Committee of Supply - Head V (Ministry of Trade and Industry)

Mr Chairman, Sir, though we achieved 3.2% GDP growth for 2018, which was actually lower than 2017 at 3.9%, there is a concern that we achieved the 2018 growth through a declining quarter-to-quarter. The usual peak season at the end of 2018 did not happen for some of the sectors.

Into 2019, there are many uncertainties. Based on the SMEs' feedback and survey by the different chambers of commerce, there is some pessimism. But with a forecast of 1.5% to 3.5% for growth this year, this range is only of moderate growth. Our economy is still dependent on manufacturing. The services sector are maintaining its growth trend. Manufacturing being a pillar of our economy, over-reliance on this sector is a concern unless manufacturing sector transforms itself to a higher value-add.

Many local businesses, as they are concerned with 2019, they harbour some of the hopes and dreams to go overseas. But what are the plans the Government would have to implementing a higher range of growth for the forecast, as well as strengthening the enterprises?

Though I believe there is some investment sense in not putting all our eggs in one basket in all sectors, we have to be selective with our limited resources. What are the specific sectors that the Government may want to look at to help uplift the growth to the higher range of our forecast?

Mr Chairman, Sir, the ASEAN Economic Committee 2025 plan is well underway. And ASEAN is poised to be the fourth largest economy by GDP in 2030 as the other countries in ASEAN hit their stride in terms of economic growth. In addition to any initiatives and support from the Government, it is imperative that Singapore's well-calibrated approach to regulation is maintained so that our businesses continue to stay competitive to tap on opportunities in ASEAN. Can the Ministry provide an update on the initiatives that the Ministry has undertaken to prepare our businesses to better seize the opportunities presented by the impending ASEAN expansion?

Additionally, given that businesses face greater uncertainty and a weaker economic outlook in part due to the geopolitical uncertainty with the US-China trade conflict, is the Ministry able to share information on how it has help our businesses seize opportunities presented by the Belt and Road Initiative (BRI) since it was first announced by China in 2013? Are the planned initiatives to help businesses explore the ASEAN region different from those of the BRI?

Mr Chairman, the ASEAN region has been growing in affluence. The Governments has been more willing to invest in recent years, many are eyeing the sectors in which Singapore is leading in the region. Many of our neighbours are also doing a good job catching up with us. Batam, for example, has increased in investments to develop local shipping and manufacturing sectors. In Malaysia, they have been building up their ports and getting into the oil tanking business in a big way. Many of oil companies are also taking up the storage tanks to store their oil cargoes.

So too in medicine – Penang and Kuala Lumpur, besides Bangkok in Thailand offer competitive prices for those seeking medical treatment. The strong Singapore dollar has also been a factor in encouraging medical tourism to other locations in ASEAN. Healthy economic growth in the region is to be celebrated but this means that we will have to do more to stay competitive and relevant. Our strategic location has given us an edge in the region, but we must take more proactive measures to enhance our global connectivity and continue to position ourselves as a key node in the global flows especially within the ASEAN region. This will apply not only to physical connectivity like our airport and air routes but also non physical modes. Can MTI provide updates on the Ministry's efforts to enhance our modes of connectivity in the region?

Singapore’s economic transformation over the last few decades owes much to its position as a regional and global economic hub. Indeed, Singapore’s economic history is rooted in its beginnings as a thriving, open port.

As we stand at the dawn of the Fourth Industrial Revolution, how can we continue to build on our status as a world-class "hub", leveraging such technologies as self-learning machines, robots, autonomous vehicles and the Internet of things? These new technologies will generate huge waves of change, transforming the way we work, live, consume, trade and invest. The emerging technologies will exert disruptive impact on jobs, firms and overall economies at unprecedented speed. As a small open economy, our response must be to embrace the technological advancements to come and to use them as new opportunities for ourselves.

The Finance Minister spoke about positioning Singapore as a Global-Asia node of technology, innovation and enterprise. I believe Singapore is well poised to deploy our strengths towards fulfilling this vision.

However, as Mr Liang Eng Hwa said, other countries and regions are not standing still. According to Innovation Strategist Charlie Ang, countries and their companies can attain sustained economic supremacy if they possess leading edge, proprietary Artificial Intelligent (AI) capabilities. The infusion of superior AI technologies into national industries, exported products and digital platforms is likely to be the next source of national competitive advantage. McKinsey predicts that “Leading AI” countries could capture an additional 20% to 25% in net economic benefits.

I would like to ask the Minister how can we strengthen our capabilities on the data, financial, regulatory and technology fronts? What can we learn from established centres such as Silicon Valley, whilst carving out a unique proposition that distinguishes us, Singapore, from other emerging centres such as the Greater Bay Area?  Which areas should Singapore focus our investments? How much risk are we willing to tolerate in this journey towards rapid and breakthrough innovation? What new social compact do we need to foster with our citizens, as we venture boldly into unchartered waters fraught with risk and failure, but rich with untold rewards and returns?

Chairman, physical and non-physical connectivity has traditionally under-pinned Singapore's success as a Global-Asia node of technology, innovation and enterprise. As ASEAN and the larger Asian region continues to grow, they are also becoming better connected to the world.  Across the world, technology also changing the way people and business connect with one another, as well as shortening and shifting supply chains and value chains. Therefore, it is essential for Singapore to constantly review the current plans, and future plans, for both our physical and non-physical connectivity, so that we can stay ahead of the game and tap on new opportunities.

As such, can MTI share our plans, moving forward to strengthen our ports, airports, logistics and customs clearance as well as data connectivity? Can MTI also share how we are building up our non-physical connectivity for Asia and ASEAN. In particular, can MTI provide an update on how we have strengthened our footprint in Asia through the Global Innovation Alliance, share details of the upcoming Global Ready Talent Programme and provide an update on how we can help our companies internationalise through various Enterprise Singapore programmes?

We have 24 Free Trade Agreements (FTAs) and Economic Partnership Agreements (EPAs) with 36 partners including the recent European Union-Singapore Free Trade Agreement (EUSFTA). So many businesses unfortunately are unaware what advantages these agreements bring to their businesses especially those smaller local enterprises.

FTA is an effective platform to encourage internationalisation of companies. However, it is unclear if any companies are tapping on it.

FTA should also enable efficient flow of trade, volumes through technology and connectivity. There is also a need to review FTAs which may not be meeting the original objectives or did not impact the trade flows, the bilateral trades of the two countries or the region. It is also important to develop such relationship and build up new FTAs with emerging markets and countries. However, we should not jump ahead of the capacities of our local companies when building up or developing these FTAs because it may lead them to disappointment and worse, great losses to the company.

Does the Ministry have any quantifiable indicators that measure the impact of these different FTAs? Example, the number of companies benefiting from it? And what can be done to connect our local companies to these platforms that the FTAs can potentially help them.

With the roll-out of Industry Transformation Maps (ITMs) for 23 sectors. The focus has been strengthening companies by transforming them. Transformation also meant change in process, change in business models and change in their business strategies. This will certainly impact employees of all levels within the companies that are undergoing transformation or change. There will be resistance to the change, and ITM may not reach the level of success that would make a difference or what is expected.

I believe there are three expects of transformation that will impact the workers directly. First, the job redesign, change in the process, change in the scope of the job. Second, job shift, the job itself is no longer available and they have to change sectors. Changing sectors also requires a mindset shift. Thirdly, job displacement. That is, when the job they had is absolutely obsolete and there is no way the workers can find any other jobs with the current skills set or even upgrading some of the skills set to the next level. Of course, we can say it is still a mindset shift and they are unwilling to change. But how can we help these workers, how can we help these employees especially when those whose companies are undergoing transformation change to a great level.

Sir, I would like to urge that we give importance to raising the productivity of older workers and to job redesign specifically as a means to achieve that objective by making it part of the ITMs in addition to leaving it to the efforts of the individual employers. Could we expressly identify job redesign for older workers as a key component of each ITM. Could we set out among the suite of initiatives, an improving productivity in any given industry. Meaning, making job redesign for older workers, part of the suite of initiatives for improving productivity in any given industry so that we may spur the collective thinking that can go into finding better solutions of job design for older workers and channel some of the industry's efforts in innovation in this direction.

Perhaps resources could be pooled by companies in the industry to develop best practices, to modify tools and equipment for use off-the-shelf by older workers throughout the industry.

As businesses in our industry think about how to change, or even disrupt processes the work place in order to generate greater value, on the back of better used resources, could we make job redesign for older workers a required part of the syllabus?

We know productivity is one of the four pillars supporting the growth and competitiveness plans of an ITM. Could we envision job redesign for older workers as a key component of the ITMs perhaps as a third horizontal along with promoting Infocomm Technology adoption and skills development? It can help to support the industries and produce improvements across the economy in the face of an ageing workforce.

Mr Chairman, Sir, all 23 ITMs covering 80% of the Singapore economy have been launched since March 2018. My capacity as the current president of Singapore Manufacturing Federation (SMF), we work at different levels to encourage manufacturing businesses to explore the different industry roadmaps.

Within our 10 industry groups, we hold regular dialogue and focus roadmap sessions without members to provide resources and support from the transformation journey. However, almost a year on from the launch of the ITMS, from conversations with the broader SMF member base, it is apparent that awareness on the specifics of the ITMs is still lacking. Businesses also need help to cope with rapid changes in technology and new business models. Can the Ministry share if it has plans for more impactful communications and assistance to reach a wider audience and in so doing, lend a hand to the ground efforts of Trade Associations and Chambers (TACs)?

Sir, electric vehicles are the future, if Singapore is to meet its commitments under the Paris climate change accord. LTA’s figures at end-2018 show Singapore’s electric vehicle fleet to be small. Of 615,000 cars on our roads, only 28,000 are electric or hybrids. Of 20,000 taxis, just 104 are electric; of 137,000 motorbikes, only two are fully electric/battery-powered.

Can we not do more to promote adoption of electric and hybrid vehicles? We do have tax breaks. But other countries have introduced reduced parking, reduced road usage fees and other incentives which go further than what we currently offer. Our progress seems slow. Raising the diesel tax will not help the environment unless there are attractive, cleaner options as my colleague Mr Dennis Tan argued in his Budget speech.

Also, can we not accelerate developing a network of charging and/or battery swapping stations island-wide? In October 2018, SP Group announced they will be speeding up the installation of electric vehicle charging points and roll out 1,000 such points by 2020. But in Parliament in 2016, the Government stated a goal of 2,000 charging points. I would like to ask the Government by when the 2,000 charging points goal will be met and what will be done to root the operational know-how with Singapore firms and ensure that this can become an exportable industry.

Following on from an earlier Parliamentary Question I filed, I would also urge the Government to reconsider setting a date far into the future for a total fossil fuel vehicle ban, as the UK and France have done. A hard target in the long-term future would focus minds and get stakeholders to start planning for the inevitable, thus hastening its arrival.

Sir, in our mature developed economy, Singaporeans constantly seek new economic growth areas for a second wing of growth. Can MTI share what are the new economic growth areas that it is currently pursuing? With increased global demand for food, Singapore can capitalise on this trend even though we have limited production capacity. After all, we have the knack of turning a disadvantage into a strategic strength. We can use our investment and innovation infrastructure and regional hub status to boost efficiency, profitability and yield.

I understand that Enterprise Singapore, through its investment arm, Seeds Capital, has channeled more than $90 million worth of investments into early stage tech start-ups with food and agri-tech solutions. Can MTI update on the progress of such investments? How does the Ministry plan to continue to develop Singapore into an urban, agricultural and eco-cultural technology hub? How can we better help Singaporeans who are interested in this sector?

Mr Chairman, Sir, I spent the first eight years of my working life in the Economic Development Board and am aware that the manufacturing sector has always been a strong anchor for of economy.

The Committee on the Future Economy recommended building a globally competitive manufacturing sector, at around 20% of GDP, over the medium term. This underscores the continued importance of manufacturing in our economy. We need to press on with this sector's transformation in order to seize opportunities offered by technology and changing market demands and value-chains.

The nature of manufacturing is changing; it increasingly encapsulates a value chain of activities including services such as design, research and development, logistics, marketing and after sales services. The closer nexus between manufacturing and services has encouraged manufacturers to incorporate services elements into their businesses to differentiate their products and enhance their competitiveness.

In MTI's COS last year, Senior Minister of State Koh spoke about how the global manufacturing landscape is evolving due to rapid technological developments, and quoted areas such as robotics and industrial Internet-of-Things. What are some of the promising growth areas which our manufacturing companies can tap on as a result?

Given the pace of change, what can our companies do to capitalise on these technological developments and stay ahead, as we transit to Industry 4.0? What is the Government doing to support the growth of our manufacturing sector?

Sir, for some time now, our economic agencies have been promoting the idea that local companies should go abroad by “hunting in packs”, that is to say by co-operating, forming consortia, sharing networks, know-how, even infrastructure and assets.

We do see this with certain countries. Japanese companies often share certain types of information among themselves relating to overseas markets. Japanese business centres are also a commonplace in Asia, providing cheap, good locations for firms just starting up in Asian countries. Japanese and Korean conglomerates are also known to bring suppliers from their own countries when they go abroad.

I would like to ask – after decades of promoting the idea of hunting in packs abroad, what results have we achieved? Has competition among companies in the same industry been an impediment? What have been the successes and failures?

I have two suggestions. Would the Government consider using overseas economic offices to obtain information about commercial tenders, to be shared among relevant Singapore companies in specific industry co-operation circles, with the member firms perhaps paying a small fee to receive these alerts? This kind of tender surveillance is a very simple yet practical form of support that operationalises the idea of hunting in packs, since our Singapore companies would jointly share the cost for such tender surveillance customised to their needs.

Secondly, would the Government consider consolidating economic agency offices abroad in buildings where there are decent serviced offices, so that Government officers can be close to Singapore firms starting up abroad, to facilitate information exchange?

Sir, for several years since PIC started, to ITM, to EDG and several, several schemes, there has been a focused effort to provide resources for our local companies to be strengthened and be more competitive. Also, with the merging of IE Singapore and Spring Singapore to form ESG, there is additional support and very focused effort through direct Government help to support these companies.

The objective of strengthening our companies is to prepare them for the future and to compete effectively overseas. For several years we have been asking them to transform to digitalise, to automate but it is difficult for some of the companies, especially those in the services sector.

I have recently visited companies who deal in flower arrangements and packaging of flower gifts as well as small businesses that deal with preparing "chwee kueh" and other local food. I wonder how they can digitise and they were asking me, "Since you have been in business, how do we digitise some of these processes when we have a winning formula here using a lot of labour". For some companies, they may not be able to transform and look beyond what they already have. It is difficult for them to scale as well. But we should continue to push companies to continue to develop some ideas of how to automate the processes and also to develop their IP.

For many years, we have depended on the multi-national companies that are in Singapore and we form a large scale of local companies who are mainly suppliers who have not developed their own intellectual property or their own branding that can scale them up for going overseas.

I see a few aspects and also as well as potential for the companies to develop. Firstly, we have to identify the nature of the product, the services or the business model, make changes to those. It may not necessarily be automation or digitalisation. Secondly, it is talent and functional skills and these talent and functional skills, if these are developed with depth, they can build up the company. Third, it is leadership and mainly the mindset change of the leader.

We have to be able to foster the partnerships between the big and the small companies. But it is not just by size, although size does matters. What is more important is to match and complement the knowledge or skills of these companies. The creativity and innovation of each company complement with their resources and strengths of the other company, if we draw them together into partnership, that will strengthen them as a company as a whole.

In coming to the new year 2019, we are looking at the future, there will be a fair bit of consolidation for some of the sectors, especially with the concern on DRC. Everybody is thinking about what to do with their own companies and their own sectors. So, it is important for us to look at some of the consolidation possibilities and combining the companies together and making them partner together.

What are the Ministry's plans moving forward to strengthen the companies? What are the Ministry's plans and initiatives, moving forward, to foster the partnership of these companies?

There are ways for consumers when they purchase products to be able to buy beyond their means of their income or income stream. They go into a hire purchase or instalment payments, and that creates some problems.

We have tight regulations on financial institutions in their lending platforms and also non-bank lending platforms in regulating them, making sure that they do not go beyond their means to lend out to those that they cannot do the Know Your Customer (KYC) survey or assess the credit readiness. But in retailers, many of them go into the credit scheme where the consumers could live beyond their means, will purchase it and pay based on instalments. We have seen many of these through our residents when we meet them during the Meet-the-People Sessions when they come forward after having encountered problems with all their purchases – whatever they have bought, have to be repossessed.

So, can the Government share if there are any regulations to tighten this so that retailers may not over-extend their credit and consumers will run into a risk?

Sir, a credit sales agreement is a useful system for someone who needs an important big ticket item to own it first, and pay the money over regular instalments. One example is the Courts' Flexi plan. This can be immensely helpful to the low-income. However, it can also be damaging if interest rates are high, and if said person is not financially-savvy.

Through interactions with my residents, I have been made aware of cases where some of them were baited by low up-front costs and misleading advertisements. This led to them running into arrears because they eventually find themselves unable to cope with the instalment plan. I even had one resident ask if he could use his CPF to service the hire purchase fees for some items purchased from a furniture store. His situation must have been quite desperate.

Marketing campaigns and advertisements are bold with their plans and claims these days. It is not uncommon to see advertisements boasting "$0 upfront" payments, especially for expensive gadgets like smart phones. Some instalment plans offer vouchers and goods-in-kind, very attractive freebies, to entice customers. Some offer payment plans spread out over 24 to 48 months, so the monthly instalment cost seems low. But it all adds up substantially, when you do the mathematics, and it is much more expensive than paying for the price in full. Those who are less financially savvy are less likely to keep proper financial records. They may over-estimate their ability to pay off the instalment plans.

Although credit sales advertisements are often accompanied by disclaimers about the conditions of each instalment plan, these are usually in small print. Even if the consumer has seen it, psychologically, their mind has already committed to the self-perceived good deal. Coupled this with a very persuasive salesperson when one shops in person, and that is a guaranteed transaction. Most people do not realise they have made a poor purchase decision until perhaps months later when they find themselves grappling with the payments.

So, does MTI have plans to regulate the types of marketing done by credit sales companies or even hire purchase ones to entice buyers? Are credit sales agreements regulated?

One episode on Talking Point last year showed how individuals who do not have credit cards are given credit from certain retailers to purchase goods. I find it worrying that some merchants would persuade customers into parting with their money with no care about whether they will have problems paying it off later.

One major furniture company even cited that no minimum income is required for its instalment plans. On the surface, it seems like they are doing a good deed to help those who are short on money to purchase the furniture and then pay later. But what happens later, if the customers cannot afford the instalments?

Has any check been done to find out how many customers purchasing goods and services under credit sales plans had to forfeit their deposits? What will MTI do to ensure that the businesses and financial institution companies do not over-extend credit to consumers without checking their credit worthiness?

Sir, the nation-wide rollout of the Open Electricity Market last September giving households the option of buying electricity at a discount to the tariff rate is one important avenue by which Singaporeans can better manage the cost of living. This consideration is also relevant for Town Councils as such statutory organisations have also benefited from the liberalisation of the electricity market earlier.

However, on 2 January this year, the Energy Market Authority (EMA) shared with Town Councils that one player, Red Dot Power, which coincidentally was in an existing electricity supply contract with the Aljunied-Hougang Town Council, would be exiting the market. EMA informed the Town Council the retailer would cease to be able to purchase electricity from 4 January, and all accounts under the Town Council's purview would be transferred to the SP Group.

The EMA also informed the Town Council that any early termination fees/charges contractually that the Town Council would have had with the affected retailer would not be applicable. While there was no interruption of electricity services, weeks elapsed before a new contract could be called for and awarded. In the interim, the wholesale SP tariff rate applied which was significantly higher than the contracted rate, at the cost of savings to the Town Council.

With individual households now able to buy electricity directly from retailers, how will the EMA deal with retailers that unilaterally terminate their contracts in the retail space? What recourse do households have against such retailers that unilaterally abandon their contract or are not able to fulfil it? Would households also be barred by the EMA from claiming for their expectation loss and what compensation would be available should the retail price of electricity be significantly higher at the point of termination to the detriment of the consumer?

Finally, it was reported in today's Business Times that out of the 30 licensed electricity retailers, the 13 who were authorised to sell electricity to households and small businesses has cleared "additional regulatory hoops to ensure viability to safeguard consumers' interests." As Red Dot Power was one of them, what were these additional regulatory hoops and what went wrong?

Mr Chairman, Sir, over the years, our processes and regulations have provided a safe and predictable environment for our people and enterprises.

With the emergence of new technologies and business models, it is important to ensure that our rules keep pace. If we are not flexible in our approach, we could easily lose our competitive advantage. A regulatory environment that supports innovation and risk-taking is therefore vital for our future economy.

However, there will be trade-offs involved and difficult decisions to make. Different regulatory agencies have their reasons for imposing rules and regulations. Some rules are needed to ensure safety, while others are needed to protect public interests.

But over-regulation could lead to high regulatory and compliance costs, and unnecessary delays in the processing of licence applications and maximising of business opportunties. Our regulatory framework must therefore strike a good and fair balance, so that our businesses can be competitive and our economy can create more good jobs.

I note that the Pro-Enterprise Panel has worked with public agencies and companies to address many of these regulatory concerns that businesses face. How does it ensure that our regulations are kept up-to-date and do not add unnecessary compliance costs for our businesses? More broadly, will our regulatory agencies be able to keep pace with the changes and develop regulatory frameworks that are needed for the future economy? Will there be more sand boxes to allow and promote new business models? What is our strategy to ensure that the Government regulations do not encumber the growth of enterprises?

Mr Chairman, this Chamber enacts law, creates regulations and enables Government agencies to formulate rules. By updating our law, introducing new regulations, we keep our governing framework current, effective and relevant to the needs of the society.

While many new regulations are conceived for their specific purposes, there can also be unintended effects and heightened compliance costs to those the regulations seek to serve.

According to the arguments of Brexiteers, EU regulations are estimated to cause Britain a total of $120 billion per year. The common and with cultural policy alone reportedly cost $10 billion pounds and indirect costs and by inflating food prices.

Some other economists estimate that the current regulations cost the UK 6% of its GDP. One of them Prof Patrick Minford said, "If Britain ceases the freedom to move away from the EU regulations, the current 6% could be cut by a third, boosting GDP by 2%."

Chairman, while we are not debating the merit of Brexit here, it is suffice to recognise the duality of regulations. Regulations seek to protect but sometimes prevent. They are trade-offs, using benefits on one hand, but also increase compliance costs on the other. High compliance costs are not just a result of the need to conform to new standards per se but also the outcome of multiple inspection stations, longer inspection time, uncertainties in the final outcome of the test.

New regulations added to existing ones can also lead to confusions. They can be onerous and costly for businesses. Already some businesses here have found it hard to navigate in an ever increasingly regulated environment.

Sir, I would like to ask the Minister if the Government has a framework to review and reduce out-dated and obsolete regulations on a regular basis to keep regulatory burden light. Would the Ministry consider applying expiry dates or sunset clauses to newly introduced regulations. How could our business associations and SMEs provide their feedback and suggestions to the Government on a regular basis with a view to improve regulations for certain industry sectors or for business in general.

I would like to ask the Minister if our Government would consider establishing a methodology to measure regulation impact on businesses regardless whether the regulation is introduced by MTI or other Ministries. Finally, how has the Pro-Enterprise Panel perform with respect to cutting Government's red tape and improve our overall pro-business environment?

Mr Chairman, I thank Members for their comments, questions and suggestions.

As we manage our near-term challenges, we must also keep a close watch on the longer-term trends that will impact our economic competitiveness and continued success. Our near-term challenges include the uncertainties of US-China trade relations, the slowing Chinese economy, Brexit and various regional elections. Our medium-term and more significant challenges include shifts in global trade patterns, production chains and value chains brought about by technological shifts and geopolitics. Finally, we should carefully watch the developments in international taxation. Our future attractiveness as a choice business location will be shaped by the outcomes from ongoing discussions at international fora on Base Erosion and Profit Shifting (BEPS) and taxation principles for the new digital economy.

Despite the uncertain global context, there are reasons for us to be optimistic.

If we get our fundamentals right, we can further distinguish ourselves and attract global investors to come here and create better jobs for fellow Singaporeans. Our fundamentals must include: first, effective governance founded upon long-term political stability, long-term planning, and a strong tripartite relationship that enable us to overcome challenges together. Second, a global mindset. We must overcome the constraints of our geographical size by leveraging the digital economy and our connectivity, and embracing talent, technology and ideas from the world. Third, a competitive advantage in innovation, creativity, and standards, but not price. We must create a virtuous cycle where research and innovation translate into commercial opportunities and gain, which then enables further innovation. This must be supported by a progressive business environment with agile regulations and a strong Intellectual Property (IP) protection regime. Finally, a skilled workforce with sustained emphasis on continuous training and lifelong learning. Our workforce must have knowledge of the region to value-add when others use Singapore as a platform.

As Mr Teo Ser Luck observed, our overall pace of growth is expected to moderate in 2019, and this will be uneven across sectors. While outward-oriented sectors are generally expected to see a moderation in growth this year due to the weaker external outlook, there remain some bright spots. These include the information and communications sector, and the medical technology and aerospace segments within the manufacturing sector. Such sectors are expected to do well, in part because they can leverage our extensive connectivity, and are also knowledge-intensive sectors that capitalise on our strengths in areas like high-quality standards and a robust IP regime.

In general, domestically-oriented sectors will need to push ahead with transformation efforts to improve their value-add and raise productivity. Performance varies across firms within each of these sectors. We have seen good efforts by some firms, and will need to sustain the momentum and impetus for restructuring to uplift more firms within these sectors.

Mr Liang Eng Hwa asked how we can prepare Singapore for the next stage of growth. To this end, we have a four-prong strategy. First, to deepen and diversify linkages to markets; second, to transform industries to seize new opportunities; third, to strengthen capabilities of enterprises and workers; and, fourth, to empower businesses and consumers through more agile regulations and a more pro-business environment.

Let me first touch on market development on how we plan to deepen and diversify our linkages to create more opportunities overseas for our companies.

As a small economy, the world must be our hinterland. We must ensure global opportunities remain open to our businesses and people. This means deepening and diversifying our linkages to overseas markets.

We will upgrade our trade agreements to secure deeper market access and updated rules that cater to new business models and regulations.

During our ASEAN Chairmanship in 2018, we completed several initiatives to boost ASEAN’s attractiveness as a business and investment destination. The ASEAN Single Window is now in place. Five ASEAN countries are exchanging trade documents electronically, with the remaining countries coming on board this year. The ASEAN-wide Self Certification Scheme will save time and costs for our businesses. The ASEAN Agreement on E-commerce, ASEAN Trade in Services Agreement and enhancements to the ASEAN Comprehensive Investment Agreement will boost digital connectivity, improve market access in ASEAN’s growing services sector and reduce investment impediments.

With China, the upgraded China-Singapore FTA (CSFTA) will provide businesses with enhanced investment protection, greater access to China’s legal, maritime and construction services sectors, and improved Rules of Origin for petrochemical and plastics exports.

Next, we must expand our network of free trade agreements (FTAs) to give our companies privileged access to more markets vis-à-vis our competitors. This ensures the diversification of our markets and supply chains, to not overly rely on any one particular market.

Last year, we saw the entry into force of the historic Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This establishes our first FTA with Canada and Mexico. A few weeks ago, the EU-Singapore Free Trade Agreement (EUSFTA) and Investment Protection Agreement (EUSIPA) received the European Parliament’s consent with a clear majority. This brings us one step closer to an FTA with our third largest goods trading partner and largest services trading partner. We continue to make progress on the Regional Comprehensive Economic Partnership (RCEP) under Thailand’s chairmanship in 2019. We are also broadening our reach by looking into FTAs with the Eurasian Economic Union, the Pacific Alliance, and the Southern Common Market in South America (MERCOSUR). For the longer term, we must increasingly take up opportunities in emerging markets by familiarising ourselves with the culture, regulations and business networks in regions that are newer to us.

Mr Teo Ser Luck asked about quantifiable indicators of how our companies have benefited from FTAs, and what can be done to increase their utilisation of FTAs.

Singapore’s trade with our FTA partners accounts for 92% of our total trade in goods and services. One of the key benefits for our companies from FTAs is tariff savings, which measure the dollar savings from our FTAs’ lower tariffs for Singapore-originating goods. Our companies enjoyed tariff savings of about $730 million in 2016, a substantial increase from the $450 million enjoyed a decade prior.

Since 2016, about 1,800 companies have benefitted each year from Enterprise Singapore’s efforts to build awareness of our network of trade agreements and its benefits. These include broad-based FTA outreach sessions, assistance requested via the Enterprise Infoline and our SME centres, and customised one-to-one advisories for companies. We will continue to work with the Singapore Business Federation and the Trade Associations and Chambers (TACs) to help our companies utilise our wide network of FTAs.

Our trade agreements complement efforts by Singapore and like-minded countries to evolve international rules and uphold the rules-based multilateral trading system embodied in the WTO. A major international effort is now underway to ensure the WTO remains relevant to the modern economy. Singapore is actively contributing as a co-convenor of the e-commerce Joint Statement Initiative. The Initiative comprises 76 WTO Members that have committed to negotiations to develop multilateral rules aimed at helping companies navigate the complex e-commerce landscape by reducing cross-border hurdles and giving greater certainty on regulatory rules. We welcome further collaboration with like-minded countries to push the envelope on digital trade issues to build an open, inclusive, connected and predictable regulatory environment for businesses.

Mr Liang Eng Hwa, Ms Foo Mee Har, Mr Henry Kwek and Mr Saktiandi Supaat asked how we can build on our global air and sea hub status to create a unique value proposition that distinguishes us from others. I agree with the comments that we need to go beyond hardware to include the wraparound software to distinguish ourselves.-

To bolster our hub status, we need to continue to deepen our physical connectivity while building “modern”, non-physical modes of connectivity to be a key node in global flows. MOT will share more on our efforts to strengthen our physical connectivity while MCI will share more on our efforts to bolster our digital connectivity.

Mr Douglas Foo also asked how the Government is helping our companies seize opportunities in ASEAN, as the Belt and Road Initiative (BRI) enhances integration and infrastructural links in the region.

The China-Singapore Connectivity Initiative – New International Land-Sea Trade Corridor (CCI-ILSTC) will facilitate trade flows between Southeast Asia and Western China through Singapore. Besides reducing the time needed to transport goods between the two regions from three weeks to one, this multimodal and multifaceted economic link will improve modern dimensions of connectivity and lower costs for businesses. This includes our connectivity in terms of data exchange and Customs facilitation.

ASEAN, with its rising middle class and rapid urbanisation, presents huge opportunities for Singapore companies. We have supported our companies to capture these opportunities by catalysing capability development, market access, and access to manpower and financing. We will continue to facilitate our companies’ foray overseas through our network of overseas centres, which supported over 100 projects in ASEAN last year. To assist Singapore companies in their initial entry into overseas markets, we have also set up a Plug and Play Network which comprises 16 partners across nine markets globally. This includes six ASEAN markets, and we will be expanding to Myanmar this year.

In 2018, we launched Infrastructure Asia to facilitate investments and financing to support the infrastructure needs of the region. By bringing together local and international firms across the value chain to develop, finance and execute projects, this enables infrastructure players to tap on opportunities in the region. We are able to do all these because of our superior brand in terms of trust, the rule of law and our financial system.

As the economic landscape transforms, non-physical modes of connectivity will play an increasingly important role.

First, data connectivity through the exchange of digitalised trade documents. The Networked Trade Platform (NTP) can help businesses save time and cost by decreasing the need for paper exchanges.

Second, we need to promote the flow of ideas and talent. Companies invest in Singapore because we have access to talent, both local and global. For Singapore to thrive, we will continue to develop our local talent, and welcome global talent, especially those with high-end digital and engineering skills, to complement our local workforce.

Mr Henry Kwek asked MTI to share more about the Global Ready Talent Programme (GRTP) and the Global Innovation Alliance (GIA).

Today, more than 50% of Singapore enterprises find it difficult to internationalise because they lack the right talent for their overseas operations. To address this, we need to build a pipeline of local talent with the requisite in-market knowledge to identify growth opportunities, and navigate challenges in overseas markets.

The GRTP comprises two components – overseas internships for Singapore students, and a management associate programme for young professionals. We will focus on markets in Southeast Asia, China and India. Singapore enterprises can receive up to 70% funding support for the allowance or salary of participants. Enterprise Singapore will work with TACs and Institutes of Higher Learning (IHLs) to facilitate internship placements between companies and students.

We will also continue to promote the exchange of ideas and talent with innovation hubs around the world. Last year, on top of launching GIA in Bangkok, we also accelerated expansion plans, establishing GIA activities in France, Japan and Germany. We will continue to expand the GIA network in 2019.

Sir, our next three strategies aim to enable our companies and people to capture the opportunities from our linkages to markets.

Our industry transformation efforts are off to a good start, with productivity growing faster in the last three years as compared to the first half of the decade. Senior Minister of State Koh Poh Koon will elaborate on how we will continue to transform our industries of today, while investing in new growth areas for tomorrow in order to benefit Singaporeans.

Over the next three years, as the overall Services Dependency Ratio Ceiling (DRC) and its S Pass Sub-DRC are progressively lowered, we will walk alongside, and support, our businesses for the transformation journey ahead, through the following enhancements.

First, we will extend the enhanced 70% support under the Enterprise Development Grant (EDG) for another three years, till the end of FY2022. This will help more SMEs undertake deeper and more ambitious transformation as part of our economic restructuring.

Second, we will extend the enhanced support of up to 70% under the Productivity Solutions Grant (PSG) for another three years as well, till the end of FY2022. This will help the smaller companies adopt pre-scoped equipment and solutions to achieve the initial productivity boost.

Mr Liang Eng Hwa will be pleased to note that the enhancements will benefit our workers too.

We will streamline our efforts and resources with the Labour Movement so that we can collectively reach more businesses – and their workers. We will do this by merging NTUC's Inclusive Growth Programme (IGP) into the EDG from FY2020, and stipulating local employment outcomes that we expect grant recipients to fulfil as part of such support, so every project can expect to have local employment outcomes as part of their KPI.

On top of this, we will work with SkillsFuture Singapore (SSG) to support successful PSG applicants in their efforts to train their workers. For us, business transformation must come together with skills uplifting for our workers. The two are mutually related and cannot, and should not, be separated.

My colleagues Senior Ministers of State Koh Poh Koon and Chee Hong Tat will elaborate on these measures. Minister Josephine Teo will also share at MOM's COS Debate about how enterprises across all sectors can continue to tap on the Lean Enterprise Development (LED) Scheme for transitional manpower support, where needed.

Beyond industry-wide efforts, transformation begins with each and every enterprise. To tackle the challenges ahead and turn them into opportunities, we will need to level up, scale up and team up our enterprises.

For enterprises that have proven track record of growth, strong leadership and growth ambition, the new Scale-up SG programme can support them in the next leap of growth to become our future industry leaders. Enterprise Singapore will work closely with these enterprises and expert partners to identify priority growth themes, provide customised guidance on the execution of their business plans, and provide access to valuable networks and connections. Senior Minister of State Chee Hong Tat will elaborate on Scale-up SG and our enterprise-centric approach to move away from grants to support enterprises in levelling up and teaming up to build real capabilities. And we agree fully with the comment that we need a customised approach and it will not be a one-size-fits-all approach for all our 200,000 enterprises that are of varying sizes with differing needs.

Our final strategy is to ensure that we have an ecosystem that empowers businesses and consumers. Senior Parliamentary Secretary Tan Wu Meng will speak about the enablers we are developing to support a well-functioning market. This includes creating a pro-enterprise regulatory environment, promoting competition, and protecting consumers.

Mr Chairman, I have outlined the measures in place to ensure that the Singapore economy is prepared for its next phase of growth.

By developing markets, industries, enterprises and enablers, we can be confident of overcoming our limitations of size and punching above our weight. This will include making sure that our workers keep pace with the skills upgrading necessary for them to get better jobs with better pay.

Economic growth cannot be an end in itself. It is the means by which we generate good jobs and better wages for all Singaporeans – it is the strong foundation upon which we build our social progress and mobility. And this is our social compact. Amidst global uncertainty, Singapore can once again distinguish ourselves by transforming ourselves to take advantage of new technologies and new markets. Together, we can create a better future for all Singaporeans.

Mr Chairman, Singapore is a small and open economy. To remain globally competitive, we need to transform our industries, and develop new areas for growth.

Singaporeans must benefit from the new opportunities that industry transformation brings. We have seen friction and instability arise in other parts of the world, when workers feel they are left behind. We should learn from these developments, and ensure that both our companies and our workers share the gains from transformation.

Chairman, allow me to provide an update on our ongoing efforts to transform our industries.

In the first phase, we have taken a sectoral approach through the 23 Industry Transformation Maps (ITMs) that have been launched. In the next phase, we will be developing synergies across sectors to build and deepen linkages between the complementary industries. In this way, industry stakeholders along different parts of the value chain can come together to innovate and ride on market opportunities.

This includes strengthening our partnerships with the TACs, which Mr Douglas Foo spoke about, through the Local Enterprise and Association Development, or LEAD, Programme. My colleague Senior Parliamentary Secretary Tan Wu Meng will elaborate further in his part of the speech.

Our transformation efforts have begun to bear fruit. For example, in line with efforts to strengthen supply chain and logistics capabilities in the Trade and Connectivity Cluster, the Centre of Innovation for Supply Chain Management in Republic Polytechnic has rolled out several initiatives. One of which, the GoLEAN Improvement Programme, helps companies systematically optimise their processes through building a culture of continuous improvement.

One beneficiary of this programme is SATS-BRF Food, a food processing and distribution company. It has improved the productivity of its core meat-cutting operations, achieving 18% manpower savings and freeing up workers to support new business initiatives. This has also resulted in shorter lead-time to deliver orders, better customer service, and lower processing cost.

More importantly, by working closely with the unions, SATS-BRF Food was able to sustain these productivity improvements and thereby improve welfare for its workers. They are now able to start their shifts at more convenient times and some have seen wage increases made possible by job re-design.

Another promising growth area undergoing rapid transformation is Advanced Manufacturing, which Mr Baey Yam Keng spoke about. We are building new niches in areas such as additive manufacturing and advanced materials, by deepening the capabilities of our companies and workers.

The Singapore Smart Industry Readiness Index was developed by EDB and leading global technical service provider, TUV SUD and launched in November 2017.

This is a diagnostic tool for companies to evaluate their readiness for Industry 4.0. To date, we have awarded over 230 funded assessments and helped more than 150 manufacturing companies better prepare for Industry 4.0.

The unions have also been important partners in building our capabilities in advanced manufacturing. For example, NTUC, e2i, EDB and the Metal Industries Workers' Union have recently engaged 16 major players in the manufacturing sector, such as Epson, Seiko, and Natsteel on the adoption of the Index and the training that is available for their workers. Such tripartite partnerships are very important in ensuring that as companies upgrade to new technologies, our workers also upskill into higher value-added jobs.

At the same time, we are also developing next-generation estates such as the Jurong Innovation District (JID), which will catalyse the Advanced Manufacturing cluster. The JID will feature innovative infrastructure, such as an underground District Logistics Network, that will free up surface land and provide seamless integration with JID buildings to transform the way we deliver goods.

Beyond physical infrastructure, we are creating platforms for local and global talent to come together to exchange ideas and to collaborate.

Last October, we hosted the inaugural Industrial Transformation ASIA PACIFIC, or ITAP – an offshoot of the Hannover Messe, the largest Industry 4.0 event globally. It is a platform for leading manufacturers, technology providers and thought leaders to exchange ideas and best practices.

This Singapore edition attracted 15,000 visitors across 55 countries, exceeding our initial goal by 50%. We look forward to hosting ITAP again this year to profile Singapore as the regional hub for Advanced Manufacturing.

The growth of the advanced manufacturing sector will have spillover effects for emerging adjacent industries, such as Electric Vehicles, or EVs, which Mr Leon Perera spoke about. In Singapore, players like Grab and ComfortDelgro have also been adding EVs and hybrids to their fleets, in line with the Government's push to encourage more carbon-efficient vehicles. Singapore's strong manufacturing and electronics sectors will allow us to plug into the global supply chain to meet the increasing demand for Electric Vehicle (EV) parts. We can also build our expertise in other nascent areas such as self-driving software development and automotive cybersecurity. Questions on plans for charging infrastructural and the use of EVs unfortunately fall under the Ministry of Transport so I hope the Member perhaps will raise these questions at their COS.

Mr Chairman, in addition to transforming existing industries, we will also develop a new sector that offers exciting job opportunities – agri-technology.

The food and agri-tech sector is a $5 trillion global industry that is growing rapidly, fuelled by new innovations in processes and products. Our good innovation climate, our strong talent base, reputation for food safety and strategic location position us very well to capture a slice of this industry, particularly here in Asia.

Mr Desmond Choo asked how we are doing to develop this industry. Our vision is for Singapore to be a leading urban agriculture and aquaculture technology hub with a food production model that can be exported to the region.

To realise this vision, I am currently leading a multi-agency team looking at how we can better support the agri-tech industry in the areas of industry and enterprise development, R&D, manpower and regulations. This Steering Committee will work closely with industry players and associations, such as the Singapore Agro-Food Enterprises Federation (SAFEF), to take on board industry feedback.

As we grow this nascent sector, we will encounter new challenges that will require us to explore regulatory flexibility and innovative ways of doing things. For example, under SCDF’s fire code, farms are regulated in much the same way as factories because production activities, such as packaging, are allowed on-site. However, some of the fire code requirements may not be applicable for farming activities and may constrain a farm’s operations. Local egg farm, Chew’s Agriculture, faced such difficulties when seeking fire safety approvals for its new farm at Neo Tiew Road. I am happy to hear that SCDF worked closely with AVA to understand the farm’s unique operations and was willing to exercise flexibility in view of the low fire risk and site limitations.

We are also helping more of our agri-companies expand into foreign markets. For example, Sustenir, a local start-up which specialises in the production of non-native plants, recently launched the first strawberries grown here in Singapore. It has worked with Enterprise Singapore to develop regional marketing capabilities and is expanding its operations to Hong Kong.

To catalyse agri-tech innovation and co-creation among industry players, we need to strengthen our infrastructure support. So, I am pleased to announce that we will establish a new 18-ha Agri-Food Innovation Park (AFIP) in Sungei Kadut. AFIP will bring together high-tech farming and R&D activities, including indoor plant factories, insect farms, and animal feed production facilities. We are working with local and overseas industry players to develop this first phase of the park, which will be ready from the second quarter of 2021, with potential for future expansion, depending on demand.

Beyond the hardware and infrastructure, a talent pipeline is crucial to succeed in this endeavour. More Singaporeans, especially younger ones, are showing interest in high-tech urban farming. We are now seeing an emerging new generation of young technopreneur farmers.

We agree with Mr Desmond Choo that interested Singaporeans must be equipped with the specialised and relevant skills to benefit from opportunities in agri-tech. Our Institutes of Higher Learning (IHLs) have been instrumental in driving these efforts. For example, Republic Polytechnic has launched a Diploma in Urban Agricultural Technology early this year. As the sector develops, we expect more of such course offerings from our other IHLs.

Minister Heng also mentioned in his Budget speech that Temasek Polytechnic will be launching a Centre of Innovation in Aquaculture. This will pull together resources, intellectual property, infrastructure and expertise from Government agencies, IHLs and Research Institutes, which companies and practitioners can tap on to deepen their capabilities.

These developments will support our agri-tech sector in becoming an export industry. Our position as an agri-tech hub will strengthen Singapore’s economy, create good jobs for Singaporeans and buttress Singapore’s food security.

Food is important to us not only as an industry. But it is something that is close to every Singaporean’s heart. Even in our communities, interest in urban farming is growing.

For instance, the Citiponics Farm @ Ang Mo Kio is a pilot project located in my own constituency in Yio Chu Kang, on the rooftop of a multi-storey HDB carpark at Level 6, Blk 700, Ang Mo Kio Avenue 6. This is the first time we are piloting commercial urban farming on an HDB multi-storey carpark, and it is another example of how our Government agencies like AVA and HDB have exercised regulatory flexibility to support the agri-tech industry. This farm will hire local residents, including the elderly, and provide them with on-the-job training. My elderly residents from AWWA Senior Community Home are very excited to have the chance to bond with one another by exercising their green fingers and, at the same time, earn for themselves a source of income.

NTUC Fairprice at the nearby AMK Hub will be one of the first buyers of the farm’s produce. Planting had started last month in February 2019, with the first harvest expected in April 2019. So, residents can soon look forward to fresh vegetables that are produced by the community, in the community and for the community.

Mr Chairman, industry transformation must not be an end in itself. It is a means to expand human capabilities and open up new opportunities for our people.

In my time with the Labour Movement and in MTI, working with companies and workers, I observed that some companies have yet to translate increased productivity into tangible benefits for our workers. Therefore, some workers find it very hard to see how industry transformation can benefit them.

Currently, the Inclusive Growth Programme (IGP) administered by NTUC’s e2i aims to address this. It helps companies kick-start productivity projects. In turn, they are required to share the productivity gains with their workers through higher wages. However, as the pace of our industry transformation quickens, we need to do more to encourage companies to move in this direction.

As Minister Chan mentioned, the Enterprise Development Grant’s (EDG) enhanced funding support will be extended for three more years. Companies will enjoy up to 70% of qualifying costs till end of FY 2022. This is to support SMEs in undertaking deeper and even more ambitious transformation projects.

At the same time, we will merge the IGP into the EDG. Mr Teo Ser Luck and Mr Liang Eng Hwa will be pleased to note that through this merger, we will encourage companies to more intentionally translate enterprise transformation efforts into improvements in workers’ livelihoods. We will do so by requiring businesses embarking on EDG projects from 1 April 2020 to commit to the fulfillment of workers' outcomes. These outcomes may include wage increases, job creation, job-redesign or hiring of older workers. With this change, workers’ outcomes will be a mandatory consideration from the very first dollar of the EDG funding. NTUC and ESG will work closely together on the mechanisms to implement this, and we will announce details later.

Mr Chairman, I will now continue in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.]: The merger of EDG and IDP represents a significant change in how we approach our enterprise transformation efforts. We will encourage companies to think of how to improve their workers' skills and career prospects through transformation, right at the start when companies design their transformation plans and apply for Government grants. After merger, from 1 April 2020 onwards, NTUC, the unions and Enterprise Singapore will work together to ensure improved productivity is translated into better worker outcomes, such as wage increases, job creation or hiring of older workers.

Through this change, we hope to send a strong signal about the Government's commitment to work closely with the Labour Movement to keep People at the heart of our transformation.

(In English): On Mr Chen Show Mao’s query, the inclusion of worker outcomes into the enhanced EDG will be complemented by the efforts of the Tripartite Workgroup on Older Workers which was established last year. This Workgroup is studying issues relating to older workers, including how to make workplaces more conducive for them. The Workgroup’s recommendations will be released later this year. In fact, many of the suggestions by Mr Chen are not new and have already been implemented on the ground. For example, our Labour Movement's push to implement more company training committees will be one mechanism in which the Labour Movement can work with companies to ensure that workers' outcomes, including older workers', are taken into account when the company transforms.

In conclusion, Mr Chairman, to create good jobs for Singaporeans, we must press on with our industry transformation efforts – enhancing capabilities, developing infrastructure and facilitating partnerships.

We put people at the heart of our industry transformation because they are our nation’s most valuable asset. By partnering with unions and businesses, we can translate economic growth into real opportunities and better outcomes for all.

Mr Chairman, business leaders must take the lead in enterprise transformation, as they know their business and customers best. The Government will provide customised support through our enterprise development schemes.

As Minister Chan said, our efforts are centred around three “Ups”: Level Up, to strengthen companies’ capabilities; Scale Up, to help enterprises grow in Singapore and abroad; and Team Up, to encourage companies to work together for win-win outcomes.

Mr Teo Ser Luck suggested that companies must level up and strengthen their capabilities. Let me touch on three aspects where companies can do so: skills training; adopting technology; and business process re-engineering.

Enterprise transformation must start with its people, to redesign jobs and upskill workers. Transformation may be technology-driven, but it should remain human-centric and people-led.

Earlier, Minister shared that we will enhance the Productivity Solutions Grant (PSG) to support employer-led training. Enterprises which qualify for PSG can apply for a training subsidy to cover 70% of their out-of-pocket training expenses, capped at $10,000 per enterprise. This is on top of existing SkillsFuture subsidies and the funding for pre-scoped productivity solutions under PSG. MTI will work with SkillsFuture Singapore on the implementation.

Another priority is to encourage companies to make good use of technology. Regardless of size and sector, all companies need to embrace technology as a tool to improve productivity, reduce operating costs and develop better products and services.

Mr Low Thia Khiang suggested having more public sector research flow into industries. We share similar views. MTI has been doing this under the Research, Innovation and Enterprise 2020. We encourage our research agencies to collaborate with industry players so that companies can benefit from the R&D and commercialise the intellectual property. There are more than 1,500 industry projects deploying more than 1,000 technologies developed by our researchers. We want to grow these numbers over time.

Defence-related research also benefits our companies. For example, optronics technology which originated from defence research was used by an SME to measure water quality in our reservoirs. There is scope to explore having more of such collaborations. However, I am sure Mr Low would agree that not everything from defence research can flow into the commercial sector, as some are classified projects to protect national security.

Enterprises can also re-engineer their business processes by harnessing the value of design and using design thinking. I look forward to welcoming Design Singapore to the MTI family from 1 April. We can further strengthen the synergies with economic agencies to grow design capabilities in our enterprises and workforce, and use design as an enabler to improve Singapore’s competitiveness.

Next, we will support companies on their growth journeys to Scale Up their operations locally and overseas. We have built a vibrant start-up ecosystem through a range of measures, such as financing, networks, infrastructure and mentorship. To succeed, we must remain open to ideas and talent, including attracting overseas start-ups and entrepreneurs, to operate here and use Singapore as a hub for the region. Several Members have made this point as well.

A number of our start-ups originate from the Universities and Polytechnics. I am encouraged to see young Singaporeans stepping forward to start their own business and turning their passion into possibilities. The nature of the industry is such that a few will succeed but many will fail, and some may even fail repeatedly.

But this is part of the learning process and what we need to build an enterprising society. It includes a “never-say-die” attitude, the courage to take calculated risks and the resourcefulness to translate innovative ideas into reality.

For enterprises that are ready to expand beyond Singapore, we will help them to develop their internationalisation capabilities and expand into overseas markets, tapping on our extensive Free Trade Agreement networks. For many years, IE Singapore, now ESG, has been supporting our companies in foreign markets through its overseas offices, working closely with EDB and other Government agencies.

In 2018, seven in 10 Singapore businesses surveyed by the Singapore Business Federation have activities in overseas markets. For companies that have internationalised, overseas revenue forms nearly half of their total revenue and has grown more quickly than local revenue. Not surprising. The overseas markets have greater potential for growth.

To Mr Henry Kwek’s query, Enterprise Singapore supported over 570 internationalisation-related projects in 2018, a 25% increase compared to 2017. We worked with partners to help our companies enter new markets. Last year, ESG added eight new partners to its Plug & Play Network, which has recently expanded to two new countries, UAE and Cambodia.

As Ms Cheryl Chan highlighted, these initiatives and partnerships provide large firms and SMEs with in-market support to help them with their overseas expansion.

We have seen Singapore companies taking on more ambitious projects overseas, which entail larger investments over longer periods of time. While these efforts may reap long-term returns in the future, banks may be hesitant to provide financing, given the higher level of risks. The Government will increase our support for these projects.

In his Budget Speech, the Minister for Finance announced the new Enterprise Financing Scheme (EFS), which will be launched this October. EFS brings ESG’s financing schemes under a common umbrella scheme, making it easier for our companies to access financing support.

The Government will raise the maximum insurance cover for overseas project financing under EFS to $50 million, and increase the maximum tenure to 15 years. To support companies that are internationalising via mergers and acquisitions (M&A), the scheme will provide a higher maximum loan cover of $50 million for such projects to allow companies to quickly build new capabilities and expand overseas.

The Government will support a higher risk-share for loans to young enterprises under EFS, for both domestic and international projects. We will also provide a higher risk-share for enterprises venturing into challenging markets, as they do face higher hurdles in obtaining financing.

I agree with Ms Cheryl Chan that we should provide tailored support to nurture local enterprises that can grow and contribute significantly to our economy. Minister Chan mentioned the Scale-up SG programme to groom high-growth enterprises into future global champions. Through this programme, we will help enterprises develop and implement long-term plans tailored to their specific growth priorities, in areas such as innovation and international expansion.

For instance, a healthcare services company with overseas operations may aim to double its footprint through M&A and expand upstream by developing its own products. Through Scale-up SG, the company will receive targeted support to develop a commercially viable product prototype, as well as to shortlist and validate acquisition targets.

When these companies grow and succeed in future, I hope they will also provide opportunities to other local companies. In this way, we can sustain our scale-up efforts and grow more Singapore companies into globally competitive enterprises.

Sir, let me move to the third “Up”: Team Up. As noted by Mr Teo Ser Luck and Mr Leon Perera, collaborations among enterprises can support capability development to test-bed innovative solutions and form business alliances to capture opportunities here and overseas.

For example, Rolls-Royce and KA Industrial Engineering, a local SME, have worked together on an automated system for loading and unloading fan blades. Previously, the process was carried out by multiple technicians dressed in protective suits, due to the high temperatures. With the automated system, a single technician can manage the process away from the furnace, improving both productivity and worker safety. Importantly, working with Rolls-Royce helps KA Industrial Engineering open doors to other clients.

Partnerships can be amongst enterprises of all sizes and with trade associations and chambers, too. Last year, ESG facilitated over 30 collaborative initiatives and supported over 40 companies to win new projects in overseas markets.

We enhanced PACT last year. This will continue to support collaborations between enterprises of all sizes. I encourage companies to band together to tap on PACT to benefit from one another’s strengths, develop deeper capabilities and successfully internationalise.

Sir, let me conclude by reiterating MTI’s commitment to support enterprises in their transformation journeys. Our conversations cannot start with Government agencies telling companies to buy equipment, adopt IT solutions or appoint consultants. We should not pretend that we know what each firm needs to improve its products and services. That must come from the business owner based on a good understanding of what his or her customers require.

Likewise, businesses should not begin the conversation by asking what grants can they obtain from the Government. We want to encourage entrepreneurs, not grantrepreneurs who seek to maximise their grant amount instead of focusing on how they want to transform and grow their business.

Enterprise transformation must start with a vision of what the business wants to achieve, what problems it wants to solve and what capabilities it needs to build to reach its goals. Then we look at what schemes and grants can best support the company. Our efforts must be enterprise-centric and transformation-focused, not scheme-centric and grant-focused.

MTI will continue to work with other Government agencies and industry partners to review our policies and processes to achieve this outcome. We believe this is effective in helping businesses to build deep capabilities and for Singapore to grow a thicker layer of fast-growing local companies.

Mr Chairman, for broad-based economic success, the Government cannot do it alone. Our Trade Associations and Chambers (TACs) are crucial partners on this journey.

TACs are a store of social capital – institutional memory, industry networks, access to overseas markets. TACs help the Government to better understand the needs of our business community.

To Mr Liang Eng Hwa and Mr Douglas Foo’s queries, we support our TACs to broaden the reach of our Industry Transformation Maps and drive industry projects through the Local Enterprise and Association Development (LEAD) Programme. Since its launch in 2005, the LEAD programme has supported more than 50 TACs in spearheading projects involving close to 52,000 companies.

Last year, the Association of Small and Medium Enterprises launched the SME Cloud Exchange Network Software (SMECEN) with LEAD support. This is a cloud-based platform for companies to perform Accounting and Human Resource functions. SMEs adopting SMECEN can reduce the average man-hours per job by up to 80%, which will allow their workers to take on higher-value work, higher-value functions.

In 2017, LEAD was expanded to support a larger base of TACs. The maximum funding level was also increased from 70% to 90% of qualifying costs for high-impact projects involving multiple TACs.

I encourage our TACs to play an even stronger role. Enterprise Singapore (ESG) will develop five-year roadmaps with TACs, to help our TACs adopt a longer-term strategy to drive industry transformation.

For example, ESG is developing a roadmap with the Singapore Business Federation to help our local businesses access overseas markets. We will support TACs to implement the roadmaps through the LEAD programme. This includes seconding our public officers to selected TACs, to allow our officers to better understand our businesses’ concerns as we work together as one Team Singapore.

Senior Minister of State Chee spoke about developing our enterprises. For this, we need a pro-business environment. As Minister for Finance said during the Budget Debate, the Government must be prepared to experiment and take calculated risks. This applies to our regulations, which Mr Baey Yam Keng and Mr Lee Yi Shyan touched upon.

First, we must create an environment where new business ideas can take flight. One way is through regulatory sandboxes, where companies can learn quickly, iterate quickly. This has enabled new business concepts like dining in a “Floating Donut” in Marina Bay.

When the idea was first raised or first floated, agencies had public safety and pollution concerns. But with the sandbox in place, the company was allowed to test their business concept for six months, with necessary safeguards.

Second, we want to streamline regulations, to reduce costs, cut paperwork and free up resources. This is a progressive economic policy move because it is the smaller businesses who have fewer resources to navigate regulations.

Third, we will make it easier for businesses to apply for licences. Starting with the food services sector, we will pilot a one-stop portal to help automate the application process and cut down processing time as far as possible.

For example, the portal will automatically recommend a course of action for land use approvals. This will save companies the hassle of going to different agencies’ websites to find out the approved land use of a particular place.

To Mr Lee Yi Shyan’s query, the Pro-Enterprise Panel (PEP) and agencies have, together, developed the best practices on licensing approaches. They have also reviewed and streamlined more than 1,000 regulations since PEP’s formation in 2000, based on ground feedback and international reports on the ease of doing business in Singapore.

For example, the requirement to affix company stamps on Government forms has been removed. We agree with companies’ feedback that this was outdated, unnecessary, cumbersome and time-consuming.

However, the suggestion of imposing a “sunset clause” on regulations may be too prescriptive. Agencies, too, need flexibility. What is more important is a mindset where agencies are continuously alive – alive to the idea of rules review, alive to the idea of adapting, alive to the idea of transformation. A living culture of asking “why do we have this rule?”, “is the rule still needed?”, “is there a better way of doing things?”. Because governance is not always about adding more rules. Sometimes, we subtract, we simplify. Sometimes, we need to tidy up to spark innovation; and, sometimes, we need to tidy up to spark joy.

Besides supporting our enterprises, we want well-functioning markets that help consumers benefit from more choices and more competitive prices. Under the Open Electricity Market (OEM), households and small businesses now have more choices. At the same time, we will ensure that consumers’ interests are protected.

I would like to assure Mr Pritam Singh that Retailers in the OEM are thoroughly vetted and have to satisfy a stringent set of requirements before being allowed to serve OEM consumers. For example, retailers have to consistently hedge at least 50% of their wholesale electricity price risk. Retailers must also safeguard all security deposits collected from household consumers and return them to these household consumers should a retailer exit the market.

The Energy Market Authority also has safeguards in place to prevent retailers from unilaterally terminating contracts, unless the retailer is exiting the market or the consumer has breached the contract terms. Retailers who wish to exit the market are expected to find other retailers to take on those consumers at the same terms and conditions. If the retailer cannot find a replacement or if the consumer rejects the proposed transfer, the supply of electricity to the consumer will not be disrupted as the consumer will be transferred to SP Group.

Mr Pritam Singh asked about the retailer who had been selling electricity to the Aljunied-Hougang Town Council (AHTC). Red Dot Power was predominantly retailing to businesses. It was not involved in the full OEM launch and we understand that Red Dot Power's exit was due to cashflow issues.

I hear Mr Saktiandi Supaat and Mr Teo Ser Luck’s feedback on instalment plans. In my own constituency duties, I have seen similar situations with my residents and in my previous role as a backbencher, I have filed parliamentary question on related topics as well. So I hear their concerns. Today, most consumer credit providers, such as moneylenders and financial institutions, are already regulated. Such providers have to adhere to rules, including borrowing limits. While retailers offering in-house credit sales agreements are not specifically regulated today, they still are subject to general laws, like the Sale of Goods Act and the Consumer Protection (Fair Trading) Act.

I agree that there should be adequate information disclosure by retailers so that consumers can make informed decisions. Enticement of consumers to over-leverage on credit should not be allowed. The Government is working with stakeholders to review industry practices and the appropriate regulatory response. MoneySENSE, the national financial education program, also provides consumers with tips on what they should look out for when taking loans and instalments.

On Mr Lim Biow Chuan’s suggestion, the Government has to balance between consumers’ interests and a pro-enterprise environment. A broad-based cooling off period may potentially be subject to abuse and introduce uncertainty to businesses. There are also challenges, some quite complex, in defining the arena of “beauty and slimming” services. CASE and the Competition and Consumer Commission of Singapore (CCCS) have conducted outreach activities to educate consumers on what our consumers should watch out for before committing to purchases.

On Mr Lim's suggestion for MAS to take reference from the Hong Kong Monetary Authority's approach to chargeback policies, MAS will study this. The Association of Banks Singapore (ABS) has also developed Frequently Asked Questions (FAQs) on chargeback. MAS will continue to work with stakeholders to educate consumers on their rights and obligations when making purchases using credit cards.

Sir, generally speaking, if you are a consumer, do read the terms and conditions carefully. If you are not sure, do not be afraid to ask. Is the business reputable? What kind of financial commitments are in the contract? Think about buying from CaseTrust businesses which offer a cooling off period. Let me reassure this house that CCCS will not hesitate to take action against retailers who persist in unfair practices.

Chairman, in Mandarin please.

(In Mandarin): [Please refer to Vernacular Speech.]: We also want consumers to access information more easily and compare options, and save money, time and effort. MTI is working with CASE to develop a crowdsourcing app for consumers to compare prices for groceries and cooked food. Through this app, consumers are able to share price information which benefits the wider community. Those with less time, less awareness of market prices, and less purchasing experience, will benefit the most. As for seniors without smartphones, they can still benefit through hearing of good bargains from neighbours, family members or friends who use the app.

(In English): In conclusion, economic transformation is a collective effort. It takes all of us – Government, businesses, TACs, and our workers – our brothers and sisters in the labour movement. It takes all of us, working together to transform our economy to succeed. Let us continue working together to create good jobs, better opportunities, and a bright future for Singapore and all our fellow Singaporeans. Thank you.

Sir, I understand that Minister Chan has just returned from Siam Reap, Cambodia, where he attended the Regional Comprehensive Economic Partnership (RCEP) Ministerial Meeting. So, probably it is timely to ask him on the latest progress of RCEP negotiation. We have a few elections in the region in the member states. Is there enough political will to overcome the specific sensitive issues and do we have reasons to be optimistic for the agreement to be concluded this year?

Mr Chairman, let me thank Mr Liang Eng Hwa for his question. Yes, indeed, I just came back from Cambodia. At Cambodia over the weekend, the Ministers had a good discussion on the RCEP. What I sense from my RCEP Ministerial colleagues is that all of them have reaffirmed their determination to try their best to conclude the RCEP this year. More so than last year, they understand the strategic significance of the RCEP and also, the criticality of the timing of the RCEP.

In a world where we see the rise of protectionism, unilateral moves by various countries and so forth, I think many in Southeast Asia and in the rest of Asia see the urgency to try to conclude this, not just for the economic benefits alone but also because of the positive message we want to send to the rest of the world of how we collectively believe in greater integration for the greater good of our people.

Over the weekend, the Ministers have agreed on a 2019 workplan which will include intermediate targets to be achieved each month for us to ensure that we get to the finishing line by the end of this year. Under Thailand's ASEAN chairmanship, we see this as a very positive development.

However, as Mr Liang Eng Hwa said, there are a few uncertainties. In particular, there are four regional elections: India, Indonesia, Thailand and Australia. From now till the end of May, these four countries will be very involved in their domestic elections. What the Ministers have directed the negotiators to focus on is to make sure that we clear as much of the technical issues as possible from now till June.

The next critical milestone for the Ministerial meeting will be in August this year in China. This will be a critical milestone because this will be a point whereby we will make the political decision and show the political commitment that all the 16 countries want to get it done this year.

So, the first part of the year, we will see the frontloading of the technical aspects of the work. In the third quarter of this year, we hope to see a resolution on the political direction after the completion of the four regional elections. In the meantime, the respective working groups are working hard to close off the remaining chapters and the technical issues.

Just following up with the clarification from Senior Parliamentary Secretary Tan Wu Ming on electricity retailers. I understand in the event a retailer exits from the market in the household sector, the retailer will be required, as per Senior Parliamentary Secretary's answer, to provide electricity or to find a retailer who would provide electricity at the same price. In the event that fails, I do not believe that Senior Parliamentary Secretary Tan has clarified what compensation alternatives would be available to the residents given that they would be back on the standard SP tariff rate. In case I missed that, just a query.

I thank Mr Pritam Singh for his clarification. From the viewpoint of household consumers, one of the key objectives in the Open Electricity Market is that in the event a retailer exits, that household continues to receive electricity. The power is not disconnected. As a first instance, if a retailer is exiting, they are expected to try and find an alternative supplier for that household with equivalent terms or failing which if the alternative cannot be found, the household reverts to SP Group as the provider of last resort in such a situation.

Mr Pritam Singh also raised a separate question, which is, is there a concept of expectation loss here. It is worth bearing in mind that in the current operating environment, where households may have obtained discounted rates from an electricity supplier, and subsequently, if the supplier exits, and they revert to SP Group, they have obtained savings at that point. So, I am just wondering what Mr Pritam Singh means by seeking compensation.

So, there are actually two distinct scenarios in that one question which Mr Pritam Singh has raised. One scenario is, if the retailer is still in the market and the consumer decides to initiate termination of the contract, and to move to another retailer because of a better deal. In that situation, if the consumer is the one initiating the termination and moving to a different supplier, then those terms and conditions, whether there is an early termination fee, would apply.

But, in the event of the other situation, when a retailer chooses to exit the market, firstly, as I mentioned earlier, the retailer has to source around to see if another retailer will offer an equivalent plan to the existing consumers. In that situation, even then, the consumer can decide he does not like this alternative because there is another better alternative available in the market when the existing retailer exits, the consumer still has that choice. So, it depends on which situation Mr Pritam Singh is looking at for the purposes of this question.

Sir, I have two clarifications for the Minister. First, whether the on-going issue with Malaysia, namely, the airspace and the port issues, if they remain unsolved, would they affect Singapore's economy. The second clarification, whether he sees the defence industry having the potential to contribute to Singapore economy.

Mr Chairman, let me thank Mr Low for his two clarifications. Let me take the second one first.

Whether we see the defence industry as able to contribute to our overall economy, the answer is definitely yes. In fact, if you look at ST Engineering today, I do not have the exact numbers, but if I am not wrong, almost half of their business comes from the non-defence sector. So, there is some cross-pollination of ideas and benefits in growing ST Engineering companies. And there are examples that my colleagues have given just now. So, the answer is definitely yes. The defence industry, either directly or indirectly, through the use of the related technologies, can benefit the wider economy.

On Mr Low's first question about the impact of the issues with Malaysia on the Singapore's economy, there are two levels that I think we must always bear in mind. First is that Malaysia is part of the wider ASEAN economy and, obviously, any uncertainties in the Malaysia's economy will affect Singapore, just as it will affect the regional countries.

Our position is that we continue to look for win-win situations and win-win projects together with Malaysia because we always believe that a prosperous Malaysia that is doing well economically is good for Malaysia, is good for the region. We will continue on this mode, this kind of mental model that we are seeking win-win cooperation.

Having said that, of course, any disruption to the Malaysian economy can have and will have a significant impact on Singapore's economy, which is why over the last few months, MTI has been encouraging our companies to seriously consider the impact of Malaysia’s political and economic trajectory. We asked and encouraged our companies to diversify their sources, their supply chains and their markets. This is part of our wider strategy to ensure that we will never be held ransom by any one particular market for our supply chains or for the market for our products and services.

So this, we must continue to do, regardless of whether it is Malaysia or any one particular market. But the Member is right, Malaysia is our next-door neighbour, our closest neighbour. Because they are our closest neighbour, all the more we must make sure that we continue to diversify and take this issue very seriously – that our economy is never held ransom or dependent on a single source.

I just wanted to ask the Senior Parliamentary Secretary, we already have a mandatory cooling-off period for purchase of timeshare contracts. There is also what they call a free-look period for life and health insurance products. Can the Senior Parliamentary Secretary give a compelling reason why MTI is not prepared to consider a cooling-off period for contracts with businesses in the beauty and slimming industry?

I thank Mr Lim for his clarification. Certain considerations apply. First of these is whether the extent of commitment by the individual consumer is very substantial and whether there have been legitimate opportunities for the consumer to decline entering into a contract at that point in time.

I hear what the Member said about how someone going for a massage finds himself under the wrong kind of pressure. But we also have to bear in mind that if a consumer feels they have been wrongfully confined; if someone is trying to extract certain decisions or concessions while they are in a vulnerable position, a consumer can and should consider asking for the authorities to be alerted. If someone locks you in a room and asks you to sign a contract, I think Mr Lim, being a lawyer, he also knows what the options are available. And you do not necessarily need to call in a lawyer for that. So, that is one part of it.

But more broadly, I would say there is also the need for us, throughout society, to continue sending a message, not just looking at legislative measures but also as a community of consumers and concerned citizens, about what kind of sales tactics are acceptable, unacceptable or completely beyond the pale in our society.