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Speech by SMS Chee Hong Tat at Budget Debate 2019

Speech by SMS Chee Hong Tat at Budget Debate 2019

1. Mr Deputy Speaker, I thank Members for their speeches on the economy, workers and jobs.  It is important that we focus on economic growth as this is linked to our ability to create good jobs for Singaporeans; generate resources for our social and security needs; and provide opportunities for future generations.  MTI and MOM will address these issues more fully during our Committee of Supply Debates.  

2. Today, I will explain why the Government had to make the difficult decision of tightening the Dependency Ratio Ceiling (DRC) and the S Pass sub-DRC for the Services sector in 2020 and 2021.  This will impact industries like accommodation, information and communications, food services, retail and professional services.  I will also discuss how the Government, employers and workers can jointly tackle the challenges going forward.

3. Let me start by commending our mainstream media for their insightful and balanced pieces on the DRC issue.  In particular, I want to highlight a well-written editorial by Zaobao on 22 February, which presented the trade-offs clearly and explained why the tightening is necessary.  The number of S Pass and Work Permit holders in the Services sector has increased by 34,000 in the last three years.  In fact, the S Pass numbers are the highest we have seen in the last five years.  The editorial hit the nail on the head by observing that if the total number of foreign workers rises too quickly, it will affect the employment outcomes of local workers and lead to socio-political problems in Singapore.  We have seen this happen in other countries.

4. Indeed, this is the key reason why the Government proceeded with the DRC tightening.  We knew it would be painful for the affected companies, and we agonised over this difficult decision during our many rounds of inter-ministry discussions.  On balance, we decided that it was better to make a move now to moderate the overall number of foreign workers in Singapore before the problem gets out of hand.  As the Zaobao editorial said, the DRC tightening is necessary bitter medicine, “治本的苦口良药”.

5. We are aware that many companies in the Services sector are facing labour constraints, and some have started to invest in productivity improvements by adopting technology and re-engineering their processes.  Ms Denise Phua and Mr Douglas Foo spoke about this. Our economic agencies like ESG and STB have been working closely with these companies and the industry associations.  I attend regular dialogues with our companies, including sessions organised by NTUC in my capacity as Adviser to U-SME.  My colleagues and I also visit Services sector companies and witness first-hand how they have been working hard to implement productivity measures and upskill their workers through SkillsFuture training. 

6. The hard work is starting to bear fruit, we need to keep it up.  If we look at the real value-added per actual hour worked from 2013 to 2018, which is one measure of productivity, it has increased by 4.4% per annum for the accommodation industry, 3.2% per annum for retail trade and 1.4% per annum for food services.  In the accommodation sector for example, total manpower declined by about 1% between 2013 to 2018, even though total room stock increased by 4% during the same period.  These positive results were due to our companies’ efforts to innovate, upskill their workers and adopt progressive work practices. 

7. What I shared above are the average numbers for each industry, we can expect some companies to be above and some to be below these averages.  But the outcomes show that our productivity measures are producing results.  The key is now to spread these efforts and benefit more companies, and for the more successful ones to eventually scale up and expand overseas.  

8. I agree with business leaders, and members like Mr Seah Kian Peng and Ms Jessica Tan, who cautioned that technology is not a silver bullet and cannot completely replace the need for human workers, especially in customer service roles.  Technology is a tool and an enabler, and what results we achieve ultimately depends on how well we use the tool.  But we also know that in the current operating environment, it is important for all companies – big or small, traditional or modern – to have a good understanding of technology and what it can do to improve their products, reduce costs and enhance service quality.  Otherwise, you risk being overtaken by your competitors.  To paraphrase a Chinese saying, “科技不是万能,但不懂得用科技就万万不能”.  Technology is not everything, but if you do not make good use of technology, there are many things you cannot achieve.  

9. The Government will continue to help our companies and we will increase our efforts in these areas.  I thank Mr Douglas Foo and our TACs for their partnership. We will work with industry associations to reach out to their members and enhance the support we provide to companies that want to transform their operations.  For example, we will be enhancing the Productivity Solutions Grant (PSG) to include a new subsidy of up to $10,000 for employer-led training. We will also extend enhanced support under the PSG and Enterprise Development Grant (EDG), keeping the maximum co-funding by the Government at 70% to support enterprise transformation.  

10. Under MTI’s Pro-Enterprise Panel, we work with industry associations and companies to review government rules and regulations, to support new business ideas and look for ways to reduce licensing costs.    

11. Using this approach, we made several rule changes over the past months which have been welcomed by our enterprises.  There are more changes in the pipeline, including a project to simplify the licensing requirements for food services companies.  We will be launching the pilot system for beta-testing in May.  So far, we have managed to consolidate the number of forms that businesses need to submit from 14 to 1; reduced the number of data fields required from 845 to 130; slashed licensing fees by up to $500; and shortened the processing time by 2 weeks.  

12. My colleagues and I are working hard on rules review because we believe it supports entrepreneurship and innovation, which are critical elements to achieve our economic transformation goals.    

13. We understand that the transformation journey for our companies can be a daunting and difficult challenge.  Government agencies and industry associations will walk this journey together with you – this is our commitment to our companies.  If you want to transform and you are willing to put in the effort to do so, we will help you.  

14. Let us work together to have a pro-enterprise, pro-worker economy, where we can continue to achieve economic growth to provide good jobs for our workers and a good life for our people.  

15. Mr Deputy Speaker, please allow me to say a few words in Mandarin. 

16. 我很欣慰看到各行各业的老板和员工们都在努力地提高生产率以实现企业转型的目标。本地餐饮企业珍宝集团就是一个好例子。我去年参观他们的中央厨房时,看到他们如何将制造酱料与汤底,把过程机械化,一方面节省人工,另一方面更好地控制生产过程。珍宝集团也研发了手机应用程序,协助聘请短期员工, 减轻在繁忙时期人手不足的难题。

17. 邻里商店也能在新加坡企业发展局的辅助下,采纳科技方案。义顺金庄就是其中一个成功例子。义顺金庄早在2014年就采用了RFID这个科技,并通过这个方案,把每天点货过程所需的时间减少超过一半。这也帮助员工在点货时减少错误,提高记录的准确度。这样一来员工有更多的时间专心服务客户,增加他们的业绩。

18. 无论企业大小,无论是传统行业或兴起行业,都需要转型, 以提高竞争力。在企业转型的过程中,政府和商会都会和企业并肩努力,同舟共济。这是我们对企业的承诺。让我们大家上下一心,团结一致;不怕风,不怕雨,继续往前走,携手打造亲企业, 亲员工的新加坡。谢谢。

19. I would like to respond to some of the points from the Workers Party MPs. Mr Pritam Singh and several of the Workers Party MPs spoke about universal healthcare subsidies. I would like to share with the House that today, we already have quite a number of healthcare subsidies that are structural so it is not cohort based. In fact, polyclinic subsidies are universal. Seniors who go to polyclinics get additional subsidies compared to other patients. This is part of the primary care network that Mr Pritam Singh and Associate Professor Daniel Goh spoke about.

20. Medishield Life – care for life. This is a universal healthcare insurance that protects Singaporeans against large hospital bills and with premium subsidies and additional premium support from Government to help lower-income Singaporeans and middle-income Singaporeans pay for their premiums. So it is not quite accurate for Associate Professor Daniel Goh to describe it as Singaporeans pay for each other and Government saves money. 

21. Actually, the Government pays quite a bit of the premiums through premium subsidies and additional premium support. This is part of the sharing. The same principle is applied for CareShield Life. There are premium subsidies and there is also additional premium support. These are part of the design of the scheme. It is not cohort based, it is structural. 

22. We will be enhancing the coverage of CHAS to benefit more Singaporeans, especially for chronic care. In 2017, more than 650,000 Singaporeans benefited from $154 million of CHAS subsidies. We will enhance the coverage and enhance the help that Singaporeans can get, the benefits that Singaporeans can get under CHAS, as part of enhancing primary care and giving Singaporeans greater peace of mind. 

23. In our hospitals, in our SOCs, in our nursing homes, there are also structural subsidies. These are means tested because we want to give more help to lower and middle-income Singaporeans. When we introduce packages that are cohort-based like the Pioneer Generation Package (PGP) and the Merdeka Generation Package (MGP), these are on top of the structural subsidies that are already provided in the system for all Singaporeans. 

24. Mr Singh claimed that the MGP is of a pungent odour and an unfair advantage for the electoral prospects of the PAP. I hope I heard him correctly. I wonder why the Workers Party chose to use such an unpleasant description and to focus on politicising this tribute to our MGs. The opposition calls for government to give more and yet when the government gives more to help Singaporeans, the Workers Party criticises the move as an election tactic. You can’t have it both ways. Please make up your mind and decide where you stand. 

25. As previously explained, we are setting aside funds from current budget surpluses to give our MGs greater peace of mind and encourage them to stay active and stay healthy. It is also to show our heartfelt appreciation to our MGs for their sacrifices and contributions to Singapore during the early years of our nation building. So let’s not diminish the significance of the PGP and the MGP. It is misleading to link these packages to election cycles. We have explained this point before in the House but let me say it again because Mr Pritam Singh brought it up. 

26. The way we derive the surpluses is that you have to earn these surpluses during the term of government and then you set them aside, the surpluses that you accumulated, to fund the PGP and the MGP. You can’t do this during the start of the term because you do not know at that point how much surpluses you are going to have and how much surpluses you can set aside to fund these packages. This has been explained before. It is part of the design of our system for financial prudence and sustainability. 

27. To look after our current generation as well as future generations, we must plan for the long term. This is what a responsible government needs to do to ensure that our policies and programmes are financially sustainable for the current and future generations. What is the size of the bill? Where are the funds coming from? How do we achieve maximum value for money? These are important questions. What we can provide for future cohorts of Singaporeans and how much resources we have to invest in our people and to continue to rejuvenate communities and infrastructure. These will depend on whether Singapore continues to have constructive politics, good government, a strong economy and a cohesive society.

28. Sir, I support the Budget. 

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