Lee Hsien Loong
Singapore
“Yes, of course, every time I sell the land, I put money into the Reserves, but I am not putting the money into the Reserves all today. I am putting it in a stream of payments, 30 years apart.”
“Speaker, Sir, I do not think it was a very difficult question to figure out, that when I spoke to MTI, I spoke to the Minister, because Mr Gan Kim Yong is the Minister for Trade and Industry.”
“" I think that would have been unjust because he has not been charged. If there is a case, the case has not been heard, he has not been found guilty or acquitted or whatever. I cannot prejudge a case based on an incomplete investigation – started recently, or a partial investigation, just entered into the formal phase.”
“Mr Speaker, Sir, first, Mr Leong is quibbling over words. In February, Mr Tan Chuan-Jin told me, "I offer to resign". I said, "Yes, sort out your constituency first". In other words, decision taken. The moment to execute it, I will decide. So, it is quite clear. Legally, he has not resigned.”
“Sorry, Mr Speaker, to respond to Ms Poa on why not no pay leave. It is my judgement to make. The Civil Service works in one way; their basis is if you have been convicted, then you are on zero pay and other consequences will follow.”
“I am very happy to note that Assoc Prof Jamus Lim appreciates the second key and is seeking a third. And I hope that it portends a change in your attitude towards the Elected President and his custodial powers. But I think the Brazil example is a very interesting one.”
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“Only one-third will come back, and they are prepared to accept that. But if that happens to Singapore, if we send 20,000 a year overseas and only one-third come back, we will not be Singapore. Therefore, we cannot afford to lose too many. We must keep a hard core in Singapore who will make Singapore work, as Dr Vivian Balakrishnan pointed out just now. At the same time, we acknowledge that the Singapore diaspora overseas is growing. I do not know how many, maybe 100,000 overseas now. We have to keep links with this growing diaspora and make the most of them, tap them for what they know of the world, of the countries which they are in, tap them for their networks, make them be part of the Singapore family spread abroad. Of course, while we keep in touch with those who are overseas, we must look after those who have not left. What more should the Government do to root Singaporeans here? The MPs have given many constructive ideas on how to improve policies and how to strengthen our sense of belonging. The Government will consider all of them, and in wherever they are workable and practical. Mr Hawazi and Dr Ng Eng Hen have responded on the education issues, on how we have a good system, but we can improve it. And particularly, I think we have to deal with the specific difficulties which caused this to be one of the push factors, which caused some Singaporeans to leave the country. We also have to think about our overall approach to engaging citizens and involving those who want to be part of the national debate. For that, we have the Remaking Singapore Committee which Dr Vivian Balakrishnan has been chairing and which he told you about. We have to engage the energies of our citizens.”
“If everybody is north, east, south and west of Singapore and there is nobody in the centre, then the centre is going to have a problem, which is like Ireland which, for centuries, sent millions of people overseas to the English-speaking world - America, Britain, Australia, New Zealand, Canada. Because the home country was poor, and there were no opportunities, they left. There are far bigger communities of Irish prospering overseas than there are Irish living in Ireland. The home country stayed poor, the daughter communities abroad prospered. It is only in the last 20 years, as Ireland, in the EU and benefiting from EU aid, started taking off, that now Irish are returning, and Ireland has net immigration for the first time in a very long time in its history. And that can happen to Singapore. The PRC is in a different position. They have 1.2 billion people, many, many talented ones, and they have been sending students overseas in big numbers - 20,000 a year, and an estimated 380,000 since they opened up about 20 years ago. So far, only one-third have returned. But they are still allowing students to go abroad because they need the students to go to learn, and some to come back and bring back the technology, the knowledge of the world, that instinct and feel for how modern economies and modern societies work, to modernise China and take it forward. Not only are they allowing the students to go, they are facilitating the students to go. Because to go to America to study, you need a bank guarantee to get a student visa. And a Chinese student from China cannot get a US$ bank guarantee. But the Government has instructed the banks in China to give US$ bank guarantees to Chinese students to go overseas, to America, to study.”
“They are staying on. It is so exciting and they put off coming back till another time. It is a real problem. We had a group of overseas Singaporeans who came to brief the Economic Review Committee a few months ago from Hong Kong, Stanford in San Francisco, and Harvard and MIT in Boston. They told us that they had done an informal survey of themselves and their predecessors over the last 10 years, the Singaporean students who had attended Stanford, Harvard, and MIT. What had happened to them? How many had come back? They said that, up to today, only about half have come back, and that would have included the students on scholarship. So many students are going overseas, many Singaporeans are going overseas, and we have to ask: will we have a problem? We acknowledge that not all Singaporeans will stay here in a globalised world. Just as we welcome foreigners to come to Singapore, so too other countries invite Singaporeans, and some will go. Apart from that, there would be reasons why Singaporeans need to go overseas to work, to learn, to be posted, to do a job. In fact, I would encourage Singaporeans who have this opportunity to go abroad, to take it up, to learn about the world, expand your horizons. But, at the same time, I hope that when Singaporeans are overseas, they will maintain their links back home and after spending their time overseas, and after some time, come back to Singapore. We cannot afford to lose too many people overseas, whether they are emotionally quitting or not. It could be, as one of the MPs said yesterday, "sheng zai si fang, xin huai zu guo".”
“So when Mr Low Thia Khiang made a rousing speech in Chinese saying that it is all the Government's fault, it sounds good but it is not so. The second question, which is not rooting Singaporeans, but the question of getting Singaporeans to physically stay and work here, is slightly different. There was no issue of Singaporeans leaving in the previous generation. The question never arose because for that generation, which country to belong to was not a matter of choice. Either they were born in Singapore or they had come here out of economic necessity. Many of them did not speak English and could not easily uproot themselves and their families and go off to some other country. And even if they could have gone, they would have felt out of place, uncomfortable and yearning for something more like home. But today, it is different. Today, Singa-poreans have many opportunities. There is globalisation. Other economies have opened up. There is a global market for talent. Many countries now emphasise talent and open their doors to welcome people who have skills and talent. Because we have given them education, because Singaporeans speak English, because Singaporeans are prosperous, so if they want to move, many Singaporeans will be welcomed in many places. So there is a choice. Our pattern of emigration has changed. In the 70s and 80s, we used to worry about people who would leave Singapore as mature adults in their 30s and 40s. They have grown up, they have started working, they have a family and they have bought a house. Now, they are thinking of selling their house, cashing out, bringing their families, and moving away to Canada or somewhere. Today, we are worrying about students going overseas, studying overseas and not returning. They have found a job overseas.”
“All new countries which are not born nations have this problem. Myanmar, with its two dozen different tribes; Indonesia, with its many different races and languages, spread over 10,000 or more islands; Malaysia, with Malays, Indians, Chinese and others. If we look beyond South East Asia, India has the same issue of identity, because India was never one country before the Raj. And their separate local identities which had to be blended together and harmonised as one Indian identity. On top of which, they had their religious divide between the Hindus and the Muslims, because India has a large Islamic minority - 100 million. Or take Pakistan. All Muslims, but West Pakistan was different from East Pakistan. The Punjabis, Sindhis and others in West Pakistan are different from the Bengalis in the East, and there was a civil war after which Bangladesh was born, and Pakistan was split into two. So many countries have this problem, and Singapore too. If you examine the definition, we did not get born as a nation either. Therefore, how do you root people to the country? That is the challenge. What has this Government done to do that? We have built a meritocratic, multi-racial society. We have given every citizen a stake in Singapore. Through home ownership, through HDB, 90% of Singaporeans now own their homes. We have generated economic growth and prosperity, and given every Singaporean a share in Singapore's success. We emphasise education in national schools, to inculcate values, to imbue students with knowledge of their mother tongue and also to equip them with skills so that they can make a living for themselves. Therefore, today Singapore is a success, and we have a much stronger sense of nationhood today than we did in 1965.”
“Mdm Deputy Speaker, may I set the debate in context by sketching out the major issues which are behind this debate about stayers and quitters. We are really talking about two distinct but related issues here. One, rooting Singaporeans emotionally to Singapore, in other words, developing a national identity, patriotism, a sense of belonging, a sense of pride in being a Singaporean. Two, getting Singaporeans to stay physically in Singapore rather than emigrating, working or living overseas. The first is a crucial long-term issue; the second is an important medium-term one. Rooting citizens is a critical but very difficult task for many new countries, especially those which have not been born as nations to start off with. A Professor of Government in Harvard, Rupert Emerson, gave a definition of a nation which is relevant to this, and I quote him: "A single people, traditionally fixed on a well-defined territory, speaking the same language and preferably a language all its own, possessing a distinctive culture, and shaped to a common mould by many generations of shared historical experience." So, there are many ingredients - a single people, well-defined territory, same language and preferably a language of its own, possessing a distinctive culture, and shaped to a common mould by many generations of shared historical experience. This definition by Prof. Rupert Emerson and was quoted by Prof. Robert Tilman from the University of North Carolina who wrote a book about "South East Asia and the Enemy Beyond" which was published in 1987. Prof. Tilman also pointed out that by this definition, Thailand is the only country in South East Asia which is a nation, and even then, only if the Thai Muslims in the South are excluded.”
“Let us have the particulars and we will investigate the matter. PUBLIC SECTOR HOSPITALS (Fee increases) 3. Dr Lily Neo asked the Minister for Health whether his Ministry will take steps to (i) ease the burden of patients who are affected by the increase in hospital charges; and (ii) implement health-cost saving measures to minimise future increase in hospital charges. 4. Mr Low Thia Khiang asked the Minister for Health what is the estimated amount of revenue the public sector hospitals projected to recover from the recent increases in charges for B2 and C class wards. 5. Mr Low Thia Khiang asked the Minister for Health whether all restructured hospitals are running efficiently and have fulfilled the original objective of the Government. 6. Mr Low Thia Khiang asked the Minister for Health when can Singaporeans expect the next round of "regular but small" medical fee hike. 7. Mr Chiam See Tong asked the Minister for Health whether he will postpone the implementation of the recently announced increases in hospital charges in view of the current economic situation in Singapore. 8. Mr Gan Kim Yong asked the Minister for Health whether his Ministry will provide a comparison of the operating costs between our hospitals and those of other countries providing similar standards of healthcare services. 9. Dr Mohamad Maliki bin Osman asked the Minister for Health (a) whether there is an increasing trend since 1997 of Singaporean patients (excluding those who are eligible for Medifund) who have sought help in settling their bills from public hospitals; (b) will the recent increase in hospital charges contribute to this trend; and (c) what measures are being taken to further assist this group of Singaporeans.”
“Mr Speaker, Sir, if there are such cases reported, we will investigate them, but if they are private parties and not in pubs, discos or licensed liquor sellers, it is in somebody's home, it is really the parents' responsibility.”
“Mr Speaker, Sir, prior to 1st October 2002, which is today, the responsibility for liquor licensing came under the Customs and Excise Department, or CED. As it is primarily a law and order issue, this function has been transferred to the Ministry of Home Affairs with effect from today. Nevertheless, this question has not been transferred and I will take this question. 35 under-aged persons were caught in 1999, 19 in 2000, and 7 in 2001. In 2002, 20 under-aged persons have been caught so far. Offenders were fined $100 and their parents were informed of the offence. The licensees who were caught allowing consumption of liquors by under-aged persons in their premises were fined $300 for the first offence and $500 for subsequent offences. CED had been conducting regular checks on licensed premises. Police, in its checks on public entertainment premises, had also referred offenders of the liquors licensing regulations to CED for follow-up actions. In addition, the Liquors Licensing Board would require licensees who repeatedly infringe the licensing conditions to appear for a hearing before the Board to see whether their licences should be revoked. I would like to assure Dr Khor that under-aged drinking is not prevalent. Measures are already in place to ensure that liquors are not sold to under-aged persons. With this function transferred to the Ministry of Home Affairs, I trust that the synergy that would be reaped by the Home Team would keep this problem under control even better.”
“Dr Amy Khor Lean Suan asked the Deputy Prime Minister and Minister for Finance (a) how many have been caught for under-aged drinking at pubs, discos and at the premises of other licensed liquor sellers for each of the last three years; and (b) what action has been taken by the police to deter such incidents.”
“Mr Speaker, Sir, Singapore has made significant headway in positioning itself as the regional IT and financial hub. Institutional investors and analysts have rated highly our national IT infrastructure, quality of manpower, as well as our political and regulatory environment. More companies and financial institutions are outsourcing processing activities, as they seek to save costs and focus on core competencies. The industry has recommended to the ERC setting up Universal Processing Centres (UPCs) in Singapore to leverage our strengths and to support our efforts to develop front, middle and back office activities here. The Government supports in principle the set-up of UPCs. The hubbing of higher value-added processing activities in Singapore will create jobs, and generate spin-offs to other economic sectors, such as business advisory, IT and telecommunications. Global corporations and financial institutions are among the early adopters who have consolidated processing along business functions, and also centralised processing either globally or regionally in the American, European or Asian time-zones. Singapore is well-placed to become a key processing hub in Asia. Cost is only one factor. For example, a consultancy study showed that Singapore was a viable location for treasury processing activities despite keen regional competition. Global financial institutions like Citibank and Deutsche Bank already have established processing centres in Singapore serving Asia, and for specific business segments, beyond Asia. We have a critical mass of MNCs and financial institutions here, which is one of our key advantages. The MAS and other agencies are currently in discussion with industry to see how to encourage more UPCs to be set up here. UNDER-AGED DRINKING 2.”
“In this spirit, Mr Deputy Speaker, Sir, I support the motion. [Applause.]”
“The Temasek Charter will guide the Temasek companies on what Government, as shareholder, expects of them. As for the private sector's concerns on the GLCs, the Government will tackle those problems whenever they arise. As I have said before, and I offer it again, if you know of specific problems, let me know, e-mail me, I will look into it, after removing your name from the e-mail. I have done so. Sometimes, there is a reason and it has to be put right; sometimes, there is an explanation and that has to be conveyed. But the Government will exit from businesses that are no longer relevant although it cannot do this overnight. The solution is not to dump the GLCs altogether or to handicap the GLCs and prevent them from competing fairly but robustly against private companies. GLCs, private companies and SMEs all have roles to play in growing our economy and developing our external wing. They will sometimes compete, but they should also cooperate with one another. As Ms Indranee and others have said, the issue is Singapore Inc. versus the rest of the world. Government's overall thrust is thus to grow the private sector as a whole, whether GLCs or non-GLCs. And as Mrs Fang Ai Lian pointed out, the issue is also entrepreneurship, because it is the spirit of enterprise that will help us to adapt and grow as the world changes. As the economy grows, and as the private sector expands, the shape of the Government in business will change. The key is not whether the companies are Government-owned, but whether they are well run, entrepreneurial and profitable. We have every intention of ensuring that GLCs are as well run, entrepreneurial and profitable as private companies. That is the way to build an efficient and vibrant economy.”
“We cannot agree; (iii) Government to outsource any commercial requirements. I agree in principle; (iv) Review of subsidiaries under the statutory boards and Government agencies. I agree; (v) NTUC/SLF to review its stable of companies. This is for NTUC/SLF to decide. Mdm Halimah and Mr Heng Chee How have already explained eloquently NTUC's views. There is nothing much I can add except to make an appointment to visit Denticare; (vi) Priority to enacting competition law. I agree; (vii) GLCs to enlist more private sector persons in boards and management. GLCs need to seek the best talent, whether it is the private or public sector; (viii) Encourage more MBOs and divestment to locals. MBO is one method of divestment to be considered, but whether it is the best approach depends on particular circumstances of the GLC and the specifics of the MBO proposals; (ix) More GLCs and private sector cooperation as cluster or consortium. We agree in principle; and (x) Regular study by the Department of Statistics (DOS) on GLCs' share of GDP. I agree. Finally, I ought to thank Dr Wang Kai Yuen for giving us a historical perspective on this subject and reminding us that these same issues were debated 20 years ago and probably our successors will still be debating them 20 years from now. We need to try to rise above the situation. Do not assume that the problem for SMEs will go away if we do not have GLCs. As Assoc. Prof. Koo Tsai Kee and Mdm Halimah Yacob pointed out, without them, the vacuum would be filled by the large private companies or MNCs and the SMEs would still have to face fierce competition. The EISC recommendations on the Government in business will help to define the Government's role, foster the growth of private enterprise and entrepreneurship.”
“One day if he goes out, he will have business sense, honed at a young and impressionable age and he will be able to make a contribution. The challenge for the civil service is to attract private sector talent to contribute to the civil service, and at the same time, to adopt forward-looking policies to manage and groom all our talents so that a stint in the public service is a value-adding experience for the officers. There are various private sector companies which also offer scholarships or sign-on bonuses at the point of graduation to attract talent. But the companies, having attracted talent, have to manage and develop them, test them out, give them opportunities and move them up as rapidly as they deserve. Unfortunately, this is far harder to do than just to bring in the talent and when it is not done, the scholars get discouraged, demoralised, leave, and the organisation stagnates. Sometimes, they also say that the Government took all their talent. But it is not a simple matter of giving fewer scholarships. It is a matter of managing the talent, bringing them in and keeping the organisation fresh and that is a top management or board responsibility. The Temasek Charter and the Government's attitude towards divesting GLCs are fully consonant with the recommendations of the EISC on Government in business. The Government fully supports in principle all those recommendations. Mr Leong Horn Kee went beyond the EISC proposals to make 10 recommendations of his own. I have already dealt with most of them but let me recap briefly: (i) To curb proliferation of GLCs. I agree that the GLCs' growth should be disciplined but I cannot agree never to start or grow GLCs; (ii) Government to set up a specific timeframe for divestment.”
“Without scholarships, either many of our young talented people cannot afford to study overseas, or if they pay their own way, they may decide not to come back at all. And the Government must get its fair share of able people, both in politics and in the civil service. Mr Leong Horn Kee suggested that Mr Lee Kuan Yew should have remained a lawyer, Mr Goh Chok Tong a shipping executive, Dr Tony Tan a banker and I too should not have been in Parliament and then Singapore would have a more vibrant private sector. We thank him for the compliments but let us ask: if we had all done this, who would then be the Government? Would we have a Singapore today? Ms Indranee said that perhaps PSA would today be called PTP. I would ask: think, who might be the Prime Minister? So, the "private sector not stupid". The key issue here is not whom we should favour in a public and private sector fight for talent, but how to encourage a healthy circulation of talents between the public and private sectors. We need to develop our young, including through scholarships, to provide the education and the opportunities to fulfil their potential. We do not ban Government scholars from leaving the Government service for the private sector if that is their inclination. In fact, we have now introduced a gap-year programme, so scholars who complete their courses can hunt around for a 6-12 month attachment, either to a super-national, such as the UN, the World Bank, the IMF, or to a merchant bank like J P Morgan Investment, Morgan Stanley or to a multi-national such as Intel, British Telecoms. He spends 6-12 months to learn about the business world and come back and be a better Government officer.”
“And even when statutory boards set up companies which meet these criteria, they should do so with an ultimate view to divest them. Let me now talk about talent, an important subject. Mr Leong Horn Kee attributed the dearth of entrepreneurs in Singapore to the monopoly of top talent by the Government. Unfortunately or fortunately, the Government does not monopolise top talent. Every year, the Government awards about 300 scholarships, which is less than one-third of the top students in the cohort with 4As. Many of these scholarships are intended for economic activities, such as those given out by EDB, A*STAR and IDA. They come in, they serve for a while with the statutory board, they go out to the industry. If we exclude them, then we are talking about even fewer scholarships, only about 200 out of 1,400-1,500 top students. Of all the scholars who have returned to serve their bonds, only 40% remain in service today. Amongst them, about half are young officers in their first four years of service. Many of them will end up leaving the service before their bonds are up. Typically, a scholar these days leaves after 3-5 years of service. Those who come in expecting to serve till they retire are a minority. They will serve their bonds. They will fulfil their obligations but they do not see themselves serving one lifetime career in the Government. They want to go out and they do go out. So we let them go and we bring others in. Therefore, there is no monopoly of top talent in the Government. If the Government stops giving scholarships, the impact on the private sector talent pool will not be enormous because we are talking about 300 people out of 1,500, not for life but for 5-10 years. In fact, not giving scholarships may make things worse.”
“Much of the public unhappiness has not been over the major GLCs, like SIA, DBS, but the small ones, mostly the statutory board companies. We have considered preventing statutory boards from starting companies without MOF's permission. My staff put it up, we have discussed it. We concluded that it was not practical. They may simply provide the service in-house, which is not better. Identifying out-of-bound areas a priori is also difficult because each statutory board's situation is different and the circumstances themselves change with time. However, the Government will review and cull the list of statutory board companies regularly. We will particularly consider the need to separate the statutory board companies from their parent, especially where the parent is the regulator, while the statutory board companies are regulatees or are somehow related to the statutory board business, thereby giving the perception that the statutory board companies have an unfair advantage, like in the case of HDB. Members will be happy to know that the Ministry of Finance will be issuing a set of guidelines to Ministries and statutory boards on the factors which they should take into account when they are thinking of setting up statutory boards. They should only form companies that serve a strategic role integral to the mission of the statutory board or that do not breach the 'Yellow Pages' rule. Companies should also not be given names that bear relation to the parent or predecessor, thus creating confusion. I used to know what PWD Corp was. Now, I have to remember CPG Corp and so will Members. But maybe that will be fairer. But overseas, where the names PWD Corp, HDB or JTC carry weight, they will be allowed to carry those brand names.”
“And they are in exciting parts of the world, not just the US, UK, China or Australia, but according to their website, also in Russia, Eastern Europe and Central Asia. They are not depending on Government hand-outs. Old Chang Kee, a franchise owned by a Singapore firm, Ten & Han Trading, has outlets in eight countries, including Malaysia, India, South Africa and China. They started off selling 300 curry puffs per day in 1956. Now they sell 18,000 per day just in Singapore alone. It is now looking to export Singapore-made curry puffs to countries like the US and Britain. The problem is, if the SMEs are successful, they grow big, they are no longer SMEs, then you have to look at new SMEs and new champions, new entrepreneurs. But they are there, they will come. Mr Leong Horn Kee suggested that the Government and Temasek publish an annual report of GLCs for greater transparency and to foster trust of the GLCs. I am not clear why he should distrust GLCs. GLCs do not operate under a cloak of secrecy. Most of the major companies which are held directly by Temasek are already listed, so their annual reports are readily available and, in fact, GLCs regularly win prizes for having the most comprehensive annual reports. ST Engineering, which holds many of our defence industries, is listed and so is subject to market demands for transparency. As for unlisted companies held directly by Temasek, such as PSA Corp, Singapore Power or MediaCorp, we have plans eventually to privatise them too. In fact, Singapore Power and PSA Corp already publish their annual reports. Accounts for the smaller statutory board companies are also available from the Registrar of Companies and Businesses. There is no need for a consolidated report by the Government.”
“Public-sector agencies are already allowed to contract start-up companies with no company track record, for IT and technology projects of up to $5 million. This is to help the SMEs have a chance and build up their track record. In addition, we have got procurement guidelines which allow Ministries to decide, based on their assessment of the potential market and the attendant risk, to lower the tender evaluation criteria in terms of the financial status of tenderers. Then, SMEs can participate in larger Government tenders. We will continue to make it easy for SMEs to participate in Government contracts, but we should not give SMEs an explicit advantage over larger firms in Government business, or handicap large firms in order to give the SMEs business. Some countries do this, eg, Germany, Japan, but the result is inefficiency and higher cost for taxpayers. SMEs have to be competitive to survive and prosper, just as GLCs and MNCs have to be competitive. Otherwise, we will wake up one morning and say, "Who stole my cheese?" As Ms Olivia Lum said, SMEs want opportunities, not handouts. And there are opportunities and many successful SMEs. Examples include Qian Hu, started in 1985 from the conversion of a pig farm into a fish farm, which is now a major exporter of ornamental fish in Singapore, with customers in more than 45 countries, a turnover of $41 million, and net profits of $3.4 million last year. That is enterprise. They gave me two fish. I gave them to my children, they took a liking to the fish and bought dozens more, some of which probably from Qian Hu. There is Food Empire (Coffee) listed on the main board of SGX. It makes and markets more than 90 instant beverage products, frozen finger food and confectionery, eg, MacCoffee, Klassno and MacCandy amongst others.”
“This is why Temasek and EDB have set aside some private equity funding to invest in promising local enterprises. For example, Temasek has a small stake in Osim International, and is represented on the board. When you rest in the Members' Room and sit on the Osim chair, please think of Temasek! Moving forward, the issue for us, therefore, is not so much managing the competition between the big and small companies in our domestic economy but, as Ms Olivia Lum and several others point out, encouraging them to collaborate in competing internationally. That is why the Government set up the Local Industry Upgrading Programme (LIUP), as well as a whole series of assistance packages for SMEs offered through MTI, eg, the Local Enterprise Financing Scheme (LEFS), the Business Upgrading through Inter-Linkages Development (BUILD), and so forth. There are almost more schemes than there are SMEs. The EISC has recommended that the Government oursource more Government functions to the private sector. We agree. Ministries and statutory boards already outsource certain services to the private sector. These include IT software development, systems and facilities maintenance, provision of medical services in prisons, provision of legal advice in certain specialised areas, such as international trade law. Our intention is to outsource as many functions as possible, provided it makes economic sense to outsource and the outsourcing arrangement is sustainable. However, remember that this does mean handing out cushy Government contracts to SMEs. It means fiercer competition for Government business, which will make suppliers more efficient, and save taxpayers money.”
“Larger companies have more resources, more capacity for risk and more staying power. For Singapore companies in these industries to be competitive, they must build up their size to enjoy the economies of scale, build up the depth of management expertise, attract talent and grow the company. As Mr Iswaran has pointed out graphically with figures, our big companies are very small by international standards. Small companies will have a much tougher time competing against the large players. We cannot tilt the playing field in these industries in favour of the small players. In fact, on the contrary, sometimes we will need to encourage the small players, nudge and persuade them to merge and to become bigger and stronger. In these industries, unhappiness with GLCs really is unhappiness at having to compete against a larger and more powerful player. But that is the way the world and the industries are evolving. On an international comparison, we know how small we are. So, we cannot solve this problem by shrinking the GLCs or divesting them. Of course, this is not the case in every industry, and SMEs form an important part of our economy. In many businesses, the small companies enjoy a nimbleness and an entrepreneurial drive and flexibility which help them to develop new products and markets, and to exploit changing conditions faster than larger companies. For example, Microsoft started from scratch when IBM was already a giant, and swiftly overtook IBM. Dell and Compaq also started from scratch when IBM said the PC is a commodity business, and they have built themselves up into big Fortune 500 companies. So, I agree with Mr Wee Siew Kim that SMEs can act as "support firms" to GLCs in a cluster approach when pursuing overseas ventures.”
“Someone else. He does not know the history of ST. ST, in fact, is an excellent example of how GLCs have grown and how we have pragmatically evolved our own solutions. We are not like the US, where the defence industries are largely private-sector firms. We also did not have economies of scale, especially at the beginning. Yet, we needed to build up our defence industries, for strategic reasons, to support the SAF. We did not do this by throwing money at the problem, or by using our muscles instead of our brains. I think this quote is from Mr Inderjit Singh. MINDEF set up the defence industries as companies instead of as Government arsenals, so that they would be subject to market discipline and would be able to operate efficiently. The defence industries did not get a free ride. They had to tender for MINDEF projects against foreign competitors - often, subsidised foreign competitors - and match their prices. Over time, they built up their capabilities and scale. They made profits, which they reinvested in the business. They grew, using internally-generated funds, not cheap Government funding. They diversified into non-MINDEF business, most of it abroad. Today, many of them are listed, including ST Engineering and Chartered Semiconductor. Could ST companies and managers have done this, if indeed they had not used their brains or had been bereft of entrepreneurship? Could the private sector really have stepped forward and filled this role, if MINDEF had not set up CIS, ODE, Singapore Aerospace and so many other companies now in the ST Group? Let me now turn to the question of size. In some industries, the advantage of size is, unfortunately, a fact of life. For example, in banking and telecoms, size is critical.”
“The rest was internally generated over the years through the GLCs' own efforts. I gave you the example of SIA and DBS just now. Let me cite another example - also recently mentioned in despatches - Singapore Technologies. Mr Inderjit Singh mentioned this as an example of a company with "murky beginnings" - I think it was his phrase. Cloak-and-dagger. Mr Inderjit Singh: No. Not me.”
“Had PWD not been corporatised, these 118 projects would have been undertaken in-house by the Government. So, by corporatising, we have created business for the private sector. The part kept to facilitate this transition is a minority - one-quarter or one-fifth of the business. But because people do not notice this, they say PWD Corp, has a moratorium and an unfair advantage. The facts speak for themselves. Mr Leong Horn Kee says that GLCs enjoy cheap funding because of their perceived links to the Government. The Government does not provide any guarantees to the GLCs. The banks and the markets have to make their own assessment of the credit worthiness of the companies they lend to, and the bigger and stronger companies will generally enjoy better credit ratings and better spreads. However, it is not automatic that GLCs will enjoy loans at lower rates. The lenders and analysts rate the companies, and their credit ratings vary from company to company and from time to time. For example, Moody's put a negative outlook on SingTel in June 2002, fairly or unfairly. SingTel considers it unfairly, but Moodys makes its assessment and it has implications on SingTel's borrowing costs. I do not know why the bankers in Mr Leong Horn Kee's project in China preferred to lend to the three GLCs and not to the one non-GLC which was there. But Mr Leong Horn Kee's explanation that the bankers were favouring the GLCs irrationally is not the only possible one. Mr Inderjit Singh claimed that GLCs succeeded because of the huge investments the Government had made in them, and because they made use of their links to the Government to get ample cheap funding. This is simply not true. The GLCs were started with only seed capital.”
“For example, any asset transferred has to be properly priced, and if a company competes for business with the parent, then it should be through open bidding or tender. Sometimes, we will need to corporatise a Government department or statutory board with a moratorium. For example, CPG Corp, which used to be called PWD Corp, or Jurong Consultants. The moratorium helps the corporatised entity make the transition into a private-sector player and, in cases where the corporatised entity was the sole supplier to the Government, it gives the Ministries time to adjust. I fully agree with Members that moratoriums are not desirable, and they should be avoided wherever possible. They are messy, circumstances change and you wished you had not done it. But a moratorium is no worse than the department or statutory board remaining a Government agency. To help make the transition, sometimes it cannot be avoided, because a cold turkey cut over may be neither practical nor wise to ensure the retention of expertise and the continuance of service to the Government in the transition. In other words, it is not just the company which may not be ready if you cut over cold turkey, but the customers, the clients or the Government departments may not be ready because, all of a sudden, instead of having a regular contractor, architect or engineer, they have got to prepare specifications, call for tenders, evaluate tenders, and supervise. That takes time to learn. Hence, what we did with PWD Corp. Since the corporatisation of PWD in April 1999, CPG Corp has been awarded only about $250 million worth of new Government projects. In contrast, private-sector consultants received 118 Government projects worth $1.3 billion during the same period.”
“Enterprises which feel that they are facing unfair competition can then take the matter to an independent Competition Commission and it will be adjudicated and there will be a redress. As to whether GLCs enjoy an inside track, our policy is clear. The Government will not tolerate this, we do not do this. We expect GLCs to compete on a level playing field. Ministries and statutory boards will maintain an arms-length relationship with the GLCs, and the GLCs must operate commercially and efficiently, and not receive special subsidies or favours. Of course, the corollary of this is that we must also not expect GLCs to do "national service", whether it is to do a favour to SMEs, lower prices, or provide non-economic services. To favour GLCs at the expense of other companies is to do harm to the economy, and to encourage GLCs to be less competitive and efficient. For example, MAS supervises the banks. One of the banks is DBS. But if you ask DBS, they will tell you that they do not enjoy any special privileges or forbearance. They are treated just like any other local bank. In fact, DBS sometimes feel they are treated more than just like any other local bank. But that is how we have to deal with it. So, Mr Inderjit Singh is mistaken that SMEs will similarly succeed if only the Government would give them the same special treatment it extends to GLCs. The truth is that GLCs enjoy no protectionist measures from the Government. Sometimes, companies which have been spun off or set up by statutory boards still do business with their parent. For example, Ascendas with JTC. In such cases, the perception is harder to dispel, and we have got to make a special effort to be transparent and above-board in the dealings.”
“If the local companies were not competing against GLCs, they would still be competing against powerful multinationals, or large local companies in private hands, which is what happens in Hong Kong. Life would not be easier. As Mdm Halimah pointed out yesterday, in many privately developed shopping malls, FairPrice does not get in because the private developers have brought in their own partners, their own private companies, their own friends, which are in the retail business, and not SMEs, nor FairPrice. So without GLCs, you would still have competition. And if we did succeed in reducing competition, which is what Mr Leong really wishes, this would result in a less competitive private sector, and fewer choices for consumers. It is worse for consumers. Far better to have keen competition in Singapore to build strong SMEs which are internationally competitive. And I think Mr Leong acknowledges this because, after his eloquent argument, finally he says he supports FairPrice. Whatever the argument, the conclusion was not wrong. And related to crowding out is the issue of unfair competition. There are different ways in which you can interpret the word "unfair". It could be unfair market practices. It could be an insight track, an unlevel playing field. It could be cheap financing. It could be size. Let me take them one by one. On unfair market practices, which means cartels, predatory pricing, abuse of dominance, the Government does not condone these, whether by GLCs or by private companies. MTI intends to enact a competition law and all companies, including GLCs, will be subject to this law. There will be some sensitive activities which should be exempted from the law, as in all competition regimes around the world.”
“The industry did not exist then. PSB created the market because of the national reason that we wanted to promote training, upgrading, productivity. And the private service providers then entered the market. Now, the private service providers say, "PSB is competing unfairly." But now that there are private service providers, it is no longer necessary for SPRING Singapore to continue to do this. And so SPRING Singapore has hived off the function to PSB Corp. PSB Corp is a corporatised entity which will subsequently be privatised. I will give you another example. Hdbay, also mentioned in the debate, was set up by a wholly-owned subsidiary of HDB - CESMA International - as a web portal for the renovation industry in January 2001. HDB did this to help raise the standards of the interior design and renovation industry. Because we get complaints, such as contractors making a hole in the ceiling, damaging the structural pillar, so HDB set up Hdbay to try to upgrade standards in the industry. HDB deals with Hdbay at arms length, but still the renovation industry questions whether HDB needed to create Hdbay at all. Well, maybe the renovation industry is right. It is arguable. But far better for us to have civil servants and officials who have the drive and enterprise to start new activities than for civil servants to sit back and do nothing. Of course, now Hdbay is up and running, HDB will consider divesting its interest in the company. But that is a different matter. At least, I have a company and there is something which we can talk about. Mr Leong Horn Kee says bliss to a businessman is a business world in Singapore without GLCs, because there will be less competition and more room for the local businessman to build up his business. Would that be worse?”
“That is the way to make the most of a valuable asset and to realise the full value of the GLCs we have built up. Next, let me address the question of crowding out. Mr Inderjit Singh and also Mr Leong Horn Kee had complained that the GLCs are entering businesses which the private sector is fully capable of doing. Let me assure them that we have no intention of doing that. For example, the famous roast duck company, again recited by Mr Inderjit Singh, had been acquired incidentally as part of a larger acquisition in 1991, and divested in 1994 purely as a business decision. It is an immortal duck! The Temasek Charter is oriented towards companies which have the potential to grow internationally, or are strategic to Singapore. In the EISC, Mr Raymond Lim proposed a 'Yellow Pages' rule. Statutory boards should not set up companies to do things which can be found in the Yellow Pages. I agree in principle with this. If you can look it up in the book, why do you want to start a company to go and compete with the private sector? However, applying the Yellow Pages rule will require judgement. We must expect times when the Ministry or statutory board judges the private sector not to be adequate, but the private sector disagrees. In fact, quite understandably, the more competitive the GLC is, the more unhappy the private sector is going to be. It is in the nature of things. And if the private sector is not up to the job, it is most unlikely that any of them will stand up and say, "Sorry, I am not up to it, please carry on." For example, PSB Corp which runs training programmes and certification for ISO 9000. Private training service providers protest at this. But the former PSB Corp, which is now SPRING Singapore, started the industry when there were no private providers.”
“And this is especially the experience in Asia. But even in the US, after Enron, it is not so clear that having a diversified shareholding and no major shareholder effectively in charge at all is a good formula. Bill Gates still owns a big share of Microsoft. He makes sure it does well. A major shareholder has a substantial amount of his own money at stake. He will take the trouble to find the right people to run the businesses, set the directions, and make sure the business is run properly. Without a major and active shareholder, it is much harder for many small shareholders to get together to do this, as Mr Raymond Lim pointed out. Hence, the Government has the responsibility to promote and ensure good governance in the GLCs. In Singapore, there are very few local individuals or companies with the resources and the capability to buy over and drive the performance of the large GLCs. In Hong Kong, there are tycoons, like Mr Li Ka Shing or Mr Robert Kuok, who own and run major companies. In fact, among the tycoons, they own and run a large part of the Hong Kong economy. Perhaps, over time, such people may merge in Singapore. But remember, a Singapore in which the commanding heights of the economy are controlled by powerful, private shareholders will be quite a different economy and quite a different society from one where the major companies are professionally-run GLCs, and the ownership ultimately comes back to all Singaporeans. Let me reiterate that this does not mean that the status quo is frozen, and that the Government is not going to divest any GLC. We will restructure the GLCs, we will sell off the pieces which do not fit. We will consider mergers and acquisitions which make business and commercial sense.”
“They sell the shares when they see the company doing badly, or even when the shares are merely under performing. And if the company is doing well, they may also sell the shares to make a good profit. They are trading, they are not long-term shareholders. Therefore, selling GLCs off to some fund manager, or new shareholder, will not magically solve the problem. The way to upgrade a business is to assemble an experienced board, build a strong and cohesive management team and do the hard work of improving systems, changing management cultures, developing new capabilities, opening new markets. Having the Singapore Government as the shareholder does not stop companies from doing this, provided the Government takes a rigorous commercial approach, and entrusts the task to a capable team. Others have argued that the Government should simply divest all its GLCs regardless, because as a matter of principle, the Government should not own companies. We do not agree. As Mr Raymond Lim highlighted yesterday, despite the recommendation of the World Bank and the IMF to privatise rapidly, the benefits of privatisation are not a given, especially if it is not done under the right conditions. For many of the GLCs, the Government is the major shareholder. If we are to let the companies go, as Prof. Koo Tsai Kee asked, to whom? Which private companies or individuals are in a position to take over SingTel, SIA or PSA? Not just financially, which is difficult enough, but in terms of management oversight. Can we really just distribute the shares to Singaporeans and expect the companies to naturally prosper? Looking at the success stories of companies around the world, great companies are built by committed, long-term shareholders holding major or significant stakes.”
“We are not selling off the family silver and the last Canaletto painting that MacMillan said about the British government asset sales. If we sold off the GLCs in a hurry, we will no doubt have a debate in the House and MPs would rightly criticise us for not safeguarding the interests of Singaporeans, and rightly so. Therefore, it would be unwise to publish a list of companies that would be divested within a fixed timeframe. The act itself would depress values, alarm customers, demoralise employees and cause viable businesses to run to seed. Some people have argued that, since the GLCs are not doing well, we should divest them in order to improve their performance. We do not agree. Firstly, most GLCs are performing well. Over the long term, GLCs have amply returned the Government's initial investment. For example, DBS and SIA were transferred to Temasek in 1975. At that time, DBS was valued at $49 million, SIA at $91 million. Today, Temasek's share of DBS' and SIA's market capitalisation is $2.3 billion for DBS and $8.2 billion for SIA. So if we take a longer timeframe, the companies have done very well. In the nature of things, not all GLCs will do well all the time. Where GLCs are not doing well, the management has to sort out the problems. If necessary, the board may need to make management changes, or the shareholders, including Temasek, may need to make board changes. Keeping businesses in good health requires tough decisions and clear mindedness, and Temasek has to have that, and do that. Secondly, I agree with Mdm Ho Geok Choo that most fund managers do not take an active role in building up the companies which they hold shares in. They buy the shares as portfolio investments.”
“Mr Leong Horn Kee said only two-thirds of these have been divested, fully or partially. That is true. But, at the same time, we also divested some 30 GLCs which were not listed in Michael Fam's Report. So, overall, since the mid-80s, we have divested some 60 Temasek companies, either completely or partially, more than what Michael Fam's Report recommended. Temasek will continue to consolidate and rationalise its stable of companies. It will divest those that are no longer relevant to its mission, but this must be at the right time, at a fair price, in a way which does not unsettle the market and which ensures that the GLCs continue to be properly managed after divestment. Mr Inderjit Singh and Mdm Ho Geok Choo urged the Government to consider management buy-out (MBO), as a method of divestment. An MBO is certainly one of the methods which the Government will consider and which, indeed, we have used on occasions to divest companies. But, as Mr Sin Boon Ann correctly pointed out, information is not symmetrical in an MBO. Management knows more about their company than the board or the shareholders. Indeed, if they did not know more about the company, something is wrong. But this causes a problem. So it is not so simple to ensure that the shareholders receive full and fair value for their shares in an MBO. The purpose of the MBO is not to sell the company cheap, but to derive full value for the shareholders and act in the best interest of the company. But we do not entirely rule out MBOs either, and each case will be evaluated on its merits. There is no reason for the Government to sell off GLCs below their fair value, regardless of market conditions, by a specific deadline. Why should we do that? We do not need to raise revenue through asset sales.”
“Most of the time, if the private sector is not willing to go in, I would say we should conclude that the business fails the market test, and should not be launched at all. But once in a while the Government may need to impose our judgment and override the verdict of the market. One recent example is the Jurong Island project. The Government felt that it makes sense for us to reclaim seven islands, fill in the land, sell the land, develop a petrochemical complex, not by building the plants ourselves but by encouraging and persuading MNCs to come and build the plants. That is an entrepreneurial business decision, although in that case the decision was made by JTC, and it was done through JTC with the help of EDB, rather than by forming a new Temasek company, which we could have done. Hence, the clause in the Temasek Charter to allow Temasek, from time to time, to invest in new businesses, in order to nurture new industry clusters in Singapore. There will be other occasions when Temasek will need to go in. On the one hand, Mr Leong Horn Kee wants the Government to stop forming new GLCs; on the other hand, he wants GLCs to help the SMEs by co-investing in them. Indeed, as Ms Indranee pointed out, there is a certain tension between these two arguments. Temasek will indeed invest in SMEs, where it makes business sense. But if we did this, please remember and accept that these SMEs, by definition, will become GLCs! Another hot issue which MPs have pressed on is the divestment of GLCs. The Government will divest those which do not have the potential for international growth or serve no strategic purpose, and these are mostly the smaller ones. Michael Fam's Report in 1987 recommended divesting 41 GLCs over 10 years.”
“The policy question is whether GLCs should continue to go into new businesses. Mr Leong Horn Kee wants to curb the proliferation of GLCs. He asked that no new GLC be formed without the explicit consent of MOF. Mr Leong's question has to be addressed at two levels. For the listed companies, which Mr Iswaran has just discussed, the decision to enter into new businesses is for the respective board of directors to take. The board has to act in the interests of all the shareholders, including the minority shareholders. We cannot forbid a listed company from doing certain activities, just because the Government happens to own shares in it. It is wrong both legally, because the directors have a fiduciary responsibility to all the shareholders, and also from a policy point of view. GLCs, especially the listed GLCs, have to operate commercially. It does not mean that DBS will go into manufacturing semi-conductor chips, or PSA should start an airline business, or even a shipping business. The decisions must make business sense, and they must fit the companies' business strategy. But there is no original sin attached to being born a GLC, which taints a GLC from birth and prevents it from doing certain types of business. As for investments by Temasek itself, we are in a different situation from the early days. There is now less need and, I think, fewer opportunities for the Government to go into new businesses on its own. We are not likely to start a new airline, or another bank. But we cannot completely rule out the possibility that the Government may need to invest directly in new businesses. These could be businesses which are exceptionally risky or which have long gestation periods, or where the private sector is not willing to go in.”
“Hence, we have had a long debate in the EISC, chaired by Mr Raymond Lim, and also within the Government on the role of the Government as a shareholder in these companies, and what the Government hopes the GLCs will achieve. The result, after extensive debate, has been the Temasek Charter. The Charter sets out Temasek's role - to nurture the companies with the potential to grow into successful international businesses. It defines the types of businesses which Temasek will hold and those that Temasek will exit and divest. Temasek will have no interest in companies that will only serve the domestic market, unless these are strategic industries, for example, broadcasting, the electricity grid or the port. The GLCs are important players in the Singapore economy. There are very few non-GLCs with the size, organisational strength, or the technological depth of Singapore Telecom, SIA, Singapore Technologies or PSA. The closest would be the banks - UOB and OUB, or now UOB and OCBC, and the property companies, eg, CDL. But these are not technology companies. We can argue whether had the Government not built up these companies, more non-Government private enterprise would have grown, and the Singapore economy would have been more dynamic and entrepreneurial. But the Government decided on a strategy, and it worked. We are convinced it is right. Maybe you are right and we are wrong, but that is Monday-morning quarterbacking. Now that the GLCs have been created, the Singapore Government has a responsibility to make sure that they are well run, grow their business, and contribute to the economy. This may mean tougher competition for the non-GLCs. But so long as the competition is fair, it is good competition, it is good for the economy, it is good for Singaporeans.”
“Mr Deputy Speaker, Sir, I thank all the Members who have spoken. It is now my pleasant task to summarise the arguments which they have very eloquently made. I do not feel like Darth Vader. I am trying to look like Yoda. The story of how GLCs came about has been well told by all the MPs. So, I do not have to repeat the historical background. But, today, the value-added of Temasek companies accounts for some 13% of Singapore's GDP. If the Government had not got involved in business, most of these companies would not exist today. If you allow for the fact that the Government itself consumes 9% of the GDP, then the non-GLC private sector, which means the local companies and the multi-nationals, makes up 78%, which is more than three-quarters. Our objective is to expand this total pie, of which the larger part is the non-GLCs. And that means expanding the productive part of the economy, namely, the sum of both the GLCs and the non-GLCs, while keeping the Government share as small as possible, because the Government share really is a consumption. It is a necessary burden, but it should be kept small. The question is: do GLCs have a contribution to make in this process? Will growing the GLCs be at the expense of the non-GLCs? More importantly, and a different question, will growing the GLCs be at the expense of the overall economy? I think those are the questions we have to consider. Everyone agrees that in our earlier phase of economic development, the GLCs made a contribution. But now that the GLCs have grown, now that they exist, what should we do with them? Should the Government exit from all the businesses? If so, how?”
“But the purpose of the five-year disqualification is not to impose a further punishment on the MP beyond that period. It is de-linked from the severity of the offence committed. The five years starts after the release from prison. So, in fact, it is the period in prison plus five years. This is to impose a reasonable rehabilitative period between the release from prison and the resumption of his qualification to run for Parliament, so as to protect the integrity and image of the parliamentary election process. Mr Speaker, Sir, there was one last point from Mr Steve Chia on holding by-election for a seat vacated immediately should a Member be disqualified. Seats can be vacated for any number of reasons - disqualification is one of them, the Member may resign or pass away. I think that is a completely separate question which is not addressed in this Constitutional Amendment.”
“In other words, the proviso to Article 48 will really be invoked for cases where the 180-day timeline applies. But if there is merit, it is available. Next, Prof. Chin asked about decisions in Malaysian courts. Why do we still need this? Prof. Chin is actually referring to Article 45(1)(e) of the present Constitution which is not the subject of any direct amendment in the Bill. But, nevertheless, the reason the Article exists is as follows. Given the close ties and links between Singapore and Malaysia, it is not realistic for us to ignore criminal convictions sustained in Malaysia. Many Singaporeans travel up to Malaysia for business and recreation frequently. Many of our citizens are either former Malaysians who have lived or worked for a period in Malaysia. And this uniquely close relationship between Singapore and Malaysia is not matched by Singapore's ties with any other country. The penal laws of Singapore and Malaysia are very similar. What is a crime is most likely a crime there, and this similarity is again unique. There is a similar situation, in fact, in the United Kingdom where the Representation of the People Act provides for disqualification for imprisonment in either the UK or the Republic of Ireland. So there is reason for this. Of course, I should add that the conviction which is outside of Singapore and Malaysia is not entirely without consequence because Parliament can still suspend the MP for dishonourable conduct under section 20 of the Parliament (Privileges, Immunities and Powers) Act. The third point raised by Prof. Chin is why disqualification after a custodial sentence is only for five years. This is Article 45(2). Again, this is not subject to any amendment in this Bill.”
“Mr Speaker, Sir, may I address the points, first, on amendments to Article 46, particularly the 180-day rule which Prof. Chin, Mr Steve Chia and also Mr Low Thia Khiang have raised. The situation which they have described is not likely to happen because six months should be enough time for an MP to complete his appeal. According to the statistics, more than 80% of appeal cases are disposed of within six months. If an MP in question expeditiously pursues his appeal, there is no reason why it should not be completed within that period. Knowing that the MP has got this six-month deadline, the courts will no doubt accommodate the MP's schedule and fix an appeal for hearing as early as possible. It is only when the MP drags out his appeal that there is any chance of the process exceeding six months, in which case he only has himself to blame. We have to set a hard time limit because we have to avoid an MP deliberately dragging his case out and then repeatedly asking for an extension of time at the last minute, prolonging the entire process indefinitely. However, the six months is not an absolute limit. If, for extraordinary reasons, the appeal has not been resolved at the end of 180 days, the MP could raise a question under Article 48 on whether he has vacated his seat, and it is still possible for Parliament to invoke the proviso to Article 48 to postpone a decision on the vacation of the MP's seat. The main point of this amendment is to suspend the right of an MP to sit and vote while the appeal is in progress and to set a structured timeline for the MP to follow. And this is to put him on notice that, should he fail to meet the 180-day grace period, he should expect very little sympathy from Parliament, except under exceptional circumstances.”
“Second, there is still a reference, I find, to Malaysian courts in the proposed Article 46(4)(c) where an MP may be disqualified if convicted of an offence by a Malaysian court. This is a historical issue. Why have we not taken the opportunity to take away this reference to Malaysia? Third, Article 45(2) refers to the removal of disqualification after, for instance, an MP has been sentenced and served his custodial sentence, and he is released. He is no longer disqualified five years after his release. He can stand for re-election. Sir, the question is, if an MP has been convicted of a serious offence or, for that matter, successfully sued in the civil court, for example, for breach of trust or such conduct which was manifestly dishonest and dishonourable, should he not be disqualified for a longer period or, in some really serious offences, permanently disqualified? Finally, Sir, the amendment may be seen by some in this House as well as outside that this was motivated by the treatment of the Non-Constituency MP in the previous Parliament, Mr J B Jeyaretnam, during his bankruptcy proceedings when he was allowed to participate in Parliament during the appeal. I am sure that this is not so and that, on the whole, the amendments to the Constitution are important in preserving the honour and integrity of Parliament. Sir, I give it fullest support.”
“Furthermore, the third time, after Parliament has gone through the whole process of public advertisements, inviting members of the public to send in nominations, interviewing them, and so on, the NMP would serve only for at most one year, before General Elections have to be called. In the last term of Parliament, these NMPs, in fact, served only 17 days and attended three sittings of Parliament. The Leader stated that at an appropriate time, the Government intended to propose a change to this two-year term to stretch it out to two-and-a-half or three years, so that within one parliamentary term of five years, we only need to select NMPs twice. Hence, this amendment to extend the NMPs' term from two to two-and-a-half years. Sir, I beg to move. Question proposed. Assoc. Prof. Chin Tet Yung: Sir, I rise in support of the Constitution (Amendment) Bill. I should just like to ask the Deputy Prime Minister some questions relating to the proposed changes to Article 46 contained in clause 3 of the Bill. First, the amendment provides for a situation where an MP may, for example, be disqualified due to his being adjudged bankrupt or convicted of an offence for which he is fined more than $2,000 or jailed for more than a year. He is then suspended from parliamentary proceedings even if he appeals. There is nothing wrong with this, and it is practised in many jurisdictions, notably England. However, I would like to ask a question relating to the 180-day limit concerning the appeal, after which a Member of Parliament must vacate his or her seat. What if the appeal had not been heard by then? What if subsequently the appeal is allowed? He would have vacated his seat already and there would be no opportunity for reinstatement. Is this really intended?”
“The first is to disallow him from participating in parliamentary proceedings while his appeal is pending. The second is to give him a reasonable time to exhaust his avenues of appeal. Clause 3 amends Article 46 of the Constitution to provide that an MP who becomes disqualified by reason of bankruptcy, unsound mind or criminal conviction, shall immediately cease to be entitled to sit or vote in Parliament until the outcome of any appeal against the Court's decision. The MP's seat will, at the very latest, be vacated after 180 days even if the appeal is still pending. An MP who succeeds in his appeal before the expiry of the 180 days will be entitled to resume sitting or voting in Parliament. We have set the period at 180 days because in vast majority of cases, the appeal process takes less than six months. This is also in line with the UK practice. In the UK, a bankrupt MP is immediately disqualified from participating in the proceedings of Parliament, but he is allowed to retain his seat for six months. If at the end of six months, his appeals to the Court do not result in his bankruptcy being annulled or rescinded, he must vacate his seat in Parliament. Extension of the Term of Nominated MPs Clause 4 of the Bill amends the Fourth Schedule of the Constitution to extend the term of NMPs from two years to two-and-a-half years from the date of appointment. In April, the House debated the motion by the Leader of the House to have Nominated MPs during the term of this Parliament. During this debate, the Leader informed Members that the present two-year term of NMPs was not ideal. If Parliament lasts the full five years, then we have to go through the process of selecting NMPs three times.”
“Next, as BCCS would no longer exist as a separate entity after the merger with MAS, clause 5 proposes the deletion of BCCS from the Fifth Schedule of the Constitution. The President has been consulted on clause 3 and clause 5 of the Bill, as these two amendments affect the custodial powers of the President. The President has agreed that I should inform the House that these two clauses have his concurrence. Let me now describe the amendments pertaining to the Members of Parliament and Nominated Members of Parliament. Disqualification of Members of Parliament Currently, a Member of Parliament is subject to disqualification under certain circumstances. These include becoming bankrupt, declared to be of unsound mind, being convicted of an offence that leads to a jail term of more than one year or a fine of more than $2,000, or being convicted of an offence in connection with elections to Parliament. When this happens, Article 48 of the Constitution gives Parliament a choice of either immediately vacating the MP's seat, or delaying the vacation of the seat to allow the MP to appeal against the Court's ruling. If Parliament chooses the former, it would not be fair to the MP, who ought to be given a reasonable opportunity to appeal against the Court's decision to retain his seat in Parliament. So far, Parliament's practice has always been to give the MP the chance to appeal. But this has given rise to the anomalous situation of a disqualified MP being able to continue sitting and voting in Parliament while his appeal is pending. There is no disincentive for the MP not to drag his feet with the appeal process. Clause 3 rectifies this, by giving the MP two incentives to expeditiously pursue his avenues of appeal.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, during the last Parliament sitting, the Second Minister for Finance, Mr Lim Hng Kiang, moved the Second Reading of the Currency (Amendment) Bill. The Currency (Amendment) Bill essentially made legislative amendments to the Currency Act to effect the merger of the Monetary Authority of Singapore and the Board of Commissioners of Currency, Singapore. As Mr Lim mentioned in his speech, the merger of BCCS with MAS would also require amendments to the Constitution of the Republic of Singapore. This Bill effects the necessary constitutional amendments to enable past reserves of BCCS to be transferred to MAS as past reserves, and to delete BCCS from the Fifth Schedule of the Constitution. The Bill also includes two other amendments, one concerning the disqualification of Members of Parliament under certain circumstances, and the other to extend the term of Nominated Members of Parliament from two to two-and-a-half years. Sir, I shall now explain the main amendments in the Bill. Transfer of Reserves Clause 2 amends Article 22B of the Constitution to enable a Fifth Schedule statutory board, whose past reserves are subject to the constitutional safeguards, to transfer any of its past reserves either to the Government's past reserves or to another Fifth Schedule statutory board's past reserves, without the transaction being regarded as a draw on past reserves. As BCCS and MAS are both Fifth Schedule statutory boards, this will enable BCCS to transfer all its past reserves to MAS. The transfer will not affect the total amount of past reserves that are subject to the constitutional safeguards.”
“This relaxation should not lower professional standards of the life insurance advisers, because unprofessional conduct will not be viewed any less seriously under the Financial Advisers Act. However, I should clarify that the CPF Board has decided that where rebates are given for products purchased using CPF savings, the rebates should be refunded to the CPF accounts so that members' savings can be safeguarded.”
“Mr Speaker, Sir, the prohibition on rebates under MAS Notice 304 was introduced in the 1990s to prevent life insurance agents or brokers from rebating, or offering to rebate, any part of their commissions as an "inducement" to clients to purchase life insurance policies, without assessing whether the policies were appropriate for the clients. The MAS discourages the use of rebates by any life insurance adviser as the basis for his recommendation to any policyholder. It still discourages this with the Financial Advisers Act, which requires financial advisers and their representatives to have a reasonable basis for their recommendation. Recommendations are expected to be reasonable and appropriate, having considered the investment objectives, financial situation and financial needs of the clients. Financial advisers and their representatives should focus on the value of their services to their clients and should not resort to the offering of rebates as a basis for their recommendation. The life insurance companies have effectively implemented the best practice recommendations of the Committee on Efficient Distribution of Life Insurance (CEDLI), including a Needs-based sales process, a comprehensive Training and Competency regime for its advisers and Enhanced Disclosure of life insurance products. MAS has therefore lifted the outright prohibition on rebates contained in MAS Notice 304. This is in line with the Authority's shift from a regulatory to a supervisory approach. We are progressively replacing prescriptive regulations with principle-based regulations, as the market demonstrates the maturity to follow best practices. Insurance companies can decide for themselves how to package and market their products without the ban.”
“Miss Penny Low asked the Deputy Prime Minister and Minister for Finance (a) what is the rationale or objective behind the reversal of the policy on rebates in the life insurance industry; and (b) in view of the Financial Advisers Act, how will this affect the development of a professional group of people such as financial advisers.”
“Mr Speaker, Sir, generally speaking, deposit insurance schemes have a cap. Their purpose is to protect small depositors because they will find it difficult to get enough information about the banks and to make a considered assessment as to which is a safe bank to put their money. Big depositors are expected to make their own judgment and decide where it is safe to put their money and not to vest their savings to banks which are unsafe. This is not just a necessary evil but it is the way the system works. If every depositor can put money, regardless of amounts, into banks, however unsafe and be confident that it will be insured by some deposit insurance scheme, then you have a moral hazard. This means that the depositor does not have to pay attention to whether the bank is safe and the bank is under no pressure to perform and to become a sound bank in order to attract deposits. Therefore, nearly all deposit insurance schemes got caps. The caps vary. We have set our cap at $20,000 which covers 85% of deposits in Singapore. We think that is sufficient. Some countries have higher caps. Where they do, it is sometimes the result of political pressure rather than because it is prudentially a sound thing to do or because there is a need for it. In fact, Alan Greenspan, advising against raising the deposit insurance cap in the US recently, said, "This is the solution, but what is the problem?" But, nevertheless, the problem was that this was election year and the Bill was passed. We are setting it at $20,000 which we think is the correct level. If you look at Japan, of course, they have no cap whatsoever, but there banks are in quite an extraordinary situation. REBATES IN LIFE INSURANCE INDUSTRY 3.”