Mr Ong Kian Min spoke about how vesting contracts in the electricity industry have led to higher prices for some industrial users. I think the matter is more complex than Mr Ong makes it out to be. Vesting contracts seek to curb the market power of generating companies to stimulate greater competition. Since the introduction of these vesting contracts, pool prices have fallen, which reflects the over-capacity which was there but might not have surfaced in the absence of competition. I do not have time to explain all of this now, but the Minister for Trade and Industry will respond to Mr Ong in greater detail during MTI's COS.

In the case of water, our tariffs are higher than in other countries. I think everybody understands the strategic reasons why. But now, with NEWater, we will be able to supply more cheaply to the industries, as we are already doing with the wafer fab plants, and we are building the second, third and a fourth NEWater plants.

Mr Inderjit Singh has suggested that we keep business costs low by giving permanent rebates and subsidies so that costs will stay low even when times are good. I think that would not be the right approach. We have to go on what the factors of production cost. We cannot subsidise services below their true costs. If you have to buy oil and gas, you have to pay for the oil and gas. I cannot charge you less for the electricity than it costs me to buy the oil and gas to generate the electricity. That will only lead to over-consumption and a misallocation of resources and a drain on the exchequer. We can make temporary concessions when we are in a downturn but, once that passes, we have to reassess and adjust to the new situation.

It does not mean that we are going back to the status quo ante. Rather, the rates should reflect the prevailing economic and market conditions. That means the rates will be set by supply and demand, and will settle at a level that businesses can afford and people are prepared to pay. People do not understand this. When we say market prices, they fear, because they think that market prices are something which they cannot pay. But if nobody can afford to pay, it cannot be the market price, something must be wrong with the price. The market price must be one which people can afford to pay. We have industrial land and factory space, we are producing utilities, that is the rate, that is what it costs us, that is what people can afford to pay, and that is the market clearing price. So, JTC is charging market prices, but these are low market prices. They have come down, reflecting the new market realities.

Similarly, with Government charges. The foreign worker levy was high before the crisis, because the market was tight and there was a great demand for foreign workers coming in and we had to control the inflow. But we brought it down to very low levels during the crisis. Now, the crisis is over, we have to bring it up, but we have only brought it up by a little bit for the skilled workers, from $30 to $50. And we are not aiming to restore the foreign worker levy to the pre-crisis rate. We are going to set it depending on the circumstances now. If there is an inflow, we have to adjust it up; if there is no pressure, we will leave it where it is. But the market, the benchmark, is now, not five years ago. So, we are very mindful of costs and its impact on businesses, and businesses should not worry because, if you look at the Government part of the costs, statutory items, e.g., CPF, taxes, they have also come down significantly in recent years and overall business costs today are quite a lot lower than a few years ago. As Prof. Koo Tsai Kee said, "We have been right-sized, Singapore is now ready to grow once more."

But even as we focus on keeping costs low, the more important challenge for us is for companies to reduce their overall costs by what they themselves can do, i.e., operating more efficiently and increasing the productivity of their workforce. So, they have to continually restructure their organisations, redeploy their workers, adjust their labour costs, and make the most of their office and factory space. These are business decisions which they have to take. They have to make themselves efficient. They have to trim. Unless they do that, no amount of subsidised labour or land will make them cost competitive. And I remind Members of this because, to see it in perspective, we have to watch our labour costs but, remember, it is not just wages. It is also what employers do with their workers. And if they do not do the right thing with their workers, then the workers will go and work for somebody else.