Madam, I wish to thank you for giving me the opportunity to participate in this debate. And in fact, I would also like to thank the movers of the Motion, my parliamentary colleagues, Mr Leong Horn Kee and Mr Inderjit Singh, for tabling this Motion. In doing so, I think they have provided this House with a great opportunity to debate on a topic which is obviously of great interest to Singaporeans and which is also important for our future growth and development.
Indeed, I have listened very carefully to the comments and viewpoints made by the speakers before me on this issue. Generally, I do not disagree that we must help our local enterprises to develop and grow. And to this end, we should examine existing schemes, policies and regulations to determine whether there are any impediments standing in the way of full participation by our SMEs, of which we place them at an unfair disadvantage compared to GLCs and MNCs. In this respect, the recommendations of the EISC should be seriously looked at and the Government should seriously consider implementing useful and practical suggestions that will strengthen our economy and make Singapore even more competitive globally.
I am all for a level playing field. But I believe that we should not have protectionist policies, not only for GLCs and MNCs, but also for our own SMEs. As such, protectionism will not, in the long term, help our domestic industries to be resilient and to compete globally.
Madam, having listened to this debate, I am not sure whether we are identifying the issues correctly. There is a tendency to compartmentalise GLCs and SMEs into different boxes and to assume that one can only grow at the expense of the other. To me, the issue is not whether GLCs should be competing with SMEs. But of greater significance is the issue of how Singapore companies, whether they are GLCs or SMEs, can compete in a very competitive world economy which has become even more aggressive with the admission of China into the WTO.
Recently, with my colleague, Mr Nithiah Nandan, we led the SLF model workers delegation to Shanghai and we visited the Philips optical storage factory there. The plant's General Manager, who briefed us, told us that the operating environment in China is very flexible and fast, and there is good support from the authorities. The factory was sited on a huge piece of land and the huge factory took only one year to build with the workers working round the clock come rain or shine. He said that in Europe, it would have taken two to two-and-a-half years to build a similar factory. The education system, according to him, is good and among the non-production staff, almost 90% are degree holders. And of these, 15% are PhDs. Among the production staff, the average level of education is at least upper secondary education.
The point I wish to make is that, instead of debating about how GLCs are crowding out local companies and to add to that, I must add NLCs, a new term that has just been developed today, perhaps we should concentrate more on how GLCs, NLCs and SMEs can partner each other as one united force to compete in the international market and to be more efficient and productive domestically.
From the workers' viewpoint, what is important is not so much whether companies operating in Singapore are GLCs, SMEs, or foreign-owned. Rather, of greater significance to us is whether such companies create jobs, incomes and bring in new technologies and skills, in other words, whether more jobs are created through such investments and whether these are well-paid jobs.
Madam, it is a fact that, overall, GLCs and MNCs provide greater job stability to our workers and offer more attractive terms of employment. This is because they are generally bigger, have more resources and are more professionally run. In my view, promoting GLCs need not be at the expense of SMEs. In fact, there is no guarantee that pulling our GLCs from certain sectors would automatically result in a mushrooming of more and stronger SMEs. What may happen, instead, is that the vacuum would be very quickly filled up by bigger, more competitive and globally-savvy foreign competitors.
This is evident by looking at the retail sector. In Thailand, for instance, the competition comes not from the State-owned enterprises but big foreign retailers, such as Carrefour and Tesco. There are local companies, but they are weak and not competitive. In Taiwan, the supermarket scene is all foreign, with Carrefour being the biggest.
Madam, let me come to another point which has been raised by previous speakers. I think it is unfair and unwise to brush the NTUC companies in the same stroke as other private enterprises. In the first place, NTUC companies are, in fact, cooperatives set up by the workers. The capital for each and every one of our cooperatives comes from shareholders which are our trade unions and individual members. Hence, these cooperatives belong to the unions and workers, and not the Government. We do not receive Government funding or capital to set up any one of our cooperatives. The priority of NTUC cooperatives must be the ordinary consumers, and the 400,000 or so Singaporeans, many of whom are low income workers, who collectively own the cooperatives. How many of our workers could afford to invest in companies and hold shares on the same basis as their management counterparts, or better-off Singaporeans?
NTUC cooperatives will be measured by whether they have helped to make a difference to the lives of ordinary Singaporeans. Our responsibility is to help workers stretch their hard-earned dollar and improve their quality of life.
Madam, in fact, our NTUC cooperatives too face intense competition from major foreign retail chains many times their size. It also has to contend with business alliances by private sector players. Since the 1980s, for instance, FairPrice had to tender for sites in open competition. In new suburban malls, FairPrice would not get a chance to even put in competitive bids, as some developers prefer to award the tender to supermarket operators with whom they had special relationships. Residents, as Prof. Koo Tsai Kee has said earlier on, have complained to their MPs when they do not have an NTUC FairPrice outlet near their home. This is clearly evident that people, ordinary Singaporeans, average workers, support the idea of cooperatives and find them useful and meet their needs.
Madam, it is true that NTUC appoints some Government Ministers, Members of Parliament and Government officers on the board of directors of our cooperatives. But this is to enable our cooperatives to benefit from the experience and expertise and, not as implied, to gain any undue or unfair advantage compared to other businesses. In fact, NTUC also appoints prominent businessmen on the board of NTUC cooperatives and many have, to their credit, willingly served on our boards which have benefited not only the NTUC cooperatives but, in many ways, have contributed towards a conducive industrial relations climate, as such co-option of business leaders has provided the opportunity for business and union leaders to integrate and understand each other's position better. The fact that many prominent businessmen agree to serve on our boards indicates that they too subscribe to the social objectives of NTUC cooperatives and want to contribute towards this larger community objective.
Madam, NTUC cooperatives are truly mass movements and we play a social role by providing real and tangible benefits to Singaporeans. During good times, the NTUC cooperatives moderate cost increases by setting benchmark prices. And during bad times, they help workers tide over the difficulties, such as the 1998, 2001 and 2002 relief packages. In fact, they collectively provided $26 million in relief package in 1998 and $52 million in relief package in 2001 and 2002. NTUC cooperatives are not set up for profits alone although, in order to stay viable, they have to be profitable so that they can continue to contribute to society. Wherever possible, NTUC cooperatives also strive for win-win strategies by working with small businesses to help them grow. For example, FairPrice and Healthcare work closely with small retailers through their franchise schemes.
Madam, recently, the cooperatives, such as FairPrice, Foodfare, Healthcare and Childcare, have also announced their commitment to help cushion the impact of the GST increase on Singaporeans next year. Since 1999, we have been publishing a set of social indicators together with our statement of accounts. This an example of the transparency requirement, which was mentioned by Mr Inderjit Singh earlier on. Just as companies account to shareholders each year, in terms of equity, we publish social indicators to show that we are not just businesses, but that we believe in social responsibility and will do our part to help improve workers' lives and ensure that their basic needs are met. Although our cooperatives belong to the workers and unions, shareholders do not profit from our cooperatives. In fact, under the Cooperative Societies Act, the maximum rate of dividends that cooperatives can pay is capped at 10%. This means that whatever benefit is reaped by the cooperatives, these are largely ploughed back to consumers and society.
Madam, I am proud to be associated with socially responsible employers who care not just for their bottomline, but also enlarge their role to care for the community. Cooperatives can serve as a check against the excesses or failures of the market. They are bound by their admission, values and traditions to consider the wider interests of society. Each and every cooperative that the labour movement has set up is founded upon a clear social objective. For example, NTUC Income was set up in those days because there is no insurance company that is prepared to provide low cost, low premium insurance coverage for workers. NTUC FairPrice was set up in those days because there was rampant inflation and profiteering, and that was eating into the hard earned cash and money of the workers. The presence of our cooperative movement has contributed towards social stability. It has helped to mitigate the effects of a widening wage gap as it helps to level up workers.
Madam, NTUC empathises with the problems faced by small retailers. Without sufficient economies of scale, they will find it difficult to operate. However, it is unfair to place the poor prospects of small neighbourhood retail shops on the growth of NTUC cooperatives. In the absence of NTUC cooperatives, small retailers would face the same competition by other big retailers, including the foreign ones. Of the supermarkets, only Sheng Siong and PRIME are owned by Singaporeans. The rest are foreign owned. We do not think that dismantling NTUC cooperatives would improve the position of SMEs, or that it would promote greater innovation and entrepreneurship among local companies. There are clearly many other factors that are at play, such as access to capital expertise and size which affect the growth of our local companies and not because of the presence of NTUC cooperatives or NLCs.
Mdm Deputy Speaker, someone has suggested that some of our cooperatives are too small and have little impact. In this case, is the answer not to grow bigger, to develop the clout? But if we do so, then we will be accused of crowding out the local companies. Even so, a small player, such as Denticare, exerts an influence. Denticare executives have been asked from time to time to raise their prices so that other dentists can follow suit. Does Denticare crowd out other dentists? It cannot be so, as the people in Denticare are themselves dentists. If other dentists wish to compete with Denticare, they are free to grow together and offer the public prices lower than the table of rates set by the Singapore Dental Association. There is nothing to stop them. And the public would applaud them, and so would I. Perhaps, I would also go and visit them, when I need dental treatment.
Mdm Deputy Speaker, in conclusion, I agree with the Motion that we should examine all ways to ensure that our local SMEs stand a chance and can benefit from Singapore's economic growth. I do not think that the debate should be about either promoting GLCs or SMEs, but rather on how both can partner each other and compete in the global economy. Both have a role to play, and they can certainly complement each other in order to promote and strengthen the Singapore brand. Most certainly, NTUC cooperatives will and must continue to play the role of a social leveller and guardian of the interests of the vast majority of Singaporeans who have benefited from our presence in the market.
