; that requires everyone striving to do better at their jobs.
On the Government's part, every time we see an innovation, we see someone who is an early adopter doing something new, we will try to spread that innovation, help other firms in the sector adopt it; and hence scale up improvements. That is our approach.
This is a fairly fundamental point. The Government can tighten labour supply, give companies an incentive to upgrade; we can provide strong support,
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but really, businesses have to respond, and management has to respond. And the Government will then find every way to spread innovation and improvements throughout that sector, and throughout the economy. That is our approach.
We have to let market forces do their work. That is the third dimension about it. It is about individual firms upgrading; it is about Government supporting; but market forces have to work. Market forces will reward those who are upgrading, those that are more efficient and those that are more innovative.
The market needs time to work. Companies do not give up their business simply because they are doing poorly in one year. It takes time for the market to sort itself out. The better businesses do move ahead at the expense of the rest.
How we pace our restructuring journey is quite important. There are two views in the Debate on this. Mrs Lina Chiam had wanted us to accelerate the shake-up of firms and accelerate the consolidation of small firms. That is one view. Mr Inderjit Singh, Mr R Dhinakaran and several others felt that we had been moving too quickly in restructuring and that we need to pause a little more. That is another view.
We have taken the middle path. First, we have avoided shock therapy because we know it actually takes time for market forces to work. If we go with the shock therapy, good firms, those with a good future can be shaken out. Good jobs, too, can be shaken out. So we have avoided shock therapy but we got to have a steady clip in our restructuring effort. Be very clear about direction and keep a steady clip, so that there is pressure on firms to upgrade.
All the changes that we have done had been phased in – they are not sudden. The most significant of the changes are the Dependency Ratio Ceilings (DRCs). They were all announced two years in advance, which is why this year and next year, you will see the full effects of the DRC cuts in the services sector that were announced last year. We phase in all our measures.
Second, we try to avoid a cookie cutter approach where there is only one formula for all firms or one scheme for all firms. Here again, there are two contrasting views as to how we should go about Government assistance. On the one hand, we have some views which have some merit. Ms Jessica Tan, Er Dr Lee Bee Wah and others talked about the need to make it easier for firms to
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qualify and take advantage of our schemes. Or, as Er Dr Lee Bee Wah said, \"Provide assistance faster!\".
Another view, which Assoc Prof Eugene Tan, Mrs Lina Chiam and others expressed, was a more cautious one, which is that we must require firms to demonstrate productivity improvements first. Show proof before you get assistance. Mandate certain improvements as the requirement before we give assistance.
These are both meaningful views. Through the range of our schemes, first, we have broad-based support that is easy to qualify for; but we also have a second level of support that is more customised where we work with the firms to ensure improvements in productivity within a space of time. We need both approaches. It cannot be only one approach of having companies show proof before they get assistance; neither can it be an approach where the money is just being handed out liberally, upfront, no questions asked. Because, then, you get what is called \"deadweight funding\". You are just going to fund what the companies would have done anyway without assistance. So, we need both approaches and that is, indeed, what we have done.
The PIC, in fact, leans a little more towards a liberal approach, but it is not \"no questions asked\". Companies know that they qualify as long as they meet the criteria. But when it comes to the PIC cash payout scheme where the money is paid much earlier and in cash rather than through tax savings later, we have to put in a check into the system, which is the \"three-employee rule\". It is only for the PIC cash payout scheme, not for the PIC scheme at large, which is a major scheme. But for the PIC cash scheme, we did have to put in the requirement because it is easy to abuse.
These are some of the practical challenges we face when devising Government support. How fast do we move; second, do we have a system which allows liberal use of funds with no questions asked; or do we place requirements that have to be met before assistance is provided? We try to find the right balance and we will improve as we go along.
Let me now move on to the next phase of restructuring. What are our priorities? And what are the priorities that have been expressed in this debate, which I think has been a useful debate.
First, we must transform our SMEs. Second, we must transform jobs and develop every talent. Third, we must transform our culture – social norms at the
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workplace and, in some regard, in our society.
In short, we have to transform our economy and we have to transform our society, if we want to succeed in this restructuring journey and achieve a high-productivity and high-income society. It is unrealistic to expect to achieve this in a few years. It is going to take some time, but we have to have a determined approach to the problems, put resources into it and make sure we move at a continuing and steady clip.
A decade from now, if we move at this clip, we will be in a different place where firms will be able to survive with good profit margins, and workers will have higher incomes. And the reason why you can achieve both – higher incomes and good profit margins – is because productivity would have been transformed.
The first priority is transforming our SMEs, and helping them overcome constraints of a tight labour market and high business costs.
Our SMEs remain at the core of our economy, as many Members spoke about. Ms Denise Phua, for instance, spoke about this. We have to make sure that our traditional businesses remain a unique part of Singapore society. As Mr Teo Siong Seng said, there is no reason why traditional businesses, including our many family-owned businesses, cannot be dynamic players in the future Singapore economy. By applying new management concepts, by going for strategies that are seen amongst other firms, including the larger firms, our traditional businesses do have a role to play in the future Singapore economy.
Our SMEs have come a long way in the last 10 years alone. If you just look at two things – and I am just picking two things – broadband access, for instance. Ten years ago, 40% of SMEs had broadband access, now it is 80%. In this year's Budget, we are going to help them move to high-speed broadband. Second, they are far more internationalised than they were before. The Singapore Chinese Chamber of Commerce and Industry did a survey on SMEs, and they found that 60% of those surveyed were now venturing abroad.
Thirdly, many more Singapore brands are now known abroad. It used to be SIA, Creative and SingTel. Now there are many other brands – Hyflux, Ezra Holdings in the Offshore and Marine sector, SC Auto in the Manufacturing sector, Charles and Keith in the Retail sector, Eu Yan Sang in the Healthcare sector and many other names that you can think of, which are well known in
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Asia especially.
The SME sector has made progress. We have got to redouble our efforts in this next decade, and I do not think it is just a matter of Government support. Because, frankly, the level of support we are providing is unmatched internationally, in whatever aspects you can think of – automation, technology, R&D, design, training of employees – we are providing very substantial support. We have got to give our SMEs time, keep a steady pace of restructuring and every time we see innovations arising, try to spread those innovations from early adopters to others.
One important approach is a sector-wide approach, which is an emphasis in this year's Budget and which we will take forward. Going for sector-wide solutions, I will just give one example, which is in the wholesale sector.
We have an e-Procurement Hub for SME wholesalers. It has enabled about 200 SME wholesalers to transact electronically with their large customers and large retailers, thereby improving inventory management. It also provides a shared platform for accounting and business intelligence functions. So, it saves them costs and manpower, and the interesting thing is that this was a solution developed by an SME itself, which IDA then went in to lend support to, and many other firms hopped onto this platform.
We want our SMEs to be a vibrant part of the future Singapore economy and we will provide as much support as it takes to help them to get there.
The second focus is to transform jobs and to develop every talent, as Ms Jessica Tan had emphasised. It involves every job. As Mr Lim Swee Say said, every job has to be professionalised. He cited the gardener in Japan, the cleaner in Germany, the waiter in the US. Every job can and has to be professionalised. It is not about preserving jobs the way they were in the past, but it is about making every job better for the worker, and thereby helping every worker to contribute to upgrading.
That is one challenge. We know what the existing jobs are and how we have to make them better. But we also have to prepare for jobs of the future, many of which do not exist today, as several speakers pointed out, including Ms Irene Ng. Many do not exist today.
The experts say that if you take people who are young, those from our primary schools, by the time they enter the workforce, computers will be a
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hundred times cheaper and a hundred times smarter. Based on current trends, it will mean a very different workplace, whether in Services or Manufacturing. Every area of economic activity will be different, because the digitalisation of economy is proceeding apace in every major economy and every economy that is globalised. It is proceeding apace, and it transforms not just businesses but it transforms jobs.
Several Members, including Ms Tan Su Shan, spoke about the challenge this poses to middle-level jobs – middle income, middle-skilled jobs. You are already seeing it in the United States. They call it job polarisation where the middle-level jobs are disappearing while that at the top-end is growing, and the middle-end is shifting to bottom-end. Lots of bottom-end jobs are being created. You are seeing it in the United Kingdom. We face that challenge here too, albeit in future. So far, we have been able to have near full employment, but this will be a challenge as technology proceeds apace.
We have to prepare for that new world. It will not be a jobless world, particularly for Singapore, a small country with the world as its market. If we stay competitive, and if we get our fundamentals right, we can create jobs. There will be many jobs that involve working with technology and using technology to gain competitive advantage. Jobs in engineering, systems and product design, systems management, people who can troubleshoot problems, solve complex problems, jobs in programming and data analysis, in ICT, and jobs in the creative industry, which Ms Janice Koh had spoken about.
There will also be many jobs that involve personalised service – in the hospitality industry, healthcare and social services, including education. The social sector is going to be a major area of job creation in the future.
But no one knows for sure what jobs are going to be around 20 or 30 years from now. We know what the broad sectors are. We know that there will be jobs, but you cannot say exactly what jobs there will be, and that is why several Members have highlighted that we have to also focus on developing obsolescence-proof skills. As Ms Irene Ng put it – the skills that will apply, regardless of the job. We know roughly what they are, but we have to keep sensing the skills that are needed in the market. Being inquisitive, thinking in original ways, being in the habit of continuous learning and, very importantly, the ability to interact with others and to respect everyone. These are skills that MOE is focusing on, from the early years, all the way through the school system.
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Secondly, very importantly, we have to redefine education, and we are redefining education. So, that is not simply a matter of what we do in schools and tertiary institutions, and then you have a separate phase altogether, which is what we do in the workplace. It is not about two distinct phases of education and learning in a person's life where most education is over by the time you finish school, ITE, Polytechnic or University, and you get your certificate, and then you have a little bit of training after that as you go through working life. It has to be a continuum, a continuum that involves regular refreshing of knowledge and skills throughout our lives – that has to be the new concept of education. If you want to develop every talent, and keep adapting to this new world, including the new jobs that will come along, it has to be a continuum.
We have a world-class school system – we know that – and our challenge now is to complement that world-class school system by having one of the best systems of lifelong learning as part of that continuum.
We must invest in this. We are studying the whole CET framework. We are developing a whole new CET Master Plan, which we will announce later in the year. It will require resources and these will be resources well spent.
But I want to emphasise two points. First, that quite apart from Government putting in resources, the business community plays a very important role and it plays a role in a somewhat different way from what has been the case before. It is not just about investing in your own employees. If you are worried about whether they are still going to be with you three or four years from now, you do not invest as much. As the economists would put it, you have to invest in the commons. Every business has to invest in its employees and if everyone does so, we raise the human capital of Singapore's society. Everyone moves up, and everyone benefits, because in a small society like Singapore, what goes around comes around. You invest in your employees, some of them may not be with you five or 10 years from now, but everyone has been raised to a different level and it is constantly moving up. That is really what we have to see. Everyone has to be invested in, every Singaporean has to be invested in with constant skills upgrading and everyone will benefit, including our businesses. The Government will help.
Second, we will also help Singaporeans themselves to take charge of their learning and development. This is a very important strategy, going forward – strengthen career guidance, strengthen knowledge of careers from early on. There are some suggestions in the debate about starting in Secondary school. In fact, MOE is starting this – internships and work attachments even when the boys and girls are in Secondary school. At the tertiary level, the ASPIRE
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Committee is developing a plan for meaningful work engagements for students, in particular our ITEs and Polytechnics.
Beyond the early internships and the attachments, it really has to be a continuous process where we have to conceive lifelong learning as one that involves regular infusions of education and learning at different times in our lives. We have to think ahead about the challenge, put the resources and plan a whole new framework for CET that enables us to do this.
There are examples. MOE, for instance, started a decade ago a system where every teacher and principal, after a period of years, can take time-off to learn. Some go on work attachments; some go abroad; some do something in another field of education before coming back – it is constant infusion of skills and knowledge.
There are many possibilities and we have to study this. It will require resources, but this will be resources well spent. We have to redefine education and invest in this next lap in education, where we complement a world-class school system with a world-class system of lifelong learning.
The third challenge: transforming culture and social norms. Many Members spoke passionately about this – Ms Foo Mee Har, Miss Penny Low, Mr Patrick Tay – and I do not want to cover the same ground which I have stated in the Budget speech and which Members have very eloquently and thoughtfully spoken about. It is a softer area, less tangible, but we all know it underpins everything else we want to do. If we want to achieve the first two objectives of transforming our SME sector, and transforming jobs, we also have to transform the workplace culture and our social culture. We know that.
The National Productivity and Continuing Education Council (NPCEC) will give this great attention in the next few years. It is something that is going to take time, but we are going to pay special emphasis on this. Not just the hard skills and technologies of involving upgrading, but helping companies upgrade management practices and helping them to reshape the workplace culture with employees. This requires much more emphasis. We will be working together with companies, and working with everyone to get ground-up ideas as to how best we can do this and support this. So, it is a very important priority as we go forward.
I do not want to mention this or go through the specifics again, as it has been very well discussed. I just want to highlight a point which Dr Lam Pin Min,
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Mr David Ong and Mr Ang Wei Neng a short while ago emphasised – that is, one dimension of this we have to think very hard about is the way in which we include older workers in the workplace and our economy. The reason why companies have to do this is not just because of the tight labour market and they have no choice but to employ older workers. And it is not just because we are trying to help older workers build up retirement savings and therefore, we want them to work for longer. Those are the economic and financial reasons. It is also because, as Mr David Ong said, it is ultimately about self-worth, dignity and productive ageing. It is a social objective.
When we think about this issue, therefore, it is not just about the financial strategies. It is really about changing the way we think about every Singaporean – maximising the worth of our older workers, finding ways in which they can add value as part of a team, and this involves transforming mindsets. This is why I want to emphasise this particular point that came up very usefully in the debate. The Government will play its role and support this in every way we can. We have the Special Employment Credit, and the public sector is playing its role. For instance, MOE, again, if I just use an example, is drawing on many retired teachers, retired educationists, involving them in a very meaningful way as we upgrade our education system.
The business community has to treat this as a strategic priority and a responsibility because we can only create an inclusive society, in the true sense, if, as Mr Yeo Guat Kwang said, we give everyone a chance to have a job and a meaningful opportunity to contribute.
Next aspect of social norms which I want to mention briefly is the importance of moving to a system where self-service becomes the default option, and something which customers even prefer. If you look at what has happened in the financial industry, for instance, it is quite interesting. We now treat ATMs as the default. ATMs and Internet banking are, in fact, the default option. Not long ago, everyone wanted to go to a bank branch, speak to the officer across the counter, see the passbook being updated in front of your eyes and make sure it is updated.
How many people still do that? Some of our older folks still want to do it, but for most Singaporeans, the ATM is the default option now. For many, in fact, Internet banking is the default option.
And we are going to go further because in June this year, we will be introducing what is called the FAST (Fast and Secure Transfers) system, which
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allows consumers and businesses to use their electronic devices to transfer funds between banks almost immediately. Today, it takes two or three days to transfer funds between banks. It will be almost immediate.
These are the changes that we have to make in every industry. Make self-service the default.
I will give another example – Real Estate. In Australia, the majority of Real Estate transactions are exclusive agency arrangements. Because they are exclusive, it is a sole agent system. The agents are happy to put all the information about a property online or in newspaper ads. They leverage on ICT. When you, in fact, go and look at the house or property, the prospective buyer can look at the floor plans, the different rooms, take a virtual tour of the entire property through online property ads. As a result, basically the prospective buyers do a lot of self-service before contacting the agent. This is another example I am giving, but it applies to many other industries. In every industry, we can think of how self-service can, in fact, provide good service but it also saves on manpower and takes us to a new and higher level.
These three priorities go together – transforming our enterprises, especially our SMEs; transforming our jobs and developing every talent; and transforming our culture. And we will not succeed unless we do all three.
Let me now move on to the issue of social spending and especially finding the right balance in our social spending.
I will start with the Pioneer Generation Package, which as I mentioned earlier, there has been very strong support for it uniformly in the House. Strong support for the fact that it is focused on healthcare needs, strong support for the fact that it is being given to all pioneers regardless of income, and strong support for the fact that we are setting aside fully now the funding required for the entire life of the Package, and that it is fortunate that we have the means to do so because of our prudent fiscal policies. I think those were the three features of the Pioneer Generation Package which were very important defining features and which have received strong support in the House.
Some important questions were raised about the implementation of the Package.
The first issue has to do with when the Package will be implemented and how quickly we are going to implement the Package. Dr Teo Ho Pin in particular
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has asked whether we can bring forward the Community Health Assist Scheme (CHAS) benefits, so that the Pioneer Generation can benefit earlier from the extra subsidies in our GPs. We have, in fact, studied this very carefully and we have decided to bring forward the Pioneer Generation CHAS benefits from January 2015 to September this year, so that it will come into place at the same time as the enhanced subsidies in our Specialist Outpatient Clinics (SOCs). So, from September, the Pioneer Generation will be able to get their enhanced subsidies across the outpatient sector – polyclinics, SOCs and GPs.
Before September, every member of the Pioneer Generation will get a Pioneer Generation card, which can be used at the GPs, dental clinics, SOCs and the polyclinics. The card will be mailed to them by September.
Even earlier, however, we will make the first round of Medisave top-ups for the Pioneer Generation. We will do this in early July. This means that although MediShield Life is going to be implemented at the end of next year, 2015, we have two years of Medisave top-ups that the Pioneer Generation is going to enjoy. It can help them to pay for a significant part of their current MediShield premiums – two years worth of assistance to pay for the MediShield premiums, using the Medisave top-ups.
Ms Sylvia Lim had asked whether the MediShield Life premium subsidies for our Pioneer Generation will cover not just MediShield Life but the Medisave-approved private plans. The answer is yes. The Medisave-approved plans are Integrated Shield Plans and they include MediShield as a basic component. In future, the plans will include MediShield Life as a basic component. So, those who are on Integrated Shield Plans will receive the same dollar amount of subsidies as those on MediShield Life.
Next, the whole issue of outreach which many Members spoke about. This is a massive exercise that involves reaching out to 450,000 Singaporeans. Thus, it involves IT systems, many agencies and many points of contact, and we want to do this as well as we can.
The first thing that we have to assure members of the Pioneer Generation about is that the benefits will be provided automatically. The pioneers do not need to worry even if they are unsure of their exact benefits. It is going to be provided automatically.
The Pioneer Generation cards will enable them to easily identify themselves at the clinics to get additional subsidies. Even if they forget to bring
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their cards, it is there in the computer system.
They will get their Medisave accounts automatically topped up, and they do not need to be CPF members, that is, having worked earlier and have CPF accounts. As long as they have signed up for Government schemes in the past, which almost all had – such as the GST Vouchers, Growth Dividends – the CPF Board would have opened a Medisave account for them. In fact, over 430,000 of our Pioneer Generation already have Medisave accounts because of these schemes.
I think the bottom line is this – as Ms Irene Ng put it – \"do not worry\". Whenever the Pioneer Generation expressed some anxieties as to whether they are going to get benefits, tell them, \"Don't worry. You'll get it automatically. There is nothing to worry about.\"
There is a very small group, less than 3%, who do not have Medisave accounts because we have been unable to contact them over the years despite considerable efforts by grassroots leaders and many people making the effort to contact them. Some have passed away overseas without their next-of-kin informing us. The NRIC addresses for some were also not valid. We will continue to work hard to find them and reach out to them. It is a small group, but we will have to keep working at this.
The outreach effort will have to involve many different approaches, many different media, many different languages. Members have all emphasised this, and this point is well taken. It is not just about printed brochures arriving in your letterbox. It involves personal contacts; it involves radio; it involves TV; and it involves languages that are most familiar to the Pioneer Generation.
It will not be just a top-down outreach effort. We work with everyone on the ground – our grassroots leaders, all the staff in our healthcare settings – our GPs, polyclinics, outpatient clinics – where people come for treatment. And we will work with our VWOs as well because they too have a lot of contact in the community care sector, especially with the Pioneer Generation.
The online facility allows younger family members who are very familiar with looking up details online to assist the elderly. But as I mentioned, the benefits will be provided automatically and there is nothing to worry about. If someone really needs to talk to a volunteer or officer to find out more, we already have today 26 CitizenConnect Centres across the island, where advice
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can be sought on the Pioneer Generation Package.
Eligibility is the next issue. Mr Baey Yam Keng and Mr Lim Biow Chuan, for example, had highlighted the case of individuals who have been living in Singapore and contributing since independence but were not able to get citizenship for various reasons, until later. The appeals panel that we are setting up will be able to look into such cases. That is why we are setting up an appeals panel. It will have diverse representation, comprising Singaporeans from a range of backgrounds. This panel will be set up by the end of April and we will provide more details on this later.
If I can move now to the issue of broader recognition of the Pioneer Generation, which many Members spoke about. Beyond the Pioneer Generation Package that the Government is providing, what are the other ways in which the community and businesses can recognise our seniors, besides our pioneers, amongst our Singaporeans. This will be a collective effort. As we approach Singapore's 50th birthday, special attention has to be paid by everyone to the role of all our seniors.
The Ministerial Committee on Ageing has called for a special SG50 – Seniors Programme to appreciate the role of our seniors in contributing to our nation. The Committee will engage businesses and organisations as part of our SG50 effort to offer special privileges to our seniors, whether it is discounts to places of recreation and leisure or other benefits. They will also find ways to engage our seniors actively, to help them to lead active and engaged lives. So, this is an important initiative and as part of SG50, we want to involve our businesses and the broader community in recognising and honouring the roles of our seniors.
Mdm Speaker, I move on now to a broader challenge, which is that of healthcare financing. This is, in fact, a key fiscal challenge for the future in Singapore, as it is, too, for many maturing societies. It is a key fiscal challenge that we face. I want to spend a bit of time talking about the nature of this challenge and how we should address the challenge.
Good quality, affordable healthcare has to be our priority. We are making a few shifts in that direction – in the last few years and in this year's Budget.
First, we are increasing the role of risk-pooling through MediShield Life to provide all Singaporeans, including those with pre-existing illnesses, with
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protection against large hospitalisation bills. Greater risk-pooling.
Second, we are increasing the Government's share of healthcare spending across healthcare settings, that is, in hospitals as well as outside hospitals. The increased subsidies in this year's Budget for SOCs, and the increased subsidies in recent years' Budgets for intermediate and long-term care services, are an important shift. It is an increase in the Government's share of spending. We have also introduced CHAS for primary care at our GPs.
Medifund has also been strengthened and we will keep it strong as part of the system. So, that is the second part – the Government is taking on an increasing role in the financing of healthcare.
The third part is important, which is that we have to preserve the role of individual savings, through Medisave, as a key pillar of the system.
Individual responsibility for health, and to save for healthcare needs, must remain a key pillar of our healthcare system. And we are going to provide additional flexibility for older Singaporeans in the use of Medisave – Minister Gan Kim Yong will talk about it more at the COS – that will help in reducing out-of-pocket payments in polyclinic and other outpatient settings. This will be implemented in the first half of next year.
But the sum of these changes that we have made in the last few years is quite significant. We are providing much greater support in healthcare, not just for the low-income group but also the middle-income group, and particularly in the outpatient primary and step-down care sector. It is quite an important shift.
I will just give Members an example. And this is not a Pioneer Generation example. I will give you the example of a couple in their early 60s – I am not talking about the low-income group which, in fact, receives very significant assistance – a middle-income couple, early 60s. The median household income per capita is about $1,700 per month, so I have chosen the median household, about $1,700 per capita household income. This is a case where the husband receives day rehabilitative care two to three times a week. The wife also visits the polyclinic twice a year and SOC three times a year. Not an uncommon example.
Over the past decade, the policy shifts that we have made to increase subsidies for the middle-income group, particularly outside hospitals, have meant that this couple would receive a quadrupling of the benefits that were in
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place a decade ago, that is, four times more than was the case a decade ago.
In addition, as we expand home-based care in future, if the husband, for instance, stays at home and receives care, the household would see a 7.5 times increase in support compared to what we had in place a decade ago.
So, it is a very significant increase in support that we are providing for all Singaporeans. And as the couple grows older, they will be getting Medisave top-ups through the GST Voucher, which is not an insignificant sum. Each of them will get GSTV – Medisave of $250 each a year. By the time they get to their 70s, it is $350 each a year, plus enhanced benefits of MediShield Life which cuts down on the risk of large bills in hospitals and which will come with subsidies from the Government for the middle-income group. So, I just want to say that we have been making significant shifts not just for the Pioneer Generation but for all Singaporeans as they get older especially.
But we have a larger challenge in future. Beyond these shifts that we are making, we have to look to the future and address the larger challenge of healthcare costs. To put the scale of things in perspective, the Pioneer Generation is 450,000 Singaporeans. The next generation, now aged 45 to 64, totals 1 million Singaporeans, and they will be entering into retirement 10 to 20 years from now. That was why they were called the \"Baby Boom\", and they will be entering into retirement 10 to 20 years from now. That is a very important challenge that we have to meet: how we can provide quality care in an affordable way. It first involves appreciating very fundamentally two key points that we have to bear in mind.
The first is that it is a misconception that countries that spend more are doing a better job in providing healthcare. Spending more does not mean better healthcare. The evidence is very clear on this internationally, that it is a misconception that merely spending more means better healthcare. Some countries have very high spending but, in fact, have much weaker healthcare outcomes than others.
I will show Members a chart to illustrate this. [Please refer to Annex 3.] This is a set of mainly advanced countries, plus Asian countries like Hong Kong, Korea, Singapore and Japan. I will have to explain that the horizontal axis represents \"Total Healthcare Expenditure per Capita\", that is, national expenditure, whether it is the Government, insurers or individuals who are paying for it, this is total expenditure per capita. The vertical axis is for \"Health Grade\" that comes from Bloomberg's Rankings of the World's Healthiest
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Countries which looks at life expectancy, percentage of underweight children, proportion of people with high cholesterol and various other indicators.
The first thing that Members will notice, of course, is that Singapore is not doing badly on health grade. In fact, we were rated the best in the world. I do not know whether it is true, but we are certainly doing quite well in healthcare outcomes. And we are doing it with relatively lower expenditure compared to other countries. Part of this is because we are a little younger as a society compared to the maturing European societies. But even if we adjust for that, we spend less on healthcare, but we achieve good healthcare outcomes.
Members will also see at the other end of the spectrum, the United States. People often refer to it in articles and wonder why we are not spending as much. They spend a lot of money but they get very weak healthcare outcomes, in fact, much weaker than most other advanced countries. And if we look at the countries in the middle, there is very little correlation between how much you spend and your healthcare outcomes.
Why is it that some countries are spending far more and yet not getting better outcomes? There are basically three reasons.
First, particularly in the United States, prices are just much higher. The costs are much higher for any particular treatment we talk about. If we talk about a knee replacement, it is about four times the cost in Singapore. Prices are just far higher in the United States than in other advanced countries. This is the first reason.
The second reason is very important because it applies to many countries, which is that incentives have led to over-prescription and over-utilisation of healthcare services. So, they end up just spending a lot more without commensurate improvements in healthcare outcomes. And this is, in fact, a very serious issue. It is an issue in countries where you have a fee-for-service model where as long as the doctors are prescribing new services and treatments, their fees go up, their incomes go up. And in the United States, in particular, their incomes can increase very significantly for prescribing additional services. That is the second reason, that there is such a thing as over-prescription and over-utilisation which does not lead to better healthcare outcomes.
The third reason is also very important. It is that many healthcare systems provide universal subsidies for everyone across-the-board – the poor, the
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middle-income and even the rich. In fact, many advanced countries do that. They provide universal subsidies across-the-board at much higher cost. It may make healthcare look very cheap for everyone at the point of consumption, but it leads to much higher usage because it looks cheap and people do not realise that they are actually paying for it in another way, through higher taxes. So, it is a system where everyone benefits from universal subsidies, leading to high utilisation of the healthcare system, but the cost is, in fact, being paid through higher taxes, insurance premiums and other means.
And it is not just cases like the US. Japan is actually a very good example. In Japan, health insurance covers a very wide range of services with very little control over access to treatment. The Japanese sees physicians three times more often than in other developed countries and they stay in hospitals two or three times longer than in other developed countries because the system incentivises it. And it has got nothing to do with demographics or physiology. It has nothing to do with their medical condition. It is all a matter of incentives.
The costs that Members saw in that chart are not the end of it. In the next 10 to 20 years, the costs are going to go up very considerably in these societies because of the incentives towards over-utilisation and over-prescription. It is a very fundamental issue. So, that is the first point. More spending does not mean better healthcare outcomes.
The second key point I want to make is that there is, in fact, no free or cheap healthcare anywhere in the world. It can look cheap or free at the point of obtaining the service because your insurance pays for it or the Government has subsidised it. But the public is ultimately paying for it, either through taxes or hefty insurance premiums. It is not as if someone else is paying for it. The public is, ultimately, paying for it.
Take Germany, where co-payments at point of treatment are very low, extremely low when you go to hospital or even in an outpatient setting. The reason why it is very low is because of very substantial contributions through payroll tax to what they call a \"sickness fund\". The employer and the employee contribute 15.5% in payroll tax that goes into a \"sickness fund\". And when you think of an employer paying, it is actually out of wages, as what would have gone into wages goes into the payroll fund to pay for the sickness fund. Then, when you finally go to the hospital or clinic, you think it is very cheap. But actually you have paid for it. It is actually pre-paid healthcare, with very few limits on how you use it. This is a fundamental point we have to understand. In fact, there is no cheap or free healthcare although it sometimes looks like that.
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It is being paid for.
So, we will have to spend more on healthcare in future. As our society ages, as medical treatments that improve the quality of life become available, we will have to spend more. But we will have to do it in a cost-effective way and prevent the total healthcare bill from spiralling upwards because everyone will have to pay for that.
We have to prevent the total healthcare bill from spiralling upwards. And to do this, we have two key strategies: first, to rebalance the structure of our healthcare system; and second, to ensure that we have the right incentives for everyone – doctor, patient and insurer.
The first strategy of rebalancing the structure of our healthcare system has been spoken about. Dr Lam Pin Min has been talking about this for some time. He has spoken about it again in the debate and several other Members have spoken about this – the need for us to place much greater emphasis on primary care and on community care: primary care through our GPs especially; community care through our rehabilitative centres, home-based care, nursing homes and other community facilities. It is very important in our next phase.
In the near to medium term, we will still have to expand our acute hospital capacity and we are going to invest significantly in acute hospitals. But in the longer term, it is really the expansion of capacity in primary care and community care that will ensure that we deliver quality care while preventing the total bill from spiralling out of control. We have to invest in primary care and community care and rebalance our system away from an over-concentration on the acute hospitals over the long term. That is why we have CHAS and stepped up, in fact, our subsidies for intermediate and long-term care to encourage people to get treatment and care nearer to home or at home. This is a very important shift for the future and Minister Gan Kim Yong will talk more about this at the Committee of Supply.
So, that is about the structure. But incentives are very important as well – incentives for the healthcare professionals and incentives for Singaporeans, ourselves. We have to first make sure that we avoid this problem of over-prescription that we have seen in so many countries. The US is an extreme example, but there are many others that we can point to, including Japan, as I spoke about. We have to ensure that treatments which are subsidised are clinically necessary based on evidence and are cost-effective.
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There are some interesting lessons we can learn from elsewhere in this regard. In fact, in the UK, France and Germany, they have set up institutions that look at evidence-based research on effective treatments and technologies for various illnesses. When should a specialist referral be made? We can learn from some of these experiments and develop our own systems.
Second, we have to promote more team-based care, in particular, one that allows our nurses and allied health professionals to play larger roles alongside our doctors. Here, too, there are very good examples in Australia and elsewhere, where nurses play a larger role. Dr Lam has also spoken about this.
Third, we have to ensure that our healthcare clusters are encouraged to play a key role in managing the overall quality of care in and outside of hospital. The clusters are not just the hospitals but they involve primary care and step-down care. And our clusters have to take responsibility for overall care of the patient, both in and outside hospital. The Government will support new initiatives, new alternative approaches, such as tele-health. Khoo Teck Puat Hospital, for instance, has a tele-health system that involves nursing homes where the patients and nurses of the nursing homes can communicate directly with the geriatricians at the hospital. It saves on time, is convenient and it allows the patient to stay in the nursing home and not to be warded in the hospital.
Finally, we all have to take responsibility for maintaining healthy lifestyles and many Members spoke about this – Mr Gan Thiam Poh, Dr Intan Mokhtar – the importance of healthy lifestyles, and the Government will spare no effort, especially through HPB, in promoting healthy lifestyles and early screening for all Singaporeans.
I have spoken about healthcare spending at some length because this is, in fact, a key fiscal challenge for our future – controlling total healthcare spending and finding a fair balance in terms of who pays for that total bill. A fair balance between the individual, the Government and the employer. It is a very important challenge for our future, and both MOH and MOF will be quite seized with this issue over the next few years.
Let me move on now to the third theme for this round up, which is the need to balance our Budget as spending goes up in the future. We have to plan for our higher infrastructural and social spending.
First, expenditures will go up. We expect our expenditures to increase by another two percentage points of GDP by 2020. And beyond 2020, it will
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increase by at least another 1% of GDP in a decade. So, the increase is likely to be 3% of GDP in total by 2030. It will be driven by two key components: first, infrastructural spending; and secondly, social spending, especially in healthcare.
For infrastructure, I would not go through all the details but, basically, we have a lot more investment to do in our infrastructure. We are investing heavily in our rail lines. Over the next 10 years alone, we are going to expand our rail network by about 100 kilometres, which is more than any other 10-year period in our history. Then, by 2030, we will be doubling our entire rail capacity to 360 kilometres, which is a massive investment. The expansion of Changi Airport will be another very important infrastructural investment – Terminal 5 – in order to cater to many more passengers. It is not just an infrastructural facility. This is a key industry in its own right – staying relevant and competitive in the aviation space is an important economic strategy for us. And it is an important strategy to help the rest of our economy because Changi Airport also supports our wider economy. So, another very important investment and an expensive one.
Third, housing. Quite apart from the fact that we are building a lot more HDB flats – 100,000 new flats over the next few years – by 2020, about two-thirds of our HDB flats, which is about more than 630,000 units, will be 30 years or older. So, estate renewal and rejuvenation will be a very important priority as we go forward and, particularly in the next decade, we will have to steadily upgrade and renew our HDB estates. So, that, too, will be a source of increased spending.
Social spending will increase and I have explained the challenge in healthcare expenditure. Quite apart from what I was talking about with regard to subsidies and the need for increased spending at point of treatment, there is an immediate infrastructural challenge. We are increasing public hospital capacity by 50% – Ng Teng Fong General Hospital, Sengkang General Hospital, Woodlands General Hospital. We are increasing intermediate and long-term care facilities by 80% by 2020 – nursing homes, community hospitals – an 80% increase in capacity by 2020. And we are increasing our subsidies, as I have spoken about.
So, in Budget 2012, two years ago, we had projected yearly total healthcare spending to double from $4 billion to $8 billion by 2016. We are, in fact, likely to reach the $8 billion figure, which is close to 2% of GDP, a year earlier in 2015. We are going to get there earlier – $8 billion of healthcare spending in 2015. Beyond that, healthcare spending will continue to grow. We expect it to reach about $12 billion by 2020. So, from $4 billion in 2011 before we announced a
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change in 2012, to $12 billion by 2020, a three-time increase.
Beyond 2020, as our baby-boomer generation enters into retirement, gets older, the bill will grow. So, we have to spend more as our society gets older. But we are not spending less in other areas. In fact, if we just look at it demographically, we would think, as our society gets older, we spend more on healthcare and we spend less on the young because the younger cohorts are smaller. In fact, despite smaller cohorts, we are not spending less on education because we are spending a lot more per student. Smaller cohorts but a lot more spending per student at every level – preschool, through our schools and, importantly, in the tertiary sector because we are expanding opportunities in the tertiary sector, including university enrolment going up to 40% of each cohort. So, we are spending a lot more on healthcare and for older Singaporeans, but other spending is not coming down. In particular, for our young, we have to keep investing in them – more investment per student, per Singaporean.
So, how do we manage this increase in spending and stick to prudent fiscal planning?
First, as our spending goes up, we have to ensure that all spending is judicious. We have to achieve value-for-money in every programme and be obsessed with achieving value-for-money in every programme.
Second, we have to target social subsidies at those who need them most. And for most of our schemes, this means more for the lower-income group, but also some support for our middle-income group. Avoid universal subsidies, as Mr Ang Wei Neng just said. The Pioneer Generation is the exception because we are honouring a whole generation for what they have done for Singapore. But, in general, avoid universal subsidies, stick to targeted subsidies that give more to those who need them the most and also help the middle-income group.
That is our first strategy to do with spending. Second, we need to raise revenues over time to ensure that we can meet our future needs without the risk of persistent deficits. We are starting from a position of strength. We have a healthy fiscal position today, and this is because we made timely changes over the years to strengthen our revenue base and to develop a resilient revenue base.
We increased the GST in 2007 while providing a significant package of offset to help the lower- and middle-income groups. The GST Voucher for the
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lower-income group is now permanent.
We also put in place the Net Investment Returns framework in 2008 which has been a major addition to our revenues and created better resilience in our revenues as well. Net Investment Returns Contribution provides 2% of GDP each year in our Budget or about $8 billion. To illustrate how significant it is, just think of the many other countries which are in exactly the reverse situation. Instead of bringing on to their budget, 2% of GDP each year in Net Investment Returns, they have to do the opposite. They have to find tax revenues to service debts, with 2% of GDP being the lower end of the scale, because, in fact, if we look at most of the advanced economies, for example, UK, Japan and many other countries, we are really talking about 3% to 4% of GDP each year that has to be found in revenues to service their debt – exactly the reverse situation.
So, this is a real strength that we have in Singapore and it comes about because we have maintained prudent fiscal policies over the years. We have built up our Reserves and we are now able to use the investment returns on our Reserves to fund current expenditures. So, our strong fiscal position has allowed us, in the current term, to set aside resources to meet future priority needs. And this is a prudent way of managing the Budget. While we have the strength, set some aside because we know there are needs in the future. We have set aside money for the Community Silver Trust, for R&D and, most significantly, we are setting aside monies for our Pioneer Generation.
But what do we expect going forward? Beyond this term of Government, it is going to be different. Our revenues are not expected to increase as a percentage of GDP. In fact, revenue growth may moderate. The asset market is likely to moderate. We are not going to get the same amount of asset market-based taxes as we had done in the last few years. Our foreign worker levy collections will also taper off as the foreign workforce growth slows down.
So, revenues are not going to increase as a percentage of GDP but spending will go up as a percentage of GDP. We will not have the current fiscal advantage that we have in the future. And at some point, our revenues will fall short of expenditures. This is a challenge which many economies faced. Hong Kong, which is a very similar society to us in terms of its demographics, faces the same challenge. They do not have to spend on defence and foreign relations but, in fact, they have the same ageing workforce. And they have projected that within the next seven to 10 years, they are likely to face structural deficits where revenues will fall short of expenditure structurally. Their Finance Secretary, Mr John Tsang, has acknowledged this, in fact, in last year's budget as well as this year's budget. Last year, he acknowledged that \"the growth of government
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revenue will drop substantially if the tax regime remains unchanged\". So, they know they need to change. Like them, we will run into structural deficits if we do not raise revenues in the next decade. So, we must be prepared for the years ahead and build up our revenues for the spending needs of the next decade and beyond.
How do we do it? Our approach has to be based on three principles.
First, whatever our tax and revenue strategies, we have to sustain a vibrant economy. Second, we have to maintain a progressive fiscal system – a fair and equitable system of taxes and transfers; and third, keep the tax burden on the average Singaporean, the average household, the middle-income low.
Three principles: keep the economy vibrant, ensure we have a fair and equitable system of taxes and transfers and, third, keep the burden on the middle income low.
The first principle is very important. Mr Alvin Yeo and Dr Janil Puthucheary spoke about it. We have to keep our economy vibrant. That is central to our social strategies because an inclusive society is a hollow concept if we do not have fruits to redistribute and share. We have to keep the economy vibrant. And that is how Singaporeans' lives have improved.
Economic competition is intensifying. It is not lessening. It is intensifying globally. The UK is bringing down corporate income taxes to 20% by next year. Taiwan has reduced its corporate income taxes to 17%, which is the same as Singapore. Importantly, quite apart from taxes, the world of technology and globalisation is reshaping the way business is being done. \"Re-shoring\" back to the advanced economies is happening, particularly in the United States, driven partly by cheaper energy cost because of the shale oil and gas revolution. Advances in robotics and additive manufacturing are allowing for cost-effective manufacturing to be done much nearer to their customer base, allowing for rapid proto-typing and mass customisation catering to their markets. It used to be too expensive to do it in the United States. It is becoming increasingly possible because of advances in technology.
To be sure, our economic competitiveness package is not just about taxes. It is about a quality workforce, excellent infrastructure, rule of law and our whole system of governance. It is about how, as Singaporeans, we make the system work well. Taxes are not the only factor. But the reality is we are a small nation without a natural hinterland and businesses do not need to be here. Ms
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Jessica Tan made this point that even knowledge-based and creative businesses do not need to be here. They can be done anywhere in the world. And with technological advances, they are being done everywhere in the world – sliced and distributed around the world and then brought together when it reaches the consumer. We have to remain competitive so that we continue to attract investments and grow talents. And that also involves retaining our own talents – Singaporeans who are well-qualified, well-educated and mobile.
However, it does not mean that we keep taxes unchanged. For example, we made property taxes more progressive last year and there is further room over time to enhance our asset taxes. We have to keep all options open.
Second principle: a fair and equitable system of taxes and benefits. That is a very important second principle. And it means, firstly, that everyone has to pay some tax. I think that is a good society where everyone is contributing. The majority of Singaporeans do not pay income tax but they pay GST. Everyone pays something for a better Singapore. But those who have done better, those who are better-off, should contribute more to society. And the lower-income and those in need should receive the bulk of the benefits. Taxes and transfers have to enable us to level up society.
That is our system. Everyone contributes something but those who are better-off contribute far more, and those in need receive more benefits than the taxes they pay. They are paying something in tax but they receive more benefits back. And the GST is a good example.
Not every tax in a progressive system needs to be a progressive tax. In fact, that is not an efficient system. Not every single tax or benefit needs to be progressive, but the system as a whole must be progressive. And the GST is a good example because the GST, in its own right, is a regressive tax. When we increased the GST, we also made major changes in our other social policies – Workfare, housing grants, education subsidies – many other changes that far more than offset the impact of a higher GST on the lower income group. It is not just a matter of the GST voucher. The GST voucher is one part of the permanent offset for the GST. It is a whole system of means-tested benefits that ensures our lower-income group gets back far more benefits than the taxes they pay. In fact, for every dollar of tax they pay, they get at least five dollars back through benefits at each stage of life – from childcare all the way to retirement needs.
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In my Budget Speech, I have given the example of a low-income couple, the amount of benefits they get over a lifetime. I would not go through the details again but it is a very progressive system of taxes and subsidies.
If you look at the tax system alone, it is more progressive than in several advanced countries. If we take the UK, for instance, despite very high top marginal tax rates, the top 20% is paying 44% of all taxes, if you add the VAT, income tax and other taxes together, they are paying 44% of all taxes. In Singapore, the top 20% pays more than 50% of all taxes. It is about 52%, a highly progressive system.
Next, I will show you how things add up across the system – taxes and transfers together – how do they add up and how we have a system where those who are better-off pay more taxes than the benefits they receive and those who are less well-off get more benefits than the taxes they pay.
I should first explain that this chart shows the net benefits, net transfers – after you pay your taxes, what is the net amount you get in transfers. [A chart was shown to hon Members. Please refer to Annex 4.] As you can see, the bottom 50% in the income ladder receive significantly more transfers than the taxes they pay and those at the higher end are paying more taxes compared to the transfers they receive. This is expressed as a percentage of household income. If I express it in dollar terms, of course those at the higher end would be paying a very large amount of dollars in net taxes. But as a percentage of income, it is lower.
I should mention also that the following is important because it comes into interpreting many of our other statistics. I have left out the first decile here, which is the bottom 10%, because we have to understand that two-thirds of the bottom 10% are, in fact, retiree households who do not have incomes, but many of them are, in fact, not poor. Sixteen percent of those in the bottom 10% live in private properties; another 13% live in HDB 5-room and executive flats; and a fair number own cars and hire maids. The bottom 10% includes basically anyone who is not earning an income from work, although some of them are quite well-off. So, I have left the bottom 10% off from there. In any event, because they do not have income from work, if I were to add them in, the benefits cannot be expressed on the chart because, as a percentage of income, it would be infinity.
But the basic point is, if you look, for instance, at those in the second decile, which is our low-income households, they get significantly more amount of
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dollars in benefits compared to the taxes they pay. And compared to 10 years ago, it has shifted – because the red bars reflect the situation in 2013, even before this year's enhancements, and the blue bars reflect the situation in 2003 – a significant shift towards progressivity in our fiscal system.
And we are doing more. In this year's Budget, we spoke about KiFAS, we spoke about the increased subsidies for pre-school education and the increased subsidies in the tertiary level.
And I just want to mention one fact which did not feature in the Budget but which is a continuing story in the education system, which is how we are doing more in the school system to help children who have difficulties in basic skills – literacy, numeracy and other areas. We are already spending 20% more for a child who is weak in literacy and numeracy throughout the course of their Primary education, compared to the average pupil. And over the next few years, by 2017, this will increase to 40%. We will be spending 40% more because of MOE's strategies on children who are weak, compared to the average being spent on all pupils – an important initiative.
To summarise, whatever we do to raise revenues in future, we have to retain this fair and progressive system of taxes and transfers.
Third priority: keep the tax burden on the middle-income low. It is an important objective of our system and Singaporeans want it to remain that way.
This chart which I show will show average tax paid by the median worker in Singapore. [Please refer to Annex 5.] Average tax paid by the median worker – this is just income tax and GST – is significantly lower than in other countries. In fact, it is lower even than Hong Kong because, in Hong Kong, income tax starts from the first dollar. It is like the UK system. In our system, most people do not pay income tax, but they pay GST. So, the average tax on the median worker is very low by international standards. And even if we include all other taxes, for instance, foreign maid levies, taxes on cars, we still remain a relatively low-cost country, with low taxes for the middle-income group.
This chart compares the tax burden in Singapore with the UK and it looks at what is called the middle quintile, that is, those from the 40th to the 60th percentile. [Please refer to Annex 6.] This is real data. This is what all the taxes amount to. Data show that the effective tax rate, which is the total amount of taxes as a percentage of their incomes, is about 10%. For those who
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own a car, it would be somewhat higher. Those who do not own a car, it is lower, at about 7%. That is our system.
We have to keep the tax burden on the middle-income low so that they get to keep as much as they earn. That is our principle. Help their incomes go up and help them to keep as much as they earn so that it is principally the higher-income group that pays significant net taxes into the system which we use to help the lower-income group so that they can get significantly more benefits than the taxes they pay.
So, we have to keep these approaches in mind in future years. We have a strong revenue position for now, but in the decade ahead and beyond, we are going to need more revenues to meet our infrastructural and social needs. Keep our economy vibrant, keep a fair and progressive tax system, keep a low tax burden on the middle-income group, and that is how we will keep Singapore a nation of opportunities with assurance for all and a country that is fair and equitable to its citizens.
As Mr Seng Han Thong has said, it is a very unusual situation. We have a system where we have the heart as well as the strength. I think the Member used a familiar Chinese saying for this, \"We have the heart as well as the strength\". There are many other countries where they have the heart but they are waiting for a future government to deliver the strength. We have the strength. We are able to do things with a heart, provide quality care, provide services in a humane way and sustain what we do because we have prudent fiscal policies that make sure we can afford it. We must stick to that system, of having the heart and having the strength.
So, let me conclude very briefly, Mdm Speaker. We have had a very good debate. As I mentioned, very strong support for the restructuring of our economy and raising of our productivity, including transforming our SMEs, jobs and social culture. Strong support for the steps we are taking to build a fair and equitable society and strong support for prudent fiscal policy which has allowed us to set aside a package to honour our Pioneer Generation, to set aside the funds today for the full life of that package.
It is worth emphasising a point which Miss Penny Low made, which has to remain our key focus for the future. She made a very good point, which is: what matters most to the Pioneer Generation? What has mattered most to them is that the next generation does better than them. And we all know it. We know it from every mealtime. We know it from every conversation we have in the
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community. That is what they are like. They want their children, they want the next generation to do better than them. They are like that. And because they are like that, Singapore is like that. We are like that. We want our children to do better. So, every Budget must be focused on our future: investing in our young, opening up opportunities and helping them to create a better Singapore.
Mdm Speaker, thank you. [Applause.]
[(proc text) Question put, and agreed to. (proc text)]
[(proc text) Resolved, \"That Parliament approves the financial policy of the Government for the financial year 1 April 2014 to 31 March 2015.\" (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Commencement Time of Committee of Supply","subTitle":"Announcement by Mdm Speaker","sectionType":"OS","content":"Mdm Speaker: Order. We have completed the debate on the Budget Statement. We are now going into the debate on the Committee of Supply. I have revised the commencement time of the Committee of Supply to start immediately. With the earlier commencement time, the revised \"guillotine\" time for Head U – Prime Minister's Office is 4.10 pm. Hon Members will be notified of the revised conclusion times for the subsequent Heads of Expenditure. The revised \"guillotine\" times that I have fixed will also appear in the Official Report [Please refer to Annex 7.]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Estimates of Expenditure for the Financial Year 1 April 2014 to 31 March 2015","subTitle":"Committee of Supply – Paper Cmd 1 of 2014","sectionType":"OS","content":"[(proc text) Order read for consideration in Committee of Supply [1st Allotted Day]. (proc text)]
[Mdm Speaker in the Chair]
The Chairman: Main and Development Estimates of Expenditure of Singapore for the financial year 1 April 2014 to 31 March 2015, contained in
\tPage: 56
Paper Cmd 1 of 2014. For convenience, I shall take the totals for each Head of Expenditure in the Main and Development Estimates as they appear in the last columns of the schedules of estimated expenditure under the Main and Development Estimates Outlays for FY 2014 on pages 6 and 7 respectively of the Command Paper.
A total of 452 amendments to the Estimates of Expenditure have been submitted this year. The guillotine times to the discussion of the Heads of Expenditure under Standing Order 92(7)(a) have taken into consideration the earlier commencement time of a sitting, the reduction of Question Time and Parliament's resolution to extend sitting times of the Committee of Supply for each allotted day.
I must remind hon Members that the total time for discussion of each Head of Expenditure includes the replies from the front bench. With the assistance of the digital timer in the Chamber, I trust that hon Members will be able to keep to the speech times indicated against their amendments. I would urge hon Members, both from the back and front benches, to adhere to their time limits, as I will be very stringent in my time-keeping.
I shall deal first with the Heads of Expenditure in respect of which amendments stand on the Order Paper Supplement. Head U – Prime Minister's Office. Mr Seng Han Thong.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Committee of Supply – Head U (Prime Minister's Office)","subTitle":null,"sectionType":"OS","content":"Mr Seng Han Thong (Ang Mo Kio): Madam, I beg to move, \"That the total sum to be allocated for Head U of the Estimates be reduced by $100\".
Singaporeans want an incorrupt government and, at the same time, they have held our public service in high regard. They believe that an effective and incorrupt public service is a key pillar of our prosperous and stable Singapore. The Government is able to introduce the $8 billion Pioneer Generation package this year not by chance but by the incorruptible system of governance supported by belief of the people in a clean public service.
Indeed, Singaporeans whose children are civil servants feel proud that their children are part of the Civil Service. Thus, the trust that Singaporeans place in
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the Public Service must be preserved and enhanced. Singaporeans see each and every civil servant as an integral part of the Government, be he a postman or a Permanent Secretary. However, in the last two to three years, there have been cases involving public officers at the middle level in CPIB, Home Team, education, foreign service and other Statutory Boards who were found guilty of wrongdoings. Singaporeans are asking, \"Why are there more and more such wrongdoing cases by the Civil Service?\" Thus, I would like to suggest that the Public Service adopt two pre-emptive approaches to preserve the integrity of the Public Service.
One, more stringent recruitment criteria and monitoring system, especially for middle-level public servants, be adopted so as to strengthen public trust. The open and transparent monitoring system for the Public Service is to capture any wrongdoing of the civil servants before the situation gets from bad to worse. Thus, if a civil servant visits the casino for more than 100 times a year, the monitoring system should sound the alarm. We may identify a few more areas of monitoring for a start.
I trust different Ministries must have their own internal monitoring system by now. My point is that we should make it more open and more transparent so that all civil servants are mindful of their misbehaviour. It is both preventive and pre-emptive. However, the effectiveness of such a monitoring system design lies in the ability to sustain the efforts.
Two, the CPIB steps up its education efforts to remind Public Service officers across all levels, especially those involved in licensing, pricing and transacting public services and goods, on what is an incorrupt government, what corrupt practices are and what actions are not acceptable.
Madam, systems are designed and maintained by people. We may have a very effective system but a corrupt officer can circumvent and corrupt the system. On the other hand, in the case of an upright officer and an ineffective system, the good officer can keep on enhancing the system. Such good value system of uprightness should be internalised in the whole of the Civil Service.
(In Mandarin): [Please refer to Vernacular Speech.] The integrity of the Singapore Government and the efficiency of its Public Service are the hallmarks of Singapore. We take pride in them. This resonates especially well with the first- and second-generation Singaporeans. They know that without the integrity and efficiency, it will be impossible for us to fund the $8 billion Pioneer
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Generation Package.
However, in the last two to three years, there have been cases involving public officers. People cannot help but wonder, what happened to our Public Service? Is it because \"the mountain is high and the emperor is far\"? Or is it because \"material comforts lead to lust\"?
Why can a school principal not lead by example? Why does a Police officer, in executing the law, break the law? Why does a CPIB officer overstep the legal boundary? Of course, people are not generalising. They still have faith in our public service. They also know that in a large organisation, such as the Civil Service, there will always be a few black sheep.
Should we not strengthen the supervision of the public service and increase its transparency? Public officers who are pondering on potential corruption would then know that they are being watched. Shall we review the recruitment process of public officers so that we can truly select the best, the ablest \"horse\", based on Bo Le's standard?
This year is the Year of the Horse. We should act immediately. People hope we have more outstanding stallions in our public service. People also hope that the Government can get rid of those black sheep.
Mr Ang Hin Kee (Ang Mo Kio): Madam, how well have we done in the efforts of our Civil Service, including those from the Statutory Boards, to help its low-wage workers to earn higher income, improve their employability and re-employment status? What more can we do to help them, including our daily-rated workers, our monthly-rated as well as low-wage civil servants, to improve their livelihood?
The Deputy Prime Minister (Mr Teo Chee Hean): Mdm Chairperson, I thank Mr Seng Han Thong and Mr Ang Hin Kee for their interest in, and support for, the Public Service.
The Government places strong emphasis on the integrity of the Public Service. We expect public officers to uphold the highest standards of integrity and professionalism. As I informed the House last year, the Public Service does not tolerate wrongdoing and misconduct. The Government views every case of misconduct seriously and takes firm action, including prosecuting the cases
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vigorously where appropriate. Recent cases have shown that we take errant officers to task, regardless of seniority or job function.
We have systems and processes to maintain the integrity of the Public Service, and I agree with Mr Seng's two suggestions for improving the integrity of the Service. We regularly review and strengthen these measures to address weaknesses or adapt to new circumstances. For example, in addition to requiring all public officers to declare their financial standing when they are first appointed to the Service, and every year thereafter, we introduced rules last year on casino visits to reduce the risk of officers becoming indebted and susceptible to exploitation.
More stringent rules on casino visits apply to senior officers whose misconduct will have significant reputational risk to the Public Service, such as the Permanent Secretaries and Chief Executives, as well as officers in positions that expose them to the risk of being suborned and exploited, such as police officers and officers performing cash transactions. For example, while most officers are required to declare only if they have visited the local casinos more than four times in a month, senior public officers are required to declare every single visit they make. Police officers working on law enforcement matters involving the casinos are not allowed to visit the casinos, except for official reasons. I think these are slightly tighter than what Mr Seng had suggested.
We have also extended Mandatory Job Rotation for fraud-prone positions, such as those handling procurement and market-sensitive information. There are several different avenues for public officers to report suspected misconduct, and we want our public officers to do so. An officer can report such cases to his supervisors, his Permanent Secretary, the Head of Civil Service or the Public Service Commission. Officers may also report to enforcement agencies, such as the Police or Corrupt Practices Investigation Bureau (CPIB). Officers do use these channels and surface suspected wrongdoing which will be investigated. So, officers are looked upon not just by external agencies but also by their colleagues, supervisors and subordinates. And this is the system which we want to have, where every public officer is responsible for the integrity of the Service.
Beyond systems and processes, it is values and culture that define the Public Service, our public officers, and how they carry out their duties. Our public officers must be anchored in and driven by the core values of Integrity, Service and Excellence. These values are embedded in our human resource processes, such as hiring new officers, training and developing our officers, and
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assessing their performance.
All public officers are governed by a Code of Conduct which is based on the principles of integrity, incorruptibility and impartiality. The Code was refreshed in September 2013 and is available on the Government Intranet. But, of course, the Code is a very dry document, so we have produced a handbook with frequently asked questions and illustrated examples. This handbook is given to all civil servants and made available to the Statutory Boards for distribution to their officers.
In January this year, MOF also issued a Government Procurement Code of Ethics and Standards of Professional Conduct for procurement officers. This is also available on the Government Intranet. The Code sets out the professional values, ethos and appropriate behaviour that we expect procurement officers to abide by in their engagement with suppliers. We emphasise the importance of values throughout the career of a public officer, at the point of induction when they join the Public Service and in milestone leadership programmes at all levels, including the middle management level that Mr Seng was concerned about.
In the past five years, CPIB has conducted an average of about 60 anti-corruption talks for public officers each year, especially those who are new in service and those in enforcement and regulatory agencies.
Mr Seng also expressed concern about the number of recent cases. The number of public officers prosecuted under the Prevention of Corruption Act has remained stable over the past five years and we will continue our efforts to eliminate corruption and bring down the numbers further. This is so also for other cases of misconduct.
Public Service leaders are also made aware that the tone that they set in an organisation affects the culture. Their personal demonstration of the values of integrity and accountability helps the staff to understand the importance of the values, the types of conduct which are acceptable and should be carried out, and help them to apply the values in their daily work.
Even with tight systems and processes and efforts to build strong values, there may be people who try to circumvent the rules. When wrongdoing occurs, we adopt a zero-tolerance approach and take firm action against the officer in a decisive and transparent manner.
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Madam, though there are some errant officers, the vast majority of our public officers take pride in serving Singapore and Singaporeans and uphold the Public Service values of Integrity, Service and Excellence. Each year, we recognise our outstanding officers, so that they will inspire their fellow officers and encourage those who are considering a public service career to do so. And I am confident that our public officers will continue to do their best in their work and, in so doing, help to strengthen the public's trust and confidence in the Public Service. It is, indeed, a tribute to our system and to our public officers that many feel proud that their children join the Public Service.
Mr Ang Hin Kee asked how the Public Service is helping our lower-wage workers. We review salaries regularly to maintain market competitiveness. Most recently, in December 2013, lower-wage civil servants, for example, those on the Operations Support Scheme, received a salary increase of $50 to $70.
In 2012 and 2013, we had also given wage increases of $60 and $70 respectively to Division IV officers, going beyond the National Wages Council's recommendations. With the above adjustments, the monthly salaries of approximately 2,200 lower-wage civil servants have increased by between $180 and $200, or some 15%, over and above their annual increments.
We also help lower-wage civil servants by encouraging them to train and develop themselves through skills upgrading because increases in wages should be accompanied by increases in productivity. We recently implemented a training roadmap that helps them to identify competencies and learning programmes that will enhance their productivity and ability to undertake bigger jobs.
For example, we have developed a range of courses on customer service, including how to deliver service more professionally and to supervise a frontline team. Through these courses, frontline officers can be considered for a higher job responsibility which will pay a higher salary.
In November 2013, the Training Incentives Scheme was enhanced to encourage and support skills upgrading. And with this, Division III and IV civil servants will receive double the incentive – $200 instead of $100 upon completing a relevant Workforce Skills Qualification. Around 230 officers have been tapping on this Scheme each year. Given the increase in incentive quantum, we expect even more officers to upgrade themselves through training
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and to benefit from it.
These efforts to help our officers upgrade themselves are communicated to our lower wage workers and their supervisors through briefings and via collaterals from the Public Service Division. We also meet regularly with the HR officers from the various agencies and also with the public sector unions, to gather feedback to further improve these measures. PSD is also working with the unions to conduct a pilot study into the future work of our lower-wage officers and the skills and training they will need to take on these new roles.
In terms of re-employment, since 1 July 2011, 324 or almost nine in 10 Division III and IV civil servants who retired at 62 have been re-employed. Since 1 April 2012, Division IV officers have been re-employed at the same substantive grade and at their last drawn salary. This has been extended to Division III officers since 1 August 2013. These re-employed officers will also continue to benefit from salary adjustments and training initiatives.
Mdm Chairperson, the Public Service will continue to work closely with the unions to uplift the salaries of our lower-wage officers in parallel with updating and upgrading their skills so that they continue to serve and contribute to Singapore.
Mr Inderjit Singh (Ang Mo Kio): Madam, during last year's debate on the Population White Paper, I asked the Government to pause its relentless population growth through immigration and instead focus on solving the many problems that we created as a result of the immigration boom of the past decade. I am glad the Government has responded to this call to pause and is doing a lot more to moderate the situation.
Among the things adopted in the amended Motion to the White Paper passed in Parliament in January 2013 is that the Government agreed to plan, invest and implement infrastructure development ahead of demand and also to ensure the benefits of our population policies, such as better job opportunities and salaries, flow to Singaporeans first.
And the questions I have for the Deputy Prime Minister are: can he please share with us the change of process in infrastructure planning that will bring infrastructure ahead of time, which means, what is changed that will prevent us from making the same mistake of the past? Has the Government decided on a
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steady state of inflow of foreigners, particularly PRs? What are the yearly numbers of PRs and citizenships granted and what measures are in place to ensure that we do not overrun the numbers that we have planned which I think we did in the past?
What is the reduction in numbers of work permits, S Passes and Employment passes in the last one year? Can the Deputy Prime Minister share with the House what initiatives are planned to ensure that population policies mainly benefit Singaporeans as was passed in the amended Motion? And are we making progress in integrating the foreigners? It does not seem to show good results but perhaps, maybe, I am missing out on something.
Mr Gan Thiam Poh (Pasir Ris-Punggol): Mdm Chairperson, I urge the NPTD to urgently implement more holistic measures to assist parents with childcare and increase our low fertility rate. At stake here is our nation's future. The prevailing thought is that having children is a personal decision. Let us not deceive ourselves. There are social, economic, health, political and military implications for the whole nation. While we should remain open to qualified immigrants, we need a stable majority core of children born to Singaporeans. With mounting research proving the benefits of having children below the age of 30, it is absolutely critical that we cut down the number of obstacles facing healthy young couples who desire to have children.
One of the most common complaints I have received is the lack of childcare centres near their homes and the high fees. Taipei has substantially increased the number of childcare centres, among other measures, boosting their TFR to 1.4. Can we provide more support for our childcare sector, not only in terms of funding infrastructure, subsidising fees but also training and retaining childcare providers and teachers?
Much has already been said in this House about what is required to tackle our low TFR. Besides providing affordable, quality childcare centres in convenient locations, my parliamentary colleagues had suggested mandating flexible hours for sectors where they are feasible, implementing free pre-school education, and even providing substantial HDB discounts and priority. I fully support these suggestions and I personally advocate making it much easier for women and men to return to the workforce after taking a short hiatus to care for very young children. To the credit of the relevant Ministries, some progress,
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in fact, has been made.
For those of us worried about reduced competitiveness if we implement family-friendly work measures, the Recruitment and Employment Confederation in UK had found that businesses reported significant gains in staff satisfaction, retention and productivity after implementing flexi-work hours.
We must raise awareness among our people, especially future cohorts, of the risks of older parenthood. Despite medical advances, when it comes to having babies, time is not on our side. The medical risks of older motherhood are well-documented. Now, we have evidence that advancing paternal age can lead to higher rates of psychiatric and academic problems in offspring than previously thought.
A study of two million children, \"Parental Age at Childbearing and Offspring Psychiatric and Academic Morbidity\" was published in February's JAMA Psychiatry. Compared to children born to a 24-year-old father, children born to a 45-year-old father —
The Chairman: Mr Gan, you have a few seconds.
Mr Gan Thiam Poh: — are actually 3.5 times more likely to have autism, 13 times more likely to have ADHD, twice as likely to have psychotic disorders and 25 times more likely to have bipolar disorder. Other academic problems included failing grades, low educational attainment and low IQ scores.
The Chairman: Mr Gan, your time is up.
Dr Lam Pin Min (Sengkang West): Madam, the recent Total Fertility Rate published by SingStat showed that it has decreased from 1.24 in 2012 to 1.19 in 2013. Our Government has been actively seeking ways to help boost the birth rate, through the implementation of various schemes, like paternity leave and baby bonuses, flexi-work hours and work-life balance initiatives. In fact, last year, a $2 billion marriage and parenthood package was announced and the quantum for the Baby Bonus was increased. With the drop in TFR, I would like to ask the Minister for his views on the effectiveness of the policy changes over the years.
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I have also received feedback from some of my residents that the one-to-one matching for the Child Development Account (CDA), while justifiably encouraging parents to co-fund their children's upbringing, has disadvantaged low-income families, who may not be able to contribute upfront the matching amount.
Will the Minister consider doing away with the matching requirement and just contribute the Baby Bonus into the children's CDA?
Mr R Dhinakaran (Nominated Member): I would like to speak on a topic of great national significance – Singapore's population and our birth rates. I would like to draw our attention to the impact of low birth rates on our population policy and other implications, and suggest measures to help encourage more births in Singapore.
Our local population is shrinking but for Singapore to thrive economically and socially, we need to have a critical population mass so that there are enough employment opportunities, investments and consumption levels to make the entire economy work well. In the long run, the most sustainable solution to this problem will be to encourage Singaporeans to have more children and to help them do this without having substantial financial strain on their resources.
The Government, over several years, has already made significant efforts to make education very affordable. With this Budget, even pre-school education becomes more affordable to many Singaporeans. It is, indeed, a great effort.
I would like to further this initiative by proposing to the Government to help to meet the medical expenses for an expectant mother, right from the point of conception until the child enters Primary school. This can be supported through vouchers for the number of routine visits to doctors as it will help ensure that the costs of healthcare for the child and the conceiving of the child do not weigh down on the young couple who wants to start a family.
This will certainly help Singaporeans to have more children and not be deterred by the costs involved in raising their children. Further, I would like to suggest that for such an assistance scheme, which could become a national initiative to grow our population, we should award it universally to all young couples and, like in the Pioneer Generation Package, not base it on any form of
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means-testing. We need Singapore children, rich and not rich alike.
Mr Lim Biow Chuan (Mountbatten): Madam, over the last few months, I have met several Singaporeans appealing for their spouses to be granted Singapore citizenship.
In most cases, the couples have been married many years and the spouses have obtained their Singapore Permanent Residency (SPR) years ago. Many of them also have children who are Singapore Citizens. However, due to their lack of educational qualification or their inability to find a well-paying job, these SPRs have not been successful in their application for citizenship. Financially, they are affected because a non-citizen has to pay more for school fees and medical fees.
In contrast, I see some new couples who had stayed in Singapore for a much shorter period of time getting their Singapore citizenship in an easier manner probably because they are better qualified or earn a higher income.
Madam, I feel that we ought to consider the many other contributions by some residents who have lived in Singapore for many years. Through their hard work, they have contributed to the success of Singapore; like many of those in the Pioneer Generation. Some of them have also played their part in having children who are Singaporeans.
I urge the Government to review the criteria for granting Singapore citizenship. We should take into account the length of time that an SPR had resided in Singapore, the fact that the SPR has a Singaporean spouse or children and the fact that many of them had integrated well and had contributed to the success of Singapore over the past years that they were in Singapore.
Mr Png Eng Huat (Hougang): Madam, the number of marriages between Singapore Citizens and foreigners was reported to be on the rise since 2000. There are about 141,000 foreign spouses who have either taken up citizenship or Permanent Residency or are on the Long-Term Visit Pass at the end of 2012. Almost half of these spouses have taken up citizenship. Given such a significant number of foreign spouses here, short and long-term visits from their hometown relatives are probably on the rise. It is only human nature that many
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foreign spouses would like their own parents or relatives to visit them and help them out in times of need and crises.
Currently, the timeframe to process the Long-Term Visit Pass or extension of a short-term visit pass takes up to six weeks, as reported on the ICA website. I would assume this KPI has taken into consideration the volume of applications ICA receives each day and the time needed to process them.
I have a case of a foreign spouse of a Singaporean who appealed for an extension of social visit pass for her relative on compassionate grounds. She said that she needed her relative to stay in Singapore for another two to three months to help her look after her mother-in-law who was diagnosed with terminal cancer while she tends to her two young children and her husband who was also diagnosed with terminal cancer. He is a low-wage worker and the sole breadwinner of the family, so, she cannot afford to employ a domestic helper or an alternative caregiver.
ICA eventually approved the extension but what was expected to be a six-week process turned out to be a 24-week wait. By then, the foreign spouse no longer needed the pass for her relative. Her mother-in-law and her husband had passed on. Imagine the angst that this foreign spouse, who is already a citizen, had to go through during the long waiting period as she went about caring for her late mother-in-law, shuttling her late husband to and from home and hospital for his chemotherapy, worrying about her children and then rushing to work after finishing all these errands.
Visit Pass, like the LTVP or Social Visit Pass, has a shelf life and, as such, approving such application on grounds of compassion carries no risk, especially when the applicant is a relative of a Singaporean sponsor. A 24-week wait for an extension of Visit Pass on compassionate grounds is hardly compassionate at all. I urge the Minister to review the current protocols and procedures used in the handling of such Visit Pass applications and renewals so that those who are in dire need will not be found waiting and wanting.
The Chairman: Mr Faisal Manap, you may want to take your two cuts together.
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Mr Muhamad Faisal Bin Abdul Manap (Aljunied): Madam, over the past two days, both sides of this House are in agreement in giving our pioneers the due recognition they deserve. However, for some seniors in our midst, the Pioneer Generation Package (PGP) appears hollow and distant to their actual life realities. To them, PGP is only an acronym.
I met Mdm Tan and Mr Sim during the course of my work. Both of them were born and bred in Singapore and have never left this country. Seventy-one-year-old Mdm Tan married a Singaporean and had six Singaporean children who have since grown up and raised families of their own. Mr Sim, a visually handicapped individual, has also not left this country since his birth in 1937. When they look at their blue Identification Card issued in 1993, all this talk about the Pioneer Generation passes them by. Mdm Tan's nationality status is that of an unknown and Mr Sim is stateless. As a result of their respective nationality status, the family of Mdm Tan has to bear a heavier financial burden due to her medical conditions. And Mr Sim is unable to access the financial assistance available to him at the CDC. Having stayed in this country for the whole of their life and after giving their youth and energy to the building of this nation, they were repeatedly told of their unsuccessful applications and appeals for citizenship.
In the context of Singapore's earliest nation-building years and their illiteracy, proper documentation was not properly kept, resulting in their inability to produce sufficient documentation to the authorities. This bureaucratic rigidity has denied them their right as Singaporeans. I think the Government can and should do more for individuals like Mdm Tan and Mr Sim. More clarification on the part of the Minister would also be helpful to the children of these individuals. Under what circumstances would a person be termed or classified as \"Stateless\" or \"Unknown\"? Can this nationality status be overturned, given the lack and patchy state of documentation in many of these cases? How can family members best facilitate the process of having the citizenship of their parents restored to them?
Madam, on several occasions, the Government mentioned publicly that there is a need to maintain the racial balance in Singapore's population so as to preserve the character of our society and enhance the social fabric of this nation. During last year's debate on the Government's proposed Population White Paper, it was reported that the percentage of Malays in the resident
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population suffered a drop in the 10-year period, from 13.9% in 2000 to 13.4% in 2010. During the same period, Singapore saw an increase in the percentage of Malay citizen population from 14.9% in 2000 to 15.1% in 2010. The Government has also made it clear that they intend and will attempt their very best to attract talents and immigrants of ethnic Malay origins to Singapore to preserve and maintain the racial balance in our resident population.
Madam, I would like to seek clarification on the following issues: firstly, what is the projected size of the resident Malay population in Singapore in 2030? Secondly, over the period of three years between 2011 and 2013, what was the percentage of Malay applicants out of the total number of applications received for permanent residency and citizenship? Thirdly, out of the total number of Malay applicants between 2011 and 2013, what was the percentage that was granted Permanent Residence and citizenship respectively? And for Malay individuals whose applications were rejected, what was the basis behind their unsuccessful applications? Additionally, between 2011 and 2013, how do Malay applicants for Permanent Residence and citizenship fare vis-a-vis non-Malay applicants? Lastly, I would like to seek an update on the Government's effort in reaching out and attracting talents and immigrants of Malay ethnicity to Singapore.
Ms Tin Pei Ling (Marine Parade): Mdm Chair, last year, we debated on the Population White Paper and the House spoke at length about building a roadmap towards a sustainable population for an ageing Singapore. The pillars set out in the White Paper were to build a strong Singaporean Core. Many Singaporeans will agree, and I agree with this, too. The good news is that, apparently, most Singaporeans desire to get married and have kids.
The recent Marriage and Parenthood study conducted in 2012 indicated that 83% of singles intend to get married and 84% of those who are married intend to have two or more children. To enable this, we must continue to shift our society and foster a pro-family culture by starting and raising a family take centre stage in our life choices. This involves aligning fundamental values, societal attitudes, practices exercised in settings, such as at the workplace, and, of course, Government policies. The Government has done a commendable job so far in being pro-Singaporean families with a generous Marriage and Parenthood Package, along with all the Baby Bonuses and the likes in the past. However, with so much emphasis on families, there is still one group of Singaporean families who may have been neglected. I am referring to the
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Singaporean families with foreign spouses.
While they are not pure Singaporean families in that one spouse is foreign, as a whole, they contribute to our Singaporean Core, too.
The number of Singaporeans married to foreign spouses has been on the rise. Marriages registered between a Singaporean and a non-Singaporean make up about four in 10 of all marriages involving a Singaporean. In 2012 alone, there were about 7,017 marriages between Singaporeans and foreigners, up by about 15% from 2011's figure. This is significant and possibly suggesting that such marriages will become a common sight. It may not be the majority but, perhaps, a more common sight in future. However, the certainty of long-term residency for the foreign spouses is a significant issue. There was a total of about 11,736 Long-Term Visit Pass and Long-Term Visit Pass Plus granted in 2012. It is a significant figure. However, what happens after these Long-Term Passes expire? Not all graduates even become PRs; some never do. But the point is that there are still families who are grappling with much uncertainty and cannot plan their lives or do so confidently.
Because of the lack of certainty of stay, some who are financially sound become financially vulnerable. While some who are already struggling are now struggling even more because of single-income source and travelling costs incurred by the foreign spouse. I gave some examples in my speech at the Budget debate yesterday. Hence, there is great anxiety, frustration and fear of being separated. The problem is worse if they have children together. The hurdles that such couples have to overcome make me wonder if there is an indirect way of telling people who they can or cannot marry. Every country has its set of policies that not only reflect prevalent societal attitudes but is also a means of social engineering. This is understandable and perhaps the right thing to do for a government chosen by its people. But in this context, I struggle to reconcile the national move to increase and strengthen the Singaporean Core and enable families with difficulties, especially the low-income families with foreign spouses.
Marriage is sacred and everyone should have the freedom to choose who he or she wants to marry. Once married, it is a commitment, and there are obligations that they have to each other. None of the Singaporeans with foreign spouses I met so far has thought of abandoning their foreign spouses, though some wondered if they should give up Singapore citizenship altogether to migrate overseas just so that the family can be whole. These Singaporeans have chosen their foreign spouses to share their lives with and these foreign spouses have also chosen to give up their homelands to be part of Singapore. Moreover,
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should they have children, the children would be born as Singaporeans, given that at least one of the parents is a Singapore Citizen.
Hence, would the Government consider an immigration progression roadmap specifically awarding Long-Term Visit Pass Plus to foreign spouses upon marriage and then permanent residency after a definitive period of, say, 10 years? This will offer a greater sense of security to these families. There are, of course, concerns over marriage of convenience or engagement in illicit activities. Heavy penalties, such as immediate revocation of the pass and permanent entry ban, can be imposed in such instances. There are also concerns over the financial health of the family because of the additional family member in an already financially-needy family. The unspoken question among some is perhaps whether this would inadvertently increase the financial liability to our nation.
In light of this, I suggest that we incentivise these families by granting PR earlier if the foreign spouse gives birth to a Singaporean child and perhaps, even earlier, if he or she finds a job with a stable income. The latter would help to strengthen a low-income family's financial position. Assuming a scenario where the foreign spouse finds a low-skilled job as a stall helper, the pay can range from about $800 to $1,000 per month. The sum of money will significantly enhance the family's income and bring more benefit than our usual PA assistance which would have been likely in a single-income source family.
Madam, marriage is sacred. It has to be a union between two consenting individuals. It is a personal choice. Against a backdrop of strengthening the Singaporean Core, I hope the Government will consider this favourably.
Mr Zainal Sapari (Pasir Ris-Punggol): Madam, the presence of immigrants is one that is essential for the continued progress of Singapore, given our ageing population. Without them, Singapore's presence on the world stage will undoubtedly be affected.
The Government should refine our immigration policies and impose checks and balances to ensure that the PRs being admitted into Singapore are, indeed, valuable additions to our society. I would like to suggest the following measures.
Firstly, to review the status of the PR from time to time, let us say, every five-year interval. The PRs must have a good track record and demonstrate their
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ability and willingness to contribute to our national development before their PR status can be renewed.
Secondly, allow for greater transparency with statistics, procedures and criteria with regard to PR matters. This would create a greater level of understanding between Singaporeans and the Government.
Finally, closing loopholes with regard to male PRs being able to avoid National Service. There is rampant practice among some PR mothers who apply for student passes for their sons. After their sons have finished their education and entered the workforce, they would then apply for PR status as a \"First generation\" PR and would not be required to undergo National Service. Madam, in Malay.
(In Malay): [Please refer to Vernacular Speech.] I would like to urge the Government to review the policy on taking in Permanent Residents. We should ensure that those who are given Permanent Resident status are able to contribute to our nation's economic development and adapt to Singaporeans' way of life and social norms.
I propose that the status of all Permanent Residents be reviewed once every five years. The Government should also be more transparent with the statistics and criteria for taking in Permanent Residents, so that there will be an understanding between the people and the Government. We should also be more aware about the steps taken by some Permanent Residents to avoid having their sons do National Service.
(In English): The average Singaporean understands the need for immigrants and welcome these talents. However, immigration policies have to be refined to manage the sensitivity and sentiments of the general population towards the presence of PRs.
The Minister, Prime Minister's Office (Ms Grace Fu Hai Yien): Mdm Chairperson, let me start with an overview of the changes in our population in the last one year.
Last year, our citizen population grew at a steady pace of 0.9% to 3.31 million through births and immigration. Our total fertility rate (TFR) was 1.19, and we welcomed over 31,000 Singaporean babies. This was fewer than in the 2012 \"Dragon Year\", but more than in 2011, the \"Rabbit Year\".
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To mitigate the shrinking and ageing of our citizen population, we continued a calibrated approach of granting about 20,000 Singapore Citizenships (SCs) and 30,000 Permanent Residences (PRs) in 2013, to those we assessed to be able to contribute and integrate well into our society. This has kept our PR population stable at about half a million for the last five years.
With the tightening of our foreign manpower policies to slow down population growth, foreign workforce growth in non-construction sectors halved to 3.5% in 2013 compared to 7.1% in 2012. The bulk of the foreign manpower growth was in the construction sector to speed up our major infrastructure projects, such as in housing and transport. As a result, our total population growth fell to 1.6% last year. This was the slowest population growth in the past nine years, and almost half the average rate of 3.1% from 2004 to 2012.
As committed in the Population White Paper, we have embarked on a new strategic direction in our population policies to bring about this slower and more sustainable pace of population growth. Our goal is that Singapore continues to be an endearing home, and a good place for Singaporeans to live, work and play.
Caring for Singaporeans remains at the heart of our population policies. In the last few days, the House discussed how we will help our Pioneer Generation and older Singaporeans. We are also supporting our younger Singaporeans in their aspirations to get married and have children. One of my colleagues at the National Population and Talent Division said this to me recently, \"Encouraging people to get married and have children is not about numbers or pushing up our TFR. I encourage others to start their own families because I have enjoyed 11 years of marriage; we have three wonderful children, and I want others to experience that, too.\" What he said captured the spirit of our work at NPTD.
Our vision for Singapore is one that is supportive of family formation, where employers, relatives, communities and Government support couples at every step of their marriage and parenthood journeys. A Singapore where care options are widely available and can be used flexibly to help parents with differing needs to balance their work and family commitments; where dads and mums both play important roles in raising children; and where parenthood and family are celebrated and respected throughout society.
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We know that the decisions to get married and have children are not easy. This is where families, neighbours, community, institutions, employers and the Government all have a role to play. Mr Gan Thiam Poh, Dr Lam Pin Min and Mr R Dhinakaran have asked what more can be done.
First, is to help our singles find a life partner. I have often asked young Singaporeans in the course of my work, whether in my constituency or the Civil Service, if they are single, dating, or seeing someone seriously. Their common responses range from \"no time\", \"no money\", to \"no right person\". I always tell these young colleagues to make time for themselves.
Recently, I met a relative who told me about his worry for his single daughters, two of them, both successful career-wise, outgoing and good-looking. When he pressed his daughters to get married, they retorted, \"What for?\" The answer took him by surprise. But on further reflection, he realised that his daughters, like many in Singapore, were no longer looking to marriage for financial security or companionship. After thinking very carefully, he now takes another approach. He said he is trying to create the environment for his daughters \"to find love\". When they fall in love, the rest will follow, he reckons.
Madam, the subject of love does not fit naturally in this House and neither is it one in which the Government is an expert. I do think that this relative of mine has a point, and I wish more of us will, like him, be concerned about the future of our children and help our children in any way that is suitable, whether it is to find love, to find the reason for wanting to start a family with a life partner, or for any other reasons. We need to tell our loved ones that we need to make time for things that matter, not wait for the \"perfect timing\", and we have to prioritise and carve out our own opportunities. As a society, we should give our singles the support, encouragement and optimism to find a companion with whom they can build their family and their life together.
For couples who wish to find a place of their own, housing is a common concern that we have been addressing. MND has ramped up the supply of new flats since 2011. Since the Parenthood Priority Scheme was introduced in January 2013 as part of the Marriage and Parenthood Package, almost 10,000 families have benefited from this scheme. Among them, about half are expecting, or have young children below two years old. The Parenthood Provisional Housing Scheme has also helped over 800 families rent flats from HDB at an affordable rate, while waiting for their new flats to be completed. I am happy that these schemes are helping our Singaporeans. We will continue to work with MND and HDB to keep housing affordable and help couples get
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their flats faster.
Dr Lam and Mr Dhinakaran gave suggestions on improving the financial support given to parents, including more help with medical expenses.
Our approach here is to provide the best support, both broad-based and targeted, to help defray the costs of raising a child, while not undermining the principle that raising a child is ultimately the responsibility of the family, of the parents. This is why we enhanced the Baby Bonus cash gift last year, to further defray some of the expenses arising from having a newborn. We also have the Baby Bonus Child Development Account (CDA), where savings deposited by parents are matched dollar-for-dollar by the Government. This money can be used for child development needs, including childcare, kindergarten and healthcare expenses.
We recognise that the primary responsibility for the care and development of a child rests with the parents, and we encourage parents to save for their child's future by co-saving with them. To help parents have more time to save into and use the CDA, we extended it so that parents have 12 years to co-save into their children's CDA, up from six years previously.
Specific to healthcare costs, each citizen newborn receives a $3,000 Medisave Grant, which helps to offset the costs of the child's hospitalisation, outpatient expenses and MediShield premiums. Many of the recommended childhood vaccinations can also be obtained free at the polyclinics, while parents who choose to vaccinate their children at private clinics can use their Medisave. We have also extended MediShield coverage to congenital and neonatal conditions diagnosed from 1 March 2013. Under the Medisave Maternity Package, couples can also tap on their Medisave funds to pay for pre-delivery and delivery expenses.
I thank Mr Gan for sharing Taipei's strategies to improve the accessibility and affordability of childcare. I recently visited the Nordic countries to see how they supported families too. And we do review and consider the policies of various countries and societies in order to pick the best options for us. People in the Nordic countries have more children than Singaporeans on average, and more of the mothers are working. One of my key takeaways was the integrated support provided to parents, in terms of the comprehensive and high-quality childcare services and options available at each stage of the child's life. From the moment the newborn arrives to when he or she completes primary school,
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there are options to support parents' needs to balance work and family.
Singapore already has many elements of such support. And we have the advantage of a strong family culture and networks, where grandparents and relatives also view child-raising as a family affair. Nevertheless, it is worthwhile taking a leaf from other countries and studying what more we can do to further support working parents.
Over the past year, the Early Childhood Development Agency (ECDA) has significantly enhanced childcare subsidies, helped to set up new childcare centres and appointed three new Anchor Operators for the early childhood sector. ECDA is also working to strengthen the manpower supply and improve the attractiveness and professionalism of the sector. These moves support our goal of giving parents more good quality and affordable options, both with caring for and developing their children. In this year's Budget, we also enhanced the Kindergarten Fee Assistance Scheme (KiFAS) to provide more fee assistance to lower- and middle-income families and expanded it to cover all Anchor Operators and MOE Kindergartens. The Minister for Social and Family Development will be providing more details in his speech on our efforts in this area.
Workplaces and employers, too, have to play their part. We must foster a workplace environment and culture that supports family goals and celebrate employers' efforts in doing so.
We introduced paternity and shared parental leave to encourage fathers to become more involved and spend more time bonding with their newborn.
When children fall sick, or need to attend medical check-ups, parents need to take time off work. We extended childcare leave last year to help parents through days like these. Both dads and mums can use their extended childcare leave so they can be there for their children.
I would also like to call on employers to do more to implement and sustain flexible work arrangements and take advantage of the Work-Life Grant under the Marriage and Parenthood Package. I visited OCBC Bank recently to learn about their family-friendly workplace practices and was very heartened to hear that they had introduced pro-family measures, such as paternity leave, family leave and an in-house childcare centre, even before some of these were legislated in the Marriage and Parenthood Package enhancements last year.
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OCBC told me that it was in its interests to have these family-friendly benefits to attract and retain talent. Out of the over 100 children that were enrolled at the childcare centre at OCBC, about 80% belonged to children of OCBC staff. What they did was that they allowed a commercial space to be converted into a childcare centre, sacrificing commercial rental; but they thought that it was a useful staff retention tool, and a welfare service for their employees, to have it converted into a childcare centre.
Of the children that belong to OCBC staff, 40% actually belong to male staff, which means that the men who were working in OCBC were also taking care of their children, ferrying and picking them from the childcare centre and so on. So, it is quite heartening to see that the men are taking on a greater role, though not quite 50:50; but I think it is very encouraging.
I happened to visit OCBC on Valentine's Day, so the childcare centre actually arranged for the children to visit their parents at their workplace and give them a card, a nice flower and a cookie. It is a very good way of engaging the staff, and I can imagine that the staff that benefitted from this would be loyal and committed to the workplace. The management of OCBC told me that this was one of the reasons why some star female bankers decided to stay on with the bank, because they felt that this is the bank that cared.
So I agree with Members that companies that invest in facilities and policies that engage staff and allow staff to balance both their work, play and life choices, will be rewarded in the long term. OCBC topped a list of the most attractive employers in the banking and financial services sector last year.
Many employers like OCBC who pitch in to make a positive difference in their employees' family lives reap the benefits of more engaged, motivated and productive employees. As we tighten our labour market, employers who adopt family-friendly practices will be able to attract and retain good employees who want to achieve both family and work goals.
Going forward, we will continue to look into how we can improve the way we provide parents with greater flexibility and enable fathers to play an active role in taking care of their children. We want to help parents balance the needs of their children and their work, and we need the active participation of employers to be successful.
Overall, we have received encouraging feedback that the various support measures have given parents greater peace of mind. The decision to have a
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child is a responsibility that goes beyond a financial one, and it involves nurturing and caring for the child. We will continue to look closely at the needs of parents, take in feedback and suggestions, and refine our support as needed.
To all aspiring and existing dads and mums, as with anything in life that is worthwhile, you need to plan and create your own opportunities. We, as family members, friends, employers and the community, will be there to encourage and support you every step of the way as you embark on this challenging but immensely fulfilling marriage and parenthood journey.
Mr Lim Biow Chuan, Mr Png Eng Huat and Ms Tin Pei Ling spoke about Singaporean families with foreign spouses and asked if more could be done to support these families. Our approach here is for Singaporean families to be stable ones and able to care for and support their family members.
To support the family and the foreign spouses as they settle in and integrate, we have a range of immigration facilities for foreign spouses, including the Long-Term Visit Pass (LTVP), and the Long-Term Visit Pass-Plus (LTVP+) introduced in 2012, which enable the spouses to be employed and have access to some benefits and, over time, progress towards naturalisation as PRs and citizens.
Various factors are considered when we assess applications from foreign spouses for Permanent Residence (PR) or citizenship. These include the length of stay in Singapore, duration of marriage, whether the couple has Singaporean children from the marriage, and whether the Singaporean sponsor will be able to support the family. So, like for like, the family that Ms Tin has described – stable marriage, with Singaporean children, stayed in Singapore for a long period of time – would stand a better chance than one who is newly married or does not have children.
Where the foreign spouse does not yet qualify for PR or citizenship, he or she could be granted an LTVP or LTVP+ to enable the couple to reside together in Singapore. The LTVP+ carries healthcare and employment benefits. LTVP+ also provides greater certainty of stay. It is valid for a longer period: three years in the first instance, and up to five years for subsequent renewals.
I would like to assure Mr Png that we take into account whether there are compassionate grounds when we consider applications from foreign spouses.
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In this particular case, I think Mr Png was referring to a family member of a foreign spouse who has become a Singapore Citizen.
We have the stipulated response time of six weeks, as stated on the ICA website. But for some cases, more time could be taken due to inadequate documentation, or reasons of concern. For example, if this particular person has been applying for social visit passes for relatives, then perhaps the situation is not as isolated or as urgent as it would have seemed. For applications like these, ICA would usually take a second look and perhaps could have taken more time than usual. But I have many experiences with ICA's application process, when it was, indeed, a truly urgent matter. For example, to support a newborn in the family or a critically ill parent, they do take an urgent review of the application and grant it expeditiously. Aside from immigration facilities, we also have programmes available to help couples build a strong foundation for their marriage and help foreign spouses better integrate into Singapore society.
We recognise the key role that Singaporean spouses and extended family members play in ensuring the integration of new foreign spouses into our society. Family members are best placed to introduce foreign spouses to our way of life and to help foster in them a strong sense of Singaporean identity.
Mr Faisal bin Abdul Manap suggested granting citizenship to stateless individuals. Most stateless individuals who are 65 years and older are PRs. We will consider their citizenship applications on a case-by-case basis. Mr Manap also asked about the circumstances leading to a person being considered stateless. It could be that this person has been staying here for a prolonged period of time, and this resulted in the lapse of his citizenship in his home country.
In other cases, for example the one I have personally come across, a child was brought in and granted Singapore Citizenship on the basis of being a child of a Singapore Citizen. It was later found not to be the case and the citizenship was revoked on the basis that the reason for which it was granted was not valid. The circumstances leading to persons being stateless are quite complex and could vary, and it could involve documentation lapses or lack of proper records. We need to treat these individuals on a case-by-case basis and review the circumstances leading to the person being stateless.
Mr Zainal Sapari suggested requiring PRs to renew their status every five years. We already have a system which makes sure that our PRs continue to have strong links to Singapore. PRs are issued with a Re-Entry Permit (REP)
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valid for a maximum of five years, allowing him to travel in and out of the country. To renew their REPs, PRs granted on economic grounds must show that they remain gainfully employed and are contributing to Singapore, while those granted on the basis of family ties must show that their roots are in Singapore and they continue to have valid family ties here. PRs who travel out of or remain outside of the country without a valid REP could lose their PR status.
PR applicants must demonstrate their commitment to contributing and sinking roots in Singapore. Those who exclude their sons from their PR applications in order to avoid serving NS will not be assessed favourably. ICA may also revoke the PR status of persons who have been convicted of offences and sentenced to a jail term.
We have provided information and statistics pertinent to immigration where possible and will continue to do so. However, with regard to Mr Manap's specific request on the number of applicants from Malays or certain racial groups, we have explained in this House previously that, because of the sensitivities involved with source countries, we have not made such information available in detail in the public. But we do from time to time provide the profiles of our new citizens and PRs on a broad basis. If you would like the information, please look out for the periodic publications by the Department of Statistics (DOS) and by NPTD. We have all along been open to people who seek out opportunities in Singapore, as a place of great promise, and they bring their skills, ideas and investments that have helped us develop quickly as a nation.
If we were to close our doors to foreigners, we will be shutting ourselves out of opportunities and innovation that are available to open and globally connected cities. Our spirit of openness must, therefore, continue, as it enables us to capture opportunities and helps Singaporeans attain good jobs and a high standard of living. We must connect ourselves with the world and be open to the flow of people, knowledge and resources. This applies to everyone who is interested in contributing to Singapore, including Malays, whom Mr Manap referred to.
While we benefit from being open, we face challenges similar to other global cities. Singaporeans are concerned with being displaced. The greater diversity of people could lead to social tensions from cultural differences. The potential to leverage on growth is also not evenly distributed, leading to pressures on equity and fairness in our society. The greater density of people could lead to crowded spaces and discomfort if we are not able to plan well for it. On top of these, we need to uphold a strong sense of national identity, as we
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are both a city and a state.
We have been taking steps to address these challenges. We remain committed to having Singaporeans as the core of our workforce. We will continue to support local enterprises and ensure that Singaporeans are considered fairly for jobs. We are working with employers to provide opportunities for Singaporeans to upgrade, and to create inclusive and progressive work environments through measures, such as WorkPro. The Fair Consideration Framework introduced recently will also help ensure that Singaporeans are considered fairly for jobs. We have made the commitment to keep the ethnic proportion within our citizen population stable. So, in reply to Mr Manap, in 2030, the Malay citizen proportion will remain similar to what we are having now.
The National Integration Council has worked with partners in our schools, workplaces and the community to promote greater mutual understanding and respect among our people. We have reached out to improve the quality of interactions between Singaporeans, new immigrants and foreigners. The Council also supports ground-up initiatives from community, civic groups and individuals, leveraging on a wide variety of platforms, including sports and the arts.
A silver lining from the Little India riot is that we have employers who are now more focused on integrating or introducing workers to the practices and social norms in Singapore. I have a resident who is a Project Manager at a construction site and he tells me that now, every day, besides safety briefings, he will also spend some time to advise his workers to observe social norms, such as not littering, spitting and loitering at void decks. I think that examples like these show that our employers are also doing their part, and we encourage more of them to pay attention on integration initiatives.
In debating the Population White Paper here in Parliament last year, the Government committed to ensuring that the benefits of our policies flow to Singaporeans. We have seen Singaporean wages grow as job opportunities are created, and also improvements in the way we support and care for our people, including in important areas, such as healthcare and education, as well as increased support for low- and middle-income households.
We also committed to resolving the current infrastructure strains, and planning and investing in infrastructure ahead of demand. We have coordinated efforts to build new infrastructure at a faster pace, and are on track to provide
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more accessible public facilities, green spaces and higher transport connectivity. Mr Inderjit Singh asked what has changed in terms of the way we plan. I think in terms of our long-term planning, such as the URA Master Plan, the planning process remains the same. But I would say that our population growth is now being watched closely and regularly at a very senior level, to make sure that we keep within the planning parameters. So, that is the assurance that we would like to give to Members of this House, that we are looking at how to moderate the growth of our population and we are taking concrete steps in that direction.
This transformational journey will take time and is not without its challenges. As the pace of population growth slows, we must strike a delicate balance between concerns over the inflow of foreigners, and Singaporeans' social, economic and infrastructure needs. We have and will continue to plan ahead to balance the trade-offs. This is a journey we can all work together to achieve, to build a shared future and a place we can proudly call home.
Mrs Lina Chiam (Non-Constituency Member): Madam, there is a trend of banks refocusing their traditional deposit business as insurance businesses. Two of our local banks own huge insurance businesses, which they cross-sell at times. In some cases, the business model involves turning cash deposits into insurance-related plans. This means more fees and commissions for the financial institution.
A traditional fund or account pays interest. An alternative policy can pay cash-back. The difference is significant. Are advisers equipped to share the differences? A plan can be exposed to investment risks. A savings account is mainly exposed to the bank's credit risk.
A second trend we observed is that bank counter staff who might not be qualified financial advisers are in charge of sales KPIs.
We urge MAS to study these trends and increase regulatory oversight to combat future weaknesses in financial advisory standards.
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Ms Foo Mee Har (West Coast): Madam, MAS reported that the average outstanding unsecured debt owed by individuals seeking credit counselling has increased, and the number of individual bankruptcy orders made has also been trending up. So far, the Government has relied on regulations, such as the capping of unsecured borrowings by any individual at four times or four months' income per lender, to safeguard over borrowing.
However, an individual could still chalk up insurmountable debts by borrowing from multiple banks, each at this capped limit. A typical individual with four credit cards, two personal loans from multiple banks could potentially chalk up borrowings of up to 24 months' of his or her income. \"Hard core revolvers\" commonly borrow from one lender to pay another, constantly revolving just to keep afloat.
The MAS has announced that, effective June 2015, it will impose a borrowing limit of 12 months' income for an individual's aggregated unsecured debt, across banks. It is a significant and welcome step to help individuals manage their total indebtedness.
However, I would like to ask the Minister how many people have already chalked up debts exceeding the 12 months' income limit. I am concerned about the fate of these individuals when, come June 2015, the banks are given access to data about their total outstanding loans, for the first time. And if all the banks decide to act suddenly and simultaneously take action on credit lines ahead of the June 2015 deadline, it may lead to a devastating credit crunch and a wave of bankruptcies, with heartbreaking consequences for the families of many borrowers.
So, I urge the Government to set up an industry taskforce to oversee and coordinate actions across banks to prevent a hard landing. To help those who have already chalked up debts well beyond their 12 months' income limit, MAS should consider setting up an Inter Bank Debt Relief Programme to restructure loans, help individuals bring down their debts over time, and to give them an opportunity to \"reset\" their lives. Credit Counselling Singapore can play a key role to help heavily indebted individuals recover from serious debt problems by providing credit management information, credit counselling and, where applicable, put up a debt repayment plan.
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Madam, some individuals who are unable to borrow from banks after reaching their aggregated debt limit at 12 months' income limit, will now consider borrowing from moneylenders, where the aggregated debt limit will not apply. Moneylenders typically charge higher rates and tougher terms. The banking and moneylending sectors currently operate under separate frameworks. So, I urge the Government to consider prescribing one aggregated total borrowing limit that will apply to lending in both sectors.
A centralised credit bureau which captures all borrowings from banks and moneylenders, should be set up to enable lenders to make complete assessments of an individual's borrowing capacity, a practice already in place in Hong Kong.
We should consider instituting a set of Responsible Financing guidelines which lenders must use to help educate borrowers. They should be obliged to advise individuals on the full implication of their borrowing decisions, when the borrower is being marketed to, and when the loan contract is being signed.
Madam, ultimately, the individual must take personal responsibility for their own finances. I hope the Government will step up the provision of financial education to help individuals understand how to use credit responsibly.
Ms Tan Su Shan (Nominated Member): Madam, allow me to declare my pecuniary interest as a banker. The Government's finances are in good shape and I hope they remain in good shape even as and when revenue falls short of expenditure. The debt at the household level though remains high. As Ms Foo Mee Har said, household debt remains high. And Forbes magazine carried an article accusing us of having an unsustainably high household debt level. This is due to high home ownership for Singaporeans, especially in HDB homes.
Whilst it is true that household debt has increased, and it is now 77% of GDP, the good thing is household net worth and household savings have been rising, too. MAS has had to rely on macro-prudential policies, like the TDSR and ABSD, to control loan growth and this serves as a form of tightening. But the question I want to ask is: are our monetary policy and low interest rates responsible? After all, our interest rates followed that of western economies where unemployment is high and they have loose monetary policies.
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Yet, we live in Asia where central banks are tightening and liquidity is being drained. China is particularly relevant, especially now, with their increased financial deregulation and a more open financial market. China has recently changed their foreign exchange (FX) forward slope as well. So, China is a mega economy that has tightened monetary policy and increased cross-border trade settlement funded through Asia.
Singapore, as a leading financial centre, plays a key role in such flows. And these flows are here to stay. Capital flows to such size exerts strong pressure on liquidity and interest rates. This collision of low interest rate policy in the West and higher ones in the East are at our doorstep. Is it time to relook at our policy of controlling FX instead of interest rates?
In the past, many economists have said that due to the openness of our economy, using FX as a lever is more potent than using interest rates.
But what if rates remain low? Rates in the West may remain low for a while longer. Bain and Co published a piece of research saying that the world has too much money and rates will remain low till 2020. There are 10 times more capital than GDP in the world today. That is $600 trillion versus $63 trillion in global GDP. That means a lot of capital chasing not a lot of growth.
If low interest rates persist, we will have to rely on more ad hoc macro-prudential policies to rein in excess loan growth and, if we do, the risk is, money here may drain off to find better returns elsewhere.
This trend may lead to the real cost of money rising, despite the low official interest rates. If a liquidity premium were to arise, then the real cost of borrowing for all will be affected. This makes doing business here unpredictable and costly. More importantly, it is the magnitude of interest rate changes that pose a greater risk. These elements are out of our control. For example, the Fed hiked interest rates by a massive 425 basis points in two years, between 2004 and 2006. Rapid increases in interest rates give little time to homeowners and businesses to adjust. The macro-prudential measures introduced may then become a double whammy for all.
The issue at hand is that the withdrawal of liquidity and the concurrent higher costs of capital in Singapore will adversely affect important areas of the economy. The property market, stock market, auto dealership and domestic retail are amongst the most vulnerable. Hence, there is a need for heightened vigilance by the authorities to pre-empt the risks ahead and to ensure timely
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unwinding of these macro-prudential policies to address any downside risks. These adjustments will have to incorporate structural developments and also account for any adjustments to China's monetary policy stance so that we can set right macro-prudential policies for Singapore.
The Acting Minister for Culture, Community and Youth (Mr Lawrence Wong): Mdm Chair, let me first address the macro-issues that were just raised by Ms Tan Su Shan. I agree with her that there are strong external forces that can impact our economy and we have to stay very vigilant. Given the current uncertainties and volatile environment, it is very difficult to predict how the external environment will change. I think if you ask the economists what the future would be like, you will get different views. Ms Tan cited forecast from a Bain and Co report of a world flushed with money till 2020. But there are also many economists who predict that the days of low interest rates and cheap capital are over.
Economists are well-known for their inability to agree on many things. But one thing that economists do agree upon is that in a world of open capital flows, a country can either choose to manage its exchange rate or interest rate but not both. In Singapore, because of our small and open economy, we have chosen to focus on the exchange rate as the monetary policy tool to keep inflation in check. And this exchange rate-centred framework has served Singapore very well over the three decades since we started.
The consequence is that our domestic interest rates will move in tandem with global rates. And as Ms Tan has highlighted, such low interest rates are, indeed, one of the factors supporting the growth of domestic credit, including to the property sector.
Given this environment, Ms Tan asked whether we ought to review and even change our monetary policy approach, to move away from our exchange rate-centred framework and switch to interest rates. In fact, this is something that MAS has studied very carefully. MAS regularly reviews its monetary policy approach, and it does not take the status quo, what it does today, as a given. And MAS' studies show that our current system has been effective and, more importantly, that a switch to a regime of managing interest rates can be highly destabilising. And there are several reasons for this.
First, the exchange rate continues to play an important role in household and business decisions, as Singapore's high degree of openness has not diminished. In fact, the policy of keeping the Sing dollar on an appreciation path
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since April 2010 has dampened consumer inflation by an average of 2.3 percentage points per year over the past four years. Taking a specific example, the stronger Sing dollar has actually kept food inflation at an average of 2.3% over the same period, which is significantly lower than the 5.2% in the ASEAN-4 and 3.7% in the NIE-3 economies. So, that is one reason.
Second, given our open economy, setting domestic interest rates above global rates will attract even more capital inflows to Singapore, especially with our strong macro-economic fundamentals. This could inadvertently fuel asset price inflation. There are also potentially unpredictable costs associated with a shift in the monetary policy framework, which would affect the domestic financial system and the broader economy.
What MAS has chosen to do is to rein in the demand for property and mitigate the risks posed by low interest rates through a series of macro-prudential measures, while keeping our exchange rate-centred monetary policy focused on anchoring inflation expectations.
The effects of these measures have been encouraging. The property market is stabilising. Private residential property prices increased by just over 1% last year and, in fact, recorded a small sequential decline in the fourth quarter. There has been a clear moderation in transaction volumes. Mortgage loan growth slowed to 8.6% in January 2014, down from 16.2% a year earlier. On the whole, household balance sheets are sound, although some over-stretched households may come under pressure when interest rates rise. And that is a point that Ms Foo Mee Har highlighted, which is why besides property purchases, to encourage financial prudence, MAS has recently enhanced the rules for credit cards and unsecured credit, as Ms Foo also highlighted.
In designing these rules, MAS has been very conscious of the need to facilitate orderly deleveraging so as not to cause a hard landing or credit crunch and drive borrowers to unlicensed sources of credit. This is why the aggregate limit on unsecured borrowing from financial institutions has been set at a fairly generous level of 12 months and it will take effect from June 2015. In fact, this rule was announced with an 18-month lead time. And all this should provide sufficient transition time and also flexibility for most borrowers.
For those who have already exceeded the borrowing limit, Ms Foo was worried about a sudden credit crush in June next year. I would like to assure her that MAS has anticipated this and put in place measures to avoid such a situation. Over the last few years, from 2008 to 2012, there were about 6,000
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individuals who were counselled by Credit Counselling Singapore who had debts exceeding their annual income. Such individuals will be given additional time – till 2019 – before the aggregate limit takes effect. Furthermore, they will not be forced to make immediate repayment of their existing loans, as the limit is designed to prevent accumulation of additional debt. I should also clarify that the lending limits do not extend to education and business loans, which are not consumption-based.
I agree with Ms Foo that individuals may need help to restructure and bring their debts down over time. So, MAS has been working with industry partners, such as financial institutions, Credit Counselling Singapore, MoneySENSE and the credit bureaus, to facilitate this transition. MAS has also adjusted the relevant rules to facilitate the transfer of a borrower's debt from one financial institution to another to enable re-financing and re-structuring across financial institutions. And this was something that Ms Foo also suggested.
To encourage responsible lending, the Association of Banks in Singapore has issued Codes of Practice relating to credit cards and unsecured lending on the relevant information that should be communicated to their customers. In addition, MoneySENSE will continue to step up its education efforts through a variety of media channels.
Ms Foo also asked about borrowing from moneylenders and having a common centralised Credit Bureau. I agree with her that information on non-bank credit channels is useful in having a more complete assessment of an individual's borrowing capacity. This is why MAS has been working closely with MinLaw to align the rules governing the grant of credit by financial institutions as well as moneylenders. For example, for housing loans, the Total Debt Servicing Ratio (TDSR) framework already takes into account all credit facilities extended by both financial institutions as well as moneylenders. And going forward, MinLaw is looking to put in place a mechanism to limit the total amount that individuals can borrow across all moneylenders. MAS and MinLaw are also exploring how relevant data can be captured in the credit bureaus. The Government will study the data and monitor the effects of the recent measures to assess the need for further measures.
Let me now turn to a point that Ms Lina Chiam highlighted on the role of financial advisers and the need for regulatory oversight. Financial advisers do play an important role in helping Singaporeans plan and meet their insurance
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and financial planning needs. The industry is regulated under the Financial Advisers Act and I would like to assure the Member that MAS does keep a close watch over the business conduct standards of financial advisory (FA) firms and their representatives, and that includes representatives in the banks.
MAS uses various tools to supervise the financial advisory industry. It carries out regular risk assessments of financial advisory firms. It conducts onsite inspections to assess the adequacy of their risk management systems and the level of compliance with regulatory standards and industry guidelines. It also commissions periodic mystery shopping exercises to assess the quality of advice and the adequacy of information disclosure provided by FA firms and their representatives.
And where laws or regulations have been breached, MAS has taken appropriate disciplinary actions. These include issuing reprimands, imposing composition fines, and prohibiting persons who have committed serious offences from working in the industry for a specified period.
In recent years, MAS has continued to strengthen regulatory requirements in the financial advisory industry to better safeguard the interests of consumers and this process will continue. Let me cite a few examples.
Mdm Chair, let me wrap up by going back to the broader picture. Looking ahead, we are prepared for a scenario of higher global interest rates, which is a scenario that Ms Tan also highlighted. Should there be a tightening of monetary policies abroad, this will be commensurate with the restoration of a more \"normal\" state of the world economy. As global growth returns to trend and inflation pressures gradually pick up, interest rates abroad and in Singapore will eventually rise.
And in some way, this is not necessarily a bad outcome for Singapore. What is critical is how the US Federal Reserve does its tapering of asset purchases. Last year, uncertainty over the timing and pace of tapering resulted in sharp corrections in financial markets. Since then, financial markets have been more discriminating and capital outflows have largely been from emerging economies with weak macroeconomic fundamentals.
Nevertheless, we must be prepared for further bouts of financial market volatility and capital outflows from emerging economies. I would like to assure Members that MAS and the relevant Government agencies are closely monitoring the impact of changes in global monetary conditions on the
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Singapore economy and property market. Overall, Singapore is well-placed to weather external shocks. Our fundamentals remain sound: a balance of payments surplus, sound public finances, stable banking sector and a credible exchange rate system. These are advantages most countries do not have. As our underlying economic and financial conditions evolve, external situation evolves, the Government will continue to adjust its policy measures as necessary to ensure overall macroeconomic and financial stability.
The Chairman: We have a bit of time for clarifications. Does anyone wish to ask any question? Ms Foo.
Ms Foo Mee Har: I had asked during my speech whether the Minister could share with us the number of people, the percentage of people whom the Government has estimated, who have debts exceeding the 12-month income limit. Would the Minister share that number, if that is available, so that we have a sense of how big is that population, that has already gone over the limit?
Mr Lawrence Wong: Madam, as I mentioned in my speech earlier, we have an estimate and that estimate comes from the people who have been counselled by the Credit Counselling Singapore. Over the period of 2008 to 2012, there were about 6,000 individuals who had debts exceeding their annual income, that means debts exceeding the 12-month limit. So, that is an estimate, it is not precise because it is not based on actual data from the financial institutions or from moneylenders but that is one estimate that we have based on people who have actually approached the Credit Counselling Singapore.
Dr Lam Pin Min: Madam, I would like to direct this clarification to Minister Grace Fu with regard to the matching grant for CDA. While I understand that it is a joint responsibility between the parents and also partly the Government, will the Minister actually consider removing the one-to-one matching, or maybe make it less onerous, maybe one-to-two, one-to-three, so that the lower-income families can contribute that amount to benefit from the cap that is provided by the state?
Ms Grace Fu Hai Yien: Let me thank the Member for the question. When we were designing the Marriage and Parenthood Package, we took suggestions and views from a wide variety of people from various segments, and this is because there are differing needs. I think how society and the Government support a young family and their newborn and young children should not be limited to this Package. When we are talking about families with lower income who have to support their children's education, the subsidies provided to
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support them in meeting their preschool education needs and school fees are very significant. Similarly, when it comes to housing, the Additional Housing Grant that the Government has given to support young parents, especially to those with lower income, is also very significant.
So, the support has to be seen in totality. The CDA portion is to meet the aspirations of parents from all income segments who wish to see the future financial security of their children being built up over a long period of time. And we encourage that.
As to whether we will review the contribution rates, we will always look at how effective our packages are and we will review from time to time. As we have just rolled out the Package in 2013, we will take some time to review the effectiveness of the measures.
Ms Tin Pei Ling: Madam, I have three supplementary questions. First, I agree that we want stable families in Singapore but I would like to ask how we define stable families here. Unless we are telling Singaporeans who they can or cannot marry. In this case, if they have chosen a life partner who happens to be a foreigner, then because of the uncertainty of stay and their future in Singapore, it is really very difficult for them to become stable, whether psychologically or financially.
The second question, which is related, is whether the Government will consider having a definitive roadmap for such immigration so that the Singaporean and their families will have a clear idea of what is expected of them and they can plan their lives accordingly.
The third is about integration. Minister talked about having programmes to facilitate integration of foreign spouses or foreigners in Singapore. In this case, specifically for foreign spouses, I agree it is very important. I am wondering if this is a deciding factor in terms of granting them their passes or their status in Singapore and, if so, may I ask how is this defined and whether there is a set of measures that can be shared in this House?
Ms Grace Fu Hai Yien: Mdm Chair, I would like to explain that the criteria to grant immigration passes as well as Permanent Residence and Citizenship involve a set of very comprehensive and holistic criteria.
Various factors are involved, but I think there will be three key considerations. First, whether the applicant would be able to financially support
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the family. Secondly, whether the applicant would be able to integrate into society. And third, whether there is a commitment to sink roots.
Specifically, with respect to foreign spouses, I think the marriage has to be a stable one, so the period of time that the couple is together could demonstrate that there are stable relations and that the foreign spouse is able to be accustomed to the life in Singapore. So, there is a certain time to wait. Typically, two years to six years is what we think is reasonable, but there are many other factors involved, including whether the spouse is able to financially support the foreign spouse. Couples do have options. I think they need to look at their options and they need to consider the stability of the marriage before they take the next step of committing more for their future, for example, if they are going to buy a HDB flat without considering their financial readiness. So, we do want the families to demonstrate that it is a stable one. Having a child actually adds to that stability and that will help in their application. But at this moment, we are not considering releasing a definitive roadmap as suggested by the Member, because we have to review our criteria from time to time and we need to make adjustments depending on the applications that are coming our way.
Also, we would not like to have applicants artificially improving their applications to meet what is stated as the criteria. We evaluate them across a wide spectrum of factors, and that would suggest that it is a stable marriage with stable families. The process is there for them to slowly naturalise and gain Permanent Residence, and later on, Singapore Citizenship.
In terms of integration, it is helpful if they come from very similar backgrounds, if not they probably have to take a little bit more time. As to whether there are fixed criteria, again, I would say that we do not have any specific requirements other than what we are familiar with.
Mr Png Eng Huat: Thank you, Madam. I just want a clarification from Minister Grace Fu. How long does ICA conduct its own KPI assessment on the six-week application process for LTVP and Social Visit Pass?
Ms Grace Fu Hai Yien: I think these are very operational issues. I am afraid NPTD does not have that ability to give you that number. If you wish, I would suggest that you file a Parliamentary Question for MHA and ICA.
The Chairman: Mr Seng, do you wish to withdraw your amendment?
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Mr Seng Han Thong: On behalf of all Members who spoke, may I thank Deputy Prime Minister Teo for his reassurance of the integrity of the Public Service and his assurance that the public sector will work with the unions for the betterment of low-wage workers in the Civil Service.
I must also thank Minister Grace Fu for her sharing of the immigration policy with a slower and stable growth, and her story of her visit to OCBC Bank. I am happy to know that now she also knows that gentlemen care for childcare.
I must also thank Minister Lawrence Wong for his insightful view on our monetary policy. We are really concerned, especially in the Ang Mo Kio Town Centre, which now has more pawnshops and moneylenders than provision shops – \"当店多过米店\" —
The Chairman: Mr Seng, it is not a speech. You are supposed to make —
Mr Seng Han Thong: So, on this note, may I beg leave to withdraw the amendment?
[(proc text) Amendment, by leave, withdrawn. (proc text)]
[(proc text) The sum of $380,061,900 for Head U ordered to stand part of the Main Estimates. (proc text)]
[(proc text) The sum of $70,752,700 for Head U ordered to stand part of the Development Estimates. (proc text)]
The Chairman: Order. I propose to take the break now.
[(proc text) Thereupon Mdm Speaker left the Chair of the Committee and took the Chair of the House. (proc text)]
Mdm Speaker: Order. I suspend the Sitting and will take the Chair again at 4.20 pm.
Sitting accordingly suspended
at 4.00 pm until 4.20 pm.
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Sitting resumed at 4.20 pm
[Mdm Speaker in the Chair]
[(proc text) Debate in Committee of Supply resumed. (proc text)]
[Mdm Speaker in the Chair]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Committee of Supply – Head R (Ministry of Law)","subTitle":null,"sectionType":"OS","content":"The Chairman: Mr Hri Kumar, you can take both your cuts together.
Mr Hri Kumar Nair (Bishan-Toa Payoh): Thank you, Madam, I beg to move, \"That the total sum to be allocated for Head R of the Estimates be reduced by $100\".
The past year or so has seen significant work done by MinLaw. It has led the way in reform in important areas, such as improving access to justice, opening our legal market and helping make Singapore a more attractive place for investment and creating high skilled, well-paying jobs to Singaporeans. We are creating a third Law School, and enabling Singaporeans who were unable to enter law school in their younger years to realise their dreams of practicing law. We have also seen movement and reform in controversial and difficult areas such as the death penalty. All these are consistent with our move towards forming a more inclusive and compassionate society for all Singaporeans.
But the circumstances we find ourselves in today are vastly different from those of 20, or even 10 years ago. In particular, the Internet has revolutionised the way we live, work and play. This is particularly relevant to us as we boast the highest Internet penetration rate in Southeast Asia and one of the highest in the world.
This has posed obvious challenges to those charged with maintaining law and order, and prescribing laws which govern interactions and relationships. Many say they prefer Government to stay away from the Internet and to allow self-regulation, but those who need help navigating this new environment, or
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are harmed by it, often turn immediately to the Government for intervention.
Next week, we will have the Second Reading on a Bill to deal with harassment, which will deal in large measure with online conduct. I shall not comment on that Bill here. However, it is a recognition that many of our laws were drafted well before the Internet was even conceived, and our institutions and procedural rules may not be equipped to deal with this new paradigm. Opportunities are abundant for those who have the means and know-how to exploit the convenience and anonymity of the Internet to commit illegal acts. These include serious crimes such as identity theft, hacking and defamation. The ramifications of cybercrime are very real. Last year, The Straits Times reported that cybercrime victims in Singapore suffered the highest losses per capita in the world. It is therefore imperative that we take decisive measures against Internet crime before it becomes a permanent fixture in our society; an accepted risk.
On that note, I would like to raise two points today.
First, I would like to ask the Minister whether, outside harassment, the Ministry intends to enact more laws to deal with online conduct, in particular criminal conduct. Three areas deserve mention here.
First, many of us will recall the spate of hackings last year by \"The Messiah\". Hacking is primarily dealt with by the Computer Misuse and Cybersecurity Act. Sections 3 and 4 cover unauthorised access to computer material, while section 5 covers unauthorised modification of the contents of any computer. What is telling is that despite increasingly sophisticated and varied methods employed by hackers, these provisions have remained largely unchanged since their introduction in 1998.
Furthermore, hacking is increasingly employed for reasons other than to commit fraud or to obtain private data – some employ hacking as a means of advancing activist agendas. The \"Hacktivist\" organisation Anonymous, for example, attacks government, religious and corporate websites as a form of publicity. In view of such developments, it is timely for us to review our laws to ensure that they are adequate to deal with such threats. In particular, precise terms describing various hacking methods can be drafted into legislation to ensure there are no gaps. For example, Dutch legislation has included the definition of \"intrusion\" within their criminal legislation, with \"intrusion\" being defined as access by means of \"break through a security; by technical means; by false signals or a false key; by disguising, which is using a stolen username
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and password.\"
A second area is online news sites. Currently, these sites are regulated by conventional legislation such as the Defamation Act. The difficulty with such legislation is that it works on the assumption that the media is licensed and responsible. This assumption does not always hold true in cyberspace. This disparity between how Internet and non-Internet news providers are regulated prompted the MDA to introduce an individual licensing scheme for popular news sites last year. This may be a convenient and expedient mode of regulation, but frankly not very satisfactory.
I would submit that such issues throw up fundamental questions not just of freedom of speech, but safeguarding the rights and interests of our society. It should properly be the subject of specific legislation, where we will have the opportunity in this House to debate what is in the best interests of Singapore and Singaporeans, and how we should define boundaries and out-of-bound markers.
Thirdly, the Penal Code should be revised to reflect the reality that the Internet is increasingly being used as a conduit to commit both traditional and novel criminal activities. We have already taken several steps in the right direction. In 2007, sections 267C and 298 of our Penal Code were amended to accommodate the use of electronic media in the commission of crimes. Also, a new offence of \"sexual grooming of minors under 16\" was introduced in 2007 to target Internet sexual predators. More can and should be done.
As criminals are constantly creating new ways of exploiting the Internet and its users, we too must constantly update our laws to safeguard our rights and interests. We should in particular review whether the offences have sufficient extra-territorial reach, and whether we have sufficient legal tools to deal with criminals who stay out of Singapore. Finally, whether the prescribed punishments take into account or properly reflect the enormous and repeated harm that can be done online.
Related to this change is whether there is sufficient help and protection for those who fall victims. The anonymity of the net often allows the real perpetrators to remain hidden or out of reach. The number of online victims is also on the rise. Last year, it was reported that there was a sharp spike in mixed delivery scams, where victims fail to receive goods purchased online and are also cheated into making further payments. While only 26 such scams were reported for the whole of 2012, at least 173 cases were reported between July
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and October of 2013. There has also been an increase in online dating scams. Just last month, it was reported that the number of people robbed by online fraudsters faking romantic interest before tricking their victims out of money jumped 62% between 2012 and 2013. I therefore ask the Minister what plans his Ministry has to tackle these admittedly very difficult issues.
Madam, on to my second cut on Singapore Law Practices. Let me begin by declaring my interest as a practising lawyer.
Singapore's legal industry has been progressively opening up to international law firms, with a view towards cementing Singapore's rising prominence as Asia's legal hub. This liberalisation process began with the amendments to the Legal Profession Act in 2000. These amendments allowed foreign firms to enter into Joint Law Ventures (JLVs) and Formal Law Alliances (FLAs) with Singapore Law Practices (SLPs). This was followed by the awarding of Qualifying Foreign Law Practice (QFLP) licences to selected international law firms in 2008. This was aimed at encouraging foreign law firms to establish themselves in Singapore, giving more options to Singaporean and foreign clients and making Singapore a more attractive destination for investment, arbitration and other opportunities. Since then, a second batch of QFLP licenses was awarded in 2012.
Madam, an inevitable consequence of these liberalisation measures is a more crowded market – since the inception of these liberalisation measures, foreign lawyers in Singapore have doubled to more than 1,200, while foreign law firms have doubled in number as well. With the influx of foreign law firms in our market, arguably the best strategy for SLPs to remain competitive and relevant is to expand overseas. However, law is inherently a parochial industry, and almost all other countries have adopted far less liberal stances towards foreign firms entering their markets. As such, SLPs face challenges in developing their legal practice abroad, hampering their ability to meet their international counterparts head-on.
Could the Minister tell us if the Ministry intends to level the playing field for local law firms venturing abroad, and if so, what measures they intend to roll out?
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Mr Alvin Yeo (Chua Chu Kang): Mdm Chairman, the setting up of the Singapore International Commercial Court (SICC) is a good move by Singapore to strengthen its leadership position as a centre for dispute resolution in Asia. Building on the success of the Singapore International Arbitration Centre and Singapore's growing popularity as a venue for international arbitration, this move seeks to position Singapore as the Asian capital for cross-border cases which are determined in Court. If it succeeds, it would serve to enhance Singapore's status as a leading financial and services hub, and will bring benefits to not just our legal sector, but also the commercial services and business tourism industries.
There are two key challenges that we need to address. One is the need to ensure that judgments delivered by the SICC are enforceable overseas, particularly in the key markets of China and Indonesia.
One of the pillars underpinning the growth of arbitration is the New York Convention which allows for mutual enforcement of arbitration awards between all signatory countries and is one of the most successful international treaties of all time.
India and Singapore, being British Commonwealth countries, enjoy mutual enforcement of Court judgments under the Reciprocal Enforcement of Commonwealth Judgments Act. The challenge is to extend that reach into non-Commonwealth countries, especially those from where many disputes originate, that could find its way to be resolved in Singapore.
The negotiation of free trade agreements, like the Trans-Pacific Partnership, affords an opportunity to provide for reciprocal enforcement of court judgments. The continuing moves to liberalise trade barriers within ASEAN is yet another opportunity to do so.
Another key challenge is to dispel the notion that the SICC is a national court, as opposed to an international one. The dilemma is how to build on the \"Singapore\" aspect of the SICC, which has credibility overseas based on Singapore's well-won reputation for professional excellence, integrity and the Rule of Law, while at the same time promoting the \"International\" nature of the
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SICC.
It has been announced that the SICC will have distinguished international justices serving on its panel of judges, and also will allow foreign counsel registered with it to appear in cases before the SICC. This will go a long way towards convincing international users that the SICC is not just another domestic court. However, the presence of foreign justices, and the admission of foreign counsel, needs to be skilfully managed, so as to preserve the Singaporean nature of the SICC, which will be fundamental, I believe, to its success.
Could the Minister enlighten us on what moves are being made to so address these crucial challenges to making the SICC the success it deserves to be?
Mr Christopher de Souza (Holland-Bukit Timah): Mdm Chairman, with projections of Asia's and ASEAN's cross border trade and investment expected to triple within the next 10 years, it is inevitable that the number and complexity of cross-border legal disputes will increase in tandem. Therefore, there is a need for a neutral and respected dispute resolution hub in the region that will be able to resolve such cross-border commercial disputes effectively.
In light of this, the Minister of Law announced that MinLaw would be facilitating the establishment of two new legal institutions, namely, the Singapore International Commercial Court (SICC) and the Singapore International Mediation Centre (SIMC) in the coming year.
The establishment of these two dispute resolution institutions are based on the recommendations made by the SICC Committee, co-chaired by Justice V K Rajah, Judge of Appeal and Ms Indranee Rajah SC, Senior Minister of State for Law and Education, and the International Commercial Mediation Working Group.
I would like to ask the Minister for Law what tangible outcomes can be hoped to be achieved from the establishment of these two institutions here in Singapore, how the Ministry envisions these two institutions contributing to the growth of our thriving legal sector, and what this would mean for lawyers in Singapore.
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It would be strategic for Singapore to position itself to also become a premier centre for both mediation and litigation, building upon its current status as the leading arbitration hub in Asia and to be able to offer a full suite of legal solutions for the resolution of commercial disputes both within and beyond Asia.
Ms Sylvia Lim (Aljunied): Madam, traditional criminal proceedings are aimed at punishing the offender. The crime victim, however, incurs expense and inconvenience and even embarrassment to help the state investigate and prosecute the offence but usually receives no compensation for injuries or losses from the criminal process.
At the Criminal Procedure Code review in 2010, the Government acknowledged this gap by rephrasing the section on victim's compensation. The current section 359 now makes it mandatory for the criminal court, convicting an offender, to consider whether to order him to compensate the victim. During that debate, I supported the amendment. I raised the concern about whether the new provision will be actively used. I noted then that if the Police did not routinely record the losses or damage suffered by the victim in their investigations, the court might not have the necessary information to make the compensation order at the sentencing stage.
How has the new regime fared? In the 2012 answer to my Parliamentary Question, the Ministry revealed that there had been 82 compensation orders made for the whole of 2011. While 82 was certainly improved from the 31 orders made in 2010, it is very small compared to the number of criminal cases where losses and damage is suffered. It was stated that the prosecutors applied for and obtained the orders in appropriate cases. Does this mean the court relied solely or mainly on the prosecutors in deciding this?
I acknowledge that not all criminal cases are automatically suitable for compensation. For example, where civil claims are complicated or disputable, they will need to be separately proved. However, I believe we can consider some changes to increase the likelihood of compensation in straightforward cases, especially for victims who cannot afford to sue separately.
One option is to have a simple joining procedure as has been done in the Netherlands, allowing victims themselves to attach a civil claim to a criminal case so that the criminal court can decide on it at the sentencing stage. It could
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also require police investigators to routinely record a simple victim impact statement with details of losses and damage sustained so as to facilitate the court in making a compensation order under the CPC later one.
As the Ministry is looking into the judicial practice in this area, I hope the Ministry will work with the Police and the courts to assess these and other ways to enhance justice for crime victims.
The Chairman: Mr Pritam Singh, you can take the two cuts together.
Mr Pritam Singh (Aljunied): First, amending the Coroners Act. I raised this up in view of the relative lack of public information that was released after the death of an inmate in official custody in 2010 and the lawful discontinuation of the Coroner's inquiry on the same inmate's death last year.
I highlight this case to ask the Ministry to consider a review of the relevant sections of the Coroners Act to require coroners to continue with an inquiry in the case of death in official custody if the defendant or defendants have pled guilty to a criminal charge so the public is served by a continuation of the coroner's inquiry.
A limited review covering death in official custody would be in line with the spirit of the current standalone Coroners Act passed in 2010 shifting the spirit of coroner's inquiry from a fault-finding to a fact-finding regime. This would also be in line with the intent of Parliament as reiterated by then-Senior Minister of State for Law, Assoc Prof Ho Peng Kee, who said that the Coroners Bill of 2010 would better serve the public interest.
On to the next cut on the discharge regime for long-term bankrupts, I would like to enquire if the Insolvency and Public Trustees Office (IPTO) would consider looking actively into the discharge of bankrupts who have in bankruptcy for more than 10 years. While I appreciate the need for IPTO to be thorough and consistent in its assessment of undischarged bankrupts in addition to balancing the rights of debtors and creditors, I would like to enquire from the Ministry if the duration of time the person has been an undischarged bankrupt – as in this case more than 10 years – factors in the decision-making process with regard to discharge and whether long-term undischarged
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bankrupts, who have been listed as bankrupts, can be treated differently.
Finally, what is the progress on the review of the bankruptcy discharge regime and its anticipated completion date as announced in last year's COS?
Mr Vikram Nair (Sembawang): Mdm Chair, the Insolvency Law Review Committee, which was formed by MinLaw to review the insolvency regime in Singapore and comprised a team of distinguished insolvency practitioners, published its report in 2013 which proposed a thorough rationalisation of the insolvency regime in Singapore, including modernising and harmonising the laws on bankruptcy and corporate insolvency. What is the Government's view on the recommendations of the Committee and does it plan to implement any or all of the recommendations?
One important matter on which the views of the Committee members differed was on whether there should be a regime of automatic discharge from bankruptcy. Countries such as Australia, New Zealand, Hong Kong, Canada and the UK all have automatic discharge from bankruptcy after a prescribed period of time, provided the bankrupt complies with his obligations while a bankrupt.
On the one hand, some members of the Committee felt that such a regime would take away personal responsibility on the part of the bankrupts and encourage irresponsible borrowing. They observed that filings for bankruptcy tended to increase, the easier it was to be discharged from bankruptcy.
On the other hand, other members felt that a regime that permitted automatic discharge would significantly reduce the cost of administration of bankruptcy and would better incentivise bankrupts to work towards their discharge.
I am particularly interested to know the Government's view on whether we should have a regime that permits automatic or easier discharge from bankruptcy. Personally, I would favour a regime of automatic discharge, at least in relation to personal bankruptcy, because it would place more risk on lenders and make them more cautious in lending practices. I am personally troubled when credit is sold like a consumer good with attractive marketing. For example, in areas such as consumer credit, credit cards and even licensed moneylenders. If lenders know that borrowers can be easily discharged from bankruptcy, they will be much more careful in lending and this will hopefully reduce the amount
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of unsecured credit that is extended to people who should not be borrowing such credit.
Mr Lim Biow Chuan (Mountbatten): Madam, in the course of my Meet-the-People Sessions (MPS), I meet residents who have had to take short-term loans from licensed moneylenders to tide them over a period of time. To the surprise of these borrowers, the interest rates charged by these licensed moneylenders are very high – up to 20% effective interest rate if your annual income is up to $30,000. There is no limit on the interest rate that a licensed moneylender could charge for a person earning more than $30,000 per year. The moneylender is also allowed to collect various types of fees from the borrower. Due to the high profit margin, there is a proliferation of moneylenders in the HDB estates.
Borrowers who take a loan from licensed moneylenders are usually in desperate situations. They are unlikely to be eligible for a loan from the financial institutions. When they have to turn to moneylenders, they find that the loans given to them come with exorbitant interest rates and all sorts of fees. However, many borrowers have no options but to accept whatever interest rates and fees imposed.
I urge MinLaw to do more to protect residents who face temporary liquidity or need cash quickly for a short term. MAS regulates the financial institutions strictly; and MinLaw also regulates pawnbrokers by limiting interest charged by pawnbrokers. MinLaw should also step in to regulate the licensed moneylending industry more strictly and to reduce the maximum interest rate which the moneylender can charge.
Can the Minister let us know whether there are plans for additional measures to protect borrowers and to curb borrowing costs from moneylenders? I call upon MinLaw to also restrict the number of moneylenders in a HDB estate so that borrowers would not be lured into thinking that credit is easily available just at their doorstep. Tougher action must also be taken against any moneylender that uses illegal methods to collect back their loans.
Mr Zainal Sapari (Pasir Ris-Punggol): Madam, when the Moneylenders Bill was passed in 2008, it was intended to allow legal moneylenders to charge interest rate in line with other financial institutions in Singapore. Many people
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in need of immediate cash thought that borrowing from licensed moneylenders would be safer than unlicensed moneylenders but they were dead wrong.
In my dealings with members of the public, I have seen borrowers' receipts where the effective interest rate amounted to a shocking 43,000% per annum and another where the effective interest rate was at 159,000% per annum.
Let me give an example of a loan given to a security guard. For a loan of $1,600, inclusive of interest and principal, total repayable over five weeks is $2,240 – a whopping interest of 40%. Late payment charge is $800 on each occasion of late repayment. Late payment interest is another 40% per week.
Even the moneylenders themselves have acknowledged that for several borrowers, in order to pay off one loan, loans are taken from another moneylender. In the case of the security guard, she owes 19 licensed moneylenders.
The borrowers who default on their payments, are subjected to tremendous pressure affecting their mental health, physical well-being, family and other ties. With that in mind, there are several measures I would like to propose to better regulate moneylending institutions in Singapore.
First, impose overall cap on interest and other charges payable by a borrower in a credit year. This has to be across the board regardless of income tiers.
Second, define and stipulate the types of payments that moneylenders can charge, for example, the principal, interest and late payment fees only. This is to simplify the terms for borrowers and to close loopholes for moneylenders to be creative and have different types of late payment fees.
Thirdly, limit the total amount a borrower has to pay in a credit year for a loan to be deemed as fully paid. This can be a percentage of the loan amount.
Fourthly, to protect moneylenders from irresponsible borrowers, I propose that a centralised loan database be set up that tracks a single borrower's loans across all moneylending institutions.
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Together with the database, we could then look into restricting the amount to be loaned by any number of moneylenders to a single borrower.
With better transparency and greater restrictions in place, I believe that the contract signed between licensed moneylender and borrower can be handled with greater honesty and mutual trust – ultimately benefiting both parties and to the society at large.
(In Malay): [Please refer to Vernacular Speech on Pg xxxx.] Madam, the terms for loans imposed on a borrower by licensed moneylenders are a cause of great concern because it causes hardship to the borrower's family. The interest and other related payments imposed are unreasonable because it can lead to the borrower to be indebted for life.
It is important that the Government take measures to curb the activities of these licensed moneylenders in order to take care of the people's well-being. I propose that the Government imposes limits to the interest amount and specifies the types of payment that can be imposed on the borrowers. Borrowers who have made reasonable payments should be considered to have settled their debt. Steps must also be taken to build a borrowers' database so that licensed moneylenders can monitor those who wish to obtain credit. These measures are important so that we can provide protection to those who had no choice but to borrow money.
The Minister for Law (Mr K Shanmugam): Mdm, I thank Members who have given their comments. Two key themes emerge from most or several of the Members who spoke. First, developing a vibrant legal sector; and second, enhancing Singapore's legal framework to strengthen our society.
On developing a vibrant legal sector, Mr Christopher de Souza and Mr Alvin Yeo expressed support for the establishment of the Singapore International Commercial Court (SICC) and Singapore International Mediation Centre (SIMC).
Let me set out the economic context. Cross-border trade and investment in Asia is growing. From 2010 to 2020, global GDP is expected to increase by 73% to over US$100 trillion by 2020. During the same time period, it is expected that Asian economies will more than triple, from US$10 trillion to US$34 trillion. The volume and complexity of cross-border disputes are expected to grow in tandem.
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Singapore's legal sector has also grown substantially. From 2008 to 2012, the nominal value-added of legal services sector grew by slightly more than 25%. The value of legal services exported from Singapore grew by more than 60%. Demand for effective and trusted dispute resolution services will continue to rise.
Singapore is well-positioned to be neutral third party venue for dispute resolution in this region. We have a highly trusted and sound legal system. We started some years ago to develop international arbitration in Singapore. That has been achieving significant success. Singapore is now the third most preferred seat of arbitration, after London and Geneva. SIAC is the fourth most preferred arbitral institution worldwide. In recent years, Singapore law firms ranked amongst the top international arbitration practices in Asia.
SIAC's caseload is also growing. New cases rose from 99 in 2008, to 259 in 2013 along and in tandem with a series of measures that we have taken. The total value of disputes rose to a record high of more than $6.06 billion in 2013. That exceeds the combined total of $4.93 billion for 2011 and 2012. SIAC's caseload is predominantly international. More than 80% of cases involve at least one foreign party.
Establishing the SIMC and SICC will extend our success in arbitration into adjacent areas of commercial mediation and court-based commercial litigation for international cases. The idea is to provide users with an entire suite of dispute resolution services and they can choose from those which best meet their needs.
Let me say something about the SIMC. Mediation is an important complement to arbitration and litigation. It allows parties to mutually arrive at mix of legal and non-legal solutions in an efficient and cost-effective manner.
It is intended that SIMC will offer world-class commercial mediation services. It will also have a panel of high quality international mediators and experts, and it will provide innovative user-centric products and services. My Ministry is currently working with industry stakeholders including the Singapore Business Federation, the Singapore Academy of Law and SIAC to establish SIMC. We will put in place necessary legislation to strengthen and support the framework for mediation. We expect that the SIMC will be launched later this year.
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Now, let me turn to SICC. Similar to SIMC, SICC also aims to attract international cases which have little or no connection to Singapore. Parties who prefer the transparency of open Court proceedings, the availability of appeal, or are involved in multi-party or non-arbitrable disputes, may prefer SICC to conventional international and commercial arbitration.
There are similar models elsewhere, including the High Court of England and Wales, which has a specialist Commercial Court in London, well known for the large number of cases which involve international parties. The Dubai International Financial Centre Courts were established to handle international commercial disputes as well.
Why would a party choose SICC? Singapore is known for its commitment to the rule of law. Our judiciary is well regarded internationally for quality of judgments and efficiency. Singapore is a neutral venue in Asia and this makes us especially attractive to foreign parties involved in cross-border disputes.
Mr Alvin Yeo raised two points: the perception that SICC is a national court, and the international enforceability of SICC judgments. On the first point, SICC will be constituted as a division of the High Court of Singapore. SICC judgments will be treated, and enforced, as High Court judgments. My Ministry is preparing legislative amendments to establish the SICC. The necessary amendments will include changes to the Constitution, the Supreme Court of Judicature Act, the Evidence Act and the Legal Profession Act. We will go for public consultation soon on these. We will also consider the composition of the Court, judges, rights of audience and related issues. All of these need to be considered carefully, bearing in mind that primarily we are looking at attracting cases which have no connection with Singapore. So, that is new work that is coming in.
On Mr Yeo's second point, namely the issue of enforcement of judgments abroad, SICC judgments may be enforced by registration in countries listed under the Reciprocal Enforcement of Commonwealth Judgments Act (RECJA) and the Reciprocal Enforcement of Foreign Judgments Act (REFJA), similar to any High Court judgment. For other common law jurisdictions not covered by these pieces of legislation, SICC judgments could be enforced as a common law debt. But I do accept Mr Yeo's point on enforceability. This has been considered. We will need to explore ways to enhance enforceability of SICC judgments. To some extent, of course, if parties in the first place are not subject to compulsory jurisdiction but are consenting to jurisdiction, then usually they will also take care of enforcement by contract.
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In its report, the SICC Committee suggested that Singapore consider acceding to the Hague Convention of 30 June 2005 on Choice of Court Agreements. My Ministry is studying the feasibility of this suggestion. Earlier this year, European Commission issued a proposal for an EU Council decision to approve the Choice of Court Convention. Once the EU becomes a party to the Choice of Court Agreements Convention, enforceability of SICC judgments will be enhanced if Singapore decides to be a party to the Convention as well.
Developing Singapore's dispute resolution framework in this way will benefit all Singaporeans. It will add to growing volume of legal work coming to our shores, and create significant opportunities for lawyers based in Singapore and Singapore Law Practices (SLPs). If successful, the SICC will attract more complex commercial litigation to Singapore, and help develop our legal jurisprudence. There will also be economic spin-offs in terms of increased demand for other supporting non-legal services, for example the tourism industry and the hospitality sector.
Now, let me move to insolvency and bankruptcy. On issues of bankruptcy and corporate insolvency, Mr Vikram Nair asked for our views on recommendations of the Insolvency Law Review Committee (ILRC). The ILRC submitted its report to my Ministry in October last year. The ILRC's main recommendation was to unify bankruptcy and corporate insolvency regimes in a single piece of legislation. This is to enhance clarity and access to our laws, and transition and coordination between the various insolvency regimes.
The recommendations were also made to update core areas of Singapore's bankruptcy and corporate insolvency regime. My Ministry welcomes the recommendations of the ILRC. Presently, we are considering feedback received from public consultation on the report, which was concluded last December.
Mr Vikram Nair also raised the issue of discharge of bankrupts. Alongside review of ILRC's recommendations, my Ministry is reviewing the bankruptcy regime. This is with a view towards putting in place a more rehabilitative regime that will allow bankrupts to be eligible for discharge within clear time frames, where justifiable. The time frame for discharge will be differentiated, depending on factors such as whether a bankrupt pays back a targeted amount, whether his creditors object to his discharge, whether there were extenuating circumstances during the bankruptcy, for example, a debilitating illness. This approach should also provide an incentive for bankrupts to cooperate.
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At the same time, we are mindful that such a regime should not create a moral hazard. It is likely that upon discharge, all bankrupts' names will be placed on a national register for a fixed period. For those who were uncooperative in paying their targeted amounts, their names will remain on the register. These issues are being considered. As most bankrupts may become eligible for discharge after a fixed period, creditors will also be incentivised to undertake better risk assessment.
Pending these changes, which will require legislative amendments, the Insolvency and Public Trustee's Office (IPTO) has also been actively reviewing current cases where a person has been in bankruptcy for a very long time to determine whether a discharge is suitable. These reviews include cases where bankruptcy orders were made more than 10 years ago. Many of these cases remain in bankruptcy because very little has been paid into their bankruptcy estates and/or there has been very little cooperation with the Official Assignee during the administration of their bankruptcy. For these bankrupts, it will help if they make a debt settlement proposal to their creditors. IPTO will assist to facilitate their discharge where possible. I think these points also answer the questions raised by Mr Pritam Singh.
On regulating the Internet, Mr Hri Kumar Nair touched on laws to regulate online conduct. He spoke about updating our laws, for example, the Penal Code, to better address anti-social behaviour taking place on the online space. The basic principle is clear – the same standards of what constitutes anti-social behaviour and other unlawful conduct should generally apply both in the physical world and in cyberspace.
The Member referred to the Computer Misuse and Cybersecurity Act, the regulation of online news sites, and the Penal Code.
The Computer Misuse and Cybersecurity Act was reviewed and updated in 2013. The amendments enabled us to take more timely and effective measures against cyber attacks that may threaten our national security, essential services, defence or foreign relations. The approach is no different to how we deal with national security threats in the physical realm.
With regard to the regulation of online news sites, the standards and safeguards in place, under guidelines by MDA, ensure that online news websites publish responsibly. These issues really relate to MCI and MDA, which
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will be best placed to answer them.
On the Penal Code, the Government updated the Penal Code in 2007 to reflect advancements in technology and the changing crime trends. Amendments were made to numerous provisions, including two provisions which the Member spoke about. Sending an SMS message containing an incitement to violence or counselling disobedience to the law would amount to an offence under section 267C, and section 367E of the Penal Code targets sex predators prowling online chatrooms and social media for young prey. Another example is making statements on blogs with deliberate intention to affect or wound religious or racial feelings of any person. That would be criminalised under section 298 of the Penal Code.
To facilitate the judicial fact-finding process for crimes involving use of computers and the Internet, in 2012, the Evidence Act was updated to facilitate admission of electronic records. But I accept the hon Member's basic point that as technology advances, we need to relook and make sure that the law keeps pace with the criminal conduct made possible by technology, and perhaps, we are already behind. So, I accept that, but as these matters are primarily under MHA, I will send to MHA the Member's substantive points – it is either MCI or MHA.
The Senior Minister of State will take the remaining cuts.
The Senior Minister of State for Law (Ms Indranee Rajah): Mdm Chairman, I will deal with the remaining cuts. Mr Hri Kumar asked how MinLaw is supporting our Singapore Law Practices (SLPs) venturing abroad. SLPs are an important pillar of our legal services sector. SLPs employ more than 90% of Singapore-qualified lawyers. Through their practice, legal knowledge and skills, they facilitate access to justice and the rule of law, uphold our legal system, contribute to the development of Singapore law and jurisprudence, drive the development of our legal profession, and support the growth of our economy.
We want our SLPs to do well and to grow not only in terms of depth and breadth of expertise, but also to expand regionally. There are good growth opportunities for SLPs locally as well as in the region.
We would like to help SLPs who are looking to capture opportunities overseas to grow and become regional leaders. The market for legal services in Asia is expected to grow with the increase in trade and investments in this part of the world. Our SLPs are in a good position to compete successfully. Our top
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four SLPs are already the largest law firms in ASEAN.
There are existing incentives and assistance schemes in place to support SLPs. First, IE Singapore's Double Tax Deduction for Internationalisation (DTDI). Under this scheme, SLPs may deduct against their taxable income, the expenses for overseas business development trips and overseas investment study trips. Second, there is the Development and Expansion Incentive for International Legal Services (DEI Legal), administered by EDB. Law firms, which are structured as companies and which provide international legal services from Singapore, can get a 10% concessionary tax rate for income derived from such services under this incentive scheme, subject to EDB's approval. There are also other schemes administered by IE Singapore and EDB, depending on needs and strategies of different SLPs.
I would encourage the Singapore law firms to take advantage of such schemes. Any expansion into regional markets must be done in accordance with their laws. The key is in understanding those countries' rules, in terms of allowing foreign firms to do business in their jurisdictions. Some may allow law firms to operate through different vehicles such as partnerships, corporations or joint ventures. Others may do so through licensing regimes. It is not always necessary to have a physical presence or office in the foreign country. It is possible for SLPs to provide legal services out of Singapore to regional clients. In this scenario, what is important is access to potential clients and having a strong Singapore legal services brand so that such clients will automatically think of SLPs when they need legal services.
MinLaw is also helping SLPs to better understand markets in the region through various means. For example, with respect to Myanmar, which is a growing and potential market, we invited the Director-General of Myanmar's Union Attorney-General's Office to speak at a seminar co-organised with the Law Society of Singapore. SLPs were briefed on Myanmar's legal and business landscape as well as their legislation regulating foreign investments. We are now also working with the Law Society to plan seminars in Yangon and Nay Pyi Taw. These will be useful opportunities for SLPs to meet potential partners and clients in Myanmar.
In addition, we will continue to support efforts of SLPs to improve productivity and develop new capabilities for the domestic and regional growth. In his Budget speech, Deputy Prime Minister Tharman announced the extension of the Productivity and Innovation Credit (PIC) Scheme for another three years. The PIC extends to law firms as well. Law firms can utilise the PIC for their training of lawyers and to acquire systems or technology which improve their
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productivity or to run their practices more effectively, for example: IT systems, document management systems, accounting systems, client relationship management systems and other automation systems. This would also include, for example, information technology devices such as iPads. In 2012, over 230 SLPs benefited from the PIC, obtaining more than $20 million worth of PIC enhanced deductions. We encourage SLPs to leverage on this scheme, as well as other schemes administered by SPRING Singapore to support their growth.
Besides the SICC, SIMC and schemes to support SLPs, we are also looking at ways to develop the in-house legal counsel sector in Singapore, especially where such jobs carry regional responsibilities.
The in-house legal counsel sector creates good jobs and provides alternative career pathways for Singapore-qualified lawyers. As the interface between business and the legal service industry, the in-house legal counsel sector creates spin-offs to our legal services industry, including SLPs. In 2012, we amended the Evidence Act to extend legal professional privilege to in-house legal counsel. In-house counsel may enjoy this privilege if they are employed for the purpose of giving legal advice and the communications for which privilege is claimed relates to matters of legal advice. This has made it more attractive for international companies to establish their regional in-house legal departments in Singapore.
In June this year, MinLaw will also be supporting the Singapore Corporate Counsel Association to organise the In-house Counsel World Summit. This will be the first time this event is held in Asia. The event will provide a platform for in-house counsel worldwide to discuss the latest global trends and legal issues that affect business activity, particularly in the Asia Pacific. It will be an important platform for networking and connecting. We will continue to study other ways to expand the in-house counsel community in Singapore.
Our moves to strengthen the local legal scene in Singapore have also been about ensuring even better access to justice, better protection for the vulnerable and equitable outcomes for all.
Mr Lim Biow Chuan and Mr Zainal Sapari highlighted concerns over the moneylending landscape in Singapore, particularly, excessive borrowing and excessive borrowing costs.
In regulating the moneylending industry, we have to maintain a balance between allowing borrowers reasonable access to credit, and providing them,
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especially those with lower income, with adequate protection. We are cognisant that some borrowers turn to moneylenders in desperation and this makes them vulnerable to exploitation.
To this end, there are various safeguards in the law such as borrowing caps for unsecured loans as well as interest rate caps. The existing borrowing caps for unsecured loans from moneylenders protect borrowers earning an annual income of up to $120,000, while the existing interest rate caps for moneylending loans apply only to borrowers earning less than $30,000 a year.
When we set interest rate caps, there are competing considerations involved. If the cap is set too low, it would be commercially unviable for licensed moneylenders to service borrowers with high credit risk. This would force borrowers to turn to loan sharks to meet their financial needs. If the cap is too high, borrowers will be overcharged by moneylenders. It is therefore necessary to find the right balance.
At present, moneylenders may also charge a variety of fees, if the borrower has agreed for these fees to be charged at the time the loan is taken. Such fees include fees for late repayment of principal or late payment of interest and fees for early redemption or termination of the loan. However, these fees can escalate for the borrower.
My Ministry is reviewing the moneylending regime. We are considering measures to address the issues raised by Members. To this end, we are reviewing the interest rate cap and considering whether there should be further restrictions on the charging of fees by moneylenders.
As for borrowing caps for unsecured loans from moneylenders, the current regime only regulates the amount that an individual can borrow from each moneylender. We intend to establish a Central Credit Bureau that will enable tighter controls over the total amount of unsecured credit which an individual can borrow from moneylenders, that is, a \"universal cap\".
Mr Zainal asked about restrictions in the number of moneylenders in any given housing estate. At present, we have not imposed any limits on the number of moneylenders in any geographical location, but this is something that we are studying.
We are looking at the statistics on the concentration of lenders and borrowers. However, geographical restrictions may have limited effectiveness
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in a small country like Singapore. Our size is such that travelling costs may not deter borrowers from going to moneylenders in different parts of the island. As part of our review, we intend to consult key industry stakeholders, including organisations that provide counselling to distressed borrowers and the moneylending industry, amongst others. I cannot overstate the importance of striking the right balance and we will announce the measures in due course.
Turning to Ms Sylvia Lim's cut, she had suggested reforms to allow victims of crime to attach civil compensation claims in criminal proceedings so that separate civil suits need not be filed, although I think that in case, Ms Lim did accept that for complex matters or things where there are issues heavily in dispute, those would be suitable for civil claims. I think that is in line with the judgment of Chief Justice Chan Sek Keong, as he then was, was in Public Prosecutor vs AOB [2011] 2 SLR 793.
Presently, section 359 of the Criminal Procedure Code allows for claims for compensation in criminal proceedings. That section makes it mandatory for a court convicting a person of any offence to consider whether a compensation order should be made, and the court will make such compensation orders where appropriate.
I think Ms Lim's point was whether or not one could have a simple joining procedure where you attach a civil claim to that criminal case. There is some difficulty in attaching a civil claim to a criminal claim because it is not just a simple matter of tagging a civil claim on. There are issues that have to be thought through carefully. Relevant considerations will include the different purposes that civil and criminal proceedings generally serve, the different burdens of proof in such proceedings, the different legal and factual issues that may arise in criminal proceedings from those in civil proceedings and vice versa, and the different types of evidence that may be required to establish the civil compensation claim and the criminal offence.
I think what is key here is that the law, as it currently stands, gives the victim the right or the ability to claim for compensation in the criminal proceedings. Our courts are actually required in every case to consider whether compensation should be given. I think Ms Lim's concern really is the ease with which the victim can claim, and whether or not the victim is able to have the issues put before the Court in a way that will enable the claim for compensation to be determined. We will certainly look and see whether more can be done to enable the victims to make claims under the existing section 359. In fact, our approach of requiring the Court to consider whether compensation should be ordered in the criminal case, in some ways makes it even easier and better for
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the victims.
Finally, Mr Pritam Singh called for a review of the Coroner's Act. The purpose of a Coroner's inquiry into the death of a person is to inquire into the cause of and circumstances connected with that death. The crux of the issue raised by the Member is this: should a Coroner's inquiry be forced to continue in certain cases, without the Coroner having any discretion on the matter, even though a finding has already been made in criminal proceedings as to the cause of and the circumstances connected with that death?
The Coroner's Act was enacted in 2010 and came into effect in 2011. Section 39 of this Act gives the Coroner the discretion to discontinue proceedings before him if he determines that the inquiry is no longer necessary to determine the cause of and circumstances connected with the death, that is, the Coroner can decide whether to continue the proceedings or discontinue the proceedings.
In exercising his discretion, the Coroner may have regard to the wishes of the next-of-kin of the deceased. In practice, if counsel for the next-of-kin is present, the Coroner would take the views of the next-of-kin on board, through counsel. So, discretion is given to the Coroner, and if the counsel for the next-of-kin agrees to the discontinuance, then the question arises: how is the public interest served by insisting that the Coroner must continue with the inquiry, particularly, where all the facts have come across? It does not make sense, in such a situation, to take away the Coroner's discretion and to force him to continue with the inquiry.
So, the question is, should we trust the Coroner to consider what is appropriate in each case? Or do we make it mandatory for the Coroner to continue? I think we should trust the Coroner and let it be discretionary. Our position is generally similar to that in the United Kingdom and New South Wales, Australia.
Madam, in conclusion, I would say MinLaw advances access to justice and the rule of law through all that we do. We will continue to review and enhance our laws to safeguard the rights of Singaporeans, strengthen the people's trust in Government, and the global community's trust in Singapore.
The Chairman: We have a bit of time for clarifications. Mr Hri Kumar.
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Mr Hri Kumar Nair: Thank you, Madam, just two clarifications; in fact, two requests. First, I would be grateful if the Minister or the Senior Minister of State could give an update on the third law school and where we are on that. And second, on the issue of moneylending regulations, I welcome the review that is going to come up. One of the reasons why moneylenders are prepared to lend to those with lower credit is, of course, the higher interest rates and returns, and also the fact that they are able to employ more robust enforcement method to recover the debt which banks normally do not. As part of the review, would the Ministry also consider looking at regulations in relation to how moneylenders seek to recover their debt?
Ms Indranee Rajah: Mdm Chair, Mr Hri Kumar asked about the third law school. The current status is that the third law school will be situated within UniSIM. The idea for the third law school is to be an applied law school meaning there should be a strong nexus with practice. We want the graduates of that law school to have not only a very strong theoretical foundation but also a strong practice-orientated teaching in their education.
The current status is that a Steering Committee has been set up, which I chair. The Steering Committee is looking into issues such as the curriculum of the third law school, admission criteria, staffing as well as all the other different facets that will go into the setting up of the third law school. The report will be out, hopefully, by the end of this year.
Mr Vikram Nair: I would like to thank the Minister for reconsidering the bankruptcy regime. I look forward to the changes. The clarification that I have to ask really is on the Singapore International Commercial Court. One of the concerns raised was the enforceability of judgments they are under. Are there any plans to expand the number of countries covered by the reciprocal enforcement of Foreign Judgments Act which might be helpful in this regard?
Mr K Shanmugam: Mdm Chair, it is really, of course, not within our control to increase the number of countries. Each country will have to decide by itself. I think what would make a significant difference is if the EU accedes to the Choice of Court Agreements Convention that I referred to, and we too accede to this Convention, together with the Reciprocal Enforcement of Commonwealth Judgments Act (RECJA) and the Reciprocal Enforcement of Foreign Judgments Act (REFJA), I think we will get pretty good coverage. But parties will have to make an assessment of enforceability when they choose a jurisdiction. We believe that there will be enough parties who would be interested in coming, particularly because they will also take into account issues
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of enforcement when they voluntarily agree with each other to come to Singapore.
Mr Lim Biow Chuan: Thank you, Madam. Some of my residents who are indebted to licensed moneylenders see their interests accumulating on a day-by-day basis. I want to ask the Minister: when will the review on this cap of interests chargeable as well as the fees chargeable be done? Can it be done expeditiously so that borrowers have a greater sense of certainty as to how much interests they have to pay? The other query that I have for the Senior Minister of State is: what are the penalties being considered against licensed moneylenders if they behave like unlicensed moneylenders who use harassment techniques to collect back loans?
Ms Indranee Rajah: Madam, with respect to the Member's question as to when the review will be completed, as I indicated earlier, there are a number of stakeholders that we have to consult. So, it is not possible to give a definitive date, but what I can assure the Member is that it will be done as expeditiously as possible.
With respect to the second question of what happens when a licensed moneylender behaves like an unlicensed one and crosses the line, the short answer is that if they cross the line and they breach the law, then, of course, they will be dealt with in accordance with the law. If they commit an offence in the course of pursuing their claim for recovery of the loan, then they will be prosecuted for that offence.
The Chairman: Mr Shanmugam.
Mr K Shanmugam: Thank you, Madam, for letting me deal with this question as well. Underlying all these questions on moneylending is this: can we do something? I have tried to explain this a number of times before. If we can take care of all the moneylending issues through legislation, we would have done that long ago. It is not a question of us saying, \"Okay, we impose caps on this, we do this, we do this, we do this\", and the problems go away. You are then going to see them going underground and the unlicensed moneylender problem will shoot up. At the end of the day, you have a problem when people need money for whatever reason, sometimes good, sometimes bad. Then, they are desperate and they will do whatever is necessary to go and borrow the money.
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So, let us deal with that. The problem is not the law. The problem is not the lack of caps. Caps can help if it is not a real market. If it is a fixed market, and we impose caps, it can help. But if there is a real market out there and after an assessment of risks, this is the interest that has to be charged, if you impose an artificial curb, the borrower and the lender will find alternate means and they will be driven underground. We used to have a huge unlicensed moneylenders problem in the past. So, we have been imposing curbs, we have been reviewing it and the reason why we are cautious is that the real nature of the problem has to be understood.
The last time round, when we introduced a whole series of curbs, there were a number of points made – some publicly in Forum letters – that this is going to drive people underground. So, it is a balance, but we have to try and protect the borrowers, and we will.
Ms Sylvia Lim: Clarification for the Senior Minister of State regarding my cut. I am glad that she acknowledged that the Ministry could do more to look into the area of \"justice for crime\" victims. She mentioned in her answer that victims could use the existing section 359 of the CPC to apply for compensation. But from previous parliamentary answer and also my understanding, the prosecutor is usually the one that applies to court on behalf of the victims. So, I would like to ask a clarification on whether, really, it is the prosecutor that is the gatekeeper of that application for compensation. Is there any way to empower the victim to have a direct route to apply to the court? That is why I brought up the joining procedure.
The second clarification is, based on earlier statistics, section 359 does not seem to be invoked very frequently. I wonder if the situation has improved or whether the Senior Minister of State can shed any light on the frequency of usage of that section.
Ms Indranee Rajah: I thank the Member for clarifying. I think the Member's understanding is correct. It is done through the prosecutor. What I intended to convey in my reply was that we are prepared to consider ways in which the victim can work with the prosecutor so that the claims can be brought to Court. With respect to the numbers, I do not have the numbers specifically with me at the present time, but perhaps the Member might like to file a question on the statistics and I can arrange for the numbers to be provided.
Mr Lim Biow Chuan: I thank the Minister for the clarification. I just wanted to share with the Minister that I understand perfectly where he is coming from.
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But I think the dilemma that the Government has is that the man in the street feels that we are in the business of licensing illegal moneylenders and, therefore, it is a concern for all of us. So, I feel that it is my duty as a parliamentarian to raise this to the Minister's attention.
The Chairman: Mr Hri Kumar, do you wish to withdraw your amendment?
Mr Hri Kumar Nair: Madam, despite the fact that the Minister has pushed my questions to some other Ministries, I would like to thank the Minister and Senior Minister of State for answering the questions and with substantial interests. With that, I beg leave to withdraw my amendment.
[(proc text) Amendment, by leave, withdrawn. (proc text)]
[(proc text) The sum of $253,196,400 for Head R ordered to stand part of the Main Estimates. (proc text)]
[(proc text) The sum of $572,831,100 for Head R ordered to stand part of the Development Estimates. (proc text)]
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Committee of Supply – Head N (Ministry of Foreign Affairs)","subTitle":null,"sectionType":"OS","content":"Dr Lim Wee Kiak (Nee Soon): Mdm Chair, I beg to move, \"That the total sum to be allocated for Head N of the Estimates be reduced by $100\".
The global and regional geopolitical situation is rapidly changing with increasing emphasis and shift to the fast growing and rising economies of Asia. As the global trade winds shift, small open economy nations like Singapore will bear the brunt of these shifting forces.
Political think-tanks have described the Sino-American relationship as the most important and the most influential in determining and maintaining global peace and harmony. The rise of China both in economic might and military modernisation will change and challenge the current status quo. Since post World War II, the American presence in Asia Pacific is not challenged and has played a stabilising force and role in our region. All these are beginning to change with a rising China exerting her rights and extending her military might.
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Singapore has always been very close to both China and America and has enjoyed very good and unique relationships with both. We have always steered very carefully to safeguard our interests and our close relationships.
In the event of a conflict or tension that is raised between two countries, how will Singapore fare? Can MFA provide an update on the key developments in our external geopolitical environment, in view of a rising China and rising tides, and provide an assessment on how this will affect our foreign policies over the past year?
Next, on relationship with our immediate neighbour, Malaysia. Our relationship with Malaysia has been described as very good as many of the bilateral issues confronting us in the Points of Agreement (POA) were resolved and currently are being implemented. Our recent talks of more linkages including high speed rail linking Kuala Lumpur and Singapore and extending our MRT to Johor are all in the works. Can MFA give an update on the status of our cooperation with Malaysia on all these projects as well as the projects in Iskandar, Malaysia?
There have been very sharp exchanges between Singapore and Indonesia over the naming of the Indonesian navy ship KRI Usman Harun. What are the lessons learnt from this particular incident? And how can Singapore strike a balance between cooperation and defending our interests in relationships with our immediate neighbours?
Indonesian President Susilo Bambang Yudhoyono will be stepping down this year. Do we expect the outcomes of this year's presidential election to affect our bilateral relationship? If so, how would it change? It is also a timely reminder of our relationship with Indonesia every time the haze appears in Singapore again. The PSI has risen to moderate level yesterday. As at this moment, it is 27. It is still in the good range.
[Deputy Speaker (Mr Seah Kian Peng) in the Chair]
Can MFA provide an update on Singapore's cooperation with Indonesia on the transboundary haze pollution issue as well as ASEAN's efforts to tackle it? I understand the Indonesia is close to ratifying the agreement. I would like to know if MFA has any further update on that.
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As for the state of relationship with other Southeast Asian neighbours, apart from Indonesia and Malaysia, what is our current relationship with Thailand, especially with the current political turmoil that is going on? And how does the current domestic situation in Thailand affect our bilateral relationship?
ASEAN nations have pledged to work towards a more united and harmonious ASEAN in the ASEAN Vision 2020 as well as the Cha-am Hua Hin Declaration on the roadmap of ASEAN Community 2015. The need to continue making progress on the implementation of the three Community Blueprints and the Master Plan on ASEAN Connectivity was emphasised. What progress has been made and how far have we advanced, in terms of realising ASEAN 2015 plan? Can MFA give an update on ASEAN 2015 plan as it is only next year and also ASEAN 2020 Vision? Are we on target for the stated goals in the plan and the vision? What are the challenges confronting ASEAN to achieving them?
What is Singapore's focus on ASEAN as we progress towards the 2015 Community goals, and how will this Community help our economy to grow? In what way does the existing regional architecture enable us to engage the major powers leveraging on ASEAN? What are ASEAN's plans after it has achieved its 2015 Community goals?
Ms Irene Ng Phek Hoong (Tampines): Singapore cannot escape the vulnerabilities of being a small state – it is often subject to pressure by bigger countries. But as it has proved since independence, it can stand up for its own interests. It has established a record of firmly setting and following its own agenda. It has pursued a rational and consistent approach in foreign relations.
This has been tested many times, including recently. One was Indonesia's naming of its warship KRI Usman Harun, which showed its complete insensitivity to our feelings. It is important that we continue to stand firm on this issue.
With Indonesia, there is also the recurrent issue of transboundary haze pollution. We need to work with Indonesia to resolve this haze problem.
A constant challenge is how Singapore can strike a balance between working with our neighbouring countries to form areas of common interest as well as standing up for our rights especially when we feel we are being pressured. And this challenge extends to Malaysia. The Malaysian media recently reported that Johor wants to review the price of raw water sold to Singapore. But I thought the issue has long been settled with the water
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agreement. What are the implications of this move?
We can expect such pressures from time to time, but thankfully with our own sources of water, it no longer gives unnecessary hostages to fortune. But we must stand firm.
The most important challenge of the future is the rise of new centres of power, particularly China. This geopolitical shift will have major repercussions on relations between the big powers and their allies and also with our neighbouring countries. And small states like Singapore are not immune to the pressures.
At this historic juncture, Singapore has to stay nimble and seek to bring to bear its soft-power resources to influence the course of events, through regional cooperation and dialogue for peace and stability in this region. Its soft power draws mainly from its economic strength and its ability to find ways to add value and be useful and relevant to the world.
It is crucial for MFA to have resources to flex its muscles in support of its ideas and to have a top-notch professional diplomatic corps at its bidding.
I would like to ask the Minister for an assessment of our relations with our neighbours and of key geopolitical developments, how our foreign policies have evolved in response and how we are building the capacity of our Foreign Service to pursue Singapore's long-term interest in an increasingly complex and dynamic environment.
Mr Alex Yam (Chua Chu Kang): The poet Robert Frost in his 1914 poem Mending Walls uttered the immortal lines:
\"I let my neighbor know beyond the hill;
And on a day we will walk the line together;
And to each the boulders that have fallen to each.\"
The poem quotes an oft repeated adage that \"good fences make good neighbours\". Over the last few years, we have built good relations with many
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of our neighbours and mending our fences, especially with our northern neighbour. Relations have improved and the personal connection between Prime Minister Lee and Prime Minister Razak has perhaps played a significant role as well.
It is perhaps opportune at this point for us to take stock of where we are in our relationship with Malaysia and the rest of our ASEAN neighbours. What has gone right for us? What should we continue to maintain? But as the narrator also said, \"I built a wall but I wish to ask.\"
Are we simply mending a cosmetic fence? From conversations with many, there is a sense of foreboding in our relations with many of our neighbours. For Malaysia, for example, investments in Iskandar, overstretching ourselves in terms of our overall investments and, of course, the recent talk of the rising water prices. What safeguards do we have to ensure that we continue to have good relations with all our neighbours and\tthat our relationship continues to grow warmer and not hotter?
Dr Intan Azura Mokhtar (Ang Mo Kio): Being a small state, Singapore can be affected by developments in the region and among our close neighbours. Indonesia will be having the general election as well as Presidential election soon, and President Susilo Bambang Yudhoyono would be stepping down this year, as required by the Constitution. Of late, we have observed strong Indonesian nationalistic sentiments that have shaped incidents on various fronts, one of which is the naming of a navy vessel.
Just like Dr Lim Wee Kiak, I would also like to ask if we expect the outcomes of the 2014 Indonesian elections to affect our bilateral relations with Indonesia. In addition, with the current dry spell, there are concerns that haze would be back with a vengeance. While the proposed Transboundary Haze Pollution Bill is a welcomed move, can the Ministry provide an update on Singapore's cooperation with Indonesia on this?
Mr Ong Teng Koon (Sembawang): ASEAN was founded in 1967 and we were one of the founding members then. It has since grown to include a regional grouping of 10-member countries, including Brunei, Cambodia, Laos and Myanmar.
Vietnam, Myanmar, Cambodia and Laos have a combined population of more than 170 million people. This represents a big market where our businesses have keen interests to access. Many businesses have also voiced
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their intentions to regionalise and export their knowledge and know-how to these countries. They feel that the young populations, energetic attitudes and growing middle class offer good business opportunities. The basis for economic cooperation is always good diplomatic relations. Would the Minister give an update on Singapore's efforts to augment our diplomatic relations with these countries, and if there are areas in security and defence for mutual cooperation?
Thailand is a founding member of ASEAN. Our two countries have extensive government-to-government, business-to-business and people-to-people links. Thailand remains a favoured tourism destination for many Singaporeans. However, there are some challenges facing Thailand's domestic political situation. How would Thailand's domestic situation impact on our bilateral relations?
Mr Alex Yam: In introducing the ASEAN Economic Community (AEC), it is written that it shall be the goal of regional economic integration for ASEAN by 2015. AEC envisages a single market and production base, a highly competitive economic region, a region of equitable economic development and a region fully integrated into the global economy.
When I was in university, my international relations professor once referred to international affairs jargon as \"broad enough to be generally acceptable but deep enough to be utterly unintelligible.\"
Perhaps that be true of the vision for AEC2015 as well. We are now just a year away from 2015. The region is still facing its fair share of political turmoil, so therefore how engaged are we in this process and what is the reality of achieving the aims of AEC2015 and its goals?
Perhaps, more importantly, from the example of the EU's integration and the troubles of recent bailouts for the EU region, what are the true benefits for our own economy and are there any sacrifices that we may have to make?
ASEAN continues to feature broadly in the world economy as a competitive region to do business in. The markets of many ASEAN members continue to boom and rightly so. But the problems of integration are manifold, how much more the plethora of issues for us to achieve economic integration. Therefore, can we continue to hold together ASEAN for the long term and do we have
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ASEAN 2015 in sight?
The Chairman: Ms Ellen Lee, you may take your three cuts together.
Ms Ellen Lee (Sembawang): Mr Chairman, ASEAN's 2015 Community Goal is an ambitious one spanning diverse realms such as ASEAN GDP, ASEAN living conditions, ASEAN as favourite Foreign Direct Investment (FDI) destination and ASEAN trade in goods and services. Good progress has been made in these realms although economic recovery worldwide is slow.
As we approach 2015, what is Singapore's focus going to be and how will the ASEAN Community help our economy to grow, particularly when growth is expected to be slow compared with the past few years? In what way does the existing regional architecture enable us to engage the major powers who wield considerable economic power and political influence on the region's affairs?
The world views ASEAN as having done well. In a world of lacklustre economic growth, especially in EU, growth in ASEAN countries has been the envy of people in the West. ASEAN citizens are growing more affluent despite large income gaps between the haves and the have-nots, more educated and widely travelled. There is a great deal of Foreign Direct Investment and, on the whole, people in ASEAN are young, energetic and hungry for growth. That good progress has been made in achieving ASEAN's 2015 Community Goal is clear. We should now focus on whether ASEAN has plans beyond 2015. What are the implications of these plans for Singapore?
On regional developments, China's rapid economic and military growth have been assessed to be a challenge to America's undisputed leadership in the post-war. The rising tensions between these two nations have been manifested not just in the increased frequency of military exercises in the region reported by the media but also by their respective allies' responses as both nations' top ranking officials go around the world to gain support for their respective stands. Singapore has been consistent in its stand that we want to be friends with all countries and that we respect every nation's right to determine its own fate. It is necessary that we remain alert to changes in our external environment in order not to be taken by surprise when adverse changes occur.
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What is MFA's assessment of the current state of affairs? Is war likely as commentators rush to offer their views on this worrying prospect? How will ASEAN be affected?
Mr David Ong (Jurong): Mr Chairman, tension has been mounting in the Northeast region as China and Japan who have long historical disputes over the Diaoyu islands have since made move to give up their military forces there. Japan's Prime Minister's visit to Yasukuni Shrine last December sparked outrage in both China and Korea. Things have not improved since. This festering tension and ongoing bitter exchanges are unsettling for the region and show no sign of abating. It may take on a sustained cycle of tension. The trilateral relationship between China, Japan and South Korea is currently at a low point.
The recent developments in North Korea and the latter show of force by test firing four ballistic missiles are again raising tension in the Peninsula. What is MFA's assessment of the political risk in Northeast Asia this year, given the recent escalation of tensions between the Northeast Asian countries?
Mr Ong Teng Koon (Sembawang): For many years, although competing claims in various parts of the South China Sea have existed, they were peaceful. Recent developments, however, are indicating an escalation of tensions.
The latest incident involved the Chinese Navy being accused of firing water cannons at Philippine fishermen to enforce China's fishing ban. Chinese media has also reported that the Chinese Navy sailed to James Shoal and conducted an oath taking ceremony vowing to safeguard China's sovereignty and maritime interests.
There are also other states making a claim for parts of South China Sea and they include Malaysia, Brunei and Vietnam.
We need the sea lanes to be free of conflict for trade to flow. Any conflict in the South China Sea is of little advantage to us. Notwithstanding our size, what is Singapore's position on the South China Sea even though we are not a claimant state? Secondly, what can be done to address these issues?
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Mr David Ong: Thank you, Chairman. Singapore has been granted permanent observer status in the Arctic Council which gives countries the right to listen in all meetings and propose and finance policies. The Arctic region is gaining clout as global warming opens up new trade routes and intensifies competition for oil and gas estimated at 15% and 30% respectively of undiscovered reserves. What steps is Singapore taking to advance our interest in this northern region, such as freedom of navigation and the opening of new routes that may have implications for Singapore as a seaport?
The Chairman: Mr Alex Yam, you can take your cuts together.
Mr Alex Yam: Mr Lee Kuan Yew once said in 2009 that \"Small countries have little power to alter the region, let alone the world. But a small country must seek a maximum number of friends, while maintaining the freedom to be itself as a sovereign and independent nation.\"
Through our short 50 years of history, the one thing that has stood out most often is our size and our size. Why two sizes you may ask? Well, we are after all a small nation, our geographical spread of just over 700 square kilometres equates to less than half of Delhi. But our size and our influence internationally is disproportionate to our physical size.
Our turbulent beginnings have perhaps shaped our psyche and we have made it a point to practise good diplomacy to maintain good relations with as many of our neighbours as possible. While the focus of many during this COS has been on big power relations in the early part of other parliamentary colleagues' speeches, Singapore's standing in the world has also been because of our relations with other key partners further afield.
In just 10 years, our trade with Japan, Korea and the EU has grown tremendously. For example, with the EU, it rose over the last 10 years from $18.02 billion to $45.64 billion in terms of exports alone. While trade alone cannot underscore the importance of bilateral relations, it is certainly a key
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cornerstone.
The economist Jim O'Neill has in the recent decade coined the terms BRICS and MINT, referring to the emerging economies of Brazil, Russia, India, China and South Africa, as well as the new growth economies of Mexico, Indonesia, Nigeria and Turkey. We, too, have had long years of relationships with many of these countries. How do we plan to capitalise on these ties and to further strengthen our bilateral relations with these economies who may well be key partners for the future?
Of course, diplomacy is not without its pitfalls and the diplomacy of small states is often buffeted by the changing tides of big power dynamics. Recent tensions between Russia and EU over Ukraine are a case in point. Amidst a world of fast changing international relations, are we, as a small nation, prepared to catch those sails at the right moment and not be swept away?
Therefore, our membership of key international fora, such as the United Nations and Arctic Council, are important ones. Of growing interest as well are our relations with the Middle East, Africa and Latin America. As mentioned earlier, some of the states in these regions will have the potential to play key roles in the future. Yet again, the unstable geopolitical climate of these regions does not make it easy for us. Therefore, how do we ensure that our interests are best represented in these regions as well?
I hope that as the world continues to evolve politically and diplomatically, Singapore is well placed to continue to play a role well above our physical limitations.
Mr Gerald Giam Yean Song (Non-Constituency Member): Sir, international development is a form of foreign aid that seeks to improve the lives of people in developing countries, while at the same time furthering a country's foreign policy goals. It does not traditionally play a very visible role in our foreign relation strategies, apart from technical assistance programmes that we provide to developing countries. This is unlike most developed countries that have dedicated international development agencies and, sometimes, even a Cabinet Minister-in-charge.
In 2013, Singapore contributed $26.7 million in Overseas Development Assistance (ODA), which includes technical assistance programmes,
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scholarships and tuition grants to foreign students. Can the Minister share what other forms of ODA Singapore contributes to which are not captured in this amount?
Many developed countries in the United Nations have committed to a target ODA contribution of 0.7% of gross national income. What is Singapore's ODA as a percentage of GNI? While I do not expect Singapore to target 0.7%, are there plans to increase our ODA in the future? Does the Government see international development as a cost-effective way of furthering our foreign policy goals? Given the multifaceted nature of international relations today, what is the role the Government sees international development playing in the years ahead?
Mr Alex Yam: A diplomat once shared during a recent conversation that consular officers are sometimes unfairly described as foreign service officers without the glamour. Yet, the work that our consular officers perform on the ground is equally important as that our foreign service officers perform in safeguarding our diplomatic relations.
The rising demand for global travel has made consular services even more taxed. With Singaporeans journeying to far-flung exotic locales, the need for help can sometimes come from the most surprising places and for the most unexpected reasons.
What are some of the challenges that we continue to face in this area and do we have sufficient manpower to cater to this growing need? Do we also have plans for a greater presence in other countries in the setting up of new consulates and embassies perhaps?
More importantly is that I ask if our officers in the Ministry are adequately compensated for their important work. Beyond remuneration, I do hope that the morale of our officers continue to remain high and that we are retaining good officers for the long term.
The Minister for Foreign Affairs (Mr K Shanmugam): Mr Deputy Speaker, I thank the hon Members for their comments. The task for MFA is to chart a course in an uncertain world: a course that best protects our country, our economy and advances our people's interests. How do we do it?
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First, build and maintain a strong international network of friends; and actively participate in international organisations which are relevant to us; support key regional organisations and platforms, like ASEAN, EAS and so on; and maintain strong relationships with our neighbours to the extent possible.
I say that because it depends on principles of mutual respect for each other's sovereignty and interests.
These principles have to be applied in the real world – a world in a state of dynamic flux, where geopolitical relationships change. Often, they change quickly.
As we speak, yet another new crisis has been added to the international problems already facing all of us. What is happening in the Ukraine impacts on all of us at several levels. There is a potential impact on the World Economy and therefore our economy as well. Other countries will see what patterns of behaviour are possible. This is a situation of a standoff now between a big country and a small country.
It offers several lessons for Singapore in real politics, international law and international relations.
Russian troops are in control of parts of Ukraine. The United Nations Security Council has been debating the issue for days. Russia and the P3 have been making points against each other. The P3 point out that moving troops into another country is in gross violation of international law, and that Russia has breached a 1994 MOU that it had signed. I will refer to this MOU later.
Russia responds by saying that the lawfully elected President of Ukraine, Viktor Yanukovych, was overthrown by a coup; and Yanukovych has invited them into Ukraine to help. Russia wants to protect Russians in Ukraine; and Russia refers to American actions in Grenada in 1983.
Will the Security Council take meaningful action beyond being a debating forum? Unlikely, given the vetoes that the P5 have, and Russia is one of the P5. So, what will happen hereafter?
One has to assess Russian interests in Crimea. Since the 18th Century when Russia annexed Crimea, Russia has always considered its interests in Crimea to be vital. Russian actions against the Ottoman Empire, in pursuance of these
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interests, led to the Crimean War over 150 years ago.
Britain and France decided to confront Russia then, through military action. Russia lost that war. If one had stepped back and considered the matter, as Ukraine was going through its protests in the last several weeks, it would have been fairly obvious that there was a significant risk of Russia moving to protect what it will consider to be its vital interest.
We do not know what was or was not considered by the different parties. And we do not know what the P3 and EU plan to do next. What is obvious now is that it is, unfortunately, Ukraine and its people who have to face the consequences of all that has happened.
Singapore's stand: we strongly object to any unprovoked invasion of a sovereign country under any pretext or excuse. Russian troops should not be in Ukraine in breach of international law. The sovereignty and territorial integrity of Ukraine must be respected. International law must be respected. There can be no qualifications to this.
Mr Deputy Speaker, I have dwelt on Ukraine at some length for two key reasons: first, Singapore has always emphasised that big or small, all countries must observe international law and we have consistently opposed invasions, whether in East Timor or Cambodia. We have taken a clear stand, even when our views were contrary to those of far bigger powers, who were quite unhappy with us. Indonesia, the Soviet Union were amongst those who were unhappy then. We take the same stand now. There should not be any invasion of Ukraine.
Second, the events in Ukraine hold a number of lessons for us. Russia had signed an agreement in 1994 with the US and the UK agreeing not to threaten or use force against the territorial integrity or political independence of Ukraine. They also pledged never to use economic coercion to subjugate Ukraine to their own interest. Ukraine's sovereignty and independence were, thus, confirmed by a treaty.
So, lesson 1 is: when it comes to the crunch, treaties are only meaningful if you have the ability to enforce them. If Ukraine cannot defend the treaty and has no partners which will come to its aid – and I mean with deeds, not just words – then the treaty, by itself, will not help Ukraine.
Lesson 2: in international relations, size matters. The disparity between big and small countries is a fact of life. And a small country which cannot protect
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itself puts its sovereignty and its people at risk. Russia is vastly bigger than Ukraine, and its armed forces are much more powerful than the Ukraine armed forces. Russia is a nuclear power. Ukraine gave up its nuclear weapons as part of the 1994 treaty.
Lesson 3: something we have repeated many times, the Security Council cannot always act decisively to protect small countries.
Lesson 4: when squeezed between two big powers or blocs, a smaller country like Ukraine can become a pawn. The country caught in between can be sacrificed if the two contending powers or blocs decide to reach a wider accommodation with each other, trading off their various interests. This has happened frequently in history – for example, to Poland. Smaller countries must always be aware of this.
Mr Deputy Speaker, I read what the hon Nominated Member Mr Laurence Lien said about the need for \"a more positive narrative that is grounded in optimism\". I wish it were possible to agree with him. But at least from the foreign policy perspective, which has a direct impact on the domestic well-being of Singaporeans, that would require one to ignore the facts and stop being realistic and honest with the people of Singapore.
Everything may look fine on the surface, but does that mean that our size does not matter? The treaties which guarantee our sovereignty and survival will, by themselves, be enough? That we can ignore the reality that we exist on 720 square kilometres? And that we are quite at the mercy of international economic winds, competition, bilateral disputes, regional tensions and shifts in the strategic balance?
It is a harsh world with rules which are often ignored by many countries, including the major powers. Success is not pre-ordained for any country, let alone a small city state. We ignore that at our peril. One has to accept facts, reality and then calmly and rationally deal with them, and explain publicly the situation and the response.
Last week, I stopped over in Istanbul, on my way back to Singapore, from Iran. I met the Turkish Interior Minister. He hosted me to lunch on the Bosphorus. As I looked out into the Bosphorus, the crisis in Ukraine, which is just really across the waters from the Bosphorus and the Black Sea, kept going through
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my mind.
Ukraine is the second largest country in Europe. It has a population of 45 million. It has an armed force of 90,000 active personnel with another one million reserve personnel. It had an elected President and Parliament. It was a functioning state, not a failed state. It was negotiating an economic agreement with the EU. It has embassies all over the world, including Singapore.
Yet, it finds itself in deep crisis. Its political system is in limbo, foreign troops on its soil, facing the serious risk of dismemberment, economy seriously affected, reserves running low.
I could not help but then think of our own situation – if we do not constantly run hard to make sure that everything works, that we out compete the world, that we can defend ourselves, how long will it take for our situation to unravel?
Mr Lien also said that we should trust our people. That I have no quarrel with – I entirely agree with him. But we also have a duty to be honest with our people and tell it like it is; and not sugar-coat the truth. It is best to be unvarnished about the truth.
If I can now offer Members a brief snapshot of the region.
Myanmar has faced ethnic as well as religious conflict recently. It has deep-seated problems and it has to deal with these issues while undergoing a difficult political and economic transition as well as handling the important task of being ASEAN Chair.
Thailand: one can see from the daily media updates what is happening and no clarity as to when or how it might end. It is the second largest economy in ASEAN.
Cambodia: post-elections, it has faced some issues.
Indonesia and Malaysia: Members will be following developments in Indonesia and Malaysia closely. So, I do not need to say much. We have had some issues with Indonesia recently. Indonesia will have parliamentary and presidential elections this year. In the past, Singapore has been the subject of adverse comments by some electoral contestants. We cannot rule out that
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happening again.
Ms Irene Ng and Mr Alex Yam also asked about potential pitfalls in our relations with Malaysia, including reports about the issue of water pricing. I, too, have read recent reports in the Malaysian media that Johor wishes to review the price of raw water sold to Singapore.
Singapore's position on this issue has been clear, consistent and unambiguous. We have articulated our position in this House many times. On 25 January 2003, Prof S Jayakumar gave a comprehensive account of our position. We have also formally conveyed our position to the Malaysian government on several occasions.
First, there is an existing 1962 Water Agreement. That Agreement is, in turn, guaranteed by the Separation Agreement. Both Agreements are international treaties which are vital to us, our sovereignty and our security. The terms of that Agreement cannot be changed unilaterally.
Second, under the terms of the 1962 Water Agreement, Malaysia has lost the right to review the price of water. I will elaborate on this when I answer a question that Ms Ellen Lee has raised, specifically on the recent Malaysian media reports on the price of water.
What we have set out is the legal position under international law. How good is it? It is good as long as both countries observe international law.
Dr Intan Azura Mokhtar asked about Singapore's relations with Indonesia, and Dr Lim Wee Kiak and Ms Irene Ng asked about the naming of the Indonesian navy ship KRI Usman Harun.
I have explained our position on the KRI Usman Harun in this House in February quite extensively. There will be issues which arise, but, overall, our relationship with Indonesia is positive. For example, we have made substantial progress in the negotiations on our maritime boundary in the eastern Straits of Singapore.
Dr Intan Azura Mokhtar and Dr Lim Wee Kiak asked for an update on our cooperation with Indonesia on transboundary haze pollution and ASEAN efforts to tackle this issue. Progress on this front has not been rapid. I will highlight
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three points.
First, ASEAN countries agreed to the ASEAN Sub-Regional Haze Monitoring System (HMS), which will allow us to better pinpoint those responsible for the haze. But we have not yet been able to implement the HMS even though the system is ready because the other parties have yet to agree to do so. The credibility of ASEAN is, of course, at stake.
Second, there was a media report on 4 March that mentioned that the majority of an Indonesian Parliamentary Commission was, in principle, supportive of the ASEAN Agreement on Transboundary Haze Pollution. That is welcome news as the other ASEAN countries have ratified the Agreement. Thus, once Indonesia agrees, the treaty can come into force.
Third, we have had reasonably successful cooperation on the ground with Jambi Province. Through a Letter of Intent (LOI) between Singapore and Indonesia, we provided assistance in technical capacity building and workshops, setting up of air and weather monitoring stations, among others. This MOU lapsed in 2009. We have suggested to Indonesia that we renew the LOI. Our respective officials have met several times. Jambi Province is keen for the LOI to be signed and for cooperation to continue. This could help on the ground by providing technical assistance and capacity building capabilities to equip local farmers with alternative land-clearing methods, sustainable farming and zero-burning practices. We are waiting for final approval from the relevant authorities in Jakarta, before the cooperation can be resumed.
Dr Lim Wee Kiak and Mr Ong Teng Koon asked about Singapore's relations with other Southeast Asian countries and the impact of the domestic situation in Thailand. We continue to broaden and deepen our relationships with other Southeast Asian countries besides Malaysia and Indonesia. With Vietnam, we upgraded our relationship to a Strategic Partnership last year and launched the 5th Vietnam-Singapore Industrial Park. We recently signed an Avoidance of Double Taxation Agreement with Laos during Laotian Prime Minister Thongsing Thammavong's official visit to Singapore. The Agreement will further expand bilateral economic links.
We also continue to maintain strong relationships with Brunei, Cambodia, Myanmar, the Philippines and Thailand, anchored by cooperation across multiple sectors. Such exchanges help sustain the momentum of bilateral relations, even as some of our neighbours undergo important political
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transitions.
On Thailand – I have said earlier what I can say. Within Thai society, there are also different factions with different interests. We can only hope for an amicable and peaceful solution to the crisis.
Ms Ellen Lee, Dr Lim Wee Kiak and Mr Alex Yam asked about progress towards achieving ASEAN's 2015 Community goal and ASEAN's plans after 2015. Ms Ellen Lee also asked about the regional architecture. A key focus of the 2015 ASEAN Community is the ASEAN Economic Community (AEC). We are about 80% on track to achieving an AEC, which will integrate and transform ASEAN into a single regional market with freer flows of goods, services, investment, skilled labour and capital. Integration is an ongoing task. It will not end on 31 December 2015.
Following the adoption of the Bandar Seri Begawan Declaration on the ASEAN Community's Post-2015 Vision in October 2013, Singapore is actively working with our neighbours to develop ASEAN's Post-2015 Vision for the ASEAN Community.
ASEAN-led regional platforms, including the ASEAN Plus Three (APT), East Asia Summit (EAS) and the ASEAN Regional Forum (ARF), have developed constructive patterns of engagement amongst members amidst an unpredictable environment. As the geopolitical complexity of the region increases, it is vital that ASEAN remains united and effective in managing shifts in partnership with our stakeholders.
While good bilateral relations with our neighbours and a strong and cohesive ASEAN contribute to regional stability, our environment is also shaped by the relations among major powers in the region.
Ms Ellen Lee asked for an assessment of the state of Sino-US relations and whether Sino-US tensions will affect ASEAN. US-China relations are the key factor that will shape the regional environment. How both powers manage this relationship will be vital for regional stability.
Although the US and China are in direct competition with each other in several areas, they also have many shared interests and strong interdependence. The US and China have committed to maintaining strong ties with each other and they share a common interest in a stable Asia Pacific region.
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This is in the region's interest.
ASEAN will continue to serve as a neutral platform for major powers to engage one another and the region. ASEAN's broader goal is to sustain an open and inclusive regional architecture conducive for peace, stability and growth.
Mr David Ong asked about the risks of rising tensions in Northeast Asia. A peaceful and stable Northeast Asia is also critical for the development and prosperity of the wider region. However, here tensions have been rising over the past year, due to a series of actions and reactions taken by different parties. This trend is worrying, as it could jeopardise stability, confidence and growth prospects in the region.
Mr Ong Teng Koon asked about Singapore's position on the South China Sea disputes and how they can be addressed.
Territorial disputes in the South China Sea are another potentially serious flashpoint. Let me restate briefly Singapore's position: we take no sides on the merits of the various claims in the South China Sea. But we are a small trading nation, where external trade is three and a half times our GDP. We have a critical interest in ensuring that freedom of navigation and overflight as well as peace and stability in the South China Sea – and all high seas – are maintained. This is important to all users of the sea as the South China Sea is a vital sea line of communications (SLOC) through which a third of the world's trade passes.
We hope that claimant states will abide by international law, including the UN Convention on the Law of the Sea (UNCLOS). As a small state, we have a strong vested interest in preserving a predictable and rules-based order in the global sea lanes – which include the South China Sea.
We have an interest to make sure that disputes are settled peacefully in accordance with international law. Singapore will continue to strongly support the effective implementation of the Declaration on the Conduct of Parties in the South China Sea and the early conclusion of a Code of Conduct between ASEAN and China.
Mr David Ong asked how else we are advancing our interests in freedom of navigation, including in the Arctic Council. At the international level, Singapore continues to actively expand our strategic space and protect our national interests through participation in international fora, such as the UN and its
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agencies.
Singapore also participates in various initiatives to ensure that our interests in freedom of navigation are maintained. For example, in May 2013, Singapore successfully gained observer status in the Arctic Council. Our contribution as an observer will allow us to monitor first-hand important issues that will affect our interests, such as the environmental effects due to development in the Arctic, impact of new shipping routes on our position as a transshipment hub and freedom of navigation.
Dr Lim Wee Kiak and Ms Irene Ng asked about how the geopolitical environment has affected our foreign policy. Although the evolving geopolitical landscape has complicated our external environment, the key tenets of our diplomacy have served and will continue to serve us well. I have set them out earlier. Even though we are a small nation, we must be able to speak up on global issues which affect our national interests, for example, allowing a country and its people to determine its own future free of external force or influence.
Singapore's continued prosperity is contingent on its security. Foreign policy is an extension of domestic policy and requires the backing of all Singaporeans, as well as a strong and dedicated Foreign Service that is skillful and nimble enough to address new challenges and seize emerging opportunities. That is really vital for the safeguarding of and advancing Singapore's interests.
Mr Gerald Giam I think really made this point that we ought to be spending more in terms of foreign aid and development. I think if you take 0.75% of our GDP, we are looking at something in excess of S$2 billion. I would suggest, with respect, that that is probably the wrong approach to take. You do not start out by saying, \"I want to spend so much money.\" You start out by saying, \"Where do I want to be in foreign policy terms? What is it that I want to achieve?\" And having listened to my speech, Mr Giam would appreciate that we do what is necessary to maintain our international space.
We need to be strong bilaterally; we need to work with regional platforms; we need to be active in the international fora, including the United Nations, and we are. For example, we effectively coordinate and lead what is called the 3G, which is a group of like-minded countries which make proposals to the G20. We chair and coordinate what is called a Forum of Small States which comprises more than a hundred countries in the United Nations. We do a number of these
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things; not all of them are costed under foreign aid development. We also, bring in, by last count, it must be in excess of 80,000 people to Singapore to train them because we do not believe in giving direct money but we believe in training people in capacity building in their countries. So, they come here, they learn from us, and I do not even like to put it in terms of \"learn\", I put it in terms of \"share\". They see what we have done right, they see what we have done not so well – that helps them, they go back. They range from countries like Botswana, Rwanda, obviously Southeast Asia – more than half the participants come from Southeast Asia – and other countries. Even China, they do not come under the Singapore Cooperation Programme (SCP), they come under other programmes. We do not cost all of them under the development aid.
So, we take part in international fora where we see it is in our vital interest, for example, the Arctic Council. We make a very serious effort, spend resources as necessary and become observers. A lot of people scratch their heads and say, \"Why does Singapore want to be an observer in the Arctic Council?\" We decided we wanted to. We fought quite hard, we were successful in getting in, as an observer. And we will make a contribution there. In fact, our contributions were so well recognised that Mr Sam Tan was asked to make a speech.
Perhaps, the Member can tell me how he thinks that we ought to be spending our money in different ways? But, so far, we make direct contributions, for example, when there are humanitarian needs. When there is a disaster, we also offer relief in kind. Rather than working back from what we ought to spend S$2 billion, we work on the basis that these are the countries that may benefit from our developmental aid. Not everything has got to be based purely on a calculative basis, nor should it be. These are the countries that we can work with and share our experiences. Often, it also is relevant to our foreign policy aims. For example, last year, we had the Foreign Ministers of the Caribbean states visit Singapore to look at our experiences and from the Pacific Islands as well. This year, it is likely that a number of Ministers from Africa will visit Singapore to look at what we are doing.
Earlier, in the Law Ministry debate, my Senior Minister of State pointed out that we are doing things with Myanmar which would help them develop their legal capacity. That does not come under the development budget either. We go in a very targeted way. Another thing we do is we go into partnership with third countries or we bring in partners and, together, we target to do some good in third countries. We have signed the partnership programme with the United Sates, for example – it is called a Third Country training programme. With US
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expertise, our local know-how, together, go into a specific country. We have such deals and agreements with a number of countries. So, if he thinks that is not enough, maybe he can tell us what more we can do.
The Chairman: Second Minister, Ms Grace Fu.
The Second Minister for Foreign Affairs (Ms Grace Fu Hai Yien): I will begin by elaborating on Singapore's key bilateral relations beyond Southeast Asia.
China and the United States (US) are both important partners for Singapore and many of our neighbours, and they have much to contribute to regional stability, growth and prosperity. Singapore maintains good bilateral relations with both countries and will continue to strengthen these ties to keep both powers engaged in the region.
The United States – for the past few decades, the US presence has underpinned regional stability, allowing countries in the region to grow and prosper. Singapore has supported the US' constructive regional engagement. We enjoy strong political, economic and security ties. The US is Singapore's largest foreign direct investor and our fourth-largest trading partner. On the defence front, we facilitated the rotational deployment of the US' Littoral Combat Ships, in line with our support for the US' continued engagement of the region. There has also been a steady exchange of high-level visits in the past year. Our Prime Minister met with President Barack Obama in April 2013 in Washington and we hosted visits to Singapore by Vice President Joe Biden and other key members of the Obama Administration. As part of the US' continued engagement of the region, the inaugural ASEAN-US Summit was held in October last year, which signalled both sides' commitment to elevate the ASEAN-US partnership and broaden existing cooperation. We look forward to President Obama' visit to the region in April 2014.
Moving on to our ties with China, we have always believed that a strong and prosperous China is in the interest of Singapore, the region and the world. Singapore has, therefore, consistently supported China's development over the years and we have witnessed bilateral cooperation expanding beyond traditional economic cooperation into new areas, such as financial services, sustainable development and social management. We continue to have excellent institutional links, such as the Singapore-China Joint Council for Bilateral Cooperation, which celebrated its 10th anniversary last year. We enjoy good relations with the Chinese leadership and saw several high-level
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exchanges, including visits to China by Prime Minister Lee, Emeritus Senior Minister Goh Chok Tong and Deputy Prime Ministers Teo Chee Hean and Tharman Shanmugaratnam. Singapore also hosted visits by Chinese Vice Premier Zhang Gaoli and Foreign Minister Wang Yi. At the broader regional level, China has been a strong and consistent supporter of ASEAN. We commemorated the 10th anniversary of the ASEAN-China Strategic Partnership last year and look forward to the Chinese leadership's continued interest in strengthening ASEAN-China ties.
I will now briefly touch on Singapore's ties with our other key bilateral partners.
Singapore and Japan have robust relations underpinned by strong economic ties and close cooperation on issues of common interest. The Prime Minister made two visits to Japan in May and December last year to keep up ties with Japanese leaders. Prime Minister Shinzo Abe also visited Singapore last July and delivered the 33rd Singapore Lecture on \"Abenomics\". We have also maintained good relations with the Republic of Korea, which has expressed interest in stepping up ties with Singapore on several fronts, including economic cooperation. Prime Minister visited the ROK in December last year and will be making another visit this December to commemorate the 25th anniversary of ASEAN-ROK dialogue relations.
Economic, defence and people-to-people links between Singapore and India continue to thrive. We had a good exchange of high-level visits last year, including those by Emeritus Senior Minister Goh Chok Tong, Deputy Prime Minister Tharman Shanmugaratnam, Indian Finance Minister P Chidambaram and External Affairs Minister Salman Khurshid. The maturity of our relations with India cushioned any negative impact arising from the Little India riot. Indian perceptions towards Singapore, which are generally positive, have not been affected. Going forward, both sides will continue to work to strengthen relations, especially in the economic, defence and air services sectors.
In terms of our relations with Europe, the Prime Minister made official visits to France and Poland in October 2013, while the President made State Visits to Hungary and the Slovak Republic in November 2013. The President will visit Portugal and Switzerland this year to explore new areas of economic and research cooperation with both countries.
Last year, I provided an update on the negotiations for the EU-Singapore Free Trade Agreement (EUSFTA). I am pleased to note that the EUSFTA, as well
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as the EU-Singapore Partnership and Cooperation Agreement (ESPCA), have since been initialled in September and October 2013 respectively. The EU is our third largest trading partner with trade amounting to S$96.5 billion in 2013 and the largest source of Foreign Direct Investments of S$189.4 billion in 2012. The EUSFTA will yield benefits for Singapore companies. The potential tariff savings from the FTA amount to approximately S$500 million each year. We are working towards the approval and ratification of both agreements by the EU Council and European Parliament. This is our key priority for 2014.
Minister Shanmugam spoke about our participation in the UN earlier on. Besides the UN, we have made great progress in pursuing our economic interest. Particularly, I am pleased to note that Singapore has been invited by Australia to the Brisbane G20 Summit in November 2014. This will be the fourth time Singapore is participating in the G20 Summit. We are also working with various parties to ensure substantive outcomes in the Trans-Pacific Partnership Agreement negotiations. The TPP, together with the Regional Comprehensive Economic Partnership (RCEP) FTA, which Singapore is also actively involved in negotiating, will promote greater regional economic integration and pave the way for an eventual Free Trade Area of the Asia Pacific. In these ways and more, Singapore has continued to make progress in expanding our economic space.
Senior Minister of State Masagos will now speak on our engagement of emerging markets in the Middle East, Latin America and Africa.
The Senior Minister of State for Foreign Affairs (Mr Masagos Zulkifli B M M): Mr Chairman, Mr Alex Yam asked about the state of Singapore's engagement of the Middle East, in view of political developments in the region, and Singapore's engagement of emerging markets, of which I will touch on Africa and Latin America.
We have focused our efforts on the Gulf countries, many of which we have established institutional platforms with, such as the UAE, Qatar, as well as Oman, where we have recently established a Consulate-General in Muscat, Oman.
Last year, between our officeholders, we visited Saudi Arabia, Abu Dhabi, Qatar, UAE, Oman and Bahrain. And recently, Minister visited Iran. Deputy Prime Minister Teo Chee Hean also visited Abu Dhabi in January 2014. Singapore also welcomed Qatari Prime Minister Sheikh Abdullah Bin Nasser Bin Khalifa Al-Thani in November last year and His Majesty King Abdullah [II]
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recently in February this year.
Our economic ties with the Gulf Cooperation Council (GCC) are strong. Last year, trade between Singapore and the GCC totalled about S$64 billion and, with the coming into force of the GCC-Singapore Free Trade Agreement in September 2013, we will further expand our economic links with the region.
At the regional level, Singapore has worked with ASEAN to build closer links with the GCC.
In addition to these political and economic engagements, we have shared our development experiences with the Middle East. For example, Singapore contributes to the Palestinian National Authority's capacity building efforts under our Technical Assistance Package. This contribution was highlighted when I attended the second Conference on Cooperation among East Asian Countries for Palestinian Development in Jakarta, where I also met Palestinian Prime Minister Rami Hamdallah and welcomed more Palestinian officials to visit Singapore under the enhanced package. We offered further help and cooperation, including water management and public administration.
Besides the Middle East, we have stepped up our engagement of other emerging markets, such as Turkey – where we opened an Embassy in 2012 – Africa, and Latin America, to expand Singapore's economic footprint.
In January 2014, Turkish Prime Minister Recep Tayyip Erdogan made an official visit to Singapore, where the commencement of negotiations on a comprehensive Singapore-Turkey Free Trade Agreement was announced. This is a significant development in bilateral relations.
Africa continues to feature on our radar as we look beyond traditional investment destinations. I visited South Africa and Nigeria in May 2013 and was impressed by the rapid economic growth and pace of development in the continent. We must not miss out on this.
We are also watching Latin America closely. Our trade with this fast-growing region reached about S$37 billion in 2013. Minister Shanmugam has visited Brazil and Peru and, in July 2013, we hosted Ministers from 10 Caribbean countries for the inaugural CARICOM High-Level Ministerial Exchange Visit.
Indeed, many Latin American countries are looking for opportunities to participate in Asia's robust growth. Notably, as of 2013, cumulative foreign
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direct investments from the region into Singapore amounted to S$25 billion.
Our ability to seize opportunities and foster cooperation with these emerging markets will give Singapore additional avenues for growth. I will now hand over to Senior Parliamentary Secretary Sam Tan who will respond to questions on Singapore's technical assistance and MFA's consular assistance to Singaporeans.
The Senior Parliamentary Secretary to the Minister for Foreign Affairs (Mr Sam Tan Chin Siong): Mr Chairman, before I begin, I would like to seek your mercy and approval to give me extra time; otherwise, I would not be able to finish my speech.
The Chairman: We have enough time. Your wish is granted.
Mr Sam Tan Chin Siong: Thank you. Mr Chairman, I would like to now respond to questions on Singapore's technical assistance programmes and consular assistance to Singaporeans.
Mr Gerald Giam asked about the role of international development in our foreign policy and whether we are considering expanding the scale of this programme. Singapore's technical assistance programme is part of Singapore's effort for international development to build a constituency of friends and supporters at the United Nations as well as important international fora.
Singapore currently extends technical assistance to other developing countries mainly through the Singapore Cooperation Programme (SCP). We do this because this is a right thing to do. Singapore had benefited from foreign assistance when we first became independent. Now that we have reached a certain level of development, we wanted to give something back as a responsible member of the international community.
We understood from our own experience that technical assistance is equally effective if not more than giving just financial aid in creating the right conditions for growth. So, under the SCP, we trained government officers from other countries to equip them with skills and knowledge to make a real impact in changing their people's lives for the better. We share Singapore's
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development experiences, our experiences, successes, as well as mistakes we have made along the way in the areas where we are strong in, such as public administration, urban planning and economic development.
Helping other countries is also not just the only right thing to do. It also helps to build a strong network of friends for Singapore who can help us defend our interests at the United Nations and other international organisations. As a small state, building a wide constituency of friends is especially useful for Singapore. The SCP helps our neighbours and also benefits Singapore.
A good part of the SCP is aimed at strengthening ASEAN. An ASEAN that is economically integrated, prosperous and neutral can better attract investments, create jobs, manage regional challenges and be a platform through which to engage larger powers. The SCP has been very, very well received by Singapore's friends and partners and it complements other forms of assistance extended by other agencies or civil societies and international organisations, such as the Singapore International Foundation.
We will need to continue investing in the SCP to broaden our network of friends and also to deepen friendships. But Singapore has limited resources and cannot compete with the larger donor countries in terms of the quantum of their assistance that we give out. Some major donors, like Japan and the US, dispense more than US$10 billion in aid per year. We do not have that kind of deep pockets but we can still do what is within our means – effectively targeting and meaningfully. We will be focusing our efforts on maximising the values of our contributions by providing smarter assistance by concentrating our efforts in areas where we can make a positive impact to the recipient countries.
We can also customise our programmes to meet the developmental needs of our friends. And we can also develop new programmes to meet emerging development needs and challenges. We can also do so by leveraging more on our network of partnerships with aid agencies, International Organisations and other developed countries to provide joint technical assistance to other countries.
Mr Chairman, I shall now move on to consular assistance to Singaporeans.
With greater affluence and connectivity, Singaporeans are travelling much more than before for work, leisure and education. Singaporeans made 6.9 million trips in 2013, that is, last year, compared to 3.6 million a decade ago. This excludes land trips to Malaysia which reach almost 20 million trips last
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year. Our consular workload has correspondingly grown in both volume and complexity with more than 3,000 consular cases handled last year. Concurrently, Singaporeans' expectations of our consular services have also risen over time. MFA treats all requests for consular assistance seriously and remains committed to providing efficient and responsive consular assistance to Singaporeans in distress abroad.
While some cases have been challenging to handle, our officers have been able to assist to meet these challenges and we are heartened and encouraged by Singaporeans expressing their appreciation for MFA's assistance. For example, when the Australian police alerted our Canberra Mission that a young Singaporean child had passed away in Tasmania while on holiday there, our mission helped advise the family on various aspects of the repatriation procedure. Our Canberra Mission also took the initiative to contact KK Hospital for the deceased's medical records so as to speed up the process. The family returned to Singapore safely and subsequently they wrote a letter to all those agencies involved, including our Mission and the Tasmanian authorities, to express their gratitude for the assistance.
In another case, a Singaporean NUS student was in Beijing on an internship programme when she received news that her father had suffered a heart attack in Singapore. Unfortunately, her passport had been submitted to the local Chinese authorities for the processing of visa and this, unfortunately, had also coincided with the three-day national holiday period for Mid-Autumn festival in China. Upon receiving the news, our Mission in Beijing quickly contacted the Beijing authorities and got the relevant officers to return to the office so that the student could retrieve her passport and rush back to Singapore that very night. The President of NUS wrote a letter to thank our Beijing Mission for the expeditious assistance extended to the student.
Mr Alex Yam asked whether MFA has sufficient resources to meet increasing demands for consular support. I would like to thank Mr Yam for his concern. MFA is constantly improving our work processes to better meet public needs for consular services. In addition to our 49 Overseas Missions, we maintain a network of 30 Honorary Consuls-General (HCGs) in countries where we do not have diplomatic presence. These Honorary Consuls General are prominent members of their countries and they help Singapore by providing consular coverage in locations where we do not have resident Missions. Where we do not even have representations of the HCG, there is an agreement among ASEAN countries to help one another's nationals when there is an emergency. We can also request assistance from friendly countries like the UK, the US, Australia and New Zealand. We also place an emphasis on emergency
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preparedness and regularly review our contingency plans to deal with potential flashpoints where Singaporeans could be affected.
MFA also participated in inter-Ministry and interagency emergency preparedness exercises as a coordinated approach among multiple Government agencies is often required when handling crises. If there is a need, we will deploy Consular Response Teams (CRTs) to help Singaporeans in crisis areas following natural and man-made disasters. For example, a CRT was deployed to Egypt during the period of unrest in August 2013 to assist affected Singaporeans, especially our students studying in Cairo.
In recent years, MFA has also been using technology to enhance our ability to monitor and respond to crises and step up our ability to communicate with Singaporeans. We started a dedicated Consular Twitter account in 2011 and launched the MFA@SG mobile application in 2012. These two technical tools help to expand and extend our reach and improve our dissemination of information in a timely and efficient manner.
As a matter of fact, the MFA@SG app now ranks among the top three Government mobile applications in terms of subscribed users. We also continue to encourage Singaporeans travelling overseas to make use of our \"eRegister\" system so that we can contact them in the event of an emergency. Singaporeans can also subscribe to receive MFA's travel notices electronically, which provide useful consular information for their overseas trips.
While our officers will continue to do their best to be creative, flexible and empathetic in assisting Singaporeans, there are also limitations to what we can do. So, we have to act in accordance with international conventions and cannot ignore local laws and regulations or interfere with the judicial processes of other countries. It is inevitable that Singaporeans may have to put up with some inconveniences and frustrations when travelling abroad. Nevertheless, MFA cannot compel a foreign country or government agency or commercial entity to satisfy the demands of Singaporeans. It is, therefore, important that Singaporeans understand what our consular officers can or cannot do.
While MFA strives to assist, Singaporeans also have to take some responsibility for their own safety when they travel. For instance, proper pre-trip preparations and taking sensible precautions while abroad can help to minimise problems during their travels.
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Ms Irene Ng mentioned the need to have well-trained and dedicated Foreign Service Officers. I fully agree with her. For a small country with no natural resources like Singapore, we really have to maximise human resources, which are our only asset. People are, indeed, key to diplomacy and there can be no substitute for people. We are, therefore, also intensifying our efforts to train and professionalise our consular officers in MFA headquarters as well and at Overseas Missions.
Mr Chairman, foreign policy starts with the people and ends with the people. We need good people to craft out sound foreign policy and we also need good people to implement them on the ground. My Ministry will continue to pay close attention to HR development to ensure that we will continue to have a good team to secure and defend the regional and international interests of Singapore through sound diplomacy.
The Chairman: Notwithstanding that the Senior Parliamentary Secretary has spoken for an additional six minutes and 35 seconds, I will still allow some time for clarifications. Dr Lim.
Dr Lim Wee Kiak: Mr Chairman, I would like to ask the Minister for clarification regarding the ASEAN Economic Committee which he mentioned. With the current political turmoil that is going on with our regional countries in ASEAN, will the remaining 20% of that work come through? And what can Singaporeans expect when the ASEAN Economic Committee comes to realisation, which means, what can the man on the street benefit from it?
Mr K Shanmugam: Thank you, Sir. The remaining 20% of the issues to be dealt with, the tariffs and coming down of the barriers, obviously are the most difficult ones. There have been intense negotiations and obviously some progress. There is goodwill on all sides, but given the differences in economic development, obviously there are some concerns amongst some of the countries about completely opening up and we are trying. Everybody recognises that come 2015, we need to make progress. We have already agreed on a post-2015 vision as well. We will have to do what we can this year and next year. There is goodwill. And we will continue trying after that.
Now, what does that mean for the man in the street? When you bring down the tariff barriers, what does this represent? ASEAN has over 600 million people. Its economy, the weight of its economy, is something in excess of $2.2 trillion. That is bigger than the economy of India.
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If you look at the map of Asia, what are the big economic blocks? India, China, Japan. Everybody recognises that. Not a lot of people realise that ASEAN is a huge economy within itself. Imagine if that economy, growing at anything between 4% and 5%, a bit more, a bit less, can bring down the barriers and create a large economic community. The sum of the parts is much greater than what we would achieve individually.
Freer flow of goods, services. Of course, professional services, there will always be more difficulties. But if we can get at least the goods, basic goods, basic services moving without too many barriers, that will be a tremendous achievement and it will add to the economic growth and it will yield substantial benefits for the people of ASEAN.
The Chairman: I see quite a few hands. So, I would like to request Members and also Ministers to keep their questions and answers short. Ms Irene Ng.
Ms Irene Ng Phek Hoong: The invasion of Ukraine by Russia is yet another reminder of vulnerabilities of small states. It is a reminder to Singapore, especially, on how harsh the world is, that size, economic strength and military power do matter in international relations. This is precisely the point I will be making in my defence cuts.
The younger generation has grown up knowing only peace. This may have lulled people like the Nominated Member Laurence Lien into a false sense of security in believing that the narrative of vulnerability is only rhetoric and not reality.
Can I ask the Minister how can MFA ensure that Singaporeans will support Singapore's foreign policy and its fundamental tenets, and to be united when any country, no matter how large, tries to intimidate or put pressure on Singapore?
Mr K Shanmugam: I think most Singaporeans, including the younger generation, understand the fact that we are small and the limitations that it brings. The extent of understanding may vary. I think every country faces this issue that what happens in the foreign policy space is not often understood in the domestic scene. Smaller countries have less of a problem because people can see for themselves every now and then what happens to them when
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international events and regional events impact them very directly. We just have to continue trying. I can give no better answer.
Mr Alex Yam: Thank you, Mr Chairman. I have two questions for the Senior Parliamentary Secretary.
Sir, you mentioned that a large part of the Singapore Cooperation Programme has been focused on ASEAN. Could you share with us how much specifically and whether there are some key examples of success? Secondly, on consular services, I read recently that the Australian MFA, in a recent review, is considering charging Australians for the use of consular assistance. Is this something, with the growing number of consular assistance requests, that MFA would also be considering?
Mr Sam Tan Chin Siong: Mr Chairman, I used quite a bit of extra time just now, so I will just give a very short answer. The second question first – whether MFA will impose fees for consular services. The short answer is no, we have no plan to do so.
With regard to the Member's first question about the SCP for ASEAN, today, we have trained about 55,000 officials from ASEAN and this constitutes 57% of our total SCP trainees. In that sense, it is almost close to 60% of the SCP.
Mr Gerald Giam Yean Song: A question for the Minister. Firstly, I said in my cut quite clearly that I did not expect Singapore to contribute 0.7% and, certainly, not $2 billion. So, I am aware that every dollar we spend on international development must be one less dollar we spend on domestic needs. I also thank Senior Parliamentary Secretary Sam Tan for explaining MFA's contributions through the SCP. My key question actually in my cut was: \"Does the Government see international development as a cost-effective way of furthering our foreign policy goals in terms of building goodwill and support from other countries for Singapore?\"
For example, after the Asian tsunami, Singapore engaged in several projects in Aceh province as well as in Sri Lanka to build up some of their capacity, not just in terms of technical assistance and training, but actually going to that country and engaging in development projects. Are there plans for Singapore to similarly explore such things, such that we can further our foreign policy goals a bit better?
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Mr K Shanmugam: Yes, we see it as part of our foreign policy aims.
Ms Ellen Lee: Thank you, Chairman. I have a question for the Minister. The Minister mentioned about Ukraine and I am just interested to know how the Minister interprets this situation. The US and almost all of Europe are condemning Russia for what they did in Crimea. But China's President has actually been contacting the Russian President and both have reaffirmed their good relationship. Given what China is doing currently in East China and the South China Sea, would that be taken as a further manifestation of Chinese intention that instead of condemning Russia for what she is doing in Crimea, China is actually supporting what Russia is doing?
Mr K Shanmugam: I think it is entirely understandable that not just China but many countries will affirm their good relations with Russia, including us. But that does not prevent us from taking a specific view on any particular action. We have made our own position clear. China has not quite said what it thinks about Russian actions, but I do not think we should draw a conclusion from the fact that the President of China spoke with the President of Russia that China is either approving or condemning the specific actions in Crimea. But what it tells us is that every country understands what its interests are. Interests are permanent, friends are transient. Each country will behave according to its size and weight and what it considers to be its interest. What China is doing is obviously calculated in China's interest.
The Chairman: Dr Lim, would you like to withdraw your cut?
Dr Lim Wee Kiak: Mr Chairman, let me thank the Minister for giving us the fine-point lessons on Ukraine as well as elucidating our current policy towards helping, always teaching others to fish, giving them a skill rather than giving them the fish. Let me also thank the Second Minister as well as the Senior Minister of State and Senior Parliamentary Secretary for answering all our questions. I beg leave to withdraw the cut.
[(proc text) Amendment, by leave, withdrawn. (proc text)]
[(proc text) The sum of $421,544,400 for Head N ordered to stand part of the Main Estimates. (proc text)]
[(proc text) The sum of $40,000,000 for Head N ordered to stand part of the Development Estimates. (proc text)]
The Chairman: Head J, Ministry of Defence. Dr Lim Wee Kiak.
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The rise of China with a fast growing economy and the continuing modernisation of the Peoples' Liberation Army's capability and platforms have changed and challenged the current security arrangements in the Asia Pacific. Both China and the United States continue to play key roles in stabilising our region over here. The recent assertive stance over competing territorial claims in the South and East China Seas has raised tensions in both regions significantly. The posturing by China, Japan and the United States over the territorial disputes increases the risk of conflicts and threatens the peace in our region. The recent political turmoil in Ukraine is a good reminder what can happen when a nation is caught between interests of larger nations and does not have the ability to defend itself.
I had the opportunity to visit the European Parliament and the European Union in Brussels last year. Speaking to parliamentarians of the member states regarding security arrangements, many were of the opinion that the formation of the European Union has delivered peace to the European continent after centuries of war. While they are apprehensive and cautious about the growth of Russia as a military might, they are not willing to see the re-emergence of German military power as well. Japan, on the other hand, has openly announced that they are reviewing their defence arrangements and may change their constitution so that they can increase their defence in view of the heightened tension with China, and also the rising tension in the Korean Peninsula. How will Asian countries, including Singapore and Malaysia, who had suffered from Japanese occupation during Second World War react to a remilitarised Japan?
Can MINDEF give an assessment of the regional security situation and the challenges confronting the region? How does MINDEF see relations between the US and China as well as China and Japan impacting our the regional security arrangement?
The combined defence spending in Asia exceeded that of the West for the first time last year. According to the Stockholm International Peace Research Institution's Military Expenditure Database, China has increased defence expenditure from US$52 billion in 2002 to US$157 billion in 2012. This is a
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whopping increase of 198% over the decade. Our immediate neighbours, Indonesia and Malaysia, have also increased their defence expenditure correspondingly over the past decade by 125% and 35% respectively. While comparing actual figures itself, Singapore has increased by about 16% over the past decade. Regional countries have been increasing their defence spending. What impact will this defence spending have on our regional security situation?
Ms Irene Ng Phek Hoong (Tampines): Regional countries have been increasing their defence spending. China leads the pack by increasing its defence budget by 12.2%, reflecting its military ambitions to play a more assertive role in Asia.
Tensions in this region have shot up in recent years over claims to disputed territories in the East and South China Seas. At the same time, nationalism has been on the rise, resulting in a more nationalistic approach to foreign and defence policy.
The danger then is that the nationalist sentiments that are feeding the desire to flex military muscles would lead to a test of wills between powers and, if there is a miscalculation, to conflict.
Closer to home, several ASEAN countries have also been spending more on defence. For example, Indonesia has posted an average annual increase of 8% over the last decade. What impact will these trends have on regional security and on Singapore's defence and strategic planning?
As a small state, it is crucial that Singapore maintains a strong and credible defence. The evolving geopolitics reinforces the need for continued and steady investments to ensure this.
We must never lose the ability to stand up for ourselves and to defend ourselves. Russia's invasion of Crimea in Ukraine is yet another reminder of that lesson.
The younger generation in Singapore, however, has known only peace. As a result, some may have been lulled into a false sense of security, as mentioned earlier, and this has led to calls for a reduction in NS and defence spending.
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It is crucial that Singaporeans show an iron will to support a strong SAF and to show no weakness as a united nation when tested by any country. I would like to ask the Minister how MINDEF ensures that Singaporeans continue to remain committed to defence and a strong SAF.
Mr Sitoh Yih Pin (Potong Pasir): Sir, there is a colloquial saying in Chinese that goes roughly like this: \"There are people who will conduct business at the risk of losing their lives, but there is certainly no one that will conduct a business that will certainly result in a loss.\" In Chinese, it goes like \"会丢了命的生意有人会做,不过没有人会做肯定亏钱的生意\".
Drug trafficking is one such example. People will try and smuggle drugs knowing fully well that they may go to the gallows. But no one will sell you a plate of mee rebus for 50 cents when it costs $1.50 to produce that plate of mee rebus.
Sir, the same principle applies to wars. Wars are started for one reason and one reason only – someone thinks that a war can be won. Some may argue that wars can begin for many reasons. For example, some people think that World War I was started by accident when an Austrian royalty was assassinated. Many wars were also started out of religious differences or fervour. But if we distil the facts, we can almost always find that the party that started the war believed they could win, whether by sheer might or even aided by supernatural power. This belief needs only to be momentary before a nation passes the tipping point and starts a war.
In the history of mankind, city-states have not had a very good record of existence. Many have come and gone through the millennia. Can Singapore be different? Actually, everything about the survival of Singapore boils down to two things – our economy must grow and our armed forces must be equal to the mission of defending Singapore.
I know, critics will tell me that there is more to government than the economy and defence, such as education, health, looking after our elderly and poor, transport and so on. I also agree. But the key word here is \"growing\". Without a growing economy, we cannot possibly fund our education, social and health programmes in a sustainable and responsible way. We can argue how
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fast should our economy grow, but no one should argue that our economy cannot shrink or stagnate – it needs to grow. As for defence, without an effective SAF, a would-be aggressor may start a war with Singapore because the aggressor thinks this war can be won.
As Sun Tzu said, the supreme art of war is to subdue the enemy without fighting. The hard truth of defending Singapore is that we have few strategic alternatives. Singapore cannot fight a protracted war. And the reasons are obvious.
Unlike Russia in World War II, we cannot trade space for time or hope for inhospitable climate before mounting an offensive. We live in the balmy tropics and we only have 710 square kilometres.
Unlike the Chinese in the Korean War, or the Vietnamese when they fought the Americans, we cannot absorb massive casualties and wear the enemy down. We only have 4 million to 5 million residents.
We have no natural terrain obstacles around us that can prevent or even slow an attack. While we may think of the seas around us affording us some comfort, the waters around us are no obstacles to air warfare and modern long-range weapons, especially in a built-up city like ours.
That means we are left with the strategic option of securing a quick, decisive and crippling defeat of our enemies once war starts. And while we want to only have friends in this world, we should leave no doubt in any potential aggressor's mind that the SAF is trained and equipped to do just that.
I, therefore, fully support the efforts of the Minister for Defence to keep the SAF the best trained and equipped armed forces in the region. This is by no means an easy task. The defence of a physically small country like Singapore is also limited by both the size of our population and the size of our defence budget. Larger countries can afford larger armies and larger budgets, especially when their economies grow. We are seeing this phenomenon of rapid growth in some defence budgets around us. I think this is natural. While we need not fear this, we should also be sensitive to this and recognise that both the rules of the game and the game itself are changing.
The SAF cannot lie idle while such developments take place. We have always placed about a quarter to a third of our Government Budget or about 4% to 5% of our GDP on defence expenditure. This has always been the biggest
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ticket item in the Budget. We should remain committed to these expenditure levels. We should also resist calls for National Service to be shortened to only a year, as suggested recently by Mr Tan Kin Lian.
As recent events have taught us, we cannot rely on people, be it others or even ourselves, remembering history to keep the peace. The best way to achieve peace and security for Singapore is for everyone to know that they cannot possibly win a war with Singapore and that starting a war will exact a terrible and unacceptable price for the aggressor. This message has to be repeatedly, if not continually, communicated to all Singaporeans and others beyond our shores. Not just to this generation, but for the generations to come. Most importantly, this message needs to be backed by the commitment and sacrifice of all Singaporeans, especially our SAF regulars and NSmen. We will do so as sensitively as possible but, when the going gets rough, we will also respond appropriately.
The other plank of our defence philosophy is that Singapore must remain relevant to the world and it is in the interests of the world's major and regional powers that Singapore remains an independent, sovereign state. That is why Singapore must remain plugged into the world community and our little country punches above our weight in the diplomatic world. A small state tucked away, forgotten by the world, is also a state ripe for the picking by aggressors.
Sir, Mr Lee Kuan Yew and other founding fathers have said on more than one occasion in the past that no one owes us a living. Actually, I think it is more elemental than that. No one even owes us an existence.
The Chairman: Mr Nicholas Fang. Not present.
Mr Pritam Singh (Aljunied): The international media have reported that the Joint Strike Fighter (JSF) was demonstrated to the SAF late last year in the US. At the last COS, the Defence Minister stated that MINDEF was in the final stages of evaluating the Joint Strike Fighter although the Minister did state that there were a number of caveats in assessing to complete this purchase. Separately, towards the end of last year, it was confirmed that Indonesia had purchased advanced Apache attack helicopters and the Leopard 2 Main Double Tank platforms that were purchased by Singapore not too long ago.
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In evaluating the purchase of the Joint Strike Fighter, how does MINDEF consider the impact of the introduction of such new defence technologies by the SAF into the region? How does MINDEF assess that its purchases do not alter the strategic dynamic such that it does not overly widen the capability gap beyond that required by the SAF to protect Singapore, and paradoxically generate insecurity in our neighbourhood or encourage tit-for-tat purchases?
Ms Ellen Lee (Sembawang): Chairman, there has been much media attention on territorial disputes in the South China Sea, in no small measure due to the number of countries involved. Additionally, there is also concern over the presence of pirates. It does not seem likely that these concerns would diminish in a short time. As such, Singapore is clearly vulnerable because we are an island nation. We have been careful in forging meaningful diplomatic ties and strategic relationships in our efforts to ensure homeland security. I would like MINDEF to provide an update on how the SAF is contributing to homeland security efforts, particularly the protection of our maritime waters.
Dr Lim Wee Kiak: Mr Chairman, MINDEF and MOE take up the top two spots of Government expenditure annually and this year's Budget is no exception.
According to the Stockholm International Peace Research Institute military expenditure database, Singapore has consistently been spending about the same amount annually on defence from 2002 to 2012 with a 16% increase over the 10 years. Just like what the Finance Minister has mentioned in the House in his speech today, the country that spends the most on healthcare per capita does not necessary mean that the citizens enjoy the highest standard or best healthcare. The healthcare standard outcomes do not necessarily relate directly to the amount of healthcare expenditure. Likewise, I am sure it does not mean that the higher we spend on defence, we will get better defence.
Can MINDEF provide an update on its approach in managing the defence budget? How does MINDEF ensure that it obtains the best value from our defence spending and that our spending enables MINDEF to remain capable and effective and become a capable force?
In a small nation like Singapore, resources, like land, are clearly in short supply. We are excited to hear about possible new developments coming up
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after the moving of Paya Lebar Airbase. There are also still large stretches of land that are occupied by military camps or designated military training areas.
Will there be further changes to the land that is currently managed by MINDEF? Can MINDEF give an update on how it ensures that it uses national resources like land prudently and efficiently?
Mr Gerald Giam Yean Song (Non-Constituency Member): Each year, MINDEF takes up the largest share of the Budget among all Ministries. This year, the defence budget is $12.6 billion – more than a fifth of total expenditure.
Singapore has the highest defence spending in South East Asia by far. According to the latest data from the Stockholm International Peace Institute, we spend 42% more than the next highest spender in the region, and 80% more than the third highest spender.
I fully appreciate the need for us to maintain a strong and credible defence force and to remain ahead of potential adversaries.
However, in deciding on its expenditure and choosing cutting edge defence technology, does MINDEF consider that if we leap too far ahead, there is a risk of spurring an arms race, as countries in our region may feel under pressure to keep up with us? This could lead to even greater spending in the future, which may be unsustainable.
Ms Sylvia Lim (Aljunied): It has been several years since MINDEF started the practice of outsourcing certain functions to the private sector or third parties. These include catering, cleaning contracts in army camps, operation of rifle ranges, repairs and maintenance, various types of training, running of IPPT and remedial training courses and so on.
I would like to ask the Minister what is the extent of the outsourcing practice and what other programmes, functions and services are outsourced to the private sector or to third parties.
The reasons for outsourcing would presumably include declining number of enlistees and cost-effectiveness. While these reasons are quite
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understandable, I would like to know what measures are taken to ensure security is safeguarded. Also, on the performance of the service providers themselves, how does MINDEF track the effects of outsourcing, and what Key Performance Indicators does MINDEF apply to ensure that the service providers meet the security and performance standards expected of them?
Ms Ellen Lee (Sembawang): My grassroots leaders shared with me their observations about how National Service (NS) is now regarded as a distinctive part of the Singapore identity and an integral part of the change from Ah Boy to Man. The proactive efforts of the Committee to Strengthen National Service (CSNS) to engage Singaporeans are commendable. To many young boys, NS is regarded as a rite of passage to adulthood, an important part of their obligation and duty to the nation. At the same time, more Singaporeans are eager to share their ideas on how to make NS more meaningful. What are some of the findings of the CSNS' efforts to engage Singaporeans so far? Are these findings made available to students, especially the \"O\" level students who offer Social Studies?
Mr Alex Yam (Chua Chu Kang): Mr Chairman, one key area of interest for many Singaporeans, when it comes to defence, has to do with that key institution of NS. It was, therefore, timely that at last year's COS, the Minister for Defence announced the formation of the Committee to Strengthen National Service. The two working groups looking at support for NS as well as recognition of benefits for National Servicemen have held a number of townhall consultations over the last one year and they have gained many proposals on how to further strengthen the key institutions.
The suggestions have been varied and I am quite certain that a good many may not be possible to be introduced. However, I am heartened that the Committee has adopted an open mind on views and ideas throughout the consultation process. The key thing spelt out by the Minister last year was to strengthen Singapore, strengthen NS and the SAF and serve all Singaporeans in that order.
After a long period of consultations as well as fruitful visits overseas, I hope that the CSNS is now ready with its formal proposals to be presented to Singaporeans. I do hope that some of the suggestions will look into further enhancing the contributions of our Servicemen as well as volunteers in areas
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where they can excel and that their efforts will also be well recognised.
The strengthening of NS is, in itself, important but the positive side effects of also engendering a strong and more united Singapore cannot be ignored.
Mr Ong Teng Koon (Sembawang): In Budget 2013, the Minister for Defence announced that he would chair a Committee to Strengthen National Service. Can the Minister give an update on the work of the Committee and the areas of focus? What measures does the Committee recommend to strengthen NS as the critical institution for Singapore's continued survival and success? Will the Committee engage in any public consultations to listen to feedback from the public and take in different views and perspectives?
Mr Pritam Singh: I signed up last year to attend one session of the Committee to Strengthen National Service (CSNS) in the second half of the year. The session I attended as an NSman was facilitated by Senior Minister of State for Home Affairs Mr Masagos. Like many of the NSmen in my group, I found the feedback process open and helpful in terms of soliciting feedback from NSmen on how to strengthen NS.
In fact, one of the more commendable things the Committee did after the feedback session was to publicise the summary of the consultation on the CSNS website. It may not have been possible to accommodate everyone's inputs as I heard them but the process itself I understand was appreciated, with many of the exchanges quite robust, frank and open. My own interactions with a handful of NSmen found that in spite of the occasional disruptions associated with NS duties with their civilian jobs, for many of them, there was a general appreciation for the institution of NS and its importance.
I would like to ask the Minister if the Committee to Strengthen the National Service could look into supporting NSmen beyond financial measures, such as the civilian utility of skills picked up in the military domain, for example, easier and more facilitative conversion standards from military to civilian licences and equipment with direct civilian applications.
Separately, last year, I raised the prospect of new citizens performing some form of NS. Can the Minister update the House on the plans for the SAF
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Volunteer Corps announced last year?
Mr Gerald Giam Yean Song: For most NSmen, annual in-camp training (ICT) involves long hours away from work and family. There is often a lot of waiting time in between the action, hence, the adage, \"hurry up and wait!\"
Commanders, however, are much busier throughout the ICT because they are often engaged in planning while the men wait. Yet, for the sake of equity, units usually issue call-ups to all involved NSmen for the full duration of the exercise. This incurs a huge cost in terms of the NSmen's time and Make-up Pay – which is based on the NSmen's civilian salary.
To better utilise NSmen resources, could non-commanders be recalled for a shorter ICT duration or even fewer ICTs? To address the inequality, key appointment holders and commanders could be rewarded with extra pay or benefits to compensate them for the additional sacrifices they make for our nation.
Dr Intan Azura Mokhtar (Ang Mo Kio): Chairman, more of the NSmen now have post-Secondary educational qualifications and would have had some form of work experience during internships or work attachments during their respective courses of study where a lot more hands-on approaches to problem solving would have been done. As the educational levels of our NSmen rise, they are likely to have higher aspirations and also want to contribute more meaningfully to the SAF, such as sharing their views and ideas on existing processes and policies. How is MINDEF looking to engage our NSmen more effectively, maximise their contributions and help fulfil their aspirations? Will there be more platforms to elicit these views and ideas from our NSmen and will MINDEF be able to support the test bed for ideas for pilot projects done by our NSmen with regard to defence and security?
The Chairman: Ms Ellen Lee, you can take your two cuts together.
Ms Ellen Lee: Thank you, Chairman. On defence relationship with major powers, the occurrence of a number of events has contributed to the increasing
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tension in our region. The spat between the major powers over China's declaration of its Air Identification Zone, the Japanese premier's controversial visit to Yasukuni shrine, the unresolved territorial disputes in the South China Sea and North Korea's threats to declare war if provoked are among the events that warrant serious reflection on how the security of the region is being affected.
Singapore has consistently pursued its policy of harmonious coexistence with our neighbours and friendly nations beyond the region. What is MINDEF's assessment of our situation in the wake of these recent events that have attracted attention across the globe? Has MINDEF's review of its current defence relationships with major powers affected plans to advance our defence relationships?
On overseas training defence ties, a very significant part of SAF's training is conducted overseas. Over the years, we have been carefully cultivating suitable partners to ensure the effectiveness of our training programmes. It is common knowledge that we have many partners, which include the USA, France, Australia, New Zealand, Germany and others. I would like to request MINDEF to provide an update on our defence ties with key partner countries, especially those with which we have training arrangements. Have the partnerships affected in any way the different aspects of our training programmes, such as the length of training and the impact on SAF officers?
The Chairman: Minister for Defence, Dr Ng.
","clarificationText":null,"clarificationTitle":null,"clarificationSubTitle":null,"reportType":null,"questionCount":null,"footNotes":null,"footNoteQuestions":null,"questionNo":null},{"startPgNo":0,"endPgNo":0,"title":"Committee of Supply Reporting Progress","subTitle":null,"sectionType":"OS","content":"The Minister for Defence (Dr Ng Eng Hen): Chairman, may I seek your consent to move that progress be reported now and leave be asked to sit again tomorrow?
The Chairman: I give my consent.
[(proc text) Resolved, \"That progress be reported now and leave be asked to sit again tomorrow.\" – [Dr Ng Eng Hen]. (proc text)]
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[(proc text) Thereupon Mr Deputy Speaker left the Chair of the Committee and took the Chair of the House. (proc text)]
Dr Ng Eng Hen: Mr Deputy Speaker, Sir, I beg to report that the Committee of Supply has made progress on the Estimates of Expenditure for the financial year 2014/2015 and ask leave to sit again tomorrow.
Mr Deputy Speaker: So be it.
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Adjourned accordingly at 7.21 pm.
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