Lee Yock Suan
Singapore
“The position will be clear when the regulations have been drafted. Right now we are debating it in the absence of actual wording of the regulations. The regulations will be fair, they are meant to maintain a level playing field, and we should wait for the regulations before we pass judgement. The intention is not to go after everybody.”
“I think the Member will be aware that Internet is a very dangerous place. We can have all kinds of poison letters and they will just spread like wild fire. So we must have some means to try and minimise this and make sure that everything is orderly and fair.”
“The other Members have no problem supporting the Bill, including Mr Chiam. I think the position is about 95% clear. 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 Yock Suan].”
“Then we will have to see the actual situation. But, as I said, the intention is to go after the popular sites, the main sites of parties and non-party political sites. If it is an individual, eg, a young man posting up his own site and saying "These are my views", we are not going to go after those people.”
“The intention is to make the rules clear for the main parties involved in the contest, in other words, the party websites. These are the areas we are mainly after.”
“I thank Mr Chiam for reminding me about his question. On listening to his speech, I was under the impression that he was asking whether this ban on opinion polls applies to the mass media. The answer is yes, it applies to all media, not just the Internet but also newspapers, TV and so on. Thank you for pointing this out.”
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“The present quantum of the Singapore Allowance was fixed in April 1982. The inflation rate since then has not been significantly high to warrant a revision of the allowance. Whilst sympathizing with the position of some of the pensioners, we should be careful not to fall into the pension trap which afflicts many western countries that have indexed their pensions to their inflation rates. With an aging population and longer life expectancy, the pension burden has grown over the years to become an almost unbearable burden on the economy of many an industrialized country. Fewer and fewer working members of the society are forced to bear the increasing burden of pensions for aged retired workers. The retired workers have contributed to the economy and this is appreciated. However, like those who retire with CPF savings, those on pension schemes should plan ahead for their retirement and manage with whatever savings they may have in addition to their pensions which are pegged to their last drawn salary. They cannot expect the State to shelter them from inflation. The hon. Member also wants to know what opportunities there are for officers in the lower divisions to continue their employment after retirement and also the terms of re-employment. Officers who joined the service before 1st July 1956, have two ways by which they can continue in employment after reaching the age of 55 years. The two ways are extension of service and re-employment. Under extension of service, which is usually for a full period of five years, the officer does not retire at 55 but is deemed to remain in service. Extension of service is considered by the appointing authority, normally the Permanent Secretary, under whom the officer serves.”
“The third point concerns the pension which has been frozen. As Members are aware, in July 1973, Division III and IV officers were allowed to convert from the Pension Scheme to the full CPF Scheme. For those who have opted to convert to the full CPF Scheme the benefits accrued to them under the Pension Scheme up to the date of conversion would be frozen. These frozen benefits are only payable in the event of an officer's retirement. Should an officer resign before his date of retirement, he will stand to lose these frozen benefits. The frozen lump sum therefore cannot be transferred to the officer's CPF account. Nevertheless, my Ministry has allowed the frozen lump sums (discounted at 6% per annum to the early withdrawal dates) to be used by the officers as payment for the purchase of residential properties, including HDB flats. Should such an officer resign from the Civil Service before retirement, he has to refund the amount utilized to the Government. The use of this amount is in addition to whatever loan the officer may be eligible for under the Government Housing Loan Scheme. I now come to the points raised by the Member for Geylang Serai. First, the matter of pensioners. He asked what help we can render to our pensioners in view of the rising cost of living. As hon. Members are aware, the Government does pay a Singapore Allowance to Government pensioners who are resident in Singapore and whose monthly pension is less than $850 per month. This allowance is in addition to their pensions provided the aggregate of the allowance and the monthly pension does not exceed $850 per month. The Singapore Allowance is reviewed now and then when there is an abnormally high rate of inflation. I must stress, however, that it is not our intention to have periodic adjustments.”
“His second point concerns the case of a Government officer who is eligible for Class C ward but who has to be admitted to Class B2 ward because no Class C bed is available. The situation can be looked at this way. The Government, as a good employer, has allowed the officer to enjoy a better class ward than he is normally entitled to but he must expect to pay a somewhat higher fee corresponding to the benefit of the better class ward. As a Government officer, he needs only pay 20% of the public rate, which means the Government is subsidizing 80% of the rate in addition to the normal subsidy for ward charges. Faced with this situation, many officers would willingly pay the somewhat higher fee to enjoy the better class ward at highly subsidized rates. However, there are some who, having enjoyed the benefits of a better class ward than he is normally eligible for, insist that they should nevertheless only be charged at Class C rates. In fact, I understand that many of these officers would be very happy if they are upgraded, in general, to Class B2 for better ward service and pay the fees which are only 20% of the normal public rates. So I leave it to Members to decide whether Government is being fair in such cases. Some hon. Members: Not fair.”
“Mr Deputy Speaker, Sir, I shall first deal with the points raised by the hon. Member for Kebun Baru. He asked about the opportunities for training in inter-personal skills for Government officers, especially those in supervisory capacity. The answer is yes. Indeed this is one of the areas regarded as extremely important in the Government service. Since the Civil Service Institute was established in 1971, special emphasis has been laid on the training of inter-personal skills. At present, courses which teach such skills are as follows: For Division I officers, courses are conducted for communication skills, organization and leadership, management communication and management principles. For Division 11 officers, there are courses in the principles of effective supervision. For FY 83, 13 such courses were conducted for a total of 253 participants. Furthermore, elements of inter-personal skills are taught in other courses of a more general nature. Examples of such courses are induction and WITS courses. 24 such courses were conducted in FY 83 for a total of 619 participants. For FY 84, a total of 56 courses for various grades of officers are planned. An estimated 1,400 participants will be attending the courses. 7.00 pm In addition to the courses mentioned, individual Ministries sponsor their officers for courses conducted by organizations such as the NPB, Singapore Institute of Management and the National Youth Leadership Training Institute. The hon. Member can be assured that steps have been and will be taken to ensure that civil servants in supervisory capacities are trained in inter-personal skills. I agree fully with him that these are very important for improving morale and productivity within the Civil Service.”
“In conclusion, I would like to touch briefly on the question of computer security which the hon. Member for Chong Boon raised in Monday's debate on the Budget Statement. The Government and the NCB are as concerned as he is that there should be adequate security in our computer systems, both public and private. The NCB has established a computer audit and security department. It works closely with the Audit Department, the Institute of Systems Science and acknowledged consultants in this field. Computer security standards have been set for the Government's computer systems and will be tested to verify their effectiveness. A security standards manual has been prepared. To stimulate private sector awareness and to disseminate knowledge on computer security, the NCB will be organizing training courses and seminars on this subject.”
“The CSCP was approved after a careful evaluation of the likely benefits and costs of the various computerization projects proposed by Ministries. The anticipated benefits fiom computerization include improved administrative and operational efficiency, higher productivity and better service to the public. The success or otherwise of the CSCP should be gauged by the extent to which these benefits are realized in practice. The implementation of the CSCP is being closely monitored to ensure that targets are achieved. For this purpose, NCB and the Ministries have specified for each major application system, not only technical performance criteria which have to be met, but also operational performance standards which must be satisfied when the system is fully operational. For example, one of the goals of the computerization programme in the Singapore Fire Service is to reduce the average time taken to respond to emergency calls by a specified percentage. The actual reduction in average response time achieved with computerization can then be compared to the targetted reduction. Productivity gains are also expected as a result of computerization. There should be substantial reductions in the time taken to process applications and provide other services to the public. Staff productivity would therefore increase. This in turn would help reduce the demand by Ministries and departments for additional manpower to cope with workload increases. In certain areas, the introduction of computers could lead to staff reductions. The excess staff will be redeployed to fill vacancies in other departments. The full extent of the manpower and cost savings or productivity gains arising from the implementation of the CSCP cannot, however, be accurately estimated at this stage.”
“The larger statutory boards, such as the CPF Board, the Telecoms, PUB, PSA, JTC, HDB, URA and the MAS, also make extensive use of computers in their day-to-day operations. 6.45 pm Four Government Ministries, namely, the Ministries of Defence, Education, Environment and Finance now have fully operational computer centres running many application systems. The computerization requirements of another six Ministries, namely, the Ministries of Communications, Health, Home Affairs, National Development, Social Affairs, Trade and Industry and also the Customs and Excise Department have been included in the Civil Service Computerization Programme. The National Computer Board (NCB) is also assisting the Ministries of Law and Foreign Affairs in identifying their computerization requirements. The CSCP involves the acquisition of three mini-computers and eight mainframe computers and also the development of 110 application systems. The three mini-computers have been installed and the eight mainframe computer systems will be installed by the end of this year. Of the 110 application systems, four are currently operational and 39 are in various stages of development. By the end of this year, 29 application systems or 27% of all application systems in the CSCP are expected to be operational. By 1986, some 80% of the application systems will be operational and the remaining application systems are targeted for completion by 1988. The CSCP is estimated to cost about $120 million, of which about 40% will be for hardware. To-date, $15 million has been spent. Of this, nearly $2 million was for hardware, $3 million for site preparation works and $10 million for systems development.”
“I move now to the next issue raised by the Member concerning the payment of the Annual Wage Supplement to retirees: The late Minister for Finance, Mr Hon Sui Sen, had logical and cogent reasons for maintaining the policy of not paying the 13th month Annual Wage Supplement to retired civil servants in their year of retirement. As the Member has mentioned, this issue has been raised so many times in this House over the years that I think hon. Members are very familiar with Mr Hon's reasoning. Basically, it is that the AWS is a bonus payable only to those who are in the service on 31 st December. Those who resign, retire or pass away before 31 st December, therefore, do not qualify. For a civil servant whose birth date is not known precisely, the Government has given him the benefit of the doubt and assumed it to be 31 st December in his year of birth, so that he can have the benefit of working till the end of the year instead of a date before that. However, since he then has to retire upon reaching retirement age on 31 st December, his last day of service is 30th December and he is, therefore, also unfortunately not eligible for the AWS. The arguments are sound and logical. However, in view of popular requests by both MPs and the public for the policy to be reviewed, I will ask the officials of my Ministry to take a fresh look at this issue again. The third point raised by the hon. Member concerns the Civil Service Computerization Programme (CSCP). He has asked for a progress report and he would also like to know how the success or otherwise of these efforts can be measured. As Members are aware, computerization is not new to the public sector. In fact, computers have been used in Government since 1964.”
“Besides financing 90% of the set-up costs and providing training grants for course fees at these centres, the SDF has also paid special attention to equip the training managers and instructors of these centres with the necessary training competence as well as consultancy skills. They will then be able to analyse training needs and advise their members on appropriate training programmes. The other issue raised by the hon. Member is that the SDF appears to favour the manufacturing sector. This is a misconception. As at 31st December, 1983, the trade and service sector received a total of $63.7 million in grants from the SDF. The shares of the trade and service sector were larger than those of the manufacturing sector in respect of training grants (36% as compared to 33% for the manufacturing sector) and in respect of the development consultancy grants (34% as compared to 25% for the manufacturing sector). In value terms, 66% of the SDF training grants were given to local companies, many of which are small firms. I share the concern of the hon. Member in the poor productivity performance of the trade sector, Much more can be done to increase its productivity. One way, of course, is through automation and computerization. Another way is through providing more systematic training not only for managers and supervisors, but also for the sales persons and other line workers. The SDF will continue to provide generous support for structured training programmes to upgrade the productivity of this sector.”
“About 140,000 workers will benefit from the training grants committed. Utilization rate in terms of grant commitments has improved from 18% of levy collections for the year in 1980 to 59% in 1983. The SDF is now directing more attention to qualitative improvements in their training schemes. The main thrust is to promote more in-house systematic training programmes by companies rather than relying on external ad hoc training courses. More generous support up to 90% grant level is available for in-house training programmes. Towards the end of last year, companies which have the capability were encouraged to submit the so-called "total training plans" to provide for the systematic training of workers over a longer time-frame. As an incentive to promote such schemes, training grants are paid in advance to qualifying companies. They, therefore, save on interest cost. The SDF has approached 50 companies to submit total training plans. Twenty such plans have been submitted, of which eight have been approved and the others are being processed. I must, however, clarify that total training plans are not the only ones to qualify for SDF grants. Other training applications will continue to be assessed according to the existing liberal SDF guidelines. The SDF has been offering advice to the smaller companies in applying for grants from the SDF. However, given their large numbers and lack of capacity to train, the most effective approach is to assist through their trade and industry associations. The SDF has thus encouraged 10 such organizations to set up permanent training centres to cater for the specific needs of their members. These include the Hotel Training Centre and the Textile Training Centre which, I think, Members are familiar with.”
“Mr Speaker, Sir, I am replying on behalf of my Minister, The hon. Member for Chong Boon has raised three questions and I propose to deal with them in sequence. First, he emphasized the importance of human resource development in our economic restructuring and he commented on the role of the SDF. The SDF's role is to promote the upgrading of skills of persons in employment. It is a financial assistance scheme to stimulate employers to train their workers and equip them with the skills necessary for economic restructuring. When the scheme was introduced in 1979, the level of employer-based training was low. To stimulate awareness of the need to train and to overcome employers' initial reluctance, the SDF has adopted a liberal approach in the evaluation of training applications. The SDF recognizes that companies have varying capabilities to train. A small firm new to training can still receive grants in spite of its weaker efforts. The hon. Member may not be fully aware of this. Differential levels of support (30%, 50%, 70% and 90% of allowable costs) are granted, depending on the depth, extent and quality of the training proposals. Considerable efforts have been made to reach out to small and medium-sized companies through their industry associations. The SDF has also identified 177 courses at the various training institutions to which companies can send their employees for training and qualify automatically for a fixed level of grants. This scheme is especially helpful to small companies. Significant progress has been made by the SDF in quantitative terms. As at the end of 1983, the SDF has committed a total of $203 million in grants under its various grant schemes. This represented 48% of total levy collections.”
“That is the meaning of this provision and it is normally accorded to all bankers. So the lesson is: Do keep your cheque books under lock and key. 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 Yock Suan]. Bill considered in Committee. [Mr Speaker in the Chair] 6.05 pm Clause 1 -”
“The Member for Thomson raised the question of the payment of interest on current accounts. As I have said, the POSB has not yet decided whether it will pay interest on current accounts. The Banking Act does not prohibit banks from paying interest on current accounts if they wish to do so. In addition, the MAS has not prohibited banks from paying interest on current accounts, and it does not intend to play a regulatory role in this matter. It is actually a restriction placed by the Association of Banks of Singapore on the banks themselves, and it is really up to the banks to decide whether in the interest of competition they should offer this facility. Finally, I would just like to say a few words to clarify the nature of the protection under clause 7 of this Bill. Clause 7 of the Post Office Savings Bank of Singapore (Amendment) Bill will enable the Bank to enjoy protection accorded to bankers under the Bills of Exchange Act against liabilities in connection with the proposed operation of current accounts. Protection is provided in such instances as:- (a) where a banker in good faith and in the ordinary course of business pays unindorsed or irregularly indorsed cheques; and (b) where a banker in good faith and without negligence collects payments of cheques or certain other instruments for his customers who turned out to be not the true owners of these instruments. Maybe I can explain this in simpler terms. You have a cheque book and you happen to lose it. Now, somebody uses it to write cheques, forging your signature or whatever. It is not possible for the bank to check every signature, and if in good faith the bank pays this cheque to a third party, the paying bank is not liable under this clause; neither is the receiving bank liable.”
“The Bank has done extremely well in this regard and should continue to do so. As the national savings bank, the POSB is fully justified in retaining its existing concessions, especially tax exemption on savings deposits and Government guarantee of all its deposits. With the existing high level of LDC debt and the concomitant risk of bank failures abroad, the Government guarantee of deposits in POSB offers depositors a safe haven for their hard-earned savings. However, these concessions must be seen in perspective in relation to POSB's role and objectives and the restrictions which have been placed on POSB. For example, in return for exemption from the provisions of the Banking Act, the POSB is required to hold at least 50% of its assets with the Government. The Bill will restrict the POSB severely in its lending and investment policy. The POSB is not free to accept deposits from corporate bodies or to engage in foreign exchange transactions and the financing of foreign trade. It will lend mainly to statutory boards and corporations wholly or mainly owned by the Government. A lot of weight has been placed on the tax exemption on savings deposit in attracting depositors. As I have said, this has been overstated to some extent. The POSB must also be commended for the imaginative and bold steps that it has taken to inculcate the savings habit. For example, it pioneered Giro and the computerization of savings transactions. Its marketing efforts have been targeted solely at the personal depositor. It has established a large number of branches throughout the country, in housing estates, in shopping centres and elsewhere. It keeps branches open on Saturday afternoons and selected branches open till 7.00 pm. The POSB has generally been responsive to the needs of its depositors.”
“If I may quote section 5A (1):- "Notwithstanding any other provisions of this Act, the Bank shall not - (d) through any company or undertaking do anything which the Bank is not authorised to do or is prohibited from doing." And section 5A (2) states as follows, and I quote: "Except as authorised by this Act, the Bank shall not engage in any commercial, industrial or financial undertaking or acquire any direct interest in the stocks or shares of any trading, industrial or financial company." So whatever it does, it must conform with the provisions of this Act. As I have said before, there are various rather severe restrictions placed on POSB to confine its role to those of a national savings bank, and not to go into the areas of commercial banking. In any case, all the operations of the Bank, including its subsidiaries, are accountable to the Minister and both my Ministry and POSB will be extremely cautious to ensure that the Bank observes prudence in all its lending and investment activities. I wish to thank the Member for Chong Boon for raising the question of security of the automated services. This is a matter which the POSB is continually reviewing, and POSB will engage the assistance of experts, if necessary, to ensure proper security of its computer systems, the automated teller machines and so forth. As Members. are aware, I think there was one incident reported in the papers of theft from an ATM and the POSB has reviewed procedures and will continue to review procedures to prevent a recurrence of such an event. If I may now come to the points raised by the Member for Thomson. I fully agree with him, and it is the intent of this Bill, that the POSB should remain as the national savings bank with a special role to play in our economy.”
“Mr Speaker, Sir, I wish to thank the hon. Members for Chong Boon and Thomson for supporting this Bill and for their various suggestions and comments. I would, first of all, like to deal with the comments by the Member for Chong Boon. At the outset, may I assure the House that the personal depositors with POSB will continue to enjoy tax exemption on the interest which they earn from savings deposits with the POSB. This will continue to be the attraction of POSB. The attractiveness has perhaps been overstated because most of the depositors with POSB are, in fact, small savers who pay little or no tax. This exemption from tax will only extend to the saving deposits and not to fixed deposit interest. In the case of current accounts raised by the Member for Thomson, the POSB is as yet undecided whether it will pay interest on current accounts. If it does so, the interest will be taxable. The other point raised by the Member for Chong Boon is an appeal to POSB not to impose too many conditions in the operation of the current accounts. On this point, I would like to assure Members that the POSB always has the interest of the small saver in mind. POSB is still looking into this matter. In the interest of banking prudence, of course certain conditions may have to be set. For example, if an account holder has only $1 in his savings account, it will be very difficult for him to operate a current account but the assurance I have given is that the POSB will always have the interest of the small depositor in mind. The Member for Chong Boon referred to the new section 5(h) of the Bill regarding the powers to participate in companies and so forth. May I refer him to another new section 5(A) of the Bill which imposes the restrictions on the Bank.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill seeks to amend the Post Office Savings Bank of Singapore Act, 1971, to clarify and redefine the functions and powers of the Bank in line with its objectives as a Savings Bank. The Bill also enables the Bank to offer certain additional types of banking services. The existing objects of POSB are to promote thrift and to deploy the funds so garnered for public development. These objects have been achieved. To provide a better service to its customers, the Bank is seeking approval to offer personal fixed deposits, personal current accounts and the sale of travellers' cheques. Certain restrictions are placed on the POSB to ensure that it steers clear of risks inherent in commercial banking business. The Bank will lend mainly to the public sector, that is, statutory boards and companies in which the Government has a substantial interest. It will be prohibited from extending loans to any individual in excess of $5,000 without any security, or in excess of $30,000 solely upon the security of any guarantee or guarantees. The POSB will exercise financial prudence in its investment activities. It may hold Government securities, mortgages of property and deposits with licensed banks. It may, with the approval of the Minister, invest in shares and securities where these are considered to be in the economic interest of Singapore. Such restrictions and prudence are in keeping with the POSB's role as a national savings bank whose deposits are guaranteed by the Government. Clause 7 provides for a new section 46, which will remove any possible doubt that the POSB enjoys the protection of a banker under the Bills of Exchange Act. Sir, I beg to move. Question proposed. 5.46 pm”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." From 1st January 1982, a surcharge of 20% of the electricity bill was imposed on owners of centrally air-conditioned commercial buildings who fail to achieve an Overall Thermal Transfer Value standard of less than 45 w/sq m. Most owners of buildings have complied with this requirement but there is a residual number of recalcitrant owners who despite all appeals have not taken steps to comply with the energy conservation standard. It is, therefore, proposed to raise the surcharge from 20% to 50% to bring home to these owners the seriousness of our energy conservation efforts. Section 3(1A) of the Statutory Boards (Taxable Services) Act is amended to reflect the increased surcharge. Sir, I beg to move. Question proposed.”
“The ranking of deposit liabilities suggests to me that domestic depositors would have first claim on the assets of any bank that would be wound up or may be wound up. Dr Goh Keng Swee: Which clause are you talking about?”
“But, Sir, we live in an age when there are threats to the international financial system and, therefore, there is need to look at banking regulations to make sure that the spill-over effects onto Singapore are minimized. I generally support the provisions of this Bill, but I have a number of questions for clarification to pose to the Hon. Minister. If I may take clause 7 first. It is not clear to me whether the provisions here apply only to domestic banks or to Asian Currency Units, or to both. Furthermore, it is not clear to me whether the provisions of paragraphs (a) and (b) under section 25(1) refer only to individuals, companies and so on, or whether they also refer to countries or sovereign risks. The exceptions which are provided include transactions with the Government. By this, I would take it to mean the Government of Singapore. Is it wise to exempt the Government from the provisions of paragraphs (a) and (b)? With the present Government in power, I think we can safely allow the banks to loan any money to the Government, but should there be a future Government less wise or less frugal, these provisions might be misused. Secondly, the exemption of transactions between banks can pose a sizable loophole in that very substantial loans could be made to other banks, say abroad, which in turn have very unwise loan portfolios. And sub-paragraph (iv) in that exception reads:- '(iv) any facilities granted against letters of credit or bills or guarantees or documents in respect of imports into or exports from Singapore;' Again, why should these be exempted from the provisions of paragraphs (a) and (b)? Next, Sir, may I refer to clause 14?”
“The operators of these Asian Currency Units know that though they are subject to the provisions of the Act but, depending on their status as companies incorporated in Singapore or outside Singapore, they have been, under administrative arrangements with the Authority, exempted from certain provisions of the Act. These exemptions have been an integral part of our efforts in developing our offshore market. The purpose of clause 15 is to put these administrative arrangements on a statutory basis. Subsection (4) of new section 69A now expressly lays down the sections of the Act from which persons operating the Asian Currency Unit will be exempted. Such exemptions from regulatory and other requirements are a general practice in the off-shore banking business. The other amendments made by the Bill do not warrant any special mention in addition to what has been stated in reference to them in the Explanatory Statement. While many of the new provisions merely give the force of law to administrative procedures, several are important innovations. It is my intention to keep the situation under observation for about a year during which time we can assess their impact on the banking industry and, if need be, return to the House for another revision. Mr Speaker, Sir, I beg to move. Question proposed. Dr Augustine H.H. Tan (Whampoa): Mr Speaker, Sir, I am sure that we can all take satisfaction with the rapid development of the financial sector in Singapore, as supported by the figures given by the First Deputy Prime Minister. That Singapore has developed into a sophisticated financial centre is no mean achievement.”
“The effect of the amendment is, therefore, that in a winding up, though the claims of the depositors of a bank will rank after the claims of, for example, the liquidator for his costs in the winding up, employees of a bank for their wages, and the tax authorities for taxes owed by a bank, their claims will rank above those of the ordinary creditors of a bank. This question of priority of debts, it should be stressed, is only of importance if the assets of a bank are not sufficient to meet the claims of the creditors of a bank. Clause 14 inserts a new section 56A which provides that amongst the depositors themselves some depositors will have a higher priority ranking in a winding-up than other depositors. Thus first preference will be given to non-bank customers of a bank if the deposit liabilities of the bank are included in the computation of the reserve and liquidity requirements in sections 34 and 35. The second preference will be given to interbank deposit liabilities if they are included in the abovementioned reserve and liquidity requirements. The third preference will be given to deposit liabilities with non-bank customers where the deposit liabilities are not included in the reserve and liquidity requirements. This, as I have explained earlier, will ensure that deposits that have been subjected to stricter prudential requirements be given priority of claim accordingly. The new section 56B is designed to facilitate the winding up of a bank caused by the liquidator by notice to require every debtor of a bank to redeem any securities he has deposited with a bank within three months of the date of the notice. Finally, as Members may know, foreign and domestic financial institutions have been operating the Asian Currency Units for many years.”
“Equally important, the conditions that the Authority will lay down for an audit will ensure that the auditor is entirely independent of the bank which he is going to audit. Furthermore, the Authority can insist that a much more rigorous and searching audit is conducted, These amendments, when implemented, should result in external auditors of banks playing a greater role than hitherto in supporting the Authority in the discharge of its supervisory functions over banks. They are clearly designed to give greater protection to depositors and creditors of banks and minimize the likelihood of fraud and other crimes of dishonesty being perpetrated or going undetected. These provisions are based on existing practices of bank regulatory authorities in Germany and Switzerland. The next major amendments to which I would like to draw the attention of Members appear in clauses 13 and 14 of the Bill. These amendments are concerned with the priority of deposit liabilities in the event of a winding up of a bank that is insolvent or is unable to meet its obligations. Clause 13, which amends section 56, provides that the deposit liabilities of a bank shall have priority over all other unsecured liabilities other than those specified in section 292(1) of the Companies Act. The existing section 56 is far too wide-ranging for it could be construed as giving priority over secured debts and over the preferential unsecured debts that are spelt out in section 292(1).”
“In the main, they are intended to extend the existing exceptions to banking secrecy to cover civil proceedings arising between a bank and the guarantor of a customer or where the bank has been served with a garnishee order attaching monies in the account of a customer or where the information to be disclosed relates to credit facilities granted by a bank incorporated outside Singapore and the information is required by its head office for supervisory purposes. However, other amendments are intended to tighten up the existing exceptions to banking secrecy. The exception that enables a bank to give information about the credit worthiness of a customer has been restricted to the giving of information which is of a general character and not related to details of a customer's account. Again, the exception in section 42(4)(a) providing for a customer of a bank to give permission for disclosure of his bank affairs may be interpreted as meaning that the customer's oral permission is sufficient. The amendment will now make clear that he has to give his written permission. The Bill proposes new provisions in clause 11 in relation to audits of banks. The new provision will enable the Authority to, in addition to the duties at present imposed on an auditor and largely dictated only by the Companies Act (Cap. 185), call upon the auditor to extend the scope of his audit to give additional information, to carry out other examinations, and to submit a report to the Authority on the results of his work. In addition, the Authority must also be immediately informed if the auditor in the course of his audit discovers serious offences or major losses or serious irregularities that jeopardize the security of creditors or that claims of creditors are not covered by the bank's assets.”
“Accordingly, it provides that banks shall not enter into agreements to acquire interests of 20% or more in any company, whether incorporated in Singapore or not, without the approval of the Authority. This provision would not apply, however, to a bank's acquisition of such assets in satisfaction of debts due to it so long as, upon making the acquisition, the bank obtains the approval of the Authority to retain these assets as an investment. To ensure that the prudential limits of section 25 and other sections of the Act dealing, in particular, with the lending and investment activities of banks are not circumvented by the use of subsidiaries or related companies, the Authority may require a bank to aggregate its assets, liabilities or profits, as the case may be, with those of any of such subsidiaries or other related companies. This will enable the Authority to exercise prudential supervision on a group basis. This provision is in line with the practice in Switzerland, and the German bank regulators are contemplating a similar policy. I now move on to the amendments that are proposed to section 42 which provides for banking secrecy. These proposed amendments have been found by experience in administering the Act to be necessary to relieve the existing rigidity in section 42(3) which deals with the requirement of maintaining banking secrecy.”
“Accordingly, the amendment proposed to section 25 would have the following effect of:- a) changing the existing limit in which a bank may grant credit facilities to a single customer or group of connected customers by lowering the aggregate percentage from an amount in excess of 60% of the capital funds of the bank to 30% of those funds; and b) limiting substantial loans to an aggregate amount which does not exceed 50% of its total credit facilities. A substantial loan means, in general terms, a credit facility granted to a single customer or group of connected customers which in the aggregate exceeds 15% of the bank's capital funds. These amendments are designed to promote prudential banking and at the same time take into account that the capital bases of all the domestic banks have grown very substantially since the original 60% limit was fixed in 1971. The total capital funds of domestic banks have increased more than 11 times, from S$325 million to S$3,849 million during the period 1971 to 1982. The lower limit of 30% should therefore not interfere with participation by banks in major loan projects or interfere with their competitiveness in their domestic and international business. The limitation on the granting of substantial loans is to ensure that banks do not concentrate their commitments too much by lending only to a few big customers and thus increasing their risk exposure. In other words, it discourages them from putting too many of their eggs in one basket. Clause 8 which introduces a new section 27A has much the same objective in mind. This provision, however, is designed to exercise a measure of control over banks which seek to diversify, for example, into commercial or industrial undertakings to an undesirable extent.”
“The proposals do not prevent, it will be noted, a take-over by acquisition of shares or the acquisition of substantial holdings in domestic banks but they do seek to ensure that the Authority will be in a position to decide whether the potential new controller or substantive shareholder, as the case may be, is a suitable person to be exercising control or to be having a substantial shareholding in a domestic bank. The proposals will only apply to persons seeking to obtain control of or have substantial holdings in a domestic bank after the coming into force of this proposed legislation. They do not affect past changes of control or past acquisitions of substantial shareholdings. The provisions in new sections 14A and 14B that deal with potential changes of control of domestic banks are, it will be noted, widely drafted so as to embrace not only situations where a person is acting alone to obtain control but also where he is acting in concert with associates. The amendment proposed by the new section 14D would enable the Authority to obtain from a bank that is incorporated in Singapore information as to the beneficial ownership of shares in that bank. This proposal is closely linked to the function of the Authority in exercising control over take-overs and substantial shareholders for it will enable the Authority to ascertain the ownership of shares held, for example, in nominee names and thus make it more difficult for persons to place themselves in a position so as to obtain control of a domestic bank through such nominees. The second group of amendments is concerned with the need to ensure that banks in their lending or investment activities conduct their business in a prudential manner and thus avoid over-committing their financial resources.”
“A mere examination of returns of banks by the Authority can be no substitute for proper internal control by bank managements. With these introductory comments, I will now deal with the main provisions in the Bill. The proposals in the Bill, in general terms, will:- i) improve supervisory powers of MAS over banks; ii) ensure that control of domestic banks would not pass into undesirable hands; iii) set limits of credit facilities that a bank may grant to its customers; iv) enable the Authority to have stricter control over the audit of banks; v) rectify the anomaly in the provision for priority of deposit liabilities by giving deposit liabilities that have been subject to prudential requirements prior claim; and vi) replace the existing administrative control over the operation of an Asian Currency Unit by statutory provision. The first major group of amendments that are proposed in this Bill is concerned with the passing of control of domestic banks to other persons. These appear in clause 5 of the Bill which introduces new sections 14A, B, C and D. These amendments would enable the Authority in relation to a bank that is incorporated in Singapore to control - a) a take-over of such a bank by the intended acquisition of not less than 20% of its shares; b) arrangements by which outside persons would be able to determine the policy of such a bank; and c) the acquisition of substantial holdings, that is, interests in 5% of the voting shares of such a bank. The purpose of these amendments is to ensure that domestic banks, which form a key sector in the economy, should not pass into undesirable hands.”
“Some of the concepts in the existing Act have to some extent become outdated, other concepts are in need of refinement to meet rapidly changing financial conditions. Thus the decision was taken to conduct a comprehensive review of the provisions of the existing Act to make it a more efficient and flexible instrument for regulating the industry in the long term interests of both the banks and their depositors and other creditors. It is against this background that the proposals in the Bill now before hon. Members should be viewed. The Banking Act provides for the organization, structuring, control and supervision of banks in general. The control and supervision of banks is, as Members know, the responsibility of the Monetary Authority of Singapore. It is well recognized that the supervision of banks is a difficult and often complex operation. Too lax a supervision can lead to abuse and fraud; too strict will stifle growth and enterprise. Since there is no perfect form of supervision, there must be a constant striving to make this form of control as effective as possible, without overdoing it. A wise Mandarin of the ancient Chinese Imperial Civil Service said that governing a country is like frying small fish. It must not be overdone. This dictum applies to bank supervision, for there are limits to what it can achieve. It cannot, of course, ensure that banks will not make loans or investments that turn out to be bad. The responsibility for making loans and investments must rest squarely on the heads of the directors of banks and that is why it is so important that directors should be persons of integrity and competence who exercise great care and skill in controlling their loans and investment business.”
“Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolution." Question put, and agreed to. Resolution accordingly agreed to. BANKING (AMENDMENT) BILL Order for Second Reading read. 3.15 pm The First Deputy Prime Minister and Minister of Education (Dr Goh Keng Swee): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Since the introduction of the Banking Act in 1971, Singapore has developed into a financial centre of international importance. This is demonstrated by the presence here of a large number of financial institutions of international standing and reputation, the advent of new financial instruments, the rapid development of the Asian Dollar Market, the extensive nature of the financial transactions that are entered into and the numerous financial services that are now being provided. The liberalization of exchange controls and the development of the capital market have also played their part in making the banking scene in Singapore vastly different from what it was at the time of the passing of the Banking Act. In the last three years, 1981 to 1983, the contribution of the financial sector to our GNP was large, $1.6 billion, $1.8 billion and $2.1 billion respectively. Growth rates registered were 25.0%, 16.7% and 14.3%. These growth rates were exceeded only by Construction. As on June 1983, the industry employed 38,268 persons, mostly in well-paid occupations. It is, then, hardly surprising that these developments have had a considerable impact on the effectiveness of the existing Act to deal with the many changes that have occurred since 1971.”
“We compromise the security of our country at the risk of total destruction. We have no intention of entering the arms race with anyone, let alone the superpowers. All we wish for is to be left alone in peace.”
“Mr Speaker, Sir, a penalty is imposed in the case where the conditions I have specified are met but the lessee has not informed the HDB. So the assignment really does not help matters. He should inform the HDB and to see whether he qualifies. And, as I have mentioned, in fact, in the case of inheritance we are going to relax the rules to allow him the option of one or the other. So if he has any case in mind, he should write to the HDB and I will ask HDB to consider the case. PURCHASE OF E-2C PLANES (Request for Statement) 19. Mr J.B. Jeyaretnam asked the Minister of Defence and Second Minister for Health if he will make a statement on the purchase by Singapore of four E-2C planes from the United States of America at a cost of S$2,200 million and say why the purchase of these planes at such cost has been considered necessary and whether the purchase marks Singapore's entry into the arms race with the superpowers. The Minister of State of Defence (Dr Yeo Ning Hong) (for the Minister of Defence and Second Minister for Health): Sir, MINDEF is currently negotiating with the US Government for the purchase of the E-2C planes. Singapore's economic well-being depends on trade, shipping and air communications. We are an international junction. Vital shipping passes through the Straits of Malacca. We survive on the basis of free passage of ships through the Straits. The E-2C planes will enable the RSAF to monitor the movements of ships and aircraft. They will also give us more time to respond to military threats should they arise. The E-2C system is expensive. But the figure of $2.2 billion is an exaggeration. The final cost, including spare parts and training, will be less than half that amount. It is an unavoidable expenditure as we value our citizens' lives.”
“Mr Speaker, Sir, I do not quite understand the question.”
“Mr Speaker, Sir, a lessee of an HDB flat who inherits a share in a private residential property may be allowed to retain both his share in the private property and his HDB flat provided all the following conditions are met:- (a) The lessee's interest in the inherited property does not exceed 50%. (b) The value of the lessee's share in the inherited property does not exceed $200,000. (c) The lessee satisfies the HDB that he is unable to recover possession of the inherited property for his exclusive use. (d) The lessee informs the HDB of the interest inherited. If the lessee fails to declare the interest inherited and if such inheritance is subsequently discovered by the HDB, the lessee will still be allowed to retain his HDB flat and inherited private property provided all the other conditions are complied with, but he has to pay a penalty fee based on 5% of the value of the interest inherited. Where the said conditions are not met, HDB's present rules require the lessee to resell his HDB flat to the HDB if, at the time of inheritance, he has occupied it for less than five years, or on the open market if his occupation has exceeded five years. The HDB is reviewing this rule to allow such future lessees the option either to sell their shares in their inherited private properties in order to be allowed to retain their HDB flats, or alternatively to resell their HDB flats if they wish to retain their inherited properties.”
“Mr Speaker, Sir, I do not have the information available here. I will supply him with the information in writing. HOUSING AND DEVELOPMENT ACT (Exemption from compulsory acquisition of property) 18. Mr Ho See Beng asked the Minister for National Development whether the owner of a Housing and Development Board flat who inherited from his father a share in a piece of property which has since been sold and its proceeds divided among the children, according to his father's will, can be exempted under section 48A (8) of the Housing and Development Act from having his flat compulsorily acquired by the Board or from having to pay a penalty and, if not, why not.”
“Mr Speaker, Sir, the piece of land between Middle Road and Bras Basah Complex was originally earmarked for public housing. However, the Government decided in September, 1982, that there should be no further construction of HDB flats in the Central Core because of the high opportunity cost of land there. The HDB has therefore shelved its original plan for the land at Middle Road. A decision on its future development has yet to be made. In the meantime, the land has been converted into a temporary car park. The piling work already carried out at the site will not go to waste as future development there can be designed to use the existing piles.”
“Mr Speaker, Sir, the hon. Member asked about public housing projects. So I have given the details. But there are four other small areas affected by other projects, and if the Member wants the information, I will supply them to him later. DEVELOPMENT OF LAND BETWEEN MIDDLE ROAD AND BRAS BASAH COMPLEX 17. Mr Ho See Beng asked the Minister for National Development what plan he has for the piece of land between Middle Road and the Bras Basah Complex as there does not seem to be any building activity on the land after completion of the piling works.”
“Mr Speaker, Sir, a squatter area known as Kampong Pachitan in the Kampong Kembangan Constituency is earmarked for a public housing project. The proposed redevelopment will provide 900 dwelling units comprising 3, 4, 5-room and Executive Apartments, Tenders for the projects will be called in the third quarter of 1985. The flats are expected to be completed by the end of 1987. In connection with the proposed development, an estimated 440 cases in the Kampong will be resettled. The exact number and type of cases affected will be known only after the Resettlement Department completes its census survey in about a month's time. Clearance and relocation of the squatters will commence in 1984. Affected residential squatters will be considered for resettlement benefits in accordance with the prevailing Resettlement Policy, subject to eligibility.”
“Mr Speaker, Sir, to facilitate easy access from Bukit Purmei Estate to Telok Blangah Rise market, the HDB recently called tenders for an overhead bridge across Lower Delta Road. The bridge will be completed in February, 1984. KAMPONG KEMBANGAN CONSTITUENCY (Housing projects and Resettlement plans) 16. Encik Mansor Haji Sukaimi asked the Minister for National Development if he will state the details of the housing projects that are to be undertaken in Kampong Kembangan Constituency and, if these projects result in resettlement of residents, how many families and residents are affected; what plans are being made to resettle them; when they are scheduled to be resettled; and what compensation and other forms of payments are being offered to the persons who will be affected.”
“Mr Speaker, Sir, HDB has no plans to build a market/food centre in Bukit Purmei Housing Estate which is a small development of only 15 blocks with 2,300 flats. The market and food centre at Telok Blangah Rise is within walking distance of Bukit Purmei Estate and can adequately cater to the needs of its residents. However, supplementary shopping and eating facilities comprising 20 shops and two eating houses have been provided at Blocks 109 and 112 within the Estate for the convenience of residents. OVERHEAD BRIDGE ACROSS LOWER DELTA ROAD 15. Mr M.K.A. Jabbar asked the Minister for National Development whether there are any plans to construct an overhead bridge across Lower Delta Road for the convenient access of Bukit Purmei residents to the Telok Blangah Rise market.”
“Mr Speaker, Sir, the HDB will develop new market facilities on a site next to the Toa Payoh Bus Interchange to replace the market and hawker centre at Block 176, Toa Payoh, which will be demolished. The proposed facilities include market produce stores, retail shops, food canteens, mini-markets and a parking garage. Tenders will be called later this year and the facilities will be ready in late 1985. The HDB will also convert the void deck at Block 163, Lorong 1, to provide seven units of shops and stores selling market produce by March 1984. As an interim measure, affected residents can use several existing markets and hawker centres within walking distance of Block 176. These are at Blocks 74 and 93 at Lorong 4; Block 188 at Lorong 6; and Blocks 127 and 131-135 at Lorong 1, Toa Payoh. BUKIT PURMEI HOUSING ESTATE (Market and Food Centre) 14. Mr M.K.A. Jabbar asked the Minister for National Development whether there are any plans for a market and/or food centre to be provided in the new Bukit Purmei Housing Estate as the residents there are not enjoying such facilities.”
“Mr Speaker, Sir, the market stalls at Hougang Avenue 1 will be allocated to stallholders presently operating at the market at Block 176 Lorong 2 Toa Payoh, which is affected by the development of the Toa Payoh MRT Station. The stalls will be balloted and occupied in April 1983. Existing licensees in other markets may apply for transfer to the market at Hougang Avenue 1, provided vacant stalls are available after the demand from resettlement cases has been fully satisfied.”
“Mr Speaker, Sir, the Public Works Department will be constructing a pedestrian overhead bridge in the vicinity of Jalan Lokam to facilitate pedestrians crossing the busy Upper Paya Lebar Road. The bridge will be ready by the end of this year. HOUGANG NEW TOWN (Occupation of market stalls) 7. Mr Sia Kah Hui asked the Minister for National Development (a) if he will give an undertaking that immediate steps will be taken to have the empty stalls in the market at Lorong 1 Hougang New Town occupied; and (b) if he will grant the requests of existing licensees in other markets, who have now moved to Hougang New Town, for stalls in Hougang New Town to be given to them in exchange for their present stalls.”
“Mr Speaker, Sir, I will ask HDB to consider this suggestion. JALAN LOKAM/UPPER PAYA LEBAR ROAD (Pedestrian overhead bridge) 6. Mr Sia Kah Hui asked the Minister for National Development, in view of the heavy traffic, whether an overhead pedestrian bridge will be built at the junction of Jalan Lokam and Upper Paya Lebar Road and, if so, when.”
“Mr Speaker, Sir, as the Member is aware, there are three vacant plots of land around Block 119 Aljunied Crescent. The largest one, opposite the swimming complex at Aljunied Avenue 2, will be developed as an extension of the Town Centre. The development will include shops, offices, and HDB Area Office and a multi-storey car park with 250 lots. The project is expected to be completed in mid-1985. The two other pieces of land next to Block 119 are located along Aljunied Crescent. Both land parcels are not earmarked for any specific development, but are reserved for use according to future needs.”
“Mr Speaker, Sir, I will ask the URA officials to consult the hon. Member as well as his community leaders on this question. ALJUNIED CRESCENT (Development of vacant land) 5. Encik Othman bin Haron Eusofe asked the Minister for National Development if he will provide details of the proposed development on the two plots of vacant land beside Block 119 Aljunied Crescent and the expected date of completion.”
“They should also report to the Police if there are suspicious characters loitering around. It is impossible, in view of the many areas concerned, for the Government to send people all over the place just to look after these sites. We do the best we can but the people concerned should also play their part.”
“The first stage is the resettlement of the squatters which involves the Resettlement Department which coordinates the allocation of flats, payment of compensation and so on to these people. Then there is the question of the clearance of the structures and control of the site after the people have moved out. Whilst being responsible for the first part, the Resettlement Department also liaises with the Government authority which is responsible for the development of the site and resettles squatters on the site according to the priority and development schedule of the project. The Resettlement Department ensures that clearance is carried out in an orderly manner and without unnecessary delay or inconvenience to the affected squatters. As soon as the resettlement of squatters is completed, the Resettlement Department informs the development authority concerned. The latter then has the responsibi- lity to clear physical structures on the site and maintain control of the site to ensure that it is free of hazards until physical development begins. I would like to assure the Member that all necessary precautions are taken by Government bodies and statutory boards as far as possible to ensure that the development sites are kept in good and proper condition. This problem, I understand, has been raised before in this House. The problem is this. As soon as some of the people move out, the Government will move in and knock down those premises which can be knocked down and remove the debris. But it is not possible to knock down those houses which are still occupied. It may be a whole row of houses, some vacant and some are still occupied. So in those cases, I think the residents themselves should play a part and avoid debris and so on.”
“Mr Speaker, Sir, I am answering on behalf of my Minister. The Member for Kaki Bukit has mentioned himself at the beginning of his speech that many of his points have already been covered and I do not think I should really waste hon. Members' time by repeating the answers. There is a Mem- not think that we as responsible MPs should follow his example. The first point is about resenlement compensation. I have already assured the House that when there is a need, my Ministry will review the rates. But our opinion at the moment is that the rates are adequate and, if anything, they are on the generous side. The Member also asked whether the cases can be resettled faster. This would depend on the urgency of the development. We cannot cater for every area of resettlement. Already, up to 50% of the flats completed are reserved for resettlement cases and there have been a lot of complaints from the public on the normal waiting list about the number of queue jumpers. This is as far as we can go in terms of trying to expedite the resettlement process. The Member made another point about compensation for fruit trees. Here again, I think I have given a very long and elaborate answer yesterday and I believe the Member was here. So there is no need for me to repeat. The point is really this. If these farmers are trying to take advantage of this scheme by planting too many trees, then we who are in charge of public funds must put a stop to it. Although the farmers may complain, I think we are just doing the right thing. He raised one other point and that is whether we can improve on the maintenance of those structures left behind as a result of resettlement. Maybe here I should explain that there are really two stages to the clearance process.”
“I would not ask him to supply catalogues because I do not think he is selling this product. But if information is available, it will be welcome. Similarly, regarding those methods to improve painting of roads, again if he has any suggestions, we will look into them.”