Gautam Banerjee
Singapore
“Sir, I thank the Minister for the explanations. Given the complexity of the process, the inherent risk of the assumptions that have been used in this expected long-term rate of return and, obviously, the interest by everyone in making sure that the process is robust and transparent, would the Minister consider, at some stage, giving a lit…”
“Active citizenry cannot be forced but we should continue to actively encourage our youth in the State's affairs. We should make them feel safe to voice their views. In this regard, all of us in this House must be willing to keep an open mind on the ideas brought up by our youth and continue to actively engage them.”
“As we bring in new locally-trained doctors as well as foreign doctors, nurses and other hospital staff, I would like the Ministry to pay more attention to their career development.”
“If we have what it takes to weather the storm, we should ensure that the strong winds do not tear down the arts and cultural scene that we have painstakingly built in recent years.”
“In conclusion Sir, I hope that we will take a long-term view and continue to make foreign talent welcome and feel at home in Singapore because they will not only help us survive the downturn but, in the light of tough competition ahead, will help us emerge from the downturn stronger and more resilient. New Citizens”
“We will need "off budget" measures to supplement, modify and tweak policies, both existing and those introduced in this Budget, and we need to do this swiftly and decisively throughout the coming months.”
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“These are subjective, so the Bill seeks to incorporate certain safeguards into the proposed amendment. Firstly, only 50% of the long-term return is allowed to be used. This provides some buffer against uncertainties, which are inherent in any forward-looking assumption and expectation. Secondly, the Minister is required to review the long-term real rate of return each year. This ensures that current market conditions and outlook are taken into account, and the rate revised if necessary. Thirdly, the President has to concur on the long-term real rate of return each year. This allows a process of check and balance on the assumptions and expectations adopted. This is very important given the subjectivity and judgment involved in deriving the rate. I believe the checks and balances in the Bill have been well thought through, but my main concern is that they must not only work but be seen to work by Singaporeans at large. We have to step up transparency and communication compared to what we do now. Unlike the present system, which is based on historical earned income, the proposed new system will be based on assumptions of future trends and outcomes – and requires a great degree of judgement. So we should discuss and embellish the checks and balances. I have the following suggestions, which I would like the Minister to consider: The "expected long-term real rate of return" used for the computation should be capped by the actual historical long-term real rate of return of the components of the relevant assets. While the past is not necessary an indication of future investment performance, a cap based on historical actual return provides a sanity check on the assumptions and expectations adopted.”
“The Amendment Bill applies only to relevant assets, which is defined to be assets held by GIC and certain assets held by MAS less certain liabilities. Other assets remain under the current constitution provisions, and all the capital gains therefrom are still considered past reserves. The Minister will derive and apply an expected long-term real rate of return to the relevant assets. Fifty percent of the amount so computed will form part of current reserves. The actual dividends, interest and other income received from the relevant assets will be ignored (ie, they will go into past reserves) to avoid double counting. This "expected long-term real rate of return" is forward looking and based on the Minister’s expectations and assumptions. It may not be the same as the historical realised rate of return. It also may not be the same as the actual realised returns each year. The only check and balance is the President’s concurrence. This is a completely different basis from the current Constitution which is based on actual returns. The inclusion of capital gains will ensure consistency in the treatment of asset classes with different proportion of yield versus capital gains. Returns from investment take the form of dividend/interest or capital gains upon disposal. Often, the two elements are inter-related. For the same investment, a lower dividend/interest distribution will, in theory, result in higher eventual capital gains, and vice versa, for example, high growth companies. Hence, it is inconsistent to include only the dividend/interest but not the capital gains. The "expected long-term real rate of return" entails the use of various assumptions and expectations about the future.”
“Sir, before I comment on this Bill, let me say that I agree with the Government that a review of the present rules relating to the use of reserves is necessary because of the following reasons: Our present rules only allow the use of: (a) dividends, interest and other income received by the Government during the financial year from investing the reserves of the Government; and (b) the interest received by the Government during the financial year from loans whenever given by the Government. Under our current rules, all capital gains, realised or unrealised, are not available for spending. Also, the present rules on the spending of our reserves implicitly assume that all our reserves are invested in fixed income instruments, which clearly they are not. A quick look at the accounts of GIC will reveal that a significant portion of the "relevant assets" referred to in the Bill are in asset categories such as private equity, real estate or alternative investment funds, which do not provide regular interest income on dividends. In any case, the concept of total returns should take into account not only the fixed annual income that is received from these assets, but also the change in the carrying value of the underlying assets. So unless we update the present rules on spending of reserves, we will have available for current spending only a small proportion of the total returns that are being earned on our reserves. Under the current rules, most of the returns being generated from our reserves will, therefore, not be available for the present generation of Singaporeans. So it is necessary to recalibrate the use of our reserves if we are to be fair to different generations of Singaporeans. Mr Speaker, Sir, allow me now to examine and comment on the main provisions of this Bill.”
“Mr Deputy Speaker, Sir, thank you for allowing me to speak on the Constitution of the Republic of Singapore (Amendment) Bill. This Bill to amend the Constitution to fundamentally change the basis on which the government of the day can spend Singapore’s reserves has been contemplated during various discussions and debates in this House for a number of years. Indeed, every year during the Committee of Supply debate following the Finance Minister’s Budget Statement, this subject has received attention from many MPs asking the Government to undertake a review of the hitherto strict, narrow and limited ways a government can use past reserves for current spending. The fact that the Second Reading of this very important Bill is taking place today when we are in the midst of a global financial crisis of unprecedented proportions is entirely a coincidence. However, the financial meltdown we have experienced over the past few weeks will inevitably influence the discussion and debate we will have in this House during the Second Reading of this Bill. But I view the timing of this debate as positive because it has raised the awareness of how complicated and convoluted the global financial system has become and that we cannot implicitly place trust and reliance in the system, or on venerable and reputable institutions, which for years have been pillars of strength supporting the global financial infrastructure that we have taken for granted. We are fortunate in some ways that we can take on board some basic "do's" and "don'ts" from this present financial crisis that we are embroiled in, as we change our Constitution to allow the use of our hard-earned and precious reserves for current spending.”
“Sir, the fact that we take the disclosure-based, tick-the-box-based approach to selling these products contributed to this problem as opposed to a principle-based approach where the financial institution takes a more holistic view of the issues, including the position that the customer finds itself? In the UK, for example, it is taking a more principle-based approach, and it is very difficult to buy these off high street banks. So, perhaps, in our review, do we consider whether we should move towards principle-based rather than disclosure-based, tick-the-box approach?”
“Mr Speaker, Sir, I would like to thank the Senior Minister of State for the very comprehensive answer. We have a dearth of three- and four-star hotels and this could affect our competitiveness. As cost is an important factor, particularly for the new destinations such as China, India and Vietnam, should we have more three- and four-star hotels to make us more competitive?”
“So, until I heard the Prime Minister and his clarification on the Singapore model of democracy, I have to say that I was tempted to support the motion that the Nominated Member of Parliament, Prof. Thio Li-ann raised. In our short history, we have demonstrated that we can balance the need for a political framework, rights and freedom for our citizens, while pursuing social, ethical and economic goals. But for us to sustain our progress and success, we must continue to get this balance between developing our democratic traditions and practices on the one hand and our economic and social progress on the other hand. In fact, where necessary, we may need to recalibrate the scale from time to time. But having heard the Prime Minister, I am satisfied that we do not need to change at this time our electoral system to retain this balance. Sir, for this reason, I will not support the motion.”
“Similarly, the creation of an elected presidency with special powers of oversight on our national reserves was an innovative safeguard, which will hopefully prevent an irresponsible government making unwarranted use of our national reserves simply to boost its popularity with the electorate. As a young democracy, our democratic values, traditions and policies are still evolving. The established democracies such as the UK and the US took many generations to develop. In Asia, the Japanese have taken over 100 years to develop their democratic system. Our own Singapore brand of democracy is also developing and judging by the views and exchanges in both the traditional and modern media, our citizens would like to be increasingly engaged and have a say in how they are governed. In fact, as far back as 1989, Minister George Yeo, in his maiden parliamentary speech noted, and I quote: "Singaporeans wants a livelier democracy, particularly younger Singaporeans. That is in accord with the times. A diversity of views is an insurance against the unexpected and the unforeseen. Singapore cannot become a great nation in this information age without a lively democracy. History, it seems, is now on the side of democracy." Nearly two decades have passed since Minister Yeo's remarks on democracy in Parliament, but his message is as relevant today as it was then. So, we must get all Singaporeans, particularly our younger generation, to embrace our own Singapore brand of democracy. But for this to happen, our citizens must see and experience democracy and its various institutions in action. Periodic elections and even by-elections are examples of democracy in action.”
“Mr Speaker, Sir, thank you for giving me this opportunity to speak on this motion. It is always a hard act to follow the Prime Minister. But in this case, I am very fortunate, because not being a student of Singapore politics, not having studied the history and being here to live through some of the tumultuous times that Singapore went through, I think it was very enlightening to hear the Prime Minister on some of the practical aspects of democracy and how we need to make democracy work in this small city state of ours. Singapore is a young nation and a young democracy. We are also a tiny city state with a mixture of races and religions. But already in our short history as a nation and, in spite of having no natural resources other than our human capital, we have achieved much that we can be proud of. The "Singapore Brand" is internationally well recognised, respected and even emulated. When we started out as a newly independent nation, we adopted the Westminster model of government but our social, political and administrative systems have evolved to suit our unique set of circumstances. So, for example, the creation of Group Representation Constituencies (GRCs) alongside the traditional Single Member Constituencies (SMCs) was a novel way to ensure that candidates from the minority races have a minimum guaranteed representation in Parliament even if voting were to take place along racial and religious lines. This was an important confirmation that Singapore is, and will remain, a multi-racial society. It left an indelible impression on new immigrants like me and helped me to decide to settle in Singapore for the longer term.”
“Can the Minister, perhaps, explain to this House that since our economy has changed quite a lot from some years back and the fact that the economic growth figure has come down in a particular month or quarter, does it not translate to loss of jobs in the same proportion? We are a much more capital intensive economy now and some particular sectors like pharmaceutical and electronics can be affected by exports to overseas countries. This would have a disproportionate impact on the GDP figures, but not on employment, and we have also developed the service sector. So I think some of the concerns that the MPs have may be a little bit misplaced on job creation. We must not take knee-jerk reactions on longer term employment policies that we have in place. I think you need to –”
“Is it being consistently done for both past cash as well as new funds?”
“One further question on economic charge. This levy on cash is not consistently done. For example, in the same report of the Auditor-General, the Health Services Authority had something like $50 million or so cash which was sitting in its balance sheet and the Auditor-General raised a point on it. I think it is when statutory boards have to do some new activities, that is when –”
“Thank you for the very comprehensive answer, Senior Minister of State. I notice from the Auditor-General's Report this year and the previous years that whenever he looks at the value for money areas, whether it is land and buildings, surplus cash, he has always got many recommendations. I just wonder whether there is enough of a culture of looking at value for money within statutory boards and Ministries and perhaps the Auditor-General should focus more on this sort of engagement across various Ministries. One example is surplus cash that many Ministries and statutory boards hold. Perhaps we should have a policy of sweeping up all the cash and keeping and investing it through other means, rather than just leaving it on the balance sheets of statutory boards who are not able to do very much with it.”
“What practically follows the above-mentioned initial letter to the Hong Kong Law Society is that if the Hong Kong Law Society decides to consider the complaint on a more formal basis, then further documentation will be required, ie, statutory declaration with supporting affidavit. The UK mechanism is by way of letter of complaint to the Legal Complaints Service, which is part of the Law Society but operates independently. Statutory declaration is not required. In the US mechanism, the complaint is ordinarily signed by a lawyer, who, by signing, affirms that there is a basis for allegations. The different states can, of course, differ in their practices but the complaint needs to be served and filed. Sir, I asked that we remove the need for a statutory declaration or an affidavit to accompany every complaint to enable complaints to be made freely and without hassle upfront. So, once again, thank you for giving me the opportunity to speak on the Legal Profession (Amendment) Bill.”
“Given that these committees now have timelines to meet to wrap up their work (eg, the Review Committee has to finish its work within four weeks), any complaint, whether frivolous or otherwise, should be dealt with efficiently. This should balance the rights of a person to have access to redress and the innocent lawyer being tied down with a frivolous complaint for a long period of time. In this open and transparent information age, when most organisations have an established policy on "whistle-blowing" and encourage 360-degree feedback from all employees, why are we making it difficult for clients and others to provide feedback on professionals serving them? Unfortunately, in Singapore, the situation is similar in other professions. For example, in the case of doctors, dentists, accountants, a complaint must also be accompanied by a statutory declaration. Given that we are in fact becoming a global city, we need to revisit this practice, not only in the legal profession but also in the other professions. Let us look at what happens in other countries. In Hong Kong, for example, purely as a starting point, if anyone wants to make a complaint against a lawyer, it can usually be done in one of the following ways: a simple letter to the law firm to which the subject lawyer is attached or a simple letter to the Hong Kong Law Society (Conduct Section). Obviously, if the complainant wishes to have his or her complaint considered by the Hong Kong Law Society, the complainant is probably hoping for the complaint to result in disciplinary action proposed by the Hong Kong Law Society.”
“The migration of people and skills from the West to the East has only just begun. In another decade, world-class service organisations will have a lot more of their people in Shanghai, Hong Kong, Singapore, Mumbai and Dubai than today, and this will be at the expense of London, New York and Paris. However, in Singapore, we have another problem because the supply of both local and foreign qualified lawyers have been very tightly controlled over many years, resulting in the present severe shortage of lawyers. Unfortunately, the Bill does not address this significant problem. I hope the Ministry of Law, working with the legal profession, will liberalise the domestic supply of lawyers and also make it easier for foreign lawyers to practise here because a shortage of qualified lawyers does affect our competitiveness as a centre of business and finance. We must not miss the opportunity of the talent migration from West to East to anchor on our shores. The second point I would like to raise is that the Bill, in an attempt to deter frivolous complaints, will now require a complainant to furnish a statutory declaration or an affidavit to support a complaint against an errant lawyer and to bear the costs for those involved in the proceedings. The amount of deposit that the Inquiry Committee can ask the complainant to deposit with the Law Society to cover necessary costs will also be raised from $500 to $1,000. These new proposals will be seen as an unnecessary inconvenience and even intimidating and alarming to many, particularly the man in the street. They may be frightened to take any action, fearing perhaps unnecessary consequences of their action. Whether complaints are frivolous or not can be determined by the Law Society with its review and inquiry committees.”
“But the ability of professionals in Singapore to adapt and innovate to meet the demands of these new buyers of professional services is hampered by the rules and regulations governing professions such as lawyers and accountants, not keeping pace with these changes in the market for their services. In fact, the legal profession is probably one of the most restricted and protected professions in Singapore. For example, foreign law firms are presently not allowed to set up businesses here except under very limited scenarios. This is an unnecessary hindrance to businesses. It restricts their choice of service providers and could mean that they do not have easy access to specialist skills and domain knowledge. Often they cannot use the international law firm they use in other locations and have to work with new untested advisers. To the extent that this Bill will allow some top quality international law firms to operate locally, it is a positive. But the proposals in the Bill are far too tentative and limited. We could have been much bolder with the liberalisation plans because experience elsewhere has shown that decisions on supply and demand of professionals are better left to the market rather than professional bodies or government departments. Opponents of further liberalisation, and we have heard a few this afternoon, have argued that if international law firms are allowed to practise here, many local lawyers would join these firms and eventually leave Singapore. This is a very unlikely scenario because international law firms are likely to use Singapore as a hub for the region and we would likely see an inflow rather than an outflow of talent. This is certainly the case with large accounting firms, consultancies and other such organisations.”
“Mr Deputy Speaker, Sir, thank you for allowing me to speak on the Legal Profession (Amendment) Bill. Let me at the outset declare my interest in this Bill. Sir, while I am not a lawyer, I do have a vested interest in the proposed liberalisation of the legal profession, which is one of the important changes this Bill seeks to achieve. Liberalisation of the legal profession will hopefully spur other professions in Singapore, including the accounting profession to which I belong, to be less protective of its turf and its members and instead be more open and receptive to new ideas, talents and specialist skills. Sir, I would like to speak on two proposed changes which the Bill seeks to amend, namely, the liberalisation of the practice of law in Singapore and the streamlining of the disciplinary proceedings for errant lawyers. Today, Singapore is one of the most open economies in the world and over the last few years, we have made huge strides in becoming a regional and, in some cases, global hub for multi-national companies to locate their key functions, such as procurement, supply chain management, finance and treasury operations. Singapore is now the preferred location for investment banks, private equity houses and other financial intermediaries to locate their regional cross-border transaction teams, which cover not only South-east Asia but increasingly India and even the Middle East. These changes in the business landscape have brought about new sophisticated buyers of professional services.”
“In the private sector, there is a move to expedite the timing of the financial statements, and six months is quite a long period, particularly for the larger statutory boards. Is there a move to prepare financial statements on a more timely basis? Where there are exceptions and statutory boards do not prepare financial statements on a timely basis, what action is taken and what sort of penalties are imposed?”
“Yes, I just wanted to emphasise the point that we try to go in and try to break into the system, which actually changes the complacency and the very cosy feeling that seemed to have happened in this detention centre.”
“My question is: as part of the security audits that were conducted there in the past, was any scenario planning and stress testing done where people were asked: "Why not you try to escape from this place? Let us see how you do it", as part of the process not only in this detention centre but in other detention centres, including prisons. When we do security audits of computer systems, we do something like penetration testing. Mr Speaker: Mr Banerjee, can you keep your question short, please?”
“I would like to commend DPM on the way he conducted the discussion in the House today. I think Members have asked whether investors and others would lose confidence in Singapore when we have an incident like this. There will always be lapses. Obviously, we want to reduce instances where there is a problem. I think people also look at what you do after there is a lapse, ie, what sort of process and what sort of action you take. I think within two months of this happening, you not only appointed an independent Committee of Inquiry, it has done its deliberations. DPM shared them in a very open and frank manner with the House. Some of the lapses are indeed, in hindsight, when you look at them, they were very silly things that happened - the picture that DPM showed us of the ledge and the perimeter fence. I think in hindsight you might ask, why was that not detected earlier? I think it is never easy to put the spotlight on you and to look at what went wrong and what you are going to do, going forward. I think that will restore a lot of confidence in Singapore's ability to look at problems and take action. There are lots of other countries which have problems. They have a Committee of Inquiry and you never get a response within a very short time, do not take the action and do not take the consequences framework seriously. This is something which I think is very good. It certainly gives me a lot of confidence that the system is working. But I would like to share one point which I observed. I was just reading the Executive Summary that the Minister gave us. It took someone forty-nine seconds, in an enactment, to get out of the toilet and get to the perimeter fence and then jump over it, and perhaps another two minutes or less than three minutes to get to the PIE.”
“Will the issue be played up and as a result our foreign imports feel less than welcome? Does our education system give sufficient mention to the contribution of our foreign imports? Do our schools teach our children and youth to appreciate the contribution of this group of potential Singaporeans? Do we dare to be more generous in our fiscal policy to attract and retain foreign talent? Whilst our economy is still performing well, we should proactively do more to address the needs of our imported talent and seek to retain them. Sir, I do not pretend to have the solutions to this potentially tricky issue which will almost certainly resurface at some stage in our political and social agenda. What I do know is that we should pay more attention towards attracting talent to Singapore and address the issues that deter them from settling here. We should also help our home-grown citizens appreciate the role and contribution of our foreign residents and help these non-citizens to integrate into Singapore society. This is a sizeable group of people. If they have a good life and contribute more to Singapore, collectively, we will all have a better life. If they do not find it meaningful to live in Singapore, we will all lose in the long run. In conclusion, I would ask the Government to step up its efforts to attract and retain talent, both home-grown and foreign. Otherwise, our efforts to build the infrastructure for a global city will be futile. Without quality human capital, who will give us this global dimension, this excitement, diversity and vibrancy that is essential for Singapore to be a global city of opportunity? Immigration”
“5 million, one thing is certain – based on our low birth rate, the bulk of any future demographic growth will have to come from overseas. Compared to yesteryears, our "expatriate landscape" has changed. Singapore is not merely attracting the doctors, scientists and expatriates who belong to the financially privileged group. There is a growing group of "middle income" foreigners, often described as "expatriates on local terms" because they enjoy little or no fringe benefits. The reason why they are here is that Singapore can offer them good career opportunities, an attractive lifestyle with the charm of a multi-cultural society, top–class education and recreational facilities for their children and a safe and secure environment. They find that most Singaporeans are warm and friendly and they feel safe and welcome even though they are a minority. After a while, some of them become Permanent Residents. Several years later, they may find themselves so well integrated into the life in Singapore that they decide to become new Singapore citizens. A happy story so far. However, they face some dark clouds and anxiety on the horizon. Like other Singaporeans, this group is also affected by spiralling housing rentals and rising costs of living. The inflation rate is high which is eating into their income and curbing their purchasing power. They are frustrated with the long waiting list to admit their children to international schools. But they also have another big concern, that is, how will they be perceived by Singaporeans in the long run? In recent years, our economy has experienced a good run but what if we have a slowdown and our employment opportunities dip? Will Singaporeans perceive foreign talent as a threat or a catalyst for economic recovery?”
“Sir, I submit to you that the future of our country will depend on how passionate we are in wanting to develop Singapore into an exciting global city of opportunity for not only our home-grown Singaporeans, but also for our expatriate population, some of whom may well sink their roots here. For Singapore to remain a city of opportunity, we must remain first and foremost a global city. One of the consequences of globalisation is that talent is very mobile and is not constrained by national borders. Consequently, many of our talented Singaporeans are now living and working overseas. This trend is likely to continue, even increase. In the private sector, we find that our most talented young Singaporeans are hungry for overseas experience, attracted not only by the learning opportunities, but by the buzz, excitement and lifestyle of cities such as London and New York. Many of them are not in a hurry to come back. However, we need to remain connected with them and eventually, woo them back home, or, at the very least, we should encourage them to be good ambassadors for Singapore in their adopted home countries. The Government has already recognised this and has started on some worthy initiatives, but more can be done perhaps in partnership with the private sector. The mindset and aspirations of young Singaporeans also need to be considered in the talent development programmes that the Government operates including its very successful overseas scholarship schemes, which are presently accompanied by long periods of bonding back in Singapore. Set formulas like these have worked in the past but may not be successful today unless we tweak and refresh them. The optimal population size of Singapore has been debated before. Regardless of whether it is 4.5 million, 5.5 million or 6.”
“Today, we have a growing service and knowledge economy to complement our high-end manufacturing base, our global schoolhouse initiative is beginning to have an impact and we have made bold moves to boost the leisure and tourism sector with iconic investments in lifestyle assets, such as the two Integrated Resorts and the Sports Hub, not to mention our museums, art galleries and our world-class National Library. Hosting events like the F1, the APEC meeting next year and the Youth Olympic Games in 2010 will add to our credibility as a global city. So what are the challenges we are likely to face if we are to avoid relegation from the premier league of global cities? My biggest fear is that when the Government is faced with domestic issues and concerns, perhaps brought about by an economic downturn, it may change course and slow down our efforts to become a global city of opportunity. For a small nation state like ours, to slow down in the race is almost as good as dropping out. We simply cannot afford to take the foot of the gas pedal, thinking that we can always come back at a later stage to forge ahead of an increasingly competitive field. Yes, the needs of our heartlanders are very important, but we must not forget the pressing need to attract top talent and top quality enterprises to drop anchor in Singapore. We need a Budget for the common man as well as a Budget for the other stakeholders in our global city of opportunity. We need to address bread-and-butter issues for the less well-off as well as attract and retain the finest chefs for our world-class restaurants.”
“At the beginning of the 20th century, conventional indicators, such as port capacity and manufacturing capabilities, together with physical size, would have been used to define a city of opportunity. While still significant, such indicators have given way in the 21st century to technological factors such as broadband availability and telecommunications infrastructure and to cultural characteristics such as diversity. These changes suggest that in addition to being a global city in the conventional sense, a city of opportunity in the 21st century must offer more. But what? PricewaterhouseCoopers and the Partnership for New York City undertook a study to find answers to that fundamental question. The results of this study, which was published in 2007, found the requirements and features of 21st century cities of opportunity have changed – and will continue to change – in areas that impact new economy competitiveness and attractiveness: areas ranging from intellectual capital and transportation assets to such fundamental requirements as safety and security. These new indicators and variables, according to the study, better reflect what it takes to succeed in a vibrant knowledge economy. This is good news for Singapore because it plays to our strengths. In fact, Singapore is well into its journey of developing into a global city of opportunity. Some years back, we took some key strategic decisions on diversifying our economy, making it more broad-based and less dependent on a few major economies such as the US and Japan.”
“Sir, I particularly like the strategic intent of the Budget where the Finance Minister spelt out how his Budget would "create new advantages and fresh opportunities for Singapore in a competitive world". He rightly acknowledged that infrastructure is only the enabler and the key to our success will be our people and our enterprises. In the Finance Minister's words, and I quote, "whether we hold our place in the top league will ultimately depend on whether our people and enterprises are top quality, in every job and business they do". I cannot agree more with him. Twenty-six years ago, I moved to Singapore from London because I saw Singapore as a city of opportunity. Today, it continues to be one, but 20 years from today, will Singapore still be a city of opportunity? I believe that while competition to be a city of opportunity is getting more intense, with rapidly growing cities in Asia and other parts of the emerging world, challenging established leaders such as London and New York, Singapore has what it takes to be a leading long-term player in the premier league of global cities, but this is not without its challenges. What makes me confident about Singapore's future and what are some of the challenges we are likely to face going forward? My confidence in Singapore's future stems from the fact that we have chosen the right strategy. Our ambition is clear, we want to be a global city, that is, a centre of commerce, finance and investment, a magnet that attracts companies, entrepreneurs and others engaged in global business and trade. We have set ourselves a target to have a disproportionately high share of corporate headquarters located in Singapore and we know that as a country, we have to offer distinct advantages for doing business in a global economy.”
“For example, we have a large food and beverage sector, which spends a lot of money on very worthy R&D projects but is presently excluded from claiming any R&D incentives. Similarly, companies in the service sector, which come up with innovative new processes to increase productivity and reduce our dependence on scarce labour resources, should qualify for R&D incentives. My point is that when the Government clearly wants to incentivise and give something back to companies, let us do so with a more "belt and braces" liberal approach to policy implementation. I would ask that thought be given to how we do this. It would be good if we no longer have to harbour the notion “Nice policy, shame about the implementation”. One way for the Government to do this is to prompt the agencies that have shaped some of the policies in the Budget to give more support in obtaining more liberal interpretations from the IRAS. Alternatively, instructions could be given to the IRAS direct as to how liberal they want the interpretations to be. In the context of the Government’s very healthy financial position, it is clear that the IRAS does not need to nickle and dime, slice and dice everything that seems to be saving on tax. A more liberal interpretation of policy by the IRAS will also save on taxpayer time and money, and ensure that policies are implemented in the spirit they were conceived. With this, Sir, I support the motion.”
“Given the cap on the expenditure and maximum potential tax savings of S$54,000 over five years, would it not have been more effective just to say that all capital expenditure in relation to improvements of business premises would qualify for an allowance up to that level? This would make implementation a breeze and save time and effort, given that most of the beneficiaries of this incentive would be SMEs. Another example is R&D. This is defined in the Income Tax Act as meaning “any systematic or intensive study carried out in the field of science and technology with the object of using the results of the study for the production or improvement of materials, devices, products, produce or processes but does not include: • Quality control or routine testing of materials, devices or products; • Research in the social sciences or humanities; • Routine data collection; • Efficiency surveys or management studies; or • Market research or sales promotions.” Fairly comprehensive, you would think. But there is significant room for disagreement over what it entails, and there will undoubtedly be significant “discussions” over scope and definition with the IRAS. The general concept seems to be that only companies that employ teams of technicians and scientists in white coats, eg, pharma or oil companies, carry on R&D. But in actual fact, many companies do it in a less organised or obvious way and this may well make it difficult for them to claim the R&D incentive which they are entitled to. Another point I have on the R&D incentive is that, given our very broad-based and increasingly knowledge-intensive service economy, why be so restrictive?”
“The third and final part of my speech deals with a matter which, over the years, has frustrated both businesses and tax professionals. This is that policies and policy intent in our Budgets have generally been good but the issue has been one of implementation. It is once you get down to the detail and try to put the policy into practice that you realise that things are not as easy as they first seem. Let me give Members an example. Claiming a tax deduction or capital allowance in respect of expenses incurred on fixtures, fittings and installations has been the subject of great debate over the years. Generally, expenditure laid out on capital assets which form part of the building will not qualify unless the building itself qualifies as an industrial building. What does and does not form part of the building can be subjective. To put the controversy to rest, at least up to a certain level, this year’s Budget grants a special allowance for all expenditures incurred on fixtures, fittings and installations. The special allowance is subject to a cap of $150,000 every three years and must be incurred any time over the next five years. However, it is worth noting that expenses relating to “structural works” and “expansion of space” have been excluded and such expenses would not qualify for the above special allowance. The issue of whether fixtures and fittings are “structural works” or “expansion of space” could be contentious. In short, it is not entirely clear what has been given away with this initiative. Just because an asset is fixed or attached to a building, does not mean it forms part of it.”
“This compares unfavourably with CPF distributions, which are tax-free, and indeed with the Supplementary Retirement Savings plan (SRS) which taxes only 50% of the final payout. 3. Although the gains and investment income earned within the section 5 plan are not taxed on a yearly basis, given that the final distribution is fully taxable when the retirement benefit is paid, this element of the income is "effectively" taxed and this would otherwise be tax-free, if it was from a personal investment. 4. Finally, there are many examples of Singapore’s international competitors providing attractive tax "favoured" environments for pension payouts making these destinations comparatively attractive in the long run. So how do we make our tax rules more expat-friendly in the long term? The legislative framework in this area already exists. However, it is not widely used. So what could the Budget have done to encourage employers to move towards a longer term reward philosophy? I have four suggestions: 1. Remove the five-year term time limit on the NOR Scheme; 2. Enhance section 5 pension plans by both permitting and encouraging employee contributions; 3. Make the same tax rules for personal investments apply to section 5 pensions and make any investment growth in the final payout of the retirement plan tax-free; and 4. The tax rules applying to all retirement plan distributions, ie, section 5, CPF and SRS, should be made more consistent with each other to avoid confusion. Through these reforms, the Government could provide even more encouragement for employers to look again at this issue and help to sustain Singapore’s position as a destination of choice for foreign talent in the short and the long term.”
“And so, at first glance, you would be forgiven for concluding that the law is not especially helpful. However, the Government does allow for the creation of approved company "Section 5" pension plans and so, perhaps the onus is very much on the employer and employee to use the existing frameworks to make adequate provision for retirement. The "employer of choice" could do well by taking the lead in this area to differentiate itself from its competitors. Section 5 of the Singapore Income Tax Act allows for tax-free employer contributions and for all employees to participate with no differentiation between Employment Pass holders and Singaporeans. Furthermore, employers are given considerable flexibility to determine their own contribution rates, to think creatively and to mould the plan to their existing reward philosophy. For example, contributions can vest over time, to be contingent upon length of service, continued employment or corporate performance, and this can create a more effective alignment of employee and shareholder interests. So why then are we not seeing employers falling over themselves to offer these schemes to employees? The devil lies in the details and, if we scratch below the surface, one will discover some elements in the tax laws that may make Singapore a less attractive tax environment than some of its competitors. These are some examples: 1. Unlike CPF, employees cannot themselves contribute to a section 5 plan and so, with no personal stake in the plan, the effectiveness of the plan in retaining the employee may be limited. 2. When expatriates reach retirement and wish to withdraw their money from their Singapore section 5 pension scheme, the final payout is fully taxable in Singapore at the prevailing rate of income tax.”
“Yet, despite these obvious advantages and the media spotlight highlighting people having insufficient savings for their retirement, this remains a much underutilised tool in Singapore for both attracting and retaining talent. So, who should take the lead in addressing the problem? A recent AXA survey found that 90% of working Singaporeans feel it is their own responsibility to save for their retirement. So, how can the Government or employers play their part in encouraging savings for our old age? Firstly, when we examine the existing employment rules, we learn that Employment Pass (EP) holders, unlike their local counterparts, are simply not allowed to make contributions to the CPF. This puts locally employed expatriates at a disadvantage. But what about the other concessions for expatriates you may ask. When we look more closely at the very tax rules created to attract foreign talent in the first place (the NOR scheme), we see that these same rules may deter them from staying in Singapore for the long term. All the NOR incentives fall away after five years (incidentally at precisely the same time as the Personalised Employment Pass expires without an option to renew) meaning that their income tax rate may actually increase at this point. The rules may only be effective in retaining talent in the short term and may force this group of employees to reconsider their long-term options. The NOR pension rules may not be especially helpful for one of the most important subsets of talented foreigners - locally employed Employment Pass holders. This 'overlooked' group cannot contribute to CPF and are not likely to be able to participate in the pension scheme from their home country as Singapore is their home country as far as their new employer is concerned.”
“Schemes like the Not Ordinarily Resident (NOR) provide tax breaks for foreign nationals working in Singapore and the Personalised Employment Pass (PEP) launched last year provides them with the flexibility of changing jobs whilst working in Singapore, hence, encouraging a longer-term stay. As Singapore becomes increasingly reliant on foreign talent, an important issue to consider is the cost of losing that talent - be it to local or overseas competition. You may ask then: what are we doing to retain this talent in the long term? In view of the increasingly tight labour market, staff recruitment and retention should be top priorities for HR Directors and CEOs. This begs the question of whether companies are being truly innovative when designing reward systems for their employees. We could take it one step further and ask ourselves if the economic and legislative framework is keeping pace with the tight international labour markets and is it effective, in terms of preventing a long-term 'brain drain' from Singapore. Sometimes, we allow ourselves to become distracted from the main issue. Perhaps, if we pause for a moment to glance up at the horizon and see the macro picture, it might occur to us that the obvious solutions can also be the most effective. In this scenario, a simple 'pension' scheme could provide a partial solution. In fact, more and more companies are favouring this strategy. After all, a pension is arguably one of the most committed forms of a longer-term reward and could also prove effective from a tax as well as retention perspective.”
“One of these measures could have been the setting up of a national fund to promote and finance "green" initiatives, with donors rewarded by way of tax deductions. The Government could also have zero-rated GST for the procurement of energy-saving devices and give enhanced capital allowances on energy-efficient equipment used by companies. Yet, another incentive could have been tax deductions to corporates for approved programmes for carbon offsetting, for example, where a firm buys carbon credits to offset the greenhouse gases emitted when its executives fly overseas. The second area where more could have been done in the Budget is to have made it easier for companies to set up pension schemes to attract and retain foreign talent. Singapore remains incredibly effective in attracting foreign talent to its shores. But is it doing enough to keep them here in the long term? The most recent population statistics suggest that more than one in five of Singapore's 4.6 million population is a 'foreigner' and that this group is growing faster than Singapore citizens and permanent residents. If we accept that not all of this one million plus group of people are brain surgeons or rocket scientists, and that fewer still receive the rich 'expatriate packages' of yesteryear, we are left with a significant number of locally employed (but nonetheless talented) foreigners working here in roles that are crucial to the continued success of the economy. Foreigners currently comprise more than 30% of the employment market in Singapore. Not only has a series of Government initiatives helped to sustain this trend in recent years, now employers too are increasingly looking to foreign shores to continue fuelling their business growth.”
“This will help check inflation, which is at record levels and put a smile back on the face of all those who are struggling with the high costs of living. The GST offset package simply does not reach out to large numbers of our resident population who are all affected by high food prices, increases in transport costs and soaring rentals. In the corporate world when shareholders see such large surpluses, they expect to share in it by way of dividends, capital repayment and other goodies, and the Finance Director of Singapore Inc has done exactly that by announcing in the Budget how he plans to share some of the surpluses with Singaporeans. The question I have is: has he done enough for the different groups of shareholders and has he made enough investments to sustain the long-term growth of Singapore Inc? In this regard, I applaud the Finance Minister for providing targeted subsidies for education training and worker support, the R&D initiatives, allocating more resources to the knowledge-based economy and innovation, providing assistance to SMEs, removing estate duties, and so on. In the interest of time, I will not elaborate on these. Instead, let me suggest what the Budget could have been in two areas: Promoting a cleaner and greener environment and enhancing pension schemes to attract and retain foreign talent. Firstly, in support of a "greener" environment. Singapore is probably one of the heaviest consumers of energy per capita in the world. Providing substantial and targeted fiscal initiatives in this area will draw the world's attention and send the right message that we are a nation that is serious about our environment. So I believe the Finance Minister missed an opportunity to provide fiscal incentives for eco-friendly business measures.”
“A robust Government budgeting process is an essential management tool and helps Government make correct decisions on future revenue and expenditure policies. On the other hand, if we are ultra conservative in our budgeting process, and we see deficits instead of surpluses in the horizon, it may lead to policy decisions, which may not be the most appropriate or timely. Therefore, it is not surprising that the Government's decision to raise GST rates in FY07 has come under the spotlight. Should the Government have raised GST rates when it continues to enjoy such healthy surpluses, not including income from land sales and Net Investment Income contribution? Unfortunately, when we were debating this last year, the forecasts on future Government revenue were way below actual. The Finance Minister had estimated total revenue for FY07 at S$40.1 billion in February 2007, his revised estimate for FY07 revenue presented to Parliament on 15th February 2008 is S$48.6 billion, so revenue was underestimated by about 21%. For capital receipts, including land sales, actual receipts for FY07 are now likely to be nearly four times the initial estimate of S$3.2 billion. Forecasting is never going to be an exact science but I believe we can and should do a much better job with our forecasts and estimates. There is simply too much at stake if our budgets are not reliable. But there is a way out as far as the policy decision on GST is concerned. What goes up can come down and I would urge the Government to reduce GST back to 5% as soon as is practicable and hold it at that level until such time that there is a real need to increase Government revenue from indirect taxation, which by definition is regressive.”
“I am not in a position to comment on an overall basis but let me pick one item from the FY08 Budget - property tax - where the FY08 estimate collection of S$2.4 billion shows virtually no increase from the previous year. Now, given the significant increase in property prices in the last 12 to 18 months, we should logically expect this amount to increase significantly. Is there something else that we, the shareholders, should be more aware of?" The last shareholder says, "Mr Finance Director, Sir, the revised estimate for sales of land for FY07 is S$10.4 billion compared to the original estimate of S$3.0 billion and the FY08 estimate is S$9.8 billion. I am curious as to why large and regular receipts are excluded from the overall surplus computation. In the corporate world, the accounting standards would have required such items to flow through the income and expenditure account and be included in the net income distributable to the shareholders." Mr Speaker, Sir, I have used these illustrations to urge the Government to rethink its budgeting philosophy. The budgeting process is crucial as it is a powerful tool to influence mindsets, drive behavioural changes and plan for the future. This applies as much to individuals and families as it does to businesses and indeed governments. True budgeting dictates that we strive to provide accurate estimates and set realistic targets. "Exceeded budget" is a nice sounding term but, unfortunately, is often used to glorify the achievement of "soft" budgets. We must move away from this culture. The Key Performance Indicators for those preparing Government budgets should not be unduly weighed towards prudence. Instead, we should give more credit to realistic preparation of estimates.”
“I put myself in the shoes of a Singapore Inc shareholder and came up with a few questions for the Singapore Inc Finance Director. The first question is this, "Mr Finance Director, Sir, you estimated a deficit of S$0.6 billion last year but you are now telling us there will be a primary surplus of S$6.3 billion. How did this happen? Can I trust next year's estimates to be accurate or will it be another set of conservative estimates?" Those with an eye for details and a penchant for numbers may well probe further. Hence, I can imagine three other shareholders taking turns to ask him questions. The first shareholder could well ask, "Mr Finance Director, Sir, your estimate for the FY07 stamp duty collections was S$1.5 billion compared to S$2 billion the previous year FY06. Your revised estimate for FY07 stamp duty collections is now at S$3.8 billion, which is 155% higher than the original FY07 estimate. The outcome is not surprising. What surprises me is the conservative nature of your initial estimates. After all, in February 2007, when the FY07 estimates were presented to shareholders, the property markets, both commercial and private residential property, were well into overdrive with high levels of transactions. The en-bloc fever was raging, new developments in Sentosa and all over the island were fetching record prices. Hence, to expect 25% lower collections in FY07 from stamp duty compared to FY06 seems very odd indeed." The second shareholder asks, "Mr Finance Director, Sir, the FY08 Budget estimates show a projected primary surplus of S$2.3 billion and an overall deficit of S$0.8 billion. Is this another conservative Budget?”
“Mr Speaker, Sir, thank you for giving me an opportunity to speak on the Budget. My comments on the Budget are in three parts. Firstly, the budgeting philosophy and mindset of the Government; secondly, I will comment on what the Budget could have been in a couple of areas; and thirdly, I will highlight some of the practical difficulties that we are likely to face in implementing some of the policies set out in the Budget. Firstly, the philosophy and mindset of the Government budgeting process. As I listened to the Finance Minister's Budget speech, I could not help but draw some parallels with the business world. After all, we are fast approaching the Annual General Meeting (AGM) season, when corporate chieftains meet their shareholders, no matter how big or small, to explain how their companies had fared, explaining the actual performance of the company versus the budget and prior year's performance, giving indications on the future, and so on. I suppose in the corporate world, the Finance Minister would be akin to the Finance Director of Singapore Inc and his Budget speech would be his annual briefing to shareholders. So how well will his AGM presentation be received by Singapore Inc's shareholders, analysts, bankers and stakeholders? For a start, everyone at the AGM would be overjoyed that the Singapore Inc Finance Director would be delivering a primary surplus of S$6.3 billion for FY07 compared to the S$0.6 billion deficit that he had previously forecast. A more than pleasant surprise. But as one can expect in any AGM today, there will usually be some shrewd and cynical shareholders who will stand up and ask probing questions. What questions can the Finance Minister expect at an AGM?”
“In Singapore, like in many other countries, the mechanism for making retrospective adjustments can be very onerous. Finally, I would like to ask whether there is any intention to align the import valuation mechanism for dutiable and non-dutiable goods. The import customs valuation for dutiable goods is determined under the Customs Act. However, the import value for non-dutiable goods is determined under the GST Act which, in theory, uses a different mechanism but, in practice, appears to follow the customs valuation methods agreed under the WTO Valuation Agreement. The difference can cause confusion and more onerous administration for importers. 3.10 pm”
“The lack of a specific timeframe, the risk of not obtaining a ruling even after much information has been furnished to the authorities, and the potential for easy modification or withdrawal, all diminish the usefulness of the ruling for the business community. We can certainly improve upon the "rulings process" by looking at the European Union, Australia, the US and Canada, all of whom either have more "tightly framed rulings processes" or tight administrative service standards to the same effect. Sir, I would also like to comment on some areas not proposed for amendment but of interest to the business community. I would like to start by asking whether section 19 could allow for interest to be paid when overpaid or erroneously paid duties are refunded. This would level the playing field and is the practice in the European Union. Secondly, could section 21 allow for application of valuation and duty at the time when goods are entered into a warehouse, rather than when they are withdrawn from it? Many countries allow the trader to choose which valuation and duty rate to apply, albeit this usually has to be chosen upfront and cannot then be changed. This helps protect the importer from exchange rate fluctuations and allows for a more consistent treatment of domestic charges, such as storage and handling, for duty purposes. Another area worth a review is whether the implementation of transfer pricing adjustments for customs declaration purposes can be improved through the Customs Act. Increasingly, multinational companies have global transfer pricing agreements underlying the pricing of their products. Most of such agreements allow for retrospective price changes at the end of a certain period.”
“Mr Speaker, Sir, thank you for giving me an opportunity to speak on the Customs Amendment Bill, which I support. Many countries look to Singapore for leadership when it comes to market economics and free trade policies, so we must continue to set a good example for others to follow. Also, given Singapore's important position as a trading and business hub, it is important that we continually review and, if necessary, tweak our laws to retain our competitive edge and remain business-friendly. Clarity and certainty of rules and regulations always go down well with businesses. Sir, I have a question on the new section 13, which entitles the Minister to exempt persons not just from tax obligations but from any provisions of the Act. Why is it deemed necessary and when is this entitlement likely to be called upon? The concern from both the domestic and international trade community is that this opens the door to unfair competition, unless the circumstances under which the entitlement can be used is more tightly controlled. I believe this section gives quite wide discretionary powers to the Minister and perhaps could be tightened so that waiver is given only for specific circumstances. Sir, I also have a couple of questions on the rulings process in Singapore. Why do the procedures for the making of customs rulings not set any time limits within which such a ruling should be issued, other than if so required under the terms of an FTA? Separately, are the restrictions on the validity of a ruling, eg, under article 9(b), too restrictive to make the rulings useful for the business community? Private sector players typically will be interested in obtaining a Government ruling if this provides increased certainty and predictability for doing business.”
“We should consider introducing legislation which either loosens up the deductibility of interest in general, or which deems pre-commencement interest expense to have been incurred on the first day of business. This would reduce the cost of finance as well as reduce the pressure on property companies to recoup that cost through enhanced rentals. So I hope my comments and suggestions will be considered by the Second Minister for Finance when he crafts the Budget in early 2008. Mdm Deputy Speaker, thank you for giving me the opportunity to speak. 5.40 pm”
“The second is that the relevant pieces are so badly written (with double, and if you can manage to get to the end of the sentence, potentially triple) negatives. It is also leafed in amongst existing legislation, and so it is very difficult to follow. There have been suggestions for a separate REIT section, rather like the LLP section, and so on, as has been done for the LLPs and business trusts to make it all crisp and clear. But that plea has not been answered yet. I would reiterate the desire to see the REIT legislation consolidated, with also the removal of any discretionary involvement by IRAS so that the whole process becomes clear and automatic. Interest expenses and other borrowing costs Changes to the legislation include amendments to section 14, the section that prescribes the extent of deductible expenses, in particular, in relation to (non-interest) borrowing costs. While these address certain illogicalities in the current practice, there is still an issue that remains a thorn in the side of many companies, but most acutely of property companies that construct properties that they then rent out. Current practice is not to allow any "pre-commencement" expenses, the largest component of which is generally interest expense on borrowings to construct the property. This can amount to two or three years' worth of interest cost and the disallowance adds significantly to the cost of borrowing. Put that in the context of the $5 billion for the Integrated Resort and the sums at stake can be quite staggering. We can find few examples anywhere else in a developed world where there is such a restriction on the deductibility of interest expense, and it is true to say there is no commercial rationale for it.”
“This has also been assisted immeasurably by the relaxation to the loss/capital allowance set off rules in section 10D which previously quarantined different types of leases and made most allowances only available to be set off against the rental income, not other income of the lessor. These new changes will inevitably result in the perking up of interest in the industry. But the final piece in the jigsaw is something which is more difficult to control. There is no doubt that countries like Ireland still have a more favourable tax treaty network with low withholding taxes and until Singapore can come alongside in this area, competing will remain difficult. This is something that can only be dealt with over time, but it is an area that we should not overlook as withholding taxes are on the gross rentals, which can often wipe out the lessor's margins at a stroke. The lack of a treaty with the US (with 30% withholding tax rates) makes this market largely inaccessible without a deal of risk. And, of course, the US is the single biggest market for aircraft leasing - so we need to remove this fiscal barrier to enable our companies to compete on an even keel. REITs Another thriving area is the S-REIT industry and there are probably more than a dozen in the pipeline that will hit the streets early next year. There is a need for separate REIT legislation as the path to transparency/exemption is presently fairly tiring and unnecessary. Well, legislation has been brought in in an attempt to sort that problem. The difficulty with it is two-fold though. It is still at the discretion of the Comptroller for transparency to apply, so this really undermines the legislation.”
“It is the people - the managers, the administrators, accountants, lawyers and bankers who create the jobs and bring the expertise. Bringing the funds onshore inevitably will bring all those resources onshore too. This was something a number of us had championed for some years and the changes are a shining example of the Government's eagerness to listen and pragmatic approach. The second is the scrapping of the notorious 80:20 rule which played havoc with funds seeking exemption under the tax incentive for funds managed from Singapore. The rule stipulated that no more than 20% of a fund could be held by Singapore investors. This was arbitrary and all or nothing approach. The replacement of the rule with a far more liberal and "honesty box" approach is a major leap forward for the industry. Unfortunately, the wording in the new legislation is somewhat cumbersome and not as clear as the circular that announced the changes. Perhaps, we should have just stuck to the circular. Aircraft leasing A good step forward here is an attempt to make Singapore attractive as an aircraft leasing hub with the introduction of section 43Y which provides for a 5% or 10% tax rate on specified leasing income and for 10% for an aircraft leasing manager under section 43Z. However, there is still some work to be done. For example, it is not entirely clear that capital allowances will be available for lessors for the cost of aircraft where each plane is held in its own special purpose vehicle. Indications are that if each special purpose vehicle forms part of an overall leasing group business that there should be no problem. However, the uncertainty for the moment is causing some still to shy away from the risk and look at alternatives. Some clarity in this area would be helpful.”
“Mdm Deputy Speaker, I would like to start by applauding the Government for the way it is converting feedback from the business community into tangible legislation. Let me now comment on a few specifics starting with charities. Charities For a long time, charities were plagued by the need for adherence to some largely arbitrary spending rules. They had to spend all of their trading income and 80% or more of their donations and other income for charitable purposes. This made life difficult for those organisations wishing to build up a war chest for future significant capital outlays as it meant often protracted explanations and negotiations with the IRAS. The replacing of the convoluted and difficult section 13M with the one-liner of section 13(1)(zm) is to be applauded. Under the new section, the income of any charity registered or exempt from registration under the Charities Act will be exempt from tax. Full stop. This clearly recognises that a charity is bound to apply its income at some point for charitable purposes, otherwise, it would simply lose its charitable status anyway. This will make life a whole lot cheaper and easier for such organisations. Hopefully, the governance framework that we put in will ensure that issues that MPs have raised will be properly addressed. But certainly, from a tax point of view, this will make it easier for charities to work. Fund management Two momentous changes for the industry are now enshrined in the Act. The first is the ability of funds managed from Singapore to be brought onshore and incorporated here and still enjoy tax exemption that was hitherto only available to offshore funds. This recognises the reality that the funds themselves are pieces of paper.”
“I would like the special committee, which the Minister made reference to yesterday, to study how the returns on CPF savings can be improved over the long term, because as a pillar of our retirement savings, not only must we save more in our CPF accounts but our savings must be managed such that we get the best possible returns while ensuring that our savings are protected. ADJOURNMENT OF DEBATE Resolved, That the debate be now adjourned. - [Mr Mah Bow Tan].”