Economy & business — Topics

5 Aug 2014

Update on Singapore's Economic Restructuring Efforts and Growth Outlook

Singapore's labour productivity grew by 2.9% annually from 2009 to 2013 but has weakened to 0.2% per annum from 2010 to 2013, with notable declines in retail, F&B, and construction, while sectors like transport and precision engineering showed strong growth.
Over 17,000 companies have benefited from productivity initiatives, with PIC scheme participation rising from 36,000 companies in 2011 to 50,000 in 2013, resulting in $1.5 billion in tax savings and cash payouts, and ICV scheme awards increasing to over 2,700 vouchers in early 2014.
Singapore's GDP growth slowed to 2.1% year-on-year in Q2 2014 from 4.7% in Q1, primarily due to a manufacturing slowdown, but the economy is expected to grow between 2% and 4% for the year, supported by a modest global recovery and resilient domestic sectors.
The government is encouraging broader company take-up of productivity schemes through business associations, aiming for about 1% productivity growth this year to align with labour force growth of 1-2% and support the 2-4% growth target.
Challenges include managing new regulatory roll-outs without overburdening businesses, considering more targeted sector-specific productivity schemes alongside broad-based ones, and cushioning job transitions through reskilling, especially for senior PMEs, with collaboration between government, trade associations, and NTUC.

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5 Aug 2014

Salary Components for New S Pass Pay Thresholds

The Minister for Manpower explained that S Pass and Employment Pass salary thresholds are raised to match local wages and prevent foreign workers from undercutting Singaporeans, while also balancing company competitiveness.
Employers can meet the new qualifying salary through a combination of basic salary and fixed monthly allowances, but variable components like bonuses or commissions cannot be counted for eligibility.
Zainal Sapari questioned whether allowing increases through allowances instead of basic pay could create a loophole for employers to lower overtime and bonus costs, making foreign hires cheaper than local ones.
The Minister acknowledged this concern and stated the Ministry would investigate if employers are exploiting this by reducing basic pay and using allowances to meet thresholds, potentially undermining the intent of a level playing field.

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5 Aug 2014

Over-charging of Placement Fees for Foreign Domestic Workers

Over the last three years, the Ministry of Manpower received six complaints from Foreign Domestic Workers about placement fees exceeding the legal cap, plus 15 additional cases found during audits, with eight cases resulting in action taken against agencies.
Singapore law caps placement fees at one month’s salary per year of service, up to two months’ total, and the ministry does not believe excessive charging by local agencies is prevalent but will act when violations occur.
For overseas fee issues beyond Singapore’s legal reach, the ministry informs relevant embassies or high commissions to enable action at the source.

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5 Aug 2014

Options for Singaporeans to Set Aside Larger Sums than CPF Minimum Sum

Foo Mee Har asked the Minister for Manpower how CPF LIFE can allow Singaporeans to set aside more than the Minimum Sum of S$155,000 to receive higher monthly payouts, questioning the cap and the scheme's funding mechanism.
The Minister explained that CPF LIFE is designed for basic retirement needs, uses risk pooling to ensure lifelong payouts, and offers options like top-ups and the Supplementary Retirement Scheme (SRS) for those seeking higher incomes.
Concerns were raised about the lack of higher annuity options within CPF LIFE, with the Minister noting that middle and higher-income individuals can use other investments and that the scheme focuses on supporting lower-income groups.
The debate also covered SRS, where payouts are taxable, and suggestions were made to increase the SRS cap to account for inflation, with the Minister agreeing to consider improvements.
Overall, the discussion highlighted CPF LIFE's role in providing basic retirement assurance, the flexibility of alternative schemes, and the government's openness to reviewing options for better retirement planning.

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5 Aug 2014

Borrowing from Licensed Moneylenders and Profile of Borrowers

The Ministry of Law provided data showing that in 2012, 33,071 borrowers took loans from licensed moneylenders, rising to 34,370 in 2013, with average loan amounts of about $1,300 and $1,400 respectively, but noted it does not track borrower age or nationality.
In response to concerns about young borrowers, the Ministry indicated it would ask the Committee reviewing moneylending issues to consider raising the minimum borrowing age from 18 to 21 to align with financial institutions and deter younger individuals.
Regarding interest rate caps for borrowers with annual incomes above $30,000, the Ministry explained these are not currently capped as such borrowers have alternative credit options, but the Committee is reviewing the issue as part of broader moneylending reforms.

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4 Aug 2014

Budget Allocation for 28th Southeast Asian Games in Singapore in 2015

Assoc Prof Tan Kheng Boon Eugene asked about the total budget, cost control measures, and potential profits for the 28th Southeast Asian Games in Singapore in 2015.
Lawrence Wong stated that the budget is still being finalized, with efforts to minimize costs by using existing facilities, seeking corporate sponsorships, and managing key cost drivers like the number of sports and events.
He noted that profits are not expected, as ticket sales are priced to encourage participation rather than fully recover costs, and the Games are hosted to support ASEAN responsibilities and benefit Singapore's sports scene.

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4 Aug 2014

Size of MediShield Fund's Reserves and Percentage Needed to Meet Claims and Premium Rebates

As of 31 December 2013, the MediShield Fund’s reserves stood at $1.7 billion, which are used to cover scheme liabilities such as policyholders’ claims and premium rebates.
About two-thirds of the reserves support ongoing and future claims, including incurred but not yet submitted claims, expected future claims, and long-tail continuing claims, while the remainder is set aside for future premium rebates.
The portion of reserves allocated to premium rebates is expected to increase under MediShield Life to smooth premium increases in old age, with the fund’s liabilities and reserves reviewed annually using actuarial principles and audited independently.

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4 Aug 2014

Loans Taken under Licensed Moneylending

David Ong asked the Minister for Law about the amount of loans taken under licensed moneylending compared to total consumer credit over the past two years.
The Minister defined total consumer credit as outstanding personal loans excluding mortgages, which were about $70 billion in 2012 and $74 billion in 2013.
Outstanding licensed moneylending loans were about $174 million in 2012 and $198 million in 2013, making up less than 1% of total consumer credit.

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4 Aug 2014

Permanent Residents Selling Their HDB Flats and Proceeds from Such Sale

Mr Baey Yam Keng asked about the number of Permanent Residents selling HDB flats over the last decade and suggested differentiated profits for citizens and non-citizens, such as a capital gains tax.
Khaw Boon Wan stated that between 2,300 and 3,500 HDB flats were sold by Permanent Resident households each year in the last 10 years.
Existing measures already differentiate treatment for Permanent Residents, including ineligibility for subsidised new flats, no housing grants, additional buyer's stamp duty, a three-year wait to buy resale flats, and restrictions on subletting and selling after buying private property.
The government is not planning additional measures at this time due to the significant differentiation already in place.
The debate focused on whether further differentiation, like a capital gains tax for non-citizens, is necessary given current policies.

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4 Aug 2014

Update on Implementation of Recommendations of the Entrepreneurship Review Committee

Assoc Prof Fatimah Lateef requested an update on the implementation of the Entrepreneurship Review Committee’s recommendations since February 2014.
The government is restructuring the Action Community for Entrepreneurship to strengthen private sector leadership in entrepreneurship.
IE Singapore launched the Market Access Incubation Programme to help startups build overseas networks, while SPRING Singapore organised pitching sessions with large enterprises.
JTC LaunchPad@one-north is on track for completion by end-2014 to provide enhanced infrastructure and networking opportunities for startups.
The government has begun implementing the Committee’s three key recommendations: private sector leadership, improved market access, and better startup infrastructure.

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4 Aug 2014

Provision of Adequate ATMs and Cash Deposit Machines

Mr Lim Biow Chuan proposed a requirement for banks to provide adequate ATMs and cash deposit machines for every 5,000 residents in an area.
The Monetary Authority of Singapore (MAS) stated that current banking infrastructure, including over 2,050 ATMs and 300 cash deposit machines, already meets or exceeds the suggested service density.
MAS highlighted partnerships with post offices and retail outlets to expand cash service touchpoints to over 3,500 locations nationwide.
The government remains committed to monitoring and ensuring access to basic banking services while balancing cost and operational factors.

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4 Aug 2014

Enhancement of CPF LIFE Payout to Help Widows

Foo Mee Har asked how CPF LIFE can be improved to provide retirement income for widows relying on their husbands' CPF LIFE annuities.
Tan Chuan-Jin explained that upon a member's death, unused CPF LIFE savings are refunded to beneficiaries and can be transferred to their accounts for retirement payouts.
The government encourages family support through CPF top-ups, tax reliefs, and schemes like the Silver Housing Bonus and Lease Buyback Scheme.
Widows without family support or resources can seek help through social safety nets such as ComCare.

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4 Aug 2014

Competitive Edge of Local Enterprises

Teo Siong Seng questioned if local enterprises are losing competitiveness, citing declines in non-oil domestic exports (especially PC exports) and reduced spending on shopping and food/beverage despite rising tourism receipts.
Lim Hng Kiang responded that the declines were due to external factors like weak global PC demand and weaker purchasing power of Indonesian visitors, and emphasized that sectors like precision engineering and furniture manufacturing continued to grow.
He acknowledged that tighter labor constraints and rising costs could affect some companies but stressed that raising productivity and internationalizing through government schemes like the Global Company Partnership are key solutions.
The government will continue to strengthen trade linkages through Free-Trade Agreements to help local enterprises access diverse markets and remain competitive.

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4 Aug 2014

Impact of Government's New Bus Contracting Model on SMRT and SBS Transit

Gerald Giam asked why SMRT and SBS Transit were allowed to continue operating nine bus packages without a tender after their licenses expire, whether they benefit from service fees without fare revenue risk or competition, and when all 12 packages will be competitively tendered.
Lui Tuck Yew explained that the Land Transport Authority is gradually transitioning to the new bus contracting model, initially tendering three packages while retaining the current operators on nine to ensure a smooth transition and minimize disruption.
He noted that the nine packages will move to the government contracting model by August 2016, with contract durations varying and competitive tendering expected for more than half of the packages by the early 2020s.

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4 Aug 2014

Regulating Increase in Number of Licensed Moneylenders

Mr Lim Biow Chuan questioned the Government on regulating the maximum number of moneylenders and pawnbrokers in HDB estates to prevent excessive availability of credit.
Minister K Shanmugam stated that imposing geographical limits on moneylenders is not currently effective due to Singapore's small size and high accessibility.
The Ministry is reviewing this position and has established an Advisory Committee on Moneylending to consider issues including the location of moneylenders in HDB estates.
The Committee's conclusions and recommendations will be shared upon completion of its work.

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4 Aug 2014

Help for Singapore Companies as Banks' Loan-loss Provisions Rise

Teo Siong Seng asked if the Ministry for Trade and Industry would help businesses, especially SMEs, address potential financing challenges as Singapore banks raise loan-loss provisions.
Lim Hng Kiang responded that Singapore's banking system remains healthy, with bank loans to businesses growing 16% year-on-year and financing challenges for SMEs declining from 38% in 2010 to 17% in 2013.
The government offers financing schemes like LEFS, MLP, IFS, and TCIS to support domestic and international business financing needs.
In Budget 2014, the MLP was enhanced to increase government risk-share for young enterprises to 70%, and the IFS loan quantum was raised to S$30 million to support larger overseas projects.
The government regularly reviews these schemes to ensure businesses have adequate access to financing.

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4 Aug 2014

Impact of Progressive Wage Model on Wages in Cleaning Industry

The Progressive Wage Model (PWM) is now a licensing condition for cleaning companies, with full implementation for all resident cleaners expected by September 2015.
Since the PWM was recommended in 2012, cleaners' median basic wages have increased by 16%, rising from $820 to $950 in one year.
The PWM is expected to improve professional standards through mandatory training and shift procurement practices toward quality-based sourcing.
Authorities will continue monitoring the PWM's impact and work with tripartite partners to promote best sourcing and regularly review the model.

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4 Aug 2014

Concessionary Rental Rates of State Land for Government Agencies

The Government charges market rates for state land used commercially but offers concessionary rates for institutional or community purposes, with the Singapore Land Authority applying this policy uniformly across all users.
Government Ministries may receive state land allocations at no cost to perform their functions, but if they lease such land to others, market-rate charges apply.
The former Ministry of Defence site along Holland Road was returned in the 1990s and is now leased out through open tender to the public as Tanglin Village, with MINDEF no longer being the lessee.

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4 Aug 2014

Easing Property Cooling Measures

Foo Mee Har asked whether the government could relax property cooling measures like the Additional Buyer Stamp Duty to allow financially prudent Singaporeans to upgrade their homes.
The Minister for National Development explained that cooling measures aim to maintain housing market stability and financial prudence, with existing concessions like stamp duty refunds and high loan limits already supporting upgraders.
The Minister emphasized that relaxing measures is premature, as it could increase demand, transactions, and housing prices, which would not be favorable to aspiring home-buyers.

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4 Aug 2014

Net Assets Enable Government to Meet CPF Obligations despite Market Cycles

The Deputy Prime Minister explained that the Government uses its net assets—specifically past reserves safeguarded by the Constitution—as a buffer to guarantee CPF savings and pay SSGS interest rates even when GIC’s returns are weak, ensuring CPF members receive promised rates regardless of market cycles.
GIC manages a combined pool of Government funds, including unencumbered assets, allowing it to take long-term investment risks; short-term fluctuations in returns due to market volatility are not considered a draw on past reserves, as the Constitution protects against systematic erosion rather than cyclical losses.
In response to supplementary questions, the Deputy Prime Minister clarified that GIC’s reported returns account for all assets it manages for the Government, that NIRC to the Budget is calculated after covering liabilities like SSGS, and that shortfalls in GIC returns relative to SSGS rates are absorbed by the Government’s net assets.

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