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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Every one of 1,557 lines we hold for Lee Hsien Loong, in date order, each linked to its source. Free to read, in full, without an account. Page 28 of 32.
“Mr Speaker, Sir, the details were contained in the consultation paper which we sent out recently. Speaking from memory, our intention is to build up a deposit insurance fund which will amount to 30 basis points, which means, 0.3% of the amount of deposits insured. But we are not building this up overnight. We are planning to build this up over a period of 10 years, which means a very small levy, 3 basis points a year, over a period of 10 years. But the exact levy will vary depending on the state of the bank and the supervisory assessment of the bank on how risky it is. So the levy will vary from bank to bank, but it will be a small levy.”
“The bank supervisor may disagree if there is a good chance that the bank can be returned to health after cleaning up its balance sheet and improving its management. But even under this option where the deposit insurer is separate from the bank supervisor, the two will still need to consult closely and share information with each other. In the second phase of the study, the MAS will assess the relative merits of the two opposing considerations, and study the practices in other countries, before making a firm proposal on an organisational structure most suitable for the Singapore deposit insurance scheme. The MAS will consult with the industry and other interested parties when the study is completed.”
“Mr Speaker, Sir, MAS has not decided who will manage the deposit insurance scheme. The first phase of the deposit insurance study by MAS focused on issues related to the membership, coverage limit, the size of the fund and how participating institutions will be assessed for premium contributions. Who will manage the scheme will be considered in the second phase of the study. There are two broad options for managing deposit insurance. One option is to have the responsibility reside within MAS. There is substantial overlap in the interests and responsibilities of a bank supervisor and a deposit insurer. MAS supervises banks to assess their safety and soundness and to minimise incidences of failure. A major part of this supervision involves evaluating the risk profile of institutions - both the health of their balance sheets as well as the strength of their risk management systems and processes. The deposit insurer similarly needs to assess the risk profile of institutions so that it can price the insurance premiums appropriately and take supervisory action to minimise the risk posed by a weak institution to the deposit insurance fund. If MAS administers the deposit insurance scheme, it can leverage on its existing supervisory resources, avoid the duplication of supervisory functions and minimise the burden on institutions. Another option is to set up a separate organisation with its own governance structure. This approach emphasises the concern that the interests of a deposit insurer and a bank supervisor may not always coincide. A deposit insurer may want to close a weak bank early instead of risking further deterioration in the bank and a larger loss to the deposit insurance fund.”
“Mdm Ho Geok Choo asked the Deputy Prime Minister and Minister for Finance, with regard to the Monetary Authority of Singapore's proposed deposit insurance scheme, (a) who will be appointed to manage the scheme; and (b) how have other countries operated similar schemes, especially with regard to best practices needed to avoid possible conflict of interest among bankers and banking supervisors who may be represented on the boards of such appointed agencies.”
“Mr Speaker, Sir, as at 31st July 2002, around 1.3 million Singaporeans have made the requisite $50 CPF contribution to qualify for ERS. Out of this 1.3 million Singaporeans, 100,398 are inactive CPF account holders and another 221 are non-salaried Singaporeans. The Government will take steps to remind Singaporeans about the ERS. In September 2002, CPF Board will send letters to all adult Singaporeans highlighting the key features of the ERS scheme. Those who have not made the requisite $50 CPF contribution will be reminded to do so as soon as possible before the deadline. After the letters have been sent out, pamphlets covering the ERS and the rest of the GST Assistance Package, such as the rebates and the CCC Assistance Scheme, will be distributed to the public. The best way to reach out to all Singaporeans is not just through the Government's publicity efforts, but the active involvement of everyone in the community. Thus, Singaporeans should help to remind their family members, relatives and friends to make the requisite $50 CPF contribution. Grassroots leaders will also be doing their part to remind their residents about the ERS. All eligible Singaporeans who have made the $50 contribution by 30th November 2002 will receive an ERS notification letter with details on the number of the shares that will be allocated to them on 1st January 2003. Those who have not made the contribution at that time can still do so by 31st December 2002. They will then receive the shares on 1st February 2003. DEPOSIT INSURANCE SCHEME 2.”
“Eligibility Criteria (a) At least one parent must be a Singapore citizen or Permanent Resident; (b) The mother/single father is working full-time or part-time regularly; (c) The combined gross monthly income of both parents not exceeding $2,500; (d) The child attending the centre must be: a Singapore Citizen or Permanent Resident; 7 to 14 years of age; schooling.”
“Eligibility Criteria For couple (a) The family must be complete - consisting of husband, wife and one child or two children; (b) At least one spouse must be a Singapore citizen. The other must be either a Singapore citizen or a permanent resident of Singapore; (c) The wife is 40 years of age or below; (d) Both husband and wife do not have any GCE `O' or GCE `N' level passes; and (e) Both husband and wife earn less than $750 each a month at the time of the application. For widow (a) She must have either one child or two children, one of whom is below 7 years of age or is attending school; (b) She is a Singapore citizen or a permanent resident of Singapore; (c) She is 40 years of age or below; (d) She does not have any GCE `O' or GCE `N' level passes; and (e) She earns less than $750 a month at the time of the application. Assistance Received (a) Annual Conditional Housing Grant of $1,200, which is credited into the wife's/widow's CPF account. The money can be kept in the CPF account or be used to buy a HDB flat; and (b) Annual Education Bursary ranging from $400 to $1,200 per child depending on the child's educational level. Fee Assistance for Student Care Given to eligible parents who place their children in non-profit Student Care Centres (SCCs). This is to ensure that SCCs are within the reach of parents who need to provide their children with an alternative form of day-care arrangement before and after school hours but are unable to afford the fees.”
“Eligibility Criteria (a) Single-parent household with dependent children and without other means of support; (b) Family members suffering from chronic illness; or physical, or intellectual or mental disability; (c) A household of elderly person/s above age of 60 years and without other means of support; (d) Principal Wage Earner passed away, or abandoned or deserted the family, or separated from them; (e) Principal Wage Earner detained or imprisoned. Centre-Based Financial Assistance Scheme for Child Care (CFAC) A child care financial assistance scheme for lower-income families, CFAC subsidy is provided on top of the existing Government subsidies to purchase child care services for their pre-schoolers below 7 years old. It also provides one-off assistance up to a maximum of $1,000 to help lower-income families meet the start-up costs for placing their children in a child care programme. The scheme aims to improve the developmental opportunities for children from low-income families and also assists working parents, especially mothers, to return or remain in the labour force. Subsidy ranges from $50 to $250 per child per month. CFAC is extended to all registered child care centres in Singapore and children in the first to fourth birth order of the family qualify for the scheme. Small Families Improvement Scheme (SFIS) Aims to help lower income couples who intend to stay together to keep their families small and to better themselves. It helps families to buy their own HDB flats and to pay for their children's education. The scheme is also extended to widows who have children with educational needs.”
“85 MCDS Delegated Schemes Public Assistance (PA) Scheme Provides a monthly grant to financially distressed Singaporeans who by reason of age, illness, disability or unfavourable family circumstances, are unable to work and have no means of subsistence as well as no one to depend upon. Monthly allowances range from $230 for a single-person household to $670 for a household comprising 4 or more persons. Recipients also receive supportive assistance such as free medical benefits at Government/restructured hospitals and Government outpatient clinics. School going children are referred to MOE for supportive assistance and the elderly above 60 years old are matched with volunteers from the Lions Befrienders for assistance in their daily needs. Special Grant Similar to PA Scheme except that the Special Grant is meant to assist non-Singapore citizens. Interim (Short-term) Financial Assistance Scheme [IFAS] Monthly grant is given to help applicants to tide over a difficult period of time. The rates are based on the quantum for Public Assistance but may vary depending on the needs of each case. Rent & Utilities Assistance Scheme (RUAS) Provides short-term relief to Singapore Citizens and Permanent Residents staying in one, two- or three-room HDB rental flats who are genuinely unable to pay their rent/utilities/conservancy charges. The scheme also assists these families experiencing hardship to move towards self-sufficiency through various support programmes/services provided by participating voluntary welfare organisations (VWOs).”
“On the other hand, the CDCs also administer the Interim (Short-Term) Financial Assistance Scheme (IFAS) where the amount of assistance is based on Public Assistance rates, with each case assessed on its own merits. The officers take a holistic approach by looking at both the individual as well as family circumstances before rendering the most appropriate form of assistance. Besides on-the-job training, the CDC officers undergo training to equip them with the skills to assess and handle applications for social assistance. MCDS is also organising a joint CDC-FSC training package to be launched in August 2002 to strengthen the networking between staff dealing with low-income families. The specific amounts disbursed under each scheme are given in the tables below. Number of Beneficiaries by Schemes April 00 - April 01 - New Cases March 01 March 02 for April - June 02 Public Assistance 2,582 2,779 145 Scheme & Special Grant Small Families 1,050 1,142 5 Improvement Scheme Rent & Utilities 629 836 207 Assistance Scheme Interim (Short- 770 5,779 1,775 Term) Financial Assistance Scheme Centre Based 234 652 327 Financial (as at Dec 00) Assistance Scheme for Childcare Fee Assistance for not 3,762 1,400 Student Care available Total 5,265 14,950 3,859 Amount Disbursed by Schemes Schemes April 01 - March 02 Public Assistance Scheme & $6,728,919.60 Special Grant Small Families Improvement $1,084,978.16 Scheme Rent & Utilities Assistance $ 602,004.57 Scheme Interim (Short-Term) Financial $2,203,471.31 Assistance Scheme Centre Based Financial $1,566,109.38 Assistance Scheme for Childcare Fee Assistance for Student $2,813,016.83 Care Total $14,998,499.”
“Income tax is collected on a Year of Assessment basis. Table A indicates the number of taxpayers and the total net tax collected for each (chargeable) income bracket in Year of Assessment 2001. Table A: Taxes paid by male and female taxpayers Chargeable Marginal Male Taxpayers Female Taxpayers Income ($) tax rate Number Total Number Total (%) Net Tax Net Tax Assessed Assessed ($/million) ($/million) 400,000 28 6,365 1054.8 821 117.0 Total 478,344 3077.8 237,550 639.3 Note: Male taxpayers include those who opt for joint assessment. FINANCIAL ASSISTANCE SCHEMES 2. Ms Braema Mathiaparanam asked the Acting Minister for Community Development and Sports (a) how many people received financial assistance under the various schemes in 2000, 2001 and the first six months of this year; (b) how much money was given out to Singaporeans in need under each scheme; (c) what are the criteria used to assess candidates under each scheme; and (d) apart from social workers, how are the others who handle such cases trained to assess cases and handle matters of confidentiality. Assoc. Prof. Dr Yaacob Ibrahim: The CDCs took over the administration of the social assistance schemes and services from the Ministry of Community Development and Sports with effect from 1st April 2001. The CDCs have helped almost 15,000 beneficiaries with financial assistance amounting to $14.99 million between April 2001 and March 2002. The various schemes have specific eligibility criteria to meet certain policy objectives. For example, a beneficiary under the Public Assistance Scheme must satisfy the criteria that he/she is unable to work because of age, illness or disability and has no means of subsistence as well as no one to depend on.”
“Mr Speaker, Sir, I understand that some Members would like to debate my Statement and in accordance with Standing Order No. 42, I beg to move, "That Parliament do now adjourn." Question proposed.”
“It is therefore difficult to commit to a schedule for restoration, though it remains the Government's intention to restore the rate as quickly as conditions permit. Barring unforeseen circumstances, we can reasonably expect to restore CPF contribution fully to 40% in two to four years. I would like to thank Mr Tharman Shanmugaratnam, his ERC Sub-committee members and the members of the CPF and Wages Working Group for their hard work in coming up with the CPF proposals. During their deliberations, they have solicited a wide range of views - from workers, labour unions, employers and financial institutions. They have produced a balanced package of proposals which preserves the existing strengths of the CPF system and, at the same time, makes the necessary adjustments to improve the financial security of individual Singaporeans, and to enhance labour market flexibility. These changes, together with the changes to the use of CPF for property purchases and the divestment of HDB market rate loans to banks, will pre-empt significant long-term problems, and contribute to Singapore's overall economic resilience and competitiveness. ADJOURNMENT MOTION”
“The remaining 10% will still have to be paid in cash. The maximum quantum of bank financing will stay at 80% of property value. The new rules will apply to CPF Board applications for private property purchases where the options to purchase were entered into, on or after 1st September 2002. Properties for which the options were signed before 1st September 2002 will not be affected. HDB loans, whether subsidised or not, currently have no cash downpayment requirement. HDB flat buyers are allowed to use CPF savings to pay the full 20% downpayment, because for HDB loans, CPF's claim rank second to HDB's claim. When market rate HDB loans are transferred to bank origination, we will initially preserve this arrangement. But for the longer term, the rules for these bank-originated mortgages on HDB flats should be aligned with the rules for private property mortgages. We will phase in the 10% cash downpayment requirement for bank mortgages on HDB flats gradually, over five years. No Change to Subsidised HDB Loans Finally, no change to subsidised HDB loans. I would like to emphasise that HDB subsidised loans will not be affected in any way by these changes. They will be subject neither to the new Valuation Limit for CPF withdrawal, nor the 10% cash downpayment requirement. Mr Speaker, Sir, I would like to ask the Clerk to distribute a summary of the changes to Members so that they could see at a glance the whole picture. [Copies of Summary of the changes distributed to hon. Members.] Conclusion Mr Speaker, Sir, implementation of many of these measures is pegged to the restoration of the CPF contribution rate to 40%. When and how long this will take depends on the state of our economy, as well as on developments in the region and around the world.”
“CPF members investing in shares or other financial assets have no such buffer available, and take on the full risks of their investment decisions. It is therefore not prudent to allow the present unsatisfactory arrangements to continue. The Government has thus decided to reverse the charge position of CPF Board and banks for mortgage loans originated by financial institutions regulated by MAS. The banks' principal will now rank ahead of CPF savings withdrawn to purchase the property and to service the loan. On interest due, CPF Board and the banks will rank pari passu. This change will align the treatment for private loans with HDB loans. It will apply to property purchases where the options to purchase are entered into on or after 1st September 2002, and also apply to all existing loans that are refinanced after this date. This reversal of charge position will also apply to the use of CPF savings for the purchase of non-residential properties under the Non-Residential Properties Scheme. 10% Cash Downpayment on Housing Loans Currently, bank financing for private property is subject to a cap of 80% of the property value. The remaining 20% downpayment must be paid in cash and serves as a buffer for the banks. CPF money cannot be used for this downpayment, because the CPF Board ranks ahead of the bank in its claim, and so, in a default, CPF money does not provide any buffer to the bank. Now that the lending bank will rank ahead of the CPF Board, CPF can be used for part of the downpayment. However, it would not be prudent to do away with the cash requirement altogether, because this could encourage excessive property speculation. We have thus decided to allow 10% of the downpayment for private property purchase to be paid out of CPF savings.”
“In the event of a loan default, the CPF Board assumes priority charge over the mortgaged property, ahead of the banks. This means that, in the event of borrower default, the banks are unable to make effective use of the mortgaged property to mitigate their losses. This is because proceeds from the liquidation of the property will first have to be used to repay the CPF Board, ie, to repay the borrower's own CPF account. And as the loan matures and more of it is repaid through CPF withdrawals, the Board's claims increase correspondingly. The banks are entitled to a diminishing residual amount after the money has been returned to the buyers' CPF account. Hence, the more loan is repaid with CPF, the less satisfactory the bank's collateral position becomes. This is not sound for the banking system. So far this has not posed any major problems, because over the past decades, the property market has risen steadily and strongly, especially in the 80s and early 90s when the economy was booming. So long as property values continued to appreciate and few borrowers defaulted on their mortgages, there was less concern about the value of the collateral, and whether banks or the CPF ranked first in a default. Looking ahead, the property market is unlikely to be as buoyant as in the 80s or early 90s. This sharpens the latent prudential concerns over the existing charge arrangement. A second problem with the current arrangement is that borrowers who run into difficulty will have less incentive to continue servicing their loans because their own CPF money will be less at risk than their creditor banks' claim on the property. This can also contribute to imprudent investments in properties.”
“The interest rate is pegged to the rate DBS charges former Credit POSB mortgagors. In 2001, about 37% of all loans provided by HDB, amounting to $3.2 billion, were market rate loans. HDB has been looking into whether certain functions that go beyond its core activities can be better handled by the private sector, so that it can better focus on its basic objective of providing affordable housing for Singaporeans. Arising from this review, the Government has decided that, from 1st January 2003, HDB will cease to grant market rate loans. Instead banks will be allowed to provide loans to flat buyers at commercial rates and on commercial terms. HDB flat buyers will benefit from more choices, and can take advantage of the many competitive housing loan packages offered by the banks. Existing HDB market rate mortgagors can continue their existing mortgages provided by HDB. However, if they wish to refinance their loans with the banks, subject to the new Valuation Limit, they can do so. CPF Second Charge on Bank Loans Next, the CPF second charge on bank loans. Currently, for mortgage loans made by HDB, HDB has first charge, followed by CPF Board, which has second charge. This means that if the buyer defaults on his mortgage, and HDB repossesses his property, then HDB will deduct the amount that the mortgagor owes HDB before paying any balance back to the mortgagor's CPF account, or to the mortgagor himself in cash. There will be no change to this arrangement when banks start selling mortgages for HDB flats, as far as the mortgagors are concerned. The banks will merely step into the shoes of HDB, and have first charge on the mortgage loans. For mortgages on private properties, however, where the banks have been the lenders, the arrangement has thus far been the opposite.”
“These include transferring future HDB market rate loans to banks, changes to the CPF charge on a private property which is mortgaged, and changes to the cash downpayment requirement on mortgages. First, the banks origination of market rate HDB loans. The Government has a responsibility to provide affordable basic housing in the form of subsidised HDB flats to Singaporeans, and to enable as many citizens as possible to own their own homes. It also helps HDB home owners to upgrade to bigger flats, as their families grow and they accumulate sufficient savings. HDB will continue to provide subsidised mortgage loans for first time flat buyers and second time buyers who are upgrading from smaller flats. However, not all Singaporeans who buy HDB flats fall into these categories. For example, they may be buying an HDB flat for a third time, or they may be making a lateral transfer from one 4-room flat to another. Some may even own private properties and may be buying HDB flats to live in while they rent out their private properties. Other HDB buyers do not qualify for HDB subsidies at all. For example, they may be permanent esidents, or they may have high incomes and be buying a flat on the resale market. HDB allows such purchases, but it does not consider them as falling within its core objective of promoting universal home ownership amongst Singaporeans. In recognition of this distinction, HDB makes two types of loans to the two groups of buyers. For the first group, HDB has subsidised loans which are a key instrument to promote home ownership. The interest rate for such loans is pegged at the CPF interest rate plus 0.1%. For the second group, who do not fall within the basic housing safety net, HDB provides market rate loans.”
“The 150% Valuation Limit will take effect for options to purchase residential properties which are entered into, on or after 1st September 2002. The limit will be brought down gradually to 120% of the value of the property, over five years. At 150%, the Valuation Limit should not have significant impact on most home buyers on the property market. Even at 120%, a typical CPF member can still service a 25-year mortgage fully with his CPF for 19 years. There is thus a long lead-time for CPF members to plan their finances properly so that they can continue servicing the mortgage in cash after their CPF withdrawals have reached the Valuation Limit, or factor in some cash co-payment along the way and spread out the usage of their CPF. However, by instituting the Valuation Limit now, we establish the important principle that the amount of CPF used to buy a house must not be excessive in relation to its value. This Valuation Limit will not apply to those who purchase HDB flats using subsidised mortgages. It will also not apply to options to purchase entered into before 1st September 2002 and existing mortgage loans, except where these are refinanced. Other ERC Recommendations The ERC has made other recommendations which I have not covered today. These include exploring ways to help home-owners monetise their assets, strengthening provisions for healthcare needs, and devolving CPF-based insurance schemes to the private sector. The Government agrees with these recommendations in principle. The relevant agencies are studying them further to see how best to implement them. Banks Origination of Market Rate HDB Loans Mr Speaker, Sir, let me now explain the changes arising from MND's study to devolve some non-core HDB functions to the private sector.”
“The civil service will take the lead and implement a Transitional CPF Top-Up Component (TCTC) for civil servants aged 50-55. Officers, who are aged 50-55 on the dates when the CPF is restored for others, will receive, in their TCTC, part of what they would have got had their CPF too been restored. PSD will announce details of this scheme in due course. Valuation Limits on Bank Mortgages Home ownership for Singaporeans continues to be a fundamental policy objective of the Government. When the Residential Properties Scheme first started in 1981, CPF withdrawals for private property purchases were subject to a Valuation Limit of 80% of the value of the property. But over the years, this Valuation Limit was progressively liberalised. The current limits on the use of CPF funds to purchase properties are very lax. CPF withdrawals for housing can reach imprudent levels if they are not appropriately capped. This is especially so because we allow CPF savings to be withdrawn not just to pay for the property itself, but also to service the interest payments on a mortgage loan, which are in fact not investments, but a form of consumption. Furthermore, the property market goes through cycles. If property prices fall, part of the CPF savings that members have put into the property may be lost. CPF withdrawals for housing are meant as a form of investment. Indeed, for most Singaporeans, the house they live in is their single most important investment. The amount of CPF committed to a house should therefore bear an appropriate relation to the value of the property. The Government accepts the ERC's recommendation to set a withdrawal limit equivalent to 150% of the valuation of the property.”
“Those workers above 55 will have their CPF contribution rate restored together with workers aged below 50, to their pre-1998 levels. The reduction of the total CPF contribution rate to 32% for workers aged 50-55 addresses a foreseeable future problem. However, for workers already in this age group who currently have jobs, the non-restoration of employer contributions may cause them to lose out, at least relative to other workers whose employer contributions will be restored. Some older workers have also expressed concern that the non-restoration will affect their ability to service their mortgages. Younger workers will have time to adjust, and are unlikely to run into such problems by the time they reach 50-55. But workers now in this age group may face mortgage payment shortfalls. These are valid concerns, although the difficulties are transitional ones. We can, and we should, take steps to buffer their impact on workers who are currently in this age group, especially as the restructuring of CPF rates for the older workers deals with a medium-term rather than an immediate problem of structural unemployment. To help workers facing mortgage shortfalls due to the non-restoration, the Government will allow these CPF members to continue to draw on their Special Account to pay their mortgages for a longer period of time. We already introduced such a scheme when we cut the CPF rate in 1998. We will now extend its duration. As recommended by the ERC, we encourage employers to pass on part of their cost savings to deserving workers in this age group, as the CPF is restored for the others. Employers can do so through the variable component of wages, such as bonuses or other variable payments, depending on the circumstances of each company and the contribution of each worker.”
“These programmes were originally intended to last for 12 months, to tide older workers over immediate difficulties in the economic downturn. The Government will now extend the enhanced support to the SRP, as well as the PJTP, for an additional year until November 2003. We will also improve the PJTP for older workers. Under the PJTP, workers receive wage support for six months, amounting to 50% of their wages. For workers who are more than 50 years old, we will extend this period of wage support to nine months, but at a lower support rate of 25% for the additional three months. To address the second problem of the seniority-based wage system, we need to inject greater flexibility in the wage system. The effort to promote flexi-wages has yielded results, but it will take many years to complete. We need to complement it by lowering the burden of statutory charges on wages for this vulnerable group of older workers. The Government therefore agrees with the recommendations of the ERC to keep the employer's CPF contribution rate for workers aged 50-55 at the current 16%. We will also progressively lower the employee's CPF contribution rate for workers aged 50-55 from 20% to 16%, as we restore the CPF contribution rate. This will increase the take-home pay for these workers and help them to meet their financial commitments. With this structural change, the total CPF contribution rate for workers aged 50-55 will be 32% - 16% from employers and 16% from employees. This is a meaningful step-down from the 40% full rate for those aged below 50, to 32% for those aged 50-55, to 20% for those aged 55-60. It will encourage employers to keep their older workers. I should clarify that the non-restoration only applies to workers aged 50-55, and not to workers aged 55 and above.”
“And more of them had to accept pay cuts. This problem of structural unemployment will not go away. The fundamental reason is that our workers will continue to face strong and increasing competition both from educated workers in developed countries, and from the lower cost workers of countries like China. Older workers will be most at risk, because they are on average less well educated than younger ones. This too will be a persistent issue, because although workers aged 40-44 are better educated than those aged 50-54, workers aged 30-34 are better educated still than those aged 40-44. In 10 years' time, when the workers who are now in their 40s reach their 50s, they will still be less well-educated than workers who are 10 years younger than them, and therefore will be at greater risk of becoming structurally unemployed. Our older workers are also more vulnerable because our seniority-based pay system pushes wages up beyond what their skills and productivity can justify. When older workers lose their jobs, they tend to have higher wage expectations, which makes it more difficult for them to find re-employment. The 40% CPF contribution rate exacerbates these problems, because it discourages employers from taking on older workers, and also discourages older workers from working for lower take-home pay. To address the first problem of older workers being less skilled, we must continue to push for skills upgrading. Last year, the Government introduced a comprehensive set of programmes to upgrade the skills of older workers. These included enhanced support for the Skills Redevelopment Programme (SRP), and the People-for-Job Traineeship Programme (PJTP) which incentivises employers to hire older workers by defraying part of the associated training costs.”
“The Government therefore agrees to the ERC's proposal to raise the income floor for employee's CPF contribution from between $200 and $363 to between $500 and $750. The vast majority of workers in full-time jobs earn more than $750 per month. This change will therefore benefit especially part-time workers. We hope that it will encourage more people who are presently not working, for example, housewives, to take up part-time work. This change will take effect for salaries earned from 1st October 2002. Older Workers Aged 50-55 Currently, the unemployment rate for older workers aged 50-55 is still lower at 4.6%. However, this situation is unlikely to persist. As our economy upgrades and restructures, structural unemployment, especially among older workers, will increasingly become a problem. We had a foretaste of this in the recent economic downturn. Older workers who were retrenched faced much greater difficulty securing re-employment compared to younger workers. A survey of workers who were retrenched in the 4th quarter of last year found that as at the end of March this year, among those aged 50-55, the re-employment rate was 41%, compared to an overall re-employment rate of 50%. Older workers also took longer to find new jobs. The median duration of unemployment for workers aged 50-55 was 21 weeks, compared to 13 weeks for workers across all age groups. On top of this, 73% of workers between 50-55 years accepted pay cuts when they were re-employed, compared to an overall average of 59% who accepted pay cuts. The pay cuts were often substantial. In other words, for this group of older workers, the re-employment rate was lower. It took them longer to find new jobs, and when they did find new jobs, they had to accept deeper pay cuts.”
“With the ceilings for non-pensionable officers brought down to $5,000, we will lower both the employer's and employee's ceilings for pensionable officers to $6,667. The contribution ceiling to the Supplementary Retirement Scheme (SRS) will be correspondingly reduced to $5,000. One reason the CPF salary ceiling had been set at a high level was to effectively lower the personal income tax burden on higher income groups, because compulsory CPF contributions are tax deductible. At a time when top personal income tax rates were high, this was especially relevant for employees, whose incomes tended to be more fully declared than self-employed workers and professionals. However, over the years we have lowered income tax rates significantly. We have now also implemented the SRS scheme, which enables Singaporeans to set aside additional voluntary savings for retirement, in tax sheltered SRS accounts. There is therefore no longer a need for such a high CPF ceiling. Singaporeans who are concerned that the lower CPF contribution will result in them paying more income taxes, and who have not taken full advantage of the SRS scheme, may wish to do so to lower their tax liability. These changes will be implemented as we restore the CPF contribution rate to 40%. Income Floor Currently, employees who earn less than $200 a month do not contribute to CPF. Contribution rates are then phased in on a sliding scale from 5% for wages at $200 to a full rate of 20% for wages at $363 and above. This income floor of $200 was set in 1955 when CPF was first introduced. In the half century since then, wages have gone up many fold, but we have not correspondingly adjusted the income floor.”
“The Special Account interest rate is currently pegged to a premium of 11/2 percentage points over the Ordinary Account interest rate. The ERC has proposed pegging the Special Account interest rate to a more appropriate long-term interest rate, such as the yield on long-term Government bonds. The Government agrees with this recommendation in principle. It will study the matter further, to determine the appropriate benchmark interest rate to use, and the time of implementation. Salary Cap The Government also agrees with the ERC's recommendations to lower the salary ceiling for CPF contributions from a monthly salary of $6,000 to $5,000. This is in line with the principle that CPF should focus on catering to basic needs of the population in the 10th to the 80th percentiles of the income spectrum. CPF members who earn more than $5,000 a month fall well within the top 20th percentile in terms of income. There is no need to require them to set aside the same proportion of their incomes in compulsory CPF savings as others with lower incomes. Lowering the salary ceiling for CPF contributions to $5,000 will achieve this. The civil service will also rationalise the salary ceiling of the public sector with that of the private sector. The salary ceilings for non-pensionable public officers are currently $7,000 for employer contributions, and $6,000 for employee contributions. We will reduce both ceilings to $5,000. Pensionable public officers currently have higher CPF salary ceilings, at $9,333 for employer contributions, and $8,000 for employee contributions. As their CPF contribution rates are lower than for non-pensionable officers, their salary ceilings were set higher so that their maximum contribution in dollar terms would equal that of non-pensionable officers.”
“The Government agrees that we should encourage Singaporeans to invest in privately-managed pension plans. Experience in other countries, such as the US and Australia, has shown that, over the long term, well diversified pension plans offer better returns than keeping the money in cash, earning short-term savings or fixed deposit rates of interest. Such pension plans also offer superior returns at lower risk and cost, compared to members investing the money themselves in shares or unit trusts. However, private pension plans are not yet available in the local market. This is partly because the current regulatory rules for the CPF Investment Scheme (CPFIS) are not conducive to such plans. More fundamentally, it will take time for Singaporeans to adopt a mindset of investing their retirement savings with a long-term perspective, instead of using CPF funds to trade for short-term gains, eg, on the stock market. Based on the experience of other countries, the process of changing this public mindset may take a decade or longer. Nevertheless, we should start now. On its part, the Government will facilitate investment in private pension plans, as an additional option under the CPFIS framework. We will review existing CPFIS rules to improve the viability of pension plans, and encourage members to consider pension plans seriously as an investment option. However, CPF members must remember that higher risk accompanies higher returns, and that they are ultimately responsible for their own investment decisions. Special Account Interest Rate Not all CPF members will be ready to enrol in private pension plans, or take on other investment options already available under the CPFIS. Those who prefer to can continue to leave their savings with the CPF Board.”
“This will allow members to draw a monthly income of about $450 to support a modest standard of living upon retirement. The Government agrees with the ERC that the CPF Minimum Sum should not remain frozen at $80,000. As the economy grows and wages increase, Singaporeans will have higher expectations of what is adequate for their basic retirement needs. The current Minimum Sum will not be enough and will need to be revised upwards over time. The Government will decide on the next target amount for the Minimum Sum and the schedule for reaching the new target, after the Minimum Sum has reached $80,000 next year. Special Account The contribution rates to the Special Account are currently 4% for members aged 35 and below, 6% for those aged between 35-45, and also 6% for those aged between 45-55 (or, in brief, 4-6-6). The Government has announced that these contribution rates will be increased to 4%, 6% and 8% respectively (4-6-8), as we restore the CPF contribution rate to 40%. Even at 4-6-8, however, only half of all CPF members can achieve the Minimum Sum of $80,000 by age 55. To help more Singaporeans attain the Minimum Sum, the Government has decided to adopt the ERC's proposal to raise the target CPF contribution rates to the Special Account by 1 percentage point across the various age groups, from 4-6-8 to 5-7-9. This will enable another 10% of CPF members to attain the Minimum Sum of $80,000 by age 55. This increase in the Special Account contribution rates to 5-7-9 will be effected as we restore the total CPF contribution rate to 40%. Investment in Private Pension Plans To help CPF members build up more cash savings, the ERC has proposed that the Government facilitate the provision of low-cost, privately-managed pension plans to CPF members.”
“The CPF system remains fundamentally sound. However, our society is changing. Singaporeans are living longer. More are remaining single or having fewer children. Increasingly, Singaporeans have to depend more on CPF savings than on their children for their retirement needs. We now must update the CPF framework, to adapt to a different economic and social environment, and to pre-empt future problems. Changes to the CPF system will be based on the following principles adopted by the ERC: First, the CPF should focus on three key objectives: retirement expenditure, healthcare and home ownership. These form the core elements of financial security. Second, CPF should aim to meet these three needs at a basic level. Beyond this basic level, individuals should rely on their own private savings and arrangements. For a compulsory scheme like the CPF to go beyond providing for basic needs would add rigidity to the economy and be onerous to both employers and workers. Third, the CPF should be designed for the broad majority of Singaporeans, between the 10th to the 80th percentiles of the income spectrum. Those below the 10th percentile cannot rely on CPF alone for their retirement needs, and would need the help of other social support schemes. Those above the 80th percentile should be well able to look after their own financial affairs, including planning for their retirement. Finally, changes to the CPF system should be gradual, because many people have made long-term commitments based on the current framework and they need time to adjust to any policy changes. Minimum Sum Since 1994, the Government has been progressively increasing the Minimum Sum by $5,000 each year. We will reach the target Minimum Sum of $80,000, including up to half in a property pledge, by July 2003.”
“Mr Speaker, Sir, the Economic Review Committee (ERC) unveiled its first major set of recommendations covering taxation in April this year. The Government responded to these measures with a package of tax reforms in the Budget Statement, which will enhance our competitiveness, and help us to attract foreign investment and talent to Singapore, thus creating jobs and generating wealth for Singaporeans. Another major set of proposals from the ERC is on the Central Provident Fund (CPF), which the ERC Subcommittee on Taxation, the CPF system, Wages and Land released on 15th July. The Sub-Committee reviewed the existing CPF framework, and proposed changes to the system to achieve a better balance between retirement security and home ownership, and to make the labour market more flexible, in order to maintain and create more jobs especially for vulnerable groups such as lower income and older workers. In parallel with the work of the ERC, the Ministry of National Development has been studying how to inject greater flexibility into the public housing market. In particular, MND has studied devolving to the private sector those functions of the Housing and Development Board (HDB) which extend beyond the Government's core responsibility of providing affordable basic housing. Today, I shall present the Government's response to the ERC's CPF recommendations, and outline the changes to CPF rules arising from MND's review of HDB. Key Principles of the CPF System Let me first deal with the ERC recommendations. The Government accepts all the ERC recommendations. The CPF is the cornerstone of our social security system. It is based on individual responsibility and self-funding, and has served us well for many years, helping Singaporeans save for their own retirement.”
“Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Defence (a) why was a United States Air Force pilot allowed to fly our Republic of Singapore Air Force fighter aircraft which crashed recently in Arizona in the United States and (b) who will be footing the loss of the aircraft.”
“A listing of all the companies in the Temasek Group will not be meaningful. For example, many of the companies are set up for specific purposes in accordance with industry practice. Thus, each ship of Neptune Orient Lines is owned by a separate company, and every building under development typically comes under a separate company. It will be more meaningful to look at the businesses that the Temasek group of companies are involved in. The main business areas and the major companies in each area are as shown in the table below: Main Businesses Major Companies Finance DBS Group Holdings ECICS Holdings Telecom & media Singapore Telecommunications ST Telemedia1 MediaCorp of Singapore Keppel Corp Multi-industry Singapore Technologies Pte Ltd SembCorp Industries1 Keppel Corp Transport & logistics Singapore Airlines PSA Corp Neptune Orient Lines SMRT Corp SembCorp Logistics1 Property CapitaLand1 Keppel Land Mapletree Investments Infrastructure & ST Engineering1 engineering SembCorp Industries1 Keppel Corp PWD Corp Utilities Singapore Power SembCorp Industries1 Keppel Corp Tuas Power PowerSeraya Senoko Power City Gas Gas Supply Main Businesses Major Companies Others Chartered Semiconductors Manufacturing1 ST Assembly Test Services1 Wildlife Reserves of Singapore Singapore Pools Temasek Management Services 1 Denotes company is held through Singapore Technologies Pte Ltd. When companies in which Temasek has a direct stake are sold off, the proceeds of divestment are returned to the Government. RSAF FIGHTER AIRCRAFT INCIDENT IN THE US 2.”
“The House immediately resolved itself into a Committee on the Bill. - [Mr Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed. PARLIAMENTARY PENSIONS (AMENDMENT) BILL Order for Second Reading read.”
“Because if they have a business where there are lots of customers coming and going, or where there is noise, smoke or smell - as an MP, I am sure Mr Leong would have met many such cases - then he has to answer to the neighbours as well as the person who wants to do the business. A balance will have to be struck. Mr Leong also asked about simplifying process of liquidation. Here, I agree with Mr Leong that we need to strike a balance between having safeguards to protect creditors and employees and, on the other hand, not imposing unnecessary business cost. To encourage people to start businesses, we must not make it too onerous and costly for those who have failed and have to exit. In recent years, the Government has reviewed the bankruptcy law to make it easier for people who have failed in their business ventures to come back and try again. As part of the review of our Company Law, the Company Law Review Committee (CLRC) is also looking at ways to streamline our insolvency legislation and lower the costs to companies that are going through judicial management and liquidation. The CLRC has also recommended that we study and learn from the developments in the major jurisdictions. For example, the UK has recently started its review on its insolvency regime. The UK's review was prompted by the need to promote an enterprise culture and to encourage entrepreneurs who have failed honestly to try again. At the same time, the law will continue to provide sufficient safeguards for the protection of creditors and employees. So, this is something which the CLRC will have in mind as it comes out with its recommendations. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House.”
“Mr Speaker, Sir, Mr Leong raised two points. First, using home addresses for businesses to register their addresses. We have, as Mr Leong pointed out, a Technopreneur Home Office (THO) Scheme. The Technopreneur Home Office Scheme was started in 1999 to allow a businessman who qualifies under the Scheme to register his residential address as his business address, and the idea was to promote technopreneurship by reducing start-up cost. There is a good reason for separating commercial activities from residential areas. We need to ensure that the use of residences to conduct businesses will not disturb neighbours and affect the living environment. Therefore, only certain types of business activities, for example, those that are not noisy and do not cause pollution, are allowed. Mr Leong mentioned dormant companies. With the new BizFile arrangement with the Registry of Companies and Businesses, one can set up a company within a few minutes. So the need to set up a dormant company well in advance, before a person actually starts business, will be substantially reduced. I think that problem will be solved. As for which business we should allow to operate within a residential premise, this is something which we will have to study. If we are satisfied that the business does not cause problems to the neighbours, I think we can consider allowing it. It may or may not be a technopreneurship type of business. But I would urge Mr Leong to consider the point of view of neighbours of people who do business at home.”
“However, if a business requires hardcopy certificates of registration for other purposes, such as for submission to overseas regulators, it can still obtain hardcopy certificates from RCB upon the payment of a fee. Removal of Pre-Registration Checks for Similar Names Sir, in the Second Reading of the Companies (Amendment) Bill, I have explained the rationale for removing the requirement for the Registrar to do pre-incorporation checks for similar names. I have also explained how the proposed removal would benefit the business community and how there would be sufficient safeguards to protect the interest of incumbent companies and businesses. Clause 8 of the Business Registration (Amendment) Bill aligns the provision in section 11 with the corresponding provision in the Companies (Amendment) Bill. Under the new section 11, the Registrar will no longer do pre-registration checks for similar names. Mr Speaker, Sir, the proposed amendments in this Bill are expected to benefit business owners in terms of lower costs, more efficient service and greater convenience. It would also align RCB's practices with its counterparts in the US, UK and Australia, and allow RCB to provide better service to its customers. Sir, I beg to move. Question proposed.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Business Registration Act provides the basic framework of governance for sole proprietorships and partnerships in Singapore. The Business Registration Act was last amended in April 2000. Sir, I have highlighted in the Second Reading of the Companies (Amendment) Bill that the Registry of Companies and Businesses ("RCB") is working on an electronic filing system called BizFile. As in the case of the Companies (Amendment) Bill, this Bill seeks to introduce legislative changes that would facilitate the implementation of BizFile for businesses in Singapore. This Bill also seeks to streamline certain procedures and provisions in the Business Registration Act. Sir, I shall now highlight the main amendments proposed in the Bill. Removal of the Need for Physical Signatures, Certificates of Registration, Statutory Declarations and Affidavits As in the case of companies, BizFile would simplify the process for business owners to register their businesses and update their records with RCB. The user need not submit any hardcopy forms, declarations and affidavits. Clause 6 amends section 9 to dispense with the need to issue hardcopy certificates of registration as evidence of registration. The hardcopy certificate would be replaced by an electronic notification. Section 9 would also be amended to remove the requirement for the business owner to display a hardcopy certificate of registration. Any member of public who wishes to check the registration status of a business can do so online, at no charge.”
“BUSINESS REGISTRATION (AMENDMENT) BILL Order for Second Reading read.”
“We do not expect compliance cost to increase significantly with quarterly reporting, because the financial results that are used for the quarterly report do not need to be audited. Many listed companies would submit regular financial reports to their Board of Directors, and the additional cost involved in presenting these reports to the public should not be too high. Some listed companies in Singapore have already started doing quarterly reporting. Drawing from the experience of these companies and countries which have started quarterly reporting, listed companies in Singapore should not face too much difficulties in implementing quarterly reporting. Mr Leong's second point has to do with statutory audit for small and dormant companies and the recommendation to remove the statutory requirement for private companies to appoint professionally qualified company secretaries. I thank Mr Leong for his comments. In fact, the Company Legislation and Regulatory Framework Committee has received similar feedback on the two proposals from the business community. The Committee's review is still on-going. The Committee has posted its draft report on the Internet for public feedback. Public consultation ends on 31st of July. I would look forward to Mr Leong making his comments to the Committee which will take them into consideration, together with other comments from the public consultation, before submitting its final recommendations to the Government. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed.”
“Sir, Mr Leong Horn Kee raised two points. First is on the quarterly reporting requirement, and the second is on the audit requirement for dormant companies. On the quarterly reporting requirement, this issue had been brought up last year when the Disclosure and Accounting Standards Committee (DASC) issued its draft report for public consultation. Some listed companies felt that the requirement for more frequent reporting would add to cost and could lead to short-term focus, as Mr Leong pointed out. However, there were other respondents, such as investors, who supported the DASC's proposal, because they would like listed companies to be more transparent and to have more timely disclosures. America, Canada, Thailand and Malaysia all have quarterly reporting for listed companies. Quarterly reporting is also required for companies listed on Hong Kong's Growth Enterprise Market (the GEM market) and the Tokyo's Stock Exchange's mother market for start-ups. Hong Kong and Tokyo are considering having quarterly reporting for all listed companies, in other words, for their main boards. Australia and United Kingdom currently require six-monthly reports for their listed companies. It is an issue where there are trade-offs. But, on balance, the DASC felt that quarterly reporting would benefit the listed companies in the long run, as investors would gravitate towards more transparent companies. In addition, quarterly reporting would also help to improve Singapore's transparency and standing as a world-class business and financial centre. To give the listed companies enough time to prepare themselves, the DASC has recommended a transition period, before the quarterly reporting requirement is imposed, which has been accepted.”
“Under the new arrangements, an applicant who wishes to register a company name can first perform some preliminary checks from BizFile to see if the name he is applying for is similar to that of an existing company or business. Bizfile would alert the applicant if there is an existing company or business with a similar name. The applicant can then decide whether he wants to proceed with the application or select another name. The law would continue to provide protection and avenues for redress for incumbent companies and businesses. An aggrieved party can lodge a complaint to the Registrar against the company or business, with a similar name, within twelve months from the date of registration of that company or business. After twelve months, an aggrieved party can still bring the matter to the court. This is similar to the practice in the UK. Mr Speaker, Sir, in conclusion, the proposed amendments in this Bill are part of a comprehensive exercise to review our company legislation and to enhance Singapore's competitiveness as a global business centre. Another private sector led Committee, called the Companies Legislation and Regulatory Framework Committee, is in the process of reviewing our company law and regulatory framework. This Committee has posted its draft report on the Internet for public consultation, and is expected to submit its recommendations to the Government later this year. If its recommendations are accepted, we will be making further amendments to the Companies Act. Sir, I beg to move. Question proposed. 2.30 pm”
“RCB would verify the user's identity online, using his unique national pin, which is also the CPF PAL pin before allowing the user to submit his declaration electronically. Singaporeans who do not have CPF PAL pin would be assigned an ID and password by RCB for their BizFile transactions. Clause 7 amends section 17 to replace the issue of a hardcopy certificate of incorporation via electronic notification. Any member of the public who wishes to check the registration status of a company can do so online, at no charge. Clause 7 also provides for the issue of a hardcopy certificate of incorporation upon the payment of a fee. This is to cater to companies that still require hardcopy incorporation certificates for other purposes, such as for submission to overseas regulators. Removal of Pre-Incorporation Checks for Similar Names For the purposes of registering company names, jurisdictions such as the US, UK, Australia and Hong Kong, do not conduct any pre-incorporation checks for similar names. These jurisdictions have found that the checking for similar names only delays the incorporation process and increases business cost. They only conduct pre-incorporation checks for identical, undesirable and gazetted names. This enables same day incorporation, which has become the service standards that businessmen would expect. To benchmark our service standards for incorporation to that of the US, UK, Australia and Hong Kong, we propose to align RCB's practice with these jurisdictions. Clause 12 of the Bill removes the requirement under section 27 for the Registrar to do pre-incorporation checks for similar names.”
“Introduction of BizFile While we strive to improve Singapore's regulatory framework, we also need to ensure that our processes are efficient and business-friendly. RCB has been actively working with the private sector on ways to streamline its processes so as to bring about greater convenience and lower cost to its customers. One of RCB's key initiatives is the introduction of a web-based electronic filing system called "BizFile". BizFile enables businessmen and professionals to perform filing and information retrieval on-line at any time of the day. BizFile also enables RCB to reduce business cost and expedite the turn around time for incorporation and filing. The introduction of BizFile would raise RCB's service standards and align its practices with its counterparts in the US, UK and Australia. RCB has launched the first phase of BizFile, which deals with incorporation of companies in January this year. It plans to launch the second phase of BizFile by the end of the year. Let me now highlight the amendments in the Bill that would facilitate the implementation of BizFile. With the move to an electronic filing system, RCB would consolidate its existing hardcopy forms into electronic forms. Currently, a person who wants to file information with RCB has to fill in several hardcopy forms that capture some duplicate data items. BizFile also removes the need for manual data entry by the RCB officers, thereby reducing the time and cost required for processing the application. BizFile further simplifies the filing and incorporation process by doing away with hardcopy certificates, statutory declarations and affidavits. There are several clauses in the Bill, such as clauses 8, 16, 19 and 24, that amend the Act to remove the need for statutory declarations or affidavits.”
“Under the new arrangements, the ICPAS would continue to play a pivotal role to support the new Council in the accounting standards setting process. In addition to setting accounting standards, the new Council would also make recommendations to the Government on the review and enhancement of Singapore's corporate governance and disclosure policies. The new Council would comprise members from businesses, professional organisations, academic institutions and Government. The Council Members would be appointed by the Minister for Finance. Moving forward, the new Council would provide a collaborative mechanism for the private and public sectors to continuously review and improve Singapore's corporate governance and regulatory framework. We expect to set up the new Council in August this year, after the legislative amendments have been approved. Directors' Report Section 201 of the Act currently requires all companies to include a report by the Directors in their Annual Report. The DASC has felt that some of the disclosure requirements in the Directors' Report, such as those pertaining to the company's financial position do not add much value as they essentially repeat information that is already provided in the company's financial statement. As a result, Directors' Report becomes overly cluttered. Clause 37 removes the requirement from section 201 for Directors to disclose such details in their report. A statement by Directors as required under section 201(15) of the Companies Act would be retained as it requires the Directors to confirm that the company is solvent and that the financial statements presented to shareholders are true and fair.”
“With the move towards a disclosure-based regime and a legislation of compliance with prescribed accounting standards, it is no longer necessary for the Companies Act to contain additional provision relating to financial reporting and disclosure requirements. Instead, companies would comply with the reporting and disclosure requirements that are prescribed in the accounting standards, or by market intermediaries, such as the Stock Exchange. These requirements are more up-to-date and they can better reflect the changing needs of the market place. Council on Corporate Disclosures and Governance Currently, accounting standards in Singapore are set by the Institute of Certified Public Accountants of Singapore (ICPAS), which is a professional organisation of accountants. ICPAS has done a good job over the years. To improve the efficiency and rigours of its accounting standards setting process, it has also aligned many of our accounting standards with those issued by the International Accounting Standards Board. However, as compliance with the accounting standards would be made a legal requirement, it would not be appropriate for the accounting standards setting authority to reside with a professional organisation. And, in leading jurisdictions such as the UK and Australia, accounting standards are set by independent bodies comprising representatives from businesses, professional organisations, academic institutions and government. This allows the key stakeholders to have a more direct say on how accounting standards should be set. Clause 36 introduces a new section 200A which provides for the establishment of an independent panel to prescribe accounting standards for Singapore companies. The proposed panel would be known as the Council on Corporate Disclosure and Governance.”
“Compliance with Accounting Standards To position Singapore as the key business and financial centre, we need to give investors the confidence that companies registered in Singapore present true and fair financial statements that are in accordance with internationally accepted accounting standards. Incidents such as Enron and Worldcom have shown the dangers of misrepresenting financial statements. While the Government cannot ensure the integrity of financial reporting, we can put in place a regulatory framework that facilitates proper disclosure. Currently, there are no statutory requirements for companies in Singapore to comply with prescribed accounting standards. Clause 37 amends section 201 to require all companies to comply with prescribed accounting standards. This is similar to the practice in the UK and Australia. Similar to the approach in UK, we would allow companies to deviate from the prescribed accounting standards if, and only if, such deviations are necessary for them to present a true and fair set of financial statements. Clause 37 also requires companies to make full and detailed disclosures in their financial statements regarding the nature, financial effect, and justifications, for such deviations. As an additional safeguard, the directors' decision to deviate from prescribed accounting standards would require the concurrence of the companies' external auditor. Clause 61 repeals the Ninth Schedule. The Ninth Schedule contains a listing of items to be disclosed in the companies' accounts and was included in the Companies Act during a time when accounting standards were not well developed. Today, the situation is different, as accounting standards have become much better developed over the years.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". Sir, the Companies Act was last amended in January 2001. Since then, three private sector led Committees set up by my Ministry, the Monetary Authority of Singapore, and the Attorney-General's Chambers, have been active in reviewing Singapore's corporate governance and regulatory framework. One of the Committees was the Disclosure and Accounting Standards Committee (DASC). The DASC submitted its final report to the Government in September 2001, with a set of recommendations to improve Singapore's accounting standards setting process, disclosure requirements and rules on auditor independence. The Government has accepted all the DASC recommendations. This Bill seeks to implement the DASC recommendations that require amendments to the Companies Act. At the same time, the Registry of Companies and Businesses has also embarked on several key initiatives to further its mission of making Singapore best for business. This includes the introduction of an electronic filing system called BizFile, which would allow round the clock filing and information retrieval services over the Internet for RCB's customers. This Bill seeks to introduce legislative changes that would facilitate the implementation of an electronic filing system for companies in Singapore. It also seeks to simplify the incorporation process and reduce the time required to incorporate a company in Singapore. This Bill also contains other amendments which are intended to update and streamline certain procedures and provisions in the Companies Act. Sir, I shall now highlight the main amendments proposed in the Bill, starting with those to effect the DASC's recommendations.”
“Section 4 of the Bill provides for this sum to be charged to the Consolidated Fund and for Singapore to subscribe to future increases in authorised capital, provided that the total subscription does not exceed US$1 million. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Mr Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed. COMPANIES (AMENDMENT) BILL Order for Second Reading read.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill before the House seeks to enable Singapore to become a member of the International Development Association (IDA). IDA was established in 1960 as an integral part of the World Bank Group to provide long-term loans at zero interest to the poorest of developing countries which have little or no access to market financing. IDA's lending helps to build the human capital, infrastructure, institutions and policies that developing countries need to achieve sustainable economic growth. IDA is funded largely by contributions from the governments of member countries. There are 162 IDA member countries today, out of 183 World Bank members. This Bill paves the way for Singapore to join the 88% of World Bank members already in IDA. Singapore is already a member of the four other institutions under the World Bank group, namely the International Bank for Reconstruction and Development, the International Finance Corporation, the Multi-Lateral Investment Guarantee Agency, and the International Centre of Settlement of Investment Disputes. IDA is the key multi-lateral development assistance institution, and our membership is simply doing what is expected of us as a responsible member of the family of nations. IDA lendings support US$11/2-2 billion worth of development projects in South Asia, East Asia and the Pacific, annually. This helps to promote growth and stability in the Asia-Pacific region. Singapore's participation in IDA will also enable our companies and consultants to share their expertise through IDA financed projects. Singapore's IDA membership subscription is US$410,159.”
“I do not believe that transaction records will be covered. SINGAPORE BUSINESS FEDERATION (Mandatory membership) 9. Ms Indranee Rajah asked the Minister for Trade and Industry (a) why is there a need for local companies with a paid up share capital of S$500,000 or more and foreign companies with an authorised share capital of S$500,000 or more to be compelled by law to become members of the Singapore Business Federation and to pay subscription fees, and (b) why have they been deprived of the option to choose whether or not to become members of the said Federation.”