Now, let me talk about SMEs very briefly, because these are small companies but a big subject, and it will be discussed in the Committee of Supply further.

SMEs are a key part of our economy. The Government will support SMEs where we can, but we cannot smother them either with too many rules or with too much help. Contrary to the popular perception, SMEs are not so badly off. They do get a fair share of business opportunities. For example, we made a sample of the small Government tenders which were awarded in FY2002, of values up to $100,000. There were 404 tenders awarded. Of these, 70% went to companies with net assets which were less than $50,000, which are very small companies, and 90% went to companies with net assets of less than half a million dollars. And this does not include supplies procured through quotations or Government work performed by such SMEs through subcontracting.

Mr Leong Horn Kee suggested that the Government could help the SMEs by giving them non-strategic and non-critical Government projects. I think this is not right. Government projects must be allocated through open tenders. We cannot exclude big companies from tendering because they are too efficient or too strong. If they offer me a good price, I have to take the good price. If they offer me better quality, I have to accept that. I cannot say, "No, you are too big. Only the little guys are allowed to play." This would only raise cost to the Government, lower efficiency and reduce the drive and enterprise of the SMEs themselves.

The right strategy is to help the SMEs upgrade their capabilities, improve their productivity and competitiveness, and venture abroad if they can. And we are doing a lot in this respect, which MTI will deal with in the Committee of Supply.

In this Budget, we have granted a 3-year tax exemption for the first $100,000 earned by the start-ups. Miss Penny Low, Mr Ang Mong Seng, Mr Arthur Fong and several others have asked the Government to consider extending the tax exemption period. Mr Leong Horn Kee further suggested that the Government grant the tax exemption from the first year of profit rather than the first year of operation. I have had a look at the data. Based on IRAS returns over the last six years, about one quarter of start-ups become profitable ever and, of those who do, most do so in their second year of operations. So, if you look at it, in the first year, hardly any are profitable. In the second year, a few are. The third year, about one quarter are profitable. Fourth year, also one quarter profitable. Fifth year, also one quarter profitable. I am not sure they are all the same companies in every year. But, by the third year, if they are going to make it, the chances are that they would have made it. So, I think three years is reasonable. Nevertheless, I will keep an open mind and consider whether to extend the length of the exemption after monitoring the results over the next few years.

Anyway, even after the 3-year tax exemption period, small companies and start-ups will not get taxed at the full corporate tax rate on the first $100,000 of income because we have a partial tax exemption within our corporate tax structure. For the first $10,000 of chargeable income, there is a 75% discount. For the next $90,000 of chargeable income, there is a 50% discount. So, Mr Ang Mong Seng says "san mian er jian", that is, three exemptions and two reductions. This is even better than that. This is "san mian chang jian" - three exemptions, perpetual reductions. But, of course, after some time, you ask for more.