There is no question that companies need to watch their business costs. But lowering the cost of factors of production-land, labour, utilities, which MPs have talked about - is only half the equation. The other critical part is how efficiently companies make use of these factors of production which determine what the company cost is.

The unit cost of labour in Singapore - we have been watching it - has not increased significantly even though wages have been rising. And this is because our productivity has risen together with our wages. In the last 10 years, overall unit labour costs only increased by 4% while unit labour costs for manufacturing actually fell by 19%. So, overall, labour costs have gone up by 4%, but in manufacturing where we are, I think both open to international competition, productivity went up faster than wages and over 10 years, our wage cost per unit output has gone down by 19%. But there are some cases where the wages have gone out of line, and downward adjustments would have to be necessary. And that is what PSA and SIA have had to do.

It is also critical that our wages respond flexibly to changing market conditions. This would allow companies to adjust to the ups and downs in the business climate and give workers more job security, of course, with the trade-off which is more variability in their wages. If you are prepared to accept some uncertainty in your pay, not from 0% to 200%, but maybe from 80% to 150% as a range, then it is possible to have greater certainty that your job will not be lost. Not an absolute certainty, but a better chance.

The cost of land has also been on the downtrend. Chart 5 shows this. Since 1998, industrial rentals in Singapore have been declining steadily, and this decline is quite independent of Government rebates, because it has happened even for the private properties and not just for the Government properties. I showed Members this same chart last year. I have updated the figures, and you can see that, even in the last one year between 2002 and 2003, land and property prices have come down by another 9%.

So, in January this year, JTC reduced its rentals of ready-built factories by as much as 17% and land rents by up to 6%. With this reduction, JTC's rentals would have fallen by nearly 40% on average since the start of the financial crisis in 1997. You can see a similar trend downwards for private industrial factories, and for commercial and office rentals.

As for the cost of utilities, competition in the liberalised electricity market has also gained us benefits. As of the end of last year, electricity tariffs are at least 9.5% lower than in December 2001, after adjusting for oil prices.