FY2023 MOF Committee of Supply Debate Speech by Senior Minister of State Mr Chee Hong Tat
In MOF's Committee of Supply Debate FY2023, VITAL's demand aggregation contracts were cited in Senior Minister of State Chee Hong Tat's speech as a good example of Government achieving savings and increasing procurement efficiency.
A. INTRODUCTION
A1. Mr Chairman, I thank Members for their questions and suggestions.
B. FISCAL SUSTAINABILITY AND GOVERNANCE OVER OUR SPENDING
B1. Mr Liang Eng Hwa and Mr Saktiandi Supaat asked how the Government ensures fiscal sustainability and spend prudently within our means.
B2. Besides the audits by the Auditor-General’s Office and our internal auditors, MOF conducts regular reviews of Ministries’ budgets to identify areas for improvement and ensures every Ministry uses its allocated resources efficiently and effectively.
B3. Singapore’s overall performance has been good, with current government expenditure being around 18% of GDP. Even as our expenditures grow further and exceed 20% of GDP by 2030, our government expenditure as a percentage of GDP is significantly lower than most developed countries. At the same time, we are able to achieve positive economic and social outcomes for Singapore and Singaporeans.
B4. One example is how we reduce the costs of major government infrastructure projects, by applying a stringent cost-effectiveness evaluation together with experts from the private sector and academia. In 2022, we achieved total cost avoidance of around $1.0 billion through this process. This $1 billion saved means we can put it to good use, and meet our spending needs in other areas.
B5. The Government also looks out for other forms of savings by integrating different projects to maximise the synergies.
a. For example, the upcoming East Coast Integrated Depot, which incorporates three MRT depots and one bus depot, saved about 44 hectares of land, this is twice the land size of Changi Airport’s Terminal 4, or equivalent to approximately 60 football fields.
B6. Another example is VITAL’s Demand Aggregation contracts for common buys such as office supplies, catering and courier services. These save the Government more than $50 million per annum. This approach also reduces the need for agencies to call separate tenders and quotations, saving at least 100,000 man-hours a year.
C. HELPING BUSINESSES REDUCE COSTS AND BUILD CAPABILITIES FOR GROWTH
C1. Sir, Mr Liang, Mr Edward Chia, Ms Mariam Jafaar and Mr Saktiandi asked how MOF helps businesses to reduce costs and build capabilities for growth.
C2. The Government will continue to implement pro-business policies and measures, and provide an environment that enables them to grow and succeed.
C3. Besides supporting businesses through our economic agencies and via a comprehensive suite of grants and incentives for innovation, productivity improvements and skills-upgrading, there are two additional areas where MOF’s work benefit our companies.
C4. First, by simplifying government rules and processes, we enable businesses to save time and money when they transact with Government. Second, by helping businesses build capabilities to enhance their competitiveness and access new opportunities, both locally and abroad.
C5. Let me share some examples.
C6. We recently launched eGuarantee@Gov, a simple and secure digital process for businesses and individuals to provide a banker’s guarantee or insurance bond to government agencies. Businesses can apply for an eGuarantee from over 20 participating financial institutions online, for direct submission to government agencies within a day.
a. With eGuarantee@Gov, there is no longer a need to visit a bank to purchase a physical copy of the guarantee or to pay for courier services to deliver it. The new arrangement is quicker, better and cheaper.
b. We expect up to 4,000 eGuarantees to be lodged in 2023, resulting in overall savings for all stakeholders of about $500,000 per year.
c. There is also scope in the future for eGuarantees to extend to commercial transactions between businesses and their suppliers and customers. MOF and the Ministry of Trade and Industry will work with the financial institutions and Trade Association and Chambers to encourage adoption of eGuarantees for such transactions.
d. Just as the use of PayNow for digital payments has allowed businesses and individuals to enjoy lower transaction costs and time savings compared to the traditional method of using cheques, the adoption of eGuarantees can bring about benefits compared to the current method of providin physical bank guarantees.
C7. Next, MOF removed the requirement for businesses with annual turnover of less than $5 million to submit audited accounts when applying for Government Supplier Registration. This benefits about 2,400 small and medium enterprises (SMEs) annually, with estimated cost savings of around $4.5 million per year.
C8. MOF continually makes improvements to GeBIZ, the government-wide procurement system. For instance, about 3,000 businesses can benefit from the Supplier File Repository by the end of this year. Businesses no longer need to submit the same financial statements and company profile, when responding to different government quotations and tenders. We will also consider the features that Mr Saktiandi mentioned for future improvements.
C9. Sir, another example is IRAS’ initiative to encourage businesses to use seamless filing software. Such software provides many productivity benefits for businesses, as they can automatically generate and file their corporate income tax computations and returns. This process takes only 15 minutes, compared to the estimated 8 hours required for manual preparation and submission.
C10. Moving on to the next area of how MOF supports businesses to develop capabilities for growth. We will continue to simplify our processes for suppliers, including SMEs, to participate in government tenders while maintaining a level-playing field for all businesses, and achieving value-for-money procurement outcomes.
a. For procurement below $90,000, financial track record is not required. The terms and conditions are also simplified, for example there is no requirement to provide security deposits.
C11. SMEs participate actively in our government contracts, and about 80% of these are awarded to SMEs annually. Winning government contracts gives SMEs the opportunity to build up their track records, develop capabilities and capacity to tap into new growth areas.
C12. To further improve the access of SMEs to business opportunities through government tenders, MOF will introduce a new category of tender by end-2023 called “Tender Lite”, which comes with fewer and simpler conditions.
C13. Tender Lite will allow more suppliers to participate in tenders with value higher than $90,000 but below $1 million, and is estimated to cover over 70% of all government tenders that are currently awarded to SMEs.
C14. MOF will work with representatives from Singapore Business Federation and the Association of Small & Medium Enterprises, as well as government agencies on the design of Tender Lite. We believe this approach of government and industry working together as partners will bring about win-win outcomes, and allow us to move faster and innovate new solutions more effectively.
C15. So my colleagues and I are keen to continue the partnership with our industry partners beyond Tender Lite, and extend the collaboration to other subsequent areas of work that will benefit our businesses.
C16. Members such as Mr Derrick Goh have highlighted during the Budget Debate that government can help prepare SMEs for new requirements and opportunities in environmental sustainability. We agree. The public sector is supporting our suppliers’ efforts to adopt greener practices, which are increasingly in demand by other major buyers. Over the years, the Government has incorporated environmental sustainability requirements into our procurement, such as requiring ICT equipment and air conditioners to meet energy efficiency standards.
C17. Our target is to include environmental sustainability requirements and evaluation criteria into all government procurement within the next 5 years, in a manner that keeps pace with industry readiness and international developments.
C18. Starting from FY24, for tenders of construction projects and ICT projects with minimum estimated procurement value of $50 million and $10 million respectively, we will set aside up to 5 per cent of the evaluation points for sustainability-related considerations. The Government will further engage the industry stakeholders on the details of these measures.
C19. Another capability that is increasingly sought after is sustainability reporting. Businesses that can provide good sustainability-related information can gain competitive advantage, expand into markets, and potentially access cheaper funds through green financing.
C20. To drive sustainability reporting efforts for the industry, ACRA and the Singapore Exchange Regulation established the Sustainability Reporting Advisory Committee in June 2022. The Committee will embark on its public consultations later this year.
C21. Businesses also need to accelerate their pace of digitalisation, a point which Mr Liang made. The Government will implement InvoiceNow as the default e-invoice submission channel for all Government vendors within the next few years.
C22. Using InvoiceNow will help businesses improve efficiency and reduce cost, by eliminating the need for manual processing and it also reduces errors. Businesses transacting on InvoiceNow can save $8 per invoice compared to the manual process.
C23. InvoiceNow also facilitates the direct transmission of invoices in a structured and standardised digital format that is accepted internationally across finance systems, and this helps businesses access overseas markets more easily.
C24. Today, about 55,000 businesses have adopted InvoiceNow, supported by 200 service providers. I encourage more businesses to come on board.
D. SUPPORTING PHILANTHROPY AND VOLUNTEERISM TO STRENGTHEN OUR SOCIAL COMPACT
D1. Sir, Mr Liang and Ms Foo Mee Har asked how MOF will support and encourage more philanthropy and volunteerism from corporations and the community.
D2. Philanthropy and volunteerism are key elements for building a strong social compact. There is something intangible and different in how we build up the character of our society, when people go beyond what they are required to contribute under our fair and progressive tax and benefits system, where everyone contributes something and those who are better off contribute more. Many Singaporeans and also foreigners and companies who are based here have an interest in philanthropy and are keen to help others in society.
D3. We have been strengthening our ecosystem to encourage their contributions and participation, to maximise the positive impact to our local communities.
D4. This is a good way to keep our society cohesive and strengthen our solidarity as one united people. Not only through taxation and redistribution, which are done through policies and laws, but also through philanthropy and volunteerism which come from willing hands and loving hearts.
D5. MOF provides funding support for many community and ground-up programmes, which contribute to the development of the social sector.
D6. There are many existing efforts by agencies working with intermediaries like the Community Foundation of Singapore and ComChest, as well as beneficiaries, to link up donors with suitable charitable causes.
D7. I have also met wonderful people such as those from Utama and Majurity Trust, who started initiatives to help raise donations from high net worth individuals and corporations to fund worthy social causes like caring for vulnerable seniors and providing opportunities for children from lower-income families.
D8. The Government provides broad-based support in the form of 250% tax deductions for qualifying donations to Institutions of a Public Character (IPCs). The Corporate Volunteer Scheme (CVS) supports volunteerism efforts by businesses in IPCs.
D9. The Government also provides matching grants to encourage charitable giving. For example, we allocated a top up of $100m to the Tote Board’s Enhanced Fundraising Programme, which in turn provides dollar-for-dollar matching on eligible donations received by charities.
D10. Sir, to build stronger social resilience, the Government will continue to encourage our community, especially those who have done well, to engage in sustained giving and volunteerism. Through such efforts, we will strengthen our social compact and build a more caring and inclusive Singapore.
D11. This will then provide the social cohesion and stability for us to pursue pro-growth policies and enlarge our economic pie, generate more opportunities and provide more resources that we can then use to invest in our collective future and support the vulnerable amongst us.
D12. In this way, we can strengthen our social compact and grow our economy at the same time. The two objectives will reinforce and support each other, allowing us to move forward while staying together.
D13. Thank you.
Click HERE to read the original speech from the MOF website.