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

[Deputy Speaker (Mr Seah Kian Peng) in the Chair]

In my view, there is no turning back on restructuring. The old way of growth where we liberally employ foreign workers is no longer sustainable. MOM's intention to maintain the foreign labour at no more than one-third of the total workforce is perhaps a reasonable

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balance to strike.

So, what more can we do in this restructuring effort? While there is no turning back on overall direction of restructuring, we should, however, have our eyes focused on managing the potential downside risks. In the horizon, there are possible events that could pose as shocks to the economy, such as the sudden drop in the overall global demand, the sharply rising interest rates and the potential geopolitical hotspots. While I support the need to have dependency ratio ceilings for each sector to control the total number of foreign workforce, we should keep the option open for adjustments of the levies should there be adverse changes to the external environment or there might be a sharply rising business cost where we need to mitigate.

Hence, I am glad that the Finance Minister has deferred the impending final increase of the foreign workers levy. I would urge MTI to closely watch overall business costs and be proactive in managing any potential downside risks from the restructuring.

On the whole, the productivity performance is still not showing the results that we desired. Construction and F&B continue to lag behind as we expand the social sectors, such as the elderly and nursing care, childcare, community facilities, which tend to be of lower value-add but yet important in improving citizens' well-being; we can expect this to be non-accretive to our productivity indicator. Nevertheless, we should continue to nudge smaller companies to improve their productivity with a series of incentives and disincentives. We should also do more to help companies reduce business costs and enhance competitiveness. The clustering and provision of shared services is a good move and I hope that it is gaining traction among the small- and medium-sized enterprises (SMEs).

Beyond SMEs, the Government should also encourage and, in some cases, work directly with larger companies on specific initiatives to innovate and uplift productivity. Besides microeconomic reform measures, Government and industry groups could work together to explore ways to better synergise and to tap on under-efficient capacity and resources within the economy.

I read that in Seoul, South Korea, they have launched something called the "Sharing City" initiative in 2013. The Seoul metropolitan city government is not only enabling sharing businesses but it is also putting its own under-utilised assets into shared use. This initiative has the overall effect of countering rising business costs, create new jobs, instil a sense of community and also, importantly, reduce wastage. I understand the other cities like Portland, Amsterdam and Milan have either launched or are contemplating similar sharing economy platforms. The concept can be extended to crowdfunding and the sharing of human resource,

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among others, something that a digitised island state like us, will be well-placed to develop.

In this Big Data era, the Government should also share more data with businesses and the public at large so that individuals and entities can be better informed and make better decisions. All these non-traditional measures add up can make a difference to the overall activity performance. Mr Chair, I have six questions for the MTI Minister.

One, there is considerable uncertainty in the global economy, with many of the major economies revising their growth outlooks. How will this affect Singapore's economy and what is the outlook for the Singapore economy this year?

Two, what is MTI's outlook for growth in ASEAN and how will this affect Singapore in the lead-up to the ASEAN Economic Community this year?

Three, the Finance Minister mentioned about the five key growth clusters in the Budget Statement. Can the Minister elaborate further on the key growth sectors and why these sectors are being identified? Also, given the changing profile of educational qualifications, how will MTI facilitate the creation of the right sort of jobs for Singaporeans, leveraging these key growth sectors?

Four, what is MTI's strategy to raise productivity growth over the next few years? How effective have the various schemes and initiatives been in improving companies' productivity?

Five, one of the key economic strategies in this year's Budget is to encourage our companies to internationalise. How can the Government help to create good jobs for Singaporeans through internationalisation?

Six, SkillsFuture is the buzzword for Budget 2015. What is MTI doing to support SkillsFuture and help Singaporeans take on good jobs in the growth clusters, leveraging on SkillsFuture?

With the slower growth rates seen in the recent years and as we continue to restructure our economy, Deputy Prime Minister Tharman Shanmugaratnam had outlined in the Budget Statement five focus sectors that Singaporeans could excel in.

While slower growth is not necessarily in itself a concern, the focus needs to be on the quality and the sustainability of the growth. Can the Minister share what are the strategies

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MTI is driving to ensure that Singapore is able to attract the growth opportunities and investments of these identified growth industries to Singapore? More importantly, how will we adapt our growth strategy to ensure continual growth and address the competition from other markets? While Asia continues to present growth opportunities, Singapore is not a low-cost market and we are seeing increasing competition from neighbouring economies as they modernise.

What specific investments will be made to ensure that our infrastructure and talent base will be able to address the needs and participate in the opportunities that present themselves in these five sectors?

With the changing profile of educational qualifications and a growing aspiration of our workforce, what is MTI doing to facilitate the creation of quality jobs and the alignment of our talent to these jobs? Will we be able to attract and, more importantly, retain our best talents to these growth sectors? Recently, Japan announced a new growth strategy to venture overseas to tap talents from developed markets like the US and UK, and Singapore is also a target for them. So, will our growth strategies be able to enable Singapore to stay attractive to retain our already scarce talent base?

There has been much discussion in driving innovation to enable Singapore companies to be competitive. Can MTI also provide an update on the strategies to drive and accelerate innovation especially in the five growth sectors identified?

Chairman, our median wages are increasing on target to reach the 30% rise between 2010 and 2020 set by the Economic Strategies Committee.

In the face of global economic uncertainty, it is important for us at this mid-point to review what the key growth sectors for Singapore are in the years ahead. These will help us plan for the training required for our workers to be ready for these sectors, which will enable them to earn better wages. Would the Ministry share with the House the sectors it has identified and its strategies to attract investments for the development of these sectors?

I would also like to reiterate my concerns over the impact of automation on jobs which I spoke at length about in my speech during the Debate on the Budget Statement. Robotic technologies are improving by leaps and bounds and are increasingly able to perform tasks

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previously thought the domain of only humans. This development will result in certain job redundancies while creating new types of jobs. Against this background and given the changing profile of education qualifications and higher job expectations, how can MTI facilitate the creation of quality jobs for Singaporeans?

As the nature of trade and trade flows change, I would like to ask the Ministry how we can keep Singapore relevant as a key hub for the international movement of goods and services?

Being a key hub is one of the main reasons for our prosperity. We are Asia's top logistics hub, with 20 of the top 25 global logistics companies operating their regional or global headquarters here. We are also one of six major cities which are hubs for all types of cross-border flows, according to the latest research by McKinsey Global Institute.

Competition among cities to become hubs is actually very keen. New ways of doing business, such as e-commerce, is changing the landscape rapidly. It is crucial that we continue to invest and innovate to stay ahead of the pack.

Mr Chairman, first of all allow me to declare my interest as President of the Association of Aerospace Industries in Singapore. Sir, Article 3.7 of the Korea-Singapore Free Trade Agreement, signed in 2005 stipulates that each party may exempt or reduce a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been exported for repair or process, regardless of whether such a repair or process could be done in its territory.

Korea has until recently granted full exemption of customs duty to aerospace components and aircraft engines repaired or overhauled in Singapore. However, this exemption is now being gradually removed until 2018 when full customs duty is payable for goods re-entering Korea.

Sir, Article 2.6 of the US-Korea Free Trade Agreement on the same subject stipulates that neither party may apply a customs duty to a good, regardless of its origin, that re-enters its territory after that good has been temporarily exported from its territory to the territory of the other party for repair or alteration.

Singapore-based Aerospace Maintenance and Repair Organisations or MROs are, therefore, at a disadvantage, compared to US-based MROs which appear to enjoy

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permanent exemption of the customs duty for goods re-entering Korea. In fact, some Korean companies have already served notice on their Singapore service providers that they will be diverting their business to US-based companies when the exemption of customs duty is ended. Would MTI consider reviewing Article 3.7 of the Singapore-Korea Free Trade Agreement, with the Korean government to bring it along the lines of Article 2.6 of the US-Korea FTA?

Mr Chairman, the SkillsFuture initiative aims to promote lifelong learning of practical skills for Singaporeans. The intention of this initiative is to empower our citizens, so that they will always be able to pick up new skills to deal with the evolving circumstances we find ourselves in.

The idea is to start building useful skills from school and continue this approach to learning throughout working life. A key part of the success of this programme will require the collaboration of industry. In particular, (a) industry will have to collaborate with schools and especially tertiary institutions, both to ensure that the curriculum teaches the students the necessary skills as well as to provide meaningful internships and paid work experiences, and (b) in order for the SkillsFuture funds set aside to be used meaningfully, they have to be used for courses that will teach people skills that have value in the workplace. This, too, will require collaboration from industry to make sure that meaningful skills are taught and to avoid a proliferation of courses that may not have much practical value.

I am, therefore, interested to know how MTI will support the SkillsFuture initiative and how the collaboration with other Ministries and Government agencies will be like in making this work.

The second cut is on research and innovation. The Singapore Government has always been extremely supportive of research and development (R&D) efforts. According to the National Research Foundation, since the first National Technology Plan in 1991, Singapore's total R&D expenditure has increased more than tenfold, from $760 million in 1991 to $6.5 billion in 2010.

To further boost R&D, on 18 September 2010, the Government set aside $16.1 billion over the period from 2011 to 2015 under the RIE2015 plan. The strategies for RIE2015 were to (a) to invest in new knowledge and areas and seed intellectual capital for future

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innovations; (b) to attract and develop scientific talent; (c) make available competitive funding to spur research; (d) strengthen synergies across R&D performers in public and private sectors; (e) focus on R&D outcomes, particularly commercialisation; and (f) support scientists in taking their ideas from research to commercialisation.

I understand that the current RIE portfolio dedicates about $9.6 billion, or about 60% of its funds, to public sector R&D and $2.5 billion to private R&D – that is about 15% of its funds – with much smaller amounts to talent, white space, innovation and enterprise and infrastructure.

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While we have a clear idea of how these funds are spent, I would also be interested to know whether MTI can provide an update of whether all this expenditure has helped promote innovation and boost productivity in our companies. Also, given the largest amount of expenditure has been on public R&D, I would be interested to know whether this public research has also helped in R&D outcomes and in particular, in commercialisation of what is developed.

Chairman, research and development (R&D) has always been the cornerstone of our economic strategies. We need to carry out R&D which can help to add value to whatever we are doing, create new systems and processes, improve productivity and open doors to new opportunities. In fact, since 1960, economic growth has been rising exponentially in relation to the total amount of investment in R&D.

The Research, Innovation and Enterprise (RIE) Council was allocated a huge amount of $16.1 billion national budget for research, innovation and enterprise for Year 2011 to 2015 as part of the RIE2015 plan. This was a 20% increase from the $13.6 billion allocated in 2006 to 2010. It is a clear indication of the Government's resolve to invest in R&D. Against the backdrop of a globally competitive economy and labour crunch, investing in R&D can help us to retain and even enhance our competitive edge.

R&D is certainly costly and short-term results are often intangible. Sometimes, they do not even yield any results or a breakthrough that may only happen years after the project began. We must continue to promote R&D and strengthen the resilience of its industry so that even in times of poor economic growth, companies are able to embrace research activities and continue to enhance their performance.

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I am proud to note that we have excellent R&D capabilities such as Research Centres of Excellence and the Centre for Quantum Technologies and Earth Observatory of Singapore, just to name a few. These are highly appealing to foreign investors and potential partners whom we can collaborate with for even greater achievements.

With such a good R&D climate, I trust that the RIE2015 has made a good headstart and the funds are being put to good use. Can the Minister share examples of projects which arising from the money given to RIE by the Government, companies have benefited and productivity boosted? What is the ROI for our economy? Additionally, what is being done to attract and retain talent in the R&D sector?

Chairman, Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR) is a state-of-the-art technology used for gene editing that has the potential to alter the DNA in human beings. MIT Technology Review called it the biggest biotech discovery of the century.

Imagine babies with rare genetic conditions and birth defects that are incurable, like urea cycle disorders, Down Syndrome or cerebral palsy, or adults with cancerous mutations or even HIV. This gene editing technology holds the promise, and often the only hope, for parents and patients who can only look forward to a lifetime of pain and suffering for their babies and themselves.

Harvard, MIT and a host of other universities and many pharmaceutical companies and biotechnology startups staffed with world-renowned researchers are pouring resources into this research frontier. Some have estimated a gene editing industry worth trillions in commercial impact and hundreds of thousands of high-value job creations.

This is one example of how investments in research and development (R&D) can contribute to Singapore. As we mature into a knowledge-based economy, there needs to be sustained investment in R&D and a continued supply of high-value researchers to meet the growing demand. There are many areas of R&D that needs Government support: basic research, applied research, experimental development, in fields as diverse as electronics, chemicals, biomedical sciences, precision and transport engineering, Internet technology, to name but a few.

The Government has invested $16 billion in research, innovation and enterprise in Singapore from 2011 to 2015. On top of bringing benefits to the economy, it is important for this investment to benefit Singaporeans. The public's perception is that many of the

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researchers within our universities and research institutes are foreigners. Is this perception justified or is it untrue? To this end, I would like to ask the Minister whether we now have more Singaporeans working in R&D careers and how does R&D investments create career opportunities for Singaporeans?

Secondly, making research an exciting and fulfilling career choice for Singaporeans is important for the research landscape. It is also important to fulfil the aspirations of young Singaporeans who enter the workforce to have a wider range of options in order to meet their interests. The beauty of R&D is that it has the potential to create entirely new clusters of supporting industries and many high-value jobs around it. My question is: what other career opportunities can Singaporeans look forward to in the field of R&D? What can the Government do to ensure a career in R&D offers a wide range of opportunities for Singaporeans?

The considerations for making strategic investments in R&D cannot simply be viewed from the typical commercial lenses of returns on investment and short-term commercial viability. I would argue that investment in R&D fulfils a strategic imperative and needs Government support to nurture in order to bring Singapore into the forefront of a knowledge-based economy.

My second cut. Mr Chairman, energy security is a strategic imperative and a priority for Singapore. Natural gas is currently the cleanest form of energy available. The Government has promoted the use of natural gas and more than 80% of domestic electricity generation is done using that.

Piped natural gas or PNG is currently imported into Singapore from Malaysia and Indonesia via four offshore pipelines. PNG contracts with Indonesia are slated to end in 2025. Contracts with Malaysia will end at some stage.

It therefore becomes vital that Singapore has a new source of sustainable natural gas supply that is sourced globally. It is not the price of natural gas that concerns me. Availability is the key here. We must have the ability to buy and store and use natural gas at whatever the price if we are in a situation where PNG is denied to us. I cannot imagine a modern city like Singapore being devoid of electricity. What are Singaporeans going to do in such a situation? It is too scary to even imagine.

Liquefied Natural Gas or LNG fulfils this important role of energy security. The Government, in its wisdom, has invested heavily in making sure that we have the capability to receive LNG. The Singapore LNG Terminal began operations in May 2013 with two storage

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tanks and an initial throughput capacity of 3.5 million tonnes per annum. A third tank and additional regasification facilities were completed in January 2014, increasing the throughput capacity of the terminal to six million tonnes per annum.

I am very relieved to note that we are well on our way to making sure Singapore will not be left in a literal state of darkness in the future. To this end, I would like to ask the progress of the Government's plans to expand the Singapore LNG infrastructure.

Mr Chairman, part of the masterplan to achieve energy security is the commercialisation of the power generation industry and the retail electricity industry, so that market-based pricing and practices can bring about greater efficiency. The Energy Market Authority (EMA) has been tasked to regulate the efficient trading and pricing of wholesale electricity and to regulate the entire power sector.

Electricity trading is a relatively new market in many jurisdictions. Markets require depth and liquidity and a critical mass of participants for its efficient function. These participants must stand ready to be able to buy and sell at market prices. To do this, they must be knowledgeable in the fundamentals of the LNG and electricity markets, be able to risk manage well and be alert and nimble to the wider energy and financial markets which are volatile in nature. Can the Government assure the House that Singapore has sufficient manpower with the requisite expertise to perform such roles?

How about other roles that are needed for the efficient functioning for the power sector? Can the Government enlighten the House what other types of expertise are needed and if Singapore has sufficient manpower to meet this need?

Mr Chairman, tourism is a major contributor to our economy. Tourist arrivals drive consumption of goods and services, which is crucial to businesses and services in our small market. Strong tourism industry also creates jobs for the service and hospitality sectors.

There has been intensifying competition for the global tourist shopping dollars. Many countries, despite being huge tourism magnets, are significantly stepping up on their efforts to target increased tourist arrivals. More notably, their target is wealthy Chinese tourists who are eager to splurge their new-found wealth on widening their horizons. In the UK, for example, Chinese netizens have been consulted to name famous landmarks and pop cultures in Chinese so that these attractions would appear more endearing to the Chinese tourists. Spain is in talks with Asian airlines to draw up more direct flights while South Korea plays up on its pop culture and medical tourism packages, successfully replacing Japan as China's top

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tourist destination in 2013. Thailand offers free visas for Chinese and Taiwanese tourists last year while in Milan and Paris, retail assistants in luxury boutiques have to learn Chinese and English to cater to an international crowd.

These countries, with their rich histories and ample variety of famous and unique landmarks and attractions, are formidable challenges for the tourism dollars.

Tourism is recognised as a vital source of revenue as well as job creation within the APEC economies, according to APEC Tourism Working Group. In 2011, tourism accounted for 8.3% of GDP and 8.4% of employment in Asia respectively.

We have many advantages that make us well-placed in receiving tourists. We offer good security and the transport system is easy to use. English and Mandarin are widely used and they happen to be the most commonly used languages in the world. I note that we are among the top Muslim travel destination for Muslim travellers to go to non-Muslim destinations for the third successive year. The Global Muslim Travel Index gave us high scores for its safe travel environment, ease of access to prayer spaces as well as the number of halal dining options.

Indeed, many of us have travelled to immerse ourselves in another country's culture, which is often different and therefore interesting to us. But are we re-inventing ourselves with new attractions and new packages? Questions were asked if the Great Singapore Sale is really that great or has online shopping taken a part of its business away? Do we need to pay more attention to other attractions? Has our F1 lost its shine as well?

Can we play up on our uniqueness as a uniquely Singapore cultural icon like the Merlion? Are we doing enough to highlight our distinctive blend of heritage and culture? What are we doing to ensure that Singapore remains as a vibrant tourist destination and retaining our competitiveness on this front?

Mr Chairman, there is intensifying competition for the global tourist shopping dollar. How will the Ministry ensure that we remain a vibrant tourist destination and retain our competitiveness on this front?

I note with concern the decrease in tourist arrivals by 3.1% last year, the first decline since 2009. One of the reasons was our strengthening Singapore dollar which makes us actually a pricier destination. How can we overcome this hurdle by adding value so that our visitors will find their trips here worth the while?

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Fortunately, total tourism receipts had stayed constant as per capita spending has risen. This is very encouraging. Would the Ministry share how it intends to maintain this trend in tourist expenditure?

While the charts are being distributed, let me explain the intent of the charts. The charts will compare our performance in GDP growth, employment and median income growth. These are our KPIs showing how our overall economy is doing, whether there are enough jobs for our people and how well our workers are being paid. For comparison, I have selected two sets of countries. The first set comprises the advanced economies, that is, the US, the EU and Japan and the second set comprises key Asian economies.

So, if Members look at the first set of charts, in terms of GDP growth, Singapore has grown by 4.7% annually since 2007 [Please refer to Annex 1.] As the charts show, we outperformed both the developed economies as well as the key Asian economies.

In the next chart, on the jobs front, our unemployment rate has not exceeded 3% [Please refer to Annex 2.] This was so even at the depth of the Global Financial Crisis. Since 2008, we have created approximately 112,000 jobs every year. More importantly, over two-thirds of the jobs created in the resident workforce were professional, managerial, executive

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and technical or PMET jobs.

The final chart is the median income of employed households headed by Singaporeans [Please refer to Annex 3.] This has been on the rise, with a real annualised growth of 2.9% per year since 2007.

Mr Chairman, as our economy matures, we will need to get used to a lower but more sustainable rate of growth. In addition, our tight labour market is a continuing reality. These domestic challenges will also affect our growth trajectory. But as the numbers show, our efforts in the past few years have put us on the right track and we are making progress despite significant headwinds. Against this backdrop, we can expect Singapore's economy to grow between 2% and 4% in 2015.

Mr Liang Eng Hwa has also asked for the outlook for growth in ASEAN and how this will affect Singapore in the lead-up to the ASEAN Economic Community or AEC this year. ASEAN is expected to achieve a growth rate of 5.6% per year between 2015 and 2019. If ASEAN continues on this trajectory, ASEAN could become the fourth largest single market by 2030, after the EU, the US and China. We must, therefore, position ourselves to take advantage of the opportunities that deeper integration through the AEC will bring, and indeed, we have been actively engaging businesses to do so.

To achieve the growth of between 2% and 4%, Mr Liang Eng Hwa, Ms Jessica Tan and Mr Gan Thiam Poh have asked what our key growth sectors and key growth opportunities will be in the years ahead. Mr Chair, our economy is well-diversified. Previously, we highlighted the Asian growth story. The prospects of an increasingly integrated ASEAN remain positive. In our projections, manufacturing will continue to be an important part of our growth story. The manufacturing sector has achieved steady value-added growth of 4.3% per year since 2007 and this was achieved while keeping the labour force in the manufacturing sector approximately constant. In 2008, the manufacturing sector employed a total of 565,000 people. In 2014, this was 536,000. We will continue to move up the value chain into advanced technology and high-value areas, as well as to seek productivity improvements in existing sectors.

Our achievement has been underpinned by a steady pipeline of projects that we have secured across our manufacturing clusters. Three days ago, I attended the ground-breaking ceremony for the expansion of Micron Technology's NAND flash memory wafer fab. This will be Micron's largest and most advanced wafer fab location in the world. It entails an investment of US$4 billion. When fully operational, it will create about 500 highly skilled jobs. Last November, I was at the opening of Amgen Singapore's biologics manufacturing facility. This facility is Singapore's ninth world-class biologics manufacturing plant, and the first in the world to use Amgen's latest proprietary technologies and manufacturing processes on a

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commercial scale. Each biologics plant will create 100 to 200 highly skilled jobs.

Cutting-edge projects like these will keep us at the forefront of global manufacturing. Our steady pipeline of investments will keep us in the game for the next five years. To remain competitive in the longer run, we will have to adopt disruptive technologies such as 3D printing and advanced robotics, something that Mr Gan Thiam Poh also raised. This will enable us to create new business models and take advantage of new opportunities.

For example, rapid prototyping through 3D printing enables faster innovation, helping companies bring their products to market faster while using resources more efficiently, which would not be possible using traditional manufacturing techniques. 3D printing enables more cost-effective small-volume production, enabling new business models which rely on mass customisation, such as the Consumer-to-Business (C2B) model as well as the personalisation of goods like running shoes tailor-made for the individual. In addition, 3D printing could disrupt established supply chains as it erodes the competitive advantage traditionally held by mass production and enables the emergence of efficient, yet small-scale domestic production hubs. So, one can argue that 3D printing and advanced robotics have the potential to disrupt the competitive landscape. Smaller niche players can now take on the bigger players.

Mr Liang Eng Hwa, Ms Jessica Tan and Mr Gan Thiam Poh asked how MTI will be facilitating the creation of the right sort of jobs for Singaporeans. The evolution of the manufacturing sector will create jobs which require new competencies such as data analytics, engineering and operations expertise. For instance, technicians in a wafer fab will require analytics and operations skills to monitor production output and quality and advanced robotics capabilities to troubleshoot and repair the robots which will take on the lower value tasks.

Mr Chair, we are taking steps to ensure that our SMEs can keep up with leading-edge technologies. This is one key reason why we will provide greater support for collaboration between large enterprises and SMEs through the Partnerships for Capability Transformation or PACT programme. We introduced PACT in 2010 to help SMEs build up their capabilities and track record. The scheme was expanded in 2013 to cover new industries as well as to include new forms of collaboration. It now provides support for supplier qualification, test-bedding of innovative solutions, knowledge transfer and productivity improvements.

PACT has achieved good progress and we will be extending the scheme by another three years, to March 2018. PACT will cover a broader spectrum of co-innovation to include joint product development at the proof-of-concept stage. This will provide greater support for co-innovation between SMEs and the large enterprises and help local contract manufacturers

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upgrade to supply higher-technology components.

In addition, to enable more projects to qualify for support, PACT will now be able to support SMEs even if the partner large enterprise does not receive funding, so long as the large enterprise is committed to develop the local company's capabilities.

We will also improve and enhance the Capability Development Grant or CDG. CDG is a flexible grant that can be customised for each individual SME. SMEs can choose to defray up to 70% of the project costs in 10 areas ranging from technology innovation to intellectual property and franchising. It has been well received and has supported over 1,200 projects in 2014. We will be extending the enhanced support under the CDG so that companies can continue to get 70% support till 2018. We will also simplify the application process for projects under $30,000 so that smaller companies can access this grant more easily.

To illustrate how all these programmes are coming together, we can look at the restructuring of the precision engineering sector. Taking advantage of the various Government support programmes, the precision engineering sector has been able to upgrade and now support the aerospace as well as the Medtech sector, in addition to the traditional electronics sector. Over the last five years, the output and productivity of the precision engineering sector have both grown by 9.9% per year.

Let me now turn to the growth prospects of our services sectors.

Our services exports have performed well in recent years. Since 2007, our services exports have grown by 6.9% per year. In terms of the value of our services exports, Singapore now ranks 11th in the world and fourth in Asia. Despite keen competition from the bigger economies, we have been gaining market share of global services exports. Take our trade in services with China as an example. We are in fact now China's third largest foreign trading partner for services after the US and Japan. So, for a small economy like us, we have in fact gone up the ladder and we are now China's third largest foreign trading partner for services, just after the US and Japan.

We have done well in the financial services sector, the wholesale trade sector as well as the transport services sector. We must seek new opportunities for growth in the other services clusters. Let us take the logistics sector, for example. Many companies in this sector have found ways to overcome manpower constraints and pursue higher value-added endeavours. More are also growing their commercial presence overseas.

YCH Group is one such company. A homegrown logistics company, YCH has transformed the traditional business model for logistics service suppliers, by adopting innovative end-to-

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end supply chain management solutions, by embracing e-commerce and developing its own proprietary software. Today, YCH operates in more than 100 cities worldwide and continues to expand its network of e-fulfilment services.

To help more companies like YCH, we will strengthen schemes to help companies internationalise. IE Singapore currently offers the Market Readiness Assistance or MRA and the Global Company Partnership or GCP to help local enterprises defray the costs of internationalisation. Starting this year, we will enhance these schemes by raising the grant support levels to SMEs. Senior Minister of State Lee Yi Shyan will share more details on these enhancements.

Our other services cluster will also provide the kind of jobs that Mr Liang, Ms Tan and Mr Gan alluded to – jobs that increasingly educated and qualified Singaporeans want to do.

Take the professional services sector for example. Since 2008, employment in this sector has been growing at 5.5% per year. As of 2013, the sector provides over 220,000 jobs and Singaporeans hold more than half of the PMET positions.

This achievement is in large part because Singapore has become a choice location for regional headquarters activities. The 2014 Economist Intelligence Unit Business Environment Rankings study ranked Singapore the best place in the world to do business. Consultancy firm Roland Berger also found that European companies consider Singapore the preferred location for regional HQ activities, with Hong Kong and Shanghai being close competitors. To sharpen our competitive edge, we are working with global leading companies to develop Centres of Excellence specialising in diverse fields ranging from analytics, growth markets, consumer insights to cybersecurity. Professional services firms such as McKinsey, KPMG and PricewaterhouseCoopers (PwC) have already chosen Singapore as the location for their Centres of Excellence. These Centres of Excellence will not only help create more job opportunities for Singaporeans but offer good quality jobs.

Mr Gan Thiam Poh asked how we can keep Singapore relevant as a key hub for the international movement of goods and services.

In addition to the schemes that I have described, we also intend to reduce trade barriers so that our companies can compete more effectively.

We already have a network of around 20 Free Trade Agreements (FTAs) with 32 trading partners, which account for more than 70% of our trade in goods. We will expand this

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network as well as review existing FTAs to maintain their relevance to businesses.

Here, I would like to respond to Mr Charles Chong's example. Under the Korea-Singapore FTA which Mr Charles Chong talked about, we have surfaced our industry's request for continued exemption of customs duties for goods re-entering South Korea after maintenance, repair or overhaul, that is, MRO in Singapore. The Korean government recently announced that it would postpone the implementation of these customs duties till 2017. We will continue to work with Korea to resolve this issue as a part of a more comprehensive review of the Korea-Singapore FTA.

Singaporean companies can look forward to further developments on three fronts in our trade negotiations: the implementation of the AEC by the end of 2015, the Regional Comprehensive Economic Partnership or RCEP and the Trans-Pacific Partnership or TPP. I have spoken about the opportunities presented by the AEC. The RCEP links ASEAN and the six ASEAN dialogue partners while the TPP connects half of ASEAN with the US and countries on the other side of the Pacific Ocean. Both the RCEP and TPP are designed to be inclusive so that we can eventually have an FTA of the Asia Pacific.

The AEC, RCEP and TPP will enhance the economic integration of the region and is expected to boost intra-regional trade significantly. For goods, our companies will be able to have better import and export opportunities because of the significant reduction of tariffs. Our companies can also look forward to further liberalisation of the service markets in the region, which will bolster the strong growth of our services exports.

Finally, these three initiatives will also deepen the protection of investments in the region, which will not only facilitate the internationalisation of our companies but also enhance the attractiveness of Singapore as a place to do business and anchor regional and international headquarters in Singapore.

Mr Chairman, I have spoken about our growth sectors, which will create new and exciting jobs. To complete our mission, we must ensure that Singaporeans are well-equipped to take up these opportunities.

Mr Liang and Mr Vikram Nair asked what MTI will be doing to support the SkillsFuture initiative. Let me illustrate with three initiatives by the Economic Development Board (EDB) to support the SkillsFuture effort by working with industry partners to develop talent at all levels in our key growth areas.

First, to ensure that our workers have the core skills needed to support future growth, EDB will work in partnership with MOE and WDA to encourage companies to build their

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training capability and expand their training capacity. EDB will support these efforts in seven pilot sectors, namely, Logistics, Electronics, Biopharmaceuticals, Chemicals, Precision Engineering, Marine and Aerospace.

Second, our future growth clusters will require domain experts with deep specialist know-how as well as competencies such as advanced manufacturing, business analytics and systems integration. EDB will develop these capabilities in partnership with industry as well as the Institutes of Higher Learning. This will go towards creating on-the-job training programmes with leading companies, anchoring Centres of Excellence and establishing relevant executive and specialist development programmes.

And third, EDB will support our companies in developing high-potential Singaporeans through the SkillsFuture Leadership Development Initiative. This will help Singaporeans to gain the necessary competencies as well as global and regional exposure to take on leadership roles in their industries.

Mr Chairman, let me summarise the key points of my response. First, despite the major disruption and the continuing aftershocks from the Global Financial Crisis, we are making steady progress and Singaporeans enjoy close to full employment. Second, our emphasis on restructuring, innovation and productivity is gaining traction in the manufacturing and the exportable services sectors. And third, we must persevere in our efforts so that we can replicate these improvements in the other sectors, particularly the domestic-oriented sectors. In short, MTI will continue to help our companies enhance their productivity, raise their competitiveness and create good jobs for Singaporeans. At the same time, we will equip Singaporeans with the skills and expertise to take on these new jobs.

Mr Chairman, if we stay the course, I am confident that we will continue to grow and do well.

Mr S Iswaran: Mr Chairman, I want to complement Minister Lim's overarching picture of Singapore's economic landscape by elaborating on the opportunities and initiatives specific to R&D, energy and tourism.

R&D is an important enabler that can help and enhance the competitiveness and productivity of our economy. It is in recognition of this that the Government has committed

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$16.1 billion in the Research, Innovation and Enterprise 2015 masterplan. Dr Lim Wee Kiak, Mr Ong Teng Koon and Mr Vikram Nair have asked how this has helped to promote innovation and boost productivity.

Let me give Members some perspectives on this. Firstly, our companies have worked with public research institutions to create new products and services and generate new revenue streams.

An example is Fong's Engineering. It is a precision engineering firm which has collaborated with the Singapore Institute of Manufacturing Technology or SIMTech. And they have successfully developed an endoscope. SIMTech played an important role during the clinical trial and evaluation phase and helped the company commercialise its product. This collaboration has helped Fong's Engineering to expand into the MedTech sector and doubled the company's average value-add per worker. This is an example of an SME that has benefited by going into a new sector with a new product and enhanced its top line.

Another example is SIMTech's work in the aerospace cluster with SIA Engineering Company and several local SMEs. As a result, these SMEs have diversified beyond their traditional focus in the precision engineering capabilities, to design and manufacture aerospace components and they too have consequently raised their revenues by up to about 25%. This is another example, but it is more in a clustered setting where a large local company like SIA Engineering with a group of smaller SMEs working with them to raise capabilities and develop new revenue lines.

But innovation is not just about new or breakthrough products. Companies can also benefit tremendously from innovative process improvements to their operations. That is why A*STAR has also been reaching out to companies through the Technology Adoption Programme.

This is a $51 million programme launched in 2013 to help SMEs in their efforts to transform their business model by making technology more accessible. And we have a team of experienced individuals who act as the interface between these SMEs and various sources of technology solutions, whether it is the public or private sector. In just over one year, more than 4,000 companies have been engaged under this programme, with 1,200 technology adoptions by companies achieving at least a 20% productivity improvement.

One beneficiary, and in somewhat an unlikely sector is the Singapore Toy Club, which rents out bouncy castles, toy cars and other party products for home parties and other functions. SIMTech worked with the company to deploy an RFID-based inventory management system to track and account for its equipment, reducing the man-hours

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required for this purpose by about 75%.

Large local enterprises are also partnering A*STAR and its research institutes to develop innovative technologies. Some of these are Sembawang, Keppel and Jurong Shipyards in the marine and offshore industry, Biosensors International in the MedTech sector and Singtel in the infocommunications sector. More recently, in the finance sector, DBS and the Institute for Infocomm Research launched a Joint Laboratory to develop new products and solutions which focus on areas such as data analytics and voice and video technologies. EDB and A*STAR will continue to engage more of these large local enterprises to explore other areas of collaboration.

In some instances, companies are unable to test certain technology applications in Singapore due to constraints such as our climate or limited land and air space. To help such companies, EDB will introduce a new Overseas Living Lab programme to help Singapore-based companies with innovation centres to test and commercialise their technologies in overseas markets. This will help to maximise the value of R&D that takes place here and incentivise firms to deepen their R&D activities in Singapore. EDB will pilot this programme with water and energy solution providers over the next two years. So, there is both breadth and depth in the way our R&D efforts have been engaging companies and trying to deliver value-add.

Mr Ong Teng Koon has asked for the proportion of Singaporeans in R&D jobs and their career options. In 2013, there were about 32,000 research scientist and engineer or RSE jobs. Seventy percent of these RSE jobs went to locals. Our scientific and research talent can pursue diverse opportunities and career pathways that suit their interests and strengths, whether it is in research, academia, industry or entrepreneurship.

Dr Daniel Teo graduated from Ngee Ann Polytechnic and then pursued an undergraduate degree and PhD in engineering. After joining A*STAR, Daniel led the invention of Flexure-Based Electromagnetic Linear Actuator (FELA), which provides high precision motion and force for driving high performance machines. You may be fuddled and so am I, but in simple terms, FELA is a breakthrough for the precision engineering industry, with wide-ranging applications such as in micro- and nano-metrology systems, machining systems and biomedical instruments. FELA won an international R&D Award and has been licensed to a local manufacturer of precision components for further product development.

Some of our researchers have become entrepreneurs. Dr Rosemary Tan was a scientist at our Institute of Molecular and Cell Biology. In 2003, she founded Veredus Laboratories Pte Ltd, a medical device company specialising in portable diagnostic tool kits using A*STAR's licence in malaria primers. She subsequently licensed A*STAR's bird flu primers and launched the company's first products in 2005. These were DNA- and RNA-based diagnostic kits for

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dengue, avian influenza and malaria. Veredus also worked with ST Microelectronics to develop rapid diagnostic kits for influenza viruses which could produce test results within an hour using Lab-on-a-chip technology. Today, it is a company that has grown from a start-up to one that has 30 employees and $10 million in revenue. So, there is quite a range of options available to our R&D people.

R&D also has catalysed new growth areas in our economy. In that regard, the $500 million Future of Manufacturing programme aims to encourage our manufacturing firms to embrace disruptive additive manufacturing technologies, such as 3D printing and robotics.

To support this effort, A*STAR will launch the Additive Manufacturing Centre in 2015 to accelerate the adoption of AM technologies in Singapore. It will house state-of-the-art industrial grade AM equipment to extend the application-centred work with industrial partners, such as Rolls-Royce, and it should attract about $100 million of industry investments.

Also, to enhance Singapore's long-term competencies in robotics, A*STAR, EDB and the National Research Foundation will be launching the National Robotics Programme later this year. It will coordinate end-to-end development of robotics technologies and test-bedding initiatives across various industry sectors and the programme will pull together capabilities across our public research institutions, to develop robotics technologies which will have an economic impact through collaborations with companies and industrial end users.

A*STAR's efforts have also spawned the growth of a new Food and Nutrition innovation hub. Leading nutrition companies such as Nestlé, Danone and Abbott have established facilities in Biopolis to conduct research into healthier and safer products. The number of scientists and researchers employed by these companies has increased from less than 300 in 2010 to around 700 today.

Let me now turn to energy which is critical to Singapore's economic competitiveness. Almost all our energy is imported and so we are highly exposed to global price movements. Global oil prices have dropped dramatically in recent months, from a peak of US$115 per barrel in June last year to about US$60 more recently.

However, movements in the global oil market are unpredictable, given the impact of geopolitical and technological developments. For now, lower oil prices have resulted in an easing of electricity tariffs and fuel costs for businesses and consumers in Singapore. But we cannot expect lower energy prices to persist indefinitely. Indeed, it would be wrong to base

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our long-term strategies on that basis.

Hence, we must not relent in our efforts to ensure that Singapore continues to have access to secure and competitively priced energy supplies. And to achieve this, MTI will continue to promote competitive markets, enhance our energy infrastructure and nurture a strong core of energy professionals. Let me elaborate.

First, on competition in our domestic energy market. Last year, the Energy Market Authority or EMA put in place a competitive process to secure new LNG supplies for Singapore and launched a two-stage Request-for-Proposal or RFP to supply Singapore's next tranche of LNG. There has been a strong response to Stage One of the RFP. We have received nine competitive bids proposing a variety of LNG supply solutions and price indices. And they collectively proposed more than 10 new source countries from which Singapore's next tranche of LNG may be secured. So, it has gone significantly towards meeting our objective of diversifying our sources and giving us greater resilience in our energy supplies. Our agencies are evaluating the bids and will announce the outcome in due course.

We have also taken steps to increase competition in the electricity retail market. Last year the retail contestability threshold was lowered from 10,000 kWh to 4,000 kWh, allowing about 15,000 more commercial and industrial consumers to choose the electricity retailer and package that best suit their needs.

About 1,600 new customers have since applied to become contestable. These include SMEs like Pet Lovers Centre, Evergreen Group, which is a stationery operation, and even not-for-profit organisations like the Alzheimer's Disease Association. So, the benefits are cascading into a much wider range of institutions and corporations.

EMA will further lower the contestability threshold to 2,000 kWh on 1 July 2015, which will benefit another 10,000 commercial and industrial consumers. This will include coffee shops, kindergartens, music schools and religious and community establishments. EMA is also studying the approach and implementation timeline for full retail contestability in consultation with industry stakeholders.

We will also enhance our energy infrastructure to meet our future energy needs. Mr Ong Teng Koon asked about the progress of Singapore's LNG infrastructure and our plans. The commencement of our terminal's operations in May 2013 has allowed us to import LNG from literally all over the world. When additional regasification facilities are completed in 2017, the terminal's throughput capacity will be increased substantially from six million tonnes per annum or Mtpa to 11 Mtpa and that is a significant increase which will go a long way towards addressing Singapore's long-term energy needs. The completion of a fourth

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LNG storage tank by 2018 will further increase the terminal's storage capacity from 540,000 cubic metres to 800,000 cubic metres.

We plan to develop a second LNG terminal. It will enhance our energy security by giving us geographical diversity to our LNG import infrastructure and it will support new industrial sites and power plantings. EMA and the other agencies are studying potential sites in eastern Singapore.

We must also ensure that we have a strong pipeline of talent to meet our energy sector's growing needs. This was a point raised by Mr Ong Teng Koon. In particular, we want to boost efforts to build a strong Singaporean core of energy professionals. To this end, EMA has established a $20 million Energy Training Fund to support the development of new power-related training programmes and co-fund course fees for local workers in the power sector.

Mr Chairman, those who choose to join the power sector will have the opportunity to pursue a rewarding career in a sector that is really a critical part of Singapore's economy. I want to give some examples of those who have either already chosen to go into the power sector or are contemplating doing so to give an example of what is possible. Mr Tan Yi Mian, who joined YTL PowerSeraya seven years ago, has been involved in challenging assignments – from the initial operation and optimisation of the company's 10,000 cubic metre desalination plant to commissioning work on their co-generation combined cycle plant on Jurong Island. Today, he is the gas plant manager and ensures that his plant supplies power seamlessly to Singapore's electricity network grid.

It is also good to see young students who are excited about a career in the energy sector. Last year, I met Ms Noor Nashriyah Binte Jalil, a second-year student in Singapore Polytechnic pursuing a Diploma in Electrical and Electronic Engineering. She is keen to dispel the misconception that engineering is a "man's field" – indeed, that is a misconception – and prove that women can do just as good a job, if not better. She will have ample opportunity to do that in about a year's time when she joins the power sector. Our hope is that her enthusiasm will be infectious and more Singaporeans will choose careers in the power sector.

Mr Chairman, let me now turn to the tourism sector. Last year, we had 15.1 million visitor arrivals, which is a dip of 3% from 2013. The performance was mixed across our key source markets. Arrivals from China fell 24% following various airline incidents and due to the introduction of stricter laws that clamped down on "zero-dollar" tours. On the other hand, there were some bright spots with visitor arrivals from markets such as Hong Kong, South Korea and Vietnam, recording double-digit growth.

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Also, the tourists who came to Singapore stayed longer and spent more on average. So, as a result, the tourism spending held steady despite the visitor arrival decline at $23.5 billion in 2014, similar to the year before.

We expect the challenges to remain in the near term and the competition from regional destinations has also been intensifying. Further, the impact of the tight labour market has been keenly felt by our hospitality sector. On a countervailing and a positive note, outbound travel to Asia Pacific is expected to continue to grow. So, we have plusses and minuses.

For 2015, the Singapore Tourism Board (STB) has forecast visitor arrivals to be in the range of 15.1 million to 15.5 million, in other words, a change of between 0% and 3% compared to last year. Tourism receipts are expected to be in the range of $23.5 to $24.0 billion, again in low growth, change range of 0% to 2%.

Mr Gan Thiam Poh has asked how we intend to remain a vibrant tourist destination and retain our competitiveness. This is a key challenge and STB aims to do so by pursuing quality growth in tourism and working closely with industry to innovate and enhance our tourism hardware and software whilst improving our capabilities.

To provide more leisure options for both tourists and Singaporeans and as part of our efforts to refresh our tourism assets, STB is working with Temasek Holdings to create a world-class nature-themed attraction in Mandai. This will have recreation and education facilities and green public spaces for Singaporeans and visitors to enjoy and appreciate nature. This is a project that is going to take several years to plan and execute but we believe that ultimately we will have a very strong product that will add significantly to Singapore's tourism landscape.

In the near term, we can look forward to the opening this year of the National Gallery Singapore and Singapore Pinacotheque de Paris, which is a fine art museum known for its critically acclaimed exhibitions already in Paris and now at their first venture outside.

We will complement these sorts of tourism hardware developments with certain content and programming innovations, and it is to help create a vibrant calendar of events for both locals and tourists to enjoy.

We want to build on our line-up of sports and leisure events, to complement the F1 and the Women's Tennis Association Finals. As part of the SG50 celebrations, an international showcase called "Singapore: Inside Out" will celebrate Singapore's contemporary creative talents in the fields of architecture, design, fashion, film, F&B, music and the arts. It will be shown in Beijing, London and New York before returning to Singapore in November.

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"Singapore: Inside Out" will spark interest, we believe, in Singapore's creative talent and enhance our image as a vibrant global city. It will be an opportunity for Singaporeans and foreigners to appreciate the works of artists like Farizwan Fajari, better known as Speak Cryptic. This is a mock-up of the art installation he will be presenting at "Singapore: Inside Out", and it is called "Kamar Kamillion"; not "Karma Chameleon" but "Kamar Kamillion". It is a recreation of the artist's bedroom, showcasing how his identity as a Malay Singaporean has been influenced by Singapore's cultural and historical landscape as well as alternative pop culture.

Through the Kickstart Fund which STB has been implementing for some time now, STB will also extend its support for the test-bedding of innovative lifestyle events and concepts with strong tourism appeal and scalability. To date, the $5 million Kickstart Fund has supported 13 such projects. One example is Spot Art. It is a competition and exhibition for talented Southeast Asian artists under the age of 30. Last year in November, which was the second edition, it featured more than 100 works by 48 artists from 12 countries – a very good start to an interesting and novel idea.

To encourage more of such projects, STB will double the maximum level of support, from the current $75,000 to $150,000, and extend the maximum duration of support to one year.

The business travel and MICE sector is another key part of the tourism industry in Singapore and we will continue to build on our strengths in these areas. Last year, Singapore was named Asia's top convention city for the 12th consecutive year as well as the top international meeting city for the seventh consecutive year. STB will continue to seek to secure major exhibitions and conferences and encourage more meetings and incentive travel. In 2015, there will be five flagship events for large incentive groups that will attract over 30,000 business attendees.

We will continue to work with the industry stakeholders on an important aspect of enlivening our lifestyle and cultural precincts. A key focus area will be the rejuvenation of Orchard Road and the Orchard Road precinct.

Dr Lim Wee Kiak has asked how we will ensure that Singapore remains a competitive retail destination for tourists and this effort is a key part. And some things have already been done. Last year, STB worked with the retail industry to test-bed new initiatives to give Orchard Road new vibrance, and one of them is KEEPERS: Singapore Designer Collective, which is a five-month pop-up showcasing local designers. This effort helped to foster long-term business opportunities for local designers. For example, one local brand Aijek by fashion designer Danelle Woo, was picked up by TANGS after being spotted at KEEPERS. STB intends to continue having this KEEPERS facility. For those of you who have not been there,

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especially the ladies, I would urge you to go because I was told there were some very surprising finds.

To take these efforts a step forward, STB is conducting an Envisioning Orchard Road exercise that is expected to be completed by end-2015. It will study consumer insights from key source markets, engage Orchard Road stakeholders to obtain insights and understand key challenges and develop a common vision and new ideas to reinvent Orchard Road.

With our companies, we want to improve productivity and create new and good jobs in the tourism sector. So, to help increase productivity, the Hotel Productivity Centre will be launched this month. This is a dedicated, one-stop centre for innovation and productivity solutions, which will look at areas such as applied research to prototype new technologies, services and solutions that can then be shared and applied industry wide.

STB is working with the Singapore Hotel Association and the Singapore International Chamber of Commerce on a manpower study for the hotel industry. The study will provide insights in the future manpower landscape, skills gap, benchmarking against competing industries as well as recommendations to enable the hotel industry to attract its fair share of talent.

STB's capability development incentive schemes have also helped to upskill our workers, especially in the higher end or upper management in the hospitality sector. One beneficiary is Ms Jennifer Chin from Mandarin Orchard Singapore. She started as an entry-level sales executive with a higher diploma in hotel management. She has risen through the ranks to become senior director in business development. Supported by STB's Training Industry Professionals in Tourism leadership development grant, basically a training grant for professionals, she is currently in the Advanced Management Programme in Hospitality offered by NTU and in collaboration with Cornell University. This will really position her well for taking on greater responsibilities.

Another example is Mr Yew Eng Tong, who is chef de cuisine at Ocean Restaurant by Cat Cora at Resorts World Sentosa. With the help of STB's Association Development Fund and commercial sponsors, the Singapore Chefs' Association has been able to send local chefs like him to prestigious overseas culinary competitions to gain experience and exposure on the international stage.

Mr Chairman, I have tried to give an overview of the various initiatives under R&D, energy and tourism, the developments we can expect to see this year and how these can be

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contributing to strengthening our economy and competitiveness of our companies. This will continue to help us on our path of promoting sustainable growth through innovation, productivity and the creation of good jobs for Singaporeans.

Mr Chairman, productivity of the Singapore economy has been lacklustre, after a spurt following the Global Financial Crisis in 2009-2010, when excess capacity within the economy was taken up. I find that to be worrying. Why? Because countries that may be less productive and cheaper than us have been improving, so they are catching up on us. And then if you look at the more advanced economies, they may be more productive than us, more expensive than us, but they have had technological breakthroughs and they are also garnering their forces. So, in some sense, their unit cost may be coming down. To quote the often-said words from my colleague, Mr Lim Swee Say: "The cheaper are getting better and the better are getting cheaper".

Singapore risks getting caught between the two forces like a pair of scissors closing in on us if we are not careful. From our standpoint, should that happen, our worry is that will real wages be affected, and it could lead to stagnation and even decline, and this is definitely something that we do not want to see. Therefore, the question is what we are going to do about that.

We are glad that the Government has also seen the risk of this happening and has formed the National Productivity and Continuing Education Council, which has since been restructured into the National Productivity Council or NPC and the SkillsFuture Council. I would like to ask MTI for an update on the work of the NPC. We have heard much about what we are going to do about SkillsFuture, but I think it is important for us also to pay the attention of the NPC and how that is translating into outcomes within the different sectors of our economy. Also, what lessons can we learn from other countries as they also try to improve their processes and their productivity, especially the developed countries, and how can we learn from their example.

Mr Chairman, the objective of the current restructuring should not just be to improve productivity. It should be to elevate performance across all sectors, in a way which will allow Singapore to exploit future growth opportunities by relying on productivity growth and not have to restrict to factor accumulation alone.

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In the period between the last two recessions, Singapore relied mainly on manpower growth because earlier productivity drives had, I believe, stopped short of the enduring transformation required to develop productivity into a reliable growth engine. Although seizing the opportunities presented by that period of growth rewarded us with surpluses well into recent years, but it also left businesses with a lingering overhang from the foreign manpower reliance.

If Singapore does not complete the restructuring needed to elevate productivity performance before the next growth wave reaches us, then we will once again be limited to choosing factor accumulation or foregoing the growth opportunities altogether. That is why I believe we must learn from the previous productivity drives and this time around, persevere on the difficult path of deep restructuring.

What more can the Government do that it has not already done? The Government can take a more active role not simply by giving, but by asking firms about what they have received, monitoring firm performance as well as measuring the outcomes from the productivity incentives at the firm level.

The first question I have, therefore, is whether such outcomes have been measured for different types of businesses. Do we know, for example, if older businesses are more likely than newer ones to apply for the Capability Development Grant, Innovation and Capability Vouchers, and PIC? For those who do apply, do older businesses benefit more than new ones? Finally, do we know the cessation rate for businesses after they have received grants?

The results of tracking outcomes in this way can be used to provide benchmarks for what businesses can hope to achieve by tapping on the schemes. They can also be used to fine-tune the application of such schemes to improve their effectiveness. Therefore, my other question is if we do track these outcomes, whether it would be possible to exploit the information to tailor follow-on assistance to suit the needs of specific types of businesses, such as for instance micro-enterprises versus larger ones?

Chairman, the Government has been pushing to improve productivity through various incentive schemes and measures to reduce reliance on unskilled foreign manpower. Hence, I would like to ask the Minister to provide an update on whether the Government's drive on productivity has been up to his expectations, especially in sectors such as the cleaning services? As it is, we are famously or infamously now known for our large armies of cleaners as a ratio to our population.

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If it is up to expectations, could the Minister share successful examples, especially in the cleaning services sector? If not, what are the obstacles faced by such sectors and what will the MTI do to address them? Apart from introducing incentives such as the Wage Credit Scheme, corporate income tax and Productivity and Innovation Credit (PIC) bonus, what other practical measures are in place to ensure that sectors which have less than satisfactory productivity improvements will make the mark?

Mr Chairman, many businesses are trying their best to get in line with the Government's productivity drive. However, many are unable to envision what Singapore's definition of success is in this productivity drive. MTI releases its productivity results regularly. However, this single measure is too broad-based and not specific enough for businesses to relate to for them to benchmark where they stand and how far they are from the Government's goals.

I propose that MTI defines a clearer vision of its productivity end-state that businesses can relate to. MTI should also work out secondary measurements that are better defined and more tangibly understood by the sectors. These could be things like target wages or value-add per skilled or unskilled workers, foreign worker or local worker, or certain targets at the sector level. For example, in F&B, it could be workers per table targets or turnaround times per table. In the construction sector, it could be value add in terms of metrics per square development, for instance.

I know MTI tracks secondary indicators, but I think these benchmarks are probably not well made known to the industry sectors for them to benchmark. Benchmarking top, median and low performers by industry will also allow businesses to look at their current performance and see how much more they need to improve. This could also hopefully enable incentives to be awarded to firms that have performed well and lead the way.

Secondly, indicators will also help sectors such as the F&B sector who often come under the spotlight. Many businesses I know put in effort, but the gains are seen in other sectors that subsequently benefit from a relaxed stance on policies. For example, the use of central kitchens as a shared service will see productivity improvements to manufacturing scores, rather than the F&B sector.

Chairman, the country's F&B sector suffers from negative productivity growth and is plagued by manpower shortages. Singaporeans are not keen to work in this industry, which is associated with low pay, poor career prospects and

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long working hours.

There have been many discussions about how the industry can benefit from manpower-lean restaurants and automated processes, but not enough is being done to address the motivation of employees and the transformative change they can bring to this sector. Please allow me to illustrate this with a real-life example of a "Best Practice".

Tender Fresh Group is an F&B group comprising 74 outlets and three restaurants. The owner, Jimmy Soh, has run the company for more than 30 years. He has a simple philosophy – employees must have a meaningful stake in their company's success and be rewarded for their contributions. He shares up to 20% of his profits with employees and an incentive payout is made monthly.

I recently spoke to Kelvin Chua, Jimmy's Chief Chef, a 33-year-old Shatec graduate who joined the company two years ago. Since then, his job scope has expanded from that of the Chief Chef to include food research and development and the opening and managing of new restaurants. Kelvin is excited that he is empowered to invent new dishes and restaurant concepts for the Group and has seen his earnings triple as he gets a share of the profits from his contributions to the group.

Chairman, every staff in Tender Fresh has a clear set of performance targets. They are rewarded for their individual performance as well as team performance. This principle applies across the group from central kitchen staff who process the chickens, delivery drivers, kitchen crew members to restaurant managers. For example, restaurant managers are offered 10% profit share incentives and they work hard to inspire their restaurant crew to provide a superior customer experience.

I would like to ask the Minister how we can get more bosses to adopt Jimmy's management ethos to spur productivity growth. How can we help businesses to appeal more to the hearts and minds of their employees and motivate them to do their best on the job? How can we help employees feel that they have a stake in the future of the employer's business and can influence the company's outcomes?

Mr Chairman, the traditional top-down approach needs to give way to one that is more of a partnership between bosses and their employees, who collaborate for business success.

Mr Chairman, given our small domestic market for businesses to grow, reliance on domestic business will not be sufficient to support and

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sustain growth. Hence, the focus on internationalisation for companies, especially SMEs, is required to grow.

By expanding overseas, SMEs will be able to tap resources, technologies and markets and hence grow their revenue base. In the Internationalisation Survey 2011/2012, it showed that SMEs surveyed derived 48% of their revenue overseas. Recently, IE Singapore also shared that 50% of SMEs have overseas revenue.

As the Minister has shared in his speech earlier, to support SMEs to internationalise, the grant and tax measures announced in this year's Budget, which are expected to cost about $240 million, are enhancements to the existing schemes of the Global Company Partnership or GCP and the Market Readiness Assistance or MRA. These are used to encourage Singapore companies to expand overseas while still anchoring their key business activities in Singapore. Could MTI share how effective MRA and GCP have been and how many SMEs have leveraged on them? What impact has MRA and GCP had in supporting SMEs as they internationalise?

Apart from these grants and tax incentives, can MTI also share how else it will support businesses to capture opportunities in overseas markets? What strategies for growth are SMEs adopting for internationalisation, how effective have they been to help them scale their business and how sustainable are they? Are our SMEs expanding overseas able to adapt to differing market norms and conditions and thrive in these new markets? Can MTI also share which markets our SMEs have had success in, in regard to their internationalisation? What are the factors that have been supporting the success of SMEs in these markets?

As our businesses internationalise, there will also be need for talent to support the business operations of Singapore-based companies, both for their headquarters operations here as well as overseas operations. What can the Government do to help support the creation of quality jobs for Singaporeans for these very jobs?

Mr Chairman, we have recognised the limitations of relying on multinationals to drive our economy. SMEs account for 70% of employment but contribute a much smaller percentage of GDP. I would like to call for a whole-of-Government approach to nurturing Singapore's global corporate champions, just as we had done so in our pursuit of foreign direct investment (FDI).

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This is an important national priority. We should create an inter-departmental secretariat to take ownership of the target to have 1,000 Singapore enterprises with revenues above $100 million by 2020 and even more ambitious goals.

This is similar to our approach to our National Productivity Council, which sets an overarching goal such as the 2% to 3% productivity growth target and then works with various agencies to set sector goals and monitor sectoral progress. For other urgent national priorities, we have committees such as the National Climate Change Secretariat or NCCS and the National Population and Talent Division or NPTD.

Such a secretariat could work with MFA to ensure that the wish lists of the most promising Singapore firms be fully factored into our trade diplomacy. It could work with companies to identify R&D needs and coordinate with our tertiary and research institutes to help to focus important IP developments for global competitiveness. It could work with the Monetary Authority of Singapore (MAS) and the Ministry of Finance (MOF) to address issues related to funding and perhaps revisit the idea of an EXIM Bank which some of our competitor nations have. It could also work with all agencies to help improve access to Government procurement opportunities or special innovation projects in ways that are GPA-compliant.

It could also work with economic agencies like IE Singapore, EDB and SPRING to ensure that more aggressive support is given to firms with the most potential to become our global corporate champions. It could help bring partners together to exploit opportunities as well as Government co-investment. But support has to be conditional on delivering results – exports, revenues and spin-off benefits to the Singapore economy.

In the early days of South Korea's industrialisation, then-President Park Chung Hee made aggressive government support available to the emerging chaebols, but conditional on the achievement of very aggressive export targets. Otherwise, the firms would be dropped from the programme.

Looking at other countries with a similar population size to Singapore which have nurtured global champions – like Israel, Denmark, New Zealand and Norway – as well as looking at how a few of our promising local companies have made good progress globally, I am confident that if we adopt a results-oriented approach, we can help build this third pillar to our economy.

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Next cut, encouraging internationalisation. Sir, we need to grow our promising local firms into globally competitive companies, but with their roots in Singapore.

The new programmes such as International Growth Scheme or IGS and the Double Tax Deduction or DTD for Internationalisation are welcome steps in the right direction. These schemes can benefit companies venturing abroad, especially by organic growth. However, in some situations, acquisition may be more efficient.

We can improve our ecosystem to enable our future world champs. We should encourage more companies to use Internationalisation Finance Scheme now that it can be used for mergers and acquisitions (M&A). The number of companies getting IE-administered grants for cross-border M&As has been increasing but is still small at 32 last year. To encourage strong development of our brands overseas, can we have a lower tax rate for IP-related income from abroad instead of the usual 17% for corporate tax?

I would also like to ask about the new schemes. Can the Double Tax Deduction (DTD) Scheme cover manpower expenses incurred to put Singaporeans overseas, such as kids' schooling allowances and relocation costs?

For the International Growth Scheme (IGS), is there a target for the number of companies to be on it? We have targets for the other schemes, but what about IGS? How many years will be granted and what are the key conditions for renewal at expiry?

For venture debt risk-sharing, do the schemes apply for overseas M&A?

Mr Chairman, our local businesses must globalise in order to grow and remain relevant. Our homegrown companies still have a long way to go internationally, both in terms of the size of their businesses and geographical coverage.

However, we should not let our small size or population limit our capacity to build world-class companies with strong brands. We have a few non-Government-linked firms which have done us proud – Creative, OSIM and Hyflux are examples that come to mind. With the Government's support, I am sure we can achieve even more of such successes. Many small countries have succeeded in building strong global companies and brands which compete with companies in bigger countries with more experience in their sectors.

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It is time that more of our local companies expand abroad. Besides the greater potential for revenue and profit growth, they can achieve higher productivity and develop new capabilities. We have just heard several Members discuss productivity, Government data over the past five years have shown that sectors with presence overseas enjoyed annual average productivity growth of over 5% compared to below 1% for those focused on our domestic market.

IE Singapore's Year-in-Review reported that 50% of our SMEs now have overseas revenue and interestingly, even more are interested in markets beyond our shores.

I appreciate the measures announced by the Minister to support companies looking to expand abroad. These include increase IE's schemes, the enhanced Double Tax Deduction for Internationalisation (DTDi) Scheme and the new tax incentive, the International Growth Scheme.

However, I would like to ask how MTI will help our businesses capture opportunities in overseas markets specifically? What are its strategies to leverage upon Singapore corporations' reputation as a trusted brand associated with reliability and high quality? Does MTI have specific plans for different sectors such as food, education, retail, environmental services, technology and info-communications? And, finally, will the Ministry care to share if there are targeted approaches to assist companies in different markets, particularly our big neighbours such as China, Indonesia and India?

MTI has been supporting internationalisation for a very long time. As early as 2002, there is an Entrepreneurship and Internationalisation Sub-Committee under MTI to provide a report on how to strengthen entrepreneurship and help our domestic businesses go beyond the Singapore market.

Internationalisation has multiple aspects. First, it can involve Singapore companies expanding the markets' goods and services. This is quite common for consumer goods companies, and you see companies like BreadTalk in other countries, and for professional service providers – law firms, accounting firms – have gone beyond our shores as well.

Second, it can involve Singapore companies making investments in projects abroad and developments abroad, either on their own, or more often, in collaboration with local counterparts in other countries. Many of our property development companies have been engaged in this.

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Third, it can involve Singapore companies moving parts of their business operations abroad. This last aspect may be a little troubling at times because many manufacturing companies, for example, have moved manufacturing operations abroad to lower cost countries.

While internationalisation can definitely be helpful to local companies and entrepreneurs, one aspect that I will be interested in is whether or not it actually helps Singaporeans to get jobs when companies internationalise. As our Singapore companies do well by moving into foreign markets, I will be interested to know whether there are any initiatives MTI has to assist Singaporeans themselves to take advantage of the new jobs that will be created and whether there are any further things that the Government can do to ensure that the benefits of internationalisation go towards Singaporeans as well, who are looking for jobs in these new ventures abroad.

Our export-oriented sectors, as mentioned by some Members, have performed better, with annual productivity growth of more than 5%. Such sectors, for example, manufacturing, finance and insurance and wholesale trade, are characterised by businesses which compete internationally. For them, being productive is essential to compete on a global scale. In contrast, productivity in domestic-oriented sectors such as construction, retail and food services has grown by less than 1%.

However, there are bright spots in the domestic-oriented sector. Take, for example, the cleaning sector, which Ms Tin mentioned. Under the Clean Mark Accreditation Scheme, some 120 accredited cleaning companies are required to appoint productivity managers to carry out continuous productivity improvement. As a result, cleaning companies are increasingly reviewing their work processes and automating their cleaning works. These companies have achieved an average of 46% improvement in process efficiency.

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Mr Liang Eng Hwa and Mr Heng Chee How also asked about the progress of the National Productivity Council (NPC). Since we embarked on our productivity journey in 2010, a total of $650 million has been committed to companies through the measures under the NPC. About 24,000 companies have benefited.

I will now share the NPC's approach in lifting productivity. At the broad economy level, we continue to build a conducive environment to support restructuring. This facilities innovation and internationalisation, which our companies need to carry out to transform. We also review regulations to ensure they do not impede productive practices.

In specific sectors, the NPC's 16 industry roadmaps incorporate international best practices. We continue to keep abreast of international trends and emerging technologies that can help raise productivity and adapt them to the local context where relevant.

Tripartite collaboration fosters collective responsibility and is an important feature of industrial development and skills upgrading in countries, such as Germany. The NPC has, therefore, been structured as a tripartite council, and our agencies continue to work with various partners to raise productivity.

Mr Zaqy Mohamad asked about the use of sector-specific productivity indicators to help companies gauge their performance. We collect such indicators to monitor sectoral performance, which complement the usual measure of value added per worker. As Mr Zaqy Mohamad had mentioned, in the construction sector for instance, we track site productivity or the amount of floor area constructed per man day. This data is published on the Building and Construction Authority's (BCA) website and is available for the industry to benchmark against.

Assoc Prof Randolph Tan further asked if we could refine our assistance to companies through various schemes based on productivity outcomes. As Assoc Prof Tan has said, productivity is influenced by a combination of factors and companies ought to be given time to transform. We agree that it would be best to assess the outcomes of their efforts over a longer period.

Our Centres of Innovation (COIs) and productivity centres work closely with companies to identify their challenges and suggest follow-up actions to take. For instance, Singapore Productivity Centre (SPC) engaged local retailers and food services companies in a benchmarking exercise in 2014. Mr Zaqy Mohamad will also be pleased to know that participating companies received individual report cards showing their performance relative to the industry average and also the top 20% of companies in their sector. Companies can then use these data to analyse their performance and, with partners like SPC, implement

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improvement efforts.

Mr Liang Eng Hwa and Mr Zaqy Mohamad asked what our strategy in raising productivity is over the next few years. Simply put, there are two ways to raise productivity – one is to grow the top line through revenue expansion and market development, and second is to improve efficiency by reducing wastage and optimising processes.

To help companies raise their top line, we will continue to assist our companies in finding new revenue streams. One way to do so is by innovating and raising the value per unit of sales. Innovation creates value and sustainable value creation is key. We provide incentives to support companies at different stages of growth.

SPRING's Innovation and Capability Voucher (ICV) offers support for companies looking for basic solutions. Since 2012, SPRING has awarded around $80 million to SMEs through 16,000 Innovation and Capability Vouchers (ICVs). This is to assist them to engage consultancy services as well as implement productivity solutions.

For companies keen on more advanced innovation projects, SPRING provides the Capability Development Grant (CDG). In 2014, SPRING supported more than 1,200 projects and provided over $100 million of funding support. My colleague, Minister of State Teo Ser Luck, will elaborate on how companies can and have used the CDG.

Dr Chia Shi-Lu and Ms Jessica Tan asked how MTI could help businesses capture opportunities in overseas markets.

Allow me to give a brief update on our external economy. We have done relatively well. From 2004 to 2013, our merchandise exports grew at 8.4% per annum, slightly above the global growth rate of 8.2%. Our export of services expanded at a growth rate of 11% compared to the global growth rate of 8.3%. In terms of Direct Investment Abroad (DIA), we have surged ahead with a compound growth rate of 12%, much faster than the global growth of 4.9%.

We have assisted our companies in expanding overseas. In 2014, IE Singapore helped 28,000 companies in venturing abroad, compared to 26,000 the year before. Of these, 4,000 took up the Global Company Partnership programme (GCP) while 24,000 took up the Market Readiness Assistance (MRA) programme, and 80% of these companies were SMEs.

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We have targeted assistance for our companies in different markets and sectors. In China and Indonesia, for instance, we have observed a rising middle-income group and growing consumerism. IE Singapore has thus collaborated with our businesses to drive market access for the consumer sectors. For instance, IE Singapore established the "Singapore Food Aisles" in supermarkets in Indonesia, so as to feature Singaporean brands and products more prominently. IE Singapore has also collaborated with the Singapore Food Manufacturers' Association (SFMA) to create a Singapore Food Product Centre in China to help our food companies navigate import regulations and source for good distributors.

Our efforts so far in helping our companies internationalise have seen good results. In 2014, as mentioned by Ms Jessica Tan, a survey suggested that about 50% of our SMEs have overseas revenue. We are also observing an upward trend of SMEs investing overseas. Singapore SMEs' stock of direct investments abroad has increased from $29 billion in 2004 to $52 billion in 2013. The top markets for our SMEs continue to be China and Southeast Asia, in particular Malaysia and Indonesia. Beyond these markets, 12% of our SMEs reported engagements in the Middle East and 5% in Africa.

Consider, for instance, this company called 5footway that own a chain of boutique hostels in Singapore. With IE Singapore's assistance, 5footway has expanded its footprint to Macau with a 25-room hostel and a boutique hotel in Hong Kong. Following the successes in Hong Kong and Macau, 5footway continues to seek further expansion and is set to launch two to three more boutique hotels in Hong Kong and Macau next year, while setting their sights on the mainland China market.

Mr Yee Jenn Jong will be pleased to note that as part of the ESC's plans, the Government aims to grow a larger base of globally competitive Singapore companies, create a vibrant corporate ecosystem in Singapore and grow the external wing of our economy. As of 2013, a total of 626 local companies have crossed $100 million in revenue. This is up from 530 in 2007 and 280 in 1998.

Going forward, we will introduce the new International Growth Scheme or IGS. Under the IGS, qualifying Singapore companies will be given a concessionary tax rate of 10% on their incremental income for a period not exceeding five years. Such companies will be expected to anchor their headquarters and key business functions in Singapore while engaging in internationalisation activities and providing opportunities for Singaporeans to gain international exposure. This includes creating good overseas jobs for Singaporeans and helping their smaller SME partners expand overseas.

Next, we will also enhance the Internationalisation Finance Scheme or IFS. IFS has helped Singapore-based companies secure mid- to long-tenure capital facilities with Participating Financial Institutions for overseas assets and acquisitions. Under IFS, the

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Government takes on up to 70% of the risk-share for approved loans. The maximum loan quantum for the IFS was doubled in last year's Budget from $15 million to $30 million.

AC Global Energy, for instance, is a local renewable energy project developer. They took up the IFS when they made the first investment into the US. Other than regulatory, tax and manpower assistance, IE Singapore also supported about S$20 million of financing for AC Global's machinery through the IFS, for use at its new biomass energy production facility based in Tennessee. This is AC Global's first foray into renewable energy and its first biofuel plant in the US and it plans to expand its business by developing more biomass-to-gasoline facilities.

This year, we will also extend the coverage of the IFS to include the financing of M&As or mergers and acquisitions. This will encourage M&A as a complementary growth strategy to help companies expand quicker overseas. We expect this to catalyse up to $100 million worth of incremental loans over the next year for companies pursuing internationalisation via M&A.

Beyond nurturing globally competitive companies, we are also encouraging SMEs to internationalise. IE Singapore will extend two existing schemes that help companies expand overseas.

First is the Market Readiness Assistance or MRA scheme. This scheme provides companies new to internationalisation with financial and advisory support in their overseas set-ups, business partner identification and market promotion. Second is the Global Company Partnership or GCP grant, which provides comprehensive and customised assistance for Singapore companies looking to expand their global presence, covering many areas such as capacity building, market access, manpower development and access to financing.

In FY2012, the support level of four activities under the MRA and GCP – namely design, branding, intellectual property and M&A – were set at up to 70% of the qualifying costs. This year, we will extend this to all activities covered under the MRA and GCP schemes. This will be provided for three more years until March 2018.

Crayon Data is a local company that has tapped on both MRA and GCP. Crayon Data is a big data analytics firm founded in 2012. Today, the company has made its way into India, the UK, the UAE and the US. In making its plans to enter its key market of the US, Crayon Data took up financial assistance from the GCP to engage in-market consultation services so as to identify project leads and tailor their market entry strategy. With this assistance, Crayon Data secured two proof-of-concept deals within a month of beginning its

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engagement. The company also used the GCP to engage a human resource (HR) consultancy to implement a HR culture – that Ms Foo talked about – that would help it attract and retain top talent. It is now tapping on IE Singapore's MRA scheme to set up its legal entity in the US.

Singaporeans will benefit from all these, as Mr Liang Eng Hwa, Ms Jessica Tan and Mr Vikram Nair have noted. Good jobs are created as companies expand overseas. Companies would need good people to take on a range of regional functions, such as in marketing, operations and financial control. Internationalisation helps create regional and global career pathways for Singaporeans.

We will also enhance the scope of the Double Tax Deduction for Internationalisation or DTDi scheme to include manpower expenses as qualifying expenditure, as Mr Yee asked about earlier. Businesses will be able to claim 200% tax deduction on expenses incurred in posting Singaporean personnel to overseas entities for up to three years of overseas operations and up to $1 million per approved entity per year. This is a fairly generous provision. This enhancement provides greater support in initial years of business overseas expansion.

Beyond growing the top line, it is also important for our companies to invest in improving efficiency. Our strategy continues to be to facilitate a conducive environment through broad-based schemes, such as the Productivity and Innovation Credit or PIC and the Innovation and Capability Voucher or ICV. Further assistance is also available at various Centres of Innovation or COIs and productivity centres where consultation and expert advice are available.

We are also working very hard to link up research organisations with SMEs. Second Minister Iswaran quoted many examples. We want to encourage more adoption and commercialisation of our R&D findings.

For instance, A*STAR's Technology Adoption Programme or TAP has developed 16 plug-and-play technology solutions, or otherwise known as ready-to-go packages, which can be applied across different industry sectors. To date, about 50 companies have adopted sensors and analytics, or what is popularly known as the Internet of Things, in sectors, such as construction, retail, healthcare and administrative and support services.

Consider this – Soundeye is a non-invasive fall detection system developed by A*STAR to pick up signs of distress when someone has fallen down. It is also capable of detecting when someone has been inactive for an extended period of time, which indicates a potential loss of consciousness. This system has been deployed in nursing homes such as Ling Kwang

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Nursing Home.

Gas and motion sensors have also been deployed in the restrooms of several places in Singapore such as East Coast Park. These sensors collect a range of data, including the number of users and air quality. Information is then analysed and transmitted to cleaners to inform them when the restrooms need to be cleaned. This allows the cleaning companies to deploy their workers more efficiently.

Ultimately, raising productivity is about people. As Ms Foo Mee Har has observed, it is right that employee engagement is an important part of raising productivity. We need to foster a positive workplace culture where workers are engaged and empowered to put in their very best. This requires quality leadership and management within our companies. My colleague Minister of State Teo will be speaking more about this later. Mr Chairman, may I now speak in Mandarin?

(In Mandarin): [Please refer to Vernacular Speech.] With the development and transformation of the economy, there are also changes to the nature of many businesses. We must ensure that Singaporeans have the skills for the future and the right mindset in order for them to do well in the new economy. Therefore, we need to adjust the current workforce development model to deepen personal skills and mastery. As familiarity leads to mastery, if people have exceptional mastery in their jobs, they will take pride in whatever they are doing.

As Deputy Prime Minister Tharman has mentioned, to shift towards deep skills, we need to make some cultural changes in our society. Individuals need to embrace lifelong learning and seek to constantly upgrade themselves and learn new skills. Employers need to recognise that their people are important assets and they should encourage them to pick up new skills. The Government announced a slew of SkillsFuture initiatives to help companies build strong teams and to help individuals keep up with the times and master future skills so that they can be at the forefront of the workforce.

We are in discussions with the businesses and unions to form up the Sectoral Manpower Plans or SMPs for key sectors and this is expected to be implemented by 2020. The SMPs focus on laying out action plans for developing the skills required in the various sectors and also career development pathways. These are highly targeted plans that aim to enhance the productivity and creativity of various industries.

In addition, to help companies internationalise and venture overseas, we need to ensure that companies are able to access local talents with international experience. We will extend the Young Talent Programme to include students from polytechnics and Institutes of

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Technical Education (ITEs) to provide more opportunities for overseas immersion programmes for the students to broaden their international perspectives. The Government will provide co-funding support for these students to take part in overseas internships and work-study programmes.

We understand the challenges that companies, in particular, SMEs, face when providing quality training for their workers. Therefore, we will work with the various trade associations and industry partners to select, train and deploy 200 SkillsFuture Mentors in the next two years. These mentors will possess deep industry skills and experience and will be able to help SMEs enhance their training capabilities. For example, the mentors can help supervisors and managers develop their ability to nurture and train others and they will also provide feedback to employers and trainees.

(In English): Mr Chairman, raising productivity is a long-term endeavour. It is also a complex task. Companies must simultaneously grow their top line and improve efficiency on a sustained basis. We need everyone – employers, workers, managers and customers – to be committed to change.

The best and most important drivers of productivity growth are the companies themselves. If all of our companies improve productivity, even incrementally, there could be a significant impact on the overall economy.

The adoption of various productivity schemes has risen over the years. More obviously can be done and we will encourage companies to take advantage of the support that the Government offers. We know that our companies need time to make changes and meaningful investments, so the Government is committed to continue supporting companies on their restructuring journey. Together, we can open up exciting opportunities and enable Singaporeans to enjoy the fruits of economic success.