Lawrence Wong
Singapore
“Sir, we will provide more information. I see the value of getting Ministries to put out more information, to share more about how their resources are being used and what outcomes they have achieved.”
“Sir, I agree fully with Mr Azhar that human capacity, human capital is critical. In fact, I would say the long-term potential of Singapore, how far we go really depends on us being able to maximise our human potential. That is key and that is why we have long invested in education. And it is not just about the investments.”
“Sir, we have been maintaining that commitment of 1% for some time now. I do not think it is about saying that we just have to do more and spend more. As many have highlighted, we want to ensure good outcomes from our R&D spending as well. So, we will continue if the outcomes are good.”
“This has never been the case. Temasek, when it started, was always very clear about its mandate from the very beginning – commercial, not doing national service, focused on commercial outcomes.”
“Sir, the MOF economists when they look at fiscal projections use Government's forecast of the economy, which is also published. We would typically use the mid-point of the range and then, of course, because these are in nominal terms, you have to factor for that. And the projections are done on those basis.”
“Sir, I was relieved that Mr Loh said he only has one question, but he asked the most difficult question. To answer the question, we will continue to monitor cost of living across all segments of society.”
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“As and when necessary, the Government allocates moneys from the Budget to specific funds to meet our various expenditure commitments. We do this for specific areas of spending where a significant amount of long-term funding is required, like R&D, coastal protection, or major development projects, and it would be prudent to save and set aside monies into these funds from time to time, when the Budget permits. Accounting-wise, allocations into these funds are expensed in the same manner as direct expenditures from the Government. The annual expenditures from the funds are audited and reported in either the Government Financial Statements or the relevant Statutory Boards’ Financial Statements and these statements are presented to Parliament.”
“The Auditor-General's Office (AGO) carried out a thematic audit in FY2021/2022 covering selected COVID-19 related procurement and expenditure at three agencies: the Ministry of Manpower (MOM), the Health Promotion Board (HPB) and the Singapore Land Authority (SLA). AGO’s ongoing audits for FY2022/2023 will cover the Jobs Support Scheme, Rental Relief Framework (Cash Grants), Rental Support Scheme and SingapoRediscovers Vouchers Scheme. The expenditure incurred by the agencies for the schemes or areas subject to AGO’s audit adds up to $32.3 billion and forms part of the $72.3 billion of COVID-19 spending. Using a risk-based approach, AGO may choose to audit other selected areas of COVID-19 spending in their on-going and subsequent reviews. Besides AGO’s audits, agencies have conducted internal audits on COVID-19 spending since early 2022, which include reviews on the effectiveness of internal controls, as well as the validity and accuracy of payments. Findings and remedial actions from the internal audits are reported to the respective agencies’ senior management, as well as to their Audit Committees and Boards in the case of Statutory Boards. The $72.3 billion in COVID-19 spending included a broad range of public expenditure to safeguard public health and enable safe reopening and support measures for individuals and businesses in the form of grants, financing assistance, tax rebates and vouchers. Over half of the COVID-19 expenditure has been audited and the remaining audits are ongoing and are expected to be completed by the end of FY2024.”
“State land is protected as past Reserves. When state land is sold, for example to HDB for the purpose of public housing development, it is a conversion of a physical asset to a financial asset. The land sale proceeds are therefore protected as past reserves and are not revenue that can be spent in the Budget. There is therefore no "net revenue" available for spending when proceeds are paid by HDB for public housing development.”
“As shareholder of Temasek Holdings, the Ministry of Finance (MOF) makes capital injections into Temasek through investments in new Temasek shares. Over the last 20 years, MOF has invested about S$70 billion in new Temasek shares. Of this, about S$50 billion was from Temasek's dividends to the shareholder. These investments in Temasek's shares are reflected in Temasek's audited accounts, which are public information. All investments in Temasek's shares are done as part of the Government's decision to allocate funds across the three investment entities in its portfolio – Temasek, the Government of Singapore Investment Corporation (GIC) and the Monetary Authority of Singapore (MAS). These decisions take into account the Government's liquidity needs and the long-term risk-adjusted expected returns of the entities. Temasek's reported Total Shareholder Returns, which gives a measure of its performance, is computed by deducting any capital injections from the Government. Hence, the Government's investments in Temasek's shares do not affect how Temasek's investment returns are computed.”
“Property Tax (PT) is assessed annually based on the annual value (AV) of the property, which is based on the prevailing rental market conditions. The AVs for Housing and Development Board (HDB) properties have largely remained unchanged for the last five years. But they have moved up recently and that is why the PT payable will have to increase in 2023. But all 1- and 2-room HDB owner-occupiers will continue to pay no property tax because their revised AVs remain below $8,000. To further cushion the impact, the Government is providing a one-off 60% PT rebate to all owner-occupied residential properties, capped at $60. We have sized the rebate based on our overall fiscal considerations, and also to provide more support for households living in HDB flats with lower AVs. For example, the PT payable for owner-occupied 3-room HDB flats will range from $21 to $40 per annum after rebate. In comparison, the PT payable for 5-room/executive HDB flats will be $148 to $225 per annum after rebate. Our PT regime remains progressive, with higher rates applied to residential properties with higher AVs. In addition, non-owner-occupied residential properties pay higher PT. This is part of a fair system of taxation, where everyone will contribute, but those with greater means will contribute more.”
“The Auditor-General's Office (AGO) has enhanced its data analytics capabilities and is able to review large volumes of financial data in public sector agencies, to ensure that their financial transactions with businesses and individuals are processed and recorded correctly. AGO also audits controls of IT systems in relation to the financial accounts and electronic financial transactions of public sector agencies. AGO uses a risk-based approach to identify the agencies and areas to audit each year. This includes electronic transactions, such as the processing of electronic invoices and payments to Government suppliers, and electronic fees and payments made by the public. The key findings are highlighted in AGO's annual report.”
“The Government keeps its accounts on the cash basis of accounting in accordance with Regulation 19 of the Financial Regulations. Under this accounting practice, a transaction is recorded when cash is received or paid. Therefore, development expenditures are recorded as expenditure in the Statement of Development Fund of the Government Financial Statements when funds are disbursed in tandem with the progress of the projects. Accordingly, we will look at the annual cash requirements for both operating and development expenditures to determine the Government's Overall Fiscal Position (OFP) and the Budget available for spending each year. But for major long-term infrastructure projects which are financed through borrowings under the Significant Infrastructure Government Loan Act (SINGA) and capitalised as assets, we will use the annual depreciation and borrowing costs to derive the OFP rather than the full cash requirements.”
“The requested information spans over two decades and we are unable to provide such a long time series of data. For the period 2018 to 2022, owner-occupied and non-owner-occupied HDB flats contributed an average of 1.3% and 1.4% of the total property tax (PT) assessed each year respectively1 .”
“Thank you. That is precisely the advantage that we have as investors. It is a very important strategic advantage that GIC and Temasek have. To have that long-term perspective and not just to focus on the short-term or follow and chase after fads; and then, if the market cycle comes down, you quickly sell your assets and cut your losses. That is not something we want to do. We want our entities to have that long-term horizon, invest within the risk limits, invest in some new technologies, some early-stage companies, recognising that, as I said just now, many startups will not do well, but a few might eventually prove to be wildly successful and become giants in their own right. So, there is a place for that. Our investment entities do recognise this and there is an appropriate allocation in their portfolios for such investments. And they will continue to take such risks. But I hope everyone in this House recognises this. And that is why it is important we insulate our investment entities from these political pressures and let them do their jobs well, commercially and professionally, as they have been doing all these years.”
“So, it has to be of that significant threshold for us to say, "Look, something is not right within the organisation; let us commission or get the Auditor-General to go in and do a proper audit and investigation". And we will not rule out if something like that were to happen.”
“Sir, this Temasek review that it has initiated is an internal one. It will be led by people who are separate from the investment team that made this decision. So, they will be separate, they will not be clouded by what steps were taken and they will report directly to the board, as I mentioned just now. What further actions might MOF, as shareholder or Government, take? Is this sufficient in this case or what thresholds will be reached in order for us to trigger further action? Quite aside from this case, for which Temasek is doing its part and is pursuing this review, which I would add, separately, that it does this for FTX, but it actually also has done this in the past before when there are similar instances. It does not happen very often. But when there are instances where, for example, there is a write-off in an investment project, where there is a permanent impairment and it is an investment that did not go well, then they would initiate something like this. They have done this before and that is what they are doing again. It is a step-up from their usual review process, which applies to all investments. In this case, as has happened in the past, Temasek feels that this is a significant project and there is something to be learnt from the experience, so, they are undertaking this separate review. Will we go beyond such a separate review to call in external auditors, for example? I think it is the question that the Leader of the Opposition raised. Certainly, the Government will not rule out doing so, but it is not just a matter of an investment loss. It would be something that we feel has gone wrong within the organisation, possibly there might be negligence, there might be fraud, there might be misconduct.”
“Yes, to the second question. I am sure Temasek is on top of this and will reserve its rights to do so. On the first question, there are scammers. We are concerned about that. Whether it is in the crypto space, whether it is SMS – there is a whole range of different scams. That is why we have set up a task force specifically on scams and we will do whatever we can to address this problem.”
“Sir, on the first question, the gap in regulations will exist, no matter what we do. Even if we have a very comprehensive system in Singapore, it does not stop Singaporeans from going overseas or going online to overseas platforms to invest in cryptocurrency. This is not going to stop that from happening. I think what we should do is focus on what are reasonable regulations, learning from the recent experiences and put in place a sound regulatory system but, at the same time, continue with the reminders and public education we have been doing all this while for so many years. We will step up our efforts there to let people know the risk of investing in cryptocurrency, that this is highly volatile, it has no intrinsic value; and, really, anyone who does this has to go in with their eyes open. On the second question, I have already actually answered that in the context of Ms Tin Pei Ling's first supplementary question, setting out the investments that our investment entities make in this digital asset space within the context of their holdings in early-stage companies. We do not go beyond that because we do not go into specific company investments. But within that broad context and the parameters I have set out, I hope Members are assured that the exposures are limited and it is within the context of a very well-diversified portfolio, which will then allow us to still earn good returns on other projects, even though there may well be a few projects where there are losses. But that is the whole point of diversification in investments.”
“But in this case, because it is such an exceptional situation, it has gotten so much publicity, it has also impacted Temasek reputationally, Temasek itself has undertaken its review, it has put out information and it has taken the extra step of doing a further review; which it has also said it will do – an internal review, led by an independent team reporting to the board, with the purpose of looking at how it can learn from this experience and improve its own processes.”
“Sir, I did mention briefly in my reply just now that when it comes to performance management, we do assess and monitor closely the long-term performance of our investment entities. The published references are the GIC Reference Portfolio as well as the MSCI equities indices, which are published by both GIC and Temasek respectively. If you look at both entities' performance vis-à-vis these reference points, they have done well, in fact. It is all published information. They have done well over the long term. We also track the performance of other fund managers. That is more internal. But in fact, many of these fund managers' performances are published. Anyone can look at how private equities have done – top quintile, top quantile – asset managers, how they have done over the long term. That information is published. So, anyone can look at that data and compare that with GIC and Temasek's performance, which is also published. The facts remain that even after comparing GIC and Temasek with other leading institutional investors, our two investment entities have done well, creditably, amidst a more challenging investment environment. So, that is for performance management. On losses, whether or not we require specific audits or reviews to be done, losses happen all the time as part of the investment process. So, you have to really take that into consideration and look at the overall portfolio rather than look at each individual project that does not do well. As I mentioned just now, if you look at the overall portfolio for both Temasek and GIC, their performance has been creditable and, in fact, in many instances, above industry averages.”
“Sir, not all Statutory Boards are subject to the Auditor-General's audits. But, in fact, where there are issues that come up – could be in a Town Council, it could be in a Statutory Board, it could be in Temasek – if there are reasons, we will have no hesitation to ask the Auditor-General to go in to do a full audit.”
“Sir, we are not planning to hub crypto activities here. We have always looked at how we can be a responsible and innovative digital asset player and the focus is on "responsible" and "innovative". Where innovation is concerned, as I mentioned just now, some of the earlier optimism about blockchain technologies has been proven to be not well-placed. I think there is now a more realistic sense of what these technologies can do. We are now continuing with pilot projects on payments, on capital markets, on settlements, to work out what are the promising use cases for such technologies. That we will continue to do. And within that context, there may be a role for DPT service providers. But if these DPT service providers do exist in Singapore, are licensed here – and DPT service providers would include exchanges for cryptocurrencies and tokens – then they will be licensed. As I have highlighted, MAS has published, even before the FTX collapse, a series of consultation papers with tighter regulatory measures. After our consultations, we will want to put in place these tightened measures for the licensed entities.”
“So, all of that is available on the Temasek website. The third question, I have answered that, too.”
“Thank you, Sir. I will answer all three questions and indulge Mr Leong Mun Wai. On the first question whether we might consolidate all the information, well, they are just three entities. Actually, more like two, because MAS is quite unique. It is a central bank. Its investments are really in very conservative instruments. So, really, there are just all of two entities. There is not much to consolidate. If you think about it, go to the GIC website, go to the Temasek website. All of the information is there. If Members think it is useful, MOF can put up links on our website to both websites, so that you can refer to them at your own pleasure and your own time. On the second question, on their reports, yes, Temasek has provided an update to MOF on its findings. These were subsequently published by Temasek itself. It is very unusual, first of all, for Temasek or GIC for that matter, to comment on individual investments – they do not, as a normal practice. Because we should not get into the habit of looking at individual investments in retrospect. There will always be ups and downs, and there will always be successes and failures in investments. So, as a matter of practice, GIC and Temasek, in fact, do not put out any information on specific individual investments. But in this case, precisely because of the unique circumstances leading up to it – because from Temasek's point of view, it recognised that it has incurred reputational damage – Temasek decided to put out a statement disclosing the circumstances leading up to its investment decision, why it had done all the due diligence and, despite the due diligence, found reasons to still proceed with the investment. All of that is on the Temasek website, including a series of FAQs.”
“Sir, as I mentioned in my reply, there is an ongoing consultation process. Part of the proposal covers some of the things that the Member has talked about. MAS is looking into segregating customers' assets from the company's own assets so that there is a very strict prohibition from lending out of customers' money, which was what happened in the case of FTX. MAS is also looking at one of the proposals to ensure that the DPT service provider does not operate a separate trading platform that simultaneously takes proprietary positions. So, these are some of the considerations. We will finalise these proposals after the consultation. There may be more feedback, including suggestions from Members, which MAS will study. But, as I said in my reply, no amount of regulation can eliminate all the risks. Even if a platform is well-run, well-managed, the cryptocurrency itself has no intrinsic value. It can go all the way to zero and people who want to trade in that must be prepared to lose all their money.”
“And if, indeed, the stress tests show that there is too much risk being taken or concentration of a particular asset that may lead to some vulnerabilities, then we provide feedback to the entities. They have the discretion then to take the necessary actions, to adjust. So, that is how we operate; not by prescribing but monitoring and setting in place overall risk parameters from which our entities operate. On audit, it is not unusual at all for private auditors to audit even public agencies. Statutory Boards themselves are subject to commercial auditors, private auditors, not to the Auditor-General. So, unless we are suggesting that somehow these private auditors are not as good as the Auditor-General, I do not see any reason why. It is not unusual that the Auditor-General has a remit, largely within the Public Service and Government Ministries. But for some Statutory Boards, for a commercial entity like Temasek, which also, within it, has a portfolio of listed entities, well, I think we should let commercial auditors do their job. And so far, they have been doing a very good job.”
“Sir, before answering Mr Leon Perera, I forgot to reply to Mr Gerald Giam's question on the publication of the risk limits. These are published in the following sense. For example, the risk tolerance, the amount of risk that the Government has set out for GIC is expressed in our reference portfolio 65/35. That sets out the kinds of risks that the Government is prepared for GIC to take and, therefore, GIC, as an active manager, publishes its performance with regard to that risk and the performance that it tracks with regard to the referenced portfolio. Likewise, in Temasek's case, it is different. It is not a portfolio manager. It is largely an all-equities investor. But in its annual Temasek Review, Temasek will put out some of its risk considerations and its risk parameters. So, to the extent that these risks are disclosed, the investment entities do have disclosures through their respective platforms – largely through their annual reports. On Mr Leon Perera's question on how do you square the monitoring of assets, geographies and all that, with the policy of leaving the boards to make their own decisions, well, we do it because monitoring is not prescribing. We monitor the portfolios, we get data, we get information, we monitor them, we subject these portfolios to stress tests, given something that collapses in an extraneous event that takes place, a crisis, a fallout in cryptocurrencies. We subject them to rigorous stress tests to make sure that the overall portfolio, even under these stress tests, does not have significant losses beyond the threshold that we think would be too much. So, we monitor.”
“Sir, I think it is important to understand the system that we have. The keys to any successful long-term reserve management systems are governance, professional management and a long-term horizon. In our case, we have put in place a very strong governance process and system, where the Government is a shareholder – we do not micro-manage, we do not decide on investments, we do not prescribe asset classes or assets – but we have a role in appointing board members, senior management and we hold them accountable to delivering good, long-term performance. And the President is part of this governance process, too, because she, in terms of the appointments of people, has the powers as well. So, within that governance system that we have in place, there are processes, there are risk metrics to monitor, there are clear accountabilities. And it is a system that has worked well over the decades and has delivered good long-term outcomes for Singapore.”
“Sir, we do take that into account in our stress tests. As I mentioned just now in my reply, MAS has assessed and determined that for the financial sector itself, financial institutions based here in Singapore, our exposure to cryptocurrencies and the digital assets is very limited. But we still apply these stress tests, not just to Singapore's institutions, but to the broader global operating environment to determine how this will impact Singapore's financial institutions. This is part of our continued risk monitoring, not only for MAS and the financial sector, but also for the Government's overall investment portfolio.”
“And the investment entities themselves, therefore, will have to do their own due diligence in analysing each particular case that comes up and consider whether or not to invest in these projects.”
“Sir, I mentioned just now that both GIC and Temasek do have exposures to new technologies and early-stage companies. These investments are within the overall context of the risk parameters set out by the Government. So, in GIC's case, it has a broadly diversified global portfolio. Within that, it has limited exposure to early-stage companies. Temasek is, largely, an equities investor. And within that space, it has exposure to early-stage companies, but Temasek itself has put out a statement to explain that its exposure to early-stage companies is about, presently, 6% of its overall portfolio. For both entities, this exposure to early-stage companies would include investments in digital assets, but it would be diversified to a broad range of different sectors. So, to answer the question: yes, there will be other companies in the digital asset space that GIC and Temasek have invested in, but they are within these limited parameters. So, if we talk about concerns of a broader fallout, I think that it would be relatively contained. But, as the Member has highlighted, there may be promising use cases in blockchains. It is still too early to say. But as I have mentioned in my reply, some of the earlier optimism about blockchains has proven to be too optimistic. Remember, a few months ago, there was a lot of enthusiasm. Even within this House, Members were suggesting for MAS to move faster. And MAS was being criticised for being too slow. So, that general enthusiasm has proven to be overly optimistic. Will there be specific use cases where blockchain technologies can be applied and be promising? Well, we are pursuing pilots in MAS, specifically in the financial sector.”
“The investment entities themselves publish their performance with respect to broad market indices. In Temasek's case, the MSCI equities indices and, in GIC's case, the Reference Portfolio, comprising 65% global equities and 35% global bonds. These market indices and data from reputable global investment funds serve as useful references. But, ultimately, the Government evaluates the entities based on their long-term performance and their track records show that they have performed creditably, even in challenging environments. Sir, in conclusion, the FTX loss is disappointing and is being taken seriously. But the occurrence of investment losses does not, in itself, imply that the governance system is not working. Rather, this is the nature of investment and risk-taking. What is important is that our investment entities take lessons from each failure and success and continue to take well-judged risks in order to achieve good overall returns in the long term. In this way, we can continue to add to our national reserves and provide a stable income stream to fund Government programmes for a long time to come.”
“Temasek has also initiated an internal review by an independent team to study and improve its processes and to draw lessons for the future. I am confident that the Temasek board and management team will learn and improve from this experience. At the same time, we should see this FTX loss in the broader context of Temasek's performance in early-stage investments. After writing off the FTX investment, Temasek's early-stage portfolio, as of March this year, has generated an internal rate of return in the mid-teens over the last decade, better than industry averages. The FTX loss will also not impact the Net Investment Returns Contribution (NIRC), as the NIRC is tied to the overall expected long-term returns of our investment entities and not to individual investments. Following the FTX collapse, some Members have suggested implementing more guidelines and safeguards over the investments made by Temasek and GIC. That is understandable, but the governance structures in place today for Temasek and GIC are already more extensive than those of a typical company. Temasek, which is an investment holding company, is audited by commercial auditors. GIC, which manages public funds, is audited by the Auditor-General. As Fifth Schedule entities, both Temasek and GIC are subject to the President's oversight of their budgets and key appointments. In Parliament, if there are any questions by Members about the performance of the entities, MOF will respond to them, as we are doing now. There is, therefore, no need for additional audit requirements or Parliamentary Committees. Instead, we should insulate the boards from political pressures. Let them do their work, carry out their responsibilities and fulfil their investment mandates, commercially and professionally.”
“There will always be new waves of innovation and technology that seek to disrupt the status quo. Some waves will turn out to be hype and fizzle out over time. Other technologies will prove revolutionary and transformational, like the Internet. But even with genuinely revolutionary technology, there are risks. Many startups will fail, while a few will prove successful and grow into industry leaders, like Tencent or BioNTech. The skill of venture capitalists lies in discerning the promising projects and backing them. Risk-taking is an essential part of such investments. As long-term investors, our investment entities have to operate in this space. They do their best due diligence based on the information available. Having made the investments, they monitor the investee companies closely, but no amount of due diligence and monitoring can eliminate the risks altogether. Insofar as blockchain technology is concerned, Temasek and GIC have some investments in the digital assets space, but they have no direct exposure to cryptocurrencies. It is disappointing when there is a loss by our investment entities, as in the case of Temasek's investment in FTX. Even more so, because the loss arose from what turned out to be a very badly managed company and from possible fraud and mishandling of customer funds. The fact that other leading global institutional investors, like BlackRock and Sequoia Capital, also invested in FTX does not mitigate this. What happened with FTX, therefore, has not only caused a financial loss to Temasek, but also reputational damage. Temasek recognises this and has issued a comprehensive statement to explain its due diligence process and the circumstances leading to its investment in FTX.”
“Next, let me address the Temasek investment in FTX and the Government's stance on our investment entities and Statutory Boards' exposure to digital assets and cryptocurrencies. The Government does not prescribe guidelines on the allocation of specific assets or asset classes, whether for cryptocurrencies or other assets. This applies to our Statutory Boards, as well as our three investment entities managing our whole-of-Government assets, namely, Temasek, GIC and MAS. Statutory Boards have specific mandates and functions. They are not investment entities, but they have the flexibility to invest their surpluses and they, typically, do this through external fund managers, under the oversight of their respective supervising boards and Ministries. We expect Statutory Boards to make prudent investment decisions and not be distracted from their core functions. For our investment entities, the Government sets out its risk tolerance limits, monitors for appropriate diversification in asset classes, sectors and geographies and ensures that downside risks are not excessive. In this spirit, the Government does not prescribe an exclusion list for specific assets. But we expect the entities to incorporate environmental, social and governance, or ESG, considerations into their investment processes. They should do so in a way that best suits their investment mandates and preserves their reputation with global partners and markets. Ultimately, the Government holds the boards and management teams responsible for formulating investment strategies in accordance with the Government's overall risk tolerance. One of the areas Temasek and GIC's private equity arms operate in is new technology and early-stage companies.”
“This does not mean that all entities which are not listed on IAL are safe to deal with. MAS cannot possibly provide an exhaustive list of all the unsafe or unlicensed entities that exist in the world. Going forward, MAS plans to introduce some basic investor protection measures for DPT service providers which are licensed in Singapore. MAS recently published a consultation paper, which includes proposals that DPT service providers, amongst other things: (a) administer a risk awareness test to evaluate if potential retail customers are suitable for accessing cryptocurrency services; (b) segregate customers’ assets from their own assets so as to prevent lending out of customers’ money and protect customer interests should the service provider fail; and (c) refrain from operating a trading platform while simultaneously taking proprietary positions for their own account, to prevent conflicts of interest. After receiving industry and public feedback, MAS will finalise the proposals and implement appropriate regulatory measures. Let me emphasise that even with these proposed measures, MAS will not be able to prevent DPT service providers from failing or customers from suffering losses. Cryptocurrency platforms can collapse due to fraud, unsustainable business models or excessive risk-taking. FTX is not the first cryptocurrency platform to collapse, nor will it be the last. Further, even if a cryptocurrency platform is well-managed, cryptocurrencies themselves, as I mentioned earlier, are highly volatile and have no intrinsic value. Those who trade in cryptocurrencies must be prepared to lose all their value. No amount of regulation can remove this risk.”
“As for Singapore’s broader financial system and economy, our assessment is that spillovers from the FTX collapse will be very limited. MAS’ surveillance shows that key financial institutions in Singapore have insignificant exposures to cryptocurrency and crypto players. MAS has explained its approach to regulating financial institutions providing cryptocurrency services, also known as digital payment token (DPT) service providers, in Singapore. Such DPT service providers are regulated by MAS to address money laundering, terrorist financing and technology risks. Whether the DPT service providers can address these risks robustly is a key consideration in licensing them to operate in Singapore. Importantly, DPT service providers are, currently, not regulated for safety and soundness, nor for investor protection. This is also the prevailing approach in most jurisdictions. MAS has been consistently warning since 2017 that dealing in cryptocurrencies is hazardous. Recent events have underscored these hazards. MAS has also in its recent statements explained the role of MAS’ Investor Alert List (IAL) and why FTX was not listed on it. Let me set this out again. The IAL serves a very specific purpose: to warn the public of entities that may be wrongly perceived as being regulated by MAS, especially those which solicit Singapore customers without the requisite licence. MAS did not have reason to list FTX on IAL because there was no evidence that it was soliciting users in Singapore. This is unlike Binance, which was placed on IAL for actively soliciting users in Singapore without a valid licence and is being investigated presently by the Commercial Affairs Department (CAD) for possible violation of the Payment Services Act.”
“Sir, before I address these questions, let me reiterate the Government and MAS’ overall approach to digital assets. We have drawn a sharp distinction between growing an innovative and responsible digital asset ecosystem, and speculation in cryptocurrency, which we actively discourage for the retail public. We encourage and support innovation in digital assets because we see potential for new technologies to transform cross-border payments, trade and settlement, as well as capital market activities. Early forecasts have proven too optimistic and it is still not clear that blockchain technology will develop beyond limited use cases into a gamechanger for a wide range of industries. This is why we are piloting specific use cases to test the possibilities in the financial sector. Cryptocurrencies are a different matter. They are purely speculative as an investment asset and have no intrinsic value. That is why MAS has consistently warned the retail public not to deal with them. Members have raised two broad issues in their questions. First, on regulatory measures and the impact of the FTX bankruptcy on our financial system; and second, on the investments made by Temasek in FTX itself. Let me start with the first issue. The collapse of FTX and other major cryptocurrency platforms should bring about much-needed rationalisation in the cryptocurrency space. The repercussions on the cryptocurrency ecosystem globally are still unfolding and we are watching this. We do not have data on the number of Singapore retail users of FTX, just as for other platforms that are not licensed here and do not operate in Singapore. Unfortunately, those who invested in cryptocurrencies through FTX’s global platform would have lost money.”
“Mr Speaker, with your permission, can I answer Question Nos 3 to 20 as well as all other Parliamentary Questions (PQs) related to the bankruptcy of the trading platform FTX together?”
“I thank the Members for the questions. I will address them in my reply at the 30 November 2022 Parliament Sitting. [Please refer to "Bankruptcy of Cryptocurrency Trading Platform FTX and Impact on Singapore's Financial Markets, Regulation of Such Asset Class and Strategies of Singapore's Investment Funds", Official Report, 30 November 2022, Vol 95, Issue 78, Oral Answers to Questions section.]”
“Past Reserves are used to fund land reclamation. The reclaimed land will form part of our state land holdings and is protected as Past Reserves. There is no change to the value of Past Reserves as the transaction is a conversion of a financial asset to a physical asset. The Government does not record the valuation for unsold state land, including reclaimed land. Instead, the Government maintains a listing of state land that is protected as part of the Past Reserves. The Government only values state land, including reclaimed land, at the point of sale to enable disposal at fair market value and avoid a draw on Past Reserves, and not on an ongoing basis. Hence, the issue of revaluation does not arise.”
“The Assurance Package (AP) for GST and the permanent GST Voucher (GSTV) scheme are meant to offset Singaporeans' GST expenses incurred in Singapore. To qualify for benefits, such as the cash and MediSave top-ups under AP and GSTV, the citizen must be residing in Singapore in the relevant year.”
“Temasek issued a statement1 on 17 November 2022 on its investments in FTX. The total cost of Temasek's investment in FTX was US$275 million, or 0.09% of Temasek's net portfolio value of S$403 billion as of 31 March 2022.”
“The Government expects GIC and Temasek to deliver good, long-term returns on their portfolios, in line with their respective mandates. The Government sets out its risk tolerance to the investment entities but does not prescribe guidelines on the allocations of specific assets or asset classes for our investment entities, whether for cryptocurrencies or other assets. We systematically review the overall risks of the whole portfolio of assets invested by the entities. This includes monitoring whether there is appropriate diversification across asset classes, sectors and geographies. The Government holds the boards and management teams of GIC and Temasek responsible for formulating their respective investment and risk management strategies in accordance with the Government's overall risk tolerance.”
“The Supplementary Retirement Scheme (SRS) is a supplementary savings scheme for all who work in Singapore. It is separate from the CPF scheme which caters specifically to Singaporeans and Permanent Residents (PRs). SRS, therefore, provides an avenue for foreigners working in Singapore to plan and save for their retirement. SRS does not have the same tax benefits as CPF. Singaporeans and PRs benefit from full income tax relief on compulsory employee CPF contributions, and CPF withdrawals are not subject to any income tax. In comparison, SRS is a tax deferral scheme where contributions to SRS benefit from income tax relief, but withdrawals will be subject to income tax. The amount of income tax paid will be dependent on the circumstances of the withdrawal, such as the timing and amount of SRS funds withdrawn, and the individual's income tax band. The maximum SRS contribution for foreigners is currently set to be equal to the maximum SRS contribution for Singaporeans and PRs, together with their CPF contributions, which foreigners do not participate in. Generally, Singaporeans, PRs and foreigners are subject to the same conditions for SRS withdrawals, including a penalty on early withdrawal of SRS savings prior to retirement. However, foreigners may be allowed to make a penalty-free one-time withdrawal after 10 years from the date of first contribution, subject to conditions, such as withdrawing the full amount. This concession recognises the non-permanent nature of residency for non-PR foreigners, while balancing against the scheme's objective of encouraging retirement savings.”
“There have been requests from members for different types of information on corporate tax on several occasions since last year. Each new permutation of data request requires intensive effort to compile. The Government already publishes extensive data on corporate tax, which is publicly available on www.data.gov.sg. This includes data that can be used to estimate the overall effective tax rate for companies in each of the published chargeable income band. We suggest that Ms Hazel Poa refer to the website to access the necessary data.”
“I thank the Member for the question. I will address it in my reply at the 30 November 2022 Parliament Sitting. [Please refer to "Bankruptcy of Cryptocurrency Trading Platform FTX and Impact on Singapore's Financial Markets, Regulation of Such Asset Class and Strategies of Singapore's Investment Funds", Official Report, 30 November 2022, Vol 95, Issue 78, Oral Answers to Questions section.]”
“Mr Louis Chua has requested for different types of information on corporate tax on several occasions since last year. Each new permutation of data request requires intensive effort to compile. The Government already publishes extensive data on corporate tax, which is publicly available on www.data.gov.sg. We suggest that Mr Louis Chua refer to the website to access the necessary data.”
“Climate adaptation is a long-term endeavour to ensure that Singapore remains resilient to rising sea levels and climate change. We do not yet have good estimates of the cost of the major infrastructural investments needed. A high-level estimate is that these will cost more than $100 billion over 100 years and will add to our medium- to long-term spending needs. We plan to employ a combination of funding methods to finance various climate adaptation measures, in a way that is fiscally sustainable and equitable across generations. The Coastal and Flood Protection Fund (CFPF), which was set up in 2020 with an initial injection of $5 billion, will allow the Government to set aside monies when fiscal conditions permit for future spending. In addition to the annual Budget and CFPF, the Government will look at the option of borrowing, for example, through green bonds, to spread the cost across the generations that will benefit from these measures. Where the measures include land reclamation, the land reclamation costs can be met from past reserves. As the Government develops a better understanding of the impact of climate change and the possible options of coastal protection measures, we will be better placed to determine the funding and specific financing options needed to support these measures.”
“Under the Companies Act, a foreign company that carries on business in Singapore is required to be registered with ACRA and subject to various requirements under the Act, including, but not limited to, the disclosure of beneficial ownership information. Section 366(2) of the Companies Act sets out a list of activities that, if undertaken by themselves, would not lead to the foreign company being regarded as carrying on business in Singapore. The list includes the investment of funds or the holding of property in Singapore. If the foreign company only engages in the activities on this list, it is not required to register with ACRA. If the foreign company undertakes other actions with its funds or property that result in it carrying on business in Singapore, it must register with ACRA and be subject to the requirements under the Companies Act. This is a calibrated approach to strike a balance between regulatory compliance and ease of doing business. In doing so, we have, nonetheless, ensured that there are other safeguards in place to deter money laundering and make information on ownership and control of foreign companies available to our law enforcement agencies. For example, the beneficial ownership information of any entity that invests its funds or engages in property transactions, such as buying or selling real estate in Singapore, would be captured by relevant intermediaries. These include financial institutions and professionals, such as real estate agents and lawyers, when they establish business relations or undertake transactions for their customers. Law enforcement agencies in Singapore have the power to obtain information from these intermediaries.”
“Under our personal income tax (PIT) regime, the first $20,000 of a tax resident individual's chargeable income is not taxed. Chargeable income refers to taxable income after netting off tax deductions and PIT reliefs. This $20,000 threshold, together with our progressive tax rates, tax reliefs and tax rebate, results in half the workers in Singapore not needing to pay any PIT currently. Among the individuals who do pay PIT, 80% of them have an effective tax rate of less than 4%. The top 10% of our PIT-paying taxpayers pay the vast majority of PIT collected each year. The Government has been reviewing our taxes and transfers system periodically. We will continue to do so to ensure that our PIT regime remains competitive, fiscally resilient and progressive. To mitigate the impact of inflation on Singaporeans, especially those with greater needs, the Singapore Government has provided direct support measures, such as the recently announced one-off Cost-of-Living Special Payment and additional Community Development Council Vouchers.”
“The Government will continue to review the criteria used for our social support schemes, including short-term measures to address cost-of-living concerns, to ensure that assistance is appropriately targeted at those with greater needs.”
“The Government uses a combination of schemes to meet the diverse needs of different families and circumstances. Various criteria are used to determine eligibility depending on the target beneficiaries. Some schemes, like cash payouts, are based on individual income eligibility. Other schemes, like the Community Development Council (CDC) vouchers, are given on a household basis. Several of our social support measures do take into account family sizes, and especially cater to those with children. For example, to address cost-of-living concerns this year, every Singaporean aged below 21 years old would have received a one-off $200 top-up to their Child Development Account (CDA), Edusave account or Post-Secondary Education Account (PSEA). The Ministry of Education (MOE) will also be increasing its support for students from lower-income households, including through enhancing the bursary quanta for pre-university and Institute of Technical Education (ITE) students, as well as revising the income eligibility criteria for MOE financial assistance schemes. More broadly, the Government provides support for the education and healthcare needs of all Singaporeans. Our education and healthcare subsidies are given on an individual basis, so larger families will correspondingly receive more help. We constantly monitor the affordability of our services and adjust our subsidies and fee regulations where necessary. For instance, to ensure affordability of childcare services, we will be lowering childcare fee caps in all Government-supported preschools from next year onwards. The CDCs, community organisations and grassroots advisers complement Government schemes by providing additional support to families in needs based on local needs.”
“I forgot to talk about healthcare. I have already talked about the projections for healthcare in 2030. That is a projection that we are able to make on account of our ageing population.”
“I forgot to talk about healthcare. I have already talked about the projections for healthcare in 2010. That is a projection that we are able to make on account of our ageing population. [Please refer to "Goods and Services Tax (Amendment) Bill", Official Report, 7 November 2022, Vol 95, Issue No 73, Second Reading Bill section.] [(proc text) Written statement by Mr Lawrence Wong circulated with leave of the Speaker in accordance with Standing Order No 29(5): (proc text)] I wish to make the following factual correction to the reply. My reply should read as follows:”