Ministry of Trade and Industry Committee of Supply 2017 – Cuts by WP MPs and NCMPs

(Delivered in Parliament on 3 March 2017)


Business Space and Rental – Chen Show Mao

Over the past year and more, commercial rental for industry, office and shops has declined. Yet a significant number of small and medium enterprises (SMEs) continue to cite the need for government assistance relating to business rental. After this year’s budget was delivered, the Singapore Business Federation (SBF) said it was disappointed with the inadequate short-term support to lower business costs, including the “absence of measures on rental rebates for businesses in general.”

Why is that? Quite apart from the fact that no assistance is too much assistance as far as prospective recipients are concerned, it seems that businesses facing challenging times may find even falling business rental a substantial burden. And for SMEs in some sectors more than others, business rental makes up a significant part of their operating costs. Could the Ministry consider whether targeted assistance in the form of rental rebates directed at qualifying SMEs or start-ups in certain sectors, may be feasible? Say to stimulate retail-oriented SMEs or start-ups, or microbusinesses, so as to bring added diversity and vibrancy to our heartlands.   There are good reasons for this: to help SMEs relieve some of the pressure they feel, to better take on the challenges of restructuring and drive innovation.


Business Rental Costs – Dennis Tan

Sir, I would like to call for the government to do a comprehensive study of the history of business rental costs in Singapore.

In survey after survey, year after year, escalating business costs have been cited as a perennial bugbear for SMEs. In its Budget recommendations for 2016 and 2017, the Singapore Business Federation (SBF) highlighted that there was an urgent need to assist SMEs with business costs in the immediate term so as to help them overcome near-term economic headwinds, and high rental costs have consistently ranked among the top cost concerns for businesses. In 2015, rental of premises was found to be the second factor with the greatest impact on profitability, coming in after manpower costs. Even though concerns over rental have finally dipped slightly in 2016 owing to slower growth overall, this is a problem that we must still pay close attention to.

I hope the government will consider conducting a major, comprehensive historical and international benchmarking study on business rental costs to understand why rental costs rose so rapidly over the past two decades, and why despite the government’s efforts in recent years to release more land through the Industrial Government Land Sales (IGLS) programme so as to ensure more industrial space, SMEs are still feeling the squeeze. The study should also include how the cost of doing business in Singapore compares globally, identify areas where the government can provide greater support to our local businesses, and provide concrete recommendations in this regard. Only by having deep understanding of the factors that caused rental costs to escalate, can we incorporate the lessons into our long-term strategy and avoid crushing rental surges in future.

Impact of R&D Spending – Leon Perera

Sir, we need to nurture Research, Innovation and Enterprise (RIE) as a key driver of Singapore’s economic success. What is equally important is to thoroughly review the economic impact of such public sector R&D spending so that we know what’s working and what’s not.

Here I have three questions.

Aside from the published data for the public R&D sector like employees, projects, patents numbers of start-ups, R&D spending and so on, does the Ministry study and publish the economic multipliers resulting from this spending? For instance, which fields of R&D have the highest long-term multiplier effect?

Secondly, what has been the economic impact of Intellectual Property (IP) generated from the R&D spend? For example, has this IP helped to create total business spending in the wider economy and if so how much?

Thirdly, does the Ministry also have a count of jobs that are directly or indirectly created from that IP?

Running and publishing regular analyses of this nature for Parliament and the public to review would help to ensure that our R&D spending is optimized for economic and other benefits.

Such analyses do not preclude some R&D spending going to knowledge creation for intrinsically altruistic and academic purposes.

But knowing exactly what the economic impact is makes for greater transparency and better decision-making.


Innovation Competitions – Leon Perera

Sir, the Defence Advanced Research Projects Agency (DARPA) in America holds competitions such as the DARPA Robotics Challenge, DARPA Urban Challenge, and DARPA Grand Challenge where participants from various backgrounds and disciplines are challenged to develop revolutionary solutions to practical challenges. For example, after the Fukushima nuclear disaster in 2011, DARPA organised a Robotics Challenge that spanned four years, aiming to spur research and technological advancement in the field of disaster robotics. The prize for the fastest robot to navigate an obstacle course based on conditions in Fukushima was $2 million, and was won by the South Korean team.

Such large-scale competitions do not only stimulate innovation and the progress of the industry, but also encourage the right qualities of perseverance, creativity and team-work among those in the R&D field. The resulting intellectual property could be harnessed to benefit the Singapore economy.

I suggest that the government, perhaps via public-private partnerships, hold competitions with significant grants to stimulate commercializable idea generation from companies, campuses, Research Institutes (RIs), Research Centres (RCs) and the general public, with some conditions to facilitate the use of the resulting IP for the benefit of the Singapore economy.


Private Sector Role in Economic Planning – Leon Perera

Sir, private sector staff do serve on the Boards of many economic agencies. But I suggest that we make more use of secondments of staff from private companies to serve short stints in government agencies to help with economic planning or promotion initiatives.

In the UK, the central civil service has just introduced a new framework for managing secondments into and out of civil service jobs, aimed at building meaningful links between the civil service and business leaders. Madam, I have met a few such private sector secondees into the British public service in the past and they demonstrated a keen knowledge of both private sector norms and constraints, as well as public sector priorities. Britain is also seeking private sector secondees to help prepare for the upcoming, technically complex Brexit negotiations. Japan similarly has private sector secondees working in Ministries.

In Singapore, there could be good demand for secondments in both directions, as business executives and civil servants may see the benefits of a stint on the other side. Of course, there are some potential pitfalls of secondment – ensuring that the stints are not too long or short, enabling secondees to adapt to a new work culture and so on – but these can be addressed through good HR frameworks.

Given the challenges of a 21st century economy and the predominance of lifelong civil servants in the upper echelons of public organizations and political office holders, private sector secondments could better enable us to form and execute economic policies.


Targets for Renewable Energy – Daniel Goh

Sir, the intended implementation of an upstream carbon tax in 2019 shows our country’s commitment to climate change mitigation. However, a carbon tax alone will not spur energy conservation and reduce emissions. The announcement has spurred talk that this could result up to a 4.3% rise in electricity prices for downstream consumers. Industries could prepare for this rise in the next few years, factor in the rise in costs, and end up not reducing energy consumption. The only one who would profit then would be the Government.

One of the most common tools used in conjunction with carbon taxation or cap-and-trade regimes around the world is the setting of hard targets for renewable energy production coupled with carbon offset incentives. We should cement Singapore’s commitment to energy conservation by setting a target for renewable energy production. Currently only 4% of electricity in Singapore is produced from sources other than natural gas and petroleum. We should aim for 10% renewable energy production by 2025. This will put us on par with other small developed countries like South Korea which has a target of 7% by 2020 and Belgium with 13%.

To provide incentives for power stations and other large emitters to turn to renewables, the government should link the investment and use of renewable energy to carbon tax offsets. These offsets can be partly funded by revenue from the carbon tax revenue in the initial years.


Competition Act and Interim Orders – Pritam Singh

Chairman, in the middle of last year, the Competition Commission of Singapore announced that it was investigating restrictive industry practices in the supply of lift spare parts for lifts managed by Town Councils. In its press release on the matter, the Competition Commission acknowledged that there could be cost savings for Town Councils should they engage third party lift maintenance contractors for various brands as compared to procuring lift maintenance services from each original lift installer.

 To this end, the Straits Times noted that the original complaint was made to the Competition Commission about EM Services, a joint venture between HDB and Keppel Land, sparking an investigation. EM Services was found to have refused to supply spare parts to third party contractors. On 12 May 2016, some two years after the initial complaint, EM Services came forward to provide a commitment to supply lift parts for the lift brand known to most Singaporeans as EM to third party lift maintenance contractors in Singapore. Following feedback from a public consultation, the Commission considered EM Services’ commitments to fully address competition concerns, presumably concerns which originate from possible breaches of section 47 of the Act.

The long duration of time between the initial complaint and the resolution of this matter would have had potentially significant cost implications for Town Councils which could have secured favourable maintenance rates from third party maintenance providers had a resolution to this matter been achieved earlier.

Section 67 of the Competition Act provides for interim measures, in the midst of investigations, when the Commission suspects a Section 47 prohibition has been infringed. The essential ingredients for instituting such interim measures is if the matter is an urgent one to prevent serious injury to a person or category of persons or secondly, simply to protect the public interest. It would appear that Section 67 could be employed against any lift company intentionally withholding the supply of lift parts under either of these two limbs. The high incidence of high-rise living and spate of lift incidents from 2015 in particular brought home the point about the public interest in a very real way.

Did the Competition Commission consider making interim orders against EM Services so as to compel the company to sell spare parts to competitor maintenance companies during the period under investigation? If not, why not? Not only would safety concerns and the public interest have been addressed, Town Councils could have potentially saved hundreds of thousands of dollars thanks to more competitive lift contracts. Secondly, on what basis did the Competition Commission deem it necessary to conduct a public consultation to affirm EM Services’ conditions to supply lift parts? Who was consulted and why did the Competition Commission choose this method of resolution and not impose interim measures?