Debate on Annual Budget Statement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mdm Speaker, thank you for allowing me to join the debate and share the Labour Movement's perspectives on this year's Budget.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr Deputy Speaker, the current global business conditions are difficult and uncertain. It will not be an easy year ahead for Singapore companies.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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