Inderjit Singh
Singapore
“You do not want our monetary policy easing to offset some of these as it will result in an inefficient allocation of resources. I think our SMEs will also be similarly affected by higher import costs.”
“Thus, SPRING can become something like a Municipal Service Office (MSO) for SMEs. SPRING has already set up an outreach mechanism through the SME Centres. This structure should stay to be the outreach arm.”
“I want to thank the Minister of State for agreeing to the suggestion of the first- and one-stop agency. We have higher expectations, so, I hope we can make it work. But my question on REITs was not answered.”
“She worried about the eroded sense of belonging that she and her friends felt and their view that Page: 24 the Government was more interested in luring foreigners than bringing Singaporeans home. She said that friends and relatives asked if she planned to stay in Australia after her graduation. In 2013, she was unsure of her answer.”
“I recently read that, in Malaysia, the EPF holders are paid 6% for their savings for a number of years, and this is much higher than the return we are paying to our CPF holders.”
“I believe Minister of State Mr Teo Ser Luck mentioned just now the company formation rate of about 14,000. I would like to ask are we monitoring the rate of companies folding up. I have heard recently that the rate has also increased, especially in some sectors that are very dependent on rental.”
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“The Inland Revenue Authority of Singapore (IRAS) is doing the same to review property tax because of the significant drop in properties prices in the last six months. Sir, JTC also recently instituted a new rule to restrict sub-leasing – I believe not more than 50% of space owned by or leased by a tenant can be sub-leased out. This is rational, but counter-intuitive. In this current environment, it will choke off more of the company's cashflow leaving too much of unutilised space if they cannot lease out. The implication of this is that we will have vacant space left and therefore drive up rentals. Sir, start-ups will be the worst affected by the bank lending squeeze so we must try to help those which are innovative and have got the potential for high growth. I suggest that SPRING proactively extends further investments to all SEEDS invested companies. SEEDS should also be enhanced such that start-ups that find difficulties in finding third-party investors can go to the SEEDS Investment Committee to get an in-principle approval to invest first and then the SEEDS team can help them look for third-party investors. Currently the process is reversed, where the third-party investors need to be found first. Sir, I also like to repeat my call for SPRING to set up a Growth Fund, which is a direct investment fund investing into growth companies. This fund can incentivise the entrepreneur to buy back the Government's share at a nominal return to the Government. This will help us build some local anchors capable of playing a big role in our economic development of the future. Sir, I also see no harm in spurring micro enterprises.”
“Second, I suggest that we open up a new channel or front for lending where SPRING sets up an investment committee, consisting of bankers, entrepreneurs, consultants and SPRING officers to approve loan applications made direclty to SPRING. Upon approval, SPRING then directs the banks to lend. This may require a different risk-sharing profile for banks to want to participate. I therefore suggest a three-year-loan where the Government gives a 100% loan guarantee in the first year, 80% in the second year and 50% in the third year. This way we avoid the moral hazard of banks lending when it does not make sense because the Government takes 100% of the risk for the full duration of the loan period. If the Government does not want to guarantee 100% and still wants to stick to 80%, then I think this system of in-principle-approval by SPRING can still work if we allow the companies to put a 20% deposit with the banks as their share of the risk while the banks disbursed the other 80% through the SRI. I am sure that these initiatives will better facilitate the cash flow for companies. Third, Sir, I have suggested the setting up of a Corporate Rescue Task Force, where we have the public and private sectors getting together rescuing companies that have capabilities that we may want to keep alive for Singapore in the long term. We should seriously consider this because there are many of these companies that are viable, have good models that could survive in the long term but need a lifeline in the short term. Sir, JTC, like HDB and SLA, is still adjusting rentals upwards. I have seen a number of examples. This needs to stop. JTC should instead conduct a review of market rental rates to be accurate.”
“Sir, I would like to speak on survival and new growth opportunities. Sir, we need to save companies which have viable businesses but are facing the liquidity crunch and unless the Government gets more involved, we will not succeed. Sir, I have got feedback that since the Government implemented the SRI, some banks have undermined it by transferring their commercial loans to the SRI loans. This defeats the purpose of SRI to catalyse new loans and if all the banks start adopting this approach, we then would have a zero net gain. So while the Government might think that new loans are being created through the SRI, this may not be the case. We need to control this. While we hope that the SRI will work, we need to do more. I want to suggest three things that we should do. First of all, like in Canada and Taiwan, where the governments till today are still directly involved, we should therefore consider setting up a SME or development bank to do something like this so that in the future, when we are faced with a similar loss of confidence of the financial sector, we will be able to act much faster in getting liquidity going again into our markets and not be held ransom, waiting for the market to get organised again. Such a bank could be still a secondary source of funds while we rely primarily on the tested approach of lending through banks supported by the various Government schemes. To be realistic, it will take time for us to set up such a bank but I think we should think about one for the future. We, therefore, need to work within the current systems if we want to help companies fast.”
“Because if we do not do this, sooner or later we will make obsolete too many of our industries too early. Madam, during the Budge debate I had asked the Minister to start to think about Economic Restructuring Committee to help plan the next phase of development for us. I hope that MTI will champion the cause of this ERC even if it is an MTI committee. And back to my point on forecasting. I would like to suggest that MTI think about setting up an institute of economic studies, something like the Institute of Policy Studies simply because I think on its own, with the complex environment that we are seeing, it is becoming increasingly difficult to predict the type of models and forecasts and what is it that is going to help us be successful in the future global economy. And perhaps MTI can consider championing this. And I think something like this would be a valuable resource not just for the Government but also for both existing and potential investors as they decide to place their operations here in Singapore. Finally, on our economic development model for the next generation – I believe focusing on MNCs will soon have limited growth potential as global companies are going to aggressively consolidate and Singapore may lose the traditional companies and operations that we could attract in the past. I think it is not a wrong strategy to refocus on growing more local enterprises, creating local anchors that can globalise out of Singapore. Does MTI see this happening or does it plan to stick to its original multi-national model that has been tested but may not work in the future?”
“Can I ask the Minister during this downturn what areas of growth can we depend on to bring Singapore out of the severe downturn? Will our economy be able to handle this fast rate of change? How will this impact our GDP? Madam, I believe that we need to once again restructure our economy. In my view, cost structure is at the top of the list of things that we need to change as it erodes our competitiveness. Also, our high cost structure now reflects our inability to support certain industries and we risk losing many of them. The semi-conductor industry and the disk drive industry are now starting to look unattractive here in Singapore. An important contributor to the GDP, the manufacturing sector is also very quickly looking uncompetitive as our costs have escalated during the good years. I also do not think a high-cost Singapore is inevitable, as I mentioned before. We could perhaps devise a two-Singapore structure where we can institute differential pricing mechanisms, and particularly for land and property. We could price our industrial land not based on competition with other users of the land in Singapore, for example, but in competition with use of land in other countries that we are competing with – Taiwan or Korea, for example. So for example, we could price industrial land according to what it cost for our companies to want to locate in a similar, in a location in Taiwan doing the same type of activity and doing the same type of facility there. This is the type of competition that we need to worry about. We had followed this differential pricing approach before. It got taken away. So I would like to ask the Minister whether he will consider looking at this once again.”
“Madam, I beg to move, That the total sum to be allocated for Head V of the Estimates be reduced by $100. Madam, I would like to discuss two points on our economy as we move forward – what to expect of it and how we should restructure it. First, on the Economic Outlook and Planning. Madam, I do not expect MTI to have a crystal ball to be able to predict accurately Singapore's economic numbers and as we have seen, MTI has had to revise economic growth forecasts many times recently, but it would be useful to know the outlook that the Government has of the economy and which scenarios it is using to plan ahead. As the economist Paul Krugman says, and I mentioned this during the Budget debate, that in depression economics, the usual rules of economic policy no longer apply. And while we are in the middle of this storm, how does the Government decide on economic policies. Whether it is UK or USA or Japan, all the fiscal and monetary measures implemented do not seem to have an impact on turning around their economies. As normal rules of planning would not work in today's world, how then do we forecast moving foward? In the coming years, I do realise that we are going to see a destruction of many accepted economic models and new models will soon have to arise. So what will MTI do to adapt to this new reality? Madam, our 2001 Economic Restructuring Committee was convened to look at tapping opportunities of a fast developing world and our status as a developed nation and therefore we chose industries and sectors that reflected this. Such an approach made high costs an acceptable thing for the sectors with higher value added activities that we have selected.”
“Sir, what is missing is the process that the President took after he received the briefing from the Government. If we could get a sense of what they discussed and what process they went through to decide, then that may clear many of these questions.”
“May I seek a clarification? I fail to understand the Member's argument that the Government will be wasting money in the Jobs Credit Scheme and businesses gaining unnecessarily when actually if the company retrenches, they will not get the Jobs Credit amount from the Government. And if the company keeps the employee, they will spend a lot more to keep the employee than the $300 that it is going to get. So I did not understand how the Government is going to waste money. In fact, I see this as a positive approach to saving jobs. If they are not going to save jobs, they are not going to get the money. So can the Member explain this?”
“Sir, as I mentioned, on the whole, the Budget is a good one. I support the Budget and I look forward to more off-budget measures to address some of the issues that I have raised. 12.45 pm”
“This was an issue we discussed during Question Time just now. In the last two years, we have gone a bit too far in allowing many foreigners to take up jobs that Singaporeans could do. This has also eroded the wages for such jobs as foreigners are able to live with a much lower wage. We need to curb the rampant influx of unskilled and semi-skilled foreign workers so that we keep wages for such jobs attractive for locals who can also do these jobs. I am not saying that we reverse on the foreign talent policy. I agree that we need to have foreign workers and foreign talent but when you have a petrol pump attendant who is a China national versus a job that was done by our senior citizen, I would have preferred a senior citizen to do that job, even if the service is a bit slower. So we need to think about how we can reserve some of these jobs for Singaporeans. Sir, in conclusion, I think that the Budget is both pro-business and pro-people because cash flow issues have been addressed and the Jobs Credit will help save jobs and it goes some way to help reduce cost. The Budget could have been even more pro-business had the Minister placed greater focus on cost reduction. It could also have lowered the cost of living for all Singaporeans with additional help for the middle-income, making it even more pro-people. Sir, we must address all the three key areas of demand, cost and cash flow if we want to be resilient and come out stronger. While the real issue of the whole meltdown in the world is demand and loss of confidence and the collapse of the financial industry, cost and cash flow are starting to be very important factors that we also have to look at. Sir, we need to be bolder and be prepared to err on the side of being too aggressive than of being too safe.”
“In fact, Temasek, which has suffered significant losses in the past few years investing overseas, could perhaps be tasked to help rescue local companies and re-focus locally, a role that it has traditionally excelled in. Sir, what about households? For households, particularly the middle-income, I had wished that we had removed the $2,000 cap on the tax rebates that we had given. We did it last year when times were still good - we did give a $2,000 rebate. But in this extraordinary time, I think we should not have done the same as what we did before. I think it is a right time to let such households have more cash in their pockets, whether to help them save for a rainy day in case they run into trouble with their jobs or to spend as necessary. Sir, one of the biggest worries I have is the foreclosures by banks, especially on HDB flats. I would like to propose that HDB consider deferring the principal mortgage payments of homeowners who lose their jobs. Private lenders should also be tasked to do the same, ie, the banks who are lending on the HDB properties. This will relieve the unemployed Singaporeans from their single largest drain of income, and they will only need to pay interest payments, and this will help them a lot. Any foreclosures, whether by HDB or private lenders, should be reviewed by the Government at this stage to ensure that the people who are coping with the sudden job loss, do not also lose their homes undeservedly. To assist the private lenders, the Government perhaps would like to consider insuring some of these loans as we are doing for the corporate loans. Sir, the best way to help Singaporeans is to help them secure a reasonably well-paid job. We must tweak our employment rules to help Singaporeans become preferred employees.”
“Today, our financial systems also do not seem to work. We may have to go back to the basics again, but whether we start a SME bank or do it another way, the way the Japanese government did, I am sure that we can all come up with a solution that is equivalent to it. The goal is that all deserving companies must get the financing that they deserve. Sir, there are also companies that have strong capabilities that Singapore should keep but which, because of the extraordinary situation that we are facing right now, may not survive, even if we extend to them short-term loans. As an example, the semi-conductor industry, I believe, is about to see an unprecedented number of failures. The Government, I suggest, should set aside a rescue fund to rescue such companies by investing directly in some of them. Any Government rescue package, which may involve both direct investments and lending, should be tailored to allow the stakeholders, especially the entrepreneurs, to earn back their ownership, with the Government's return on investment being revenue neutral, if possible. In this way, we will encourage the stakeholders and incentivise them to remain in the trade. Otherwise, they will exit the trade and the core competence that we have developed over the years may be lost and it may be very difficult for us to rebuild these things again. I understand that the Government is not the best judge of which companies to lend to or to invest in or to rescue. I therefore suggest that we set up a Corporate Rescue Task Force to assist the Government to decide which companies to rescue. This kind of groundbreaking measure will be appropriate for the challenges that we are facing. Sir, corporate rescue is going on all over the world and I think we have to start thinking of doing down here too.”
“Although the Government has avoided direct lending, this is increasingly being seen as the only way to get liquidity out and flowing again. In UK, for example, the credit guarantee schemes did not work and Prime Minister Gordon Brown is now considering direct government involvement in lending. In Japan, the government is almost directly involved by providing 100% guarantees on loan losses. This is targeted specifically at SMEs, who have seen among other things a significant drop in profits. Loans of up to about JPY 280 million (which is about S$4.75 million) per company is available and the Japanese government had put aside 6 trillion yen for this scheme. This is as close as the government lending directly but is done through banks. While I can understand why the Government is sticking to tried-and-tested methods to lend money through the financial institutions, we must be mindful that the banks and financial institutions are all facing restructuring issues and will not go back to being aggressive lenders very soon. In fact, lending to companies whose profit is dropping is anathema to private lenders. Even though I support market-driven lending, and I have said it many times in this House, we cannot wait for the banks and the financial institutions to get their act together to restart lending to companies. There is a strong case for Government being more actively or even directly involved in lending. Sir, in today's world, many countries, including developed nations like Canada and Taiwan, still have government-owned banks and institutions involved in lending to companies, particularly to their small and medium enterprises. In our early days, when the banking system did not work in Singapore, we had a development bank to help finance companies.”
“And I think the Public Transport Council (PTC) could have been fast to recommend reduction in transport charges. We could have reduce ERP temporarily. There were a list of 18 cost increases that were announced last year. I will not go through the 18 reductions this year. But the point is: we could have done a lot more and all of them may have had a minimal impact, but if taken together, they would have been very significant for businesses. I feel that the cost, as an issue, has been underestimated as a problem by the Government. I hope to see the cost issues dealt with more urgency in any off-budget measure the Minister may be planning, and I hope it happens soon. I point out that cost reductions will also have the effect of increasing available cash in many cases. This, if spent, will circulate in the economy. The survival issue 3 is on cash flow and this is especially for companies, but also for households. To ensure that our companies survive this crisis, we need to increase their cash flow, and to help them increase it. Not every company can be saved, but there are companies that still have viable businesses and, through financing, can remain alive. For these deserving companies, we must ensure they get the financing they need. Other companies that are weak, unable to compete and without visibility of demand returning back soon, may not be worth saving. Sir, despite the two enhancements made since November last year, banks are still not lending the way we want them to. These measures did not address the core problem that banks' lending patterns have changed. I hope that the SRI announced in the Budget 2009 will make things better.”
“This has been part of the experience in the past. We did give this kind of tax rebate to landlords who mostly did not pass it on to their tenants. And I fear that the tenants may not see the full impact of this property tax rebate. And if this were to happen, we will not help companies save costs and could even lead to companies not able to survive because rents are already very high. I therefore suggest that the Government modify the scheme to give rental rebate coupons directly to tenants who could then use these coupons to pay part of their rent to the landlords. The landlords will in turn encash these coupons from the Government as part of their property tax rebate entitlement at the same level that was announced. Of course, another way to ensure that the benefit is not swallowed by landlords would be to pass an edict to landlords to reduce rentals - and this was a move recently taken by the Dubai government. I do not favour this. I prefer the first approach. But we could do that to help our tenants. Also, we could have taken a more bold measure in cutting Government fee charges instead of just freezing them. A good place to start will be to look at all the rates and charges that have been increased over the past two years, and peg them back to, say, 2005 and 2006 levels. This will help de-escalate the cost increases imposed by Government agencies over the past two to three years. What else could the Government do to help reduce costs to companies and Singaporeans? Well, we could have, perhaps, for Singaporeans, introduce foreign maid levies for the next one to two years. We could have given U-Save rebates to companies like what we did for individual households.”
“The NWC has announced recommendations for wage cuts and, together with the Job Credits Scheme, we should try to make things work and incentivise companies to retain jobs. I notice, however, that President Obama in the US had recently dropped a similar US$3,000 per worker annual Job Credits Scheme. We need to understand why the USA dropped their scheme so that we can strengthen ours and ensure that our Job Credits Scheme is effective as intended. Sir, aside from wage costs, we need to deliver additional cost savings to employers and to companies. Assuming that the Job Credits Scheme saves about 9% of costs for companies, which is about the effective CPF savings, that is 12% of job credits, they will still need higher cost reductions to survive because, for many businesses, the demand has dropped by up to 50% in some cases, and not just by 10% or 20%. I believe we could have reduced costs in a number of ways. The proposed temporary GST cut will lower costs for companies and households across-the-board. In fact, I favour a 2% to 3% GST cut more as a lever for cost reduction than as a demand driver although it should achieve both. The UK has responded in a similar way as they have cut their VAT by 2.5 percentage points. Additionally, the impact on revenue of a GST rate cut will be negligible if one considers the savings from not having to give out more GST credits and the expected increase in spending by individuals and companies had the GST been lowered by about 2%. I applaud the move to help reduce rentals by giving the property tax rebate. If fully passed to the tenants, the rentals savings are expected to be around 3-4%. There is, however, much concern that the property tax rebates given for commercial properties may not translate to lower rent for tenants.”
“This will be the fastest way to boost demand for many companies. I am not suggesting protectionism but instead to level up the playing field so that our smaller companies can get a greater pie of the Government's business. This change made now will go a long way in helping companies survive this downturn. Sir, the second survival issue is one of cost. High costs are now a problem that would have hurt us even had the recession not come. In the two years preceding this downturn, our "growth at all costs" policy led to structural cost issues in Singapore. This will worsen the impact of the recession for our companies and households. At the recent Singapore Perspectives Conference, organised by the Institute of Policy Studies, one of the consensus items that came up was that Singapore's cost structure should be reviewed. Living and doing business in Singapore need not necessarily mean putting up with high costs. High costs do not have to be inevitable here. We now have a unique opportunity to fix and decide what is the right structure for Singapore's economy is for the next 10-20 years. Sir, the 2009 ERC is convened to make this its priority. We can also implement meaningful cost-cutting measures now. But what I really like about the Budget this year was the savings that were achieved through the job credits. This, in addition to being a wage saving for employers, was also a move to save jobs. This key initiative is timely and helpful. I do not agree with some who had commented on this, who prefer a CPF cut as a blunt tool to lower wage cost for companies. I think CPF is already insufficient for retirement for most Singaporeans and I believe it is at the right level now and we should not touch it.”
“6 billion of capital spending loss for a GDP of our size. The additional GST credits of $580 million appear small compared to this loss. The GST increase has produced a negative effect on spending and if its cutback can produce even a modest stimulus to consumption, it should be considered. Tourist spending should also follow the same pattern should we temporarily roll back the GST increase. Every small stimulus must be explored and the benefits of a temporary GST roll back are worth our effort. In one to two years, we can restore this, so that we do not overly compromise our long-term fiscal restructuring and the tax structure that we have put in place. Sir, I applaud the Government's plan to spend more to boost demand. We should, however, diversify the demand throughout the economy. Most of the infrastructure projects that have been announced, as I have read from the papers, which is close to about $11 billion in value, will benefit mainly the construction sector. The surge of projects now will keep construction costs high, but may lead to a huge drop in the future for this industry as projects for the future are brought forward. In fact, the pipeline of projects for the construction industry are already full for the next couple of years. So adding more may not be effective. It may be better to spread projects over a longer period of time. The same Government dollar should, in fact, be spent in a diversified manner to spread the benefit to other industries. For example, spending on the IT and energy sectors could additionally lead to future savings, especially if we work on renewable energy type of projects. Sir, Government agencies should tweak their procurement policies to give more businesses to local SMEs.”
“The Government has been quick to say that this downturn is not caused by structural issues in Singapore. In part, I disagree. Some of our costs issues have been neglected for some time in the boom years of 2006/2007. In the restructuring effort, we should be open to, as far as possible, correcting the policies that may have created these issues. We will then be better able to compete and pull ahead when things are back to normal. I urge the Government to take the lead to quickly convene a 2009 Economic Restructuring Committee. I think it will do us good to help us survive and also to prepare for the future. So, what should be our policy priorities during this downturn? As I see it, there are three main areas that require our urgent focus: demand or income for households; costs for all; and, lastly, cash flow, which is mainly for companies but also for households. Let me first begin with demand. It seems counter-intuitive to be thinking about stimulating demand in such an open economy as ours because of leakage of import payments. However, although our growth is built largely around external demand, we can rely on domestic demand to contribute to overall GDP growth. Even if it will have a small impact, it will still be useful. How can we do this? It appears to me that the most effective way to stimulate local demand would be to temporarily cut GST by the 2 percentage points that we had introduced in 2007. This will be more effective than the additional GST credits announced in this Budget. A recent article in the Straits Times by an economics professor explained that for Singapore's GDP, the 2% GST increase in 2007 resulted in 1.5% increase in CPI, and therefore, eroded the real value of assets by the same proportion. This was computed to be about $6.”
“But in a downturn like what we are seeing, these do not seem to be effective. Therefore, the Government-supported lending schemes had to be tweaked two times; once, after November and again, during this Budget. In an extreme financial meltdown, we should have been bolder from the start to do it all the way, rather than doing it three times. Similarly, with the area of training. After first announcing SPUR, the Government had to announce two more enhancements in two months, indicating again that we were too conservative in the first place. We will need to be bolder than this to survive. Sir, I am not criticising all of these things that we have introduced. The SPUR and the financing initiatives are all very good initiatives. What I am saying is that we should have been bolder and done more right from the beginning, and take it seriously that the environment ahead of us is a lot tougher than what we think. Sir, the Budget should have focused more on survival than longer-term issues, as I mentioned earlier. We should have perhaps call it a "survival and building resilience package", which will immediately shift the focus to the pressing need for survival. The Economic Restructuring Committee of 2001 was convened in response to a series of downturns and the Government felt that we needed to find a more sustainable model for growth as we developed as a nation. Today's challenge is perhaps as severe a test as we had faced since our independence. By the time the world comes out of this downturn, the global landscape would have shifted drastically. Old models and development strategies will have to be significantly altered. We need to anticipate this and do what it takes to succeed in this new world order that is about to come.”
“While I am happy about the Government's boldness to use the reserves as an extraordinary action, I am afraid the approach taken by some Government agencies and Ministries appears to be business as usual. The standard operating procedures (SOPs) used in the past, we must understand, will not work and may even hurt us in our efforts to try to recover quickly from this downturn. Sir, the Nobel-prize winning economist Paul Krugman explains that when depression economics prevails – I am not so sure whether we are in a depression yet but it looks like it – the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly. We must take this to heart right now. Let me explain with three good examples of how some of the Government agencies are operating like business as usual. First, in the 4th quarter of 2008, JTC, HDB and SLA were still increasing rentals effective 1st January 2009. I can understand that they operated based on lagging indicators of market rates, but such agencies should have taken the lead by stopping any increase in rentals as early as possible. They may even have been applying the well-intended 15% rent rebate based on the new increased rent, which would nullify the purpose of this measure - the 15% rental rebate. As lead agencies, they should have stopped rent increase; in fact, even reduce it as early as the 4th quarter last year. The second example of business as usual seems to be the one on financing schemes. They first announced some changes in November to help companies have better access to financing. In an ordinary downturn, these measures would have helped. I have looked at this many times while I was doing work on financing. They would have helped in ordinary downturns.”
“We must thank all the past Governments for operating with this principle because had we been too quick to dig into our reserves in the past downturns, we would today have less to help us when we really need it. The fact that we are able to use our reserves today to help us, gives us greater confidence that we have enough resources to weather the storm that is coming our way. Had we depleted our reserves in our early years, today we would be losing hope, and hope is something Singaporean cannot afford to lose in this environment. I support the Government's move to use the reserves for only extraordinary one-time actions and not to fund ongoing operating needs. This is the principle that has been clearly laid out. We cannot get into that habit of spending it for operating needs because if we do, in no time we will deplete all our reserves and erode our capability of defending ourselves from future turmoil. For all other Government expenses, we had the foresight to change our Government revenues from the reserves from Net Investment Income (NII) to Net Investment Returns (NIR) last year. I believe that by using the NIR approach, we should have more than enough to fund the future needs and also to support the needs that we have right now. If the NIR becomes insufficient, instead of digging to the reserves again, we should question if our reserves are well-managed by GIC and Temasek and change the way they operate to make sure that we get the returns that we need to help the Government operate in the future. This is an issue that I will raise again during the MOF Committee of Supply.”
“So, in this year's Budget, I do not think we will be rewarded or thanked for doing so much for the long-term competitiveness of our economy. We must be focused on helping Singaporeans and companies in Singapore survive, leaving the long-term planning later. What we need is a survival-focused budget. We have built an economy on strong foundations, but today these foundations are under pressure. Worldwide, banking and financial systems are failing or foundering. Confidence and demand are at a low ebb, and cost competitiveness has become a major issue. We should bring ourselves back to the basics today with a survival Budget, as our founding fathers did when Singapore became independent. So what does a survival budget look like? First and foremost, a survival budget must carry with it a mindset that extraordinary times need extraordinary actions. Most of us alive have never seen such a synchronised melting down of the global economy. It is a downshift of epic proportions. This is not time for business as usual. Sir, I would like to applaud the Government for taking the extraordinary action of digging into the reserves to help defend our economy in times like this. The reserves, as we have been educated, are meant for a rainy day and it cannot get worse than this day, and it cannot get worse than this day. I still remember the lesson I learnt in this House from Minister Mentor Lee during my first term as an MP, "that the reserves are not for the past, neither are they for the present but are meant for the future." And today, we are talking about surviving the future.”
“Mr Speaker, Sir, I rise in support of the Budget 2009/2010. First of all, I want to say that the $20.5 billion Budget before us is a good budget that attempts to balance short and long-term issues while having the right intent of assisting companies, retaining jobs as well as building long-term competitiveness. The Government's reaction so far has been one of prudence, recognising that there are more bad news to come and has indicated that it has some cards in reserve, to deal with when the time comes. But the question is: should we be prudent or aggressive with the Budget? Sir, the 1% cut in the headline corporate tax rate will mean little to companies facing losses and cash flow crunch. Similarly, incentives to invest in R&D may not be first on the wishlist of CEOs facing pressure to shrink their operations, lay off staff or find financing for work in progress. These measures have their place, and will work to strengthen our economy in the long term. The challenge, however, is to ensure that when these measures start to kick in, we will still have many more players in the economy that we now have. These measures could have waited until we have stabilised and helped companies survive first. Then we can quickly introduce the same initiatives in which, I believe, we would still be ahead of the curve and better-placed to benefit from them, perhaps one year from now. In the short term, our well-intended long-term moves may only have a marginal impact on our economy. The real downside to unveiling these now is that it distracts us from the current problems that all of us are facing. Sir, in a downturn, there are no heroes, only survivors.”
“Second, where MAS has investigated the person and released a report to that person as is provided for in the new sections 70A and 71A, which is amended by clauses 33 and 34 respectively. In this change, there is an obligation of confidentiality such that without approval, this report cannot be disclosed by the investigated person to his legal counsel. I believe that this is too restrictive. Once a report is released by MAS, it is likely that MAS has had sufficient time to form a view on the conduct it is investigating. So it is not fair to have these additional restrictions to the person. And we should also align this with the criminal law generally where, I am told, that as soon as the investigative authorities form a view, there is no further need for restrictions on the person under investigation from seeking advice. Advice from competent professionals could also be key to an early and voluntary remedial action taken by the investigated person. Sir, on balance, I support the Bill as a necessary addition to our financial architecture to try to change the landscape here, and I hope that my comments will be taken into consideration as we put the changes in place.”
“ Mr Speaker, Sir, I have made extensive comments on the Securities and Futures (Amendment) Bill which this Bill proceeds to follow, as the Minister has mentioned. I, therefore, support the amendments in this Bill that affect the amendments in the Securities and Futures (Amendment) Bill which we have just covered a while ago. I will, therefore, limit my comments to the points that were not covered under the SFA. I have one main concern and that regards the investigative powers of MAS. Sir, I am especially concerned about the new section 70A(6) which makes it an offence by a person if such a report by MAS was disclosed to him, unless he can prove that it was contrary to his desire, which means that he did not desire to receive it even if someone had sent him without his choice, and that he took suitable steps to surrender the report and destroy the copies of the report that he got. The offence is proposed to be punishable by a fine of $50,000 or imprisonment of up to two years, or both. Notwithstanding that this may be the most convenient disincentive to put in place, it must have some semblance to what is practical and what is reasonable. Sir, we cannot criminalise people merely because of the action of other people. In this case, if a report was sent to this person without his choice, without him knowing about it, he is liable. Even if we are building a safeguard, these people then have the ability to exonerate themselves by pointing to their own conduct after the disclosure is made to them. The starting position itself, in my opinion, is bad, that they are exposed to a liability not through their own action. I would therefore urge that this provision be reviewed in the change.”
“Under sub-section 4, it is proposed that the Court will not make such an order if the party against whom it is sought is innocent of knowledge and did not have a reasonable suspicion that the benefit he gained was due to a contravention such as specified in section 236(1). And then there is the word "and" – and if he has changed his position after receiving the benefit. This cumulative requirement of innocence and change of position is not rational to me. If someone is innocent of such a knowledge, then why should we require that his position be changed before we make an order for disgorgement? Similarly, if he is not innocent of such knowledge, why should it matter that he has changed his position after that? I would recommend therefore that the requirement be limited to innocence of knowledge of contravention only, without the additional requirement of change of position. Sir, on balance, I support this Bill, although I hope the Minister will respond and, if necessary, make modifications to the Bill as I have outlined, in view of revelations of the fragility of the financial infrastructure that have come out as a result of all the recent events in the financial industry. And as I have mentioned, I hope that we will quickly follow with another amendment to put in place all the lessons that we have learnt in the recent saga.”
“Sir, I also note that the Prohibition Orders seem to be perpetual. From the Bill, there are a variety of situations where the Prohibition Orders can be made. I suggest that the Prohibtion Orders be time-based, with the possibility of an extension where appropriate. Further, where the infraction is less severe, these Prohibition Orders should be treated differently from those where there have been offences of dishonesty and fraud leading to the Prohibition Orders. For both of these categories, especially for the former, I would suggest some process of rehabilitation and re-admission as a representative. This will allow us to keep our talent base here. So, on the issue of fund raising, while I generally support the changes under clause 67 which amends section 240, I would like to ask the Minister why clause 73, which amends section 275 to reduce the minimum investment amount required for offers made to certain accredited and other persons from $200,000 to $100,000, is necessary. I worry that this reduction may open up a pool of unsophisticated customers that representatives may be tempted to target. We have seen from the recent structured product saga, particularly the Lehman Minibonds, there were those that we called "vulnerable customers" who had invested more than $100,000. One of my residents invested $110,000, and I consider them as not in the know. I think reducing from $200,000 to $100,000, at this point of time, does not seem to be a right move. Can the Minister please explain the reason for lowering this floor amount? The new section 236L, which is introduced by clause 61, allows MAS to apply to the Court for an order for disgorgement of benefits.”
“This amendment, I hope, will prevent such a lax regime from developing here. The ability to make a prohibition order against a person who has been ordered to pay a civil penalty is a useful pressure mechanism against such a person as well as a protective mechanism for the public, as in the proposed section 101A(1)(f). The power of MAS to make prohibition orders under the new section 101A, with the powers to revoke or suspend a licence holder's licence if such an order is in force (under the new re-enacted section 95(2)(h)), is an important power and I am glad to see this included in the amendments. I would suggest that if a Prohibition Order has been made, this also be reflected in the publicly available information on licence holder – the suggestion that I made earlier. I also note that from the proposed section 101A that there may exist an interim period between the making of a Prohibition Order under that section, and the revocation or suspension of the licence holder's licence. In that interim period, and after, it is critical that the public has this information so that they can take steps to protect themselves. It may also be that a Prohibition Order does not lead to revocation or suspension of the licence under the proposed re-enacted section 95, as the MAS would have to give the licence holder the right to be heard before doing so (as stated under section 95(4)). In that event, there may be a situation of some loss of reputation to the licence holder or to the institution because of the revelation of the information. However, I think it would be best to err on the side of protecting the public. Licence holders will just have to be that much more careful before exposing themselves to situations where their licences are threatened.”
“I also suggest that as in other professions, such as the legal profession, a compulsory ethics component be included in the examinations, in addition to the product knowledge and rules and regulations components which are the requirements right now. These will make the examinations and curriculum in sync with what the current context demands of us. MAS could even consider footing some of the cost for the training and examinations in the interest of upholding standards. So we can support institutions that do these examinations by funding them. In particular, where the representative that is being certified has worked with institutions that hit troubled times due to improper market conduct or dubious sales practices, the financial institutions employing and certifying them should be cautioned to take extra care when reviewing their status and in certifying them. MAS, perhaps, should get involved in cautioning them. The powers of MAS under the proposed sections 99M and 99N are comprehensive and should provide comfort to the public that the regulator has the teeth to keep representatives straight. The powers in section 101A in particular and their effect as set out in the proposed section 101B are also important in this regard.   The extension of the prohibition order regime to institutions that were exempt under the Act (as stated in clause 39, in the proposed new section 101A (1)(b)) is also welcome, as it aligns the regulatory oversight role over all such institutions and also levels the playing field. In the current financial meltdown, we have seen that many of the culprits of the problems caused in the US operated with near impunity and outside of effective regulatory oversight.”
“An important provision to safeguard the public is the proposed new section 99H, which requires principals to lodge documents certifying that they think their proposed representatives are fit and proper persons for the appointment in respect of the regulated activity, as defined in section 99H(1)(b). Although there is a requirement for the institutions to keep records of documents on the basis of which they certify such representatives as fit and proper, the issue might be that this certification is very subjective because it is done by the financial institutions and this certification may not be standardised across the industry. The certification is also a one-time certification. I therefore have three suggestions for improvements here. First, I would suggest some kind of periodic confirmation of certification. Although the legal effect would be the same as the initial certification, the periodic certification would keep the importance of responsibility operating in the minds of the leading executives at the financial institutions about the importance of the certification. Second, I suggest that MAS be given the power to audit the certification to see whether the institutions have a process in place and exercise proper judgment when certifying representatives. My third suggestion relates to the examinations. Under the proposed amendments, representatives have to take an examination before they can become approved. My question is: is MAS involved in the setting of the curriculum for these examinations or at least having an oversight of it, and reviewing the stringency of the examinations?”
“I would suggest that, as a best practice, the MAS make it a practice of publishing the information collected pursuant to its powers in section 99C(1), which it is allowed to do under section 99C(2). Sir, having information that is easily publicly accessible will add teeth to the requirement imposed by the proposed new regime of all representatives having to be registered. Knowing that your status can easily be checked will be a sure way to incentivise people from becoming legitimate licence holders. The move to make all representatives here subject to licensing requirements (as proposed by the new section 99B, as amended in clause 36 of the Bill) is a positive one that will simplify matters not just for professionals wanting to work in the financial industry in Singapore but also for members of the public who deal with them. The provision allowing a person to be licensed as a temporary representative (which is proposed under section 99F) would in theory allow talented financial practitioners from other countries to come here and work for short periods of time on a limited assignment basis. I would caution, however, that in the current period of job losses, particularly in Wall Streets and other European financial markets, we are likely to see an inflow of financial practitioners seeking their fortunes here while they ride out the downturn elsewhere. The MAS should therefore exercise strict control on the practitioners it allows to practise here as temporary representatives, and push them as far as is practicably possible to make them committed to become at least provisional representatives (under the proposed section 99E) pending their sitting for the examinations to become appointed representatives as proposed under section 99D.”
“We must remain vigilant that once licensed, there is some continuing oversight over these professionals. We must balance the reduction in oversight with mechanisms that allow the public to have better information about the licence holders and their backgrounds and competence, an accessible means to raise concerns about the licence holders, and the ability on the part of MAS to investigate and suspend or revoke the licence as appropriate. It should not be that once it is perpetual, we do not come back and review the licence holders. Sir, MAS can collect information on licence holders and the activities to which their licences relate (as proposed in the re-enacted section 94) and also publish this information (as proposed in the new section 94(2)). In the age of the Internet, and given the important end of protecting the public by giving them information about the licence holders, I would like to recommend that MAS consider, as a best practice, publishing at least the basic information about licence holders and their allowed fields of activity, on a page linked to main website, MAS website, and that this information be accessible by the public without charge. Also, where a representative has had a prohibition order made against him, it would be important to have this information publicly accessible. The proposed new section 99C(1) also provides for collection of information on the representatives. This will ensure that the financial industry professionals who have a record of action taken against them will not be able to continue acting with impunity and harming the financial interests of members of the public and the institutions that deal with them.”
“To give this change meaning in the present context, we need to ensure that the regulator is vigilant and takes the initiative to review the products out there, as well as the institutions selling them, instead of just scrutinising new products that institutions intend to place on the market. So we should review all the current products that are already out there. Sir, I would like to move now to the comments on this Bill. I have some specific and some general comments. The replacement of the licensing regime for representatives under the SFA with a notification regime is achieved by the amendments (and consequential amendments proposed) by clauses 17 to 39 of the Bill. My comments are, first of all, the Bill modifies the current requirement of renewing a Capital Markets Services licence every three years, which poses some administrative and compliance pressure on the industry. The switch to a perpetual licensing scheme makes this compliance much easier and is a positive move to assist the financial institutions at a time when institutions are under pressure on the business side and as competition heats up around us, and as we try to grow ourselves as a financial centre. It is also good because it is similar to the perpetual licensing regime that governs banks and insurance companies and rationalises the systems governing the different parts of our financial infrastructure. So they were different in the past and I am glad that we are rationalising right now. Sir, in the recent structured products saga, we have heard from members of the public who feel that they have not been well served by financial advisers or people who have persuaded them to invest in the instruments.”
“Mr Speaker, Sir, I support the Bill. This Bill comes during the time of great turmoil in the global financial markets. World financial systems have failed and today no one knows what the right financial model will be for the future. Sir, this Bill is about two years in the making, and I am sure many of the changes proposed already need changing for us to be able to manage the financial markets in the future. We learned many lessons not only from the failure of Wall Street and other major financial markets of the world but also close at home where the sale of structured products in our financial institutions demonstrated some weaknesses in the Securities and Futures Act, the issue that we discussed during Question Time just now. I therefore urge the Minister to as quickly as this Bill gets passed start the review process of the next set of changes. We hear that MAS is already doing this, and I hope that he can come back and implement them as quickly as possible. Sir, the one area the public will demand of us and which deserves special scrutiny is on whether there is sufficient oversight over the products on sale and the people that they are sold to. There is a strong view among people on the ground that we need to tighten the regulations surrounding this. Many unsuspecting or vulnerable people got sold products that they should not have been sold. In this Bill, among the things we are doing is altering the definition of “securities” (in section 239) and “futures contracts” (in section 2) of the Act. In this change, MAS is given the ability to prescribe products as securities and the power to exclude certain products from the list of securities or futures contracts.”
“Sir, I have two questions. One is on the role of the independent person that was appointed. Did the role include deciding who gets how much or would the person be involved in ruling on the process? Secondly, there is also a whole group of people who had not made complaints to the FIs. Will they be allowed to make complaints and go through the process, now that the rest have been reviewed?”
“Sir, since we are administering the schemes through the financial institutions, can I ask the Minister whether they have seen any of the financial institutions which have withdrawn from some of the Government schemes, whether local or foreign?”
“I have two supplementary questions. First is on this issue about the investigations conducted by the financial institutions. There has been some feedback from my residents and also members of the public that the panel set up by the financial institutions and the banks may not be independent enough to review these things. In fact, the investors feel they may be disadvantaged if they do this. Would the Minister consider setting up an independent panel, perhaps by MAS, to investigate the selling of such structured products, ie, the issue that we are talking about right now? Secondly, I have heard that some governments have set up high-level committees to investigate any regulatory breaches in the sale of the structured products – the same products that were sold here. In view of the seriousness of the issue, would the Minister consider, perhaps, setting up a parliamentary committee to investigate any regulatory breaches by the financial institutions and any related parties with regard to these structured products?”
“Can the Minister comment on what the short-term impact will be on the returns available for the Government for spending as a result of the current era of high inflation rates? Will we actually see lower amounts available in the next few years? Sir, on balance, the proposed changes on how our reserves can be tapped for Government spending are necessary and timely. And I look forward to the quick implementation of these changes after the Bill is passed, as I am quite sure we will need to spend more to help Singaporeans as we go through a prolonged period of tough times ahead as a result of the global financial crisis that we are seeing today. Sir, I support the Bill. 4.45 pm”
“If the reason is bad or underperforming investments, should we not at a global level include Temasek so that we have a handle on how prudent we then need to be to make up for the losses in the other areas? A related point is that the Ministry should be looking at Temasek, GIC and MAS together and then assign them their respective roles, which I am sure the Goverment is doing but it is not so clear. MAS, for example, is probably the entity to perform currency stabilisation and the most liquid GIC could take a long term, slightly more conservative view in its investments, while Temasek shoulders more of the risk. At least that way, with a coordinated strategy, we do not risk overexposure in any one sector of the economy. With Temasek excluded from this amendment, will MOF still retain the oversight needed to coordinate the investments of our national reserves so that there is no over investment by any one entity if they are not coordinated? Will the Minister please tell us when does he expect Temasek to be included into the competition of the NIR? As a final comment, I wish to highlight the difference between using a nominal rate of return and a long-term real rate of return. In the latter, which is the proposal, inflation would be factored in to give us what is projected as the real available amount. This may even lead to a lower figure than the nominal one which may not be adjusted for inflation. Hence, it will be a more accurate view of what is actually available for us to spend. I think, on the balance, this is a more prudent approach than in the past where inflation was not factored when we used the NII.”
“Is there a trigger point where the Minister must go back to the President with a revised set of numbers, say, when the projected long-term real rate of return changes significantly over a short period of time? Alternatively, can the President ask for such a review once the numbers have been submitted? The last thing we would want is for the future government to hide behind a long-term forecast in the face of an economic slowdown, especially when poor economic performance is due to structural problems in the economy that may impede the achievement of the long-term rates. So if we have many years of slowdown and we still expect to achieve a long-term rate, that may be not realistic in the long term. A related point is that we must remember that the forecasts which are carved out are notional amounts. When we value the appreciation of assets, for example, the assets are not liquidated to give us funds to spend. Instead, the amendment will allow the Government to spend a certain amount based on the underlying value of the reserves. A major problem can arise when the assets are suddenly devalued, for example, in situations like what we are facing today. Is there a trigger for a review in such a situation of what the underlying base value of the reserve will be? The most important thing in determining the long-term return rate is going to be what is that base value. So what is the process to trigger a review of this, in case there is a major change? The fifth question I have is on why Temasek Holdings is excluded from the amendments? Is this delay in including Temasek in this pool because it needs time to digest the recent investments that have come unstuck?”
“This, of course, is a very serious duty as it concerns the amount that is being carved out from the past reserves; what we wanted to protect for a very long time. Can the Minister please elaborate what measures are in place to assist the President's office to evaluate this, including the information that will be supplied to the President for this? In particular, is the President able to call on relevant expertise to assist him, and do we also need to provide a budget for the President's office to put in place the required expertise to make the assessment? Will the President have to rely on the Government's experts for assistance in this? If so, how will we ensure that the President gets advice and assistance that is independent as well as competent? Sir, the third question is on dealing with a deadlock. Can the Minister elaborate on how a deadlock or disagreement between the President and the Government about what the long term real rate of return is expected on the assets that are being measured will be handled? How will this be resolved? Will there be a structured process – the Minister briefly mentioned there will be – or will we see a prolonged disagreement period that could stifle Government spending? So a fast structured process will help us avoid such a deadlock. A concern I have is that long-term forecasts can be generally positive, and hence the amount carved out from the reserves for present consumption can be optimistically high, even in periods of a few years of negative growth. The problem that I foresee is that it may be some years before the government of the day is forced to recognise its optimistic forecast that may be unwarranted. By that time, we could have significantly overspent beyond our means.”
“I therefore ask the Minister if he can confirm that this is the case if he applies the Net Investment Returns formula for past performance of the reserves as opposed to the NII. Had we done that, would we have more money to spend? I would like to turn now to some queries that I have on the mechanics of the proposed amendment. The Bill makes amendments to Article 142 of the Constitution. Broadly speaking, Article 142 allows Net Investment Income to be pushed into the past reserves, except for the portions certified by the Minister. Hence, only the portion that is carved out in this manner would be available for current spending. The amendments also tweak the formula for what is carved out in Article 142(1A) and it sets out a formula of the long-term real returns of NIR, as we have heard. My first query is on the term "long term". Can the Minister please tell us what it means in the context of the amendment? We hear about a 20-year horizon – is there a consensus on this? Can the Minister clarify on the process of aggregating the long-term expected returns? He mentioned that boards of GIC and MAS will determine the number and that the Minister will present this to the President. Will the Minister be aggregating this before presenting to the President? Can the Minister share with the House the consultation process that was undertaken to determine what "long term" means and who was consulted in this process? My second query relates to the ability of the President's office to assess the advice of the Minister, as required under Article 142(1A)(a), on the long-term real rates of return expected to be earned on the assets that are being measured.”
“I note that the Government's willingness to undertake this amendment comes after many years of an almost allergic reaction to any suggestion made to touch the reserves for any Government spendings. And I still remember, in this House, how Dr Wang Kai Yuen made a suggestion and was told that this is not meant for the past, not meant for the present, but is meant only for the future. With Singaporeans increasingly facing the cost crunch of the global downturn, and the need to invest in structural improvements in Singapore and its economy, this expansion of the Government's ability to tap on the reserves is, therefore, timely to help us align the economy to meet the needs of the future and to convince the present generation of Singaporeans that some part of what we have prudently accumulated will be used for their benefit, as opposed to just being stored for the benefit of some unspecified future generation. The Government's current proposal based on the long-term expected total returns, including capital gains, in principle, would allow long-term planning of spending and avoid knee-jerk reactions. It would also give the government of the day confidence that its plans for capacity building can be funded, even in periods of slowdown. So this is a very good move. As a general guide, one indication of whether this Bill meets its objective is to see whether, in any given year, and irrespective of the performance of the economy, it would increase the absolute amount that the Government is able to draw from the reserves when compared to the amount the Government is able to draw using the present formula for the Net Investment Income. If it does that, then this Bill will have achieved the flexibility we wanted to give the Government by this amendment.”
“Or worse still, the Government would have to tax Singaporeans higher and also implement high GST in the coming years to all of these things. Many of these investments need to be planned and built, taking a long-term view of the economy, irrespective of whether the economy is in a period of a slowdown or a period of expansion. Up to now, the amount available from out of the national reserves for such spending was largely dependent on the performance of the economy in the previous year. While this provided a useful way to keep spending within our means, it had its disadvantages, as the Minister has mentioned. For one, in years of slowdown, the available funds shrink, and may therefore lead to the Government not spending on much needed projects and social spending. While in strong years of growth, spending on added available funds leads to an overheating of the economy, as we have discussed during the Budget debate this year. This deepens the troughs and exaggerates the peaks of the economy and is not desirable. Another disadvantage that the Minister has pointed out is that it may encourage the Government to take on greater financial risk for short-term investments just to reap higher returns so that the government of the day can meet higher spending needs. So the investment patterns may change just to suit the short-term needs. Finally, spending on social and welfare needs should in fact increase in periods of economic hardship. In the past, this spending was dependent on the performance of the economy and if we do that, the spending actually decreases when actually we should be increasing spending in difficult times.”
“Mr Speaker, Sir, I support the Bill. Sir, the Minister mentioned in his speech that the Prime Minister, for the first time in a long time in 2006, spoke of the need to finance increasing spending by tapping on to the reserves. We never talked about this in the past. During the 2007 Budget debate, we had a debate about using more of our reserves to fund Government spending and not burden Singaporeans with higher and higher GST to fund high Government spending. In 2007, the Minister for Finance agreed to look at different models, including the way universities endowment funds in the US were tapped to fund expenditures. And, of course, finally, we are seeing the constitutional amendment today. I am very happy to see that we have finally decided to make this change. And I am also happy that we did not pull this amendment out, despite the problems that we are seeing in the financial market – the tough time and the uncertain investment environment ahead – we are moving ahead confidently with these changes. I have some comments on the amendment process which should, in theory, will allow the Government of the day to unlock a larger portion of the reserves for future budgets, than it is presently allowed to do so under the current definition of Net Investment Income (NII). As the Minister highlighted in his speech, in the years ahead, major investments will be needed in various areas of infrastructure, capabilities and greater social needs like funding retirement, Workfare Income Supplements, baby bonuses and many more. It is therefore unrealistic, as the Minister mentioned, to depend on the NII alone as this would mean that we sacrifice some of the much needed investments and expenditures.”
“Sir, I am glad that the Government reacted by giving the guarantee on Thursday. I would have thought that, given that we have a strong financial system and fundamentals in Singapore, we should have been the first to react in Asia, maybe after Europe. We could have been the first to react in the world. Now that we have done so, that is good news for us. I am asking that MAS be proactive and to act fast in case any changes come. We should be among the first to react to give confidence to everyone. There were cases of people who were withdrawing their money and keeping it below their pillows – I was told by my classmate – and I think that is unhealthy. Had we guaranteed it earlier, I think we could have avoided this position. Second question: by guaranteeing the deposits for all banks in Singapore, how will MAS proactively monitor foreign banks which may take deposits from Singapore that are guaranteed by the Government, and then use these deposits outside Singapore to maybe invest and help defend their own foreign subsidiaries and home-based companies?”
“Mr Speaker, Sir, I have two questions. The first is whether any of our local banks has applied for liquidity assistance from MAS. In the light of what is happening right now, MAS has offered its help. Has any of the banks come forward to seek liquidity assistance? Second, there were reports of AIG wanting to sell AIA, the life insurance arm of its business. Would MAS intervene when this happens to ensure that the buyer is someone who is legitimate and able to guarantee the insurance policies of members?”
“Sir, I have a broader issue related to complacency in Government. First of all, I would like to say that we have not lost confidence in the DPM and also ISD. I think they have done a good job. They have a good track record. So, that is not the issue here. But we also need to send signals correctly, not just to Singaporeans but to the civil servants and every one else in Government, that when they make a mistake, they need to be appropriately punished for it. We have adopted a reward system that matches that of the private sector where we pay everyone as high as possible. Therefore, people should expect that when they make a mistake, they will be appropriately punished. I am not suggesting that we punish the Deputy Prime Minister. But I think the signal that we send is very important, not just for this incident but also for past incidents, eg, the Nicoll Highway incident, the two ships that collided in the sea, etc. What did we do? How were the people on the Navy ship that collided with another ship some years ago punished? What happened to the people in charge? These signals are important so that, first of all, Singaporeans know. Secondly, in the civil service, if I am a civil servant, I know that if I make a mistake, I would be punished for it, and therefore I need to maintain high standards.”
“Madam, I would like to thank the Minister of State, Mrs Lim Hwee Hua, for comprehensively answering all the questions, especially on the SWFs. I think we had a very good answer for that and we are reassured that MOF is indeed reviewing what needs to be reviewed. With that, Madam, I beg leave to withdraw my cut. Amendment, by leave, withdrawn. The sum of $459,148,900 for Head M ordered to stand part of the Main Estimates. The sum of $142,033,400 for Head M ordered to stand part of the Development Estimates. COMMITTEE OF SUPPLY REPORTING PROGRESS”