Alvin Tan
Singapore
“And if our companies can use Johor as a complementary base to scale, serve larger markets and strengthen their regional competitiveness while retaining their core capabilities here, that is also additive integration.”
“Sir, I have answered the Member's questions specific to HDB car parks. Specifically, I think, with the provision of hose reels, fire engine access, natural and mechanical ventilations that will help in the event of a fire, and that the HDB carparks must comply with these technical specifications and safety requirements under Technical Ref…”
“Sir, all Housing and Development Board (HDB) car parks are designed and constructed in compliance with the prevailing Fire Code stipulated by the Singapore Civil Defence Force (SCDF). This includes provisions such as hose reels, fire engine access and natural or mechanical ventilation to disperse smoke and heat.”
“What was left unsaid was that in the emails and in the MP Appeal System (MPAS), the Member was informed that: one, he was aware of the fact that AVS had investigated the incident; he was aware of the processes; he was aware that AVS found no professional negligence or misconduct by the vet; he was aware and noted that AVS had found no rel…”
“As we have observed a growth in the range of animal-related services offered by non-vets that may pose a risk to animal health and welfare, Part 4 of the Bill will introduce various offences and penalties to safeguard against unlawful practice and misrepresentation by or about unauthorised persons.”
“Owners are responsible for providing for their pets' needs, including medical care. So, we strongly encourage prospective pet owners to thoroughly consider the full cost of raising a pet before committing to becoming a pet owner. Mr Deputy Speaker, Sir, vet professionals form an important pillar of our animal health and welfare system.”
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“I thank the Member for his supplementary questions. As I mentioned in my main reply, Singapore is a part of the global supply chain of the semiconductor industry. So, many of our companies do rely on US technologies as part of their manufacturing processes and operations. There could thus be some impact on these companies, but we do not have granular information at this stage. However, the situation is constantly evolving. So, we are monitoring it very carefully. It is equally possible that the US could be contemplating additional steps that may further reshape or affect the technology supply chains. Our companies will be affected in certain ways, given that we are part of this global semiconductor supply chain. Prime Minister Lee, in Australia recently, said this week that these trade restrictions could result in, I quote, "less economic cooperation, less interdependency, less trust and possibly, ultimately, a less stable world" – which is a clear, negative force for Singapore. Against this backdrop, it is thus more important that we uphold and reiterate our position as a stable, trusted and well-connected hub and location for businesses, including the semiconductor businesses. Earlier this week, together with Deputy Prime Minister Heng Swee Keat, we were at ITAP Asia where many of the semiconductor companies were there. We launched the Industry Transformation Maps which will anchor many of their capabilities here – it is not just the semiconductor companies, but the ecosystem that we are attracting to be based here in Singapore.”
“Mr Speaker, the latest US export controls announced on 7 October 2022 are aimed at restricting China’s access to specific types of advanced semiconductor chips, especially those with wide applications in artificial intelligence and supercomputing. While these measures are not targeted at Singapore, our semiconductor sector could still be impacted, since semiconductor supply chains are highly complex and globalised. Many semiconductor companies operating in Singapore have manufacturing processes and products that rely on US technology, which may be subject to export controls imposed by the US government. While Singapore and our companies cannot be completely sheltered from geopolitical tensions, we can mitigate the risks by ensuring that we remain a stable, trusted and well-connected location for companies to do business. We are also working with our companies to strengthen their business continuity plans and diversify their supply chains. We will also pursue the strategies we announced recently at the launch of our Electronics and Precision Engineering Industry Transformation Maps earlier this week. These include anchoring investments from leading global companies, doubling down on R&D investments in emerging semiconductor technologies and also deepening our talent pipeline. Collectively, these will enhance Singapore’s relevance in global semiconductor supply chains and strengthen our resilience against any shocks.”
“I thank the Member Saktiandi Supaat for his supplementary question. We have conducted a series of stress tests and most of the stress tests by MAS suggest that, as I mentioned earlier, most of the households, including borrowers on floating rate packages, should be able to service their debt, even under very conservative scenarios of simultaneous interest rate shocks and income loss, and also a full pass-through of sharp global interest rate hikes. These stress tests – I might qualify or caveat – only assessed debt repayment ability based on income. So, in fact, household savings, such as cash and CPF Ordinary Account (OA) funds, for example, which could provide financial buffers, are excluded. So, they are relatively conservative, in that regard. I will share another aspect which might be useful. If you look at it from a bottom-up perspective, MAS' account level stress tests of new borrowers have assessed that most households, in fact, should be able to continue servicing their debt under stress assumptions of even a 400-basis point increase in interest rate and a 10% reduction in income. So, we have conducted these stress tests based on quite conservative measures: excluding CPF OA, cash and also in stressing in quite higher interest rate increases. But as the Minister for National Development had also earlier mentioned, MAS is working very closely with MND to monitor this situation carefully and, for those who are unable to service their loans, we will find ways in which to allow for debt repayment restructuring as well as to look for alternative housing.”
“I thank the Member for his supplementary questions. What is quite useful is to look at the corporate balance sheets, the health of the corporate balance sheets. Maybe I will just share a few useful data points. The first is that most Singapore-listed firms continue to hold sufficient liquidity as of the first half of 2022 and these are liquid assets, such as cash and cash equivalents, that are exceeding their short-term liabilities. And MAS has conducted stress tests on these balance sheets of SGX-listed firms which show that most corporates will be resilient to further interest rate increases and earnings shocks. In the unlisted sector itself, most firms also either have healthy debt servicing ability or sufficient cash holdings to cover the short-term financing or operational needs, but MAS and the Government will monitor this very closely and adjust where necessary. With regard to the second supplementary question, I mentioned earlier on that Senior Minister of State Chee Hong Tat had shared how the Government is also availing access to financing to the corporate sector as well as SMEs. Some of these include Enterprise Singapore's Enterprise Financing Scheme which help businesses access and tap into funding and also co-sharing loan default risks. SMEs can also tap on a variety of schemes, such as the Productivity Solutions Grant, Energy Efficiency Grant and SkillsFuture Subsidy, to help them transform their businesses in light of many different challenges afoot. In fact, NTUC's new Company Training Committee grant also helps SMEs to improve productivity as well as the quality of their workforce.”
“I thank the Member for her questions. I think many of our residents have also shared with regard to the scams and one of the issues with regard to banks as well as the scams is on individual responsibility as well. But we also make sure that we have constant updates with the Police and will also inform customers on how to report to the Police. I know that this issue with regard to scams is a rather new one because of the online as well as technology. But what we are trying to do with both the loss-sharing framework as well as the public outreach to individuals and also to encourage the banks to have good processes in place will be very important for us to manage this issue in a fair and equitable way. But that notwithstanding, we want to encourage all members of the public to, first, be extremely vigilant. If you see any of these funds being transferred outside, that is, unusual transactions, please inform your banks immediately. We, on the MAS front, are coordinating very closely with the Police as well as the financial institutions to tighten these processes and this consultation will come in due time so that we can tighten these processes and combat scams together.”
“I thank Dr Tan Wu Meng for his supplementary questions. Maybe I will share about the second question first with regard to the equitable risk-sharing framework on the continuum between the error as well as the unforced error. These are issues or steps that we are taking proactively within consultation. MAS, with regard to the other agencies, are looking into this equitable sharing framework and will take into account both this broad continuum because the instance where a scam is being perpetrated, as well as the discovery, these are all quite critical in terms of finding the perpetrator, in terms of making sure that there is recovery as well. So, we will factor those into our discussions. On the first question, at this point in time, we do not track those data. But we will take into account the Member's feedback.”
“So, members of the public are encouraged to obtain such hotline numbers from the official sources, such as at the back of the ATM cards and to also save the numbers on their mobile phones. In addition, members of the public can also file a Police report either online or in person if they have lost money to scams. They can call the anti-scam hotline at 1800 722 6688 for advice. This is managed by both the National Crime Prevention Council (NCPC) and also the latest ScamShield app that is available now on both android as well as IOS can also be used to report suspicious scam messages. But, in concert, all of these are also a work in progress. We also encourage members of the public to give us feedback and also the financial institutions as well as the retail banks on how to tighten this further as we continue to fight as an ecosystem against scams.”
“Mr Deputy Speaker, I thank Mr Saktiandi Supaat for the supplementary questions. With regard to the loss-sharing framework, I think the major principle is for us to find a good platform in which to design a fair and effective framework such that many of the different parties have a shared responsibility, all aspects of it. It is taking us longer than expected because to put in all of the key aspects in place requires us to make sure where the shared responsibility lies equitably across all of the different stakeholders. But we continue to work on this at a very urgent pace. We understand that this is urgent work and what we are trying to do is to make sure that this loss-sharing and accountability approach incorporates as well as involves all key parties in the ecosystem and every single aspect of this. Every stakeholder has to be vigilant in their own right against scams, both institutions as well as individuals. That is why, in my original answer, I said that it was important for all of us to also conduct public outreach and also for the financial institutions and authorities to play their part. What we are trying to achieve is, as I mentioned, a fair as well as effective framework so that there is shared responsibility across the ecosystem. With regard to the Member's residents, this is something that is very important for us to bear in mind. If members of the public face this issue, they should notify their banks immediately, if they suspect that they are victims of scams. Many of the financial institutions, in fact, the major retail banks, have made it easier for the public to report scams by either having dedicated hotline numbers or making it the first few options on their phone banking menu.”
“For instance, it has shared materials advising the public to not share personal details, such as log-in credentials and one-time-passwords, with unverified parties. IMCS will continue to work with all stakeholders to deepen its public outreach.”
“MAS is working with the industry to finalise a framework for the equitable sharing of losses resulting from scams. The Payments Council has proposed a draft set of responsibilities relevant to financial institutions and consumers. MAS is finalising the framework, in coordination with other Government agencies. It is taking us longer than expected to design a fair and effective framework that ensures shared responsibility across the ecosystem as well as incentives for each party to be vigilant against scams. MAS aims to seek public comments on the framework as soon as possible. At the broader level, the Inter-Ministry Committee on Scams (IMCS), chaired by the Ministry of Home Affairs, also partners the financial institutions closely. This includes Project FRONTIER, as mentioned by the Member, where the Police have established processes with financial institutions to swiftly freeze bank accounts suspected of being used in scams, in order to mitigate victims’ losses and disrupt scammers’ operations. From January to June 2022, the Police froze more than 7,800 accounts and recovered more than S$80 million worth of scam proceeds. The IMCS has also strengthened enforcement against perpetrators. Since the formation of the Singapore Police Force’s Anti-Scam Command in March this year, more than 4,300 scammers and money mules who were involved in more than 12,000 scam cases involving S$101 million were either arrested or called up for investigation. Other than enforcement actions, the IMCS has expanded its public education campaign, called "Spot the Signs. Stop the Crimes", to build public awareness and vigilance on how to spot scams.”
“Finally, we are also facilitating this community building amongst family offices such as supporting the setting up of the Global Asia Family Office Circle to galvanise and to encourage like-minded family offices towards common areas of interest, such as ESG, philanthropy enterprise financing and to create opportunities for collaboration amongst many other co-investments. The final point is that we have, as a posture, consistently welcomed a variety of financial and other capital investments into Singapore. We have welcomed individual companies that can contribute to Singapore's growth, create good jobs, regardless of where they are and regardless of their country of origin where they come from. So, we need to remain open, we need to remain connected to global investors to strengthen Singapore's value proposition to Asia and to be a key Asian node for high growth tech investment and tech companies to base here, to grow their patient capital, and then to grow and be a base for new and exciting industries, and ultimately, create good jobs for Singaporeans.”
“The Member may know that in 2019, MAS and EDB jointly set up the Family Office Development Team or FODT to coordinate a whole-of-Government effort to ensure Singapore remains a really relevant and attractive location for family offices. This development team has three focus areas. The first focus area is to enhance and widen the operating environment to broaden the suite of asset vehicles, such as variable capital companies (VCCs), that are available to these family offices. Second is to develop the capabilities and to build essential skillsets among our service providers, both local as well as foreign, and our professionals. For example, MAS and the Institute of Banking and Finance launched these skill maps for family office advisers, including those at banks and tax or legal firms; and also, for entry level professionals employed in family offices; and also, then, management level executives who head and also run these offices. We also do training for advisers. For example, the Wealth Management Institute and the SMU Business Families Institute have launched a series of training programmes for family office advisers, professionals and principals that are then accredited against these skill maps. So, if there are many individuals or professionals who are interested in entering this space or to deepen your capabilities, you can also take reference to these skill maps to better equip yourselves with the necessary skillsets to enter this industry. MAS has available co-funding schemes in place to offset the training fees for professionals attending these courses that have been accredited against these skill maps.”
“Mr Deputy Speaker, I thank the Member for his supplementary questions. The SFOs generate employment in Singapore in a couple of ways. The first is by directly employing advisers and investment professionals; and also, to generate indirect employment when they work, for example, with external finance, tax and legal professionals, and also fund administrators, for example, custodians, on investment management, wealth planning and also operational matters. So, a wide aspect in both direct as well as indirect employment. SFOs also expand the pool of patient capital for Singapore-based startups and business ventures, as well as Singapore-based funds that invest in such companies. Investee companies may also benefit from the strategic guidance offered by the principals of these family offices, many of whom themselves are owners of successful businesses. Some families also use their SFOs or related entities to manage their investments and contributions towards social and philanthropic activities or causes in Singapore. With regard to the second supplementary question on where the SFOs originate from, the SFO community in Singapore is diverse, it is international. They come from a variety of regions, including Europe, the US as well as Asia. And families who are keen to set up a satellite presence here in Singapore, do so because of our favourable business environment, connectivity to the region which allow for them to use Singapore as a base to explore investment opportunities beyond Singapore to the region. I will also just share a little bit about what we are doing to attract these family offices, as related to that supplementary question.”
“Sir, our Government agencies are working to encourage family offices to invest in local companies in a number of ways. First, single family offices (SFOs) applying for tax incentive schemes have been required since April this year to allocate at least 10% or S$10million of their assets, whichever is lower, to local investments. Local investments may include: one, equities listed on Singapore exchanges; two, private equity investments in unlisted Singapore-incorporated companies; or three, qualifying debt securities. Second, MAS and Enterprise Singapore have set up a number of platforms to connect local companies to potential investors, including family offices. These include "Deal Fridays", FinTech Investor sessions, and the Singapore Week of Innovation and Technology (SWITCH), which we will be organising from 25-28 October, this month. We are also encouraging match-ups during the annual Singapore FinTech Festival, which will also be organised very shortly, from 2-4 November. Third, MAS and EDB have supported the Wealth Management Institute’s Global-Asia Family Office Circle, which aims to encourage family offices here to make co-investments in companies as well as develop strategies in areas such as philanthropy and sustainable investments. At the same time, we must recognise that family offices come to Singapore to access investment and philanthropic opportunities in the broader Asian region. This adds to Singapore’s status as a dynamic as well as purposeful financial centre, supporting growth and opportunity in our neighbouring countries.”
“For example, Malaysia's BT regime is also quite similar to that in Singapore. There are also other jurisdictions – Australia, Hong Kong and Canada, for example – that have different structures, but they have their own regulatory regimes suited to their own ecosystem. In short, by amending this Bill, the Bill will contribute towards a strong, a robust and transparent regulatory framework for businesses and investors, and also support Singapore's business competitiveness. With that, Mr Speaker, I beg to move.”
“Just on another point by Assoc Prof Jamus Lim on taking a more interventionist approach to direct high net worth wealth to fund specific causes that are aligned with Singapore's interest, the approach thus far has been to enhance just the overall ecosystem to encourage high net worth individuals to conduct their giving activities in Singapore, effectively just to build the culture of philanthropy until so when these offices and these structures come to Singapore encourage them to give locally as well. It is also to help them to find ways in which to give to local causes as they gain familiarity over time with what is required in the landscape. We have, so far, stayed away from dictating the causes that high net worth individuals should give to an industry. We just do not want to be that prescriptive in that regard as we start to build up this ecosystem. Mr Speaker, let me conclude by reiterating the benefits that we seek to bring with this set of amendments. These amendments will bring the BTA in alignment with the regulatory regime for companies, upon which the regulatory regime for BTs is based. It will also strengthen the corporate governance safeguards of BTs. I also want to just share as a final point that this is not very unique to Singapore. In fact, apart from Singapore, there are few other jurisdictions where BTs are also used as corporate vehicles. Australia, Hong Kong, Canada have business vehicles quite similar to our BTs. But, of course, our own BT regime has its own legal framework with very clear rules that are specifically tailored to the features of our Bts. In fact, it was developed to be as close to a company as possible, as they are intended to be an alternative structure to companies so that they have that flexibility.”
“Mr Speaker, Sir, I will now address the broader questions raised by Assoc Prof Jamus Lim on the role played by business trusts and on the development of the trust and foundation landscape and if there are ways in which the Government can foster a culture of philanthropy. Business trusts are by design suitable for businesses, as I have mentioned in my earlier speech, that have high cash flows and also stable growth. They add to the array of many alternative structures for businesses to organise themselves in a manner that meets their operating and fundraising needs. As for Assoc Prof Jamus Lim's suggestions to support a culture of philanthropy, they extend quite beyond the scope of the BTA, as I have mentioned earlier, but we will be happy to take those questions as matters for further study where relevant. I will also just mention that one of the strategies under MAS' Financial Services Industry Transformation Map (ITM) 2025, is to help to develop Singapore into Asia's centre for philanthropy and MAS will provide support in line with this ITM. In fact, last week, Deputy Prime Minister Lawrence Wong announced a number of measures that we are studying, including reviewing our tax incentive structures and schemes to see how we can encourage family offices to do more philanthropic giving and to support the local philanthropic ecosystem, by structuring their giving through local charities and also non-profit entities.”
“Mr Louis Ng further asked about the differing burdens placed on a controller versus a person who knows or ought to know the identity of a controller. For brevity, I will refer to the latter as third parties. The Bill requires both controllers and third parties to provide information to the trustee-manager when served with a notice to do so. In addition, controllers are required to notify trustee-managers of their particulars, such as the dates they became controllers of the BTs. However, third parties are not under similar obligations to furnish information on a controller unless they have been asked to do so by the trustee-managers. The differing requirements are intended to balance between requiring trustee-managers to maintain a complete register of its controllers and the burden to third parties. The duty to notify the trustee-manager of a controller's beneficial ownership of the BT falls naturally on the controller himself, as he is the primary source of information about his own interests in the BT. The same cannot be said for third parties, who are one step removed. Requiring a third party to provide the trustee-manager with information on another person, the controller, without being asked to do so would impose an excessive burden on the third party. Nevertheless, where a third party is served a notice by the trustee-manager to provide information on a controller, he would be clearly informed that the information is required of him. He would therefore be obligated to provide the information in this situation.”
“Loans, by their very nature, are expected to be repaid according to the terms of the loan agreement unless otherwise agreed with the lender. While the Bill will not require trustee-managers to include terms in their loan agreement for repayment of loans under circumstances other than those specified in the Bill, trustee-managers can still choose to include such terms as they deem appropriate. For repayment terms that are required by the Bill, Mr Louis Ng further asked how these should apply where a loan was granted to a director to defend criminal or civil proceedings and a conviction or judgment against the director was only obtained for some, but not all, of the charges or heads of claims. The provision does not provide for apportionment. The general position is that the loan will need to be repaid according to the required terms, as long as the director is convicted or judgment is made against the director and that the conviction or judgment is final. The next set of questions Mr Louis Ng raised relates to the transparency requirements for unlisted business trusts regarding their registrable controllers, or controllers in short. He asked what would constitute "reasonable steps" for the purpose of a trustee-managers' discharge of their obligations to identify controllers of a BT. MAS intends to issue guidelines on this, similar to the guidelines issued by ACRA, under the Companies Act. Under ACRA's guidance, a company is regarded as having taken "reasonable steps" if it sends out a notice at least annually to each member and each director of the company, unless the person has already provided it with the requisite information.”
“So, they do hold a wide range of assets but they are not limited to real estate, although many that Assoc Prof Jamus Lim raised appear to be linked to real estate, but they can also operate active businesses. The two regulatory regimes cannot, therefore, be equalised. What MAS has done is to draw the most appropriate provisions from both the Companies Act and also the REIT regime to design a regulatory framework that addresses the needs of stakeholders in a BT. MAS will also regularly review the regulatory regime for BTs and will make appropriate refinements to ensure that the regime remains robust and also meet the market needs, as and when it is required. Mr Louis Ng raised a few questions relating to loans by trustee-managers to their directors for defending against proceedings or regulatory actions. Mr Ng also asked about the difference in treatment between loans made to directors for defending against civil and criminal proceedings, compared to loans to directors for defending against regulatory actions. In the case of loans for defending against civil and criminal proceedings, the Bill requires specific terms to be placed on the loans, namely that the loan is to be repaid no later than 14 days of certain events occurring, such as if the director is convicted. However, similar loan repayment terms are not required to be included for defending against regulatory actions, consistent with the comparatively less severe nature of regulatory actions versus Court proceedings. The difference in treatment also follows from equivalent provisions in the Companies Act and it can also be found in the UK Companies Act as well. Mr Louis Ng also asked for clarification, whether repayment will be required in situations not specified in the Bill, such as if charges are withdrawn.”
“The new section 52B provides for any persons with reasonable cause, that the BT should not be deregistered to object when MAS issues a notice of its intention to apply to Court for liquidation. The context of section 52 is actually for a defunct BT, but it is actually not for still functioning BTs – just to clarify that point, which is quite important. The Member, Assoc Prof Jamus Lim also mentioned about the distance between trustee-managers in a BT, and unit-holders or stakeholders. The trustee-manager, in this regard, has to manage businesses and operations, just in the same way as the board or the management of companies and has to similarly consider the interest of key stakeholders, in order for the business to be successful. Again, going back to it, is really aligning both. On the distribution of REITs, I just want to clarify that REITs must distribute 90% of the income in order for them to enjoy tax transparency. In fact, REITs are required to distribute least 90% of their distributable income to enjoy this tax transparency, where BTs do not enjoy any tax transparency and, hence, are not subject to similar requirements. There are differences between REITs, as well as BTs and that is why although they are structurally similar, some of the provisions, we have to regard them as separate as well. I will address other points with regards to trust and REITs. REITs are investment funds which are obviously subjected to investment guidelines and are intended to specifically hold income-producing properties. The business trusts are not investment funds. They are business structures which can hold the wide range of assets. Assoc Prof Jamus Lim mentioned many of the 18 that he raised earlier on.”
“MAS has also taken reference from applicable REIT rules when reviewing the BTA, especially in areas where the risks are similar. For instance, MAS has, in this Bill, proposed that the removal threshold for trustee-managers be aligned with that for REIT managers. If you reference the requirements for REIT managers, MAS is also considering amending subsidiary legislation of the BTA to enhance independence requirements for directors of trustee-managers. MAS will be consulting on its suite of proposed amendments to subsidiary legislation of the BTA in the coming months. Just a few points about the fiduciary role of the directors of the trustee-manager. The directors of a trustee-manager essentially perform the same fiduciary role as the directors of a company. Hence, we are trying to align the BTA with the Companies Act. The provisions allowing loans to be given to directors of companies are also relevant to the directors of trustee-managers within the BTA. On whether vehicles are trying to get away with easier regulations as regard to the BT versus REIT – companies, BTs and REITs are, in fact, all subject to corporate governance requirements. Assets that do not fall neatly under a REIT structure can be included in a company structure. It is important that we have these proper rules and consistent rules for both companies and BTs. And that is why, again, going back to the fundamentals, that is why we are aligning the BTA to the Companies Act. On section 52, it is an existing provision that MAS may apply to a Court, to appoint a liquidator to wind up, and thereafter, deregister a defunct BT.”
“Mr Speaker, Sir, I thank Mr Louis Ng and Assoc Prof Jamus Lim for their views on the Bill. I will first address specific questions raised in the Bill before tackling the broader questions on the relevance of BTs' structure and the trust foundations in the philanthropy landscape. But I also wanted to say that, for the purposes of this amendment Bill that we focus very much on the core of what we are trying to do, which is to enhance the transparency and strengthen governance of Business Trusts(BTs). And for many other topics, we can leave that on another day. On the Bill, both Mr Louis Ng and Assoc Prof Jamus Lim raised questions on provisions that will seek to align the BTA with a regulatory regime for companies. Assoc Prof Jamus Lim asked about the appropriateness of replicating the Companies Act's provisions in the BTA, as well as whether we need to strengthen the regulatory regime for business trusts relative to the regulatory regime for REITs. BTs, as the Member had noted, is also meant to be an alternative business structure to companies. Hence, the regulatory regime for BTs is modelled after that of companies. Similar to the Companies Act, the intention of the BTA is to set out requirements to protect, indeed, the fundamental rights of unit-holders of these registered business trusts and to set out the duties and accountability of the trustee-managers and their directors. That is at the fundamental level. And then on top of requirements that we have adapted from the Companies Act, MAS has also included relevant governance requirements from the REIT regime. BTs and REITs, of course, share a lot of structural similarity. For example, both are externally managed, as I had mentioned in my speech.”
“The Bill will align the removal threshold for trustee-managers with that of REIT managers. This will help strengthen accountability to unit-holders. In conclusion, the amendments will enhance the transparency and governance of registered business trusts in Singapore. They will streamline regulatory requirements and reduce compliance costs. This will improve the efficiency and robustness of the BT regulatory regime, benefiting the industry and investors. Mr Speaker, I beg to move. [(proc text) Question proposed. (proc text)]”
“The Bill will align these timelines with the business trust's financial year end. The Bill will also mirror amendments to the Companies Act to reduce the number of documents accompanying a set of financial statements. To facilitate electronic communications by registered business trusts, the Bill allows for electronic transmission of notices and documents with unit-holders' implied or deemed consent, in accordance with the trust deed of the registered BT. Currently, a registered BT wishing to publish notices and documents on a website can only do so with its unit-holders' express consent. The amendments will help to increase efficiency in this regard. Mr Speaker, I will now cover the next set of amendments, which are to strengthen governance standards and safeguards for registered business trusts, taking reference from the regulatory regime for Real Estate Investment Trusts (REITs). Business trusts are structurally similar to REITs in that both are trusts constituted by a trust deed and, unlike companies, are not legal persons. Both are also usually managed by an external manager. Business trusts are managed by trustee-managers and REITs are managed by REIT managers. This external management model introduces governance risks such as potential conflicts of interest between the external manager and also unit-holders. Unit-holders' ability to vote to remove the external manager is a fundamental safeguard against such risks. Currently, a trustee-manager can only be removed by unit-holders by way of a resolution passed by not less than 75% of the voting rights of all unit-holders present and voting at a general meeting. For REITs, there is a lower removal threshold of more than 50% which applies.”
“Currently, unit-holders holding at least 10% of the voting rights of unit holders present at a meeting have the power to call for a poll. The Bill lowers this threshold to 5%, making it easier for unit-holders to call for a poll on issues that they are most concerned with. The Bill also expands the scope of the statutory derivative action in the BTA to allow a unit-holder to apply to the Court for leave to commence arbitration on behalf of all unit holders of the BT or to intervene in an arbitration to which the BT is a party. This amendment will align unit-holders' rights to bring a derivative action with that of shareholders under the Companies Act. In addition, where an application to wind up a registered BT has been filed in Court, the Bill expands the range of orders that the Court may make, including an order to buy out the interests of one or more unit-holders. Currently, a Court hearing such an application can only make an order for the registered BT to be wound up. The additional remedy helps to protect the rights of minority unit-holders as there may be cases where the company is still viable and it would be a more efficient solution for the majority to buy out the minority or vice versa. The third key area is to improve the ease of doing business and to reduce administrative burden. These include changes to simplify deadlines for annual general meetings (AGMs) and the filing of annual returns. Currently, registered business trusts are required to hold their AGMs once every calendar year and not more than 15 months after the preceding AGM and are also required to file annual returns within one month after the AGM. These requirements do not refer to the financial year end of the registered BT.”
“With these amendments, unlisted registered business trusts will be subject to the same transparency requirements as unlisted companies regarding their beneficial owners. These requirements will help to mitigate the risk of business vehicles being used for illicit purposes, regardless of whether they take the form of a company or a trust. Currently, directors of trustee-managers of registered business trusts are required to disclose conflicts of interest in transactions as well as their interests in the registered business trusts. The Bill will extend such requirements to CEOs of trustee-managers, in recognition of the influence that they have on the affairs of business trusts. The change is consistent with existing disclosure requirements that are applicable to CEOs of companies under the Companies Act. The Bill further introduces requirements for auditors of listed registered business trusts and their subsidiaries to seek MAS' consent if they wish to resign before the end of their term. It also sets out procedures for the appointment of a new auditor where the resigning auditor is the sole auditor, including a reserve power for MAS to make such an appointment. These requirements will allow MAS to prevent a listed BT or its subsidiary from being left without an auditor. Through the application process, MAS may also be alerted to any potential breaches of the BTA and the Accountants Act. This is in line with provisions in the Companies Act in relation to auditors of public interest companies, which include listed companies and their subsidiaries. The second key area is to strengthen the rights of unit-holders of registered business trusts.”
“Mr Speaker, Sir, on behalf of Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of the Monetary Authority of Singapore (MAS), I beg to move, "That the Bill be now read a Second time". The Business Trusts Act 2004, or BTA, provides a framework for the governance of registered Business Trusts (BTs), which are enterprises that combine the characteristics of both a company and a trust. The BTA also facilitates the use of BTs as listing vehicles and as a new asset class for investors. But unlike a company that can only pay dividends out of its accounting profits, a key feature of a BT is the ability to pay dividends out of its cash profits. This makes it particularly suited to businesses with stable growth and high cash flow, such as infrastructure businesses. Many requirements in the BTA were adapted from the Companies Act. The Bill proposes updates to the BTA that are consistent with amendments that have been made to the Companies Act to enhance the regulatory framework for companies. In addition, MAS has also identified other legislative amendments that are needed to maintain the robustness and relevance of the regulatory regime for business trusts registered under the BTA. Mr Speaker, I will now go through the key amendments in the Bill. Let me start, first, with the amendments to better align the BTA with the regulatory regime for companies. These are mainly in three areas. First, is to enhance transparency and corporate governance. The Bill introduces requirements for unlisted business trusts that are registered under the BTA to obtain and maintain information on their controllers, also commonly known as beneficial owners and to also provide such information to MAS and other public agencies upon request.”
“As a leading bunkering hub with expertise in ancillary services, such as the retrofitting of LNG ships, we are an ideal homeport for LNG-powered ships. STB’s grant schemes also encourage the deployment of cruise ships with sustainable practices to Singapore. In 2022, Singapore will welcome its first deployment of an LNG-powered cruise ship, Silversea’s Silver Nova. This will pave the way for the deployment of more sustainably powered cruise ships to Singapore. I wish to thank Mr Louis Ng for his questions and keen support for this Bill, which will be critical for our tourism industry. Mr Speaker, Sir, the Government is committed to continuing its efforts to make Singapore an attractive and sustainable tourism destination and also fostering an environment for tourism enterprises to thrive. We look forward to the continued support of this House in this endeavour.”
“For example, in a public health emergency, cruise terminal and tourist guide licensees may be directed to abide by new protocols in relation to persons at cruise terminals or in their tour groups, so as to protect the general well-being of the public. Just like other regulatory regimes, STB and the Controller will ensure there is clear public interest involved before relying on this ground. With regards to the sustainability efforts of the cruise sector, which Mr Louis Ng asked about, the global cruise industry’s commitment to environmental sustainability is evident. Despite comprising less than 1% of the global maritime industry, the global cruise industry is at the forefront of developing innovative technologies and has invested more than US$26 billion in new ships with energy efficient technologies and cleaner fuels. Liquefied natural gas (LNG) is one of the cleanest-burning non-electric marine fuels available today. There is an increasing trend of cruise lines building LNG-powered ships. This is a significant step as the use of LNG results in almost no sulphur emissions, reduces nitrogen oxide emissions by 85% and reduces greenhouse gas emissions by 20%. The industry is also actively exploring the use of alternative sustainable fuels and implementing them at scale in future. In April this year, the Cruise Lines International Association (CLIA) announced clear commitments to implement environmentally sustainable practices at sea and at berths. CLIA’s global fleet of cruise lines aim to achieve net-zero carbon cruising by 2050 and reduce the rate of carbon emissions by 40% by 2030. In line with our Singapore Green Plan 2030, Singapore is well-positioned to facilitate the cruise industry’s shift towards a more sustainable future.”
“Mr Speaker, I thank the Member for his support of the Bill and the opportunity to make some clarifications. Mr Louis Ng asked about the introduction of a new provision for STB to act as a guarantor for tourism enterprises and the situations in which STB might do so. On rare occasions, STB may opt to exercise the power to act as a guarantor if there are strong and clear benefits to the economy. Multiple layers of safeguards will be in place before STB takes on this guarantor role. For example, a comprehensive risk assessment will be conducted to measure factors such as: (a) the risk to the Government; (b) the track record of the tourism enterprise, (c) potential cost and time savings; and (d) economic benefits. STB will also need to seek the approvals of its Board of Directors as well as the Minister for Trade and Industry. Additional safeguards may also be taken to reduce the overall risk to STB, such as requesting indemnity from the tourism enterprise. Mr Louis Ng also asked how public interest will be determined in this Bill. The term “public interest” appears in legislation of other regulatory regimes, such as in the Travel Agents Act 1975. As I mentioned in my speech, the cruise terminals are international gateways into Singapore. As a port of entry, there are safety and security considerations on whether the cruise terminal licensee is fit and proper to operate such a critical checkpoint. Where there are risks to Singapore’s public interest, for example, being complicit in allowing a breach of border security, the Controller will be able to take into consideration these factors to assess the suitability of the licensee. Other factors which may be taken into account include, but are not limited to, public health considerations.”
“This Bill will enable STB to drive the development and regulation of our tourism sector more effectively and continue its efforts to make Singapore an attractive tourism destination for all. Mr Speaker, I beg to move. [(proc text) Question proposed. (proc text)] 6.34 pm”
“First, clauses 3 and 4 of the Bill introduce administrative amendments to update and incorporate flexibility into the Board’s voting processes, tenure and the number of members. This is in line with the Board provisions for other Statutory Boards. Second, clause 6 of the Bill clarifies STB’s purview over tourism enterprises and expressly provides for powers to provide grants and act as guarantor for selected strategic tourism enterprises. Third, clause 11 of the Bill accords legal recognition to the electronic version of tourist guide badges. This will allow tourist guides to access their badges more conveniently online. Both physical and electronic badges will continue to be recognised, until a transition to a full e-licensing regime takes place at an appropriate time. Fourth, clause 21 of the Bill expressly provides for the power of the Board to collect and access tourism information reasonably required for the functions and duties of STB, including industry development and promotion. Examples of such information would be visitorship numbers and tourism receipts. To protect the information that has been collected, clause 21 also includes a “preservation of secrecy” provision to limit the onward disclosure of such information. Fifth, this Bill expands STB’s administrative and enforcement powers, including according appropriate penalties, to regulate tourist guides and the cruise terminal licensees. This is necessary for STB to exercise its regulatory functions effectively. Singapore’s tourism sector is poised for strong growth as it emerges from the effects of the COVID-19 pandemic.”
“Section 29V also requires the cruise terminal licensees' central management and control to be ordinarily exercised within Singapore so that STB can take enforcement action swiftly if any contraventions ever arise. Section 29ZB provides for a special administration order to be made, where the affairs, business and property of the cruise terminal licensee may be managed directly by STB. These powers are intended to ensure business continuity and avoid disruptions of cruise operations and passenger flows under extraordinary circumstances, such as the insolvency of a terminal operator. In drafting these amendments, close references were made to similar provisions in the MPA Act, as well as the Civil Aviation Authority of Singapore (CAAS) Act, which exercises similar powers over Singapore’s airports. STB will exercise these powers with a light touch, with the primary goals of: one, growing the cruise industry to benefit our economy and, two, strengthening Singapore’s position as the region’s leading cruise hub. We have also consulted stakeholders in the cruise industry and have incorporated their feedback accordingly. [Mr Speaker in the Chair] Consequential amendments will be made to the MPA Act to avoid any overlaps in the regulation of cruise terminal operators when STB takes over the roles I have just described. All other marine and port services and facilities will continue to be regulated by MPA. STB and MPA will work closely to ensure the seamless implementation of these amendments. The second set of changes clarifies and enhances STB’s administrative capabilities and enforcement powers over the broader tourism industry.”
“The Cruise Lines International Association projected that global cruise passenger volume will recover to pre-pandemic levels by the end of this year and increase by approximately 30%, compared to 2019, by 2026. With a low market penetration rate of 0.2%, the cruise industry is especially optimistic about the growth potential in the Asia Pacific region. Cruise capacity in the region is projected to more than double from 3.4 million in 2022 to 7.3 million passengers by 2027. As the volume of cruise tourism grows, Singapore's cruise terminals will become critical infrastructure for our tourism sector. To ensure that these terminals are operated in a manner that is aligned with our broader goals of developing Singapore's cruise and tourism activities, STB will need regulatory powers to ensure high service standards, optimise the use of the limited number of berths and prevent excessive pricing. The newly added Part 3AA in the Bill provides clarity on the cruise terminal licensing regime. New sections such as sections 32A and 32B further empower STB to conduct surveys and obtain information such as financial and operational data from the cruise terminal licensees. Such data will help STB monitor the industry's development and make comprehensive analyses and projections for effective economic regulation. As cruise terminals are international gateways into Singapore with significant market power, sections 29R and 29S empower STB to have oversight and control over the ownership and acquisition of the cruise terminal licensees. The intent is not to control the day-to-day commercial decisions of the licensees but where there are material changes to the equity control of the licensee, STB's approval will be required to safeguard Singapore's national interests.”
“Mdm Deputy Speaker, on behalf of the Minister for Trade and Industry, I beg to move, "That the Bill be now read a Second time." The Singapore Tourism Board (Amendment) Bill principally amends the Singapore Tourism Board Act to provide the Singapore Tourism Board (STB) with statutory powers for the economic regulation of the cruise industry as well as to clarify and enhance STB's administrative capabilities and enforcement powers over the broader tourism industry. Allow me to elaborate on the two key legislative changes contained in the Bill. First, the transfer of economic regulatory role for the cruise industry from MPA to STB. The Maritime and Port Authority of Singapore (MPA) is empowered under the MPA Act to regulate the provision of marine and port services and facilities in Singapore, including the two cruise terminals – the Singapore Cruise Centre (SCC) and Marina Bay Cruise Centre Singapore (MBCCS). For cruise services, MPA oversees maritime safety and security as well as the pricing of port services and facilities. MPA and STB also jointly regulate berth allocations and service standards of the terminal operators. This is sensible as these factors are vital to the implementation of our cruise tourism industry, which STB oversees. Under clause 5 of the Bill, we are now formalising and clarifying STB's regulatory role over the cruise terminal operators in the Singapore Tourism Board Act. Let me explain why this is necessary. Singapore's cruise tourism industry has grown tremendously since the opening of MBCCS. From 2012 to 2019, overall passenger throughout has grown at a compounded annual growth rate (CAGR) of 10.3% to reach 1.82 million. Despite the COVID-19 pandemic, demand for cruise holidays has rebounded strongly worldwide.”
“I have responded to the Member's Motion by articulating our Government's macro and micro approaches. We plan and execute for the long term and, at the same time, continue to have the dexterity to zoom in into the details that matter on the ground to Singaporeans and Singaporean businesses. Indeed, the livelihoods of our people are not a theoretical exercise to us. Rather, we focus on strong job creation and wage growth as the best ways to help Singaporeans tide over these immediate difficult times and ensure that we have sufficient resources to tackle the long-term challenges. The mindset and bias towards action have allowed us to weather storms and seize opportunities throughout our history. That is the hallmark of our Government. This is our commitment to Singapore and we will continue to do our utmost to deliver on this commitment, especially in these challenging times.”
“Foremost is the fact that a strengthening exchange rate cannot fully offset global prices without causing immediate negative consequences on growth and, therefore, the labour market. Indeed, this is precisely the reason why many advanced central banks are guarded in the speed and also the extent to which they will hike interest rates. This monetary policy action, in and of itself, has attendant spillover effects that we must all take into account in a very uncertain, dynamic and also challenging economic environment. Therefore, a judicious blend of tight monetary policy and targeted supportive fiscal policy, carefully calibrated, is most appropriate. In fact, the Member mentioned that the fiscal policy must be timely, targeted and temporary in rebating back fiscal upsides. That is what we have precisely done with the S$1.5 billion support package. If you look at it, the combined Budgets of 2020/2021, together with monetary policy decisions – both fiscal and monetary policy together – supported Singapore's GDP growth by about one percentage point in 2021 and prevented the deterioration of the unemployment rate by four percentage points, even as the combined expansionary monetary macroeconomic policy responses were non-inflationary. At this juncture, the current round of combined fiscal and monetary policy responses is expected to contain medium-term inflation, without significant loss of output or inadvertently adding further to the underlying tightness in the economy. On indexing financial assistance payments to inflation, I would just like to say that the Government regularly reviews our schemes to take into account needs and affordability. And inflation is one of the many factors taken into consideration. Mdm Deputy Speaker, allow me to sum up.”
“The measures included in the package also help our local companies transform and cope with rising energy costs by becoming more energy-efficient. It also provides targeted relief for specific groups, such as self-employed persons, who depend on their vehicles for their livelihoods and, hence, are more adversely affected by energy cost increases. These include taxi drivers and delivery riders. Overall, we designed the package to avoid stoking further inflationary pressures and distorting price signals, while being, as the Member suggested, fiscally responsible and sustainable. And as Deputy Prime Minister Lawrence Wong said yesterday, if the situation worsens significantly, we would be prepared to do more. Let me turn to some of the specific issues raised by Assoc Prof Jamus Lim in his speech. On MAS' monetary policy response to inflation, more specifically, we need to recognise that the global nature of the price pressures we are facing is affecting all of our trading partners. The sharp pick-up of inflation of food and oil prices since Q4 last year, principally, reflects the effects of serious disruptions of global supply due to the Ukraine-Russia conflict. So, it is inevitable, as the Member had mentioned, that some of these prices will affect our economy. Many Singaporeans do accept that the situation requires some adjustments to the high prices. Given the circumstances, I will explain a few points below. MAS, using its monetary policy, has strengthened the exchange rate by at least 5% on an annualised basis, which has kept domestic food inflation, for example, to one-fifth of global food inflation thus far. How MAS decides on the extent of its tightening of the exchange rate takes many different factors into account.”
“So, as we continue to plan and execute our macro and strategic plans, we also keep our eye firmly on the micro – the ground picture. So, we plan and execute the macro, but we also keep our eye firmly on what is happening on the ground. It is reflected in how we navigated Singapore through the COVID-19 crisis and support Singaporeans and local businesses during this period of rising costs. During the height of COVID-19, we committed close to S$100 billion over the last two years, part of it to support businesses hit by COVID-19 restrictions. In particular, our Jobs Support Scheme (JSS), which provided wage subsidies to employers to help them retain workers, saved 165,000 local jobs between March and December 2020. We also rolled out initiatives, such as our SingapoRediscovers Vouchers (SRVs) for our embattled tourism sector. Collectively, about $300 million in vouchers and out-of-pocket payments were generated through SRV transactions. This provided crucial support to our local tourism business. In anticipation of higher prices, we rolled out support for Singaporeans in Budget 2022, including the Jobs and Business Support Package, to help businesses and workers, as well as the Household Support Package to help households with their daily needs. And to help Singaporeans cope with rising inflationary pressures, we also brought forward the implementation of some of the measures, including our CDC Vouchers and Small Business Recovery Grant (SBRG). The additional S$1.5 billion support package Deputy Prime Minister Lawrence Wong announced on 21 June provides immediate and targeted relief to lower-income and vulnerable Singaporeans, who are disproportionately affected by higher prices.”
“5%, energy-related components in Singapore's Consumer Price Index, which includes the cost of electricity, gas and petrol, increased by 13.6% year-on-year between January and May. So, 27.5% versus 13.6%. Second, we continue to build our trade links to the world, to diversify our sources of imports and exports, even as the world is experiencing a retreat of globalisation. We concluded the world's largest Free Trade Agreement (FTA), the Regional Comprehensive Economic Partnership Agreement (RCEP), in November 2020, and are part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). We have also signed the Pacific Alliance-Singapore Free Trade Agreement (PASFTA) in January and are on track to conclude an FTA with Mercosur. We have also signed Digital Economy Agreements (DEAs), Digital Economy Partnership Agreements (DEPAs) and are in the process of negotiating a green economy agreement with Australia. These trade agreements help us to diversify our imports, open markets for our businesses and future-proof our economy. Third, we continue to stay open and connected to the world and to innovation, investments and talent. And despite the challenges posed by the COVID-19 pandemic, we attracted S$11.8 billion in Fixed Asset Investments (FAI) last year. We have secured significant investments, for example, Sanofi has committed to setting up a €400 million vaccine production facility in Singapore. These inbound investments create good jobs for Singaporeans, make our economy vibrant and competitive and prepare us for the next pandemic – long term. Overall, strong growth will support job creation, wage growth and help address inflationary pressures.”
“Mdm Deputy Speaker, I thank the Member for tabling today's Motion. I will respond to the Motion in two parts. I will start by addressing the macro picture, before zooming in to the micro picture. A hallmark of our Government since Independence has been our ability to look long term. We see the big picture, the macro picture. This includes assessing the world and the winds of change, as well as identifying the trends, opportunities and challenges for Singapore. In this House yesterday, I shared our economic outlook for Singapore, including our GDP growth and inflation projections. For the sake of brevity in this response, I shall not repeat those details and Members can refer to my speech yesterday. What I would like to focus on in my response is how we have planned for and laid foundations for the long term. First, we maintain a stable macroeconomic environment so that businesses and households can make economic decisions with confidence. And a core tenet is our exchange rate-centred monetary policy which has helped us manage inflation. During this period of rising inflationary pressures, MAS has pre-emptively tightened monetary policy since October last year, as the Member has observed. This longstanding policy has directly helped dampen imported inflation. How? To Assoc Prof Jamus Lim's point on food prices, as well as energy prices, let me dive deeper. For global food prices, while global food commodity prices increased by an average of 25.4% year-on-year over the first five months of 2022, domestic food prices increased by an average of 3.6% year-on-year over the same period. So, 25.4% versus 3.6%. On energy prices, likewise, even as global energy prices rose by 27.”
“Deputy Prime Minister and Minister for Finance will also share, as I mentioned earlier, some of the different fiscal measures that have been put in place to support businesses and households during this time.”
“I thank the hon Member for his supplementary questions. Higher prices will lead to some adjustments in consumer behaviour, as consumers substitute between products, as well as services. Thus far, the higher inflation readings in recent months have not led to any significant cut-backs, at least in household consumption. The latest private consumption, retail sales and F&B sales indices point to firm consumption spending. In fact, spending on food services, as well as wearing apparel and foot ware have seen a discernible step-up, relative to Q12022, in the month of April, following the removal of mobility restrictions. I also wanted to highlight an example. A consumer-facing company in Singapore that has done well so far this year after restrictions have been removed is Dian Xiao Er. They shared that the dining crowd has returned and sales have recovered to pre-COVID-19 levels. Dian Xiao Er is expecting its revenue to increase by 40% from FY2021 to FY2023, based on this recent performances. On the Member's second supplementary question, I would say that, in the near term at least, external inflationary pressures are expected to remain strong, as factors driving up global inflation, such as elevated energy prices, are likely to persist for some time. Domestically, I mentioned earlier that the labour market is still tight. It will remain tight in the near term and will lead up to continued upward pressures on labour costs. But with the relaxation of the border measures in March and inflows of non-resident workers, I think, that should also help alleviate some of these pressures.”
“I thank the Member for this supplementary question. Inflationary pressures, as we all know, are subject to external environment. Currently, the external cost pressures – I mentioned the Russia-Ukraine conflict as well as supply chain global disruptions – will impact projections. But at this point, MAS and MTI expect inflation to moderate towards the end of the year, baring any significant shocks. With regard to the support for businesses as well as households in addition to the $1.5 billion package that we announced, we have also previously announced over the course of the COVID-19 pandemic support for businesses, support for households, and in the medium to longer term, to help businesses and workers to upskill, to help businesses to prepare for the global economy – the changes, the swifts to supply chain, the shifts towards the digital economy, as well as the shifts towards the sustainable economy. Deputy Prime Minister and Minister for Finance Mr Lawrence Wong will go into some of these details later in his reply to the Parliamentary Questions, talking about the many different physical measures that we have out in place to support businesses, as well as Singaporeans.”
“Following the significant easing of border measures since end-March, the in-flow of non-resident workers should help to alleviate manpower shortages and also moderate labour cost pressures in the coming months. If we were to assume stabilisation in global commodity prices and the unwinding of global supply chain constraints, both MTI and MAS expect inflation to moderate towards the end of the year, as I had mentioned earlier on, even as it remains higher than the historical average.”
“Sir, I thank the Member for his questions. First, I would say that our economy is operating slightly above potential. I think in the last two years of the COVID-19 pandemic, we have been urging for and doing all our best to help our businesses recover. I would also say that we should grow if we can grow because strong growth will enable us to create jobs, good wages, make our economy more vibrant, attractive to foreign investment; it also helps us in many ways to address some of the inflationary pressures that I mentioned earlier on. But, granted, we also have to manage inflation, upskill our workers, prepare our businesses for the long run. To the specific points that the Member raised, if you take into account this expected recovery and the resilient performance of some of the outward-oriented sectors, such as our electronics cluster, MTI's assessment is that GDP growth is on track to come in within the official forecast range mentioned earlier of between 3% and 5%, notwithstanding external shocks or growing headwinds in the economy. This growth forecast actually represents above-trend growth because in the five years prior to the pandemic, GDP growth averaged about 3.2% per annum. This growth forecast, as I had mentioned, represents above-trend growth but along with it, also the economy's output gap, which is actual output minus potential output, and it is estimated to turn mildly positive this year. He talked a bit about labour market conditions. We all know that labour market conditions are tight. We expect them to remain tight but a significant overheating of the labour market is unlikely.”
“First, we will maintain a stable macroeconomic environment so that businesses can make investment and operational decisions with confidence. The Monetary Authority of Singapore has tightened monetary policy three times since October last year. The appreciation of the Singapore dollar will help to temper imported inflation. Second, the $1.5 billion support package announced on 21 June will provide immediate and targeted relief to lower income and vulnerable Singaporeans, who are disproportionately affected by higher prices. The Deputy Prime Minister and Minister for Finance will be elaborating on the support measures later. Finally, MTI will continue to attract investments and foster new growth engines. Strong job creation and wage growth are the best ways to combat inflation. To sum up, our economy is facing significant headwinds, including a global economic slowdown and strong external inflationary pressures. However, I am confident that by working closely with businesses and Singaporeans, we will be able to weather the storm, as we did with the COVID-19 pandemic.”
“For the rest of the year, the recovery in international travel and domestic demand with the lifting of COVID-19 restrictions will help to mitigate some of the weaker external demand. Miss Cheng Li Hui and Mr Shawn Huang asked whether Singapore is likely to see a recession or stagflation within the year or the next few years. Overall, MTI expects the Singapore economy to expand by 3% to 5% in 2022, with growth likely to come in at the lower half of the forecast range. We expect growth to moderate further next year. At this stage, we do not see or expect a recession or stagflation in 2023. Nonetheless, risks in the global economy remain significant. These include further escalations in the Russia-Ukraine conflict, more severe global supply-side disruptions, risks to financial market stability if monetary policy tightening in advanced economies is faster than expected, and the trajectory of the COVID-19 pandemic. Mr Desmond Choo also asked how rising global interest rates will affect lending and mortgage rates in Singapore. To tame rising inflation, the central banks of many economies have started to raise interest rates. With higher global interest rates, Singapore’s domestic interbank interest rates have also risen in tandem, although the extent of the increase has been moderated by the strengthening of the Singapore dollar. The increase in domestic interbank interest rates has in turn led to a rise in lending and mortgage rates in Singapore. As global interest rates could increase further, businesses and households should bear in mind the rising cost of borrowing when making borrowing decisions. The Government understands businesses and Singaporeans’ concerns. The Government plans to address the challenging environment in three ways.”
“The global economic environment has become increasingly challenging. The Russia-Ukraine conflict is now entering its fifth month, while economies such as China continue to grapple with the COVID-19 pandemic. Protracted global supply disruptions, due in large part to the conflict and the pandemic, have fuelled inflationary pressures globally, especially through their impact on energy and food commodity prices. As a small, open economy, Singapore cannot be insulated from these external developments. In particular, we have seen a significant rise in inflation. MAS Core Inflation picked up to 3.6% year-on-year in May, from 3.3% in April and 2.5% in the first quarter of the year. CPI-All Items inflation, which includes private transport and accommodation costs, rose to 5.6% year-on-year in May, from 5.4% in April and 4.6% in the first quarter. Inflation is likely to pick up further in the coming months but should start to moderate towards the end of the year if external inflationary pressures recede. For the year as a whole, MAS Core Inflation is expected to average 2.5% to 3.5%, while CPI-All Items inflation is projected to average 4.5% to 5.5%. Mr Desmond Choo asked whether inflation has affected consumer demand and businesses in Singapore. Notwithstanding rising inflation, economic activity in Singapore has remained resilient thus far. In the first quarter of 2022, Singapore’s GDP grew by 3.7% on a year-on-year basis. Non-oil domestic exports and industrial production remained healthy in April and May, rising by 9.3% and 10% year-on-year respectively over this period. Similarly, retail and food and beverage sales volumes increased by 8.4% and 6.9% year-on-year respectively in April, reflecting a continued recovery from the pandemic.”