Hon Sui Sen
Singapore
“Sir, I must inform the Member for Rochore that the companies are run on the basis of private sector companies, i.e. their budgets are drawn up by their boards of directors. I do not know to what extent their budgets follow Government budgets but they are certainly not regulated in the sense that Government budgets are rigidly enforced.”
“Perhaps the Member is referring to PIE's operations with respect to the Armed Forces. PIE provides some of the supplies for feeding our army and other armed forces. If the private sector is equally viable, equally able to supply foodstuffs, I see no reason why they should not also compete with the PIE.”
“Jeyaretnam asked the Minister for the Environment and Minister for Communications if he will request the Port of Singapore Authority to consider providing transport alternatively paying a transport allowance to all employees of the PSA who have been moved out of the PSA Staff quarters in Blair Plain and as a result of which have been put…”
“INTRACO is a company in which the Government has some equity. I believe the proportion is somewhere around 20%. So in a sense it is not exactly a Government controlled company, although 20%, of course, is a fairly considerable share. In the case of PIE, the answer is yes, it is a Government company.”
“The dividend yields for the three holding companies were nil, The yields for the operating companies were nil for 34 companies (including eight which have yet to commence operations), 1% to 10% for five companies, more than 10% but less than 20% for 10 companies, and at least 20% for nine companies.”
“Sir, the simple answer to that is no, for the purpose of this Bill. This Bill merely enacts legislation to implement the 1982 Budget concessions.”
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“The Member for Whampoa mentioned the penalty of $30,000 as being perhaps too light for offences of this nature. As this is an alternative to a prison sentence, I would suggest that where the penalty is considered inadequate the court might very possibly impose the other penalty, a prison sentence of five years. I am sure the Member will consider this prison sentence adequate for even a crime of rigging and manipulation. On the comment of the Member for Jalan Kayu on the nature of the organisation which we are proposing to set up, he mentioned an independent commission. I think this was considered but it was thought that, having regard to the administrative difficulties, the problem of finding adequate persons to staff an organisation on the lines of the Securities and Exchange Commission, the solution we have arrived at - in trusting to self-regulation by the Stock Exchange - is the best that can be adopted in the circumstances. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. -[Mr Hon Sui Sen]. Bill considered in Committee. [Mr N. Govindasamy in the Chair] 8.26 p.m. Clause 1 ordered to stand part of the Bill. Clause 2 -”
“The Government believes that it is important that Parliament should clearly state its abhorrence of such practices and that every effort should be made to stamp them out before they become widespread. Sir, I do not propose to dwell upon the other provisions of the Bill, as these are dealt with in some detail in the Explanatory Memorandum, or will be clear in the explanations on the amendments I am introducing. Before concluding, however, I would like to clear up a misunderstanding that has occurred due to an erroneous reference in the Explanatory Statement dealing with clause 13. It is not Government's intention that a remisier should deposit $30,000 or $100,000 as security with the Registrar of Companies. This provision will apply only to dealers who are not stockbrokers. I commend this Bill to the House. Sir, I beg to move. Question proposed. 8.20 p.m.”
“This will not prove burdensome to stockbrokers, for under Stock Exchange Rules they have been required to maintain trust accounts. Again, licensed dealers who are not stockbrokers will be required to enter into a fidelity bond. The reason for this is that the fidelity fund provisions in the Bill apply only to stockbrokers who are members of the Stock Exchange. With regard to the latter, they will find little that is unusual about those provisions, for under the existing Stock Exchange Rules a Fidelity Guarantee Fund was created to compensate persons who suffer loss by reason of the default of members. The provision in the Bill therefore merely gives statutory force to the establishment of such a fund. The amount of capital in the existing fund will form the basis of the fund established under this Bill. Another significant feature of the Bill is to be found in Part VII, where new offences are created in relation to market dealings. The first offence relates to creating a false or misleading appearance of active trading in securities; the second to market rigging activities; the third to the use of fictitious transactions to affect the stock market; and the fourth to knowingly circulating false rumours with respect to securities. A maximum penalty of $30,000 or imprisonment for five years is provided for these serious offences. It may not often be necessary for prosecutions to be launched under these sections, as in the United States similar provisions have been used with great effect to inhibit those wrongful practices which do so much to destroy a true market in securities.”
“The scope of the proposals contained in the Bill as it affects investor protection is therefore much wider than that contemplated in the Ferris Report. This is probably inevitable since Mr G. M. Ferris, in his study of the securities industry, has concentrated, in the main, upon ways in which the Stock Exchange of Malaysia and Singapore could strengthen the basic structure of the member firms of the Exchange, could dampen down excessive speculation and could improve trading facilities. However, he has made useful recommendations with regard to investor protection on such matters as listing requirements of companies minimum capital requirements of member firms, etc., surprise financial audit of member firms, excessive speculation and disclosure of information to the public some of which have been incorporated in this Bill or the Companies (Amendment) Bill, 1970, while others have been or will be incorporated in Stock Exchange Rules. The Bill, for the first time in Singapore, proposes to license dealers in securities and their employees who are engaged in negotiating investment in securities. The Government believes that a system of control by licensing of dealers in securities is necessary at this time and this is particularly so as regards dealers in securities who are not stockbrokers. For while stockbrokers have always been subject to certain traditional forms of control by the stock exchange, other dealers have not been subject to any real form of control. The provisions in the Bill should ensure that only persons of good character and in a sound financial position will be permitted to be licensed as dealers in securities under the Act. Licensed dealers will be required to keep trust accounts and have them audited.”
“(5) Dealers, who are not stockbrokers, will also be required to keep accounts and records and make a deposit of $100,000. (6) All dealers in securities, including stockbrokers, will be licensed to deal in securities. (7) Specific offences are created to deal with dishonest trading in securities. While the Bill covers the whole of the securities industry in Singapore, I would like to make it clear that the Bill does not attempt to prevent speculation as such. Some speculation attends every anticipation or expectation of short or long term price trends which induces trading activity on the Exchange. It is and always must remain the responsibility of the individual investor to decide as to the advisability of any particular investment. What the Bill does do is to attempt to see that the stock market operates in a fair and open way and that people do not manipulate the market by illegal means for their own profit. The Bill, together with the New Rules that have recently been passed by members of the Stock Exchange, will, it is considered, go a long way to achieve these objectives. However, I would like to emphasise again that the Bill does not merely pay lip-service to but acknowledges the principle of self-regulation of the Exchange by the Committee and is not intended to interfere with the day-to-day control by the Committee of normal share trading on the Exchange, nor with the traditional form of control that the Committee exercises over members of the Exchange except on such matters as the licensing of dealers in securities and the reduction to statutory form of existing Stock Exchange Rules with regard to the maintenance of brokers' trust funds and the fidelity fund.”
“It is the wish of, I am sure, the Malaysian Government as well as of the Singapore Government that this unified Exchange should continue for the benefit of both countries. Members will be reassured to learn, therefore, that the Malaysian Government, with which we have been in consultation, has indicated general agreement with the principles written into this. Bill and the Companies (Amendment) Bill. It is most desirable that the legislation in both countries should, in some respects, be uniform on these subjects and I am happy to say that the Malaysian Government is considering the introduction of complementary legislation. For without it, neither Bill will be fully effective in its operation. However, the decision not to introduce into Singapore direct centralised control does not mean that other forms of statutory control are undesirable. This is far from being the case, and this has raised the question as to which forms of control are best suited to local conditions. The Bill has answered the question by introducing the following forms of control over the Stock Exchange and its members and other dealers in securities: (1) Ministerial approval will be needed to establish any new stock exchange. (2) Any future alteration of the-existing rules of a stock exchange may be disallowed by the Minister. (3) The maintenance of proper trust accounts by brokers and other dealers in securities and the auditing of the same will be given statutory force and the Minister may in special circumstances appoint a special auditor. (4) The establishment of a fidelity fund by the Stock Exchange has been placed on a statutory footing and persons who suffer loss as the result of defalcations by brokers may be compensated out of the fund.”
“These Rules have incorporated some of the recommendations of the Ferris Report and in some respects the new Rules have gone further along the road to secure investor protection than was contemplated in the Report. No doubt future Rules will incorporate some of the other recommendations made by Mr Ferris. Indeed, I am persuaded to believe that the spirit of cooperation that has been shown by the Stock Exchange Committee with my Ministry in attaining the common objective of investor protection will continue long after this Bill has passed into law. With this in mind, it is proposed that meetings will be held periodically between members of the Stock Exchange Committee and Government officers in a Standing Committee whose function will be to review problems arising in the implementation of this proposed legislation and the Companies (Amendment) Bill as well as the application of the New Rules of the Stock Exchange, and to make recommendations on amendments which experience may show to be necessary. The Committee can be assured that the full support of the Government will be given to it in the application of the provisions contained in these two Bills, particularly in regard to those provisions dealing with unlawful share trading and disclosure by shareholders and directors of companies and auditing of accounts of dealers in securities. Since the Committee, in many instances, will be the first to become aware of possible breaches of the provisions in the proposed legislation, it will be one of the functions of the Committee to consider these breaches and, if necessary, to bring them to the attention of the Government for appropriate action to be taken. Members are aware that there is a unified Stock Exchange as between Singapore and Malaysia.”
“The experience of Singapore in this respect would not, it is thought, have been unlike the experience of the more economically advanced members of the Commonwealth, for example, Australia and the United Kingdom, where the need to exercise some form of control over the Securities Market has in the period 1958-1970 found legislative expression in various Acts of Parliament in those countries. The decision of the Government to legislate to regulate the Securities Market in Singapore can, therefore, be regarded as part of a Commonwealth-wide approach towards investor protection. The form of control adopted in Australia and the United Kingdom takes substantially the same pattern and it is to be noted that in each of these countries the system of self-regulation by the Stock Exchange has been preferred to that of regulation by an independent statutory body along the lines of the Securities and Exchange Commission in the United States of America. And it is this pattern which has been incorporated in the present Bill. In reaching the decision that self-regulation was, at least under present conditions prevailing in the stock market, preferable, the Government was influenced by the consideration that the Stock Exchange of Malaysia and Singapore is in a position to exercise close and effective control over the securities industry generally. It was also encouraged to believe that the Committee of the Stock Exchange was seriously attempting, within the limits of its capacity, to exercise this control with rigour. This has to some extent been evidenced by the new Rules and Bye-laws which the Committee have adopted, as well as by action taken by the Committee to deter manipulation.”
“Sir, I beg to move, "That the Bill be now read a Second time." I would like to place this Bill in its proper perspective by reminding Members that developments on the Stock Exchange have attracted both public comment and criticism since 1968. In fact, there has been, in this House and outside it, considerable pressure put upon the Government from time to time to intervene in the public interest to protect investors from unscrupulous manipulation and rigging on the Stock Exchange. Recent developments on the Stock Exchange which have resulted in the Committee of the Exchange suspending or limiting trading in certain shares, as well as the timely study of the Securities Market in Singapore and Malaysia by Mr George M. Ferris, Jr. (which is commonly referred to as "the Ferris Report") have focused attention on the shortcomings and deficiencies of the Securities Market in Singapore and have raised the question as to what form of legislative intervention is needed to remedy these shortcomings and deficiencies, particularly as they affect the protection to be afforded to the investing public. For there can be no doubt that some form of intervention is necessary to ensure that the Securities Market operates in a fair and open manner and to prevent, as far as possible, certain persons, especially those with "insider" knowledge, from manipulating the market by illegal means for their own profit. Even without the occurrence of the above-mentioned events, it is probably inevitable that the Securities Market in Singapore could not, having regard to the accelerated pace of economic and industrial development and the need to attract private capital investment to support and quicken this development, have continued for long in its traditional laissez-faire state.”
“Clause 24 seeks to provide a new general section giving the Comptroller the right to require and take securities for payment of duty and for the collection of revenue. At present the requirement for security is only for certain sections of the Ordinance. The new provision allows enhanced safeguards particularly where high duty goods are involved. Containerised cargo moving through Singapore is expected to increase and clause 28 empowers the Minister to make regulations on documentation, storage, movement and examination of containerised cargo. The clause also enables the Minister to require customs stamps to be used for the payment of duty on cigarettes. The other amendments are purely technical or procedural amendments. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill.- [Mr Hon Sui Sen]. Bill considered in Committee; reported without amendment; read a Third time and passed. SECURITIES INDUSTRY BILL Order for Second Reading read. 8.03 p.m.”
“Clause 7 seeks to empower the Minister to exempt the payment of such fees or charges leviable on items other than goods. Section 13 of the Ordinance, as it now stands, gives the Minister powers only to exempt payments of customs duties, taxes, fees or charges payable on goods. However, there are fees payable other than on goods, for example, warehouse fees. Clause 8 proposes to extend the scope of the tax, currently limited to vehicles using heavy oil or diesel oil, to cover liquefied petroleum gas and other gases to take account of technological changes and new propellants for vehicles. Section 34 of the Ordinance regulates the liability of the master or agent of a vessel in respect of short-shipments, short-landings, etc. Clause 12 seeks to supplement this section by extending liability to cover goods landed until they are lawfully removed for export, or enter customs territory or are received for storage in a free trade zone. This removes any doubt as to liability of administrators of free trade zones and will not affect shipowners who may insure against such liabilities. Clause 19 seeks to reduce the period during which draw-back claims may be made from 12 to 6 months of the date of payment of duty to bring this section in line with other sections of the Ordinance. Clause 21 makes the preparation of palm trees for tapping an offence. At present only tapping is an offence. As section 84 of the Ordinance now stands, provision exists for adjustments in prices of sums equal to increases or decreases in existing customs duties levied or payable after a contract is signed. Clause 22 seeks to cover, in addition, price changes arising out of the imposition of new duties or the abolition of duties.”
“Sir, I beg to move, "That the Bill be now read a Second time." The Bill seeks to amend the Customs Ordinance, No. 44 of 1960, to give more flexibility in administration, update sections of the law and also clarify the limitations of the customs provisions in relation to the free trade zone. I shall now deal with the important amendments. Clause 2 of the Bill seeks to amend section 2 of the Ordinance by repealing the existing provision which provides that the Ordinance shall not apply to Pulau Sebarok or Pulau Bukom Besar in respect of petroleum, and re-enacting the clause giving the Minister more flexibility. More oil refineries are being developed on off-shore islands and the re-enacted section 2 (a) would allow the Minister to specify any off-shore island where the Customs Ordinance shall not apply in respect of petroleum. Clause 2 also clarifies that the Ordinance shall have no application within the free trade zone in respect of acts lawfully done. This avoids the need to list out and add to or delete from the list preventive and prohibitive sections of the Ordinance applicable to the free trade zone as required presently. Clauses 4 and 5 seek to amend sections 4 and 5 by transferring the authority for the statutory appointments of Comptroller, Deputy Comptroller, Assistant Comptrollers and Customs Officers from the President to the Minister for administrative simplicity and to bring this provision in line with similar provisions in other revenue Ordinances. Clause 6 seeks to amend section 11 o1 the Ordinance to empower the Minister to levy duty on locally-grown tobacco as Virginia-type tobacco, suitable for cigarette making, is currently grown locally.”
“13 of 1956) and to repeal the Singapore Traction Ordinance (Chapter 111)", presented by Mr Yong Nyuk Lin; read the First time, to be read a Second time on Monday, 11th January, 1971, and to be printed. ROAD TRAFFIC (AMENDMENT NO. 2) BILL "to amend the Road Traffic Ordinance, 1961 (No. 26 of 1961)", presented by Mr Yong Nyuk Lin; read the First time, to be read a Second time on Monday, 11th January, 1971, and to be printed. JURONG TOWN CORPORATION (AMENDMENT NO. 2) BILL "to amend the Jurong Town Corporation Act, 1968 (No. 5 of 1968)", presented by the Minister for Finance (Mr Hon Sui Sen); read the First time, to be read a Second time on Monday,. 11th January, 1971, and to be printed. LOANS (INTERNATIONAL BANK) (AMENDMENT) BILL "to amend the Loans (International Bank) Ordinance, 1958, of Malaysia (M. Ord. 41 of 1958) in its application to Singapore", recommendation of President signified; presented by Mr Hon Sui Sen; read the First time, to be read a Second time on Monday, lit/i January, 1971, and to be printed. METRICATION BILL Order for Second Reading read. 3.38 p.m.”
“Sir, on the basis of a detailed study made by the Ministry of Finance, the Government decided against an Export Credit insurance Scheme. The result of the study showed that such a scheme could not be expected to be self-financing. No official had been sent abroad for training in the running of an Export Credit Insurance Scheme before the decision was taken. An official had, however, visited Hong Kong where such a scheme was in operation to study the feasibility of introducing a similar scheme in Singapore. BILLS INTRODUCED 3.30 p.m. DIPLOMATIC AND CONSULAR OFFICERS (OATHS AND FEES) (AMENDMENT) BILL "to amend the Diplomatic and Consular Officers (Oaths and Fees) Act, 1968 (No. 42 of 1968)", presented for the Minister for Foreign Affairs and Minister for Labour by the Minister of State for Foreign Affairs (Inche A. Rahim Ishak); read the First time, to be read a Second time on Monday, 11th January, 1971, and to he printed. PREVENTION OF POLLUTION OF THE SEA BILL "to enable effect to be given to the International Convention for the Prevention of Pollution of the Sea by Oil, 1954, and to make provisions for preventing the pollution of Singapore waters by oil and other substances", presented by the Minister for Communications (Mr Yong Nyuk Lin); read the First time, to be read a Second time on Monday. 11th January, 1971, and to be printed. PORT OF SINGAPORE AUTHORITY (AMENDMENT) BILL "to amend the Port of Singapore Authority Ordinance, 1963 (No. 36 of 1963)", presented by Mr Yong Nyuk Lin; read the First time, to be read a Second time on Monday, 11th January, 1971, and to be printed. BUS SERVICES LICENSING AUTHORITY BILL "to repeal and re-enact with amendments The Omnibus Services Licensing Authority Ordinance, 1956 (No.”
“Mr Speaker, Sir, I do not know whether I need answer the Member for Whampoa! He welcomes the establishment of the Monetary Authority. His remarks on the automatic mechanism being possible also under the Authority are, of course, accepted. This is quite possible. But I think in the circumstances in which we operate in Singapore and in the South-east Asian area, which has had some experience of "banana" currencies, there is, as I have explained, some psychological importance in showing that our money is well controlled under the Currency Board which does not allow for any manipulation of the note issue. I think this is important. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Hon Sui Sen]. Bill considered in Committee; reported without amendment; read a Third time and passed. RECLAMATION (BEDOK/TANAH MERAH BESAR) 5.00 p.m.”
“Clause 22 outlines in detail the powers of the Authority, e.g., it may accept deposits of money; issue demand drafts; purchase and sell gold and foreign currencies; purchase and sell Treasury' Bills and Government securities, etc. Clause 23 lays down the general principles under `which the Authority's funds may be invested. The Authority in its functions as banker and financial agent to the Government will mainly be responsible for the managing of the external assets of the Government, undertaking the-issue and management of Government loans and of Treasury Bills. In this capacity, the exercise of powers by the Authority will remain subject to the respective legislation pertaining to these subjects. The Treasury Bills issue will be made under the Treasury Bills Ordinance, the issue of registered stock will be made under the Development Loan Act, while the investment of Government's external assets will be subject to the Financial Procedure Act. Clauses 26 to 40 contain miscellaneous and transitional provisions which provide for such matters as the financial year of the Authority, submission of annual accounts, powers to make regulations, etc. Sir, I beg to move. Question proposed. 4.54 p.m.”
“The Managing Director will be entrusted with the day-to-day administration of the Authority and will be answerable to the Board for his acts and decisions. It is envisaged that the staff of the departments which I have named earlier will be transferred to the Monetary Authority. Clauses 17 to 20 of the Bill provide for this. It is intended that employees from these Government departments will be transferred to the Monetary Authority on terms no less favourable than those that they are enjoying with the Government. The value of their pension rights will be safeguarded in any Authority pension or provident fund schemes, The Authority shall act on the advice of the Public Service Commission in regard to appointments, promotions and termination of employment, dismissal and disciplinary control of its employees. Clause 21 (1) will enable the Authority to take over the powers of the Government under the Banking, Finance Companies and Exchange Control Ordinances. It is further envisaged that it may be necessary in future for the Authority to administer other functions in any specified law relating to banking, investment or other financial matters, and provision for this is made in clause 21(2) . It will be necessary to transfer to the Authority certain assets and liabilities of the Government arising out of statutory requirements in the banking and finance companies legislation. Banks and finance companies are required to maintain, as part of liquidity requirements, a statutory reserve with the Accountant-General based on 3� per cent of their deposit liabilities. This amounts to approximately $120 million. As the Authority will now be responsible for these matters, clause 21 (3) provides for the transfer of liabilities together with their matching assets to the Authority.”
“It is therefore proposed in the Bill now before the House that there should be established a Monetary Authority of Singapore, comprising the departments I have mentioned with the single exception of the Currency Board. It is considered, for the time being, that the currency-issuing functions of the Board should remain with it and that the Board should continue as an independent and separate statutory authority. The automatic mechanism of the Currency Board with its 100 per cent external assets backing has been and will be of great psychological importance in maintaining confidence in the Singapore Dollar. Thus the operations and the assets backing the Currency issue will be unaffected and will continue to be clearly identified. The Monetary Authority will therefore for the time being have no note-issuing functions. I would now like to discuss in some detail the provisions of the Bill for the establishment of the Monetary Authority of Singapore. Part II of the Bill provides for the establishment, capitalisation and administration of the Authority. Clause 3 sets up the Authority as a body corporate. The authorised capital of the Authority will be $30 million, while the paid-up capital will be such amounts as may be approved by the Government from time to time. This is laid down in clause 5. Clause 8 provides for a Board of seven directors comprising the Minister for Finance, who will be the Chairman, the Permanent Secretary (Economic Development) of the Ministry of Finance, who will be the Deputy Chairman, the Accountant-General and four other members who will be appointed by the President. Of the four members appointed, one will be the Managing Director of the Authority.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In Singapore, as a result of historical factors, the various monetary functions normally associated with a Central Bank are currently being performed by a number of Government departments ;and agencies. For instance, the responsibility for the currency issue lies with the Currency Board, which is a statutory authority. Then, the Commissioner of Banking and the Commissioner of Finance Companies is responsible for the regulation and supervision of banks and finance companies, whilst the Exchange Control Department is responsible for all matters concerning foreign exchange. Finally, the Department of Overseas Investment in my Economic Development Division is responsible for the management of the Government's external assets, while the Accountant-General is responsible for the sale of Treasury Bills to banks and other financial institutions, the raising of domestic loans and the management of the clearing house system. Quite clearly, the task of co-ordinating and directing the policy of these .diverse organisations makes for a full-time occupation and while the present system of ad hoc control by committee has worked reasonably well up to now, the increasing complexity of modern banking and monetary management makes it necessary to streamline the system. Apart from rationalising the structure and organisation of the system, the bringing together, under one single authority, of all these different organisations will enable a coherent and uniform policy to be developed for all monetary matters. In addition, it is hoped that with the passage of time will come the development of greater professional expertise. This is vital for the efficient functioning of a modern monetary system.”
“Clause read a Second time and added to the Bill. Clause 34 to 72 inclusive ordered to stand part of the Bill. Schedules 1 to 4 inclusive ordered to stand part of the Bill. Bill reported with amendments; read a Third time and passed. MONETARY AUTHORITY OF SINGAPORE BILL Order for Second Reading read. 4.45 p.m.”
“Mr Speaker, Sir, I beg to move, "That the clause be read a. Second time." Mr Speaker, Sir, the purpose of this clause is to provide relaxation from the provisions of clauses 25, 27 and 28' which are based upon the capital funds concept; that is to bring in restrictions related to the head office funds rather than the paid-up capital and reserves, a concept more common in other legislation elsewhere. In my view, there should be no difficulty in foreign banks transferring, if necessary, some of their-working capital funds as additional funds to Singapore in order to continue their business in Singapore in conformity with the provisions of the clauses I have mentioned. However, I have received representations from the Association of Banks and the International Chamber of Commerce on behalf of some of their members that these clauses are unduly restrictive in the carrying on of their banking business. One answer to this, may well be that the local banks will welcome the opportunity to take on the business which they are unwilling to do by bringing in additional funds. It can be contended by the local banks that the amendment I have introduced can lead to unfair discrimination against them because foreign banks can, on the face of it, expand their business to the detriment of the business of the local banks. Nevertheless, because of the fragile climate in which I am told the industrial and commercial growth is nurtured, I have by this amendment allowed for relief to be considered on specific application by any bank whose head office is outside Singapore, but only for the first two years. The bank must, however, show that any such relaxation is, really necessary and will not be to the detriment of depositors. Question put, and agreed to.”
“Mr Speaker, Sir, I have indicated that in view of the definition of "published reserves" which has now been inserted in its proper place in clause 2, the intention is to delete this clause. Question put, and negatived. Clause 33 accordingly disagreed to. New Clause 33 - "Relief from 33.-(1) Any bank whose opposed head limitations office is situated outside Singapore by sections may apply in writing to the Commissioner 25, 27, 28 for an order relieving that bank from the restrictions or limitations imposed by sections 25, 27 and 28 of this Act in relation to any transactions referred to in those sections and the Commissioner may make such order subject to such conditions as he thinks fit. (2) The Commissioner shall make an order under subsection (1) of this section only if he is satisfied that the making of such order is in the interests of the creditors and depositors of the bank. (3) An order made by the Commissioner under subsection (1) of this section shall be effective for such period as the Commissioner may decide and shall cease to have effect on such date as may be specified in the order except that no order may be made which is expressed to have effect for a period longer than two years from the date of the coming into operation of this Act. (4) The Commissioner may make an order under subsection (1) of this section in respect of transactions entered, into by the bank before or after the date of the coming into operation of this Act.". - [Mr Hon Sui Sen] Brought up, and read the First time.”
“Mr Speaker, Sir, I beg to move, In page 19, line 28, to leave out "Any" and insert "Subject to this Act any". The purpose of this amendment is to clarify that this particular clause will be subject to clause 33 which I shall introduce later. Amendment agreed to. Clause 30, as amended, ordered to stand part of the Bill. Clauses 31 and 32 ordered to stand part of the Bill. Clause 33 - Question proposed, "That clause 33 stand part of the Bill."”
“Mr Speaker, Sir, I beg to move, In page 19, line 5, to leave out "dead" and insert "deed". This is to correct a typographical error. Amendment agreed to. Clause 29, as amended, ordered to stand part of the Bill. Clause 30 -”
“Mr Speaker, Sir, I beg to move, In page 7, line 13, after "annual", to insert "licence". This is just a matter of clarification. It is to make it quite clear that it is licence fees with which we are concerned here. Amendment agreed to. Clause 13, as amended, ordered to stand part of the Bill. Clauses 14 to 28 inclusive ordered to stand part of the Bill. Clause 29 -”
“Clauses 3 to 12 inclusive ordered to stand part of the Bill. Clause 13 -”
“Mr Speaker. Sir, under the law the Minister is empowered to issue new licences. The practice over the last few years has been not to issue any further licences because obviously we have too many banks in Singapore. If there are very good and sound reasons why more banks should be licensed - if, for example, in certain branches of banking there is any inadequacy - then obviously such applications will be entertained. I do not consider that the present minimum requirement of $3 million is a very adequate qualification for banks in Singapore. It will be imposed on the present banks and there should be no difficulty for most of them to meet this capital requirement. But I do not consider that any new application with just $3 million will be an adequate reason for a new licence to be issued. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Hon Sui Sen]. Bill considered in Committee. [Mr Speaker in the Chair] 4.35 p.m. Clause 1 ordered to stand part of the Bill. Clause 2 - Mr Hon Sui Sen: Mr Speaker, Sir, I beg to move, In page 2, after line 20, to insert - ""published reserves" means reserves which appear in the accounts of the bank but does not include any reserves which are represented by the writing down of the value of assets or by provision for the depreciation of fixed assets or which are maintained for any specific purposes;". The purpose of this amendment is to insert in its proper place among the definitions the definition of "published reserves". In the present Bill, before this amendment, the definition appears in clause 33. Amendment agreed to. Clause 2, as amended, ordered to stand part of the Bill.”
“While the Bill would provide powers for the Commissioner to have tighter control over banks and their activities, the modernisation of the banking law should cut down unsound practices and so work to the general interests of depositors, the banking system and the public at large. Sir, I beg to move. Question proposed. 4.30 p.m.”
“A new provision has been added prohibiting disclosure of information relating to the affairs of the bank's customers to any person or body of persons who are not resident in Singapore or to any foreign Government or organisations, unless the customer permits it or he is declared a bankrupt or the information is for the purpose of assessing the credit-worthiness of the customer. The Bill also provides for the appointment of approved auditors and their duties, the establishment of a Clearing House, bank holidays, priority of deposit liabilities, disqualification of Directors and employees of banks, offences by Directors, and power to compound offences. It is also provided that the operation of the Companies Act, 1967, shall not be affected by this legislation though, in case of conflict, this legislation will prevail. The legislation will also not apply to the Post Office Savings Bank, a registered co-operative society, a licensed pawn-broker, or a licensed finance company. Mr Speaker, Sir, I should like, in conclusion of my explanatory remarks, to say that this Banking Bill has received consideration over a considerable period of time, that consultations have been held during its preparation with the Association of Banks and others interested regarding its provisions, but responsibility for the Bill in its final form of course remains with my Ministry. Since its publication, a number of representations from banks have been received and I can assure them that every consideration has been given to their representations and that it is not my purpose to administer the law in any way which will curtail the effectiveness of the banking system.”
“Inspection of books, accounts and transactions of a bank under conditions of secrecy is also provided for. The Minister may direct the Commissioner to make an investigation of any books, accounts, and transactions of any bank if he believes the bank is carrying on unsound business. The Commissioner and the Minister are provided with the necessary powers to take over the control of a bank if it is unable to meet its obligations or is conducting its business to the detriment of its depositors. The duration of control is laid down and within this period the bank is required to co-operate with the Commissioner. The Commissioner, with the approval of the Minister, may also prohibit any bank from carrying on banking business if he considers it in the interests of the depositors of the bank. The Bill introduces the concept of numbered accounts, that is, accounts which are identifiable only by number or code word. No bank shall operate numbered accounts except with the approval of the Minister who may attach conditions, qualifications and limitations. The owners of numbered accounts shall only be known to senior officers of the bank. Provisions are made for absolute secrecy on the part of bank officials and no information concerning the identity of the owner of a numbered account shall, be given, unless the account holder permits it or he is declared a bankrupt or a suit arises between him and the bank or when the account holder is required to do so by order of the High Court made for special cause in any civil or criminal proceedings.”
“Loans extended for the purpose of purchasing or improving immovable properties are limited to 30 per cent of its local deposits and, with the approval of the Commissioner, up to 60 per cent. No bank will be allowed to do trading on its own account. Whilst this provision has not been specifically spelt out in the present legislation, banks in Singapore do not in fact undertake trading on their own account and it is envisaged that no difficulty will be encountered with this provision which is common to most other banking laws. There are transitional provisions to enable banks which have, before the date of coming into force of the legislation, entered into transactions prohibited under this law, to liquidate such transactions or bring them within the law. In order to allow some banks time to adjust to the requirements of the new Banking Act, I am introducing an amendment to the Bill which will enable the Commissioner, if he is satisfied that such time is required for adjustments, to grant a grace period not exceeding two years to any particular bank from the provisions of sections 25,27 and 28 of this Bill (i.e., restrictions covering loans to a single borrower, equity investment and immovable property). As in the current legislation, there will be provisions to require banks to keep minimum liquid assets in Singapore and to maintain statutory reserves with the Accountant-General. There is also provision to allow control over banks on the regulation of interest rates, discount, commission, and other charges of banks. The Commissioner may also make recommendations on credit policy and, if these are not complied with, the Minister may impose such directions as may be necessary for their implementation.”
“The Commissioner may prohibit such further grants of advances, loans or credit facilities or impose restrictions on the grants unless he is satisfied that these would not be against the interests of the depositors of the bank. Part V of the Banking Bill spells out restrictions on certain types of business and prohibitions on others. These prohibiting clauses are new and are designed to safeguard depositors' interests. They have been recommended by the International Monetary Fund, and are found in the banking laws of a number of other countries. Briefly, they are that no bank will be allowed to grant to any single customer any credit facility which is at any time more than 60 per cent of its capital funds, though this can be increased to 100 per cent with the approval of the Commissioner. Again, no bank shall grant any advance or credit facility against the security of its own shares. Unsecured facilities to any Director, any firm in which any of its Directors is a partner, or to any related corporation, etc., would be limited to $5,000. Unsecured facilities to its employees would also be limited, nor will a bank be allowed to acquire or hold equity capital or other undertakings exceeding in the aggregate 40 per cent of its capital funds. Provision is made, however, for the Commissioner to approve any shareholding in any corporation set up for the purpose of promoting development in Singapore. To prevent speculation on property, a provision has been made that, apart from the properties used as banking offices and for housing its employees, no bank shall be allowed to purchase or acquire immovable properties exceeding 40 per cent of its capital funds.”
“More comprehensive definitions appear for "bank" and "banking business". A new concept of "capital funds" has been introduced so that a healthy relationship between a bank's lending power and its net worth in Singapore is maintained. "Capital funds" mean, for a bank whose head office is situated in Singapore, its paid-up capital and reserves and, for a bank whose head office is outside Singapore, the net head office funds and such other liabilities as the Commissioner may decide. As in the current legislation, the operation of a bank in Singapore requires a licence. The minimum capital requirement has been raised from $2 million to $3 million. In the case of a foreign bank, this has been raised from $5 million to $6 million with a requirement that the net head office funds in Singapore should be at least $3 million. At present foreign banks are required to hold $2 million approved assets locally. It is not considered that these requirements will cause any difficulty to banks already licensed, but a transitional period of two years, which can be further extended by approval of the Minister, is being provided for compliance with the requirements. It is further proposed to require banks and their branches to pay licence fees annually. As at present, certain statistical statements will be required to be furnished to the Commissioner and the Chief Statistician. Every bank shall also send to the Commissioner particulars of all advances, loans and credit facilities granted to any of its Directors, any firm in which any of its Directors is a partner, or to any related corporation, etc.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The law regulating banking in Singapore at present is substantially the Malayan Banking Ordinance of 1958 which was modified in April 1967 only to empower the Singapore Commissioner of Banking to administer this law. At that time, a draft Banking Bill had been prepared by the International Monetary Fund for Singapore but it was considered that, in view of the impending change in the monetary system caused by the redemption of the Malayan dollar and the issue of the Singapore dollar, there would be some advantage in avoiding unnecessary changes in other parts of the system and, therefore, in maintaining the status quo of banking in Singapore vis-a-vis Malaysia. Now the redemption of currency issued by the Board of Commissioners of Currency, Malaya and British Borneo, has all but been completed, and the Singapore dollar is firmly and fully established. Moreover, the banking legislation in Malaysia has also been amended. It is therefore appropriate that we should now enact our own legislation to include modifications which would overcome the shortcomings of the present legislation. The Banking Bill now before Members incorporates the basic features of the current Banking Ordinance, but it also introduces a number of new provisions, the most important of which are designed to ensure better and sounder banking practices and to better safeguard depositors' interests. They include restrictions on the amount a bank can grant to a single customer, a prohibition from engaging in trade, restrictions on the extent a bank can acquire equity capital and immovable property, and on the amount of loans extended for the purpose of purchasing and improving immovable properties.”
“Now, Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. TRUSTEES (AMENDMENT) BILL Order for Second Reading read. 3.26 p.m.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to provide statutory authority in accordance with clause 2 of Article 85 and clause 2 of Article 87 of the Constitution of Singapore for additional provisions for expenditure in excess of the provisions for expenditure authorised by the Supply Act, 1970. These additional sums have been scheduled as Supplementary Estimates which have been considered and approved by the House as Cmd. Paper No. 19 of 1970. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Mr Speaker, Sir, the problem of duplication of services has been very carefully considered by the World Bank which finances the Port of Singapore Authority, and also by the Jurong Town Corporation, which is now asking for this loan from the Asian Development Bank. The World Bank, in its loan to the P.S.A., specified that there should be consultation with them before any expansion of port services is effected in Jurong. In this particular case, they have given their approval for this loan by the Asian Development Bank to proceed. I would also suggest that, because the Jurong Port is now being administered by the P.S.A, on behalf of the Jurong Town Corporation, in fact, there will be no duplication in practice. The nature of the cargo handled by the Port in Jurong is also entirely different from the kind of cargo which is being handled in the P.S.A, area. The Jurong Port handles, in the main, bulk cargoes which are intended for the Jurong New Town. I therefore consider that there will, in practice, be no duplication at all. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. -[Mr Hon Sui Sen]. Bill considered in Committee; reported without amendment; read a Third time and passed. SUPPLEMENTARY SUPPLY (NO. 3) BILL Order for Second and Third Readings read. 3.25 p.m.”
“The early passage of this Bill is therefore necessary. Sir, I beg to move. Question proposed.”
“Mr Speaker, Sir, I beg to move. "That the Bill be now read a Second time." The Bill seeks to amend the Jurong Town Corporation Act, 1968, to provide for the power to maintain adequate and efficient port services and facilities in the Jurong Port and the power to borrow money direct from any source. In regard to port operations, the present Act is silent and while the Jurong Town Corporation has power to borrow by the creation of debentures, this method is not acceptable to both the World Bank and the Asian Development Bank which do not wish to be involved as debenture holders. Therefore, power to borrow direct must be provided. The Jurong Port, with its five berths, started operation in early 1966 and the cargo handled has now passed the one million-ton mark. It is expected that, with the rapid development of Jurong Town and with the increasing number of industries established, the cargo handled will increase by about 20 per cent per year for the next ten years. The Port has now reached full occupancy. It is therefore necessary that it be expanded to cope with the future demand. The expansion which is planned involves the reclamation of Pulau Chichir to make available 40 acres of land, extension of Berth No. 5 from its present 465 feet to its full length of about 900 feet, and connection of Berth No. 1 to Pulau Chichir by a causeway to provide for 2.400 feet of additional deep-water wharves. The total cost of this expansion is about $30 million. In view of the large sum involved, the Jurong Town Corporation has applied to the Asian Development Bank for a loan of about $25 million. Negotiations for this loan have now been successfully concluded, and the President of the Asian Development Bank will be in Singapore to sign the Loan Agreement on the 4th September, 1970.”
“Yes, Sir. Typed copies of the Bill distributed to Members.”
“Now, Sir,I lay upon the Table a Certificate of Urgency signed by the President in respect of the Bill. Certificate of Urgency handed in.”
“Mr Speaker, Sir, I beg to introduce a Bill intituled "An Act to amend the Jurong Town Corporation Act, 1968 (No. 5 of 1968)". Bill read the First time. Second Reading”