Leong Horn Kee
Singapore
“My question is that, although at the point of purchase when the blocks were built, this may not be structural deficiency, as the Parliamentary Secretary said, but it is now because the demand or desire is for lift access.”
“Lastly, by centralising at MOM, I wish to urge the kind Minister to provide more funds and resources for job search programmes. Most feedback from residents is that they are not getting sufficient help and satisfaction on job search services at the CDC level.”
“At the same time, our SAF soldiers are better educated and trained to handle more sophisticated fighting system. Thus, the combination of both modern weapon systems and better trained soldiers will provide a good platform for our SAF to build a strong and capable integrated fighting force.”
“All right, "may" allow two months of disruption. But in terms of cohort, after the students have left school, they are no more in the same cohort. They actually enter enlistment at different times of the year. So this issue of relating cohort to enlistment period may not be valid. Therefore, why not just have a clarity of rule?”
“Sir, on this issue of early disruption of two months, we should actually look at it not from the two months' point of view of early disruption, but from the 10 months of waiting time. The servicemen will have to mope around waiting for 10 months for his tertiary education.”
“If the safety and personal security in Johor is not improved, no matter how excellent or scenic a bridge we build, Singaporeans will be hesitant to visit Johor and spend time and money there.”
The complete record
Every one of 876 lines we hold for Leong Horn Kee, in date order, each linked to its source. Free to read, in full, without an account. Page 6 of 18.
“Mr Speaker, Sir, as Mr Chew is a worthy candidate for this post, I would like to second the proposal.”
“Let us hope that, through the collective concerted efforts of our honest and effective Government, the hard work and drive of the people and the perseverance and pioneering spirit of local companies, together we shall see ourselves through this dark period ahead. And let us hope that we can see some light sooner than expected.”
“With the possibility of dropping property prices, many properties can go into a negative equity, that is, the market value of the property could be lower than the loan taken. In such an instance, some banks would be quick to protect themselves and ask for more cash or more collaterals. Those who cannot meet the bank's demand will encounter forced sale of their properties. I understand that, in Hong Kong, for example, there are about 300,000 loans that are already in the negative equity range. I do not know how many are there in Singapore. But with the raging storm and the coming recession, I am sure that more families will face the prospect of negative equity. So we would like to urge the banks to be more understanding and to try to allow their customers' housing loans to be restructured or deferred. As Minister George Yeo has said, in time the storm will blow over and then the umbrellas can be returned to the bankers gratefully by the lenders, but please do not take away the umbrellas when the storm is still raging. Sir, finally, I would like to hail the move by the Government to have a wage cut of 10% for Ministers, office-holders, top civil servants, MPs and NMPs. This is a right move, especially for the Ministers, they will actually encounter a 17% wage cut, because 7% is from salary formula reduction and another 10% is from wage cut. This is a good gesture and a sign of good leadership. Sir, in conclusion, I would like to repeat the fact that this economic package announced by the Deputy Prime Minister is most warmly welcomed by all.”
“Adding to the woes would be the bankers calling at the doors to repay bank loans, or insist on accelerated repayments of principals, or even payment of higher interest rates, or to provide more security cover, collaterals, or top up with cash. Although I agree that, in principle, we should not tell the banks how to run their business, but there is reason for the authorities to request the banks not to be overly panicky or being overly predatory. They commonly say that bankers are fair weather friends. In good times, they lend you plenty of umbrellas when the sun is shining. But at the first sign of rain, they will scramble to snatch back the umbrellas. Worse, now Minister BG George Yeo has told them that a terrific perfect storm is blowing. I think they are even more worried. Hence, I would like to ask the Government to urge the banks, especially local banks, who may have more local interest in their heart, to stay their hands in calling on defaulting loans. They should instead be sympathetic and call on their borrowers to see how they can help them restructure their loans or allow them to defer their repayments. It would be a sad case if many companies collapse because of forced loan recalls by the banks. Sir, similarly, for housing loans, I am pleased to note that the Deputy Prime Minister has said that the HDB will introduce some schemes to help HDB dwellers to defer their loan repayments. On private residential properties, I would like to also call on the banks that, for Singaporeans who have taken up private residential property mortgages, they should be a bit more sympathetic and lenient in dealing with possible defaulting loans.”
“Now on some suggestions that the DPM may not have covered in his announcement. First, I would like to suggest allowing, on a very stringent and specific basis, families to draw on their CPF in case they are really in dire need of financial support. During this very difficult financial crisis, many people will lose their jobs and encounter severe financial difficulties, especially those with young families and children to support. I would like to suggest that, for those who are severely affected and they have run out of savings and all other means of supporting themselves and the family, they should be allowed to draw upon their CPF savings. If the Government is concerned about flagrant and wanton demands by certain people to spend their CPF savings, which are actually meant for old age, the Government can set up rules to limit the withdrawals. Withdrawals can be limited to only the Special Account, for example. I would also like to urge the Government to consider this suggestion seriously and, perhaps allowing it on a stringent case-by-case basis, and also with the support of the Citizens' Consultative Committee (CCC). The constituency's CCC can conduct visits - they know the ground, they know the people well - they can investigate the financial status of each applicant and they can only give their support or endorsement when they are persuaded that these families require financial assistance and therefore can be allowed to draw on their own CPF savings. Next, the need to urge our banks, both local and foreign banks, to continue to support our companies. During the recession, many local companies will find difficulties in cash-flow management and making sufficient income to cover overheads and pay the staff payroll.”
“I would like to particularly praise the scheme which is to gather $500 million of loans to assist local companies, because this is the time when local companies do need help in terms of financing their operations. As their revenue drops, they may find that they do have a shortfall of earnings to cover their expenses. I do like to ask the Deputy Prime Minister that in implementing the disbursements of the loans, consideration be given to factors that are not just, say, liberal but at least easily accessible for companies that are still viable and would need the loan to sustain their businesses. Otherwise, if the money is there, with $500 million, and the loan is hard to be obtained for local companies, then it does not serve any purpose at all. On the other measures to introduce pump priming measures, I support the proposal to identify 100 infrastructure projects, such as upgrading the NUS campus, constructing new polytechnics and various projects, to be accelerated. However, we are aware that such infrastructure projects have leakages of income mostly to foreign sources. Therefore, besides pump priming of infrastructure projects, I would like to urge the Government to also consider including in the pump priming programme, other non-physical works. These are in the areas of soft services, such as works to be issued by the Government for IT and software development, consultancy contracts, process improvements, product development and R&D projects. If the Government can push up more generously these non-physical projects, then local companies can also benefit more directly. The development of intellectual and human capital from these projects would be more enduring and have longer impact on promoting Singapore as a knowledge-based economy.”
“3 billion is already accounted for and there is no need to dig into the reserves? Sir, I would like to divide my comments on the various measures into two groups: (1) measures to help individuals; and (2) measures to help local companies. First, measures to help individuals. On the intention not to have CPF cuts, I agree fully with the Government that there should be no further cuts in the CPF at this juncture. Anyway, CPF cut is a very blunt instrument. At present, the employer's CPF remains at 16%. There is already a 4% of CPF yet to be restored. Any further cut in the CPF would mean that the effective household income of Singaporeans is reduced. Many Singaporeans use their CPF to pay for housing loans. Hence, should the CPF be cut, they will have to take out of their own disposable household income to service their housing loans. Sir, on the other substantial measures announced by the Deputy Prime Minister, such as the additional tax rebates for individuals, this again is most welcomed. The lower tax to be paid by the people would mean that people would have more money to cover for household expenditure, schooling expenses and other expenses that may need to be paid. The rebates could assist in some form of stimulating the consumer spending which will have a beneficial ripple effect on the retail sector, eating establishments and the overall domestic sector. Sir, on measures to help companies, I am also in support and pleased to hear about the several schemes to help companies, which include enhanced LEFS, higher SDF rates, lower transport costs, reduction of stamp duties and various other measures.”
“And if local companies survive, in turn, they would help to sustain employment and preserve jobs for the people. My first comment on the Singapore Shares is that the concept of Singapore Shares, originally suggested by the Prime Minister during this year's National Day Rally, is innovative. The Government has means to pay out the huge sum of $2.7 billion because of the accumulation of surpluses from this current Government. The concept of Singapore Shares is a form of wealth sharing and wealth redistribution, and is appropriate and justifiable. In good times, we save; in difficult times, we take out the savings to help the people, especially those who are less well-off and less privileged. Therefore, I agree with the principle of the Government to give more of the Singapore Shares to the lower income group. Taking the amount of $2.7 billion, if we take a base population of about 2 million working adults and senior citizens, it would come to about $1,350 per person over five years. For a family of two adults of husband and wife, this would be about $2,700, which is quite a substantial and meaningful sum, especially for lower income families who will get more than this $2,700 per family. I hope that, of course, the Government can continue to do well, accumulate more reserves and in the future, perhaps give us more. I would like to ask the Deputy Prime Minister a clarification. He said in his speech that for the current $11.3 billion package, there are sufficient funds in the current Government's reserves. For next year, assuming after the election which is definitely due by August next year, there may be a need for the Government to call on the reserves because the new Government may not have reserves. So could he clarify whether this present package of $11.”
“3 billion ringgit rescue package, which is about S$2 billion, and Hong Kong recently announced a HK$15 billion rescue package, which is about only S$3.5 billion. So, in contrast, I would like to say that it works out, in comparison, on a population basis, in the US the rescue package amounted to about $640 per person; in Malaysia, it is only about $90 per person; in Hong Kong, it is about $500 per person; and for Singapore's package of $11.3 billion, it comes out to about $3,500 per person (based on a population of about 3.2 million Singaporeans and residents). So this package, indeed, is quite substantial. In fact, the Hong Kong package, in contrast, after its announcement, had been criticised by their locals as being insufficient and would not help the economy. This Singapore package, as I said, is very sizeable and should satisfy most expectations. The press has actually speculated that the package will amount to only $8-$10 billion. So this $11.3 billion is even higher than most expectations, in contrast to the 1998 package, which was $10.5 billion. But in that package, about $7.5 billion was from CPF cuts. So the actual contribution from Government was only $3 billion. Therefore, in contrast to this $11.3 billion rescue package, as announced by the DPM, it is over three times the 1998 package. So, therefore, I would like to call this economic package bold and meaningful. Bold because it is sizeable enough to make an impact; meaningful because the measures are thought out to be targeted at several specific sectors of the economy and people who are most affected by the recession. These are the poorer families and unemployed, and also to help local companies so that they can survive the downturn.”
“Mr Speaker, Sir, thank you for allowing me to join and take the lead in this debate, and put forth my views on the economic rescue package just announced by the Deputy Prime Minister. Sir, I am very heartened to note that the package is indeed very wide-ranging, very well thought through and, of course, very substantial, amounting to $11.3 billion. This is in addition to the $2.2 billion announced previously. However, there are so many measures and so many incentives being announced that I also cannot keep track when I was taking down the notes. But allow me to make a few comments. Sir, I intentionally called this the "economic rescue package" because our economy indeed needs rescuing. As the DPM has said, we are in the worst recession since Independence. In 1964 we suffered a 4.3% drop in GDP, whereas in 1985 we only saw 1.6% drop, and now we are expecting perhaps a -3% for year 2001. But for the rest of 2001 and the year 2002, the outlook still looks uncertain. Under this scenario, the people and local companies are extremely concerned. In this cold raging storm which would last into next year, or perhaps longer, the economic rescue package is warmly welcomed by all. The feeling is like the Chinese saying, "xue zhong song tan", which means, in a snowy storm you get warm coal, and this warms the hearts of the people. Mr Speaker, Sir, allow me to make some quick comments and views on the various measures. First, the economic package of $11.3 billion, I feel, is indeed very large. In fact, in comparison, we know that the USA has announced an economic stimulus package of about US$100 million, which is about S$180 million. Malaysia also announced a RM4.”
“As I understand it, unless I am mistaken, authorised share capital may not necessarily equate to paid-up capital because full equity may not be paid by the foreign companies, although they may have the authorised share capital. Next, representation of varied interests in the SBF. Given that the SBF will be a large gathering of companies, I wonder how it can be effective in representing the wide and varied interests of all its members. Would the smaller companies feel that they have lesser representation because the Council could be dominated by the big boys and the prominent businessmen? Sir, on the role of the SBF vis-a-vis other business bodies, a query I have is how is the SBF going to operate effectively. At present, the Bill provides for three local chambers of commerce and industry, ie, Chinese, Malay and Indian, to be represented on the Council. But there are also many other business and trade bodies that are already in existence. They speak for their own industries' interests. For example, there is the Association of Small and Medium Enterprises (ASME) and there is also the Singapore Confederation of Industries (SCI). What are their roles now vis-a-vis the SBF? The Minister has explained that the SFCCI, which is the confederation of chambers of commerce, is going to be closed. But what about the SCI? Will it also become defunct or will it be invited to join the SBF as a component member? I would like to ask the Minister to enlighten us. Sir, I support the Bill.”
“Mr Deputy Speaker, Sir, I support the Bill as it serves to create a new super chamber or body to act as a powerful and concerted voice to speak for the business community. Similar federations of business bodies have been formed, as the Minister has mentioned, the Keidandren in Japan, and others elsewhere. In Britain, the Confederation of British Industry (CBI) has been formed for the same purpose. Sir, I previously asked some Questions for Oral Answer in the House regarding this Bill. At that time, the Minister replied that the Bill was being formulated and he would give a more complete answer when the Bill is ready for presentation to this House. So I shall take this opportunity to ask a few questions. First, on compulsory membership. According to clause 5(1) of the Bill, membership is compulsory for local companies with paid-up capital of more than $500,000 and foreign companies with authorised share capital of over $500,000. I have a few questions. (1) Is it advisable to have compulsory membership by law, for both local and foreign companies? There are a myriad of local and foreign companies. Some may not find any reason or need to join the SBF, or some can be dormant even though they have the qualifying $500,000 paid-up capital. So why not make the membership voluntary, instead of making it compulsory? Under the compulsory scheme, as I heard the Minister, they would have collected $6 million from the membership fees. That seems to be a large sum. (2) Why is there a difference in the definition used for paid-up capital for local companies and another definition used for authorised share capital for foreign companies?”
“Of course, Sir, we do not hope that there will be a terrorist attack in Singapore, but it is an area which we should look into. Sir, I support this Bill.”
“Sir, on interest income from insurance broking premium account, under the new Bill, the MAS will prescribe that interest earned from insurance broking premium account should be distributed to insurers. Previously, the interest can be retained by the insurance brokers. This has enabled insurance brokers to quote lower and more competitive insurance premiums. I wonder why the MAS has decided unilaterally to dictate that interest earned should now be distributed to the insurers, instead of being retained by the insurance brokers. On the register of prohibited persons, I understand that the MAS will keep a register of prohibited persons who would be debarred from participation in the insurance business. I am concerned about easy accessibility of the public to this register, as that could be subject to abuse or undesirable usage, since it is available for public inspection. Could the Minister allay the public's fear on how the handling of the register would not be subject to abuse? Finally, on the impact on the insurance industry of risk exposure caused by terrorist attacks. Sir, on a general issue relating to the insurance industry which could be of public interest, I would like to ask the Minister whether the recent terrorist attacks on the World Trade Centre in New York have affected our insurance industry. Are our local insurance companies affected and exposed to the huge potential insurance claims arising from this incident? I wonder whether risks against terrorist attacks are insurable and, if so, how would our local insurance industry deal with this matter and could it give rise to higher insurance premiums payable in the event of potential claims for damages caused by acts of terrorists.”
“Mr Speaker, Sir, this Insurance (Amendment) Bill is introduced mainly because of changes to the other Bills, ie, the SF Bill and the FA Bill, which have just been passed by this House. There are also other measures on improving and updating the regulation of the insurance industry, and these new rules are also welcome. Sir, I would like to express my support for the Bill. However, I would like to ask the Minister the following questions. First, cost impact on the insurance industry. I would like to ask the Minister whether the Bill will have an impact on the operating and training costs to the insurance industry arising from the several new requirements to upgrade this industry. For example, the Bill requires non-life insurance companies to obtain actuarial certification of their insurance liabilities. This is to ensure that insurance companies have appropriate reserves to meet all ultimate liabilities. Would this requirement add to their costs? As the intention is to continuously upgrade the knowledge and expertise of insurance agents and brokers, would the higher operating costs also add to the companies' operating burden? Sir, secondly, under the division of the various functions between the new legislation where direct life insurance brokers will be governed under the new FA Bill, could insurance companies also participate in the financial advisory and planning business? If they could, would they be governed by the Financial Advisers Act as well? And how does MAS ensure that insurance companies and their agents have the necessary competency to give financial planning advice to their clients?”
“For example, if a foreign syndicate tries to play and corner certain local stocks from overseas, how do we control and penalise them? Similarly, if a foreign-based Internet company offers securities advisory services without an approved licence to Singapore residents, how do we ensure that they are giving competent advice and complying with Singapore's listing, take-over and other securities rules and code? On enhanced rules on insider trading, Part XII, Div 3 of the SF Bill deals with a new change in the treatment of insider trading rules. As I understand it, it has shifted from person-connected to information-connected rule. In principle, I am in agreement with this change, as it gives greater clarity and intent on insider trading. However, I am unclear on the actual implementation of this change. Will the "person-connected" approach be withdrawn such that only "information-connected" rule will apply? For example, during the restricted buying period when a company was about to announce its financial results, for "person-connected" parties or persons who have no access or have no information of the company's results, could they then trade in the shares of the company during the restricted buying period? I would like to ask the Deputy Prime Minister to explain further on how this new ruling operates. Mr Speaker, Sir, I wish to express my appreciation to MAS for being responsive to market changes by introducing so speedily this new legislation to regulate the capital markets.”
“Mr Speaker, Sir, I wish to speak in support of this Bill. The introduction of the Securities and Futures Bill serves to update the legislation to keep in pace with the changes and advancement in the capital markets. It sets out the new regulatory framework for the securities and futures market and put it all into a single piece of legislation under the SF Bill. Sir, I would like to make a few comments on this Bill. First, areas of conflict in SGX as a securities industry regulator. As I see it, one of the essential operational differences with the SF Bill is that several regulatory functions of SGX are removed and put under MAS. I feel that this is a correct move in the right direction. Currently, SGX itself is listed on the Singapore mainboard. There may well be instances of conflict of interest when SGX has to function as both the regulator as well as the player in the securities industry. However, I note that, with the changes, SGX will still retain some regulatory functions, especially on listing functions. I would like to ask the Deputy Prime Minister what is the rationale for doing so, and how are the regulatory functions divided between MAS and SGX under this new SF Bill, such that it will minimise the avenues of conflict of interest on the part of SGX. Next, effectiveness of the extra-territorial jurisdiction. Clause 339 of the SF Bill confers the power of extra-territorial jurisdiction on acts of having substantial or reasonably foreseeable effects in Singapore. Here, I would like to ask the Deputy Prime Minister how we can be effective in policing and curbing undesirable securities and futures trading activities that occur in foreign jurisdictions.”
“Sir, my question is about the effective date of the new water price. What I hear from the Minister is that the effective date will be from the point when the two Prime Ministers sign the new agreement. But would it not be possible to actually ask that the old agreement, which has the old price of about 3 sen, be allowed to run its full term, before the new price is implemented at a later date?”
“Sir, may I ask the Minister whether he has a more definite date as to when the off-Budget measures would be announced and if the flash estimates can be ready earlier, could the off-Budget measures be announced earlier so as to help the industries and Singaporeans?”
“Sir, may I ask the Minister whether his Ministry has now revised the GDP forecast for the whole year? I think the last forecast was minus 1.5%. BG George Yong-Boon Yeo: We expect the flash forecast to be out on 7th October and when that forecast is out, we will also revise our GDP estimate for this year.”
“If Singaporeans and PRs can voluntarily save for their old age, then they will become less of a burden to the state. Although I do not know how much tax will be lost if we give 100% tax-exempt benefit, I firmly believe that it is worthwhile to give such a benefit for Singaporeans and PRs. Extension of the 62-Year-Old Age Limit Sir, at present, the scheme restricts the contributor to an age limit of 62 years. Many older Singaporeans have enquired as to why there is an age limit of 62 years. Why discriminate against them? If Singaporeans and PRs are prepared on their own to contribute to their SRS beyond 62 years old, they should be encouraged to do so. However, I understand that the Minister and his Ministry are concerned with the risk of round-tripping, meaning that a contributor pays money into his SRS and then withdraws money immediately at the same time, with tax benefits. Sir, we can contain this problem by setting a moratorium of, say, five years on all new SRS contributions after age 62. This way, the 5-year moratorium will ensure that older workers can save for their old age and overcome the problem of round-tripping, as they can only withdraw their money five years later. Finally, I wish to reiterate that I find the SRS scheme meaningful. I am in full support of the scheme. However, as can be seen from the points that I have raised above, I just wish that the Government can be more generous in the benefits and conditions for the SRS scheme, so that more Singaporeans and PRs can be encouraged to participate voluntarily.”
“For example, the matching contribution can be just on a 1:2 basis, or at such a rate or proportion as the employers feel appropriate. Sir, I understand that the employers' matching formula is one of the reasons for the success of the equivalent SRS scheme in the US. Equal Contribution Limits for Both Locals and Foreigners At present, the scheme allows the contribution of Singaporeans and permanent residents of up to 15% of their annual income or $10,800. For foreigners, the limit is higher, at 35% of their annual income or $25,200. Sir, I find this discrepancy in the contribution rates rather strange. In fact, I find it very hard to understand. If the intention of the Government is to encourage Singaporeans and PRs to save more for their old age, then we should allow them a higher limit. In contrast, the foreigners do not need to remain in Singapore and, therefore, there is no reason for us to be concerned about their retirement funding needs. Moreover, a higher limit for foreigners means that they enjoy more tax benefits. To be consistent, I would like to ask the Minister to consider whether the contribution limit for Singaporeans and PRs can be increased to the same level as for foreigners. Increase of Tax Exempt Limit to 100% Currently, the proposal is to limit the tax-exempt portion of SRS withdrawal to only 50%. Again, I find this ruling rather strange. If the Government is sincere and truly wants Singaporeans and PRs to save more for their old age, then it would well be beneficial for the Government to allow 100% of their SRS withdrawals to enjoy tax-exempt status. This is the same tax-exempt basis for normal CPF contributions. So why not be more generous? Why be so stingy? Why not allow SRS contributions to enjoy a full 100% tax exemption upon withdrawal?”
“Mr Deputy Speaker, Sir, I would like to speak in support of this Income Tax (Amendment) Bill. The Bill seeks to implement the numerous income tax changes announced by the Government for the FY2001 Budget. As most of these tax changes have been well debated in this House, I shall not delve into them. However, the Bill also covers a new issue, which is the introduction of the Supplementary Retirement Scheme (SRS). As this SRS has not been fully debated in Parliament, I feel that it is worthwhile to raise certain issues concerning the SRS so that we can have a full debate on this matter. Matching Contribution from Employers Mr Deputy Speaker, Sir, my first point concerning the SRS is that, overall, the objectives of the proposed SRS are commendable. Essentially, the SRS is meant to encourage Singaporeans and residents to voluntarily contribute to their own retirement fund, over and above the mandatory CPF contributions. However, one negative impression of the SRS is that it appears to cater to and is more favourable as a tax incentive to the higher income group. As we all know, about 70% of the lower income group of the population do not pay income tax. For the lower income group, the tax savings in absolute terms are smaller and less meaningful, compared to the higher income group. But it is the lower income group that needs to save for their retirement. One way to assist the lower income group and encourage them to contribute more actively to the SRS is to allow for matching contribution, also on a voluntary basis, from the employers. The employers' matching contribution can be up to a limit of 1:1 basis, but it need not be set as a fixed matching quantum since it is meant as a voluntary contribution from employers.”
“It says, "The MOF has now decided to extend the 25% property tax rebate for commercial and industrial properties for a year from 1st July this year to 30th June next year, . and the effective rate during this period would thus be 7.5% as compared with 9% before this."”
“Then after a few years, we have a few hundred such officers, and I think we should extend it to the other Ministries as well, we will build up a deep inside knowledge of China. Then whatever happens there, we will know how to position ourselves. China is a big market. I was talking to David Abel, my counterpart in Myanmar. When I was in Kunming, I ate turtles which were imported from Myanmar. He said, "Ah, turtles, we export lots to Yunnan." But Yunnan has been importing so many snakes, especially the poisonous variety, from Myanmar that the rat problem in Myanmar is getting out of control. So he told the Chinese, "Look, can you please slow down your eating of Myanmar snakes?" The Chinese market will open all kinds of possibilities, and we must get into it early, know what is happening, position ourselves, make use of the strengths and the assets that we have. Mr Leong also asked whether we will provide grants for companies to upgrade human resources, R&D and so on. In fact, we are doing a lot - EDB, PSB, NSTB. We have a whole range which is available. Recently, I announced on behalf of NSTB a post-graduate programme, $500 million for five years, to promote post-graduate training so that we have the knowledge workers to power the knowledge economy. And if Mr Leong has any particular ideas which are additional to what we already have, MTI will be very happy to hear of them. Sir, I hope I have answered all his questions. An hon. Member: What about property tax on residential properties? BG George Yong-Boon Yeo: I am sorry. Let me read out the section to Members again. This was carefully vetted by the Finance Minister.”
“President Jiang Zemin and Vice Premier Li Lanqing were there for the ceremony to mark the conclusion of the first phase and the opening of subsequent phases. When I was in Shanghai for the APEC meeting, at a cocktail, one Chinese Vice Minister came up to me and said, "You know, Suzhou attracted more investments this year than Shanghai." I could not believe my ears - Suzhou had more investments than Shanghai! Later on, when I went to Suzhou, they confirmed it. Think about it. All of us know about Shanghai. Few people realise that Suzhou has done so well, and the flagship of Suzhou is our industrial park. So if you read internal Chinese literature, Singapore's standing in China is very high. Our passport is held in high regard. We are known to be trusted. So we should build upon this. The trouble is, because the situation in China is changing so fast, for many of us, in our minds, we have not pressed the "Refresh" button on China. And for China, you must press the "Refresh" button every six months to make sure that you have an updated picture. With the Olympic Games and with the opening of the western region, there will be many new possibilities. In MTI now, we are conducting a major review of our China policy, and we are bringing in our Ministries. One idea, which we are working seriously on, is this. We are now sending many of our scholars to the West. When they come back, we will send them for a one-year bond-free attachment to China. They will be fully paid, they do a job, they get attached either to a company or an institute, improve their Mandarin, know what China is like at the basement level, build up deep knowledge in MTI and all the statutory boards.”
“In fact, the reason why we have to cut wages so deeply the last time round was because the currencies around us depreciated by about 40-50% while ours depreciated by only 15-20%. So, suddenly, we had to face a margin of 20-25% and therefore we took the 15% wage cut. This time round, when you look at our relative unit labour cost, it is still competitive. So because there is no need to do a major wage cut this time round, the present package should be sufficient. But having said that, I should also say that if things get worse in the future, then we may have to do more and we will consider all possibilities. I can understand the reluctance by all of us, by the unionists, by Singaporeans generally, to resort lightly to a CPF reduction. On the exposure of Singapore to the global economy, what is the alternative? Ever since we became independent, we knew that our own domestic economy was too small. If we rely only on the regional economy, I think we will be much worse off. In fact, it was because we did not rely on the regional economy in the last crisis that we went through it reasonably well. So we try to buffer ourselves. We have close outriggers which are grounded in ASEAN. We have further outriggers which reach out to Japan, Europe and America. But, unfortunately, when the flows everywhere are down, then we are down. It cannot be helped. Is this a criticism against our economic strategy to globalise our economy? Not at all. In fact, globalisation is the best diversification that we can have for our economy. Mr Leong asked about what else we should do on China. I mentioned earlier that we have good links with China which we should build on. Recently, the Senior Minister was in Suzhou.”
“I would like to ask the Minister, in spite of the confidence that he has instilled by mentioning that there will be no further cuts in the CPF for the business sector, whether he is aware that there is a need for more cost-cutting measures for the business sector because operating cost and business cost are, in fact, a major factor in retaining their competitiveness. Could the Minister be more generous again in looking at various Government rates and fees that can be cut so that these businesses will be able to enjoy a more competitive environment because business cost is a factor for them to remain competitive? Finally, I would like to ask the Minister about the extension of property tax rebate. He did mention about an extension of property tax rebate for commercial and industrial properties. My question is: why is this rebate not also extended to the residential sector as well? BG George Yong-Boon Yeo: Sir, inevitably, this package will be compared to the $10.5 billion package which we had the last time. Let us go back to the $10.5 billion package and what it consisted of. Of the $10.5 billion, $7.5 billion consisted of CPF and NWC deductions. In other words, most of that package consisted of a deep wage cut across the board in Singapore. Do we need to do that this time round? So far, the necessity is not obvious. Whatever we do, we cannot give work to the wafer fabs or to the disk-drive factories or to the petrochemical island, or to our pharmaceutical companies. The reason why business is down is not because of high wage cost, but because the global market is down. If we cut wages, I think that may not be a wise thing to do, because there is no need to.”
“Yes, Sir. Could I ask the Minister, since he mentioned that China is a bright spot, what are the plans that his Ministry has in helping local companies to strongly link up with China, in particular, in terms of business missions and training missions? How do we link up with businesses in China so that we could at least latch onto China, which is a growth area, despite the downturn in the other economies? Sir, finally, a point on CPF cuts. I am also pleased to hear the Minister mentioning about the holding back of the restoration of the 4% CPF cut until a review in the middle of next year. This is very comforting for the local businesses. I also agree with the Minister that there is no need for any drastic CPF cut now.”
“I think to build up the human capital and to prepare ourselves for this new economy is very important. The Minister has also mentioned about the possibilities of China.”
“Sir, first of all, I would like to thank the Minister for Trade and Industry for announcing this set of measures valued at a total of $2.2 billion. I would like to say that I find this set of measures very comprehensive although it was done in a short period of time, since his announcement about the measures earlier this month. I would like to ask the Minister a few questions, Sir. Singapore is said to be a very export-oriented economy. Some of our detractors have said that Singapore is a very exposed economy. Now, with the downturn, including even the United States, Japan and our regional neighbours, we are possibly going into a further downturn. I would like to ask the Minister that, although now we have a set of measures worth $2.2 billion, in the event of a further drastic downturn, would he be prepared to consider further off-Budget measures. In this downturn, as the Chinese saying goes, we should wei yu chou mou (????), which means to plan and build our huts before the rain comes. While the $2.2 billion measures are very meaningful, I find something lacking in what the Minister has proposed. Although he has announced several measures, particularly those by MOM to help workers in skills retraining, what I would like to ask the Minister is whether he could be more generous in providing for capital grants for companies in the area of equity human capital development. This is the area where we can build our only resource, which is the human capital. Therefore, could the Government consider giving more grants in helping SMEs when they want to embark on R&D programmes involving, as the Minister has stated, information technology, software development, communications and other areas in the new economy?”
“The House immediately resolved itself into a Committee on the Bill. - [BG Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed.”
“Sir, the Deputy Prime Minister has not answered a question that I posed in my speech. The supervision of banks using different capital adequacy ratios may lead to unfair rules and an uneven playing field for different banks. BG Lee Hsien Loong: I am sorry, Mr Speaker, I should have explained. As I said, we expect most of the banks to be on standard rules. But in special circumstances where the banks have special risks, then it is necessary for them to have higher capital adequacy provided for, and we have to set higher limits. Is it an uneven playing field? Well, it is, because we are dealing with players who are not of equal quality. And if the risk is higher, it is necessary that you carry higher capital. It may be that you are running higher risk and because your capital is down, you are trying desperately to double or quits, and make good. As a regulator, we cannot allow that to happen. Between Singapore banks and foreign banks, even today there is a certain unevenness, because the Singapore banks have to have 12% capital adequacy, whereas foreign banks in foreign jurisdictions have 8% by law and operate under a different regime. So it is already not equal. But as I explained to Members, very few banks operate exactly at the margin. The Singapore banks are all well above the 12% level. The good foreign banks are not only above the 8% level but also above 12% de facto. In fact, capital adequacy has not been a constraint on banks' returns, and has not been a constraint on banks developing and growing their business. I do not think the changes we are making will make the situation any more difficult than it is now. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House.”
“For instance, I understand that the Basel Accord only requires a 8% CAR. However, we have to be aware that if the CAR on some local banks is lowered, would the depositors be subject to higher risk? On the contrary, MAS may decide to impose higher CAR for the smaller local banks. I would like to ask the Deputy Prime Minster whether or not, in this case, MAS is setting uneven standards and rules on CAR for the various local banks, thereby creating an unlevel playing field between the local banks. Sir, these are some of my queries and questions. May I conclude by stating that I fully support this Bill.”
“Hence, I am concerned that the smaller customers and depositors may be neglected, and given poorer service. This is evident in the merger of DBS Bank and POSBank. There have been instances recently where the small depositors have to suffer a significant drop of the service standards and an increase in the charges imposed on them. I would therefore urge the Government or the MAS to be mindful of these developments. Second, the prohibition of unlicensed offering of deposit-taking services. This restriction is targeted mainly at entities that are offering deposit-taking services through the Internet. I would like to ask the Deputy Prime Minister how the Government could regulate Internet banking entities that are not domiciled in Singapore, and therefore not subject to MAS' licensing and rules. I recall that about two years ago, there was an Internet bank started in the UK called EGG.com. This company offered better interest rates to attract depositors and managed to amass 7 billion pounds of deposits within one year. If such Internet banking companies were to lure Singapore depositors with substantial higher interest rates and other benefits, some Singaporeans and residents may fall for it. How do we regulate and control such Internet banking operators who are not operating within Singapore, but attract deposits from overseas? Third, flexibility for MAS to prescribe capital adequacy requirements. The present Banking Act requires local banks to maintain a minimum capital adequacy ratio (CAR) of 12%. The new amendment will allow MAS to prescribe CAR on a consultative basis. This is a meaningful flexibility which MAS can decide to impose lower CAR for the stronger local banks which are therefore better able to take a higher risk profile so as to compete internationally.”
“Mr Speaker, Sir, I would like to start by stating explicitly that I support all the provisions in this Banking (Amendment) Bill. The amendments are positive as they generally strengthen the regulatory and legislative structure of the banking industry. These amendments pertain to stronger prudential safeguards and corporate governance, greater operational flexibility and facilitating risk supervision of the banks. As said by the Deputy Prime Minister BG Lee, who is also the Chairman of MAS, these changes will ultimately benefit depositors and shareholders, and strengthen the financial system as a whole. The new rules that I particularly like are: (1) Separation of financial and non-financial activities of local banking groups, and the 3-year grace period for the divestments to take effect. (2) The revision of ownership rules. (3) Revision of methodology of monitoring property-related exposure. (4) Prohibition of unlicensed offering of deposit-taking services. (5) Changes to the capital adequacy requirements. Arising from these amendments, I have the following clarifications and queries which I wish to pose to the Deputy Prime Minister. First, on the overall consolidation and merger of local banks. The Government has expressed the wish to see faster consolidation of local banks, so that they can achieve greater size and bulk, to be better able to compete regionally and internationally. I would like to ask the Deputy Prime Minister whether the Government is happy with the current pace of restructuring and consolidation of local banks. In the process of consolidation, I would like to urge the Government not to forget the small SMEs and small depositors. Bigger banks mean that they will target for and concentrate on the big customers.”
“Sir, may I ask the Minister whether he is aware that in the case of Cable and Wireless Optus, it is operating at a much lower profitability than SingTel and, as a result, SingTel's earnings could be dragged down after the acquisition? Can the Minister tell this House why the board and the management of SingTel considered Optus to be acquired at a fair price, even though it was at a price tag of about $15 billion? How would SingTel fund this acquisition? The next question relating to DBS Bank, along the same vein, is whether the Minister is aware that some newspaper analysts have commented that DBS Bank is perceived to be overpaying for Dao Heng Bank. Can the Minister also explain why the board and management of DBS Bank considered Dao Heng Bank to be a good buy?”
“And, in fact, some of the building owners in the existing CBD area, who plan to overhaul their stand-alone airconditioning systems, have also inquired whether they could tap from the pilot district cooling system plant. On the problem of noise and aesthetics, there are solutions to overcome them. Mr Leong also asked why do we need an Act to effect all these, and why can this not be controlled under the EMA. The Energy Market Authority of Singapore Bill serves as an umbrella Act that empowers the EMA to administrate industry specific legislation, one of which is the District Cooling Bill. The Bill is structured in this way because different industries have different requirements, and therefore require different legislation. 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 Peter Chen]. Bill considered in Committee; reported without amendment; read a Third time and passed. CONTROL OF RENT (ABOLITION) BILL Order for Second Reading read. 5.00 pm”
“Why not just simply deal with it as a section within the new Energy Market Authority law? Finally, Sir, may I end by saying that I support this Bill in its intent, since it will bring the novel concept of district cooling for the benefit of the occupiers in the building. But may the Acting Minister address my concerns, Sir? Mr Peter Chen: Sir, let me thank Mr Leong Horn Kee for supporting the Bill in the first place. Let me try to address some of his concerns. Perhaps if we look at the successful application of the district cooling system in some other countries, we might get some assurance. District cooling system has been successfully implemented in several countries like the USA, France and Japan. Some of the notable areas are Reedy Creek, Florida, Paris, France, etc. As regards alternative and fail safe systems, the EMA can specify various standards as part of the licensing conditions. Mr Leong has also raised some concerns on whether or not a mandatory imposition of district cooling system would discourage potential investors in tendering for the land sale in Marina South. This is quite unlikely. In fact, the tender for the first land sale in Marina South was closed only three days ago. This site will eventually house the district cooling system plant, which the successful tenderer has to provide space for. URA received two offers for the land parcel. And as the district cooling system is a new concept in Singapore, it will be quite natural in the beginning for potential tenderers to ask a lot of questions and inquire about the details. But the feedback is that most of the developers were receptive to the idea of district cooling services.”
“I am concerned that the compulsory district cooling system there may affect the tender prices, as it is perceived as an additional cost, rigidity of the system or concerns about how the system would be perceived by prospective buyers or tenants of the premises. Sir, prospective tenants may be deterred to move into an office area if they have to incur higher fitting cost. Compared to the current situation, the tenants and owners of the premises have a varied number of choices, in terms of whether to use central airconditioning, split unit, room unit or even window unit. In district cooling, the occupiers have only one choice. It is like in transportation. You can choose to go by MRT, to take a bus, taxi, car or even bicycle. But in the case of central district cooling, we cannot do anything else but take the MRT, and MRT in itself, as a single system, although it is faster, is actually more rigid and restricted in its coverage. Sir, I am not sure how the central district cooling system would be constructed, but I would imagine that the system requires an extensive infrastructure of piping, feeding out from a central cooling plant. If an end user is located far away, there will be loss of cooling efficiency, loss of energy efficiency and maybe even higher pumping cost. Hence, I am not yet persuaded that the district cooling system can be more efficient and will be able to enjoy lower energy and other operating costs. Sir, a central facility needs more physical space, and maybe more costs for the extensive piping and infrastructure. Visually, I think it can also create aesthetic and noise problems. Ultimately, it may not lead to lower prices for the consumers. Sir, my last point is to ask the Acting Minister why the need to enact a law to specially deal with this concept.”
“Mr Speaker, Sir, the District Cooling Bill is introduced to enable the Minister to declare that it is mandatory for the occupiers of premises in a designated area to use district cooling. The idea of district cooling, as I understand it, is that cooling or the provision of airconditioning in an area is provided by a central facility. District cooling works on the assumption that a centralised facility will be more efficient, enjoy lower cost due to the higher economies of scale and sharing of common services. Sir, I support this Bill in view of this potential benefit of district cooling. However, I do have some concerns which I would like the Acting Minister to clarify. Sir, the concept has been talked about for several years, but this is new and untested in Singapore. My main concern is that the structure is too rigid. To make it work, the system has to be made mandatory so that everyone is forced to use it. This means that the operator of district cooling services is a monopoly in a designated area. So there are the evils of monitoring and regulating a monopoly. As it is, being the sole proprietor of a cooling facility, any failure of the system means that there will be no alternative. We may say that it is not a life threatening event if no airconditioning is provided. When the system is down, people just get hot, or hot under the collar, so to speak. However, I want to point out that in a modern office, airconditioning is very important to keep the computers cool, not the human beings as such. If the computers are down, the companies may lose very valuable electronic data. The damage may be very severe, or even irreparable. Sir, the proposed idea is to do a pilot test of the concept in the new phase one of Marina South area.”
“I support the Bill as the objectives are noble, which are to generate competition, leading to better efficiency, better service and, hopefully, lower prices for the end consumers. Sir, let us hope that it will work as planned.”
“Can the EMA act fast enough? In the event of power failures, what are the fallback or urgent recovery measures? How would the EMA ensure technical competency of the power generation companies? Any power failure will not only cause inconvenience, but can also cause hazards to lives and high economic loss to industries, in terms of production and output. We are reminded of the total power loss problems encountered in places like Malaysia, California, New Zealand and other places. Public Dissemination and Explanation This fourth area is on public dissemination and understanding of the new structure. Here, I would like to urge MTI and the new referee, EMA, to conduct extensive public forums and publicity, to explain the structure of the new energy sector. For industries, it is important that they understand the mechanics of the new structure so that they can make the right decisions and select the right choices. As for small businesses and households, I would like to suggest that the transition be conducted in a more gradual manner. For these users, the need for clear and wide public explanation is even more important. For example, in some households, we may have old folks living in very small flats, or residents who are illiterate, who cannot understand the choices given to them and, therefore, are unable to understand the whole new structure. Learning from Others' Experiences My fifth point is whether there will be examples around the world where the new approach has been successfully implemented. If the new concept has been tried and tested elsewhere, can we not learn from them and avoid their mistakes? In conclusion, I would like to congratulate the Ministry of Trade and Industry for taking this bold move of revamping the entire energy sector.”
“Naturally, the large Government-linked Companies (GLCs) will be entering the sector. But will there be other interested parties, like the private companies and foreign MNCs? If there is insufficient number of players to become power generation companies (called Gencos in short) will it lead to inefficiencies? Will it lead to more efficiency, or in fact to the contrary, more confusion? If the number of players is small, would there, in fact, be a risk of cartelisation? Impact on Prices and Service Standards Electricity and gas coming out of the copper wire or copper pipe will be the same, since they are all pumped through a common grid. Unlike other consumer products, there is really no product differentiation for electricity and gas. Therefore, my second question is: will there be a wider number of options and choices? What will be the impact on prices and service levels? Sir, the issues and potential problems mentioned above are also applicable to the suppliers, who will on-sell the electricity or gas to the end-users. How would the EMA ensure that the suppliers give better prices and provide good service standards? If the number of players is limited, how is the EMA able to ensure that fair practices are maintained by the suppliers? Difficulty of Regulation of Several Participants Sir, the third issue is that with the sector sub-divided into several parts, would there be more difficulty in the regulation and supervision of the many participants? In the past, there was just one body, which was the former PUB, to monitor and manage. Now, the new EMA has to watch over several players. As the Senior Minister of State has said, can the EMA be a good referee? How would the EMA be able to ensure reliability of supply? And what if the players play foul?”
“Mr Speaker, Sir, I support this Bill as this new Energy Market Authority of Singapore Bill sets to liberalise the entire electricity and gas sectors. When the Bill becomes law, it will enable the Government to gradually break up the generation and production from the sale and distribution so that there will be more competition, leading to more efficiency and lower prices. Sir, the Energy Market Authority (called EMA in short) will regulate the gas, electricity and other energy-related matters. Overall, I feel that the concept and intentions are laudable and will lead to benefits to the end consumers, which are the industries, businesses and homes. It is like the liberalisation of the commercial sectors, as in banking and finance. In banking, this is called the "Big Bang". Although the concept is the same, in the energy sector, if we are liberalising this sector, we better not call it the "Big Bang". Because in a sensitive area, like energy, we have to be very careful. If wrongly ignited, a "Big Bang" of the energy sector may lead to a big explosion! Sir, I am indeed concerned that if this is not done properly, the liberalisation exercise will indeed explode in our face. I do have a worry that, if not managed properly, the breaking up of the sector could turn into a mess. Adequate Market Size Mr Speaker, Sir, allow me to explain my concerns. First, adequate market size. I have a worry as to whether Singapore is too small a market for the proper competitive environment for this energy sector to operate. Is there sufficient market size to allow several players to enter the market and remain viable and sustainable? Is there enough room for several power generation companies, each of sufficient economy of scale?”
“Hence, I strongly feel that it is not realistic to continue to adopt a self-denial approach that the GLCs have no impact on private enterprise. I would propose that a detailed study or review be done by a special committee, with representatives from both the public and private sectors to examine how the positive effects of GLCs can be further developed, and how the negative effects can be mitigated. The private sector and GLCs can work together for their mutual benefit, especially in going regional and seeking business opportunities around the world. The GLCs have played an important role during the formative days of Singapore's economic development. After 36 years since independence, it is time to do an appraisal to reprise the roles of the GLCs.”
“Hence, I like to contend that the unlevel playing field of GLCs is more often perceived than real. But even if it is perceived, it does have a significant impact on business dealings. On stifling private entrepreneurship, I feel this is an area of real concern. The concern is that because GLCs command such a large segment of the economy and influence, they therefore capture an unduly large pool of the business and talent, thereby stifling private entrepreneurship. Private companies are affected as they have a smaller share of the pie, and they find difficulty in attracting talents to join them. In contrast to GLCs, the impression of staff joining GLCs is that they offer better perks and sinecure. I think this is a concern that is worthwhile studying more in depth. We want to build a strong private sector as an engine of growth. We also constantly lament on the lack of entrepreneurship. Sir, I wish to clarify that I voice the above concerns not because I am against GLCs per se. I think they play and will continue to play a very important role in the nation-building process. I have many friends who are working in GLCs and have close business dealings with GLCs. In fact, I have worked in a GLC before and served on boards of GLCs previously. Sir, I understand the Department of Statistics is doing a study on GLCs and the Government has announced that its divestment strategy of GLCs will continue. I would like to know the status and the current plans. Besides raising this issue in the Committee of Supply debate, I also have filed a Parliamentary Question to seek more clarity from the Government. In the Singapore context, I believe the GLCs are here to stay, even in varying degrees in future.”
“GLCs are manned by current and past top civil servants, both at the board and management levels. By the fact that GLCs are owned and linked to the authorities, at both shareholding and management levels, they do exert a substantial influence in the market, beyond the numerical percentage of their share of the economy. The main disadvantage of the crowding out by the GLCs is that open market forces may not operate fully. If you were to read the annual report of Temasek Holdings, we cannot help but to have the impression that we are reading the general economic survey of Singapore. The GLCs, and the Government affiliated and union associated organisations are practically involved in every aspect of the economy. In fact, we cannot get by a day without having some dealings with the GLCs. For example, when we go to the bank, read the newspaper, buy food, use the telephone, or even take a bus, taxi or MRT, the GLC is there. In fact, GLCs are involved in everything that we do. We cannot throw a stone without hitting a GLC. Are they not crowding out the private sector? The unlevel playing field is the second constant refrain of the private sector. To be fair, I do not believe that the GLCs will get special deals, privileged advance information of Government policies or changes in plans, or even have easy access to Government funds. Every request for fund is properly and thoroughly evaluated before the money is committed. But what is true is that the top civil servants who are directors and managers of GLCs do have a better appreciation of Government policy thinking and trends. They also have close contacts, connections and access to their counterparts in the Government regulatory agencies. These are in fact strong advantages.”
“Sir, it cannot be denied that the Government-linked companies (GLCs) have been a positive influential factor on the economic development of Singapore. Many GLCs were formed in the early 1960s when there was a lack of private sector initiatives to spearhead industrialisation and the Government wanted to spur the growth of certain new sectors, such as banking, shipping, ship repair and the defence industry. The background, impact and public perception of GLCs is well-covered in a recent article written by a journalist, Mr Yap Chuin Wei and published in the 3rd March issue of the Straits Times. I agree with Mr Yap that the constant refrains of local businessmen about GLCs are that "they are crowding out the private sector; they are stream-rolling the competition and that they are stifling private entrepreneurship." It is a well-researched and well-argued analysis of the impact of the GLCs. I recommend that the Minister read this report. Local businessmen do not begrudge the existence of GLCs. In fact, everybody recognises the significant role the GLCs have played in our nation's progress. The concerns over GLCs are three-fold: 1) The crowding out effect of the GLCs; 2) The complaint of unlevel playing field; and 3) The stifling effect on private entrepreneurship. Actually the comments about GLCs also apply to other Government affiliated and union associated companies. On the crowding out effect of the GLCs, the Minister for Trade and Industry has clarified that the GLCs contributed to only 13% of the economy. Another report said that the GLCs and statutory boards collectively take up about 23% of the economy. In my opinion, even at 13% of the economy, the GLCs exert a much larger influence over the market.”
“Because of the conversion to full CPF scheme, the number of pensioners will diminish over time. Hence, I would like to ask the Finance Minister, since this year he has not given very much to the pensioners, in fact a very meagre sum as benefit to them, perhaps next year, he can surely do more for them, and particularly, since next year he is budgeting a higher surplus of $4.4 billion.”