According to Finance Minister Tharman Shanmugaratnam, the Government Land Sales policy has been a responsible one that is also market-led.
The minister made this comment in Parliament on Wednesday in response to questions raised during the Budget debate. He added that the government is doing the right things to sustain Singapore's competitiveness. The Government Land Sales programme came under the spotlight in Parliament earlier this week.
MP of Ang Mo Kio GRC, Inderjit Singh, said the programme was responsible for pushing up property prices as the Reserve List system raised prices artificially.
In response, Mr Tharman argued that the system allowed market forces to play.
He said: "We ensure that enough supply is made available to meet basic demand through the Confirmed List, and let the market decide whether it wants to develop more sites through the Reserve List. No one anticipated the strong surge in demand for office space in the last two years, coming right after the 2002 to 2004 period, when the market conditions were very weak."
Mr Tharman noted that during the same period, some 120,000 sqm of office space were converted to other uses.
Rising office rentals are a concern, with some MPs asking for rebates to help businesses cope. But the minister said rental rebates will have an adverse effect.
"In an environment of strong demand for rental space, the outcome of government giving tax rebates on rental costs will be that prices are bid up further because this would merely stimulate demand for rental space without adding to the supply of space," he said.
Mr Tharman also added that there was no need to cut tax rates. He said the incentives offered this year to spur productivity and innovation will complement tax cuts announced previously.
These cuts include a reduction of Corporate Income Tax from 20 percent to 18 percent as well as improvements to Partial Tax Exemption for SMEs. Taken together, it will translate to S$160 million annual tax breaks for the SMEs.
The finance minister gave the assurance that Singapore will focus on providing a conducive tax environment for companies.
MPs have also asked in Parliament for more incentives to reward eco-friendly business practices.
To this, Mr Tharman said Singapore has managed to achieve good economic growth while maintaining a high quality environment, and further steps will be taken to promote energy efficiency.
These measures will be announced by the relevant ministries at the Committee of Supply debate.
On workforce training, Mr Tharman said current programmes are already heavily subsidised. But more studies will be done on the Individual Learning Accounts Scheme as suggested by MPs during the debate. - CNA/so
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