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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“Mr Speaker, I thank the Member for tabling today’s Motion. I share her concerns over losses suffered from scams, as do other Members in this House. Over the past year, Dr Tan Wu Meng and Ms Yeo Wan Ling have raised questions on the avenues of recourse for customers who suffer losses from scams. Mr Saktiandi Supaat and Dr Lim Wee Kiak also asked about the status of the Shared Responsibility Framework. Let me touch on our broad strategy to fight scams before highlighting ongoing efforts by the Government and banks against more concerning scam typologies. I will then share the avenues that customers have for recourse and provide an update on the Shared Responsibility Framework. Singapore adopts a three-pronged strategy to fight scams. First, upstream measures, such as the ScamShield mobile app to filter and block scam messages and calls, and the SMS Sender ID Registry regime to label non-registered senders with the “Likely-SCAM” label. Second, downstream measures, these include bank measures implemented last year. And third, public education through public advisories and sharing best practices to fight scams. Our collective efforts are showing some encouraging signs. The total amount of scam losses decreased slightly in the first half of 2023, compared to the same period in 2022. Nevertheless, the scam situation remains serious. With more of us transacting digitally, bad actors are adopting increasingly sophisticated methods to target victims. We must constantly sharpen our approach to fight scams in this rapidly evolving landscape. Among scam types prevalent today, digitally enabled scams involving phishing and malware are of gravest concern. This is where victims either gave away or had their banking credentials stolen, leading to unauthorised transactions.”
“Sir, I thank Ms Carrie Tan for her question. As I mentioned earlier on, MAS will review reports of breaches of misconduct and take appropriate regulatory actions against FIs or representatives that are found to breach MAS regulations.”
“Sir, I do not have the answer at this moment but will check and get back to the Member.”
“FIs will then review the facts and circumstances of the case in accordance with proper procedures, including interviewing the complainant and keeping the complainant apprised of the case status. They will offer redress to consumers where their representatives are found to have committed mis-selling or other wrongdoing. If the FI's response is not to the customer's satisfaction, he or she can approach FIDReC, which I mentioned. The outcome of FIDReC's adjudication is binding on the FIs, but not on consumers, who retain the right to pursue their claims through other avenues, such as seeking legal advice on the merits of their case. Finally, consumers may also file a report with MAS if they suspect that an FI or representative has committed a regulatory breach or misconduct. While MAS does not adjudicate individual cases of disagreement between consumers and FIs, MAS will review reports of breaches or misconduct and take appropriate regulatory actions against FIs or representatives found to have breached MAS regulations.”
“Sir, I thank the Member for his supplementary questions. With regard to vulnerable clients, including seniors who may not be savvy with the English language, FIs must implement additional safeguards when recommending products to such clients. A supervisor from the FI must call the client to check back on his or her understanding of the product and risks before any sale to vulnerable clients is allowed to be completed. MAS has also publicly consulted on proposals to enhance pre- and post-transaction safeguards for these vulnerable clients. I will just share a few examples. First is the strengthening of requirements to identify selected clients. Second is to require FIs to ask the selected clients to have a trusted individual to be present during the sale and advisory process. And third, to require FIs to audio record call-backs to the selected clients and to provide the recordings to them upon request. MAS is reviewing the feedback from the public consultation and will produce the response when the review is completed. With regard to the Member's second supplementary question, there are many different reasons why clients may wish to withdraw their investments. One, it may be due to the fact that they have their own preference or they may have a change of mind. MAS does not have this information, but the FIs will have that information. On what recourse mechanisms customers or consumers might have, please allow me to just elaborate shortly. Consumers who suspect any wrongdoing again should lodge a complaint with the FIs, which are required by MAS regulations to investigate and resolve these complaints promptly and also independently. The complaint must be handled by a separate unit comprising staff who are not involved in sales.”
“Sir, the Monetary Authority of Singapore (MAS) expects financial institutions or FIs and their representatives to conduct their prospecting and marketing activities responsibly and in conducive settings. MAS has set standards of conduct for such activities. For example, one, representatives of FIs must disclose their identities upfront and clearly to prospective clients; two, FIs should monitor the conduct of their representatives at roadshows through site visits and mystery shopping; three, FIs should conduct call-backs and surveys within the free-look period to check if clients understood the products that they purchased at roadshows. MAS has recently issued a public consultation to strengthen these safeguards by making them mandatory. MAS has also proposed additional new measures, such as requiring FIs to: one, offer consumers additional time of at least three to five days to consider their decisions; two, limit the use of gifts to influence consumers’ decision-making; and three, conduct roadshows and marketing events only in commercial premises instead of public spaces, such as streets and pedestrian areas. A consumer who feels he has been sold a product through inappropriate means by a representative of an FI should immediately lodge a complaint with the FI. The FI is required, by regulation, to thoroughly investigate the matter. Where the representative has been found to have mis-sold a product, the FI will offer redress. Should the consumer remain dissatisfied with the FI’s response, he can approach the Financial Industry Disputes Resolution Centre (FIDReC) for assistance. FIDReC’s mediation and adjudication services provide consumers with an accessible and affordable avenue to resolve disputes with FIs.”
“Sir, I thank Dr Tan Wu Meng for his supplementary questions. It is worth saying that not all mergers, as I mentioned in my original answer, give rise to competition issues. Many, in fact, are pro-competitive or are competitively neutral. To determine if a merger is anti-competitive, CCCS will assess whether the merger leads, as the Member alluded to, to a substantial lessening of competition. With regard to this specific case, as I mentioned to the Member earlier on, we will be conducting a public consultation and I invite Members, as well as members of the public, to give their views on this particular merger.”
“Sir, there are several Parliamentary Questions on this matter that have been filed and the Ministry of Transport (MOT) will be addressing them at a subsequent Sitting. Can I ask that the Member refer to those replies instead on the Point-to-Point Act?”
“CCCS, in this case, will be consulting on the proposed acquisition and the public will be able to provide feedback through this public consultation.”
“I thank the Member for his supplementary questions. Let me just share again and reiterate the point that CCCS is still assessing this and, so, we cannot comment on a specific case under consideration at this stage. What we can do is to share about the processes and that is what I will be doing shortly. CCCS, for the Member's understanding, adopts a two-phase approach in evaluating merger applications that are made through the Competition Commission. And upon receipt of this complete application, CCCS' will carry out a phase one review which involves a quick assessment. This phase one is expected to be completed within 30 working days. The timeline is subject to suspension for a variety of reasons, for example, if the merger parties do not respond to CCCS' requests for information or provide documents which are needed to complete its assessment. For merger situations that do not raise competition concerns, CCCS will issue a favourable decision at the end of the phase one review and, therefore, the merger can proceed without undue delay. If during the phase one review CCCS is unable to conclude that the merger situation does not raise competition questions or concerns, it will provide the merger parties with a summary of its key concerns and then proceed to carry out a more detailed phase two review, which is expected to take 120 working days. To the Member's questions about consultation and concerns, I want to assure him that information provided by third parties play an important role in CCCS' assessment of mergers. CCCS obtains relevant information from third parties, such as competitors and customers, via public consultation and by contacting them directly.”
“Sir, the Competition and Consumer Commission of Singapore (CCCS) has received Grab's notification of the proposed acquisition. CCCS will assess the impact of the proposed acquisition on competition and consult relevant stakeholders before reaching a decision on the matter.”
“As I mentioned to the Member earlier on, it is measured against a trade-weighted basket of currencies. We have tightened monetary policy five times since 2021, and there was no such announcement.”
“Sir, just to take a step back and just to also state to the House that the relevant measure of MAS' financial performance is not currency translation effects or interest expense, but how well its investments have done. MAS made a small gain of $0.6 billion on its investment portfolio amidst a depressed market environment. And last year, as Members would know, was an unusual year for financial markets, where bond markets and equity markets performed very badly. In this case, MAS' investment performance had to be viewed from a longer-term perspective. Since the 2008 Global Financial Crisis, MAS' investment portfolio had benefited from an unusual period of low inflation as well as low interest rates. Including this latest year, MAS recorded an annual average investment gain of S$11.7 billion in the last 15 years. MAS seeks to preserve the external purchasing power of the OFR over the long term to support monetary policy implementation. So, over a 20-year period, MAS' average annual investment gain was 3.7%. Notwithstanding the financial loss that we had been discussing, MAS' OFR position remains strong and it re-transferred S$191 billion of excess OFR to the Government.”
“I thank Mr Don Wee for his question. In fact, that is the whole purpose of MAS' monetary policy – it is to manage price stability as well as to manage inflation, and we have done so. I explained in my reply to Parliamentary Questions and the supplementary question by Ms Hazel Poa. Let me just reiterate a few points on how the policy has been successful in curbing imported inflationary pressures. Again, I said that between May 2022 and June 2023, our import price index had fallen by some 14%. So, in concert, this has dampened. Had we not done so, I think the cost of living would be higher, imported inflation would be also higher.”
“Sir, I thank Assoc Prof for his supplementary question. I think it is really important to note that the Singapore dollar is trade-weighted against a basket of currencies, not just the US dollar. Therefore, you need to look at it as a whole basket of currencies. We look at it from very much over the long term. First, on currency translation effects, I have explained that technically. The second is on currency intervention and as well as money market operations. Because the Singapore dollar was already on an appreciating trend and in addition to high savings rates as well as large volume of capital inflows, MAS also intervened by selling Singapore dollars and, therefore, moderating the appreciation rate. Had it not done so, then you could worsen inflation. But when you sell Singapore dollars into the domestic banking system, you will then have to undertake money market operations. This is the normal conduct of central banking policy. What the MAS then does is to sell repurchase agreements (repos) or MAS bills, of which it then has to pay interest payments on. And these interests, in line with global interest rates, have risen. And, therefore, when we issue an MAS bill, for example, we would have to pay a higher interest rate. That adds to that 30% account of the loss that we are talking about today. So, just explaining the technicalities of how this works; trade-weighted as well as why we need to conduct money market operations to moderate the appreciation of the Singapore dollar.”
“Sir, I thank the Member for her supplementary question. As I mentioned earlier in my reply, the loss is attributed to 70% in net currency translation losses and a 30% in interventions and money market operations. These are the normal functionings of how central banks conduct monetary policy and with its goal to dampen inflation and to have medium-term price stability – so that is to put that into context. On its impact on price stability and its impact on inflation, I had mentioned that in my Parliamentary Question reply. But let me also explain that if MAS had not tightened monetary policy, quarterly core inflation would have reached 7.2% year-on-year at its peak – 1.9 percentage points higher than the actual peak of 5.4% year-on-year in the first quarter of 2023. So, inflation would have stayed higher for much longer and brought about much more significant increases in the cost of living for households. Therefore, MAS' conduct of monetary policy has made an impact. We are still seeing the impact over the course of the different quarters, having tightened monetary policy five times since October 2021.”
“Accordingly, MAS' reported net loss in the last FY has no impact on the NIR that is available to the Government. Second, similar to other Statutory Boards, MAS makes contributions to the Government's Consolidated Fund in lieu of corporate income tax. This is based on 17% of the net profit for the year, after offsetting cumulative losses from previous financial years. The Government recognises that MAS contributions will vary considerably from year to year and has therefore smoothened the revenue volatility by requiring the annual contributions made by MAS to be paid in equal proportions over a period of three years. Given the net loss in FY2022/2023, MAS will not accrue a contribution to the Government's Consolidated Fund for that financial year. Nonetheless, MAS will still make a contribution of S$0.4 billion to the Government's Consolidated Fund in the current financial year, based on past profits. This smoothening formula has thus helped to mitigate the impact of MAS' net loss on the Government's budget. In sum, MAS’ overarching mandate is to ensure macroeconomic stability. As Deputy Prime Minister Lawrence Wong stated in this House on 1 August 2022, the Government does not expect MAS to deviate from its mandate to maximise its contributions to the Budget. MAS’ monetary policy has helped to deliver broad macroeconomic stability for over 40 years as the basis for sustained economic growth and increases in real incomes for Singaporeans.”
“Between May 2022 and June 2023, Singapore's import price index had fallen by some 14%. This decline in import prices has, in turn, contributed to lower domestic inflation. On a month-on-month seasonally adjusted annualised basis, MAS' Core Inflation fell from its peak of 9.1% in June 2022 to 2.2% in June 2023. Mr Yip Hon Weng asked how MAS strikes a balance between managing inflation and incurring losses and whether these losses are anticipated. MAS' monetary policy is focused purely on keeping inflation low and ensuring medium-term price stability. It does not take into account any potential impact on MAS' profits because to do so would undermine its mission. This is similar to how other major central banks conduct monetary policy. Many of them have also reported losses arising from their monetary policy operations. MAS' financial performance is a necessary consequence of its conduct of monetary policy. The OFR is key in enabling MAS to conduct effective monetary policy. As a central bank, MAS adopts a conservative approach in its investments, with a significant proportion of its portfolio invested in liquid financial market instruments. Through a well-diversified portfolio and careful risk management, MAS expects to earn good long-term returns that are commensurate with its risk profile. Finally, let me turn to Mr Yip's question about the impact of MAS' net loss on the Government's budget position. MAS contributes to the Government's budget in two ways. First, under the Net Investment Returns (NIR) framework, the Government can spend up to 50% of the expected long-term real return on the assets invested by MAS, GIC and Temasek. NIR is based on the long-term expected returns of these entities and, hence, is not affected by their short-term performance.”
“As MAS explained earlier, had it not done this, the Singapore dollar would have been too strong and therefore hurt the economy. While this currency intervention added substantially to our OFR, it created excess Singapore dollar liquidity in our domestic banking system which MAS had to remove and, therefore, incur an interest expense in the process. Mr Don Wee asked if MAS plans to increase the interest yields and payments of Treasury Bills and bonds to curb losses and encourage a higher level of savings. Such instruments are issued by the Government and not by MAS. The interest rates payable on such instruments are not determined by MAS but are market-determined via auctions. As the interest rates of such instruments have increased in tandem with the rise in global interest rates, we have already seen a healthy pick-up in demand by the public. Mr Yip Hon Weng asked whether there are plans to broaden the basket of currencies in which the OFR is held. The OFR is already held in a diverse range of currencies. As long as the Singapore dollar appreciates against these currencies, there will be negative currency translation effects. In the last FY, the Singapore dollar appreciated against every major currency. As MAS explained earlier, the effects of a stronger Singapore dollar cannot be hedged or diversified away. Let me now respond to the Members' broader questions on monetary policy. Ms Hazel Poa asked about the benefits of a stronger Singapore dollar in view of the financial losses recorded by MAS. The appreciation of the Singapore dollar last year reflected the outcome of MAS' tighter monetary policy to dampen inflation. This policy has been successful in curbing imported inflationary pressures. Let me explain how.”
“Mr Speaker, my response will cover the questions raised by Ms Hazel Poa, Assoc Prof Jamus Lim and Mr Don Wee in today's Order Paper, as well as Mr Yip Hon Weng's question filed for tomorrow's Sitting. If Mr Yip is satisfied with the response, he may wish to withdraw his question after this session. Assoc Prof Jamus Lim asked about the components of the net loss, including from the Monetary Authority of Singapore's (MAS) currency intervention. MAS had explained in detail the constituents of its reported financial loss at its annual press conference in July, which I will reiterate here. About 70% of the net loss was due to the negative currency translation effects of a stronger Singapore dollar. This is not due to currency intervention. The negative currency translation effects arise because the Official Foreign Reserves (OFR) are held in foreign currencies but reported in Singapore dollars. Therefore, a stronger Singapore dollar will result in a lower value for the OFR when expressed in Singapore dollar terms. This currency translation effect does not have any bearing on the external purchasing power of the OFR or on MAS' ability to conduct monetary policy. The remaining 30% of the net loss was due to net interest expenses from MAS' money market operations to mop up excess liquidity in the banking system. The net interest expense incurred on MAS' money market operations to mop up this excess liquidity in the banking system was unusually large in the last FY due to two factors: one, the large volume of operations; and two, higher interest rates. The high volume of money market operations was necessitated by MAS' interventions in the foreign exchange market to moderate the appreciation of the Singapore dollar.”
“Mr Speaker, Sir, may I have your permission to take Question Nos 23, 24 and 25 in today's Order Paper together, please?”
“[(proc text) Question put, and agreed to. (proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Alvin Tan]. (proc text)] [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]”
“The proposed amendment, therefore, provides clarity on the statutory requirements applicable to similar agreements for loans or financial assistance, based on our engagement with IMF on both the NAB as well as BBA. Regardless, any such loans or financial assistance that are granted to IMF under BWAA will continue to be subject to strong safeguards and the risk to Singapore's Official Foreign Reserves from the absence of this early repayment option is very low. Why? Well, first, when Singapore provides a loan in support of IMF arrangements or programmes, Singapore, as I mentioned earlier, lends to IMF, not directly to member countries in need. Therefore, Singapore's loan exposure is to IMF and not to the borrowing countries. Second, as IMF enjoys preferred creditor status, loans granted by IMF must be repaid ahead of all other creditors. Third, should Singapore have a balance of payments need, IMF is obliged under our loan agreements to repay the loan to Singapore immediately. And finally, IMF has an excellent repayment history and has never defaulted on repayments to its creditors. I emphasise that where the IMF arrangement or programme can be prematurely terminated or suspended, and where the terms of any agreements for loans or financial assistance can be unilaterally amended, MAS will require IMF to include an early repayment provision in accordance with BWAA. Finally, Mr Saktiandi Supaat spoke of the need to be prudent in public spending. I want to assure him and emphasise that MAS will continue to exercise a high degree of prudence when considering each IMF request for financial assistance. Sir, I believe I have addressed Members' queries. I thank Members once again for their interest in and support of the Bill. Sir, I beg to move.”
“It is also in line with the current practice for other international organisations that establish offices in Singapore. The current practice does not explicitly require Parliament to fix, by resolution, the maximum amount of grants to be given under a specific grant agreement by agencies to support the operations of Singapore-based offices of other international organisations. So, on the IDA question which the Member Assoc Prof Jamus Lim mentioned earlier, under the IDA Act, there is no requirement, therefore, for Parliament to approve grants made by the Ministry of Finance to relevant international organisations' offices. And the issue covered in the present amendment here, therefore, does not arise in the case of the IDA Act. In terms of the quantum of financing that has been provided to the IMF offices in Singapore, between financial year (FY) 2019 and FY2022, MAS provided an average of about $2.3 million to the STI annually and about $390,000 to the RRO annually. Through their regional surveillance and capacity development activities, the IMF's Singapore offices strengthen Singapore's status as a regional financial hub. Let me now turn to the amendment to waive the early repayment requirement in certain circumstances and, specifically, to answer Mr Saktiandi Supaat's question, the NAB as well as BBAs are examples of IMF's multilateral loan arrangements which involve the use of standard form agreements. For NAB, IMF confirmed that an arrangement can be made to facilitate repayment of a member's NAB contribution should the need arise. In the case of BBA, IMF confirmed that BBA cannot be suspended or prematurely terminated. Thus, the issue of early repayment did not arise.”
“The policy intent has always been, and continues to be, to apply the safeguards specific to both these sections only to grants provided to IMF to assist member countries under IMF arrangements or programmes. These grants are different from MAS' financing of the IMF offices in Singapore. As I mentioned in my earlier Second Reading speech, when Singapore contributes grants to support international efforts, including IMF arrangements or programmes to assist member countries in need, we do so alongside other country contributors. So, MAS cannot dictate terms because there are many other contributors to such arrangements or programmes. We thus have to rely on IMF to ensure there is proper governance in the administration of the grants. Therefore, it would be prudent to subject such grants to additional domestic safeguards in sections 6A(2) and 6A(3) of BWAA, including Parliamentary oversight, which the Member had mentioned earlier. In contrast, the scope of MAS' financing for the IMF's offices and how it can be used are clearly stated in the respective MOUs between IMF and Singapore. MAS exercises direct oversight on the use of the funds, and IMF must meet MAS' reporting requirements. Instead of Parliamentary oversight, MAS' funding of the IMF's operations in Singapore is subject to the approval of the President. MAS' funding of the IMF's offices in Singapore is drawn from MAS' overall budget, which requires the President's approval, pursuant to Article 22B of the Constitution read with section 166 of the MAS Act. Presidential approval is required in every financial year, even if Past Reserves are not used. The proposed amendment then clarifies the distinction between such funding support for IMF offices in Singapore and grants to support international efforts.”
“6 million to the IMF's CCRT; second, a grant of US$2 million to the IMF's COVID-19 Crisis Capacity Development Initiative, which seeks to meet the urgent capacity development needs of countries affected by the COVID-19 pandemic; and three, a grant of US$0.97 million to the IMF's Trust for Special Poverty Reduction and Growth Operations for Heavily Indebted Poor Countries. To ensure transparency and accountability, MAS has issued media releases for each of these contributions on its website, in addition to publishing the information in the Government Gazette. As Assoc Prof Jamus Lim mentioned, and also both Members Saktiandi Supaat and Don Wee, it is, indeed, in Singapore's interest to contribute grants to support the IMF's initiatives, such as PRGT, to assist vulnerable, low-income countries, but also provided that the BWAA safeguards are complied with. This was explained to this House in 2016 when BWAA was last amended to empower MAS to contribute grants to IMF. By contributing to such initiatives, Singapore joins other members of the global community in supporting the IMF's role to safeguard global monetary and financial stability and foster sustainable growth and prosperity for its members and also to generate the goodwill that Members had mentioned. This will, in turn, not just generate goodwill but also benefit Singapore's economy and financial stability. I will now turn to Members' questions on the specific amendments proposed. First, let me cover questions relating to the amendment to exclude MAS' financing of IMF's operations in Singapore from the application of sections 6A(2) and 6A(3).”
“The portion of Singapore's quota subscription that is paid in SDRs or foreign currency can be repaid to Singapore on demand to obtain Reserve assets to meet our balance of payments financing needs, as and when that need arises. Next, IMF also relies on borrowed resources to support its lending activity. These currently arise, as I mentioned earlier, through the New Arrangements to Borrow (NAB) and the Bilateral Borrowing Agreements (BBAs). Since the BWAA was amended in 2016, Singapore has made loan commitments of US$1.9 billion to IMF under the NAB for 2021 to 2025 and US$1.7 billion under the BBA for 2021 to 2024. Only members with strong external positions, such as Germany, Japan, Switzerland, the United States and Singapore, are requested by IMF to contribute to the NAB and BBAs. The full list of contributors to both the NAB and BBAs respectively are available on the IMF's website. For these loan arrangements, IMF uses standard form agreements signed across all the contributors so that the same terms apply across all contributors and there is also parity of treatment. Third, Singapore has also contributed grants as part of the IMF's multilateral initiatives. In November 2016, Singapore contributed a US$20 million grant to the Poverty Reduction and Growth Trust (PRGT) and US$0.3 million grant to the Catastrophe Containment and Relief Trust (CCRT). CCRT provides debt relief for the IMF's poorest and most vulnerable members in the event of a global health pandemic or natural catastrophe. More recently, to enhance the capacity of IMF to assist vulnerable, low-income member countries to respond to the COVID-19 pandemic, MAS provided three grants. First, an additional grant of US$17.”
“Here also, the multilateral development banks (MDBs), such as the World Bank and the Asian Development Bank, have crucial roles to play, as these institutions seek to crowd in private capital to close climate financing gaps, including by scaling up the use of blended finance. And MAS will continue to work closely with IMF and the MDBs on climate financing initiatives in the region. On capacity-building, IMF and its training institutes, including IMF-STI, conduct training courses centred on the macro-economic implications of climate change. These courses are targeted at policymakers from the region, including Singapore and our neighbours. As I mentioned earlier, MAS has been providing funding support and guidance for STI on programmes that best meet members' capacity needs, including on the climate front. Mr Don Wee, Mr Saktiandi Supaat and Assoc Prof Jamus Lim raised several questions on the different forms of financial support Singapore has provided to IMF. I would like to thank all Members for the support of Singapore's continuing contributions to IMF's programmes and arrangements. Singapore will, indeed, continue to contribute to global efforts to bolster the IMF's resources and we will carefully assess the merits of future requests, and Parliamentary approval will be sought. But let me go into the different forms of financial support, even as we stand ready to assess each and every potential request. First, on quotas. Singapore's quota subscription of SDR 3.9 billion in IMF is a funded contribution. It is part of Singapore's Official Foreign Reserves and earns interest based on the SDR interest rate. A quarter of the member's quota subscription is usually paid in SDRs or foreign currencies acceptable to IMF, with the remainder paid in the member's own currency.”
“Mr Deputy Speaker, Sir, I thank the Members, Mr Don Wee, Mr Saktiandi Supaat and Assoc Prof Jamus Lim, who have spoken in support of the Bill. I will first address Mr Don Wee's questions relating to the IMF's role in dealing with climate change. In line with the IMF's mandate to promote global macroeconomic and financial stability, and recognising that climate change can pose a significant risk to members' economic well-being, IMF has stepped up efforts to incorporate climate considerations and goals across its surveillance, lending and capacity development activities. On surveillance, IMF provides guidance to members on appropriate macroeconomic and fiscal policies that facilitate climate mitigation, adaptation and the transition to a low-carbon economy. IMF incorporates climate risk analysis into its Financial Sector Assessment Programmes to assess the impact of climate change on the stability of members' financial sectors. IMF has also developed tools to help governments identify and select good quality public investment projects for building low-carbon and climate-resilient infrastructure that can attract climate investments. On lending, IMF created a new lending facility, the RST, which Assoc Prof Lim talked about. They did so in April 2022 to provide affordable, long-term financing to low-income and vulnerable middle-income member countries in support of macro-economic policy reforms related to structural challenges, including climate change. On RST, IMF has, indeed, requested for our contributions and MAS is assessing the request. RST also aims to catalyse financing from other stakeholders for climate-related projects. So, I agree with Assoc Prof Jamus Lim on the need for Singapore to play our role, including in initiatives like RST.”
“Amidst the uncertain global economic environment and rising geopolitical tensions, IMF is a key pillar of the multilateral system that fosters cooperation and promotes shared interests in the international financial system. The proposed amendments will enable Singapore to contribute to the work and mission of IMF as a responsible member of the international community, in a prudent manner that fulfils the intent of BWAA and ensures the proper exercise of MAS' powers. Sir, I beg to move. [(proc text) Question proposed. (proc text)]”
“IMF is required to ensure uniformity and equity of treatment for all contributing members and cannot provide for early repayment to any one contributing member, short of a contributing member having a balance of payments need. IMF has also indicated that certain IMF arrangements or programmes cannot be suspended or prematurely terminated. The Bill will, thus, amend BWAA to waive the early repayment requirement in instances where: (a) the relevant agreement is in a standard form provided by IMF, which MAS cannot amend unilaterally; or (b) the relevant agreement is for an IMF arrangement or programme which cannot be suspended or prematurely terminated. I would like to emphasise that loans or other financial assistance granted to support IMF arrangements or programmes will continue to be subject to strong safeguards, including the safeguards in sections 6A(2) and (3). There are also further safeguards in relation to loans. First, when Singapore provides a loan in support of the IMF arrangements or programmes, Singapore lends to the IMF and not directly to a member country in need. That is, Singapore's loan exposure is to IMF, not borrowing countries. Second, IMF enjoys preferred creditor status. This means that loans granted by IMF will be repaid ahead of all other creditors. Third, as I mentioned earlier, should Singapore have a balance of payments need, IMF is already obliged under our loan agreements to repay the loan to Singapore immediately. Mr Deputy Speaker, Sir, in conclusion, as a small and open economy and as an international financial hub, Singapore benefits from global economic prosperity and financial stability.”
“In addition, MAS' financing of the IMF offices in Singapore is currently subsumed under MAS' overall annual budget and approved on a consolidated basis by the President, in accordance with the budget approval process under the MAS Act of 1970. BWAA will, therefore, be amended to clarify that agreements to provide grants to finance the operations and functions of the IMF's offices in Singapore are not subject to the safeguards in sections 6A(2) and (3). To be clear, agreements to provide grants to support IMF arrangements or programmes to assist member countries that are in need will remain subject to the safeguards in sections 6A(2) and (3), including the requirement for Parliamentary approval. The second set of amendments relates to section 6A(4) of BWAA. These apply when MAS enters into an agreement to provide a loan or other financial assistance, excluding grants, to support an IMF arrangement or programme. Section 6A(4) requires that such agreements include provisions that allow MAS to require early repayment in the event of suspension or premature termination of the IMF arrangement or programme for which the assistance was provided. This early repayment requirement is in addition to existing provisions in MAS' loan agreements with IMF, which oblige IMF to immediately repay the loan in the event of a balance of payments need in Singapore. The intent of the early repayment requirement was to provide additional assurance that MAS would be able to recover its monies from IMF, even if we have no balance of payments need. In practice, however, IMF is unable to accommodate requests from MAS to include this early repayment requirement in IMF arrangements or programmes which are multilateral in nature and use the IMF's standard-form agreements.”
“The two offices are: First, the IMF-Singapore Regional Training Institute (IMF-STI). This is the IMF's regional training centre for the Asia and Pacific Region. Its mission is to enhance the economic and policymaking capacity of countries in the region. MAS co-funds the IMF-STI with IMF, our Ministry of Foreign Affairs, as well as the Government of Japan. Second, the IMF Resident Representative Office in Singapore (IMF RRO). This serves as a liaison office between IMF and Singapore and assists with the IMF's macroeconomic surveillance work in the region. MAS co-funds the IMF RRO with the IMF. Grants provided to finance the IMF's offices in Singapore are different from grants provided to support IMF arrangements or programmes which assist member countries in need. When Singapore contributes grants to the IMF to support its arrangements or programmes to assist member countries in need, we depend on the IMF management and Executive Board to ensure proper governance in the administration of the grants. It would, therefore, be prudent to subject such grants to additional safeguards in section 6A of BWAA. These safeguards include ensuring that: One, any grant provided is pursuant to a specific request from the IMF; Two, any grant is provided only as part of a multilateral effort by IMF members; Three, there is transparency in the form of a Gazette notice covering the key information of the assistance; and Four, Parliament approves grants by specific resolution. In contrast, grants to finance the IMF's offices in Singapore support IMF's operations and functions in Singapore. The scope of this financing is clearly set out in memoranda of understanding entered into between the Government of Singapore and IMF. MAS exercises oversight on the use of these funds.”
“This is subject to safeguards, set out in section 6A of BWAA, that ensure the proper exercise of MAS' powers in relation to this. Sir, I will now go through the two main amendments proposed in the Bill. First, the Bill proposes amendments to clarify that the safeguards which relate to grants in sections 6A(2) and (3) of BWAA are intended to apply to grants provided to help member countries under IMF arrangements or programmes. They are not intended to apply to grants provided to fund the IMF's offices in Singapore. Second, the Bill proposes amendments to the early repayment requirement in section 6A(4) of BWAA to take into account: one, the IMF's use of standard-form agreements, and that, two, some of its arrangements or programmes cannot be suspended or prematurely terminated. I wish to emphasise that the proposed amendments remain consistent with, and do not detract from, the intent of the existing safeguards in section 6A, which is to ensure the proper exercise of MAS' powers in relation to the provision of loans, grants or other financial assistance to the IMF. Allow me to elaborate. The first set of amendments relates to the safeguards in section 6A(2) and (3) of BWAA. These safeguards apply when MAS enters into an agreement to provide a grant to the IMF to support IMF arrangements or programmes with member countries in need. Under BWAA, MAS has provided various grants to the IMF for this purpose. For example, MAS provided three grants in 2021, as part of multilateral efforts to enhance the capacity of the IMF to assist member countries, including in response to the COVID-19 pandemic. Separately, MAS, on behalf of the Government of Singapore, funds two IMF offices which we host in Singapore.”
“Mr Deputy Speaker, 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". Sir, the International Monetary Fund (IMF) is a global multilateral institution with a mission to achieve sustainable growth and prosperity for its 190-member countries. It supports economic policies that promote domestic and global financial stability and foster the economic well-being of countries. The IMF performs three main roles in furtherance of its mission: first, economic surveillance; second, lending to member countries; and third, capacity development. The IMF depends on its members to provide the necessary financial resources to carry out its mission. The primary and permanent source of the IMF's funds is members' quotas. This refers to each member's capital subscription in the IMF that is broadly based on the member's relative position in the global economy. Quota resources are supplemented by multilateral borrowing arrangements with member countries which are in a stronger financial position, such as the New Arrangements to Borrow (NAB) and Bilateral Borrowing Agreements (BBAs). As a small, highly open economy, and a responsible member of the international community, it is in Singapore's interest to support the IMF's multilateral efforts to promote financial stability and strengthen the resilience of the global financial and monetary system. Under the Bretton Woods Agreements Act (BWAA), MAS is empowered to enter into agreements on behalf of the Government of Singapore to provide loans, grants or other financial assistance in support of IMF arrangements or programmes.”
“But I would like to assure the Member that the Government will continue to monitor consumer goods' price developments closely and be prepared to do more if necessary.”
“Sir, over the last two years, CPI-All Items inflation in Singapore rose from 2.3% in 2021 to 5.5% year-on-year in March 2023. The increase in prices was mainly driven by the higher costs of private transport and food. The Government has introduced comprehensive measures to help Singaporeans cope with inflation. First, through support programmes, such as: one, the latest tranche of CDC Vouchers in January; two, the Cost of Living Special Payment next month; three, the enhanced GST Voucher (GSTV) – Cash payment in August; and four, the Assurance Package Cash towards the end of the year. On average, for lower-income households, the enhanced GSTV scheme and Assurance Package will fully cover the increases in spending due to inflation and the GST rate increase this year. For middle-income households, the measures will substantially cover the increases in spending. Second, the Monetary Authority of Singapore (MAS)'s five monetary policy tightening moves since October 2021 have led to an appreciation of the Singapore dollar and helped temper imported cost increases, including for food. As I highlighted to the House in February this year, the effects of MAS' past tightening moves are expected to continue to dampen inflation over the course of the year. Third, while private transport costs have risen, the Government has ensured that public transport remains affordable. Every public transport journey is subsidised by the Government. In fact, the Minister for Transport added that more than $1 for every public transport journey, subsidised. In addition, one in two Singaporeans, including seniors and lower-wage workers, benefit from concessionary fares which are up to 70% less than adult fares.”
“I thank the Member for this supplementary question. Maybe, just let me give the Member a broader view. The foreigners' share of private housing purchase has dropped from about 20% in 2011 to about a low of about 3% to 4% over the past few years. Coming out of the pandemic, the share has remained limited – about 7% in the first quarter of 2023. Again, the Member wanted more questions, I would ask the Member to file a separate PQ on foreign housing.”
“Sir, just two points. The first is that we have every intention of answering those questions. The Member has reached out to me also. And specifically, the Member did not put it in time for it to be rolled over and so it was converted to Written PQs. And the team had very specifically noted that we wanted to answer both questions by Mr Louis Chua as well as Mr Leong Mun Wai as comprehensively as possible, which I had done so. The Member's questions on foreign funds inflow, it was specific to SFOs. So, if you wanted an answer to a broader question with regards to overall foreign funds inflow, may I ask the Member to file a separate PQ, which we will be happy to take at another Sitting.”
“I thank the Member the Member for his supplementary questions. I think I will talk about the first supplementary question which is effectively on source country breakdown. I had mentioned earlier on that, in fact, the source region is the Asia Pacific region, followed by Europe and Americas. We have given more details because, as I mentioned earlier on, of those centres that publish surveys quite similar to our MAS survey that I mentioned, none of the surveys published source country details. Some also do not even publish regional breakdowns. We have done so. I think that would suffice in terms of source country breakdown. With regard to the second question, I think I had responded to one of the Member's questions with regard to the requirements for SFO. We are still within the two-year period, so I encourage the Member and other Members of this House to ask again after the two-year period.”
“More specific to Mr Leong’s question, family offices themselves have had virtually no impact on our private housing market as there was no residential property transaction attributable to family offices over the last six years.”
“So, most funds are managed here, are invested outside and they also typically remain in foreign currencies and thus, have little or no effect on the Singapore dollar exchange rate or our OFRs. If some of these inflows do get converted into Singapore dollars, they would, just like all net capital flows into Singapore dollars, generate some appreciation pressure on the exchange rate. MAS addresses any such pressures, regardless of the source of funds, as part of its regular market operations to achieve its monetary policy objectives. We have not seen unusual surges of capital into the Singapore dollar that have required a pronounced response on MAS’ part, and certainly not from family offices which, to reiterate, would not form a significant portion of the total flow of funds for management out of Singapore. The third question by Mr Leong Mun Wai is on the impact on inflation. As for inflation, it has little to do with foreign fund inflows into Singapore, let alone the portion due to family offices. The step-up in core inflation since late-2021 was primarily due to the sharp increases in global energy, imported food prices and stronger domestic wage growth. These cost increases fed through to higher electricity and gas, food and essential services prices, accounting for nearly 75% of MAS' Core Inflation in 2022. And now, the impact on the private property market. Some foreign funds do flow into the private property market. However, purchases by foreigners have been relatively low, at about 4% of all private residential property purchases on average over the past three years.”
“We do not yet have the data as these SFOs have two years from their point of application to meet the local investments requirement that MAS just introduced in April 2022 – so, just one year ago. We are within the first two-year implementation period, so, data on the volume of assets is not currently available. Members of the House should note, however, that while assets are managed in Singapore by entities based in Singapore, most of these assets are invested outside Singapore. And this is understandable as the investment universe is much larger outside Singapore and investors use Singapore as a financial centre to access investment opportunities in our region and beyond. But as these assets are managed from Singapore, they help to create jobs and valued-added in our financial industry. There are also positive spill-overs to other sectors as these investors often appoint tax and legal professionals for wealth planning and operational matters. So, it benefits our financial industry and beyond. Mr Leong Mun Wai also asked about the impact of the inflow of foreign funds through family offices on our Official Foreign Reserves (OFRs), the private property market and inflation. Please allow me to set the context. The bulk of the gross inflows into Singapore comprise flows by financial institutions and other non-financial corporates, not high-end individual investors; and even less so family offices which are only one category within the latter. To reiterate, most of the funds managed here are invested in assets outside Singapore. Hence, they typically remain in foreign currencies – this is to the second point about the impact on OFRs.”
“There is no breakdown for family offices in particular in MAS’ annual survey, which I cited. However, Singapore family offices (SFOs) that apply for and are granted tax incentives by MAS managed about S$90 billion of assets as at 2021. This is less than 2% of the S$5.4 trillion assets managed in Singapore as at 2021. In short, the bulk of the increase in AUM in Singapore is attributable to institutional investors. Non-retail individual clients account for a small proportion, and family offices even less. Mr Louis Chua and Mr Leong Mun Wai asked for a breakdown by source countries of wealth inflows, and for Mr Leong Mun Wai, specifically for family offices. Based on the Asset Management Survey, non-retail individual clients come from a wide range of places. The most granular breakdown of foreign sourced funds is available by regions, rather than by specific countries. This is no different from surveys published by financial sector authorities or industry associations in major wealth management centres like London, Hong Kong and Switzerland. What we are providing on the regional breakdown for non-retail individual clients in fact goes beyond what these other jurisdictions publish as they do not put out data on specific categories of investors like individual investors. The top-sourced foreign region for the increase in Singapore’s AUM for high-end individual investors from that period of 2017 to 2021 was the Asia Pacific, as is to be expected. This accounted for slightly over half of AUM sourced from high-end individual investors. Asia-Pacific was followed by Europe and the Americas. Mr Leong asked how much SFOs that have applied for tax incentives since April 2022 have invested in local investments.”
“Singapore is a trusted, vibrant and well-regulated international financial centre in Asia, one of the fastest growing regions in the world. Naturally, this has attracted a wide range of investors, including global and regional institutional investors as well as individual investors. Family offices are one particular category of individual investment. The Monetary Authority of Singapore (MAS) does not have comprehensive data on fund inflows into Singapore through family offices. Such detailed data is not necessary for MAS to carry out its functions of ensuring macroeconomic and financial stability. But let me share what we have. Mr Louis Chua asked about wealth flows while Mr Leong Mun Wai asked about foreign funds inflow through family offices. I take their interest to be in investments made by high-end individual investors. The investor type closest to high-end individual investors in MAS’ annual Asset Management Survey is the category called “non-retail individual clients”. This category includes family offices, clients of external asset managers, private trusts and high net worth individuals. Based on the survey, the Assets Under Management (AUM) of foreign non-retail individual clients managed by financial institutions in Singapore increased by about S$470 billion from 2017 to 2021. This makes up about 20% of the increase in total AUM by Singapore’s asset management industry from 2017 to 2021. Also, the growth of assets from these high-end individual clients has been broadly similar to that for overall AUM. Let me explain. This, in other words, means that there has been a much broader pick-up of funds flowing into Singapore’s wealth management industry, but it is not peculiar to these high-end individual clients.”
“Sir, MAS as well as the IBF will be organising round tables between FIs and polytechnics to strengthen the industry and academia collaborations in areas such as tightening the relevance to curriculum and to industry; what industry requires, industry's needs, and also enhancing the learning outcomes of internships. In addition, we are also going to make sure that there are going to be coordinated outreach efforts, such as career fairs and financial industry showcases to raise awareness and increase indeed, the students' awareness and interest in the financial sector. To give the Member an example, is the industry's showcase held at the Ngee Ann Polytechnic on 24 April which I attended in conjunction of the launch of the scheme, where financial institutions make presentations to polytechnic students and set up booths to interact with students. MAS is also exploring having finance professionals conduct regular sharing sessions on campus to increase students' understanding of developments and to work in the sector. So, if you are a polytechnic student and you are interested in the financial sector, please look out for the myriad of opportunities available.”
“I was speaking to both the financial institutions including JP Morgan as well as Allianz and many others and also the students there and the feedback was: one, that they are very keen to hire polytechnic students because the financial sector is hiring and the financial sector is a very dynamic sector; the second is that the students are also very open to taking on these internships and apprenticeships; and for those who are working already in the financial sector, who want to take on or to do a degree, the third track helps them to do so. So, in speaking to JP Morgan and others, I think this is a scope that we want to expand to allow for the financial sector to take on a bigger talent pool. I am confident that our polytechnic talent is able to fulfil that.”
“I thank the Member for his supplementary questions. Today indeed, many polytechnic students are keen to pursue degrees instead of entering the workforce, because they perceive a university degree as essential to securing a good job and also to progress in their careers. On the employers' end, few of these employers offer apprenticeship programmes – like the one that I mentioned, the MAS scheme – particularly in the financial sector. Employers may not be rolling out these apprenticeship schemes as they are unfamiliar with the polytechnic talent pool, unfamiliar with the calibre of the polytechnic students and also face difficulties in hiring them or attracting them into the sector upon graduation. With the roll-out of this scheme, the Polytechnic Talent for Finance apprenticeship track, we hope to correct this misperception that a university degree is a prerequisite for a good job and a career progression in the financial services sector. This apprenticeship track incentivises financial institutions to develop these kinds of apprenticeship programmes that provide a clear path for deserving apprentices to be placed in university graduate-equivalent roles upon completion. We really hope that the introduction of the scheme will spur our FIs to develop more apprenticeship programmes for polytechnic graduates and create a new path for polytechnic students to take on as an alternative to pursue a university degree. I was at the launch of this scheme.”
“Apologies, Deputy Speaker. Yes, Question Nos 7 and 8. Thank you.”
“In line with this principle, FIs participating on COSMIC will also be permitted to disclose the information they receive from COSMIC within their financial group, only for group-wide ML/TF/PF risk management purposes, on a need-to-know basis, provided additional safeguards set out in the legislation are in place. This is to mitigate the risks of leakage, and unauthorised disclosures and unintended legal risks to FIs that had shared the information. With this, Madam, I beg to move. [(proc text) Question put, and agreed to. (proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Alvin Tan]. (proc text)] [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)]”