Debate on Annual Budget Statement

Order read for Resumption of Debate on Question [24 March 2016],

"That Parliament approves the financial policy of the Government for the financial year 1 April 2016 to 31 March 2017." – [Minister for Finance.]

Question again proposed.

12.32 pm

Mr Liang Eng Hwa (Holland-Bukit Timah): Mdm Speaker, firstly, my congratulations to the Finance Minister for his well-delivered maiden Budget speech. I am most impressed with the overall balance of the Budget measures and the clear roadmap articulated in the area of industry transformation.

Although there were no new big-ticket items introduced, the Budget actually went into the next level of the nuts and bolts of implementing the various policy measures that were introduced in the last few years. It shows continuity in the policy directions and staying committed to the overall game plan.

Here, I would also want to record our thanks to Deputy Prime Minister Tharman, the former Finance Minister, for instituting the timely and necessary shifts in the fiscal policy during his tenure and getting us towards more inclusive growth as well as strengthening our social compact.

The Budget, in a way, also reminded us that we do have in place a comprehensive tool kit to deal with the challenges ahead. A number of life-changing measures were introduced in recent years and require steadfast and diligent implementation. I see this as among the important priorities of this year's Budget, which is to implement well the series of far-reaching social and economic programmes and to ensure they remain well-funded and sustained.

Clearly, economic transformation is the priority focus for this year's Budget and, indeed, will be in the years to come. That is the "get real" part for us as a country. We are mindful that to achieve better lives and a stronger nation, we need to have the means and the resources to get there.

The Industry Transformation Programme is both an exciting roadmap to achieve quality growth as well as a practical organisation of the various efforts to help businesses deepen capabilities, scale up technology adoption and transform through innovation.

The $400 million Automation Support Package and the $450 million National Robotics Programme are necessary bold moves. Somehow, we cannot run away from tagging dollar values to important initiatives to show solid commitments. I welcome that.

The enhanced Risk-sharing Financing Scheme to support scale-ups as well as the upsized Mezzanine Growth Fund to support expansion and internationalisations are useful enablers. It goes some way to addressing the funding needs of companies seeking to grow their businesses. These new measures are tilted in favour of businesses that are looking to upscale, innovate and internationalise, the three important key words in the Industry Transformation Programme.

And I agree with the approach. It is usual to expect individual businesses to have varying aspirations and perspectives with regard to future growth or expansions. Some companies may be satisfied with the status quo and find no need to take on new risks or seek new growth markets.

But for those who are prepared to venture into new frontiers and have good business ideas and are willing to take on investment risks, we should do our utmost to assist them in a meaningful way so as to increase their chances of succeeding. Their successes will add vibrancy to the economy, create better jobs and grow value overall.

Digitisation of the economy and the Internet of Things continue to proliferate at a very fast speed around the world. It is no longer just about setting up digital platforms for the purpose of gaining efficiencies and data management. Rather, digital platforms should also spur innovations and co-creation. To this end, developing the National Trade Platform into an open innovation platform where third-party apps and value-adding services can be incorporated is accretive. In fact, in many platforms today, it is the apps that drive adoption and utilisations. The global trading system has grown in complexity and we need to continually crowd source innovative solutions so as to stay in-game in the global trade flows.

Mdm Speaker, having a vibrant startup scene is an essential part of an innovative and value-creating economy. We need to place-make the ecosystem with the necessary players, the budding entrepreneurs, mentors, venture and private equity funds, among others. Hence, I fully support the set-up of the new entity SG-Innovate, which is the soft infrastructure needed to foster innovation and collaborations. On the other hand, we will also need the second Launchpad @ Jurong Innovation District (JID), which is the hard infrastructure to serve as spaces for entrepreneurs and researchers to design and test-bed their new ideas.

A key ingredient for a vibrant startup scene is for the barriers to entry to be kept as low as possible, whether it is rental costs, red tape or others. I like the JTC Launchpad at one north – the now famous Blk 71 at Ayer Rajah. It is actually a very modest set-up but a very conducive environment. I would imagine that the maintenance cost for the place would not cost too much. And that is the right approach.

So, in developing the next gen JID, we should bear in mind not to allow the cost of land and the cost development to be the de-enabling factor for startups or would-be entrepreneurs.

In the last decade, innovation districts have emerged in the Western economies. In many of the United States (US) cities, innovation districts emerged near anchor institutions – the universities – the midtown areas where economy shaping, learning, living and social networking are integrated. It has helped cities move up the value chain of global competitiveness. Creating a new innovation district next to an established technological institute like the Nanyang Technology University (NTU) is an exciting idea.

Besides the innovation districts and launchpads, our neighbourhoods are also places where entrepreneurism and innovations can take root. After all, Jack Ma started Alibaba at his humble apartment in Hangzhou.

Already in the heartlands, we have seen smart work centres being set up at community locations like the community clubs and libraries. They are meant to promote flexible work arrangements. Nonetheless, these well-equipped and broadband-enabled smart work centres can also serve as initial workspace for budding startups. The Finance Minister spoke about revitalising Housing and Development Board (HDB) shops in his speech. Perhaps, HDB can work with the Infocomm Development Authority (IDA) to set aside shop spaces as smart work centres for heartland startups as well.

Much has been said about the need for a "more integrated approach" among the different agencies and support schemes, and a "more targeted approach" to develop each industry. These are very much the crux of implementing transformation on a national scale. To transform at the enterprise level is already a formidable challenge. To do it at the economy-wide level, the challenges just multiply.

Take the National Robotics Programme. We have seen promising adoption at the hospitals. The Finance Minister mentioned that it could be widely applied to transform sectors, such as construction, manufacturing and logistics, with the aim of providing solutions to small and medium enterprises (SMEs) at reasonable cost. This is all very exciting, but I can imagine the various implementation challenges ahead.

The first question is whether there will be a champion agency with deep enough knowledge and the leadership to drive and coordinate this programme. How would the robotics programme work along with the various efforts by the other agencies, like the Standards, Productivity and Innovation Board (SPRING), the Building and Construction Authority (BCA), the Agency for Science, Technology and Research (A*STAR), the Workforce Development Authority (WDA), and how will this agency be involved in the research and development (R&D), acquisition, standards and deployment of robotics in the enterprises. Or is this a case where the Government's role is primarily as the grant provider and to "let a thousand flowers bloom", with the hope that it will accelerate the use of robotics in the industry? If so, how do we minimise wastage from duplication in R&D, share the limited robotics expertise and avoid fragmenting the robotics suppliers' industry?

As we promote and incentivise the use of technology in enterprises, we should also synergistically grow our local technology providers. The transformation package is an excellent opportunity for our local technology industry to build credentials and expertise, which they can leverage to expand internationally. This should be the second order priority for the National Robotics Programme (NRP).

Leveraging on the trade associations and chambers (TACs) to help transform industry is also a logical move. The Government and businesses can work together to develop the industries, identify market failures and work out the most appropriate interventions, be it systemic or otherwise.

We should leverage on TACs to build interdependencies among industry participants and encourage the "win-win" culture of mutual harnessing and sharing. Of course, the TACs would also need a little incentivising as well, and, hence, the Local Enterprise and Association Development-Plus (LEAD+) programme is the needed boost. However, it becomes trickier if the sector has more than one TAC representing them. Here is where the Government could encourage the setting up of umbrella TACs to coordinate for the entire sector.

I applaud the move to second up to 20 public officers to interested TACs to better understand the needs of businesses and to build closer rapport. It demonstrates commitment to the task and would help raise the partnership to new high levels.

I also read from the news that a team of officers drawn from different agencies will be set up to serve each of the 20-plus sectors. These cluster champions will actively engage the industry to carry out the transformation roadmap. Such facilitation efforts, when backed by necessary resources will help kick-start and fast track the pace of transformation.

Clearly, in a Government-led transformation and where the agencies play a hands-on role to facilitate and enable transformation, we need to first get the bureaucracy right for the task.

Agencies will have to work in a more integrated and networked rather than the hierarchical manner. Public sector officers will also need to master the art of seeking aligned partnership with enterprises, something that is not written in the Public Service manual.

Also, importantly, in innovation-driven transformations, agencies administering the grants will need to move away from key performance indicator (KPI)-driven criteria to more outcome-based criteria in dishing out support. The ticking of boxes approach would not achieve the outcomes that we want.

As we seek new ways to grow the economy, it is also timely to take stock and review if the various economic agencies that were set up years ago are still well-positioned to carry out the transformation roadmaps laid out. Agencies like the Economic Development Board (EDB), SPRING, International Enterprise (IE) Singapore, A*STAR, JTC, WDA, IDA, among others, have been excellent and effective organisations in carrying out their respective missions. But as we press on for a decisive shift in our economic growth strategy, we have to examine whether the scope of work of different agencies can be better integrated, and whether we can eradicate overlaps and re-mission the agencies if necessary. And whether we need a merger and acquisition (M&A), so to speak, among the agencies?

Mdm Speaker, I am glad that the Finance Minister continues to exercise prudence in the Budget, notwithstanding this being an expansionary Budget. It is worth noting that our expenditures have grown to almost two-and-a-half times what they were 10 years ago. And in the years to come, the rate of increase in expenditure will continue to rise.

While there are no new measures in this year's Budget to deal with the cyclical downturn, the Budget this year still presents substantial support for firms, especially SMEs. The $1.9 billion Wage Credit Scheme payout this year, the $1 billion extension of the Special Employment Credit (SEC) and the enhanced corporate income tax rebate, among others, actually put money into businesses and would help the cash flow position of companies.

Although the increase in total expenditure amounts to $5 billion in this year's Budget, the overall injection to the economy is actually much higher if the net investment returns (NIR) contribution is taken into consideration. The NIR contribution (NRIC) of $14.7 billion, versus $9.9 billion in financial year (FY2015), helps to fund the basic deficit of $7.7 billion. This net injection into the Budget, which is not funded through taxes or tax leakages, represents a strong stimulus to the economy and helps to support overall growth.

While the overall surplus of $3.45 billion may be good news, it may pose potential problems to the Finance Minister. I am sure expectations will rise for the Government to spend more, given the surplus that we have.

However, we should note that the increase in NIRC, which is the major balancing item for the Budget, is merely due to changes made to the NIR framework last year. Temasek's NIRC is now also based on expected long-term returns, like the Government of Singapore Investment Corporation (GIC) and the Monetary Authority of Singapore (MAS). Some would argue these are just changes to accounting treatment.

There is no guarantee that the expected long-term returns would not fall in the years to come, as it really depends on the prevailing yields of the financial markets and the global outlook. Already, we are seeing negative interest rates in countries like Japan and Europe and that we are entering into a world of low returns.

Mdm Speaker, notwithstanding the expansionary Budget, we should still monitor very closely how the slowdown would impact businesses in the short term.

Uncertainties and downside risks in the global economy have increased. For instance, as China continues with reforms to rebalance the economy, there are concerns that the Chinese economy could slow down more sharply than expected.

The services-driven nature of growth in the US and China, as well as the trends of in-sourcing in the two countries, may mean that external demand for our exports will remain subdued. China and the US are our top trading partners.

We should watch closely how the lower oil prices would impact the marine and offshore sector as these could have negative spillover effects on other sectors supporting the oil and gas industry. And we should also be concerned about the continuing shrinkage of the manufacturing sector.

Mdm Speaker, the Finance Minister had emphasised at length the spirit of partnership in his speech. The Government will lead and act, whether it is economic transformation or social uplifting. But the Government cannot do it alone. We can achieve better and with more sustainable outcomes if the stakeholders are in this together.

Last month, The Business Times conducted a pre-Budget poll. One of the questions posed to the chief executive officers (CEOs) participating in the poll was whether businesses should rely less on the Government's help and more on their own efforts. The results were actually surprisingly very encouraging. From the poll, 69% of CEOs think that businesses should be more self-reliant and rely more on themselves and less on the Government to grow their businesses, although I must add that the recent position paper published by the Singapore Business Federation suggests a different sentiment. In that paper, almost all the recommendations that were put up asked for the Government to do more.

In preparing this speech, I must admit I struggled quite a bit as to the role the Government should play in the next phase of our economic development. In the last five decades, we saw strong and direct involvement by the Government in industrialising the country. We achieved remarkable growth, very much engineered by the state. Government-linked companies, like Singapore Airlines (SIA), Sembawang Corporation (Sembcorp), Keppel, the Port of Singapore Authority (PSA), Singapore Technologies (ST) Engineering, were established which developed world-class capabilities for the economy and created good jobs. The Government's direct hand in the economy has enabled Singapore to progress and thrive.

But my intuition tells me that in the next phase of development where the strategy is geared towards innovation, value creating and more entrepreneurship, the Government's hand in the economy should be less direct, though not necessarily less in terms of financial resources or administration.

At least in the short to medium term, the Government would have to push urgently the various key horizontal enablers and to facilitate the realisation of a conducive ecosystem where innovation and entrepreneurship flourish. Left to market forces, we may take a long while to transit or may not even get there. Or we may have to do it in a more painful way at a later stage.

Ultimately, it is the businesses that must come up with the next "killer" product or services that can sell to the consumers of the world. Businesses should be the trendsetters. The Government can help, but the Government may not always make the right business call.

Hence, the ideal state is for the Government to forge and sustain strong partnerships with economic stakeholders and, over time, with the stronger industry players and enterprises emerging, they can take the lead in driving the growth ahead. The gut instinct or the "animal spirit" is still very much needed to bring us to the desired state. Mdm Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] Mdm Speaker, with the rapid technological development in the world, Singapore is also undergoing a necessary industrial transformation process. What I am most concerned about is how this will directly impact our workers.

This is the challenge that many developed countries are facing. A recent survey showed that in the US, close to 47% of the existing jobs could be replaced by technology or digitisation in the next few years.

The advances of technology and the Internet have created innovative business models which, in turn, caused products and services to become outdated very fast and their lifespan shortened. This means that the existing skills of workers may not meet the demand of the new jobs, creating a mismatch problem. The workers will end up like a "hero who has no place to show his prowess".

So, I hope that the Government will pay attention to this issue and give more support. Although we have some comprehensive packages, I believe that, in helping the workers, we can adopt a more proactive, caring and inclusive approach.

(In English): Mdm Speaker, with that, I support the Budget.

Mdm Speaker: Assoc Prof Randolph Tan.

12.52 pm

Assoc Prof Randolph Tan (Nominated Member): Thank you very much, Mdm Speaker, for allowing me to participate in this debate.

In recent years, some have expressed views that Singapore's early post-Independence economic philosophy had put an overly heavy emphasis on growth. I do not agree. I think it was a choice for Singapore which the founding generation made and for which the founding leaders took responsibility. They decided – correctly, in hindsight – on promoting growth and investment. And because they took early and decisive action, Singapore gained a valuable lead over many other countries that subsequently took the same route. Courageous decisions, not an endowment of natural resources, brought our economy to where it is today.

The courage of such decisions bequeaths to later generations an expanded set of choices. Today, instead of tearing everything down to remake the economy, we can choose to do so selectively. And because we can do it with a high degree of penetration facilitated by depth of policy insight, we have more confidence that our economy's edifice will remain secure.

Led by our founding Prime Minister, the early generation of leaders emphasised the need for an economy that continually updated itself and checked its relevance. In order to remain updated and relevant, strong growth during the early days of development provided us with the necessary head-start. If Singapore had commenced its pursuit of growth any later or grown any slower, imagine where we would be now in the face of the prevailing state of regional and global competition.

The basic principles of Singapore's economic philosophy have remained intact till now, but that can easily change. Just as natural resource endowments can be readily depleted through unrestrained profligacy, later generations of Singaporeans can easily end up with a vacuous foundation on which to erect their future economy if our economic philosophy shifts in the wrong direction. That is why I believe it is important at this point to recall these principles.

In my opinion, the principles which characterise the economic philosophy that has guided our economy to its current level of development can be condensed to three basic ones. These are self-reliance, openness and a determination to remain updated and relevant.

The first can be seen, in many ways, in our approach to economic partnerships within and beyond the region, as well as in our emphasis on communal effort and individual responsibility.

The second characteristic of openness is seen in our welcoming approach to foreign investment, both of money and talent, something that occurred from the very early days of Independence. Today, there are few who seriously doubt the need for Singapore to continue to remain open and welcoming, especially to foreign manpower. The disagreement which exists has been about how much and in what manner to accommodate, not in the fundamental principle of being open to investment and talent. There is also openness to trade, which is why Singapore has always been exceptionally progressive in its approach to regulation, regionalism and globalisation, when compared to other economies.

Finally, there is the continual push to remain updated and relevant. It is a philosophy which is reflected in our untiring pursuit of upgrading in every aspect of our lives. This last one is also the one which I feel has been most taken for granted. We enjoy good working infrastructure and roads without potholes, but it is also common to see frustration with what some regard as incessant upgrading works. It is not uncommon to come across criticism about such things, without enough appreciation of the actual alternatives we could be presented with if we decide not to pursue continual upgrading.

The approach taken in this Budget will, I believe, strengthen our commitment to these same principles. Indeed, Mdm Speaker, I believe this Budget goes beyond fiscal initiatives. What it has done is to introduce subtle policy innovations which will expand the options available for managing Singapore as an advanced economy.

Our development over the last 50 years into an advanced economy means that the policy approaches that were adequate when we were a Newly Industralised Economy (NIE) need to be supplemented with new policy innovations with sufficient penetration to deal with the deep level of sophistication that the economy has achieved.

The most significant in this Budget relate to the labour market. Labour market innovations have always played a critical role in Singapore's economy. An early one was the setting up of the National Wages Council in 1972 as a tripartite body. That provided the framework for decades of strong labour market performance. Singapore's outstanding record on employment growth, unemployment and income growth over the years is a testament to the efficacy of this and other supporting labour market policy innovations.

Of course, we are not alone in these kinds of innovations. Other countries have also introduced innovations which have strengthened their labour market performance substantially. One good example is Germany's introduction of flexible working time accounts. Often, reception to such innovations is mixed, at best. They faced criticism and opposition, and only proved themselves over time, during crises, in particular.

Despite the outstanding performance of the labour market, past Governments did not rest on their laurels. In 2008, another important labour market innovation was heralded by the introduction of Workfare by then-Finance Minister, Deputy Prime Minister Tharman.

By encouraging workers at the lower end of the wage spectrum to seek employment and remain employed, Workfare has proved to be a forward-looking approach that helps the more vulnerable segments of our working population, and it does so in a fashion which is closely aligned to our economic principles.

Other labour market innovations include wage support measures, most notable of which was the Jobs Credit Scheme of 2009, the enhanced system of levies and dependency ratio ceilings (DRCs) on foreign manpower, the Jobs Bank and, more recently, the Progressive Wage Model. By contributing to an increased range of policy options, such innovations equip the Government to handle increasingly complex labour market issues.

I would like to focus on the system of levies and DRCs. This system is vital for managing our long-term dependency on foreign manpower in a sustainable manner. Since its introduction at the recommendation of the Economic Strategies Committee (ESC), the current comprehensive system of levies and quotas has not been tested by a full-blown downturn. Yet, beginning with last year's Budget, subtle changes have already been taking place in the way this system is applied without requiring recession as a precondition.

Last year, in response to the slowing economy, previously announced levy increases for S Pass and Work Permit holders were deferred for all sectors. In justifying the freezing of levy increases for manufacturing for two years, then-Finance Minister Deputy Prime Minister Tharman drew a link to the "progress in productivity" improvement that had been achieved. This year, the Finance Minister cites the moderating demand for Work Permit holders in the marine and process sectors in support of extending the freeze on levy increases for another year.

Mdm Speaker, unlike the Central Provident Fund (CPF) cuts, the levies are sector-specific and can be deployed to address weakness on a sectoral basis. In this manner, the Government is expanding the application of the system of levies as a policy instrument, allowing it to evolve into what could eventually become a very powerful tool for managing the labour market and one that is definitely more amenable to finetuning according to the degree and area of weakness in the economy.

Given the importance of this system of levies and DRCs, I believe it is important also to look out for possible signs of weakness. Where necessary, apart from an expansion in their application, such policy tools may provide improved performance with appropriate reconditioning. This is especially so if there is clear evidence of unintended outcomes.

In order for the system of levies to remain reliable and for its policy potential to be fully realised, we should re-examine the issue of whether and how quota restrictions should be imposed on top of the levies. DRCs, which are quantitative restrictions, mean that aside from determining their willingness to pay, employers have to make a further determination of the numbers of workers they are entitled to hire under the quota. Basic contradictions occur when both price and quantity restrictions are required to be fulfilled at the same time. Some of the problems we have observed in the labour market could be manifestations of these contradictions. Let me take one common example. There have been complaints about situations where local workers are hired mainly to justify DRC-based eligibility for foreign hirings.

Practically speaking, it is not possible for pricing and quota decisions to be made simultaneously. Consequently, the likelihood of such unintended outcomes is increased when employers approach their hiring decisions in a two-stage manner. If they begin by determining the price they are willing to pay, one would expect that an employer would then proceed to optimise his entitlement under the quota.

In order to reduce the likelihood of such unintended outcomes, it is timely to consider modifications to the system to eliminate the need for such a two-stage decision-making process. Such a two-stage process imposes unnecessary burdens on employers.

There are alternatives that could potentially improve such a system. One possible solution is to forcibly reverse the order of the two-stage hiring decision process. In practice, a system that requires employers to decide the quota they want before pricing their entitlement would end up being quite similar to the Certificate of Entitlement (COE) system for vehicles. Of course, this is a suggestion which commentators have raised in the past and which I am sure policymakers would probably have considered. What I would like to point out and urge is a re-examining of its potential at this point in time.

I fully recognise that the implications of commoditising manpower services to such an extent should not be taken lightly. Payment for manpower services is not like payments for vehicles, because it affects the livelihoods of workers and the welfare of their families. Auctioning the right to hire also creates uncertainty for employers, possibly to an extent which would wipe out any efficiency gains. But the confidence with which the system is being used, at this point in time, is an encouraging sign that there is scope to alleviate the inherent contradictions that remain.

Employers need some certainty in order to carry out forward business planning. Hence, the improvements in information sharing, including warnings about whether they have a weak core of Singaporean workers, are important improvements to our system. Moving forward, would it be possible to expand the policy options for dealing with employers who have a "weak Singapore Core" of workers and whose prospects for moving towards a "stronger Singapore Core" in the short term are actually constrained by the realities of supply?

Here, let me be explicit about one thing. My concerns about DRCs come from the head and not the heart. In my heart, I have no doubt why there was a need to resort to quantitative controls on top of imposing levies. I believe, for instance, that as a Singaporean worker, I probably benefit directly from such a system. But it is no use to have short-term benefits which diminish our long-term prospects. It is in our interest to ensure that the system remains viable for the long term.

Another area of concern which I had spoken about in this Chamber before and which invariably provokes a clash of emotions is prolonged forms of wage support, especially when these are not tied to clear rules for withdrawal.

In this Budget, the Finance Minister is expanding SEC for three years up to end-2019. Although I am opposed to extended wage support, I have no hesitation in acknowledging the Finance Minister for what can only be a decision made from his heart not to immediately discontinue such schemes. There is no doubt that loss of jobs and the uncertainty associated with job search is an emotionally costly affair on those of our fellow Singaporeans who become affected. In the last few decades since our first recession, there have been many families whose lives have been severely disrupted as unemployment hit them.

In the process of searching for a new job, their decision about whether to accept lower paying alternatives or hold out for a similar position, and the anguish as the unemployment duration lengthens for them, are heart-breaking and anxiety-filled, not just for them but also for their family members, if they are the primary breadwinner. Yet, fellow Singaporean workers have remained stoic through each and every ensuing downturn, maintaining their faith in the almost unparalleled capacity of the Singapore economy to create jobs. It is no mean feat to continue to generate jobs in an increasingly sophisticated economy packed into one of the most congested cityscapes in the world.

Ultimately, while saving jobs for the present, especially during times when the economy is weak and layoffs are mounting, is good, we should also have an eye for the preservation of the longer-term performance and vitality of the labour market. In a time of disruptive change, it may be better to ensure that the mechanisms for the market-driven reallocation of resources are allowed to function normally than to be slowed. That is why I hope the Finance Minister will reconsider his promise under the Adapt and Grow Initiative of expanded wage support for retrenched workers. What I would urge him to do is to tie any support to specific conditions, such as the job search process. Although it is a difficult decision, I am certain that to preserve the policy effectiveness of these and other innovations, the Government must ensure that it is not just creating jobs, but continues to be focused on the more important task of creating longer term employment opportunities of value.

Finally, Mdm Speaker, I would like to ask about some challenges that could confront the Industry Transformation Programme.

The sector-specific approach that is introduced in this Budget could actually result in complications over time. While customising plans for each sector – whether in terms of manpower projections or business coordination – could potentially improve the fit to the specific needs of each sector, it may result in an entrenchment of sector-based interests and, ironically, could detract from overall coordination at the national level. This type of "spaghetti bowl" phenomenon is not unlike the complex maze of bilateral and multilateral relationships that analysts in trade theory refer to when analysing the impact of trade agreements.

I support very strongly the switch away from a broad-based approach to a targeted approach. I would go even further. We should not rule out re-introducing broad-based measures later on. After all, policy tools must be judged solely on the grounds of efficacy, and shying away from promiscuity is an unnecessary self-limitation.

Despite that, from a policy perspective, administrative ambitions have to be tempered as well. As this Budget places us on the threshold of a technically more complex era of sector-focused planning, we should also guard against spawning a monstrous array of coordination challenges.

My question is: are there adequate assurances that sectors will not retreat into their own narrow outlook and compete for limited resources without an appreciation of national concerns?

Let me give an example. The strong support from the Government and other stakeholders notwithstanding, resource constraints are a major factor. If we look at R&D as an example, in terms of R&D spending as a percentage of gross domestic product (GDP), it is well-known that Singapore ranks behind a number of countries. In 2012, the figure of around 2% for us was half that of world leaders Israel and the Republic of Korea. But dollar spending has been high. Hence, in terms of the number of R&D personnel per million persons of the population, Singapore's figure, actually, has been consistently above those of the Republic of Korea, Japan, Germany and even the US.

Research manpower in Singapore has been growing rapidly, with the number of research scientists and engineers increasing 1.5 times between 1997 and 2012. Such rapid rates of growth are not only difficult to sustain, they affect other sectors that compete for the same limited supply. The Industry Transformation Programme will further increase the scramble for already tight resources in this area.

Even as the outcomes from such efforts must be properly measured and assessed in order to justify public expenditures, we should avoid sparking off a chase for measured KPIs.

Mdm Speaker, in conclusion, when we were an NIE, our Pioneers remodelled the entire economy and reshaped our physical landscape. They did so, keeping our core philosophy intact. Thanks to them, Singapore is today a thriving metropolis, with the luxury of fully-financed plans chasing after limited manpower and tight space. With virtually no more derelict structures to tear down, we have to choose which good buildings should make way for even newer infrastructure whenever we contemplate a make-over. The choice in this Budget to prioritise restructuring over shorter term concerns has been a difficult one. It is a courageous decision that will fortify us for the journey ahead. Mdm Speaker, I support the Budget.

Mdm Speaker: Mr Sitoh Yih Pin.

1.12 pm

Mr Sitoh Yih Pin (Potong Pasir): Mdm Speaker, I rise to congratulate Minister Heng Swee Keat on his first Budget Statement as Finance Minister. Minister Heng is Singapore's eighth Finance Minister and is Singapore's first Finance Minister who was born after our very first Finance Minister took office in 1959.

Our very first Finance Minister needs no introduction in this House. Anecdotes of Dr Goh Keng Swee's frugality and thriftiness are legendary. His penny-pinching habits, including the state of disrepair of his car, have all been well-chronicled. In the context of Singapore today, our younger Singaporeans may not be able to relate to these stories personally and some may even find them laughable or ridiculous.

But thriftiness was the hallmark of our founding leaders. Not only Dr Goh, but then Prime Minister Mr Lee Kuan Yew and each and every one of our founding leaders. No exception. Not surprisingly, this sense of thriftiness laid the cornerstone of Singapore's fiscal policy for the past 57 years. This translated into a fiscal policy where we always live within our means and put away as much as we can for a "rainy day". We do so to secure the future of our children and grandchildren, just like the Pioneer Generation had secured for us what we have today.

Mdm Speaker, this represented one of our core values and was also a reflection of Singapore's early history. The odds were stacked against us then. So, we took nothing for granted.

Times have changed. Singapore has done reasonably well. Our fiscal prudence has put us in good stead. Educated guesses on the state of our reserves often arrive at a figure few could fathom or ascertain in an instance, the actual number of numerals involved. I am a chartered accountant by profession and I struggle also! This is, however, a good thing, something we should be rightfully proud of. But this has led to calls from some quarters for the Government to spend more. Calls for more subsidies and Budget goodies. Calls for short-term fixes to stimulate the economy and to make the lives of Singaporeans easier and more comfortable.

First Deputy Managing Director of the International Monetary Fund (IMF), Mr David Lipton, warned last month that the global risk of "economic derailment" has grown. If true, this will certainly affect Singapore and calls for our Government to do more, spend more and help more will inevitably get louder and louder.

To be fair, the argument to assist those less privileged or to share some of our successes is not an unjust one and our Government has acknowledged this. ComCare, Workfare, MediShield Life, the Pioneer Generation Package, SkillsFuture, Silver Support Scheme are just a few examples of what the Government has done over the years.

Any further calls for more liberal spending by the Government, however, should be carefully considered and treated with great caution.

Madam, the US, Europe and other countries have taught us from recent history that no country, no matter how developed or advanced its economy, is immune to slowdowns or the vagaries of the global economy. Singapore is no exception. If we think we are safe and invulnerable because of the size of our bank balance and, therefore, can and should draw down on it to make our lives "easier" and "better", we are simply deluding ourselves.

History is there for us to learn from, not to repeat its mistakes. We should never deviate from our fundamental principle of "living within our means" and being financially prudent, no matter how tempting it might be to simply use money to solve problems that we are facing or will face.

In a recent interview with Channel News Asia, I highlighted the distinction between items that are "good to have" and "must have", the point being that the items that fall into the former category can wait while we allocate resources to achieve the latter first. I said it because I believe in it. But it was also a good soundbite for television. But carrying out the proposition is certainly more complex than delivering it on television.

In this, I do not envy the job of Minister Heng or any of our Ministers for Finance preceding him. How does one decide the arbitrary line that distinguishes the "good to have" from the "must have"?

As Singapore became more successful through the years, naturally, Singaporeans want more. The concept of wanting more is understandable. It is part of achievement and the fruit of hard work and ambition; key attributes to success. The question is: how much more?

Time changes. Context and circumstances change. What is a "good to have" in the 1970s may very well be a "must have" today. Terminals 4 and 5 of our airport and their construction costs may seem extravagant to some, but is crucial when looked at in the strategic light of how Singapore hopes to position itself as a hub in this region. Our passenger numbers are increasing. Between 2011 and 2015, they have gone up by almost 10 million. We want it to grow more. It has direct and indirect consequences for our economy.

Security is also a key "must have". I am sure we all agree, without it, everything else really does not matter. The world is getting more chaotic. The recent bombings in Jakarta, Paris, Lahore and Brussels reinforce this.

We also want a better and more efficient public transport system. We want the convenience of public transport at our doorstep. We want sheltered walkways to take us from our towns to the various transport nubs. The list goes on.

Mdm Speaker, it is clearly not an easy task to draw a line between what is a "good to have" and what is a "must have". But looking at the heart of this Budget gives us an indication of a possible yardstick. The yardstick being that any decision must centre around whether something is good for the long-term benefit of Singapore − to ensure that it not only benefits us but is enduring enough to benefit successive generations of Singaporeans − our children and grandchildren.

This is further accentuated by the fact that a significant portion of our Budget initiatives goes to "training or upgrading" schemes, such as SkillsFuture, the Adapt and Grow initiative and the Tech Accelerator programme.

This Budget also launches a new Industry Transformation Programme. This is meant to help firms and industries restructure, create new value and drive growth. This is, again, a future-centric programme for the long-term benefit of our economy.

But as with all restructuring exercises, we must expect pain when excess is trimmed. Not all firms will survive. Firms should also not expect such grants to be permanent. The Government's role, after all, is to assist industries and firms to grow sustainably and succeed on their own accord in the future. Madam, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] In this Budget, the Government also launched the Industry Transformation Programme. This means that the Government will help firms and industries to transform, innovate and grow. This is, again, a future-centric development programme, beneficial to the long-term development of our economy.

However, with limited resources, the transformation programme will encounter some difficulties. During the transformation process, pain brought about by change and trimming excesses should be expected. In the end, not all firms will survive and firms should not expect such support programmes to be permanent. After all, the Government's role is to help industries and firms to grow steadily. Whether they can succeed in the future will depend on their individual efforts.

(In English): Folded into this is our Government's assistance to our SMEs. Higher corporate income tax rebate, SEC and the SME Working Capital Loan Scheme are further initiatives aimed at helping our SMEs succeed amid tough economic conditions and tight labour constraints.

Again, these policies have been tailored with an eye for the future, to provide a helping hand to our SMEs gain a foothold in their respective industries on their own steam. This will ensure sustainability and longevity.

Mdm Speaker, this Budget aims to provide and implement long-term solutions to long-term issues. It does not look for short-term fixes. It aims to help those who need it the most but also assists us all in working towards a bright and sustainable and secure future for Singapore.

Times will change. Context and circumstances will change. Our needs and wants as a country will change. Our principle of fiscal prudence should not.

This is a principle that has been handed down to us by our founding leaders, and I urge all successive generations of leaders to keep to the same. Mdm Speaker, I support the Budget.

Mdm Speaker: Mr Heng Chee How.

1.22 pm

The Senior Minister of State, Prime Minister's Office (Mr Heng Chee How): Mdm Speaker, thank you for allowing me to participate in this debate.

I want to begin by stating what I hold to be a hard truth about Singapore's survival and prosperity. And that truth is that Singapore must recognise our innate strengths and weaknesses and find ways to make up for and transcend our weaknesses and, at the same time, figure out approaches to propel ourselves ahead of the other nations. This has been and remains the only viable way to continue to make a good living and secure a bright future for ourselves and our children in an uncertain and turbulent world.

For this reason, three things in this year's Budget speech resonated with me strongly.

Firstly, that the economic transformation is, in the words of Minister Heng, "urgent and critical"; secondly, that we must "spend right"; and, thirdly, that more than ever, there is a need to do "together" and to go beyond an expectation that it is sufficient for the Government to "do for us". And by "us", I mean the companies or people. It is going to be increasingly important.

These three things are not only about specific Budget measures of where the funds and incentives are applied. It is not about where the money is going alone. I think these are three critical mindsets that all of us in Singapore must have, if we are to survive and thrive.

Allow me, once again, to quote from our founding Prime Minister Mr Lee Kuan Yew. I think this particular quotation is by now very familiar. He said, and I quote: "This country belongs to all of us. We made this country from nothing, from mud-flats. Over 100 years ago, this was a mud-flat, swamp. Today, this is a modern city. Ten years from now, this will be a metropolis. Never fear!"

He said this at a grassroots event in Sembawang in September 1965. Such was the boldness and audacity of the Lee Kuan Yew generation. Never faint-hearted. Always ready to look reality and obstacle in the eye, and then to find and fight a way forward through to victory.

We must do likewise. Today's challenges are no doubt different from those of the initial Independence years. That is true. But one must never underestimate the difficulties faced then, or to give ourselves too many excuses now for not driving harder and smarter to change with the times, to adapt and stay relevant – to not only be busy but to mean business − so that we can continue to have a reason to be useful to the world and, thus, a reason to earn a good keep.

Our productivity overall, minus the cyclical rebound, has been lacklustre in general. To me, this is worrisome. This is why I agree with Minister Heng that economic transformation for us is not only critical; it is urgent.

There is no time to lose and a soft economy should not lull us into slackening our resolve. We must press ahead with structural and strategic reforms even as we tackle cyclical pain and strain. If we just march on the spot and productivity continues to be lacklustre, then other countries will surely catch up with us, close the distance and then, eventually, overtake us. Should that happen, then it would be a sad case of asking, "Who moved my cheese?"

The Government is putting in place both constraints, for example, in a tighter foreign manpower policy, as well as incentives to nudge companies and industries away from overly manpower-intensive approaches towards manpower-lean ways. The Government is also investing very heavily in spurring innovation, technology adoption and process remakes. It is definitely pouring resources into pre-employment and in-employment training, skills upgrading and retraining, through numerous initiatives, including SkillsFuture. This would be money necessarily spent and spent right, provided we elicit the right responses from those who can make things happen. And who are these? Companies and their employees.

So, we have to ask: are our companies responding fast enough, with enough hunger, with enough fervour? Are our workers, at whatever level that they are at, clear enough about what they need to know, and fired up enough to take to learning what is required not only for now but for future employment and employability?

On top of positioning funds and setting up entities and processes, we must also ask what else must we do to tap constructively into our common imagination and anxiety, to unite our spirit and to unleash its power, to mobilise our people into real and impactful action.

I firmly believe that it is the effectiveness of this mobilisation that will ultimately determine our progress and success.

The Labour Movement is keenly aware of our role as a social partner in nation-building. To help workers maximise employment, minimise unemployment and have a fair go at good jobs and prospects are our constant goals. Tripartism has been acknowledged as a significant national competitive advantage in attracting investments to create jobs for Singaporeans.

The environment is changing. The types of industries and jobs in our economy are changing. The workforce's education profile is changing. The workforce age profile is changing. The nationality mix of the workforce is changing. The technology at work is changing. How people are earning a living – be it salaried, self-employed, hybrid – is changing. The platforms through which goods and services are traded and money is made are all changing.

This means that we have to consider our approaches carefully and adapt our ways to ensure that the Labour Movement remains relevant and effective in standing up and speaking up for workers, employees, income earners of all types at all levels. At the same time, we must continue to create this value for working people in ways that concurrently strengthen our national and sectoral tripartism.

My fellow Labour Members will elaborate on the respective segments of the workforce that they are championing. For me, I would like to devote the rest of my speech to mature workers, a segment of fellow workers that I have long spoken up for.

I would like to begin by drawing attention to the coming workforce and skills shortage. It may appear odd for me to allude to a coming workforce shortage at this point when we are voicing concern about the possible increase in retrenchments and unemployment resulting from slower growth expected this year. However, I have a basis for this.

According to Government projections, the local workforce will peak around 2020, that is, four years from now. This is because the Baby Boomers leaving the workforce by then are estimated to roughly match the local new job entrants. Beyond 2025, more could be leaving than entering.

Add to this is the need to maintain the local-foreign manpower ratio at a socially acceptable level, and you will immediately see that companies have to re-think their manpower strategy. At the minimum, they have to ask themselves two questions. Firstly, where are you going to get your headcount? Secondly, where are you going to get the skill sets you need?

Any company that does not ask these questions or figure out good answers to them is doomed to fail.

Clearly, if one has to do more with less, then productivity and capability become the lifeblood. And just as clearly, if one has to hunt for headcount, then keeping the capable headcount that one already has becomes an act of self-preservation. Because there is no point losing what you have, or allowing what you have to waste away and then try in vain to recruit that younger person out there who may not be there. This is, to me, pure logic.

In this area, I see that the Government is doing its utmost to help companies.

First, the Government has earlier announced that it has accepted the tripartite recommendations to raise the re-employment age ceiling from 65 to 67. I urge the Minister for Manpower to make the specific announcement of when this will take place at the coming Committee of Supply. Mature workers reaching age 65 working for companies that strictly follow statutory ages will greatly appreciate that. And, by my analysis earlier, I think companies ought to welcome such a move.

Second, I applaud the numerous measures announced by Minister Heng in encouraging employers to continue hiring mature workers. These measures include the earlier announced Wage Credit Scheme, the payouts have just been made, the extension of SEC as well as Enhanced Workfare Income Supplement to lower-wage mature workers, so that more may choose to remain in work. Referring to what Assoc Prof Randolph Tan has also mentioned just now, when he spoke about these being helpful measures from the heart, but what about the long term. I support this but, at the same time, my next point says that we have to balance these with continued investment in the skill sets of our mature workers.

Third, employers must not neglect the continued training and development of their mature employees. Such employees are more likely to want to stay on with the company, compared to the turnover rates that have been observed through surveys amongst the younger cohorts. This means that the effective runway for mature workers actually may not be shorter than that of younger workers. If their skills are kept up-to-date and sharpened, they will be an asset to the company. If they are neglected and rust away, then they lose employability and their companies lose capability. That would be a road that leads to mutual destruction.

The 25 Sectoral Tripartite Committees (STCs) are now deliberating and devising Sectoral Manpower Plans to support the capability-building and development of their respective industries. I urge every STC to also detail a plan to help their industry sharpen and tap the value of a skilled mature workforce. Each STC must go beyond recommending paying more in the hope of getting additional skilled headcount from somewhere. There is also an STC for HR, and I urge HR STC to consider this demographic reality and see how best to equip and certify HR practitioners to help operationalise this for their companies and their industry.

Fourth, efforts to enable workplaces to appreciate and fully tap contributions of mature workers must be stepped up. These include not only how to refine funding programmes, such as WorkPro, but also how to spur the adoption of successful age management methods. I cite some examples. These would include the redesign of HR policies. So, for example, where it makes sense, companies can consider retirement ages that are above the statutory retirement age, where it makes sense for the company. There are companies in Singapore already doing that, as a matter of strategic recruitment, retention, redesign of jobs and work processes, use of assistive technologies to help overcome some of the expected physical deterioration with age, considerations of enhanced lighting and safety to minimise unnecessary injuries and, therefore, maximise the ability of the workforce to continue working without mishap and so on. We must make the working environment as ageless or age-neutral as possible, so that mature workers can be enabled to contribute as much as possible, for as long as possible. Many of them want to and companies will increasingly need such employees very much, even if some of them have yet to realise it at this point.

Mdm Speaker, I was asked by a friend after Minister Heng delivered his Budget speech whether I thought that the measures he announced are enough to help Singapore's economy transform and whether I had hoped for more incentives in various places. I told this friend that, to me, the Budget had set the direction and positioned resources for companies and people to take advantage of, to help themselves, now and for the future. It is not a question of whether the Government could have doled out more money here or there. It is whether there is enough will; enough will to ride that rainbow and create that better future. Whether there is enough gumption to brave the challenges, and whether there is enough good sense to do it together.

On 8 August 1972, speaking at the National Day Rally, founding Prime Minister Lee Kuan Yew said this, and I quote: "A faint-hearted people would have given up long ago. We never gave in, never mind giving up. For that alone, we deserve to succeed. If we press on, in 20 years, we shall build a great metropolis, worthy of a hardy, resilient and stout-hearted people."

He is right. And it is now up to us to get it right and show that we can make it. Mdm Speaker, I support the Budget Statement.

Mdm Speaker: Assoc Prof Daniel Goh.

1.38 pm

Assoc Prof Daniel Goh Pei Siong (Non-Constituency Member): Mdm Speaker, the emphasis on innovation as the third pillar in the Industry Transformation Programme is a right emphasis. This is more than just a good thing to do. As the Minister said in his Budget Statement, it is critical to the programme. If we fail at innovation, we will fail to transform our economy for the next stage of value creation for growth and this will endanger our very existence as a global city and an independent nation.

Innovation is not an aspiration; it is a survival imperative. It is, therefore, important to get our innovation policy approach right. In this respect, I have three issues to raise.

Accounting for the investments. The first issue is accountability. Significant public monies are being invested by the Government in innovation. I believe most Singaporeans do not object to this necessary investment. However, this does not mean that the Government should not account to Singaporeans that their money is well-spent and there are good results to show from the investment.

An amount of $19 billion has been set aside over the next five years for investment in science and technology research under the Research, Innovation and Enterprise (RIE) 2020 plan. Under the plan, $4 billion has been earmarked for industry-research collaboration. The Government is further topping up another $1.5 billion to the National Research Fund (NRF) in this Budget. It is crucial, as the Minister said, "to capture the economic and social value of R&D".

But the public needs to know exactly how much of the value is being captured for the benefit of the Singapore economy and, I must emphasise, for the benefit of Singapore society, that is, Singaporeans ourselves.

The example of the Procter and Gamble Singapore Innovation Centre (SgIC), set up in collaboration with A*STAR and EDB, is well-worn. The question is, as an "open innovation hub", how many Singapore enterprises is the Innovation Centre helping to facilitate research and accelerate product development?

We should not begrudge P&G for obtaining a large benefit from the Innovation Centre for their own product development. After all, P&G is promising to share valuable expertise and experience. Nevertheless, Singapore enterprises should have a fair share of the R&D outcomes.

As it has been two years since the Innovation Centre was set up, the Minister should be able to give the public a sense of how much of the economic and social value of R&D at the Innovation Centre Singapore enterprises has been and will be capturing.

For sure, returns on investment in R&D and also tech startups are long term by nature. In this regard, Infocomm Investments Private Limited, the venture capital subsidiary of IDA, has been around for 20 years now. Surely, the Government will be able to give us much more than a sense of the value Singapore enterprises are capturing through the funding from Infocomm Investments. The Government should be able to give us the actual return on investment (ROI) in innovation for Infocomm Investments.

This is important because Infocomm Investments is the foundational model for SG-Innovate, which is a far more ambitious scheme to expand venture funding and accelerator and incubator support to new and emerging sectors. The success of Infocomm Investments should be detailed beyond a few anecdotal examples. On top of accounting for the investments to the public, explaining the ROI for Infocomm Investments would greatly inspire public confidence about the Government's present efforts in innovation and allay general cynicism about Singaporeans' ability to innovate.

A more fundamental question then is whether the Government has any framework to measure and evaluate the ROI in innovation and enterprise. Measuring ROI in innovation is fast becoming a norm internationally.

A recent report for the United Kingdom (UK) government estimated the median private rates of return to R&D investments are around 20%-25% in terms of economic output or productivity increases, and social returns are typically two to three times larger than private returns. In the UK, public R&D investments have yielded social returns of around 20%. This is a ready benchmark for us to adopt.

I emphasise that I am referring to the general ROI in innovation and enterprise for the whole R&D sector and for key vehicles like Infocomm Investments, Biopolis and Fusionopolis. Investments in innovation and enterprise are inherently risky and fine-grained ROI with regard to individual investments and grants may stifle R&D instead.

If the Government has an internal framework to measure and evaluate the ROI in innovation and enterprise, then it should share this with the public and let Singaporeans know how we are faring vis-a-vis international competitors. If the Government does not have an existing framework, then now is the time to develop a framework to measure ROI in innovation and publicise it.

This is not to embroil the Government agencies in the politics of blame and shame. This is to instil basic accountability for good governance as well as to mobilise Singaporeans for the innovation drive, which is a survival imperative.

The Singaporean Core in R&D. The second issue is the development of a Singaporean Core in R&D. In order for the economic and social value of R&D to be captured in the long run, we need to make sure R&D funding for scientific research is benefiting Singaporeans directly. While we invest heavily in deepening R&D capabilities, the corresponding focus should be to make sure these capabilities are anchored by a Singaporean Core in the R&D sector.

The NRF has been actively trumpeting the latest scientific advances. One such advance featured in the news in 2013, the invention of an invisibility cloak to make things disappear from view, quite literally caught my eye. This is the stuff that makes for the thrill of Harry Potter fantasies and Star Trek science fictions and captures the public imagination. But does it capture the economic and social value of R&D for Singapore and Singaporeans?

It was a good scientific advance, but industrial application of the cloak is still very far off, as the materials used were bulky and cloaking was effective only from six perspectives. This is understandable. Scientific progress takes time and the translation from science to marketplace is an undertaking that requires patience and commitment. Beyond the medium-term economic value of R&D for Singapore, another concern is the long-term social value of R&D for Singaporeans.

It was reported that the research team that invented the invisibility cloak was led by a Singaporean Permanent Resident (PR), a young professor at NTU. This is not quite accurate. The team comprised six other collaborators from Zhejiang University in China and the Marvell Technology Group Boston in the US.

From the order of names listed as co-authors of the paper of the invention published in a prestigious scientific journal, the Singapore PR professor was listed last and appeared to be a junior member of the team. The team leader appears to be a Zhejiang University professor who conceived the original idea and led in the design of the cloaks and the experiments.

The global university field is characterised by the mobility of talents. Though probably just a junior member of the team, the Singapore PR professor involved in the invention of the invisibility cloak is a young researcher under the age of 35 and has many decades of breakthrough research work in him yet. We need to attract and retain foreign talents like him. Better still, we need to help him and his family sink roots in Singapore as a citizen, so that he will become a member of the Singaporean Core in R&D.

We are making progress in deepening our R&D capabilities, as the invisibility cloak example shows. But the ideal would be that a cloak nearing industrial application be produced by a local industry-university team led by Singaporean scientists.

My point and my plea are this: while the Government pumps generous funding into R&D to deepen innovation capabilities, that it does not ignore the social factor. It is not a matter of just plonking talents together and getting them to talk and work with one another. We need to focus on developing more Singaporean innovators as well as retaining non-Singaporeans who would help Singaporeans innovate. We must strengthen and empower the Singaporean Core in R&D. Only then will they continue to create value for the nation deep into the future.

Beyond the Innovation Enclave. The third issue is the risk of the innovation enclave. The industrial park model has been successful for us in the last 50 years. It is right we celebrate Jurong and how its success has benefited the country and our countrymen.

Mdm Speaker, this is what Jurong means for me: not an industrial enclave, but a focal point for our successful industrialisation, which was replicated in the many satellite industrial estates co-located with HDB towns, such as in Toa Payoh and Hougang, built in the 1970s and 1980s. The network of industrial parks merging into our heartland mobilised a generation of Singaporeans to become workers to transform the country and taught all of us the culture of hard work and perseverance.

The Jurong Innovation District looks glamourous. The concept of getting researchers, entrepreneurs, industrialists and investors to live, work and play in the same mega-mall so that chance and choice encounters could produce new ideas, inventions and businesses is very plausible and attractive. But does it really work?

Research on science and technology parks and their influence on innovation has seen mixed results. Some studies show that science parks promote interaction between firms and research institutions, while others show that notwithstanding the increased interaction, geographical proximity does not seem to be an important factor for forging formal research links and innovativeness.

The question remains for researchers of science park innovation: are these parks "seedbeds" or "enclaves" of innovation? The difference is this. The science park, as "seedbed", would see the science park as providing the right environment to nurture new technology startups benefiting from technology transfer, research spinoffs and the development of innovative products. But depending on a whole host of factors, the science park could very well end up as an innovation "enclave", where enterprises are attracted to the science park due to the status and prestige of being located in the exclusive park. The science park becomes a high-tech island with innovation taking place, separated from the rest of society.

We have had science park developments in the Buona Vista area, including Biopolis and Fusionopolis, next to the National University of Singapore (NUS) for two decades now. There is, therefore, a precedent for the Jurong Innovation District. It is worthwhile for the Government to make its case to the public that the Buona Vista science parks work as innovation seedbeds and are not an innovation enclave detached from the rest of Singapore.

Are the Buona Vista science parks successful by measures of innovation? What is the ROI in innovation for the Buona Vista science parks? Have Singapore enterprises and Singaporean innovators that relocated into the science parks become more innovative?

How have Singapore enterprises benefited from these science parks? Are the main beneficiaries vertically integrated foreign multinational corporations (MNCs) which have merely shifted their operations to Singapore? Are the benefits to Singaporeans mainly trickle-down effects rather than improving Singaporeans' innovativeness?

Have the science parks trained up a Singaporean Core of R&D professionals? Is the R&D leadership in the science parks still dominated by foreign scientists? Are formal research links between NUS and firms located in the science parks significantly higher than those located outside the parks?

My concern is that the Jurong Innovation District is going to develop into an enclave enveloping NTU. Such an innovation enclave would mean foreign MNCs and venture capitalists congregating in the enclave with more foreign researchers and managers. They would live, work and play with an exclusive group of local elites selected to interact with them.

My concern is that the Jurong Innovation District, by virtue of its exclusive urban design, would become a high-tech island detached from the rest of Singapore, from the heartland estates where Singaporeans and Singapore enterprises are supposed to be beneficiaries of innovation. Are we creating mega-ivory towers, one surrounding NUS and the other surrounding NTU? How would the science parks plug back into Singapore society to diffuse creativity and innovation into the rest of the city?

The Singapore Model. Has the Government considered decentralising the industrial district-cum-science park concentration to seed a network of smaller science parks in the heartland estates, so that innovation can tap on the mass creativity of the Singaporean workforce? The benefits of this alternative model are these.

Instead of focusing only on startups, the innovation drive will also plug into the large body of SMEs to enrich our enterprise base and spread innovation to our local companies. Instead of hoping only for foreign know-how to somehow spread to selected local entrepreneurs, the heartland science parks will multiply and synergise local entrepreneurship, so that innovation will take off from a Singaporean base to engage the world.

The network of heartland science parks will bring a beneficial diversity to our public housing towns, making them more cosmopolitan than they already are. Conversely, the rich heartland life worlds will expose otherwise isolated researchers to a grounded diversity that could generate interesting and relevant innovations. In time, the different science parks could evolve into diverse specialisations, creating experimental niches that will give local character to the towns. Bedok may well become a fintech powerhouse, while Bukit Batok becomes the cleantech town.

A positive side effect is urban renewal of our heartland estates. Our heartland town centres will stay economically vibrant as local businesses provide services to the science park crowd. It will also increase the number of local jobs available in the heartland for those who find it difficult to travel. Overall, it may help solve the problem of ageing estates as older townships continue to attract younger families to move into them due to the heartland science parks.

Most importantly, innovation will not be concentrated in two districts but will be everywhere in Singapore, turning the enclaved city into the creative city where innovativeness becomes a cultural norm for everyone in every vocation, from the cleaner to the CEO, from the office clerk to the scientist.

This, I believe, is what Jurong was for Singapore in the 1970s. I hope the Jurong Innovation District is just the beginning to create a network of innovation estates all over the island, across the city, through the heartland.

We are now on the cusp of another industrial revolution. Let us be brave for a brave new world. Seed innovation everywhere in Singapore and empower every Singaporean to pursue innovation. On this note, Mdm Speaker, I support the Budget.

Mdm Speaker: Mr Alex Yam.

1.53 pm

Mr Alex Yam (Marsiling-Yew Tee): Mdm Speaker, first, allow me to congratulate the Finance Minister on his first Budget Statement. Minister Heng worked hard at the Ministry of Education to ensure that every school is a good school, and now, with an even heavier portfolio, he has, in his first Budget, made his mark in attempting to make every industry a viable industry, every worker a valued worker, every family a stable family, and every Singaporean an important pillar of Singapore society. His call to Singaporeans to come together to partner for the future is timely as we chart the path towards SG100.

Mdm Speaker, our fiscal position for FY2016 seems healthy. It is also reassuring that the Minister seeks to reassure all of us of it being prudent. And we have arrived as a shining red dot because we have had a Government that has been accountable, innovative and yet prudent in our expenditure.

Although I am impressed by Budget 2016, please allow me to voice a few concerns.

I add my voice to the view that there is a need for long-term fiscal prudence both in Government and also in how society perceives the annual Budget. For FY2016, our total expenditure is $5 billion more than the previous one. Although we have endowed future Governments with the creation of large endowments, such as those for the Pioneer Generation package, MediFund and Workfare, we need to keep our eyes on the horizon and ensure that we have enough for our children and our future. Our Pioneers and founding fathers toiled hard to save us from seeing a rainy day. I am concerned that we do not reach the stage that we develop the habit of giving out fish rather than teaching how to fish. In trying to get feedback on the Budget, I received one email that simply said, "This year no ang pow".

We cannot expect each Budget to be one bearing gifts aplenty. Unlike Santa Claus, we need to work within the Budget and we certainly do not have an army of elves turning out gifts by magic. So, we need to be wise with what we spend and spend what we do well.

Industries and businesses, especially the small and medium enterprises, should take the opportunity offered by this year's Budget to upgrade themselves and stay competitive and productive and be prudent with what they spend on.

In terms of wages and productivity, more than 95,000 employers in Singapore will receive about $1.9 billion in Wage Credit Scheme (WCS) payouts by the end of this month and SMEs will be the beneficiaries of about 70% of the disbursed payouts.

WCS is very much favoured by employers because it extends a lifeline to their businesses and also helps them retain and train their staff. But my concern is: if and when WCS is discontinued, will these businesses, dependent on this scheme, therefore, fold?

Should there not be some enterprise on the part of our enterprises to ensure their future survival without just depending on schemes and innovations? I hope proper auditing is carried out to ensure that the money ploughed into this scheme is wisely used for the purposes intended. I, therefore, hope the Minister would be able to enlighten us on the actual number of businesses that have benefited and, most importantly, the number of employees who have benefited from this scheme. Could the Minister share with us the statistics from these companies and the number of employees who were rewarded with larger wages?

This scheme, amongst many others, is not meant to be a panacea, but I hope that WCS does not instead become an opium. Will WCS be seen as a wise investment used well or will we be none the wiser on how businesses use the funds?

SEC, which has been mentioned by a number of speakers before me, has been extended till 2019. Again, it would be helpful for us to have a better in-depth view of how it has been benefiting companies and employees.

Mdm Speaker, I ask these questions because some of the employees that I have spoken to, in their haste to retain their jobs, settle for much less while doing the same job or perhaps even more. Some are unable to successfully adjust to the pay cuts and a drop in their status from a change in their job scope. What are the measures therefore taken by employers to retain these workers and how does the Government monitor if the money doled out is properly accounted for? Again, we cannot be penny-wise and pound-foolish. Employees should not be taken for a ride by employers. As the hon Member Assoc Prof Randolph Tan mentioned, sometimes well-meaning policies may not be wise when placed in the hands of unscrupulous employers.

I also welcome the lowering of the cash payment rate under the Productivity and Innovation Credit (PIC) scheme and the scheme will also not be extended beyond the Year of Assessment 2018. The PIC scheme saw 142,000 claims in 2015, more than double the claims in 2014. But authorities have also warned that false claims are being made. And I am sure everyone has read with interest that a recently convicted online pimp had applied and obtained PIC payouts! Perhaps, very innovative, but productivity? Not entirely sure.

The long-term investment by the Government is a wise one. But prudence requires us to ensure that it is used well and not well abused. Deputy Prime Minister Tharman, our former Finance Minister, had always had a very positive outlook in life. His comments made during the recent Singapore Forum with regard to productivity growth were very encouraging. The provision of platforms for industries and businesses to hop onto and overcome the productivity conundrum is timely but the question is, for how long? Prime Minister Lee himself has also weighed in on this issue, saying all measures have been taken to boost productivity and to have more "faith".

But again, for how long more? Should 2018 prove insufficient, would more tax dollars have to be spent to address this gap? What would be tangible results for the average Singaporean? They should be explained, too, in layman's terms. Therefore, the onus is also on our businesses to innovate and be productive. If they do not, and if their businesses suffer, who is to blame? We cannot drink water on behalf of the horses. In the name of prudency, we cannot also drink water that does not already exist.

I especially like the comments made by the CEO of Qian Hu, Mr Kenny Yap, in a recent interview with 938LIVE. The outspoken ornamental fish exporter was reported to have said that an enterprise that shuns innovation will not survive. Allow me to quote him: "Any enterprise that does not embrace innovation, especially in Singapore, will not survive in the next three to five years. I guarantee you that."

My only wish is that there are many more Kenny Yaps out there who would do us proud with their conscientious and competitive approach to business.

I also welcome the Enhancement to Revitalisation of Shops Scheme. But in this area, my worry is not just about revitalisation. If we simply look around us and our estates, shopping malls are popping up like mushrooms after autumn rains, they are competing for the same consumer pie. And every single mushroom mirrors the other – same type of shop mix. In the news last week was also a big head-on clash between two behemoths on Orchard Road – Ngee Ann City and Takashimaya; even Orchard Road is not unaffected by the challenges of productivity. While we can revitalise shops, spruce them up, what is still of concern is how HDB shop space is fast becoming another battleground for established brands selling the same generic stuff, while local merchants, small specialised merchants who have been there for many years, are being priced out by the competition.

Resilience in Singaporeans. Apart from the industry-based boost to transform our industries, I welcome the focused support that Budget 2016 offers to the people of Singapore – be it the young, the old, families, the needy or the disabled. There is something for everyone.

Investing in SkillsFuture has been one of the best initiatives that our Government has undertaken. Lifelong learning is a culture that should take hold in each and every one of us. The costs involved are not small. While the credits only began in January this year, I think we need some sensing on the progress and usefulness of the scheme to date, despite the very short period of time. With a large number of courses being made available, although we say hobbies would not form any part of this scheme, my fear is that some of these courses could become dominant within the course structure.

During a recent dialogue session held by the PAP Seniors Group last week, seniors who participated in the session stated that more information is also required on some of the schemes, and more of their key concerns are with the Silver Support Scheme. At the same time, it was also suggested at the same dialogue that the Silver Support Scheme be enhanced to benefit the elderly on a monthly basis, rather than on a quarterly basis. With the need to sustain daily living expenses, participants felt that a constant monthly supplement for the elderly is in need and would be more helpful.

The same discussion also focused on the establishment of Community Networks to help seniors discover health issues earlier and address them. The seniors in the discussion group urged the Government to pilot it in more than three to five precincts for there to be a better understanding of issues in different estates.

Mdm Speaker, one other topic that is close to my heart is the announcement of the Fresh Start Housing Scheme. I am glad the scheme will help such families to own a 2-room flat with a shorter lease. However, the concerns, which I shared before, still remain. I also believe that the flexibility in the scheme for shorter leases will provide the impetus for younger families to upgrade to housing on full leases when they are ready and where possible. I hope that the cost of these flats could be kept low to allow them to regroup and move forward. We would also need more details on the criteria to identify these families that qualify for the Fresh Start Housing Scheme.

Mdm Speaker, time does not permit me to go into detail and talk about all aspects of the Budget. Overall, to me, this Budget, even if skewed towards the industries, is a welcome and necessary change – a very slow and silent revolution. Businesses and industries fuel our growth and it is only right that we shower them with more care amidst a possible downturn. But I only hope that business owners and industries do not become too dependent on initiatives and funds from the Government. We hope these measures are temporary and wish that they serve as a catalyst for Singapore's growth.

"Every School is a Good School" was Minister Heng's mantra when he was our Education Minister from 2011 to 2016. His tenure there left an indelible imprint on the education sector as his vision sought to bring out the best in every child. He has just started his innings at the Finance Ministry and I am sure his vision will also be embedded there. The current Budget runs in a similar vein, ensuring every industry is a viable one, re-emphasising that every worker is a productive worker, and every Singaporean an equal partner in Singapore's growth. And again, with an eye always on prudence, may every Budget be a balanced Budget. Spend well, spend wisely. Mdm Speaker, I support the Budget Statement.

Mdm Speaker: Mr Thomas Chua.

2.06 pm

Mr Thomas Chua Kee Seng (Nominated Member) (In Mandarin): [Please refer to Vernacular Speech.] Mdm Speaker, Members of Parliament, good afternoon. Firstly, let me declare that I am the President of the Singapore Chinese Chamber of Commerce and Industry. When delivering the Budget Statement, Minister Heng Swee Keat quoted one sentence that I was particularly struck by. This was: "There is no such thing as a sunset industry, only sunset thinking!" The two points I will be raising today are centred on this sentence.

Firstly, enterprises have to be mindful that there is no such thing as a sunset industry, only sunset thinking. In general, people tend to term sunset industries as those deemed to have no future and where profits are not easily forthcoming. As a matter of fact, those so-called sunset industries could thrive as long as they clearly understand market changes, discover changes and address them, and succeed in restructuring and upgrading their industries. In this regard, the local food processing industry, furniture manufacturing industry and garment fashion industry are examples of success. What they share in common is that their industry leaders are united, have vision, courage and determination; they seek a way out amidst changes and have the gumption to try. Not only have they led their industries from the bleak winter into the spring, but they also managed to uplift the image of the entire industry, hence attracting young people to join the industry, bringing with them new ways of thinking and new ways of doing things.

Given the rapid changes in the current business environment, bottlenecks could occur in the development of any industry. Even those industries which are doing fairly well now may face new challenges five or 10 years down the road. Traditional industries are mainly involved in the areas of clothing, food, accommodation and transportation; they will continue to have demand even as time evolves. We live in an era where infocomm technology is already a norm. However, some shops still operate like before by waiting around for customers to drop in, hence have little business; some industry players adapt to the change by using online sales to expand their market reach, and do very well. Just as mindset influences thinking, thinking determines the solution. Whenever changes appear in the marketplace, enterprises need to embrace their customers' needs, make adjustments to their business model and undertake the necessary transformation.

In the past few years, the Government has provided many assistance schemes to support enterprise transformation and productivity improvement. However, it is essential for enterprises to be self-reliant. Hence, Government assistance cannot be viewed in terms of whether it is sufficient but whether it is truly effective. The problem is that some industry players have no confidence in their own industries. This kind of mindset is, in fact, sunset thinking, which would sooner or later lead to their elimination.

Secondly, Government officials need to be mindful that there is no sunset industry, only sunset thinking. Minister Heng Swee Keat announced that in order to support the Industry Transformation Programme and strengthen the coordination among Government agencies, the Government will be setting up teams comprising officials from EDB, SPRING Singapore, IE Singapore, A*STAR and WDA, to develop road maps for each economic sector. This is a very good beginning.

I hope that when Government officials gauge industry potential, they should not only measure the pace of growth and economic contributions but also consider the social functions as well. Even as we emphasise creating value-add, we should not ignore the value of their existence. Having been in business for many years, I am deeply aware that traditional industries that wish to innovate and achieve growth will encounter countless bottlenecks. However, for these traditional industries, the value of their existence lies in being able to survive well and service the society at large.

We should realise that industry development has its own rules and process. Transformations also take many different forms. Some gradually evolve, some involve major reforms while some undergo complete changes altogether. The role of Government officials in economic transformation is to gather resources and promote industry development through policies. Therefore, I hope that Government officials could understand the uniqueness of each industry and be open-minded and inclusive in guiding industry transformation. They should not have preconceived notions on the industry potential. While some of these methods have worked in the past, they may not necessarily be effective in the future.

As Minister Heng has said, industry transformation is a very long-term strategic plan and the crux is how to implement this plan. In this regard, collaboration among enterprises, as well as the close partnership among enterprises, TACs and Government agencies, is of great importance. I really hope to see that the Government could obtain an in-depth understanding of industry development processes and needs, to avoid wrongly interpreting the situation and trends during the process of structural adjustments. To the officials, any small misinterpretation is just a concept, but, to the enterprises, it is tantamount to wasted time, manpower and resources, which may not be reversed.

In this year's Budget, the Government has rolled out a $4.5 billion Industry Transformation Programme to help enterprises. It has also affirmed the contributions of TACs. TACs have intimate knowledge of their specific industries and, moreover, have industry leaders with deep experiences in restructuring. This would be able to help their member companies effectively.

Singapore's Public Service standards and efficiencies are world famous. In the past, Singaporeans have benefited from the 3P model, which is, the close cooperation among the Government or "Public", citizens or "People" and enterprises or "Private". During this period of economic restructuring, we need to build up the PPT model, and fully optimise the strengths and advantages of the Government or "Public", enterprises or "Private" and trade associations or "TAs", integrating all kinds of ideas, concepts and methods. In this way, transformation and driving up productivity would not only be the objective of the Government, but also the common target of the Government, enterprises and trade associations. With this common goal, the effectiveness of the implementation process would be greatly improved.

Mdm Speaker: Ms Sylvia Lim; not here. Mr Melvin Yong.

2.16 pm

Mr Melvin Yong Yik Chye (Tanjong Pagar): Mdm Speaker, I agree with the Finance Minister on the need to transform our economy and the Government's comprehensive plan to transform enterprises and industries through innovation.

It is inevitable. Companies will have to transform to stay competitive through adoption of technology, optimisation of manpower and streamlining of work processes. We have to do more with less. But in this transformation process, there will be workers – Singaporean workers – who will be affected by the changes.

Mdm Speaker, the economy is undergoing structural changes and not simply conventional fluctuations in demand and supply. We must understand that some jobs will disappear and no longer be available. Some jobs will be redesigned. Some will take on added functions and a broadened scope. New jobs will be created. With this structural transition, our workers will have to adapt quickly and be equipped with new skills at a much faster pace than before for the new jobs ahead.

Indeed, transformation is necessary, but we must not forget our workers in this transformation journey, our workers who are the bedrock of our economy. We need to ensure that no one is left behind as the changes gather pace. We need to ensure that our workers, both young and old, can maintain a sense of job security.

When there are structural changes, it can result in a "chain effect" on three fronts – jobs, workers and skills. These changes can spread from one function to another within a company, essentially, changing with it, the requisite skill-sets required for each role.

For instance, when a retail company adopts an e-commerce platform and reduces its physical shop fronts, certain job functions would change. New processes will have to be introduced and implemented. What this means is that workers who used to take on specific job functions may suddenly find themselves having to move to new or expanded job functions. In that sense, it is not only about one worker, but rather, all the workers along that value chain will also have to transition into other job functions. This may occur both upstream and downstream within a company, from one company to another, within an industry or even across industries.

Changes are never easy to deal with, but they also present an opportunity for our workers to undergo training and upgrade their skills. While today's economic conditions are difficult, there are still jobs available – good jobs, new jobs, different jobs. Certain industries are growing and require more manpower. For example, the public transport industry is looking to hire thousands of drivers, engineers and technicians. The key challenge is to improve on our job matching. We need to create better awareness of where the available jobs are and what skill sets are needed for these jobs. To that end, we need to better coordinate and bridge the manpower demand and supply chains so as to improve the chance of a suitable match between job and worker.

Currently, when there is a retrenchment exercise by a unionised company, the union would coordinate efforts with the National Trades Union Congress' (NTUC's) Employment and Employability Institute, or e2i, and e2i would assist in job matching for the affected workers after assessing their profiles. During the process, there would be in-house training and coaching for the workers. Where needed, these workers would be advised to go for further training to enhance their employability.

The Place-and-Train programme is another way of job matching to help displaced workers secure suitable jobs. Under the programme, workers receive training while in employment with the company. This is a win-win outcome. Companies resolve their manpower shortage issue and workers enjoy job progression and, more importantly, job security. Since 2008, NTUC has worked with various industry partners to create over 50 Place-and-Train programmes.

Mdm Speaker, effective job matching is also applicable to new entrants who are fresh out of school. We need to create more meaningful internship attachments and apprenticeship programmes to allow students to gain valuable hands-on experience at the workplace. This would help channel students with the relevant skillsets and requisite experience to the appropriate industries, minimising post-school "talent leakage".

The Government and employers can do more to improve job matching. We need to encourage more employers to embark on Place-and-Train programmes. Besides providing funding support for these programmes, the Government needs to work closely with the industries to identify future jobs so that we can better prepare our younger generations and equip them with the relevant future skills to meet the needs of these future jobs.

According to the Ministry of Manpower's (MOM's) 2015 Labour Market Report, residents aged 40 to 49 formed 33% of the total number of residents made redundant in 2015. This clearly reflects a trend whereby workers in their 40s are more vulnerable and susceptible to job displacement. On top of that, mature professionals, managers and executives (PMEs) above the age of 40 who are displaced often take a longer time to find employment. Many times, the jobs that they have been doing are no longer in demand and they do not have other skills or relevant experience to perform another job.

Indeed, not having a second skill deprives our workers of the opportunity of promptly finding alternative employment. The longer it takes to find a job, the harder it gets for a successful job match, the higher the stress for the individual and the family. We need to help our workers attain a second skill, but not only when they face a risk of displacement. Even before the risk of displacement becomes real, we should help them acquire relevant skills to help them move ahead into new jobs, different jobs, future jobs.

The SkillsFuture programme presents a good platform for our workers to pick up new skills and we need to encourage more to make good use of their SkillsFuture credits. The Labour Movement is driving it together with MOM and I would like to ask the House to do more to emphasise such a need to all our workers.

Mdm Speaker, we need to transform our industries and our economy. But we must be mindful that there will be workers who will be affected in this transformation process. Singaporeans are most concerned about their job security. I would like to urge for greater sectorial tripartite partnerships among the various Government agencies, employers and the Labour Movement to tighten the support structures for our workers, especially those affected by these structural changes.

The tripartite partners also need to work closely to articulate the future skill sets and competencies needed for the future jobs. We need to help our workers upskill, reskill or second skill – however we call it – ahead of time, instead of in present time or, worse still, behind time. We hope to leave no one behind.

With our strong tripartite partnership, I believe we can and will manage the change well. Together, we will come out stronger, as we have time and time again. Mdm Speaker, I support the Budget.

Mdm Speaker: Dr Lim Wee Kiak.

2.25 pm

Dr Lim Wee Kiak (Sembawang): Mdm Speaker, there was much anticipation for this year's Budget, given that everyone is bracing for headwinds on our economy. Small businesses, particularly, are very worried about their outlook; so, too, are the workers on their job prospects. The Finance Minister has been very reassuring in his speech and I am confident that, once again, as long as we band together as one, we will tide over the difficult year ahead. The question is not just about the current headwind but what our future economy is going to be like. There is an urgent need for a new strategy, a new paradigm, a new narrative for Singapore so that Singaporeans can continue to enjoy good jobs.

In today's speech, I will highlight and put forward a bold proposal for an uncertain future ahead. Second, I will talk a little bit about what I like and what I do not like about this Budget, and third, I will talk about learning from a crisis.

In preparing for an uncertain future ahead, truth be told, for all our accomplishments as a nation, we are still very vulnerable to global economic and political storms. So, how can we survive as a small country in this turbulent world? History has never been kind to small countries. How do we ensure our continued existence in this big chaotic world? We have grown from an entrepot trading centre to manufacturing, to a thriving global city, actively engaging in regional and international dialogues from social, political to medical science; we are plugged in to the global network. Our manufacturing industry was once filled with vitality. Even Apple opened a plant in Singapore in 1981 to manufacture circuit boards and computers for several years. Between the 1960s and 1990s, we had high economic growth and Singapore was recognised as one of the four Asian Tigers, along with Hong Kong, South Korea and Taiwan. Today, the tigers are facing extinction.

How do we maintain our relevance to the world? If I may use a biological analogy: we could learn from the small organisms as to how they have survived and thrived over the millions of years. The mitochondrion is a very unique organelle within the cell and it is the only organelle within the cell that has its own DNA and genes. It is found in all cells, hosting critical biochemical processes like respiration and energy production. In short, the mitochondrion is the powerhouse of the cell. Because it has a structure that is very similar to a bacterium, many scientists believe it started off as a free-living bacterium many million years ago. Over time, it evolved and became incorporated into the Eukaryotic cells. And now, all cells cannot survive without a mitochondrion. So, we need to make Singapore a country such that we are very much needed in the modern scheme of things. Singapore can be the mitochondria to the world.

Singapore is a democratic, secular, multiracial society with good political stability. We have well-developed infrastructure and good diplomatic relationships with all countries. We are strategically located as an air and sea transport hub, as well as a leading financial, communications and arbitration centre. Yes, we are small, but that also means we are no threat to the others as well. Since 2002, we have hosted the annual Shangri-La Dialogue which is attended by defence ministers and defence chiefs from 28 Asia-Pacific countries. We have also successfully hosted many important global meetings, such as the first World Trade Organization (WTO) Ministerial Meeting, the International Civil Aviation Organization (ICAO) meeting, as well as the World Customs Organization (WCO) meetings. We even played host to the historic landmark meeting last year between China’s President Xi Jinping and his Taiwanese counterpart, President Ma Ying-jeou. In the same year, we saw the opening of INTERPOL Global Complex for Innovation (IGCI), which complements INTERPOL's headquarters in Lyon, to enhance its presence in Asia and support policing efforts to tackle international crimes around the world.

There are at least 70 resident foreign embassies and high commissions, 43 foreign consular posts and 11 international organisations in Singapore. Recently, we saw the opening of the China Cultural Centre as a bridge for people around the globe to get acquainted with China and vice versa. The Orthodox Metropolitanate of Singapore and South Asia has its headquarters in Singapore, of which 12 countries, including some of our neighbours and parts of Asia, are under its spiritual jurisdiction. So, from political to culture and religious organisations, we are clearly the choice for them.

I would like to now propose a bold idea that we should lobby for the United Nations (UN) to establish a stronger presence in Asia by setting up a UN Asia Headquarters (HQ) in Singapore to house its key UN offices. Today, UN has permanent offices in New York, Geneva as well as Vienna, Austria, and in Nairobi, Kenya. Surely, this is the millennium for Asia; and should UN not have a better presence in this region?

Asia is not only the most populous region in the world, but it is one of the biggest markets for global trade and an engine of growth for the world economy. Singapore should be the best venue for UN to consider building its Asia HQ as the shift in economic and military power tilts towards our region.

We have the infrastructure – from transport to communication, from political stability to social security – and with our educated workforce and our close relationships with many countries, Singapore should be the UN regional HQ for Asia. Likewise, the World Health Organization (WHO) should set up the most advanced diagnostic laboratories and disease surveillance centre here to monitor epidemics and pandemics that can affect the whole world. The list should include the International Labour Organization, the International Civil Aviation Organization and even the UN International Children's Emergency Fund (UNICEF) as we have the expertise and the ability to house them. If Singapore is the home to UN bodies, then we can be even more well-plugged into the global network to see us well through beyond our next 50 years.

Jobs for graduates and boost for tourism. The opening up of UN offices in Singapore would also provide good employment prospects for Singaporeans from across various sectors here. The UN Park in Geneva is a tourist attraction. I am sure if we were to have a UN Park in Singapore, it would be a tourist attraction, too.

Reconsidering our defence strategy. The presence of UN bodies, including the UN Security Council, here would also help to balance our defence posturing. We are ranked second in a list of countries by military expenditure per capita, second only to Saudi Arabia. So, to the layman, it looks like we are spending a lot on defence. However, it is because we have a small population.

If you look at the list of countries by total military expenditure, we are far from the top. Take, for example, Indonesia President Jokowi's campaign pledge to increase Indonesia's defence budget to 1.5% of gross domestic product (GDP) from its current 0.8% as Jakarta seeks to achieve a so-called Minimum Essential Force by 2024. They are now ranked number 30 in terms of military expenditure, just six places below us. Defence spending of our neighbours, given their growing economy and population size, will outstrip us soon. I am not saying this to get us into an arms race, but I raise this so that we know that there is a limit to what we can do, given our small size and small population. We need a new defence strategy, apart from maintaining a strong deterrent armed forces.

What I like and do not like about the Budget. I am pleased that in his maiden Budget, the Minister for Finance has given focus to the elderly and the needy in our society. The Workfare Income Supplement (WIS) and the investment in SkillsFuture are commendable efforts and, indeed, reflective of our caring policies. I like the Silver Support Scheme, which is designed to help the lower 20th to 30th percentiles of the economic group of the elderly. The Silver Support Scheme is the latest addition to our social safety network providing support to our needy senior citizens. It is like an extension of the current Public Assistance Scheme rather than what some perceived as an extension of the Pioneer Generation scheme. Resources needed for the Pioneer Generation Package are finite and the last Government has already set aside money for it.

The number of Pioneer Generation citizens will decrease with each passing year while the number of recipients for Silver Support Scheme is likely to increase with our ageing demographics. Resources needed to fund this recurring and perpetual scheme will have to come from the Government of the day. Can we sustain such a scheme, given that our working population to senior citizens ratio is dropping rapidly each decade?

I have also received feedback from a few upset elderly who own 5-room HDB flats and were excluded from the scheme. Since there are already two other criteria – per capita income of less than $1,100 and also the CPF contribution limit of $70,000 before age 55, is there a need to cap the housing types only at 4-room HDB flat and below? Many have upgraded to 5-room flats to accommodate a bigger family and the price difference between 4- and 5-room flats was not that great decades ago. If we include the 5-room owners, how many more seniors will be eligible for the Silver Support Scheme?

The three qualifying criteria are reasonable, simple and practical to implement but there will always be deserving cases that may not qualify. Is there an appeal mechanism for those who do not meet the criteria and feel that there is a case for them to appeal? If there is none, I hope the Minister can consider setting up one. Within the 140,000 recipients who qualified for the Silver Support Scheme, some may already be on the Public Assistance Scheme and some other welfare schemes. How will the new Silver Support Scheme affect the current assistance that they are receiving?

What I do not like about the Budget this year is very simple – there is nothing "green" about it. There is no mention of climate change mitigation and what we are doing to reduce greenhouse gas emission. Although we do have green car carbon emission rebates, I am disappointed that there are no further enhancements to it. I hope the Government can put more focus on this and develop our green industries further.

Learning from an economic crisis. There is a whole slew of schemes to help businesses, particularly SMEs, to face the challenges ahead. However, if I may briefly raise this point as I do not know if we are doing good if each time when we anticipate an imminent economic turbulence, everyone would look to the Government for shelter. Businesses are always hopeful and confident that the Government will introduce measures to help them tide over the crisis and, indeed, the Budget always delivers.

In the last crisis, the Government introduced and enhanced many policies to retrain workers and help employers. But there are also situations that, if we over-shelter, we may end up with an over-reliance on the Government and businesses may become like plants growing in a sheltered greenhouse – they will not have the resilience to withstand a storm or winter.

Economic crises are cyclical occurrences, just like the seasons. Seasons come, seasons go. With every crisis, we are supposed to emerge stronger and more resilient from the last one. But that would not happen if companies do not feel the pressure to improve, innovate or adapt. Business leaders who have the foresight will take advantage of the crisis to learn about the weaknesses of their set-up, resolve them quickly and accordingly. Some will restructure and become leaner. Some workers will learn new skills and become more employable. But there will be that few who do not learn from these lessons and take for granted that there will always be help available.

This sort of mentality is harmful all round. We are encouraging local businesses to venture out, but the business climates in other countries are far harsher than Singapore's. There will be more obstacles and nobody will be at hand to provide them with aid and assistance. By all means, give them the fishing rod, teach them how to fish, but do not just give them the fish. The Government and our local enterprises should not waste a good opportunity to learn from a crisis. Let the businesses learn to grapple with crisis and come out stronger. As the Chinese saying goes, 不经一番寒彻骨, 哪来梅花扑鼻香. In other words, "The plum only blooms in the harsh coldness of winter." It means success comes only with hard work and labour.

In conclusion, it may be a difficult year ahead and work to groom a truly resilient Singapore never ends. But I believe that with wise leadership and the diligence of our people, we will all live to smell the fragrance of the plums. Mdm Speaker, I support the Motion.

Mdm Speaker: Ms Foo Mee Har.

2.38 pm

Ms Foo Mee Har (West Coast): Mdm Speaker, I commend the Finance Minister for a thoughtful Budget, with its sharp focus on transforming our economy to ready ourselves for the future, whilst continuing the efforts of previous years to foster a caring and resilient society. I will focus my speech on our economy and jobs.

Madam, what stood out for me was the recurring theme of partnership throughout this Budget, emphasising the need for all parties to work together in new ways to transform our economy and strengthen our society. I fully subscribe to this spirit of collaboration, which is critical in this increasingly complex world where the Government cannot be expected to know all and do all. We are most effective when working together, leveraging one another's strengths.

Corporations and individuals alike need to take greater charge of their own destinies, even as they look to the Government to foster a nurturing and enabling environment in which to thrive and grow. We will get to SG100 in better shape if we each focus on our strengths, align our goals and resolve to support one another in the journey there.

Madam, it is encouraging to see that we have achieved an overall surplus of $3.4 billion, attributed mainly to contributions from investment returns. But I am concerned about the underlying structural deficit. For four consecutive years, our expenditure has grown faster than operating revenue growth. For the last two years, total expenditure has outstripped operating revenue and this trend may continue, given our ageing population and slowing growth.

It is, therefore, crucial that we enter into careful consideration and robust debate over our country's spending plans to ensure that every dollar is well spent. I would like to ask the Finance Minister what measures have been instituted to track KPIs and outcomes on big-ticket investments, such as the Industry Transformation Programme and SkillsFuture. This is to ensure that these multi-year schemes achieve their policy intent and deliver the expected outcome, namely, the boost that is needed for our capabilities and competitiveness.

What lessons have we learnt from our experience of years past, where well-intentioned productivity schemes, costing billions of dollars, ultimately failed to lift productivity levels? We have been on this restructuring journey for some time now and, with each passing year, the urgency to show results grows whilst our margin for error shrinks.

Central to this Budget is the $4.5 billion Industry Transformation Programme, packed with measures mostly targeted at helping SMEs scale up, use automation and foster innovation. The introduction of a one-stop Business Grants Portal is timely. And two thumbs up for the shift from the broad-based PIC scheme towards a targeted and sector-focused approach to support schemes.

So, perhaps because the new schemes that have been announced have been targeted, many SMEs have the impression that they will not benefit much from this Budget. We should remember that, apart from these new schemes, SMEs can continue to take advantage of many broad-based schemes that were previously introduced, such as the Transition Support Package, Infrastructure Projects and SEC. For example, firms received a total of $1.9 billion under the Wage Credit Scheme this year to help them defray the wage cost increase given to Singaporean employees.

Madam, the path that the Finance Minister has chosen is not an easy one. Execution will be more complex as success will depend on multiple partners pulling their own weight. The Government agencies will need to work closely with enterprises at the industry level in order to develop transformation maps tailored for each sector. They will need to come up with different support schemes, tailor-made for different industries, and they will need to look afresh at specialised infrastructural development for each key sector.

Trade associations will need to proactively step up their outreach to member firms, develop capacity and capability-building in their respective industries and lead the development of industry-wide solutions that address common challenges amongst their members.

These are all steps in the right direction but the journey will take time and success is not guaranteed. These initiatives require extensive planning, coordination and execution, but we must not be deterred. I urge all parties to seize this opportunity to embrace a new era of collaborative ventures. If it all sounds familiar, perhaps it is because we hearken back to a time when our Pioneer Generation, faced with great uncertainty in a new land, depended on one another to make what they could of the little they had. They were inventive, determined and they were a team. So, too, it can be with us.

Madam, I am encouraged by the increasing number of support schemes available to promote a vibrant startup ecosystem, including SG-Innovate. But even while we foster a healthy environment for startups to succeed, we should not forget to also help long-established companies continue their success and thrive. Many of these home-grown companies,老招牌 big or small, are ageing family businesses, where longevity depends on conscious and deliberate efforts towards a successful handover of the business. These SME bosses often share the strain on them to continue managing the day-to-day business when age catches up, yet they are unsure how they should go about structuring a smooth transition. For some, their children are either not ready or disinterested to carry on the family business.

For many family businesses, succession represents a "make or break" crossroads in the company's history – and many do not make it across. A study done by Prof Joseph Fan of the Chinese University of Hong Kong found that 65% of the value of family businesses is lost as a result of succession issues.

We must, therefore, put in place measures to preserve and build on the precious value of these companies accumulated during Singapore's growing years. We should learn from the best practices in Europe, home to some of the world's oldest brands, many of which started as small family enterprises. We should provide counselling services to prepare family businesses for succession, advice in the transfer of ownership between generations and trade-offs to be considered when choosing between future managers from within or outside the family.

We should set up a market place and also financing schemes to connect owners, potential successors and investors. Our learning institutes may also offer strategic and business expertise to these family businesses to help them refresh and reinvent themselves. With such support, perhaps we could help the likes of Mrs Kwan of Lana Cake Shop ensure that her amazing chocolate cake remains a treat for generations of Singaporeans to come.

Madam, this Budget contains all the right ingredients to set the foundations for the future economy. However, we also need to help our workers cope with the cyclical headwinds and structural changes that will come their way. I am especially concerned about the plight of PMEs – they will bear the brunt of economic restructuring, impacting those in their 40s and above the hardest. They need our support.

I would like to renew my calls for the Government to review policies governing the employment of foreign PMEs. Unlike lower-level jobs where foreigners hired on Work Permits and S Passes are subject to dependency quotas and levies, there is nothing similar in place for PMEs. We need to consider subjecting employers of foreign PMEs to the scrutiny of labour market tests urgently.

We should not shy away from actively promoting and championing "Hire Singaporeans First", as the Government's first duty is to its own people. If Singaporean candidates possess the necessary capabilities for the jobs they aspire to do, then they should be given greater consideration than foreign candidates.

As for those who have lost or at risk of losing their jobs due to restructuring, we must do everything we can to help them get back into the workforce. We have focused our efforts so far on SkillsFuture to help PMEs learn new skills. But many employers believe that no amount of new knowledge and skills can help displaced PMEs restart if they do not, first, have the right mindset. Employers are concerned about having to deal with the baggage and motivational issues that come with hiring a displaced PME. We must, therefore, provide the necessary emotional and motivational support to reignite passion, and this must be an integral part of Professional Conversion Programmes.

As for us jobholders – whether PME or otherwise – we will need to adapt to a new paradigm. No one can promise us a job for life. When Steve Jobs, in his commencement address at Stanford, told his audience to "Stay hungry, stay foolish", he was advising them to take control of their own destinies, to be vigilant and open to new possibilities, to never be complacent, and never too comfortable. I think that is excellent advice.

It is an uncertain and fast-changing world that we live in. Hope for the best but plan for the worst. Try and put aside some savings to tide you over tough times. Arm yourselves with marketable skills. Take advantage of SkillsFuture and be ready to seize new opportunities. Stop looking back. Look forward and put yourself out for the new possibilities. Build bridges, cultivate and maintain a strong network of friends and contacts. The future lies in collaboration.

Madam, I conclude that this is a Budget for our times – when we urgently seek a path towards new heights for Singapore, to be enabled by reinvention and transformation. This is a significant challenge at the best of times – and these are certainly not the best of times. We should lose no time in taking the first determined steps forward, looking out for perils and pitfalls, ready to make course corrections, and always, always watching out for one another. Madam, I support the Motion.

Mdm Speaker: Mr Leon Perera.

2.51 pm

Mr Leon Perera (Non-Constituency Member): Mdm Speaker, before I begin, please allow me to declare that I am the owner of a mid-size, Singapore-based enterprise.

Mdm Speaker, we need local enterprises as the third pillar of our economy, standing alongside MNCs and Government-linked companies (GLCs). Right now, the share of SMEs in value-added in our economy is less than what their share of business numbers and employment would imply. We lack the equivalent of Germany's mittelstand, a critical mass of world-leading SMEs which are world leaders in niche product categories or technologies, like, for example, Faber Castell, a manufacturer of pencils.

The issue should not be framed in terms of just providing state support to help companies survive, but in terms of providing enablers to help companies to develop their own competitiveness. The state has a vital role to play in countering some of the downsides of our economic environment like high costs, but it should also act as a catalyst to help our SMEs identify, develop and maintain their own critical competitive success factors. This is especially so in regard to developing productivity, where Singapore is still struggling in certain sectors, especially in services, construction and other domestically-oriented ones.

To this end, our main focus should not be only on short-term props like ensuring more public sector construction projects, even if those are necessary, to smooth out short-term fluctuations, but on making SMEs more competitive and more productive. In this regard, I have several suggestions.

Firstly, companies all operate at different levels of productivity, even within the same industry. I used to take my children for breakfast before taking them to swimming class when they were much younger. Near the swimming class, there were two cafe outlets. One frequently had five, six or seven staff present, many of whom were standing around with nothing to do much of the time. Yet, many dishes were not available or took a long time to prepare. Orders were sometimes forgotten or mistaken. The other cafe outlet had two to three staff and yet, all the food and drinks were prepared fairly quickly. No prizes for which one we went to for our breakfast most of the time.

However, companies do not all know how well they are performing vis-à-vis their industry peers. This is particularly true of SMEs. They do not have the visibility about the rest of their industry and often do not have the resources to understand what productivity levels are like in other developed countries and how those are achieved. What is available is public information which tends to be about larger, public-listed companies and industries dominated by these larger companies.

No doubt, the National Productivity Council and SPRING do work with SMEs to raise productivity, disseminate best practices and so on. But nothing beats a simple quantitative ranking to focus minds. I suggest a productivity benchmarking system. This would be similar to how our household utilities bills show a chart of our electricity and water consumption, compared to similar-sized households and the national average.

Economic promotion agencies or the Government can agree on a company-level standard for, for example, "poor", "average", "good" and "excellent" productivity for specific industries. Government agencies could then automate the extraction of data from financial statements filed with the Accounting and Corporate Regulatory Authority (ACRA), even for private-exempt companies. This data analysis could be used to derive the average figure within the industry and the figure for each company.

ACRA, SPRING or another Government agency could then write to each company each year to inform them of their level of productivity, where it is ranked versus the industry average and where it stands relative to the benchmarks which have been derived from global analyses.

Improvement in a company's productivity ranking could be used as one criterion or one forward-looking condition, not the only one, to grant access to Government incentive schemes.

Secondly, R&D matching. My second suggestion is to create an R&D-matching facility to allow SMEs to work with autonomous universities (AUs) and national research centres (RCs) and research institutes (RIs) under the A*STAR umbrella to call for tenders, as it were, for standalone R&D projects. The Minister for Trade and Industry revealed in response to my Parliamentary Question that from 2004 to 2014, the total number of licensing agreements signed with private companies by Exploit Technologies Pte Ltd, which helps commercialise intellectual property (IP) from the R&D sector, was 920, or just over about 80 a year. Of these, about 80% were with SMEs and startups.

We can do even better in intermediating between the R&D sector and local SMEs to allow synergistic projects. The example of Taiwan's Industrial Technology Research Institute (ITRI), Germany's Fraunhofer Network or even how some Japanese MNCs collaborate very closely with Japanese universities to outsource part of their R&D work is interesting in this regard.

Mdm Speaker, I suggest we create a facility whereby local SMEs are able to proactively put out a tender of sorts for potential R&D projects and assess bids from interested researchers at our RIs, RCs and AUs. If a project is agreed between the parties, A*STAR and/or other relevant agencies could provide co-funding in exchange for job creation commitments or some form of modest profit-sharing. This would appeal to SMEs which seek R&D support for ideas they may have but lack in-house R&D resources and who may not want to go down the path of the Get-Up Programme, which allows researchers to be seconded to companies, since their needs are more project-specific.

Next, Mdm Speaker, I would like to speak on sector-specific measures. The services and construction sectors are two sectors which are still grappling with productivity issues. These two sectors will see foreign worker levy rises. But with PIC support tapering down towards 2018, are the measures in Budget 2016, such as the Automation Support Package and Industry Transformation Initiatives, enough? We need both carrot and stick for these sectors.

It may also have been the case with some firms that PIC was not used to make game-changing investments in technology in the past. For these two sectors, to help them transition to a higher productivity future, we should pay careful attention to ensure that funding support is available to make transformational game-changing investments in technology and work processes, either using the Automation Scheme provisions or some other incentives.

Next, SMEs still face problems to do with high cost, problems attracting talent and access to finance. Some of these issues were highlighted in the Singapore Business Federation's January 2016 report on "A Vibrant Singapore Private Sector". The Government needs to help level the playing field. For example, unit labour cost for the overall economy increased at an average rate of 2.15% from 2010 to 2014. This is higher than labour productivity growth of 0.3% measured in terms of real value-added per worker, and 1.3% measured in terms of real value-added per hour worked over the same period.

In this regard, I would like to discuss the Jurong Innovation District. I will take up the issue of access to finance in the Committee of Supply (COS) and access to talent later on. On the Jurong Innovation District, one of the key challenges that SMEs face is rental costs. Will the Jurong Innovation District provide a rental cost environment that will be conducive to SMEs and startups which also wish to take advantage of the space, or will rentals be high, eating into their startup funding? More broadly, the issue of high rentals has to be addressed as it is a bigger and more fundamental impediment to startups and SMEs evolving innovation capabilities as opposed to gaining access to innovation districts with purported network effects. My colleagues will have more to say on this issue of rentals during COS.

Next, the Workers' Party suggests that we create a mechanism to ensure a high-level whole-of-Government approach to SME development that goes beyond just the Ministry of Trade and Industry (MTI). If we see local enterprise development as a critical priority, as I believe we should, we should create a national secretariat for local enterprise development, one that brings together multiple Government departments and Ministries and which can create and execute goals for different Government agencies to nurture local enterprises in their spheres of responsibility. In the same vein, the Singapore Business Federation has suggested creating a Minister for SMEs.

Next, on nurturing SMEs, the pool of local enterprises is also not equal in terms of their goals and aspirations. Some aspired to become world-class whereas others aspired to maintain themselves as SMEs indefinitely.

Our approach to incentives should reflect this inequality very strongly, as was practised by Japan and Korea in their early days of post-war development. I think there is far more room for SME Government support, such as access to finance, tax incentives, cash grants schemes and so on, to be much more calibrated, based on the aspirations of SMEs. We can give more aggressive support and higher quantum of incentives and agree on stretch goals with those local enterprises which want it and – this is the crucial point – which can deliver results. The support should be conditional on hitting goals in terms of revenue, investment, job creation and so on, as determined objectively by audits or checks. The support should be unequivocally withdrawn if results are not achieved within a certain timeframe. The genuinely entrepreneurial and ambitious SMEs that we have would welcome this.

Lastly, Mdm Speaker, and briefly, making SMEs more competitive is also about unlocking talent in Singaporean entrepreneurs and workers. There is a pragmatic case for egalitarianism as unlocking hidden talent, particularly for our local enterprise sector, which needs it most.

The CareerBuilder Singapore's Employer of Choice 2015 survey showed that sectors like the Government and Public Service, airline and travel and banking and financial services are the top industry sectors that millennials want to work in. In other words, many of our young Singaporeans are drawn to work in the Public Sector, banks and large enterprises. This draws talent away from startups and local enterprises, particularly SMEs. To tilt the playing field so as to nurture our local enterprises, we should consider a few possible actions.

Firstly, we should do more to foster entrepreneurial attitudes in school, not only at the tertiary level but at the secondary level as well. We should also teach our children about the contributions of entrepreneurs and local firms.

The SME Talent Programme (STP) helps local SMEs attract talent from local educational institutes by co-funding internships, study sponsorships and fresh-hire training. In 2015, the Minister for Trade and Industry replied to Mr Chen Show Mao that 155 STP job matches and over 700 STP internships were implemented, benefiting 192 enterprises. More publicity should be created around existing SME Talent Schemes among both SMEs and students to drive the take-up rate even higher, which I believe is possible. This should be done in terms of media awareness programmes as well as school events. SMEs should also be encouraged and supported to develop employee branding initiatives so as to be more successful in hiring.

Lastly, we should do more to measure and raise social mobility to provide more educational support to persons with disabilities to develop their talents and to work with ex-prison inmates to support their entrepreneurial dreams.

I shall have more to say on these topics in COS and future debates, but the reason I raise this subject in the context of a discussion on local enterprises is that future entrepreneurs and innovators can come from such backgrounds. In a situation of talent scarcity, with a large and attractive Public Sector and MNC sector, we must do more to unlock resources of talent, not just because it is the right thing to do morally but also economically. The late Andy Grove of Intel, for example, was severely hearing impaired as a young man but went on to transform Intel and the global semiconductor industry.

Mdm Speaker: Mr Ang Hin Kee.

3.03 pm

Mr Ang Hin Kee (Ang Mo Kio): Mdm Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] : Mdm Speaker, I support the Motion. We heard earlier a Workers' Party Member of Parliament mentioned about the help needed for bosses of SMEs. I will address my speech on how workers in SMEs will benefit.

This year, the Minister for Finance announced many measures to help SMEs. These are helpful but for them to be effective, we have to ensure that the bosses and workers understand how they can benefit from these measures. So, the publicity efforts should not be aimed only at the business. I think the Government and the employers should explain in detail to the workers. They should understand whether the workers appreciate what these measures mean to them.

Workers, in looking for a job, not only consider the salary, they also consider whether the jobs are challenging and whether the career will have progression. They also hope to see that the business bosses have detailed planning and improvement in many areas, and this will help them to decide whether this company is worth staying on for the long term.

We now know that SME workers account for more than 70% of our workforce. So, we have to ensure that we continue to attract people to work for SMEs. The Government can work with the SMEs in two ways.

First is to optimise business. In optimising the business, if more SMEs can get help from the Government, their operations will be optimised. Robots will automate the processes. Some workers may feel that the bosses are trying to help them, but some others may be worried that they will lose their rice bowls. We should consider how to improve the communication with the workers and before the introduction of automation, let them understand the goals of this automation and how they can benefit from it.

Secondly, we can consider how to do these in parallel – help them to adapt and implement automation at the same time. This will remove their worries and will be more effective.

Second, the Minister has announced a scheme with $450 million on robotics but some people may be worried that the work will be displaced by the robots. If robots can help them improve their effectiveness and make their work safer, more productive and more innovative, then workers will be more willing to accept. In this process, I suggest that the automation and the Adjust and Grow upgrading scheme should be implemented together. So, in implementing the robotic scheme, we should also improve the attitude and adaptability of the workers.

In addition, the Government, in assessing the schemes, should understand whether the enterprise can apply the schemes and whether the enterprise has given sufficient help to the workers, so that they will understand how these schemes can benefit the workers.

Secondly, I hope that the Government, besides implementing the schemes, many of the application processes can be improved. SMEs do not have enough resources and they may not understand how to seek help. Some of them feel that to submit the application forms to many different agencies, they are quite troubled by this process. Some of them may not understand the schemes. Some of them may have to seek help from intermediaries. But with companies that have a shortage of resources, the application for help actually has become a burden. Fortunately, this year, the Government has introduced a creative scheme, a website, so that all relevant materials will be supplied to SMEs. SMEs can also seek help from U SME under the NTUC and the trade associations.

The Minister has announced this LEAD+ scheme this year which will provide wider assistance in capital and schemes to attract more workers. This will help them to implement their projects. I took part in a seminar conducted by U SME recently for SMEs. Besides explaining to SMEs how they can innovate and revamp, it also helped them to interact among one another. I realised two points.

First, many of the SME bosses are relatively older and their educational level is not high. I hope that this LEAD+ scheme will have a Chinese version in explaining the contents of this scheme. The officials should have proficiency in Mandarin so that they can help the SMEs.

A good package must be repeated three or four times to be effective. When we provide help to SMEs, we must repeatedly explain the good points, so that they will receive the help just as how we implemented the Pioneer Generation Package through different channels and repeatedly explained the benefits to the Pioneer Generation.

Second is the expansion of business. Last year, the Government introduced the Earn and Learn Scheme to attract more graduates to join the SMEs but the coverage of the industries is quite small and the quota is small. I hope more employers and graduates will be able to benefit from this scheme and that businesses will be able to attract more young graduates to help them expand their business.

There may be another problem. On the frontline, the supervisor may not be able to guide and communicate with the new workers. On the one hand, we try our best to send graduates to the SMEs. I hope under this Earn and Learn Scheme, we can ensure that the supervisors and the workers will have good communication through proper training. In this way, we will have a good system for them to welcome the new workers.

Besides new workers, when they decide to expand the business, there are some old workers who will feel worried because the ability to adapt to new technologies, the new skills, they need more help. Some old workers resist change because they have a sense of fear. They are afraid that they will not be able to do the job, they will not be capable of completing the work, and they may lose the job to the younger and new colleagues. The companies and the Government must give more time for training, so that they can adapt to the new technology. The Government can also send some mentors to help these SME workers, so that they will adjust effectively to welcome and accept these new contents.

Finally, to help our SMEs and upgrade our workers, there are many challenges, we should not underestimate them. Just like the story of Travel to the West, there are many difficulties and our opponents are powerful. The Government and the enterprises should work together with our workers, so that we can move together and overcome these challenges in this uncertain market.

The SG100 starting point has received the strong support of the Budget. I hope the Statutory Boards and the innovation partners will together be helping our SMEs, so that they can help them to overcome all the challenges they face along the way.

Mdm Speaker: Ms Chia Yong Yong.

3.13 pm

Ms Chia Yong Yong (Nominated Member): Thank you, Madam. I echo the Finance Minister's call for Singaporeans to work together in new ways to transform our economy and strengthen our society.

The Finance Minister said, and I quote, "Everyone has a role, and together, we are weaving a rich tapestry – each thread a different colour and texture, but woven together to give strength and resilience to our economy and our society."

To have a strong resilient tapestry, we cannot reinforce one part and allow another to fall apart. It may sound trite, but our individual destinies are interwoven, and how our individual and collective destinies play out will, to a large extent, determine the destinies of our future generations. So, we need to be responsible for one another: the Government for its people, and the people for themselves and their country.

Undergirding this relationship of interdependence and cross-responsibility is accountability: the Government to its people, and the people to themselves and their country. We should, therefore, approach Budget 2016 with this sense of responsibility and accountability.

Government spending has increased substantially. I welcome the measures, but because we are using public funds, I would like to see that our funds are prudently disbursed, responsibly utilised and effectively achieve the expected and intended outcomes.

By way of illustration, Madam, allow me to address the drive for innovation under the Industry Transformation Programme. First, I would like to declare my interest as a partner of Yusarn Audrey, which is a law firm specialising in intellectual property and the commercialisation of intellectual property.

The Finance Minister states, again I quote, "The ownership of intellectual property (or IP) allows companies to realise the value of its efforts."

The total allocation of funds under the RIE 2020 Plan, from 2016 to 2020, is $19 billion, out of which a sum of up to $4 billion will be directed to industry-research collaboration. This allocation represents, again I quote the Finance Minister, "a concerted shift towards innovation and enterprise, to capture the economic and social value of R&D." In addition, there will be a top-up of $1.5 billion to NRF this year to support the RIE 2020 Plan.

There should be a few key observations on the innovation drive. These would be: (a) the purpose of innovation is to meet the needs of people and industries better; (b) innovation is the engine of value creation and growth; (c) there is economic and social value in R&D and (d) ownership of IP allows companies to realise the value of their efforts.

I will just paraphrased the Finance Minister.

In order to achieve the outcomes, we are: (a) making a concerted shift towards innovation and enterprise; (b) placing great emphasis on industry-research collaboration; (c) spending billions of dollars on this; and (d) in this for the long term.

Madam, what we want is for innovation to create IPs which are relevant to our people and industries, meet their needs better, enable them be more productive, profitable, and competitive, propel them and Singapore into a different and higher league, IP which translates into better a quality of life for all Singaporeans, generates more such IPs, multiplying their positive effect and impact on our economy and our society. And for that, we are investing billions of dollars and we will be in this for the long haul.

With the foregoing as the background, I will now address two fundamental issues which, ideally, we should tackle.

One, IP ownership. One of the four major thrusts of RIE 2020 is to strengthen flow-through from research to its eventual impact on society and the economy. To ensure that we can effectively do so, we need to own the IPs or, at least own the rights, on a sustained long-term basis to achieve that impact. The issue of ownership of IPs is particularly important in research collaboration. We need to be clear as to who owns what IPs. This issue should be considered even more carefully where the parties to the research collaborations involve non-Singaporean entities and that happens pretty often.

I think we would all agree that unless we own something, we do not have full rights to do whatever we want with it. If I am using a borrowed mobile phone, I have no rights to sell it. I do not even have a right to lease it to another person. I am currently using a dictation software which I bought. It transcribes my dictation into text. I can use it. But I have no rights to reverse engineer, I have no rights to copy or to make improvements. In fact, I cannot even install it beyond a stipulated number of devices. I cannot generate recurring revenue through royalties and licence fees. Why? Because I do not own the software.

So, unless we own the IP rights or have meaningful rights to the IP in the innovation, we do not have the rights to deal with the IP in the way we want to. Unless we own the IP rights, we would have to be bound and limited by terms of licences and permissions granted by the IP owners.

Would we think it is odd for us to pay billions of dollars and not have full or have meaningful rights to our IPs in our innovations? I think we would consider that odd. Is it possible for that to happen? Yes, I submit, very possible.

I acknowledge that we cannot have our way always, particularly in collaborations. The good thing about IP is that rights are a complex bundle and there are strategic structures that can be customised in dealing with this bundle. The point that I would like to emphasise, hon Members and Madam, is that we must be careful in our research collaboration negotiations not to concede valuable foreground IP in return for consolation IP. Otherwise, we would be like the man who owns the land, pays the builder to build a house, but stays in the house as a tenant of the builder.

No, Madam, we want to use such intellectual property for value creation and growth so that we can harness the economic and social value of such a property. That is why we are investing the money, is that not so, so that we can be competitive and profitable? We want to be able to monetise such intellectual property rights so that we can receive revenue, whether it be a one-time payment for transfer or recurring revenue by way of royalties and licence fees. We need to know what to retain and what we concede.

Therefore, I hope that the Government will set clear guidelines for the retention of IPs which are of strategic value to Singapore. We must not let Singapore pay money to be used as a test bed without retaining valuable strategic IPs arising from such research.

Madam, on industry-research collaboration. In order for us to generate value creation and growth for the relevant industry and ultimately our economy, we must identify the measurable outcomes to be attained. Tangible outcomes should be differentiated from intangible outcomes. We should ensure that we are in a position to correctly identify the outcomes which are impactful and strategic to the industry and direct the research accordingly.

The collaboration has to be conducted at a high level with mutual respect and understanding between the industry and research institutions. It is important that the industry plays a more active role than that of a mere feedback provider. The industry and research institutions should collaborate to identify the outcomes that are impactful and strategic and cross-validate each other's inputs. We should not be content with just filing patents. The number of patent grants is not a measure of the success of our investments. We need to see the tangible economic and social impact from such innovations.

In addition, in order for the IPs created to be more effectively exploited and applied within the industry, the IPs should be owned by the industry or the commercial entity, possibly either represented by the TACs or, as I had said, by the company itself. To encourage further research, we could have schemes for the licence back of such IPs. We would require cross-licensing to other entities within the same industry, and we could commercialise and derive revenue from them.

I would, therefore, suggest, for the consideration of this House, a structured framework wherein the industry-research collaboration proceeds on the basis of the industry specifying, validating and accepting the outcome of the research, whilst the research institutions use their expertise to achieve the desired outcomes. This structured framework differentiates the industry as the client, as opposed to a feedback provider, and the research institution as the expert adviser, researcher and developer. As a client, the industry will be better able to communicate its greater insights to direct the outcome of the research. I also believe this framework would result in the creation of IPs that would be relevant to the industry, which would, in turn, create an intangible impact on the Singapore economy and community. As a corollary, funding for industry-research collaboration projects should be granted to the commercial entity or the TACs for them to appoint research institutions for such purposes.

This framework, I believe, will enable the industry to enter into other collaboration agreements with its members, or with other industries, and to proliferate further value creation and growth. In addition, it would be able to monetise the economic value in the IP, be profitable and competitive. Ultimately, the benefits will be shared by the Singapore economy and community.

Madam, I have filed COS cuts, so I will speak more on this later. But suffice it to say that the agencies administering the grants, the industries and research institutions must see themselves as being in partnership for Singapore's future, beyond their respective KPIs, beyond the granting of patents, for the future of Singapore. As the Finance Minister says, "We must remain prudent in expenditures, and ensure every additional dollar spent is spent responsibly." Indeed, let us move forward on this issue courageously, decisively and responsibly.

Madam, allow me now to move on to the third section of the Finance Minister's speech, on building a caring and resilient society. Here, I declare my interest as President of the Society for the Physically Disabled (SPD) and board member of SG Enable. In this portion of my speech, I will be referring to persons with "disabilities" or "special needs", but they will all be the same group.

I am encouraged that the Minister makes specific mention early on in this section, of the three groups of special people within the Singaporean society: those who have special needs, those who are less well off or who have fallen on hard times, and seniors. I welcome Budget 2016 for its inclusiveness and initiatives to empower persons with disabilities, the seniors and the economically disadvantaged.

We have, indeed, come a long way. We have come a long way, since the Prime Minister's National Day Rally speech in 2004, in taking care of vulnerable groups in our society. The second Enabling Masterplan ends this year, and the steering committee for the third Enabling Masterplan has been appointed. We have made great improvements in infrastructural accessibility. There is greater breadth and depth in our programmes for persons with special needs, the seniors and the economically disadvantaged.

The appointment of Deputy Prime Minister Tharman as Coordinating Minister for Economic and Social Policies sends a strong message that economic policies cannot be segregated from social policies and affirms the Government's commitment to include vulnerable groups in national planning and nation-building. The Public Service initiative to employ persons with disabilities is another important milestone in the Government's walk of the talk.

The opening of the Enabling Village, a one-stop community space and service centre dedicated to integrating persons with disabilities in society, serves to bring new opportunities for persons with disabilities. I welcome the recent Enhanced Wage Credit Scheme and the SEC scheme for persons with disabilities. I welcome the enhancement of the Workfare Training Support Scheme which allows persons with disabilities who earn low wages and are younger than 35 years old to be eligible for funding in their learning. These enhancements show the Government's recognition that persons with disabilities can be economically productive, and its flexibility in providing for the limitations and needs of persons with disabilities in the support for their employment progression.

Why do I recap this? Because I believe that the Government has set a good framework and built a good foundation for the cultivation of a caring and resilient society. This is critical; this is basic. But what more do we need?

Beyond this framework, beyond all the financial measures, we need people to make this successful. Madam, I believe we do have a kind and caring society in Singapore. Of course, we have discordant voices and there will always be. Singaporeans, on the whole, are known for their kindness and generosity. I have experienced that through the years in my personal journey.

In terms also of relationship, we are not really too remote from persons who may have some form of special need. It could be a child, sibling, spouse, parent, grandparent, friend, colleague. Or we may know someone who is related to or associated with such a person.

For some of us, by reason of illness or accidents, we acquire some form of disability. And for all of us, as we age, we slowly lose our vision, hearing, speech, mobility. When we buy insurance, there is a category of protection for permanent disability. The insured can claim insurance payout if he or she suffers permanent disability. This is a reminder that any of us could suffer a permanent disability.

As a wheelchair user, I do not relish the thought of having more persons on wheelchairs. But it is not for me to wish otherwise, because there are things beyond our control.

So, I have recapped what the Government has done. I have spoken about the culture of kindness and generosity, and I have spoken about the form of experience that some of us had, either personally or distally, with disability. And we know that we can suffer disability at any time.

So, why then do persons with disabilities still not feel included in our society? It cannot be that it is because people are not kind. Could it be that it is because we have a lack of awareness? Could it be that it is because there are disabilities that are not visible? Could it be that it is because there are disabilities that are perceived as disabilities?

Here, I would like to share some small voices:

"We hope for you to be patient when we are slow in entering the elevator. We do not like to hold up others.

"We hope for you to be accommodating when we make strange loud noises. We cannot control our muscles.

"We hope for you to give up your seats in the train. We feel bad for you not to have a seat, but our ankles are weak and we cannot stand for long.

"Please understand if I refuse to communicate; sometimes, I am afraid and confused from the many voices I hear in my own head.

"Do not be offended if I do not respond to your greetings. I cannot hear you.

"Give us a chance to train and upgrade our skills so that we can work. We cherish our hope for a brighter future.

"Give us a chance to work, so that we can be less of a burden to our families.

"Let my son have flexible working schedules so that he can accompany me for my medical and therapy sessions. I do not want him to sacrifice his career development or lose his job because he is looking after me.

"Be kind to my parents when I throw tantrums. It is not because they did not teach me well. I simply cannot comprehend my external environment.

"Please play with me. My legs are weak, but I still have a sense of adventure.

"Thank you for accepting me."

Madam, a disability is not caused by a medical condition per se. A disability – a person is disabled by external and internal barriers that impede his development and participation in the community. We have people who do not feel included because they do not know what disabilities and what challenges we have. Can we ask this House to be that platform to convey the little voices that I have just shared? Let our people know that there are disabilities they cannot see, they cannot perceive. But those are disabilities that are real and hurting.

I ask for a national education campaign so that we can reach out to our people. I ask that we understand so that we can be one, and I ask that when we understand and when we are one, we can then build a country together. We will then have a caring and resilient society. It matters not then whether our society is rich or poor; we will all be rich. So, Madam, I support the Motion. [Applause.]

Mdm Speaker: Thank you, Ms Chia. Those are very nice and necessary comments. I am sure the House will respond accordingly. Let me move on to Ms Sylvia Lim.

3.34 pm

Ms Sylvia Lim (Aljunied): Mdm Speaker, the focus of my speech today is on understanding and addressing employment insecurity.

Madam, this year's Budget Statement acknowledges that businesses are facing difficult and uncertain conditions. To this end, we see a continuation of some existing schemes to support businesses, such as the Wage Credit Scheme and an extension of the SEC which provides a modest offset for wages paid to Singaporeans. These measures benefit employers and employees still on the payroll. The painful reality is that there is a significant proportion of Singaporeans who have lost their jobs or are at risk of losing their jobs. What is the size of this problem? The Minister said that unemployment remained low at 1.9%, but this percentage included foreigners in the computation. What about unemployment among Singaporeans?

According to the Labour Market Report issued by MOM last month, unemployment among Singaporeans rose to 3% in December, meaning that more than 58,000 Singapore Citizens were out of work. As for long-term unemployment among residents, for those who have been searching for work for more than 25 weeks, for the whole of 2015, there were 12,700 residents in this predicament. The report further noted that among those made redundant and sought to re-enter the workforce, only about half of them were able to do so within six months.

These figures paint a worrying picture but, in all likelihood, under-represent the problem. This is due to the definitions adopted in compiling the data. While the definitions used are in line with international norms, it is useful to elaborate briefly why unemployment statistics likely under-represent the employment landscape.

First, a person is considered unemployed only if he is out of work and actively searching for work. If a job seeker is unable to find work and decides to give up the job search or to go into training, he is not considered unemployed. In addition, a person is considered employed in Singapore so long as he has worked for just one hour in the period in question. Thus, a general manager who loses his job and works just five hours a week at a fast food chain counter is considered employed and off the unemployment statistics. Clearly, the plight of this general manager deserves attention.

One of my residents recently shared with me his worries about employment in security. Some of his friends in their early 40s had recently lost their jobs. They had decided to dumb down their expectations and found jobs in other industries, but the reduced pay was insufficient to meet their commitments, leaving some of them to become Uber taxi drivers to supplement their income.

Such persons are not captured in our statistics. But are these displaced workers not worthy of attention? What stress befalls a breadwinner who loses his job at a stage of life when he has to support children or elderly parents, service a mortgage and more? These stresses, in turn, have ripple effects on the quality of family life and the ability of children to concentrate on their studies.

Madam, it is time for the Government to put in more efforts to measure underemployment. Unlike unemployment, which refers to the extreme situation of a total lack of work, measuring underemployment will indicate to what extent a person is suffering from a partial lack of work. According to the International Labour Organization (ILO), measuring underemployment is increasingly relevant for industrialised countries. ILO noted that many countries were facing changes in the employment situation, labour market flexibility and the rise of various forms of non-standard employment. Thus, new situations have emerged that can be regarded as under-employment. According to the 16th International Conference of Labour Statisticians, underemployment reflects an under-utilisation of the productive capacity of the employed population.

Measuring under-employment usually starts off with time-related measures, namely, the hours worked versus the hours that the employee could be available and willing to work. We note that the Government has been putting up some statistics on time-related underemployment in its Labour Force Reports. While looking at underemployment based on time is certainly useful, it does not present the full picture. Returning to the general manager example, the fact that he works five hours a week, as compared to a full 50-hour week, is one indicator. But it is also relevant to consider whether he is now drawing a pay at a rate below what is commensurate with his qualifications and experience. A person's earning potential is just as relevant as the hours spent at work.

In order for us to better understand the phenomenon of underemployment in Singapore, I call on the Government to do the following.

First, the Government can use the existing data it already collects and publish headline numbers showing not just unemployment, the headline numbers should include time-based underemployment and the numbers of demoralised workers, meaning those who have given up looking for work and, hence, dropped out of the unemployment statistics.

Putting these three measures in headline numbers will ensure that public attention will be focused on these. Secondly, the Government, in time, should go beyond this to look into a substantive measure of underemployment and publish that. For example, employment income versus the median income for that academic qualification and age, or versus the previous employment income. This will give some idea of the extent to which people are downgrading expectations and taking up jobs that are below reasonable labour market expectations just to make ends meet.

Madam, I believe that such additional measures will enable us to understand better the underemployment facing Singaporeans so that appropriate policies and mitigation measures can be put in place.

Coming back to the Budget measures, what does this Budget do for workers who lose their jobs? There is an Adapt and Grow Initiative and the TechSkills Accelerator. Adapt and Grow is stated to be targeted at those who face greater difficulty in finding jobs and for mid-career jobseekers. The emphasis is on inducing employers to hire through wage support to the employers and on retraining and job matching assistance. These are certainly laudable, but it may take some time before the job seeker is able to find meaningful employment, through no fault of his own.

As for TechSkills Accelerator, it is not clear whether it is meant only for those already from the information and communications technology (ICT) sector or has a broader catchment. However, it is very ambitious. I concede that I am no ICT professional, but TechSkills Accelerator assumes that technical skills learning can be accelerated. For simple level skills, that might be the case, but for specialised knowledge, I can imagine that it would take years of experience to master, just like other professions, say, engineering or law.

In this economic transition, there are hardworking Singaporeans and their families being pushed into limbo. As a society, we should devise some safety nets to give them some peace of mind. To this end, the Government should look into the feasibility of introducing redundancy insurance.

One model could involve requiring workers resident in Singapore and their employers to each contribute a very small percentage of the employee's monthly salaries towards a fund. The fund should be geared towards helping workers who undergo involuntary unemployment, meaning those who are made redundant, including those terminated with notice. The fund could gear towards giving a six-month payout at a fraction of the worker's last drawn salary, say, 40%, subject to a cap, say, based on the median wage. Such a modest scheme of limited payouts which end after six months will send a clear signal that only a temporary buffer is being provided, incentivising the worker to actively prepare to earn his own income again.

Madam, such redundancy insurance has benefits for both the individual and society. For the individual, he would seriously have recourse to this buffer which he contributed to. He may not need to queue up at the social assistance agency and tap on public monies. He also need not grab the first job opportunity that comes along but be able to take a bit of time to hold out for a suitable job, enabling a better employee-to-job-fit and sustainability.

Madam, this Budget emphasises the need for innovation which, in turn, requires people to feel secure. As pointed out by the panellists at the Economic Society of Singapore post-Budget roundtable, better cushions for the unemployed will also encourage more people to venture out on their own and become entrepreneurs, an essential element of an innovative society.

Madam, economic restructuring and downturns from time to time will result in redundancies. It is also inevitable that if we succeed in our productivity and automation drives, people will be displaced from their jobs. We should devise a feasible scheme to tide our fellow citizens through these difficulties.

Mdm Speaker: Ms Sun Xueling.

3.43 pm

Ms Sun Xueling (Pasir Ris-Punggol): Mdm Speaker, thank you for allowing me to speak in support of the Motion. This year's Budget stood out for the futuristic new economy it painted while taking care of the humanistic immediate needs of our families and our workers. A new world where robotics and other forms of automation become core factors of production, industries are transformed and local firms scale up and internationalise. But also a new world where our children benefit from the First Step Grant and the KidSTART programme, and our seniors get help through the Silver Support Scheme.

There is a lot that we wish to do: to improve education and opportunities for the less advantaged, to take care of our elderly more and to have social safety nets to cushion Singaporeans impacted by a restructuring economy. In a world with unlimited resources, we can strive to do everything. But alas, we do not have unlimited resources.

The sustainable solution to provide more resources for social spending is thus to grow the pie so that we have more to share. I would thus like to focus my speech today on the economy and I will take up issues pertaining to individuals and families in the COS debates.

The scale of the issues that confront restructuring economies worldwide is not lost on us, and while the Minister for Finance urges us not to let pessimism take hold in the midst of difficult conditions, the need to act decisively and quickly is apparent, as he said, and I quote: "The global economic landscape is changing and our challenges are pressing. We have a narrow window. We must find every opportunity to transform, to emerge stronger in the coming years."

The Budget contains a host of measures to hasten the transformation of our economy – the Automation Support Package, Financing and Tax Incentives to Support Scale-ups and even a Business Grants Portal to streamline grant applications for our firms.

But these are supply-side mechanisms, and supply and demand forces are closely interwoven. In our policies to grow the economy, we should also emphasise demand-pull policies – policies that help create new markets and expand existing ones – and I would like to suggest that we can do this by upgrading the Singapore Inc model.

The role of the Government is critical in the Singapore Inc model. The Jurong Innovation District and Smart Nation are initiatives which play a role in creating demand for new products and services and drive change through being lead users of technology. Together with the Punggol Creative Cluster, these platforms allow local technologies to be test-bedded and this opens up opportunities for exports if they are successful.

And just as we had adopted a targeted approach in our early years of economic development, the need to identify core areas of competencies, strategic strengths and invest in our capabilities in them, has grown even more acute, given the increasing contribution of technology and knowledge to products and services. We need to build deep verticals and competencies, for only then will our products and services be sought after by international markets.

We have existing competitive advantages and we should build on them. Some competitive strengths arose out of scarcity or needs that we have. Our land scarcity, for instance, led us to create giants in urban planning, infrastructure and city management solutions. Our water treatment competencies arose out of a need for self-reliance. Companies in strategic industries will continue to innovate and be competitive because the problems that they solve for are integral to us.

As we embark on the Jurong Innovation District, Punggol Creative Cluster and Smart Nation initiative, new competencies will emerge. Exploration of the use of data analytics and seamless Internet of Things technologies will add to our urban solutions capabilities. Energy-efficient green buildings, urban greening or farming will add to our offerings as a green and liveable city. And with greater connectivity arising from Smart Nation, all our critical sectors of power, security, water, telecommunications, banking and finance, transport will be linked up, and competencies in cyber security will emerge to safeguard the resilience of our system.

Next, we can look to grow markets by working with emerging champions. Our Singapore Inc model of economic development has always been one where we are open and aspire to work with the best in the world. By working with emerging champions − companies with leading technology or new business models that are rapidly disrupting traditional businesses and creating demand with their new products and services – we can share in their IP, people and networks and ride the megatrends with them.

We can gain access to emerging champions via M&As or through partnerships. Singtel's recent investment in Trustwave, the largest independent provider of cybersecurity services in North America with a presence in Europe and Asia, is an example of how our companies can grow competencies via M&A and internationalise in new market segments quickly. Our corporates can also work with emerging champions via a partnership model as many emerging champions start out as small companies looking for partners to trial their products and services.

To encourage such partnerships, our two economic agencies, EDB and IE Singapore, need to tie together more strongly the efforts of attracting inward-bound investments with internationalisation of our local enterprises. Our local enterprises need a booster.

Another area that Singapore can leverage is in the speed and scope of our policy support. To give some examples, Uber was a $60-million company five years ago. Last year, it was worth $50 billion and had expanded to 63 countries − a growth of 800 times in five years. Airbnb was a $100-million company five years ago. Last year, it had grown to $24 billion and expanded to 192 countries − a growth of 240 times in five years

The speed at which companies need to grow and seize market share in the age of disruptive technologies is a matter of life and death for them. A year in the lifecycle of a technology-driven company can be worth a difference of 10 times in valuation and the outcomes can be quite binary – all or nothing.

As a small nation, speed of adaptation and adoption should be our strength. We had a Singapore Inc model of industrialisation in the past and we had put everything on the table to attract foreign direct investment (FDI). A one-stop window for speedy approvals to enable rapid startups was the key then.

If we are to be an early adopter or test bed from which new businesses can grow, our policies need to react to companies quickly. This is the new tempo of the market. Our Government agencies need to adopt a faster process, perhaps a one-stop window, when looking at licensing requirements for new technology and business models.

We can, and we should, upgrade our Singapore Inc model so that it is more likely that the "next big thing" grows from our shores.

Lastly, we have always leveraged our role and connectivity in the region. The ASEAN Economic Community 2015 and China's One Belt One Road (OBOR) initiative, together with funding streams from the Asian Infrastructure Investment Bank (AIIB), give us a fresh opportunity to shape a narrative that puts Singapore in the centre of capital flows, international cooperation and development.

We can leverage the promise of the Southeast Asian market to attract investments, partner players and internationalise. This is not a new concept. But changing geopolitical situations, changing trading patterns and a new narrative coming from China warrant a constant reassessment to see how best we can position ourselves. We are a key node along OBOR in the centre of Southeast Asia and we can be a gateway linking the South China Sea and the Indian Ocean Basin and be a place for businesses to embark on partnerships and expansion into the region.

Further, China has become a net exporter of capital in 2015, with non-financial outbound direct investments exceeding inbound FDI. As China looks to Southeast Asia for opportunities, particularly in the area of infrastructure development and production capacity cooperation, Singapore can play a role as a project development hub and provide a financing platform for China's new initiatives. Already, the World Bank Group's Infrastructure and Development Hub and the Asian Development Bank's (ADB's) Asian Infrastructure Centre of Excellence are established in Singapore. We are a hub for various infrastructure funds and project finance banks, such as Standard Chartered, Sumitomo Mitsui, that have their project finance desks here and can work hand-in-hand with the likes of the Industrial and Commercial Bank of China (ICBC) to provide financing options.

There are, of course, always risks in overseas projects, especially when commercial projects can be thwarted by diplomatic tensions and idiosyncratic problems. But what we can try to do is to focus on projects which have strategic value for us and provide services where we have expertise, as this will allow us better control of project risks.

The new economy presents challenges. But there are strengths that we can leverage on, new partnerships that can be formed and new opportunities that we can seize. Our Singapore Inc model was one where we put our minds and our resources singularly behind the need to provide good jobs and a good standard of living for our people. We can and should upgrade our Singapore Inc model to forge a new path forward.

Mdm Speaker: Order. I propose to take a break now. I suspend the Sitting and will take the Chair at 4.15 pm.

Sitting accordingly suspended

at 3.55 pm until 4.15 pm.

Sitting resumed at 4.15 pm

[Mdm Speaker in the Chair]

DEBATE ON ANNUAL BUDGET STATEMENT

Debate resumed.

Mdm Speaker: Mr Desmond Choo.

4.15 pm

Mr Desmond Choo (Tampines): Mdm Speaker, thank you for allowing me to join the debate. This year's Budget continues to strengthen the foundation for Singapore's future growth. It gives Singapore's longer-term economic transformation added impetus. Both businesses and workers need to transform for a new economic model. We need to help them to be ready for tomorrow. Much has been said about helping companies to transform. I will address how we must transform the way we help our workers, especially younger Singaporeans, to prepare for this new future.

The Budget offers hope to industries and some individuals. Yet, against this backdrop, we also have recent news of much-touted companies in high-growth sectors, such as Rakuten and Double Negative, exiting Singapore. These are dark clouds for our workers, including our youths and millennials. A report by Randstad showed that our millennials are less confident about the job market and fear they may lose their jobs. Indeed, some already have a difficult time looking for one.

Some of these youths have asked me, "With all this gloom, is there still a rainbow for me to chase after?" This reminds me of a recent encounter during a house visit with a young resident who is not more than 35 years old. He works in the manufacturing sector. Naturally, I asked him how was his job and if times were tough. Surprisingly, he said, "Yes, it is tough in the manufacturing sector but I'm okay." This is quite different from the many conversations I have had.

Two years ago, because he was worried about job security in the traditional manufacturing sector, he started looking for alternatives. He chanced upon a write-up on 3D printing, researched into it and was convinced about the prospects of this industry. He tapped into his informal networks to understand more about the industry. He left the familiarity of his old job and got a new one with a 3D printing company developing prototypes. The company is doing brisk business and he is now doing well. He has found his rainbow and is riding a new wave of growth. Even in an industry beset with growth issues, there are many opportunities for those who can seek them.

The question is: can we help young workers and millennials discover their own rainbow, especially when our younger Singaporeans will have more than one career throughout their lifetime and many students struggle with the paradox of choice? In essence, the future of employment facilitation must change. An industry-led integrated career counselling system can help. It starts from preparing students in schools, then to their workplaces so that they can constantly stay relevant to the global marketplace of jobs.

The Ministry of Education's (MOE's) strong career counselling initiatives are a good step in the right direction. But there are two issues here. One, it is not possible for counsellors to have up-to-date knowledge on all industries. Two, the need to help these youths with career navigation post-graduation.

MOE can partner the Labour Movement in the latter's broad economic representation to guide our youths in choosing the right paths. The Government can have the Labour Movement to run their career counselling services. This then allows students the opportunities to tap on the unions' extensive network to understand jobs and entrepreneurships through industry networking, workshops and workplace visits. Post-graduation, this relationship continues seamlessly into the Labour Movement's network of career development opportunities.

We must also bridge the gap between training and industry needs. Jobs are being transformed so quickly that employers are finding it difficult to find workers with the right skills while, at the same time, students find their school knowledge quickly redundant once they step into the working world.

I now come to the second facet of transforming employment facilitation. We need to broaden the adoption of the apprenticeship system so that, for certain industries, our youths are much better prepared for work. In the German and Swiss style of apprenticeship, students not only learn realtime industry-relevant skills, but also work habits from mentors. They also pride themselves equipping apprentices with problem-solving skills on the shop floor and not only in the classrooms.

However, such schemes can be costly. Can the Government consider further incentivising companies, especially promising SMEs, to start apprenticeship schemes, as opposed to just internship programmes commonly implemented today? Employees and unionists can be trained to become certified mentors and appraisers. And because students and workers know that what they learn is practical, there is good career path, they will more likely stay on the job. We can create an ecosystem of continual training and upgrading that is truly win-win-win. In preparing workers for the future, a tripartite partnership is and will be an important catalyst.

The proposed Industry Transformation Programme, especially in the ICT sector, embodies many important elements in helping workers to transform. Minister for Finance Mr Heng Swee Keat proposes for transformation through innovation and for innovation to be pervasive across all segments of society. This is a point well picked up by hon Member, Mr Thomas Chua, that there must not be sunset thinking and that change is needed in every firm, every segment, and he used the food industry as an example. Indeed, he is right on the mark. We need pervasive innovation to help our workers to get good jobs continually.

The ICT sector will be an apt sector to test bed new ideas and catalyse innovation. Furthermore, Minister Heng's proposal for the ICT sector addresses many of millennials' desire for continual innovation, definable skills level and broad-based level application of their skills. For example, the TechSkills Accelerator programme would identify the skills needed in the industry, match them with specialised training providers and chart a clearer path for careers in the sector.

The success of the ICT sector is, indeed, critical because ICT skills and innovation are strategic competencies for Singapore. They are the engine of value creation and growth. In ensuring the success of this ICT transformation, I would like to encourage the Government to consider enhancing two key areas: one, stronger employment facilitation; and, two, care for workers.

It was announced that the ICT sector will offer 15,000 jobs over the next three years, thereby providing many opportunities for Singaporeans. To ramp up our national capabilities quickly, we should fill these jobs not only with new entrants from the Institutes of Higher Learning (IHLs), but also from millennials seeking career changes and displaced mid-career information technology (IT) professionals. Yet, we all know that competencies, such as data anaIytics, cybersecurity and applications development, require extensive and lengthy training. How will the Government help working Singaporeans to maintain their income while working towards these new competencies? How can we help the displaced professionals to quickly get into these new jobs? How can we scale up the professional conversion programmes?

To our workers, a good career is not only a challenging one that brings back the bacon, but also where there is relative security. For the ICT sector to attract local talent, our workers in the industry can be afforded better employment security. The Singapore branch of Double Negative was responsible for some of the visual effects in several Hollywood blockbusters, such as "Man of Steel" and "The Hunger Games". It was, indeed, an important symbol of a thriving media ICT industry. Yet, its departure was sudden. It was not a unionised company and workers were offered retrenchment terms less than market practices. The young employees' faith in the sector might be shaken.

It is certainly much easier for technology and media companies like Double Negative to uproot itself, compared to a manufacturing plant. It is also true, lest we forget, that the only job security is not unemployment or redundancy insurance, but value-add and mobility. Therefore, how can we put in place strong employment facilitation and reassure our workers that this is a good industry despite its volatility? I encourage the Government to work with the Labour Movement to better provide workplace support and care for workers.

While the proportion of resident-to-work-pass-holders in the ICT sector is reflective of other sectors in Singapore, we note that one-third of them are foreign work pass holders. Out of this group, most of these are Employment Pass holders holding on to good jobs. While a Singaporean Core is one that taps on the diversity of skills of that industry's workforce, how can the Government work towards ensuring that young Singaporeans are not crowded out of good jobs?

Perhaps what is most critical, beyond good school-to-work preparation and apprenticeship systems, we need our millennials and Generation Z to have that sense of adventure and gumption to take on the world. We need to have the mindset that even in a period of slow growth, there can be many bright sparks, if we choose to look for them. There are rich findings for those who decide which rainbow to pursue and work at it with gumption to make it truly theirs. With this, I support the Motion.

Mdm Speaker: Dr Teo Ho Pin.

4.27 pm

Dr Teo Ho Pin (Bukit Panjang): Mdm Speaker, I rise in support of the Budget.

I support the key thrusts of the Budget in forging strong partnerships to transform our economy and build a caring society. The Finance Minister has highlighted that our economy and ageing population are facing new challenges. He has emphasised that we must find new ways to grow our economy, educate and train our people, and forge more partnerships to encourage firms and community organisations to work together to take care of Singaporeans.

Given the complexity of these new challenges, I agree with the Finance Minister that we need to adopt a targeted and prudent approach to help our businesses, workers and seniors in our community.

First, supporting SMEs. Madam, we must support our SMEs. Global competition and fast-changing economies have affected our SMEs adversely. Many SMEs face challenges, such as lack of business opportunities, high financing and business cost, and difficulties with retaining talent. As a result, many have closed their businesses while others struggle to sustain their business operations.

Madam, I would like to propose three suggestions to help our SMEs. First, help SMEs to identify business opportunities. The Government can increase its efforts to provide SMEs with information on emerging markets in our region, including information regarding the ASEAN Economic Community, free trade agreements and new industry growth clusters in Singapore. A business opportunities portal can be set up to provide updated information on new business opportunities both in Singapore and the region.

More seminars, workshops and networking sessions can be organised by various Government agencies, together with trade associations, to provide more opportunities for SMEs to meet up with MNCs and GLCs operating in Singapore and overseas. Furthermore, incentives can be given to bigger firms to adopt and nurture SME subcontractors for long-term partnerships. This is a practice in Japan where MNCs have long working relationships with their subcontractors. Some MNCs provide scholarships to the children of their subcontractors' employees or owners, so that these children can continue to run their family businesses and support the MNCs.

Two, help SMEs to improve productivity and the quality of products and services. As highlighted by the Finance Minister, productivity growth has remained flat despite the high take-up rate of PIC grants. Many SMEs are simply using PIC to replace their old machines and add new ICT devices without restructuring their work processes to improve productivity.

We need to ensure that the use of PIC grants will actually increase production capacity or reduce manpower or improve the quality of products or services. We must focus on helping SMEs achieve quality growth and develop niches to remain competitive.

To further improve the business processes of SMEs, the Government should partner trade associations to develop and document best business practices. This will raise the overall skill levels of our workforce and shorten the learning curve of new staff.

Three, help SMEs to recruit and retain talent. SMEs face tremendous difficulties in attracting and retaining talent to ensure continuity and quality of their products and services.

The turnover of staff has also made it difficult for SMEs to build capabilities and grow. With a tight labour situation, it will be more difficult for SMEs to attract talent to restructure and grow. I would urge the Government to help SMEs attract and retain talent. This could be in the form of Government-funded co-payment of SME scholarships or gratuity performance and loyalty bonus for long-serving staff, for SMEs to reward and retain their staff.

Next, supporting SkillsFuture. Madam, in today's fast-changing economy and technology, it is important to nurture a culture of learning amongst Singaporeans. In schools, students must be given more opportunities for experiential learning, such as service learning projects, internships and applied research projects. This will narrow the gap between theory and practice, and enable our graduates to be more industry-ready when they enter the work environment.

As for working adults, they face various challenges in upgrading their employability skills, such as language barriers, family commitments and even lack of support from some employers. We must find new ways to facilitate and encourage SkillsFuture learning among workers. I would like to propose that we set up centres of excellence for SkillsFuture learning, in partnership with trade associations and professional bodies. These centres of excellence must be conveniently located for easy accessibility. For instance, the centre for excellence for finance must be at our business and financial district.

In addition, some schools within HDB housing estates can be designated as SkillsFuture centres for generic skills training, such as language, IT or office administration skills.

Next, building a caring society. Madam, building a caring society requires the contributions of every Singaporean in our society. Singaporeans who are more able must step forward to lend a helping hand to those in need. Companies should exercise more corporate social responsibility and do more for the community. As reported in The Straits Times on 26 March 2016, 97 charities were de-registered between 2010 and 2014 due to difficulties in getting staff, volunteers and donations. This is, indeed, a big setback in building a caring society.

To date, there are over 2,000 charities in Singapore. Many of these charities are small outfits with limited capabilities. I urge the Government to consider merging or clustering the charities so that they can enjoy better economies of scale and develop capabilities to sustain their operations. Rather than having many charities scattered all over Singapore, it may be more efficient to co-locate them to support various towns. Furthermore, these co-located charities can consider providing "mobile services" to serve more people, especially those with mobility problems.

Madam, as the saying goes, "Health is Wealth". There is no point building a wealthy Singapore if our people are not healthy. Without health, Singaporeans will not be able to enjoy the fruits of our labour and have a good quality of life.

Madam, I have been advocating a healthy lifestyle for Singaporeans for many years. At the North West Community Development Council (CDC), we have set up hundreds of healthy lifestyle clubs for our residents. In this regard, I urge the Finance Minister to consider setting up a Healthy Lifestyle Endowment Fund to support organisations which champion a healthy lifestyle.

Promoting health among Singaporeans will improve their quality of life, increase their productivity at work and reduce the healthcare expenditure of our country. A healthy ageing population will also reduce the financial impact on families and reduce the tax burden for future generations.

Madam, I hope the Government will place more importance on promoting a healthy lifestyle among Singaporeans over the next 50 years.

Mdm Speaker: Mr Saktiandi Supaat.

4.36 pm

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mdm Speaker, I join in the chorus of hon Members who congratulate the Finance Minister for presenting a Budget that will help our economy innovate and ready it for the future. It is a Budget that addresses the needs of the business community, especially those in the oil and gas industry and the oil-and-gas related industries – a sector that has seen a sharp decline in business conditions in line with the fall in oil prices. Many have had to downsize and recalibrate their business model. Budget 2016 aims to balance the need to sustain reform with short-term counter-cyclical measures to support slowing growth.

The prudence of the Budget is apt as it keeps some dry powder for potential off-Budget measures, if needed. It is also a Budget with a social focus, extending help to the lower-income groups, families with children and the elderly, but also professionals, managers, executives and technicians (PMETs) to some extent via or through efforts helping to adjust to changing circumstances. These are groups that are especially affected both by the cyclically slowing economy and by the structural shifts affecting a number of sectors in the economy.

Some may say this Budget is sombre and lacking in "goodies". But I think otherwise and believe that, in the context of past Budget measures which are still being implemented, this Budget is measured and well-calibrated to take on the storm.

The Singapore economy is in transition and some in the workforce are experiencing rising incomes and even employment volatility. We have focused a lot on the medium to long term and they are very valued measures. But at this point, I would like to suggest that we relook at the option of moving to a current year pay-as-you-earn (PAYE) basis of income tax assessment as an automatic economic stabiliser.

This issue has been discussed slightly more than a decade ago by some economists. I refer to the summary report of a workshop on "PAYE Taxation System" jointly organised by the Institute of Policy Studies (IPS) and the Economic Society of Singapore (ESS) on 23 October 2004. While discretionary fiscal or Budget measures we are seeing now could be seen as a macroeconomic stabilisation tool, its effectiveness may be limited by the long lags between fiscal policy decisions and their impact on the economy, and also the difficulties in determining the optimal amount of transfers, disbursements and rebates.

Ultimately, the aim here is to do a little bit more from a tax payment perspective to allow Singapore to have a slightly stronger foundation to better withstand global economic shocks. The rationale for considering the current year basis is to enhance the effectiveness of the tax system as an automatic stabiliser and to help taxpayers better manage their cash flow by matching tax payments and incomes. Indeed, a shift to the current year basis could increase the compliance burden of the tax system, cause uncertainty for some taxpayers, and also reduce cash flow flexibility for others. An accurate system of assessing current year income is also important for a successful PAYE scheme. But the macroeconomic benefits of shifting to a current year system or scheme may have added support now as, under the preceding year basis, tax is paid on income earned in the year before – which would hit the newly retrenched or those who just had a pay cut or even those with a wage freeze amidst rising costs.

It is likely that as we restructure and face increasingly volatile global business cycles, income streams for both individuals and companies will become more unpredictable, making it more difficult to plan for deferred tax payments as per preceding year basis. Successful countries which have successfully transitioned to the current year basis tax system include Australia and Malaysia.

It may yet be too soon to react and stave off a recession. And yes, we are not in sight of a recession but we may see zero growth and, with this, comes cyclical and, potentially, structural unemployment. We need to monitor very closely the pattern of retrenchment and shuffling of workers. We must ensure that the connection between hard work by Singaporeans and the fruit of their labour remains intact.

For example, those who have been toiling day after day at the shipyards, factories, hotels, retail stores, offices, banks, trading houses and airports should not be unfairly treated. We must not allow foreign employers to furtively downgrade and reshuffle local staff under the guise of economic restructuring such that they create openings in senior ranks for expatriates to take over from the locals. To those who harbour such intentions, let this be a shot across the bow. Even as we help to support our people through change in this Budget, I strongly urge the Government to give more bite to the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) to reinforce what measures we are doing now for the medium to long term. And I have mentioned this in my speech during the Debate on the President's Address. I am all for introducing wider laws to protect against discriminatory practices.

Our entrepreneurs and their businesses are one of our engines of growth. We are right in giving them assistance. All said, our economy inevitably transforms, and they, too, have to transit and shift their mindsets. As a senior oil trader told me, I quote: "If I can't sell one petroleum product because of market change, I will look for other products to trade. There is a long chain of by-products from a barrel of crude and it requires the same skill set except that I have to learn something new, get out of my comfort zone, understand the next product and its uses, its price and market share, and start to go overseas to talk to new customers." And that is the entrepreneurial mindset.

We also have many small entrepreneurs and these include retail outlets in the HDB heartlands. Already we have seen the demise of the mom-and-pop shops. Let us not allow our town centres to turn into shuttered centres. I hope the Government will look into sustained measures to revitalise these centres. One thought that comes to mind or a simple quick way is to lower or make free parking charges at town centres during lunch hour, especially for those which are not located in populous or popular neighbourhoods. HDB could also look into actively managing the tenant mix at these centres, so that there are wider and more attractive choices to draw customers.

I also applaud the Budget's focus on "transforming through innovation" by creating an open and innovative urban environment. I hope we can see more JTC efforts to agglomerate certain industries together leading to innovative and sustainable infrastructure solutions which may bring about overall cost savings for businesses. Similarly, I am especially excited about the "blue ocean" approach to pioneer new industries and create the industrial park of the future at Jurong Innovation District. I do hope more of this can be replicated in other areas in Singapore, hopefully, maybe in Toa Payoh. But I think that is a bit of a stretch. I believe that by creating the right environment, we can turn it into the right ecosystem for an innovative and creative industrial sector.

From the workers' standpoint, this Budget's social measures do have a sharp focus on helping low-wage workers relative to PMETs. However, the vulnerable group in this current environment of structural change would also include those who are in their mid-careers and higher up the corporate ladder. They are graduates, earning higher salaries, in their 40s and are often targeted for lay-offs as part of cost-cutting measures. Others are let go because they become redundant as their skills are no longer relevant or required. This applies also to those who are non-graduates, diploma holders. They would have housing loans, renovation loans and car loans to service. And then there are children's school fees, school transport, three square meals a day for the family. These are very daunting demands when you do not have a job.

Some are already retrenched and taking jobs with lower wages. A small number would have taken up driving taxis or joined the Uber or GrabTaxi operators. A few more were fortunate enough to find jobs but in postings overseas. They have to sacrifice family togetherness in order to stay afloat. They become Singaporean expatriates, a small but growing breed. So, I urge the Government to look into recruiting more mid-career people and give priority to those who were retrenched. Also, I hope that the Government and society do not discriminate those who hold part-time degrees. Instead, the Government should regard them as people who took up the torch to improve themselves at their own pace. They are the lifelong learners and their attitudes and spirit should be encouraged. Mdm Speaker, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] Singapore's economy may be facing challenges currently, but at this point in time, it is not experiencing a downturn. In addition, there is unequal growth amongst all the sectors, with several sectors still seeing growth opportunities. In view of this context, the 2016 Budget aims to ensure that Singapore is able to withstand current uncertainties and drive the nation's economy towards a new phase of development for future growth.

This Budget also builds on the successes of the last 50 years. The Finance Minister has emphasised the importance of the "Spirit of Partnership" that will drive Singapore's growth and help to transform the economy through innovation and industry, and build a caring and resilient society. Workers, business owners, the people and the Government must also work together to build a brighter future for Singapore.

The three main thrusts of this Budget are: one, a growing fiscal spending alongside a prudent Budget; two, the Industry Transformation Programme to create new value and spur growth; and three, to support firms and our people in facing present challenges, including demographic, cyclical and structural changes that are ongoing. There is also a focus on increasing awareness to ensure that Singaporeans can adapt and gain access to new opportunities. Generally, this Budget shows a commitment to support businesses and industries because they are facing pressures currently.

Malay/Muslim firms can still receive benefits from measures introduced during the previous Budget, including wider support through the Transition Support Package. But I urge the Malay/Muslim companies to, if possible, make use of the support given through the Industry Transformation Programme and the Automation Support Package to increase their restructuring efforts because the opportunities to compete are growing smaller. China and other nations are becoming more competitive and we are also facing the issue of an ageing population and the presence of disruptive technology, which will challenge the way firms conduct their businesses.

In addition, I hope that our Malay/Muslim Chamber of Commerce and Industry will receive benefits from the LEAD+ programme to build on their capabilities. I hope, in future, the chamber of commerce can play a more important role to help Malay/Muslim firms enhance their contributions in the global value chain, become more productive and seize opportunities overseas.

The third thrust is helping our people cope with the changing demography and economy, by learning new skills. This is important because, during my Meet-the-People sessions and the recent dialogue sessions at MENDAKI Social Enterprise Network Singapore (SENSE), I found that many people within our community are aware of SkillsFuture but are still unsure how to apply and which courses they should take. We must increase efforts to inform the community about the transformation of the economy in the future, the skills that are needed and also how to take advantage of the national SkillsFuture movement.

In addition, the increasingly challenging job market has also motivated many of our Malay workers to upskill while many also lost their jobs in certain sectors. If we look at the situation in the current job market, 40% of those seeking jobs through MENDAKI SENSE in 2015 are those with GCE "N" and "O" level certificates as their highest qualifications. Another 30% possess either the Institute of Technical Education (ITE) or diploma qualifications. If this trend goes on and the spectre of an economic downturn becomes a reality, it is very possible that this will have a cascading effect on the economic status of Malay/Muslim families. It is hoped that the Adapt and Grow as well as the TechSkills Accelerator initiatives, will help our rank-and-file workers and our PMETs in general, and in the IT sector, to adapt in terms of seeking jobs and upgrading to the necessary skills, as well as work with accredited employers.

The 2016 Budget's focus on economic policies is also balanced by welfare assistance and income support for the elderly, low-wage workers and the young, as well as general measures to help households cope with the cost of living. I hope that the Government's assistance through the First Step Grant can be extended to single mothers so that their children, too, can receive the benefits. To me, this is important because their children are also Singaporeans. In addition, I welcome the Fresh Start scheme and hope that the conditions stipulated for families to receive the grant will not be too strict. Finally, for the low-income elderly, there is the Silver Support Scheme, and while the upcoming community network for the elderly is a good measure, nonetheless, I hope that some flexibility can be given, for instance, to those who may be living in a bigger flat, but do not have savings, or family support or have no children. There is a small group of elderly who needs help, who may not fulfil all the criteria for Silver Support and should not be left out.

(In English): This Budget calls for partnership among all parties: labour, employer and the Government. I am confident that our workers will be more flexible and resilient under difficult circumstances and be prepared to make adjustments. Just as employers and the Government adjust to adapt and grow, all Singaporeans, too, can do so. On that note, Mdm Speaker, I support the Motion.

Debate resumed.

Mdm Speaker: Mr Patrick Tay.

4.51 pm

Mr Patrick Tay Teck Guan (West Coast): Mdm Speaker, I rise in support of the Budget. Just this morning, I caught up with 24 Barclays' staff who are professionals, managers and executives (PMEs), both young and not so young, who are going to be retrenched in the next few months. I share their fears and concerns.

In fact, in the past weeks during my weekly house visits, many Boon Lay residents, including PMEs, I spoke to are troubled by the outlook in their companies. They lament that there is a sharp slowdown in orders and the amount of work to be done. Unions and union leaders, too, are concerned as some are seeing companies fold while some are negotiating retrenchment settlements. The mood is, generally, one of uncertainty and doubt.

MOM's unemployment statistics are clear. PME unemployment stands at about 2.7%. In fact, last year, we saw a record of more than 15,000 retrenchments and layoffs, and 71% of them were PMETs. I am expecting things not to get rosier this year; well, at least for the first half of this year.

What is so unique this round is that it will not just be cyclical forces alone but also structural. Worse still, it is coming at a point when Singapore is embarking on economic transformation and restructuring, having a relatively flat-line productivity the past few years, an ageing workforce, a tight labour market and slower employment growth. Not every industry or sector is hurt and bleeding, but some sectors are already bearing the brunt of low oil prices, currency fluctuations, market uncertainties, re-calibration, consolidation and a generally weaker global demand.

Unless we do something resolutely and proactively, we may have to face the worst before it gets better. Some used to say that globalisation destroyed many blue-collar jobs but, these days, technology is threatening the PMEs – otherwise known as the middle class or sandwiched class. They are no longer immune because of job obsolescence, disruptive technology, shared economy, crowd sourcing and the Internet of Things.

I am glad that strategic plans and measures have been rolled out via SkillsFuture last year and the relentless efforts this year to transform our economy through enterprise and innovation via the Industry Transformation Programme. I support the Budget and applaud the Adapt and Grow initiatives announced by Minister Heng. However, I am particularly concerned about how we can support our people through this rough patch of change and uncertainty.

I would also like to thank hon Member Ms Sylvia Lim who earlier reiterated the call which I made in this House over the past few years to further examine and relook underemployment as well as unemployment insurance.

The Government can spend tons of resources and come up with a buffet of programmes but at the end of the day, it takes two hands to clap but more than just two hands to make a resounding applause. Employers and businesses across various sectors and industries must believe in the same cause and embrace change before change embraces them. Our workers and unions need to stay future-ready so as to navigate, weather through and rise above the storm. The Government needs to provide the systems and supporting structures to facilitate, encourage and catalyse. Society, too, must be receptive to changes, abandon old paradigms and adopt major mental model shifts.

In these uncertain times and as we navigate through the peaks and troughs, we need to develop what I call 3R employers and a 3R workforce.

So, what are 3R employers? They are employers who are revolutionary, responsible and ready.

The first "R", revolutionary. We must move from evolution to revolution. Employers and businesses need to be revolutionary in incubating and executing ideas to embrace change, technology and innovation to achieve breakthroughs, enhance and develop new capabilities to stay ahead of the game. An example would be the use of drones to access hard to reach areas instead of risking human life and yet achieve time, cost and manpower savings.

The second "R", responsible. Employers must be responsible and go beyond that to be progressive in human resource practices and harnessing our human capital. It is imperative for them to establish good and sound employment and industrial relations. In unionised companies, they must foster strong union-management relations through trust and openness. Responsible such that when they restructure and need to lay off workers, they do it responsibly and in accordance with accepted codes and tripartite guidelines.

A good example is not laying off workers just before a festive period, such as Chinese New Year, Hari Raya or Deepavali. Another would be the payment of retrenchment benefits when there is an industry practice to do so. Hiring such that they focus on developing a strong Singaporean Core, they must eradicate all forms of discrimination or biasness, especially with regard to age and the attitude towards both mature and older workers.

The third "R", ready. Ready to redesign work processes and re-create good quality jobs to attract and retain the people and navigate the new labour and employment landscape. Ready to overcome the new norms, challenges and competition that lie ahead.

What is a 3R workforce? It is a workforce which is relevant, resilient and ready; not just the workforce but also our unions and the Labour Movement.

The first "R", relevant. Relevant amidst the rapidly changing employment, economic and global landscape of change and development. Relevant to the needs of the company, profession and industry. Relevant in the new economy of future jobs, future skills and future careers. Relevance can be achieved through a spirit of lifelong learning and continuing education. To learn, unlearn and re-learn. To deep-skill, second-skill and develop pi-shaped skills.

Unions and the Labour Movement must stay relevant to workers of yesterday, today and tomorrow. This can be achieved through our unions stretching the scope of representation and expanding our membership base to PMEs so that we can look after their interests and welfare. However, we need all employers to support us on this front.

We also need to expand our reach and build bridges with professional associations, such as our current 32 U-Associate partners, to build a stronger value proposition to PMEs, helping them progress in their careers and profession and creating a network of excellence and building our U-circle of friends. We are also exploring ways to be the voice of professional freelancers.

The second "R", resilient. We also need to stay resilient. This is especially crucial during this period of uncertainty and rough patches in certain sectors. Our workers must stay resilient to ride through the global transformation of work, economic restructuring and industry transformation efforts. Resilient also to weather through greater uncertainty in terms of employment and to move into new jobs and new sectors. We need both new mindsets and new skillsets.

Lastly, we need to be ready. We cannot just be ready for now but ready for the future. I recently had a dialogue with a group of 40 PMEs to ask them what they define as being future-ready. The answers actually vary, depending on their life stages. For the young PMEs, future-ready means being equipped to progress, develop and move up in their careers. They are not looking at 10-year time-frames. It is much shorter than that. For the not-so-young PMEs, they consider job stability and security, that is, employment and employability, as crucial tenets of being future-ready.

In short, we need to be ready to Do More, Grow More and Be More!

On the part of the Government, the Adapt and Grow initiative should address our current challenges and the pressing needs of our workers, especially our PMEs, as we row across choppy waters. I have three suggestions.

First, enhancing the existing Career Support Programme (CSP) to give a boost to hiring our Singaporean PMEs. This can be done by widening its outreach, stretching its coverage and deepening its assistance to all PMEs, especially the mature PMEs as well as all PMEs regardless of age who have been retrenched or are unemployed. I say this because many employers are unaware of CSP. The current criteria also do not address those PMEs who are under 40 years of age and have lost their jobs. In short, the wage support can be more generous during this rough patch.

Second, strengthening the Singaporean Core by wielding a heavy hand against recalcitrant companies with the ‘"double weak" and which turn a deaf ear to scrutiny and warnings. Take to task, with more robust measures, those who treat the Fair Consideration Framework job advertising requirement in the Jobs Bank as mere lip service and window dressing.

Third, we can also go beyond Professional Conversion Programmes to any tailored targeted programmes with flexibility of interventions which can help minimise skills mismatch, jobs mismatch and expectation mismatch.

Fourth, set up a support network for these unemployed and retrenched PMEs so that they do not fall into a deadly spiral of despair and depression. NTUC's U PME Centre has piloted this for one year and is called the Career Activation Programme. The programme is supported by a team of career activists who are volunteer PMEs who have faced job losses and who have been through the school of hard knocks and have now succeeded. We have achieved small but steady successes but, more importantly, this support network has helped to boost the self-esteem and morale of the dejected and pessimistic, making them more positive and career-ready.

To conclude, Mdm Speaker, I support the Motion and look forward to specific details of the policies and programmes by the respective Ministries, especially MOM, during the COS, to help my fellow workers especially the PMEs.

Mdm Speaker: Mr Chong Kee Hiong.

5.04 pm

Mr Chong Kee Hiong (Bishan-Toa Payoh): Mdm Speaker, the Finance Minister had announced a prudent Budget in the face of a number of constraints. Last year, we had lower revenue contribution from the traditional three main sources – corporate and personal income taxes and Goods and Service Tax (GST) – due to slower economic growth. The revenue contributions from these three sources are expected to be similar or less in 2016.

One of the things that jumped out in Budget 2016 was the huge increase in the projected NIRC to $14.7 billion. Without NIRC, the 2016 Budget will be in deficit of $11.3 billion. In addition, the dark clouds hovering over the global economy is a stark reminder to spend within our means and save for rainy days ahead.

Our open economy is vulnerable to external shocks. As the Minister had cautioned, we will meet strong headwinds. For 2016, MTI has maintained the GDP growth forecast at only 1% to 3%. While I agree with the Minister that we are coming from a position of strength and should not be overly pessimistic, I am quite concerned.

Although our public finances are healthy, our social development expenditure has been growing at a faster rate than revenue growth. With a maturing economy and ageing population, expenses will increase and our fiscal position will be tighter. Whatever schemes we push out, such as the Silver Support scheme, has to be sustainable over time. How shall we sustain our ever-increasing social expenditures?

The way forward is to increase our revenue pie through pursuing economic growth which I have touched on in the debate on the President's Address. To prepare for the future, the Government is investing more in infrastructure development, including healthcare, public transport and Changi Airport, upgrading Singaporeans through SkillsFuture, pumping more funding into R&D and placing a stronger emphasis on technology adoption and innovation.

It was announced in January this year that our Government's science and technology research budget will rise to a record of $19 billion in the next five years. This works out to be roughly $4 billion each year, which is around 1% of our GDP, comparable to the US' spending on R&D. In comparison, South Korea, Japan and China's investments in R&D are 4.3% in 2014, 4% in 2016, budgeted, and 2.05% in 2014 of GDP respectively.

Apple alone spent US$8.1 billion in 2015 and Samsung spent US$13.8 billion in 2014. While I fully support this enormous investment in R&D, I would like to urge the Government to consider investing even more in science and technology R&D. This is because we have seen how technological development in robotics, automation, artificial intelligence and ICT are already disrupting business models around the world.

To reap the benefits of this new Industrial Revolution 4.0, not only do we need to utilise and harness its power, we also have to develop, create and own the patents and IP rights in these segments, too, as profits will accrue to the owners.

It is not easy for our local enterprises to do these on their own due to their smaller sizes. Where some of our local enterprises have achieved nascent success, larger and more established foreign competitors would naturally be interested in acquiring them. But is that the best option? We need Government support, both in funding and in collaboration with local and foreign researchers and universities, as well as foreign firms and for a longer period of time so that these local enterprises could grow to a size that can establish them as significant international players in their own right with a Singapore brand.

But here lies another question: is it possible for us, with a rapidly ageing population and a workforce better known for reliability and efficiency, to become creative and innovative?

Funding support for innovation is very important. But even more important is our culture. What we need to do, and quite urgently, is to change our attitude and mindset.

Creative ventures and setting up businesses require guts because you are putting your own money, time, resources and reputation on the line. We have been trying to encourage risk-taking among our researchers and enterprises for years. As they say, if you want to take on projects in unchartered grounds, "Do not ask for permission, ask for forgiveness afterwards."

Is our society ready to forgive a little more easily and make it easier for those who dare, to pick themselves up when they fall and try again? We await the day when we have people comparing how many times they have failed and are still trying, instead of which company they are working with.

Supporting our people to overcome challenges and seize opportunities is our investment in SkillsFuture − equipping our people with the right skill sets to work in our new restructured economy. SkillsFuture is a fantastic scheme which encourages individual Singaporeans to take ownership for their own upgrading and career development.

A number of my residents have expressed concern over their abilities to re-learn and re-train for different job functions or industries. I would like to take this opportunity to share a story reported in this year's 3 February issue of Bloomberg, titled "Appalachian Miners Are Learning to Code".

Jim Ratliff worked for 14 years in the mines of eastern Kentucky, drilling holes and blasting dynamite to expose the coal that has powered Appalachian life for more than a century. Today, he rolls into an office at 8.00 am, settles into a small metal desk and does something which, until last year, was completely foreign to him: computer coding. The coal market began to collapse in 2011 and forced five major producers into bankruptcy. This had hit the miners of Appalachia very hard. The miners had to find alternative jobs and a number of them turned to computer programming, one of the few growth sectors they could identify. I find this example particularly inspiring. They prove that with the right support and attitude, it is never too late to re-learn, re-train and restart a new career.

Mdm Speaker, next on addressing near-term concerns. I declare that I have interests in the hotel and food and beverage industries. While I appreciate the deferment of levy increases for Work Permit holders in the marine and process sectors for one year, as well as maintaining the manufacturing Work Permit levies for another year, I feel that these should be extended to the services and construction Work Permit holders as well. The fact remains that Singaporeans are not keen on jobs in these sectors and employers have difficulty recruiting enough staff.

During a recent coffee shop visit, a stall owner reflected that he is unable to secure cooks for his zi char, which is a cooked food stall. Singaporeans that he interviewed wanted shorter working hours and long holiday periods. Separately, I was told a parent wrote in to the human resource department of a hotel to request that her daughter not to have to work the night shift. These are businesses that hire both local and foreign workers. In this uncertain business climate and with near-term cyclical weaknesses, we ought to act proactively to support these businesses by deferring the levy increases by one year.

On a broader front, would the Ministry work with TACs to look into setting benchmarks and controlling either the quota or the levy instead of both simultaneously? This will give businesses more flexibility to drive their business and to have a better mix in the number and type of foreign workers they can employ. With this, I would like to conclude with my support for the Budget.

Mdm Speaker: Minister Chan Chun Sing.

5.14 pm

The Minister, Prime Minister's Office (Mr Chan Chun Sing): Mdm Speaker, thank you for allowing me to join the debate and share the Labour Movement's perspectives on this year's Budget.

This year's Budget comes at a time when the mood in Singapore is rather sombre. When we walk the streets and talk to our workers across all industries, the things that are uppermost on people's mind are as follows.

One, will I still have a job by the end of this year? If I do, will I have any pay raise, if I am fortunate enough? If I lose my job at the end of this year, will there be another job looking for me?

Times have changed, and times have changed very quickly. It was not so long ago that people were choosing their jobs. But the mood has turned around very quickly.

The next question that both businesses and our people ask is this: is the current economic slowdown a cyclical or a structural issue? Recently, during the festive period, I had the fortune of driving down Orchard Road. And I always make it a point, when I drive down Orchard Road, to look at the taxi queues. I try to make a mental comparison of the length of the taxi queues with those of last year's or the preceding months. I try to make a mental count of the number of big bags that the people in the taxi queue are carrying. I noticed that the queues are shorter and the bags are fewer. So, the question in front of us is: is this a slowdown where, sooner or later, the same business model will allow us to pick up steam again and life will be back to normal?

My conclusion is that the current slowdown is both cyclical and more fundamentally, structural. The taxi queues might have gotten shorter and the bags fewer because people are more careful with their spending now. And the taxi queues could also have gotten shorter because Uber is competing with the taxis now. The number of bags may have gotten fewer because people are buying less. But a friend told me that he tested the online shopping delivery time. It has gotten longer. That suggests that it is not just a cyclical slowdown but there is perhaps a more fundamental shift in the consumer pattern – from physical offline shopping to online shopping. If that is the case, the question is: how should we respond to this? I will come back to this in a short while.

Some workers have commented that this year's Budget did not seem to speak too much about training. There was a lot of news about the $4-plus billion that we are going to spend to restructure our economy. So, some workers asked me: has the Finance Minister forgotten them? My answer is no.

If I may borrow a quote from Minister Lim Swee Say. Last year, we embarked on SkillsFuture and we committed more than $1 billion to upgrade the skills of our workers. And we have barely started. We, in NTUC and the People's Association and many service providers, are ramping up relevant courses to meet the needs of our workers. So, yes, we have committed $1 billion as a first tranche to try and get ourselves up to speed with the skills of the future.

This year, the focus is on trying to create jobs of the future. And as Minister Lim Swee Say would say, "Only when we have skills of the future, plus the jobs of the future, will our workers have careers of the future". So, I do not see this year's Budget in isolation. I think we should see this year's Budget as an on-going continuous effort to restructure our economy and upskill our workers so that we can all have careers of the future. This is where we are today.

Many workers have given us feedback that they are very appreciative of the Ministry of Finance's (MOF's) effort to expand and extend SEC, the Workfare Scheme, the Silver Support Scheme and the Professional Conversion Programme. Indeed, we are very thankful that we still have the means to do all these schemes. But I would certainly agree with the hon Member Assoc Prof Randolph Tan who spoke earlier that we need to ask ourselves what is our definition of success for these schemes.

For the Labour Movement, the definition of success for all these schemes is not in the continuation or the continuous expansion and extension of these schemes. Our mark of success is that in time to come, we are able to slowly, but surely, wind down the proportion of workers who are dependent on such schemes. The true mark of success for all these schemes is not the schemes themselves, but for us to work upstream to make sure that as few workers as possible are reliant on these schemes. This suggests that we have to go upstream to do many more things and not see the expansion of these schemes as a mark of success.

So, at this point in time, we are at the critical juncture of our economic transformation. How do we restructure our industries to create the jobs of the future? How do we ramp up the capacity to upskill our workers so as to equip them with the skills of the future?

The Government has not shied away from spending resources to upskill our workers or to help our industries restructure. But it is incumbent upon all of us to realise that all these monies come from the taxpayers; and it is incumbent upon all of us to realise that whoever takes any of these monies, either for personal upgrading or for corporate restructuring, has a responsibility to society. Our responsibility is to use this money wisely to really achieve the goals that we set out to achieve, rather than to waste or fritter them away. That would be the greatest injustice that we could do to ourselves, our companies and, of course, our country.

To do this, as hon Members Patrick Tay and Desmond Choo have shared, we encourage businesses to relook business processes, expand the markets to go beyond Singapore, and re-examine work processes to see how to raise productivity gains. But the businesses cannot do this alone. The workers must similarly embrace a lifelong learning culture to make sure that we are ready not just for today, but for tomorrow.

Let me now touch on three critical challenges that I think we need to face head-on going forward.

The first has to do with our effort to tackle possible structural unemployment. The example that I shared just now, about people moving from offline to online, does not mean that jobs are destroyed and no new jobs are created. In fact, although the retailer who used to have a physical shopping outlet might be displaced, on the other hand, there are new jobs that are being created at the e-commerce, data management and logistics management fronts. So, the problem is not the total number of jobs available in the economy. The real question is: how do we help the person who is displaced at the retail line get into another job that has been created? It will be too far-fetched, for most of the time, to expect someone who is displaced at the retail scene to be able to go into the e-commerce or data management space with minimum training.

In order for us to avoid structural unemployment, many people need to literally move one step to the right. The person displaced from the physical retail space might have to take on another adjacent job and someone else might have to take on another job and, slowly, step by step, upgrade themselves. So, it is not a simple issue. For every one job that is being displaced and one job that is being created, we need to train more than that one person to move from A to B.

It will be a very involved process and the Labour Movement will definitely want to work with employers and the Government to make sure that we minimise the occurrences of structural unemployment. The faster our structural changes go, the more we need to do this. But it is not so easy. Because when growth slows down, the space for manoeuvre that we have becomes tighter. So, growth, in itself, provides us the space to overcome some of these challenges. When we do not grow fast enough, it will become even more difficult for us to help those who need the help most, that is, those who are displaced structurally. And the jobs will not come back even after this cyclical downturn because consumers' habits and production patterns have changed.

So, we will need to do much more to overcome this. From NTUC and the Labour Movement's perspective, we can do three things much better in partnership with the tripartite partners.

First, as the hon Member Desmond Choo has highlighted, we need to go upstream. Go upstream into the schools, the polytechnics and ITEs to provide career guidance and counselling so that we minimise the chance of every fresh graduate being put into a wrong course or selecting a wrong course because they do not have the correct information. We need to have career guidance and counselling right from the school and onwards to beyond the time they spend in school. NTUC, together with WDA, will announce more details later in the year.

Besides going upstream, we need to do more for the midstream through continuous upgrading. The Labour Movement will want to partner the Post-Secondary Education Institutions (PSEIs) and IHLs to stretch the SkillsFuture credits that are available to all our workers. Today, they all have $500 in their SkillsFuture credit account. With the Government's subsidies, it can allow our workers to undertake more than a few upgrading courses. But the upgrading courses must be there.

Today, we still have much to do to ramp up the number of courses that are current and relevant to the workers. It is not just about encouraging workers to take up any course. It is about encouraging workers to take up courses that are relevant to them; that allow them to have a better chance of obtaining a better job and a better career downstream. And our workers are clever enough to know what are the jobs that may be available and what are the courses that they want to take. We must facilitate this.

The third thing that we need to do better in tackling possible structural unemployment is to second-skill or prepare our workers at the age of 40 for the second "lift-off". I learned this from the Swiss. They have a very concerted programme to make sure that before the worker reaches 60 years old or 50 plus, they are equipped and counselled on the next lap of their career. It has to start at the age of 40-plus, to prepare for the next step in their career.

If we can do these three things well – upstream, midstream and downstream – then we have a much better chance of tackling any possible structural unemployment.

The second big concern that the Labour Movement has is ensuring retirement adequacy. After Dr Goh Keng Swee's time, we have had a rough rule of thumb that has worked very well for us. For every dollar we earn in our lifetime, we save one-third of it. That is essentially the basic CPF system. If you earn $100, the employers put in $20 and we put in $20. This means that there is $40 in CPF out of the total of $120, hence, one- third. Where did Dr Goh get that magic number of saving at least one-third? That is because most of us work two-thirds of our life and then spend one-third in retirement. If we start working at the age of 20 and retire at 60, we work 40 years. And if we live until 80, that means that we need to prepare for 20 years of our life in retirement with 40 years of earning. Hence, the rough rule of thumb, without taking in the interest rate and escalation in medical cost, would require us to save at least one-third.

This is a choice that we must allow people to make: some people would like to save more and retire earlier, whereas some would want to work longer and prefer to save less. Our job is not to dictate the choices that our people make; our job is to facilitate their choices with the options available.

Many of our people want to work longer and we should find ways to re-examine this concept of a fixed retirement age to allow Singaporeans with the experience and capabilities to contribute as long as where they want.

5.30 pm

This is work-in-progress. Some countries in Europe have done this. It is a very involved process, in defining the capabilities required and the job specifications, to facilitate this.

[Deputy Speaker (Mr Lim Biow Chuan) in the Chair]

But we must look into this because our people are working longer. Our challenge, when we come to speak about retirement adequacy, is not just talking about whether the older workers should get 20% when they are past the age of 60 or 65. This is because, if the employers are unscrupulous, they will tell you that, "I can give you back your 20% CPF if I lower your base pay". It is the total pay package that is important.

Our job is to make sure that our workers command a respectable total pay packet that allows them to save up enough for their retirement. Retirement savings have to start from Day One. The formula that I just shared, starts with the assumption that at the age of 20, when we start working, we save one-third conscientiously.

When we can get more and more people to be self-sufficient without having to depend on the Silver Support Scheme in future, then we have truly succeeded. We can then reserve the finite resources that we have for those who are truly in need because even with the best of our abilities, there will be some in society who will not be able to save enough for their retirement adequacy. Our job is to make sure that as few as possible need to rely on the Silver Support Scheme in time to come, and that we can focus our finite resources on those very few.

This will require us to work very hard to look at job redesign and prepare our workers for the eventuality. And it is never too early to talk about preparing for retirement and saving up for retirement.

The third challenge that the Labour Movement is most concerned with is the issue of productivity gains. We have read many statistics that our average productivity is quite low. But let us go beyond that average number. It is not true that we do not have high productivity sectors. It is also not true that the average number defines the productivity of the entire sector. Let me give some examples.

In the current volatile environment, many people would think that the oil and gas industry is suffering and is in the doldrums. But it is not true that the entire oil and gas industry is suffering. There are companies in the specialty chemical sector that are earning more because they are able to hold up the prices while their feedstock prices are low. There are companies in other sectors, despite what you say about these sectors, that have above average productivity.

In terms of sectors, there are three sectors that are particularly challenging and require us to pay much greater attention to if we are to lift the overall productivity number of our country. They are construction, retail and food and beverage (F&B) sectors. We have to do much more if we truly care about the salaries of workers in these sectors. Because without real productivity growth, no matter what rules we come up with, it will uplift the salaries of the lowest earners in our economy artificially. So, we owe it to them to try our very best to lift those numbers.

This is why the Budget this year goes beyond a broad policy. We need to go sectorally to examine where the laggards are in our productivity drive and how best we can help them to uplift the productivity in their respective sectors. It is not easy. It is not as easy as just giving out grants to encourage people to change their work processes to achieve higher productivity. If giving out money is the KPI, then perhaps MTI and MOF will not be sweating so hard because it is easy to give out money. To achieve real productivity growth, we need to go sector by sector and, sometimes, company by company. It requires the TACs to work very closely with the civil servants, workers and so forth, to identify areas which they can improve, in each and every process that they are involved in. So, it is no easy work. But we have no choice. We either do this or we pretend that some broad macro measures will miraculously lift the productivity of all. I do not believe that.

I have visited enough companies to know that no two companies are the same. No two companies can even blindly adopt processes that have been proven elsewhere. They have to localise and contextualise them; and they have to win over the workers – retrain them, according to their capabilities to adapt and adopt those new strategies. So, it is hard work.

On this front, the Labour Movement is committed to work with MTI, MOM, MOE and MOF to give our best shot for all our companies to do this well. It is not a short-term challenge but a long-term one. And very often, when we talk about productivity, we have a lot of new ideas about how new hotels can be differently designed, new production processes can be differently designed, and so forth. These are good ideas. But I would urge all of us to look beyond all these because the turnover is too slow. If we only focus on the new ones, it will take us very long before we change the entire stock.

I will give an example of the hotel industry, which is very challenging when it comes to lifting the productivity of, say, the housekeeping services. For all the new hotels that we designed, yes, we can do something different. And we are doing something differently. But our focus must go beyond that because, at any one point in time, the vast majority of the hotels are from the existing stock. Their rooms cannot be re-designed overnight. So, we need to pay attention not just to the new stock that are coming in, but also the vast majority of the old stock that we have inherited and must continue to work with. It is not something that we can do easily. But I would suggest that we relook at some of our processes seriously to catalyse some of these.

In the area of productivity, very often, we talk about the training of man and the buying of new machines − what we called the first two "Ms" − the man and the machine. But if we are truly serious about raising our productivity across all sectors, let us all unite together to re-examine our mindsets and methods.

Take the security industry for example. There is no way that we can design a higher paying job for the security guard if the building has not been designed for security right from the onset. As Churchill would have said, "Once we design a building in three months, the building will take the next 30 years to design us"; and it will design our jobs as well. If we do not design security upfront, there is no way that we can uplift the productivity of our workers downstream.

What about the methods? We have to re-examine − and I hope that the Government will take the lead in this − how we do our contracts. Explore whether there are opportunities to aggregate contracts, both in terms of time and space, for us to achieve greater economies of scale and the scale to redesign some of the jobs for our lowest-wage earners. These are the things that we have to do step by step to raise the productivity. At the end of this, once again, as Mr Lim Swee Say has put it most eloquently, "Economic growth equals manpower growth plus productivity growth". If manpower growth is zero, then our only variable is productivity growth. If productivity growth is low or zero, then economic growth is low or zero. It is a very simple equation and we should bear it in mind.

For the last part of my comments in English, let me state the Labour Movement's stance on the Singapore Core. We believe in the Singapore Core. We believe in urging and working with all companies to build a strong Singapore Core. But that Singapore Core does not mean that it is an all-Singaporean workforce. We recognise and accept that for Singapore to be regionally and globally competitive, we need a diverse team − a team of talents from cross-sector and cross-cultural backgrounds and have international exposure.

So what does it mean to develop a real Singapore Core? It means giving all Singaporeans the best shot to rise up the hierarchy. We are not asking for affirmative action that just because we are Singaporeans, we will get ahead compared to the rest. We are asking for a fair chance. We want to work with all MNCs to give our workers a fair chance, a fair shot. And NTUC is committed to working with companies to give our workers chances to be groomed, not just deepen their professional competencies but to equip them with the cross-sectoral competencies, so that they have the best shot to rise up the hierarchy and reach the C-suite positions. It will be such a waste that, after EDB and MTI have worked so hard and we have all these good jobs in Singapore, our people are unable to take on these jobs.

And to take on these jobs, we must prepare our people way in advance − 10 or 20 years in advance − for them to be groomed systematically through diverse paths, to be exposed beyond the country, to see the world as their oyster and not just Singapore. Only then will we be able to take on the very best jobs.

Today, the persons holding the country's top jobs in Exxon Mobile and Shell are Singaporeans. But these two Singaporeans did not grow up just in Singapore. They were exposed to the opportunities across the globe before returning to Singapore to take on leadership positions. We will continue to make sure that we adopt this inclusive and globally-oriented approach when we define the Singapore Core. The Singapore Core cannot be defined from an exclusive and inward-looking perspective. We will work with MOM and MTI to continue to strengthen companies which want to support us in this endeavour. And I think Minister Lim Swee Say will announce more about such measures in the coming week.

NTUC will also be doing what we can to help our younger generation get the necessary exposure when they are young, before their family commitments tie them down. We need to prevent PMETs in their 40s from being displaced in 10 years' time. We have to start with PMETs who are in their 20s and 30s now. Otherwise, we cannot blame the competition if, one day, our people lose out.

So, Mr Deputy Speaker, the challenge is upon us, just as it is upon any other country. We need not fear the competition because there is competition. In fact, the greater the competition, the more intense the competition, the more we are able to pull ourselves apart from the competition if we organise ourselves well and get our act together. As I always say, the circumstances will not define us; our responses to the circumstances will define us.

There is no reason that our tripartite formula that has served us so well will not be able to help us overcome this challenge ahead of us. But it requires us to have a shared understanding that this is not just a cyclical slowdown. There are more fundamental structural forces at work. It requires us to have a shared understanding that for every dollar that we take from the Budget, we have a responsibility to do the most that we can, be it businesses or individuals. Sir, thank you very much and please let me continue my speech in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] Mr Deputy Speaker, Sir, last week, former Member of Parliament Mr Yeo Guat Kwang and I met some SME bosses to discuss future challenges. Mr Yeo Guat Kwang truly lived up to his reputation as Yeo Guat Kwang – he compiled all the difficulties faced by SMEs and summarised them into a list of 12 "headaches". This is what he calls the four "threes". It is not a 4-D number.

First, SMEs face three "highs" – high rental, high wages and high levy. They also have three "less" – less business, less profit and less workers. They feel that there is a "lack" in three areas – the bosses lack power, the workers lack motivation and landlords lack empathy. And they face three "difficulties" – difficulty in doing business, difficulty in getting workers and difficulty in securing a shop space. With these 12 challenges, can this year's Budget really help SMEs?

It is our wish for our SMEs to succeed because all large MNCs started out as SMEs. Without today's SMEs, we will not have the Singapore MNCs of tomorrow. In the1960s and 1970s, we developed a number of Singapore MNCs. Today, the challenges are the same. How do we grow a new generation of Singapore MNCs? How do we support the SMEs of today so that they will flourish and continue to employ 70% of workers in Singapore? This is our challenge.

I am neither a doctor nor the Minister for Finance. Perhaps the Minister for Finance has some remedies but I have learnt a thing or two from Minister Gan Kim Yong. I may not be able to solve all the problems of SMEs and I am not saying that I can do better than SMEs because, ultimately, a lot of problems must be solved by SMEs themselves. SMEs have to address many near-term issues and the NTUC and Government want to do our part to help them.

Mr Gan is the Minister for Health, and he takes care of his health in three ways. Firstly, by taking less sugar and less salt. Secondly, by exercising more. Thirdly, by taking tonics occasionally.

So, let us talk about taking less sugar and less salt. SMEs agree with, and are appreciative of, the measures implemented by the Government. However, they face a big challenge: they do not have enough manpower and time. Even though the Government has implemented so many good policies, they wonder: "How can we benefit from them? Do I have the time to understand all these measures? Or is it a case of there seemed to be many options but none is within reach?" In this aspect, we are heartened by the Finance Minister's announcements. If the Government can streamline these procedures and consolidate various measures and workers can be sent for proper training and there is partnership with SMEs, then I believe SMEs will benefit tremendously and be very grateful.

To be honest, SME bosses are very busy and every day is a challenge. So, as Government officials, we cannot just wait for them to apply for these schemes or come forward to understand these programmes. That is being too passive. For NTUC, we will be proactive in helping to promote these programmes for SMEs to benefit from them. If we can all do that, even if it is just an ordinary policy, we will see good results. On the other hand, if we do not convey the message to SMEs during the most crucial period, even the best policies will come to nought. So we really hope to work together with the TACs of SMEs and the Government to address these problems.

Why do we say less sugar? In fact, the Minister for Finance gave a lot of "candies" but we all know that we should take sugar in moderation. If we take too much sugar and it becomes a habit, then obesity problems may arise and it does nothing to solve our problems. As Mr Thomas Chua mentioned, the Government has taken one step forward. And we hope that companies and unions will work together and move forward together for a better future.

Secondly, move around more. But where can you go? Actually, SMEs have combed the entire Singapore but Singapore will always be a small market. We all know that if an SME makes $10 out of every Singaporean, it will only be a millionaire. But if you go overseas, for example, to big cities in China and India, you only need to make $1 out of every customer and you will become a billionaire. Singapore is a small country and a small market, but it does not mean that we cannot venture overseas and conquer other markets. However, it is easier said than done and requires cooperation from IE Singapore and other economic agencies to help our SMEs expand out of the domestic market and venture abroad. Only when they go international to conquer a bigger market will our SMEs become MNCs of the future. So, do exercise and move around more. Hopefully, the Government, unions and businesses can move together hand in hand.

Thirdly, take some tonics occasionally. In this area, NTUC will do our part. We are very interested in the bosses of SMEs, big or small. They have two key areas of needs. Firstly, we often talk about the training of workers but bosses need training too. For example, at the recent training session organised by the Bosses' Network, company bosses get to upgrade their skills and open their minds which help them achieve breakthroughs. When bosses achieve breakthroughs, workers will follow likewise. If bosses cannot make a breakthrough, then there is no need to even talk about productivity. In this aspect, NTUC will continue to organise programmes for company bosses to learn from one another and share best practices with the rest of the SMEs in Singapore in the shortest time possible. Secondly, SMEs face great difficulties in terms of manpower training. In this regard, NTUC will launch training programmes to help our SMEs strengthen human resource management. Only when they upgrade their human resource management skills can our workers have a better future.

As for us, the success of an SME means success for our workers. If the bosses' businesses cannot succeed, our workers will not have a better tomorrow. So, to us, the success of businesses and improvements to our workers' lives are two sides of the same coin. They are, in fact, the same issue.

Moving forward, NTUC will continue to work with SME bosses and other organisations because we believe that the Government has taken the first step. The next step requires both people and businesses to work together. By doing so, we will be able to overcome both the current cyclical issues and long-term structural challenges.

Mr Deputy Speaker: Mr Lee Yi Shyan.

5.55 pm

Mr Lee Yi Shyan (East Coast): Mr Deputy Speaker, Budget 2016 challenges us to think long term. We want to address immediate cyclical head-winds, but the more important task remains in taking measures that will help us fundamentally restructure the economy. Towards this goal, the Finance Minister declared, "We will target resources towards enabling firms to build deeper capabilities, develop their people, scale up and internationalise".

The businesses which I talked to welcomed the new economic initiatives. While waiting for further details, many already have suggestions on how we could become more competitive. They look forward to giving their views to the Committee of the Future Economy. For now, I would like to share my thoughts on three of the new programmes.

First, I must commend that the $400 million Automation Support Package (ASP) is a powerful tool. As a three-in-one package, it provides capability grants, tax allowance and concessionary loans to help SMEs undertake comprehensive remodelling of their businesses. For instance, SMEs could undertake automation projects, re-engineer workflows, acquire new technologies and train its workers. However, some SMEs might find the capital cap of $1 million limiting. I hope the Ministry would consider expanding the cap if the usage of the scheme is high, which, in itself, is a very encouraging sign.

Next, let me comment on the $450 million National Robotics Programme. If we look at the global market for industrial robots, four key points stand out: one, on a worldwide basis, robot sales have doubled in the past five years; two, the top five markets, namely, China, Japan, America, South Korea and Germany, account for 70% of the world demand; three, Asia is the fastest growing market for robots; and four, China is the largest buyer by volume. China buys one in four sold worldwide.

On a per capita basis, South Korea and Japan are leading the world in having the most robots per 10,000 people, ahead of the traditional industrial power houses such as Germany, Italy, Sweden, Denmark, US, Spain, Finland and Taiwan. Conspicuously, Singapore is absent from the list.

Hitherto, most robotic solutions have been applied to the manufacturing sector. But this is changing. More and more robots are being deployed in the services sectors, giving hope that we can substantially reinvent our services sector which has been lagging in labour productivity growth.

Consider, for instance, applications in the hospitality sector: robot bartenders which can mix up to 50 types of drinks, robot concierge providing travel tips to hotel guests, self-guided vacuum cleaners combing common areas, and autonomous guided vehicles delivering room service to hotel guests.

Another example is healthcare. Our hospitals are already using robots to pack medications, move supplies between rooms, transporting patients on motorised beds. Surgeons are using robots to assist in complicated and delicate surgeries.

In Japan, Showa University has developed a robot dental patient, a robot which mimics human responses: it can talk, blink, roll its eyes, sneeze, shake its head, cough, move its tongue and becomes tired from keeping its mouth open for too long. It would even choke and show gag reflexes if the trainee dentist becomes too rough. This life-like robot provides a realistic simulated environment for training and learning.

Mr Deputy Speaker, some of our services sectors are ahead in the use of technology and robots. Others are still trying to figure out what to do. But all sectors will benefit from having their own industry-level collaboration platforms.

The good news is that we are not starting from zero. Changi General Hospital's newly opened Centre for Healthcare Assistive and Robotics Technology (CHART) can be a good reference model. CHART brings together healthcare professionals, academia, industry players and research institutions to develop the hospital applications which can be shared with other hospitals in Singapore and beyond.

In establishing such centres, I would go further to argue that we should not be contented at being a mere consumer of smart solutions. We should instead aspire to create our own applications and products that are commercialisable and exportable. In this way there is a chance that we can build up an eco-system, a new industry based on our consumption expenditure and R&D investments.

In fact, global spending on robots is expected to quadruple to $67 billion by 2025, creating some 3.5 million new jobs in the process. The growing robotic industry will offer us real opportunities or applications for business and healthcare workers.

This leads me to the third point: how do we develop the 20-plus Industry Transformation Roadmaps that give us not just a sustained path for productivity gain but also lead to us to becoming Expert Centres for Best Practices?

Minister Heng announced earlier that the Ministry would provide a $1.5 billion top-up to the National Research Fund this year. It is part of the Government's plan to provide $4 billion to support industry-research projects to drive and deepen industries' innovation capability.

The industries I talked to warmly welcomed the renewed emphasis on industry-led research projects. Furthermore, they also wished to see a better integration of NRF funding with the Industry Transformation Roadmaps, eliminating the perception that our research institutes and our industries have not forged a common vision for the future and are working separately from each other.

According to the 2013 national R&D survey, economic spin-offs attributed to R&D was $23.8 billion. The private sector contributed $23.7 billion, which is 99.5%. The public sector, comprising the Government, universities, polytechnics and research institutes merely accounted for less than 0.5%.

From the above, it is clear that allocating more R&D funding to industry-led research collaborations would greatly multiply the economic spin-offs to our economy. Large local enterprises and SMEs especially, are hoping that more R&D funding can be directed to them for better local value capture and IP-retentions.

Mr Deputy Speaker, under RIE 2020, the Government has identified four broad verticals to focus our R&D efforts. They are the Health and Biomedical Sciences sector, the Advanced Manufacturing and Engineering sector, the Urban Solutions and Sustainability sector and the Services and Digital Economy sector.

To fully harness the economic spin-offs of these four sectors, two changes would be helpful: one, Ministries and their agencies to take on industry-development roles; and two, agencies outside MTI be given the investment promotion tools to undertake economic development under the whole-of-Government approach.

Let me explain. In each of these verticals, there is substantial expertise residing in our public sector and "their industries". Consider the Urban Solutions and Sustainability cluster. The Urban Redevelopment Authority (URA) is a respected agency internationally for its world-class planning capability. BCA's Green Mark and Sustainability standards are being adopted in other countries. The Centre for Liveable City is a global thought-leader in urban planning and solutions. The Land Transport Authority (LTA), coordinating huge investments in building up an elaborate public transport network, has experience that is valuable to other cities. IDA architects the state-of-the-art infrastructure to make Singapore a world leading smart city. EDB draws in clean and green technologies research needed to grow a smart city. And the list goes on.

Each of these agencies has something unique and valuable to contribute to an overall competitive cluster. The solutions we devise here require a high degree of interagency coordination and seamless public private partnerships. Together, we are solving very real, day-to-day problems with budget, resource and space constraints.

Given the inter-disciplinary nature of problems in urban solutions, a more effective way for industry development for this new vertical would be to empower Ministries and agencies involved to take on industry development roles, by giving them the necessary tools to do so.

In this way, we can grow our competencies into new clusters of growth, bringing along our large local enterprises and SMEs to create solutions for a fast urbanising Asia.

Mr Deputy Speaker, Budget 2016 has emphasised the importance of partnerships in bringing about collective progress and effective restructuring of our economy. In this regard, I am pleased to note that the Ministry is enhancing the LEAD programme to strengthen our TACs so that they can do more for their members.

In my interactions with the Singapore Furniture Industry Council (SFIC), I have seen how an effective TAC has helped the entire industry to upgrade, internationalise and acquire new design capabilities. SFIC could do so because it has successive generations of strong leaderships. SFIC's annual International Furniture Fair Singapore is very well-attended. It also generates for SFIC the financial resources needed to sustain a full-time professional secretariat. While SFIC is well-organised and well-run, the same cannot be said of every TAC. I hope the enhanced LEAD+ programme will help many more TACs to professionalise and level up. Mr Deputy Speaker, please allow me to say a few words in Mandarin.

(In Mandarin): [Please refer to Vernacular Speech.] In the 2016 Budget, the Finance Minister repeatedly highlighted the importance of long-term economic restructuring. Only with a strong economy can we raise the income of workers and invest in social development, healthcare, infrastructure and defence to ensure peace and stability for our nation.

Yet, as Singapore embarks on its 51st year of nation-building, we are faced with a world that is totally different from the one in the early days of our nation-building. Many developing countries in Asia have caught up with us. China has surpassed Japan in 2010 to become the world's second largest economy, and is forecast to surpass the US in about 10 years' time. External competition, an ageing domestic population, low fertility rate and limited space – all these have put a limit to our development. Right now, there is a greater sense of urgency to accomplish the many things that we need to do, for our next generation.

Ultimately, whether economic restructuring succeeds or not will depend on how our businesses and workers are involved. I hope we will face the competition with courage, resilience, determination and creativity to overcome constraints and competition. Our competitiveness is built through roughing it out in the international marketplace. If we rely on a walking stick and depend on protection, we will not be able to endure the storms that come our way and will never be able to take flight.

Conversely, if we are able to build upon the pioneering spirit of our nation and work together, with TACs actively participating in industry upgrading programmes, company bosses striving to learn the best practices of world industry players, workers investing in lifelong learning to master new skills, and with the technical and R&D support of our tertiary and research institutions, there is hope that we will be able to strengthen our competitiveness, create our own innovative products and services, and earn our place in the international market.

(In English): Mr Deputy Speaker, at SG51, Singapore faces a vastly different, developed and connected world. Every country I visited is making progress. Some inspire; some impress; some make me worried.

When I was in Sanya City, Hainan last week, I saw a seafront belt of 12 hotels under construction. Each of these mega-hotel complexes has a private beach, iconic architecture and differentiated theme. Each would have been a billion-dollar project if located on Sentosa. Seeing them makes me wonder: are we as imaginative? Are we as bold? How are we to maintain our tourism share? To the competition around us, do we keep up or give up?

China is gargantuan in every aspect of its economy. And in enormity emerges excellence. It is common knowledge by now that China is the world's largest market for smart phones and e-commerce and mobile or m-commerce. It is the world's largest automobile market. China produces 6.6 million graduates every year. It has 100 cities with more than a million people, and Shanghai alone is 4.2 times the size of Singapore in population and talent terms. China's outward investments started to outstrip its inward investments last year. Economists expect China to overtake America somewhere between 2020 and 2030 to be the world's largest economy.

The rise of China has enormous ramifications for us and the region. Last year, Shanghai Mayor Yang Xiong and I spoke in the Twin Cities seminar entitled "科技创新驱动合作商机", translated as "Opportunities and cooperation driven by science, technology and innovation." The topic suggested by our Shanghai counterparts clearly showed that Shanghai was like us, at the stage of development where science and technology matter most. But the title also meant that if Singapore did not have adequate science and technology capability, there was no basis for this seminar.

In conclusion, there is, therefore great urgency for the tasks at hand. We must redouble our efforts in R&D, applying our R&D resources to industries, get our young people interested in science and technology and pay serious attention to the learning of Mandarin and regional languages.

Capital is mobile. Firms will invest where they can find high-quality workforce and talents. If we stagnate, if we close our doors to foreign talents and new ideas, the Singapore Core will be weakened and Singapore will diminish.

On the day the Finance Minister announced the 2016 Budget, The Business Times headline read: "Singapore's continued relevance – that's the big question". Mr Deputy Speaker, the question is: can Singapore stay relevant?

Mr Deputy Speaker: Mr Ong Teng Koon.

6.13 pm

Mr Ong Teng Koon (Marsiling-Yew Tee): Mr Deputy Speaker, this year's Budget is an important one as our country embarks on the next phase of its developmental journey towards SG100. The Singapore economy has started to experience significant headwinds that have made the business environment less favourable and the short-term outlook less optimistic. Much of this can be put down to external factors, such as the slowing Chinese economy. But it has made the operating environment more challenging for local businesses, even as they come under pressure to restructure and raise their productivity.

It is, therefore, reassuring that a good part of Budget 2016 has been geared towards extending more targeted help to viable local businesses to help them weather these toughening conditions. I refer particularly to those measures targeted towards our SMEs, such as the Loan Assistance scheme and the Industry Transformation Programme.

Even as we seek to provide such near-term assistance to local SMEs, however, I would urge that thought be given to enhancing the broader eco-system that would sustain entrepreneurship and ground-up innovation in the long haul.

In parallel, we have seen that productivity growth has been modest and uneven in the past few years despite intensive efforts. Raising overall productivity will necessarily involve rewarding the strong and allowing the weak to exit the scene. Businesses with fundamental flaws in their business models, for example, those that are over-reliant on cheap labour or Government subsidies, should be allowed to die a natural death. Policies that inadvertently keep such "zombie" businesses alive will only hold back productivity growth and technological advancement.

To tackle the twin challenges of encouraging entrepreneurship and increasing productivity through innovation, we need to consider how we can protect the interest of the entrepreneur even as we allow businesses to fail where warranted. This is especially important in an economic downturn, when even good businesses can fail due to circumstances beyond their control, such as a major customer defaulting or going bankrupt. Therefore, a holistic set of measures needs to be put in place to support businesses through such events.

I would like to outline three specific aspects where support for entrepreneurs can be enhanced: one, developing the business idea; two, launching the business; and three, mitigating the impact of failure.

The key first step lies in developing the business idea, to ensure that would-be entrepreneurs have sound, robust business models in place before launching their ideas.

One piece could be around education, equipping them with the skills needed to develop a thorough business plan. This will involve educating them on business fundamentals, such as market sizing, business plan development, operations and so forth. It is important that we go beyond theory and focus on the hands-on, in-depth sessions to strengthen proposals and pre-empt future problems. Perhaps this could be made a part of the SkillsFuture programme.

In recent years, we have seen the establishment of a number of "accelerators" which are designed to help startups succeed. However, these tend to be focused on startups in sectors that are perceived to be "sexy", such as media and Internet businesses, or in financial technologies (fintech), for which a new dedicated one-stop office has just been announced. What we might see as more everyday businesses can also benefit from such support, be they from retail, F&B or basic services. This is especially important as it is these everyday businesses that will, ultimately, make up the bulk of the Singapore economy.

Let me now turn to the second aspect where more support can be extended, namely, at the stage of launching a business. Even with a sound business plan, many things can go wrong when launching a new business. Startup firms in Singapore can easily be crippled by high costs, and we could consider building more proactive "test bed" facilities to allow room for experimentation. Take, for example, the F&B industry. Singapore's F&B industry has a strong international reputation, with many brands successfully going global.

However, consider the daunting challenge facing a would-be restauranteur today. Securing a space is a challenge, as most high-traffic malls are run by REITs and will not take a risk on unproven concepts. Even if they were able to obtain a space, they might have to sign a two-year lease, with significant penalties for early termination. This greatly increases the risk facing any potential start-up F&B operator. Would it be possible, for example, to collaborate with mall operators to offer "co-hawking" spaces, providing startup F&B businesses access to high traffic at affordable rent with flexible lease terms to test out their concepts for six months before graduating to permanent locations if they prove successful?

Another example of potentially prohibitive costs is legal services. Currently, a law firm can easily quote $10,000 to $15,000 or more for a shareholders' agreement. This is not feasible if you are raising a seed round of only $40,000 to $50,000 of funding. Perhaps SPRING could consider providing standard templates for startups to use or to seek to partner startup-focused low-cost legal firms.

The third area where more could be done is mitigating the impact of failure for would-be entrepreneurs. In this regard, I should make clear that it should not be the objective of Government policies to completely eliminate the risk faced by new ventures. We certainly do not want to give the impression that small businesses can do whatever they like and the Government will bail them out. However, what I am advocating is to have more focused efforts to ensure that those who heed the call and take the plunge into the world of business do not risk permanent damage to their reputations and their future income potential should the venture fail to pan out.

In this area, I would like to focus on three issues: one, criminal liability resulting from business failure; two, insolvency; and three, society's tolerance for business failure.

Let me illustrate with a real-life example of how our current legal provisions can overplay the risk of criminal liability for entrepreneurs who encounter difficulties. Mr Chua was a director of a property construction and development company who came to see me for help. His company, which employed more than 100 foreign workers at its peak, had run into severe financial problems due to the downturn in the property sector. As a result, Mr Chua had had to liquidate all his personal holdings and to go into debt to try to pay his workers' levies and salaries.

However, due to the illiquid nature of his assets, he was ultimately unable to make all the necessary payments in time, and although his workers' levies and salaries have largely been paid, and all affected foreign workers have been successfully repatriated, Mr Chua was charged by MOM in Court for 16 counts of contravention of the Employment Act for the late salary payments. These are considered criminal charges under the Act.

While we can all understand that the Act was enacted to prevent fraudulent or malicious failure to pay salaries, the punishment seems harsh in cases where a business runs into cashflow problems due to a general downturn in the sector. Even a sound business can be thrown into default if one major customer fails to make payment on time. Hence, we need to administer the Act with great discretion and compassion.

I note that the insolvency regime is currently undergoing a timely revamp. This is warmly welcomed and as the region enters challenging economic times, we need to further strengthen policies and schemes to give our local businesses time to turn things around, rather than risk turning a short-term cashflow hiccup into a death-spiral that ultimately kills the company and harshly penalises the business owner.

I would highlight the possibility of promoting so-called "schemes of arrangement" in adverse times, as these can help business owner-managers turn around their insolvent businesses. Schemes of arrangement appear to be the most popular corporate rescue regime and a study from 2002 to 2009 by the Insolvency and Public Trustee's Office showed a 77.1% success rate out of 48 cases.

Let us help make schemes of arrangement more widely available. Currently, they are rarely used by SMEs as they are prohibitively expensive to set up, with all parties engaging lawyers to negotiate their positions. Negotiations can also drag on as 75% of each class of creditors needs to agree. Would it be possible for the Government to create a forum for facilitating the resolution of creditor disputes in the event of insolvencies involving outstanding amounts below a certain cap? This would function in a manner similar to a small claims tribunal or other mechanisms to lower the transaction costs for all parties while ensuring fair outcomes.

There is scope to strengthen such arrangements. For example, every business has a few key contracts that allow it to continue trading. This could be contracts relating to supply of raw materials or lease agreements. Some of these contracts may contain a provision where, if the business enters into a scheme of arrangement, the contract may be terminated. Let us keep these contracts, ranging from supply contracts to lease arrangements, alive during the duration of the scheme. This allows a company with a fundamentally sound business with misaligned cash flow the breathing room to allow it to operate and trade back into success, creating a more stable business environment.

Another critical aspect of rehabilitating an insolvent company is to give access to financing. Currently, there are plans to permit "super priority financing" to help these businesses attract funds to restructure their businesses. As with the working capital loan support initiative, the Government can consider covering part of the risk of such loans. This will serve to increase access to such loans, provided safeguards to ensure debt levels remain manageable.

Good businesses will sometimes fail due to bad luck or circumstance. If we are to encourage entrepreneurship in our country, we need to develop greater tolerance for business failure. Businessmen should not have to face criminal charges and possible debarment from hiring foreign workers if their plight was due to genuine business difficulty, not any malicious intent to defraud workers. Criminalisation of such situations turns a short-term problem into a potentially lifelong handicap which may severely restrict future employment or business opportunities for the affected individuals, even if they had tried their best to do everything right.

Of course, this is not to pretend that all business failures are equally noble; many will be due to incompetence, insufficient planning or outright fraud. But productivity and innovation require some risk-taking and, without risk takers, there would be no progress. So, we need to ensure that risk takers who aim high but fall are provided the necessary support to enable them to rise again. Mr Deputy Speaker, I support the Motion.

Mr Deputy Speaker: Mr Vikram Nair.

6.24 pm

Mr Vikram Nair (Sembawang): Mr Deputy Speaker, I speak in support of the Budget. It is anticipated that the global economy will slow this year. China, one of the main drivers of global growth in the last few years, is slowing. High commodity prices, which fuelled growth in many parts of the developing world, including Southeast Asia, the Middle East, Africa and South America, are also dropping.

It is anticipated that many industries that had developed to support the commodity price boom, including mining, offshore exploration and shipbuilding and rig-building, will slow. Even alternative energy, which always becomes more economically viable when energy prices are high, may also become less attractive.

Financial institutions, which have extended credit to these sectors, may also face a problem of rising non-performing loans. Singapore, apart from facing these global headwinds, will also be going through its own economic restructuring. Local businesses are still adapting to manpower constraints from the tightening controls on foreign labour.

In this context, an expansionary fiscal Budget is to be welcomed. If Government spending is able to pick up some of the slack from the slowdown in private sector expenditure, this will, in theory, help to stimulate the economy.

Also, it is good that the expenditure is being focused on those sectors that are most in need and most likely to spend. The expenditure covers a wide range of support for SMEs to modernise and survive in the tougher climate. This includes the Automation Support Package, financing and tax incentives to support scale-ups and support for internationalisation. In the context of helping transform our economy and helping businesses cope and adapt, I believe these are to be welcomed.

There are also a number of measures that are going to continue and these include continued support from the Transition Support Package, as well as the extension of SEC.

Given the tough climate, I have no quarrel with these as they stand at the moment. The only caution I would sound is that we should not institutionalise subsidy to industries. Many developed countries, in response to pressure, have subsidised a wide range of sectors, including agriculture and manufacturing, under the pretext of supporting infant industries.

These subsidies can prove very difficult to remove. This is because the cost of a subsidy is distributed across all of society, while the benefit is concentrated on just a few people. Thus, the people who benefit from it would have a strong vested interest in resisting the removal of the subsidy, while the people paying the price are usually too large a group to be specifically concerned.

Systematically expanding the system of subsidies, will add to the long-term fiscal burden a country faces and add to the strain that future generations must pay if allowed to expand imprudently.

Singapore has stayed clear of this because most Government grants or incentives have very specific parameters and we try our best not to make them recurring even though, at times, they get renewed at Budgets. However, as we expand this list of grants and support, we must be cautious not to fall into the trap some other countries have fallen into of having institutional subsidies for various sectors of the economies. These subsidies can then develop into crutches.

Additionally, in the event the Government wishes to be more creative or adventurous in extending support to SMEs, another option might be to provide low-cost financing, rather than grants. There are some Budget measures that follow this principle including the SME Working Capital Loan, as well as the SME Mezzanine Growth Fund. But in principle, I would support financing as opposed to grant because this way, companies take the benefit of financing when they need it to get over a tough patch, but the expectation is that they will pay it back in future.

This may also give the Government more ability to finance and support a greater range of activities as earlier successful finance recipients pay back what they have received.

On a related note, although this is an expansionary Budget, I am heartened that, overall, there is still going to be a modest Budget surplus. Some of this is due to increases in revenue from expanding the definition of Net Investment Income. It is also good that much of this is going towards social spending. As our population ages, the reality is that the workforce will shrink relative to the non-working population.

The working people may face multiple strains of supporting young children and others who are unable to work on account of age or illness. To the extent that the Government is able to socialise some of these costs, the burdens on this working group would be less. The Budget schemes including GST Vouchers, Silver Support, srvice and conservancy changes (S&CC) rebates and support for children through Children Development Account (CDA) grants and KidSTART, all fall within this category and, as they are all being provided within the context of a balanced Budget, they are to be welcomed.

My only concern is that as these support schemes get increasingly institutionalised and the base of people receiving support rises relative to the working population, there is likely to be significant additional strain on the Government Budget. It is my hope that we will continue to finance these schemes. The only way I can see this being sustainable, apart from increasing taxes or finding other sources of income, would be to continue growing the economy. The biggest challenge we face will be to continue to be creative in finding new drivers of growth, so that we can support what is likely to be a falling working population and larger base of dependants. Mr Deputy Speaker, I will speak in Tamil.

(In Tamil): [Please refer to Vernacular Speech.] Mr Deputy Speaker, at the opening session of this Parliament, I spoke about the importance of sending children to pre-school. About 17% of Indian families had not sent their children to pre-school, and this may lead to more difficulties for them once they start primary school as they will not have had the same head start as their peers.

One of the facts that I believe that had contributed to this were concerns about the costs of pre-school. At the time, I mentioned the many schemes that the Government already had to help defray the cost of pre-school education, including the availability of Centre-based Financial Assistance Scheme for Childcare (CFAC) and Kindergarten Fee Assistance Scheme (KiFAS) grants. With these grants, the cost of childcare and kindergarten education can be significantly defrayed for those with lower incomes.

However, even with those measures, there are concerns about the cost of bringing up children. In this regard, I welcome the measures in the Budget to further assist with the costs of bringing up young children. Two measures are of particular note. First, the First Step Grant provides $3,000 into the child's CDA account. This account can be used for the child's healthcare and childcare needs and this can be of help to them. Additionally, parents will also continue to enjoy dollar-for-dollar matching for amounts put into the CDA grant. Thus, if they put an additional $3,000 into their CDA account, this will be matched dollar-for-dollar by the Government. Currently, not all parents fully utilise this account and some do not use it at all. I encourage all parents who have concerns about meeting the cost of childcare to maximise the CDA grants available if necessary.

Additionally, the KidSTART scheme will provide additional help for low-income families for the first six years of their lives. The Minister mentioned that this is in recognition of the importance of the early years of education and to ensure that children from poorer backgrounds do not miss out on this.

With these new schemes in place, I would strongly encourage all parents to enrol their children in pre-school education. If you know of neighbours and family members who have not done so, please encourage them to do so. I believe that with the help and financial assistance available, all families should be able to send their children to preschool so that they will be adequately prepared for primary school.

Mr Deputy Speaker: Mr Yee Chia Hsing.

6.34 pm

Mr Yee Chia Hsing (Chua Chu Kang): Mr Deputy Speaker, I wish to commend the Finance Minister on his inaugural Budget speech, which I thought was comprehensive and balanced.

Today, I wish to talk about Singapore's engines of growth. The Finance Minister began his speech by sharing some history of the first Budget speech by Mr Lim Kim San in 1965. Allow me then to share some history.

From 1819, when Stamford Raffles first set foot on our shores until today, Singapore can be said to have four main engines of growth. For over 100 years before our Independence, Singapore has made use of its good location to act as a trade hub, connecting Southeast Asia to the rest of the world. This is our first engine of growth.

After Independence, we developed manufacturing as our second engine of growth. We became a major ship building and oil refinery centre. We reclaimed swamp lands in Jurong to create the first industrial estate and attracted many MNCs to set up factories here, creating jobs for many of our citizens.

Our third engine of growth was the development of Singapore as a regional financial and wealth management centre. We moved towards electronic trading of shares and removed estate duties. And we gave attractive incentives to foreign financial institutions to come to Singapore. The increase in the number of players pushed our local banks to also up their own game, providing better service to all.

With the revitalisation of the Marina Bay area and the opening of our two integrated resorts, we gave a further boost to tourism, our fourth engine of growth. I am sure Marina Bay Sands, with its spaceship rooftop, is one of the most iconic in the world. People see a photograph of the Sands SkyPark and know this is in Singapore.

Like many Singaporeans, I wonder what is next. Are we going to be like a pack of cards with just four aces? Are we going to be faced with slower growth? Can our children grow up in a Singapore where they will be able to follow the rainbow and pursue their dreams?

Budget 2016 seeks to transform our industries to strengthen our expertise and drive growth through innovation. New schemes were introduced to promote the use of automation and aim to help our SMEs "scale up".

I cannot crystal-ball and say what our next engine of growth will be. But if we look back at the four previous engines of growth – trade hub status, manufacturing centre of the world, regional finance centre and tourism – a common thread runs through them. Each of these has to do with Singapore opening itself to the rest of the world, and this we can never stop.

Whether for companies or people, Singapore must continue to be a beacon for the best and brightest to set up their base here and to call Singapore home. We cannot afford to turn xenophobic or to be inward-looking because if we do, Singapore and Singaporeans will be the worse for it. Mr Deputy Speaker, on this note, I support the Budget.

Mr Deputy Speaker: Mr Ang Wei Neng.

6.38 pm

Mr Ang Wei Neng (Jurong): Mr Deputy Speaker, the current global business conditions are difficult and uncertain. It will not be an easy year ahead for Singapore companies.

In response, Minister for Finance Heng Swee Keat has unveiled a raft of measures which the Government will be undertaking to soften the blow, from introducing new schemes for SMEs to increasing public spending.

This is welcome news. It is also very clear that once again, the Government is in the driver's seat of the Singapore economy. While this has worked for us for the last 50 years, we need to evaluate if this is sustainable or effective for the next 50, as we live in an increasingly competitive and volatile world. At some point, the people and private enterprises need to steer the economy while the Government is playing a supporting role by ensuring that policies are business-friendly.

In the US, its largest and most innovative corporations are private enterprises like Google, Intel, Microsoft and so on. Japan has large conglomerates like Mitsui and Nippon Telegraph and Telephone Corporation (NTT), while Korea has chaebols like Samsung, LG, Hyundai and so on.

These companies are all important driving forces in their respective domestic economies and are also huge global players.

In Singapore, the driving force of the economy has always been the Government. From attracting foreign MNCs to creating jobs in the early days to developing strong Government-linked companies like SIA, PSA, DBS Bank and ST Engineering to expand overseas in the 1980s.

In the year 2000, Dr Tony Tan chaired a Technopreneurship 21 Ministerial Committee to help nurture local high-tech enterprises. It was tasked to study entrepreneurship in several major cities. Committee members were told by some in the US that the US government has no role in developing entrepreneurship, but Singapore went ahead anyway to put all the policies and support in place to nurture entrepreneurship. At that time, the foreign observers commented that Singapore was probably one of the few countries in the world that had put in so much effort to promote entrepreneurship. Subsequently, the Singapore Government's effort to promote entrepreneurship has been cited as a successful model by Mr Josh Lerner, who is the author of the book "Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed – and What to Do about It". Today, Singapore is consistently ranked as one of the easiest places in the world to do business.

Despite all these measures which create an entrepreneurship-friendly framework and a growing awareness of the need to drive productivity among SMEs, the actual state of private enterprise is lacking.

While there has been an increase in the number of young startups, our productivity growth is dismal. The productivity growth target for the economy, as outlined by the Economic Strategies Committee in 2010, was 2% to 3% a year over 10 years. If we exclude the post-financial crisis rebound in 2010, productivity growth came in at a compounded annual growth rate of 0.3% over 2009 and 2014.

When the Minister for Finance, Mr Heng Swee Keat, singled out the major innovations in Singapore’s history, most, if not all, of the innovations were led by the Government, be it in NEWater technology or innovations in our social policies.

There are very few private sector-generated global innovations we can be proud of besides the Soundblaster by Creative Technology. Even then, technological change has superseded this innovation.

Are we doing the right things? If we scratch beneath the veneer of good news, some CEOs in the private sector questioned if the Government really understands the way the private sector thinks.

Take the PIC scheme as an example. PIC was started in 2010. Since then, about 71,000 cash payout claims amounting to $3.6 billion were made between 2011 and 2015. However, the PIC scheme has been abused. In 2014 the taxman had to claw back $7 million worth of improper claims. PIC has been successful in promoting awareness of the productivity movement but less effective in promoting innovativeness.

SEC is another example. It was introduced in 2011 to provide support to employers to hire older Singaporean workers. It is supposed to expire this year but it has been extended to 2019. The SEC fund will be topped up by $1.1 billion this year.

Does SEC really influence employers to employ more workers above the age of 55? Of the five employers I have asked over the last one week, ranging from SMEs to MNCs, all of them conceded that SEC did not influence their decision to hire older workers. Given the current tight labour market, they will employ workers above 55 years old as long as they qualify for the job, regardless of SEC. However, all the five employers, as expected, welcomed SEC as it improves their bottom line. Rather than just merely extend SEC for another three years, my suggestion is to increase the employers' CPF contributions rate for workers who are between 55 and 60 years old to 17%, that is, the same as workers who are below 55. Just increase the employers' contribution rate for the workers between 55 and 60 years old. By doing so, more elderly workers will be encouraged to stay or return to employment.

Without better understanding, the Government's efforts cannot effectively transform the SMEs. Our business promotion policies will not be effective in driving the desired outcome.

In fact, the Government may be doing too much to protect and cushion private enterprises from developing resilience and true excellence. William Kerr, an assistant professor at Harvard Business School, argues that "subsidising individuals can have a perverse effect of encouraging entry or keeping alive lower ability entrepreneurs". Mr Sankaran, Vice Chairman of Makino Asia Group Companies, also shared with me that Government subsidies, if not implemented appropriately, could hide SME's inefficiency and, at times become a crutch rather than helping them to run.

In coming up with policies and programmes geared towards promoting enterprise, those from the private sector could be involved to a greater extent in the development stages. Coming from the target audience, they would know better if the programme would be useful and how it would be taken up or abused. This would hopefully result in programmes which are more realistic, effective and targeted.

Private sector involvement does not have to end at discussion. The Civil Service could hire promising executives from the private sector to supplement its policy team. For instance, venture capitalist and entrepreneur, Dr Finian Tan, joined the Administrative Service for a few years. However, the practice of recruiting mid-career executives into the Public Service appears to have stopped. Is it worth reviving?

Similar reciprocal arrangements, where public officers are given the opportunity to better understand the private sector, would also help in formulating more effective policies. The initiative to second up to 20 public officers to TACs, to help Government agencies to better understand enterprises' needs and to support TACs in developing their capabilities and strengthening their processes and services, is a good first step. We should have more of such arrangements.

In deepening private sector understanding, the Government may also want to consider seconding public officers to promising SMEs. After their private sector stints, they can help to formulate better policies and incentives to encourage enterprises to improve productivity, innovation and expand regionally.

The healthy exchange of staff between the public and private sectors will deepen understanding between the two sectors. Certainly, there are constraints and it is easier said than done. However, well-thought-out and administered policies and programmes generated from a solid base of knowledge will likely result in less abuse, and make them less of a hand-out nature. They should result in spurring on our SMEs and private enterprises to aggressively compete in the local and global marketplace, because they want to, and not because the Government wants them to do so. For the sake of future-proofing our economy, it may be worth a try. With this, I support the Budget.