Mr Vernon Carroll, President
Mr Lee Tzu Yang, Country Chairman, Shell Companies in Singapore
Mr Thomas Thomas, General Secretary
Distinguished Guests
Ladies and Gentlemen:
In the 1960s, when I was finishing secondary school, there were some choice jobs. If you could not go to university to become a doctor, then you should aim to be a teacher, or work with a bank or Shell. If you could land a job in Shell, you were secure for life. You did not have to join any of the social clubs because the company provided club-house facilities. For some time, it was true that if you had a job with one of the oil companies, you were the envy of many. The oil-refining revenues were so substantial that when we looked at Government statistics, we had to exclude oil.
How things have changed! Today employees of banks and oil companies are not envied as much as before!
Some time in the early 1990s, competitive pressures on oil-refining activities mounted. Reflecting on the situation one day, it dawned on me that there was no reason why Singapore is a centre for oil-refining. We did not have any crude oil, nor did we have a huge domestic market. Yet Singapore had become a major centre for oil-refining! The competitive pressures meant that margins were shrinking. Oil refiners here had to become the most cost-efficient to play any role. Today the pressures are there, and probably at the height.
What has this meant for employees? To become even more cost-efficient, employers had to trim staff numbers. The results have been very telling! Membership of Singapore Shell Employees' Union is about half of what it used to be! Maintaining good industrial relations during a period of constant restructuring and pruning of staff is not easy. In Shell you have done it reasonably well. Yes, sometimes relations had been strained, and temperatures had risen. On the whole, issues have been resolved. Not all have been resolved to everyone's satisfaction, but generally you have done well.
Why is this so? It is due to leadership - from both unions and management. Both recognised the need to develop a framework for the smooth conduct of industrial relations, and the first shared vision was formulated in 1994. Today you have updated the shared vision, and will launch the Industrial Relations Operating Model. Congratulations, and I hope you will share your experience with other companies who may be interested!
I am sure Singaporeans outside of Shell will be wondering what this means. Is a shared vision just to managed restructuring and retrenchments? People who are retrenched need jobs, so who is looking after them? Do they have a future? Indeed, what kind of future is there for Singapore?
Well, let us cast our minds back! We had high unemployment in the 1960s. Job creation then was the biggest problem for the Government. Government persuaded Shell to expand on Pulau Bukom. As I said earlier, there is no compelling reason to set up an oil refinery in Singapore, when we do not have crude oil, or a huge domestic market. Yet Shell was persuaded! Singapore can supply the region and even beyond, if we are competitive in price. Other oil refiners came, and invested.
Since then we have broadened the base. Well before the book "Who moved my cheese?" came out, we had decided to find new cheese. So we developed a chemicals industry. And we base it on an island created out of the water - Jurong Island! Our economy is performing better this year because of very good growth of our chemical industry, together with biomedical sciences and shipbuilding and repair.
There is also no compelling reason why anyone should site his chemical plant in Singapore. We do not have a big market. Yet, we have succeeded!
Let me tell you a story. A few years ago, a very distinguished visitor was shown Jurong Island.
After the briefing by EDB, he asked: "It must be very costly to reclaim land."
"Yes, your Excellency", the official replied.
"Do you charge enough to recover the cost?" he asked.
"No, we cannot. At current rental, it will take us a long time to recover the cost, maybe 100 years" the official replied.
"Do the companies pay corporate taxes?" he asked.
"We grant tax holidays for pioneer companies for 10 years, and post pioneer concessions can also be discussed" the official replied.
"Do the employees pay income taxes?"
"Yes, they do" the official replied.
"Ah! So the return is the taxes you collect!" he said.
"Your Excellency, Government collects some personal income taxes, but 70% of employees in Singapore do not pay tax!" an official clarified.
I wonder what went through the mind of this visiting dignitary. Maybe he was thinking: "You don't recover the cost of land. You don't collect corporate taxes for 10 years or more. You collect some personal income tax, but not much. What is the pay-off?"
Can you figure out the pay-off?
It is in jobs! The jobs employ Singaporeans. They get wages to spend. The chemical hub on Jurong Island generates economic activities. So it is not just those who actually work on Jurong Island every day who benefit. It is also the employees of other companies servicing the companies on Jurong Island. I am told that since we stepped up security on Jurong Island, more than 100,000 passes had to be issued! That is the impact of the chemical hub!
You know it takes a long time to reclaim land, get investors, build the plants, before the jobs come. To shorten the process, EDB starting selling the land before reclamation was completed. One investor came quietly to check, and found his "land" still under water! He must have had great faith in Singapore to recommend to his Board to invest! We have kept faith with him!
If we do not have a big market for chemicals, why do investors put their money here? We create the conditions for a chemical industry to be efficient, that it can export to the rest of the world.
I tell you this story to illustrate how the Singapore Government works. It is constantly looking for "new cheese". Some factories will shift out when we are no longer competitive, but we will have new factories that can thrive here. It does not mean that we must have natural advantages to succeed. We create the advantages. That was how we did it with the oil refining industry, and then with the chemicals industry.
As individuals we tend to look at the immediate and short term. We worry about our jobs only when there is a threat. If Government acted in the same way, we would be in deep trouble! Government looks ahead, and plans ahead. It will be good if we as individuals can at least think ahead!
Then we won't fall into states of depression when there is a downturn, or when we suffer some setbacks! Just look into our past, and we will know that we have always picked ourselves up and moved on.
And if you need another story to give you comfort, just look at NEWater! If we can solve the water supply problem, what else can we not solve, when we put our minds to it?
Happy National Day!
