Lim Hng Kiang
Singapore
“The company has made commitments to recycle the ash, and as for renewable energy, the gasification project is not an energy project, it is not a generation company (genco). It is to produce hydrogen and carbon monoxide or, essentially, carbon. Because as feedstock to the petrochemical sector, you need more C and more H2.”
“The Government will continue to recover the IIA awarded if the company fails any conditions or breaches the legislative amendments. I would like to highlight that there are no errant cases in the last five years for IIA and the current amendments are, therefore, not reactionary in nature, but are being made for legislative clarity.”
“In addition, the IIA scheme will be extended till 31 December 2022. Clauses 10 to 13 give legislative effect to this change. The remaining legislative changes arising from our periodic review of the income tax system are either administrative or technical in nature.”
“Data on household and individual savings rates by income groups are not available. However, data on the aggregate level of household financial assets can be obtained from the Household Sector balance sheet compiled by the Department of Statistics.”
“The aggregate level of financial assets owned by Singapore’s household sector6 in each of the past five years is provided in Table 1 below. Data on the amount of financial assets owned by households and individuals in the different income percentiles is not available.”
“The Second Review of the Comprehensive Economic Cooperation Agreement (Second CECA Review) is ongoing. The review is taking some time as both countries have our respective interests to work through, such as in the area of labour mobility. Our agencies regularly engage Indian counterparts to work through issues collaboratively.”
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“My apologies for not addressing that specific observation. Basically, our trade comprises several elements. One is, of course, domestic exports where it is obviously in our interest to be able to sell as much as we produce and to sell more. The second part is re-exports, and this is a very important part of our role as a trading nation. When you look at our statistics and it shows that our trade is more than three times of our GDP, you must see it in this context – a big proportion of it is re-export. We do not see this big ratio as a disadvantage. In fact, we see this as a very big advantage of Singapore. In the world trading forums, Singapore clearly is seen as punching above its weight. The fact that a small country with 4.5 million people is ranked somewhere between 12th and 15th in the world trading league is really something to our credit.”
“I think Mr Inderjit Singh knows that Mr Philip Yeo speaks his own mind. He does not echo the Minister. [Laughter]”
“Both Mr Inderjit Singh and Mr Liang Eng Hwa asked about how we can anchor more local companies to complement our MNCs. I think this is what we have done effectively. As I mentioned, the petrochemical, with the MNCs, but our ASPRI members are SMEs and they are working very effectively. Similarly with the pharmaceutical and precision engineering industries. Another example is our Marine and Offshore Engineering industry, where in fact the 'queen bees' are our local shipyard companies, Keppel and SembCorp Marine, and supporting them are some 500 local SMEs with various capabilities. So we have taken a cluster approach rather than a divide between MNCs and local SMEs. If I may borrow Deng Xiaopeng’s observation, that "it doesn’t really matter if it’s a black cat or a white cat". So, similarly for us, we look at a company and assess its value-add, its ability to generate jobs, its commitment to Singapore and its contribution to our economy. It does not really matter if it is an overseas MNC, an overseas SME or a local company. Of course, if it is a local company, we are even more cheered by the prospects of helping our own companies. Now let me turn to ask Senior Minister of State Iswaran to continue on resource costs and on tourism.”
“Let me explain the changing nature of trade between Singapore and the US. Part of the reason why the trade deficit has grown over the years is because a large proportion of goods from Singapore is not exported directly to the US but through China. Because we have gone up the value chain, we are exporting the more value-added components to China; China finishes up the product and sends it to the US. So the trade is still growing but is not reflected in our trade statistics. Traditionally, we have had a deficit in services but, over the years, I think the deficit has grown smaller because Singapore is also becoming more competitive in services. What has benefited us particularly with the US- Singapore FTA is foreign direct investments. The foreign direct investments (FDI) stock from the US has increased from S$37 billion as at end 2003 to S$49 billion as at end 2007. So the FTA has encouraged many more US companies to invest and to re-invest in Singapore. Mr Heng Chee How raised a concern about protectionism, I think this is something that we are very concerned about. Our FTAs with our partners allow us to keep this issue alive. At the various forums, whether within ASEAN, APEC or WTO, we will continue to raise the voice against protectionism. Mr Inderjit Singh asked about how we can engage with our companies and suggested the formation of a Corporate Rescue Task Force. As I mentioned just now, we are engaged very effectively with the companies at all levels. I mentioned that we have about 30-odd industry and trade associations. Each association has about 300 to 400 members. So we are plugged in with all the key members in every sector, and we know the status and the situation in all the clusters.”
“Other countries that grew at a more moderate pace in the past have also entered into recession. Some, like Taiwan and Ireland, are expected to contract just as sharply as Singapore this year. Others whose economies do not rely on exports as much as we do have also seen similar or even steeper declines in their exports than we have. We are on the right track in pursuing strong economic growth. Growth has helped us to build up healthy balance sheets at the Government, corporate, and household levels. This has enhanced our resilience. Growth has helped us to build up valuable skills and capabilities in our industry sectors and in our workers. This has enhanced our competitiveness. Growth has made possible a strong investment pipeline that is helping to create jobs even through this recession. Even during this downturn, we continue to think long-term. Over the long term, the Asian growth story is still intact. Asia is in a position to experience rapid recovery once the global economic situation improves. Therefore, we must not lose the capacity, the capabilities and the skills that we have built up over the years. This is why preserving jobs and keeping companies afloat are so important. We will continue to engage our companies and industry associations on a sectoral basis to tailor to the specific needs of each sector. Policies and measures will be reviewed and adjusted to meet new changes and challenges. The world will eventually settle into a new balance, and we must be ready to capture the new opportunities that surface with the tides of change. Mr Chairman, let me now address a couple of the specific issues raised by Members. Ms Sylvia Lim asked whether the US-Singapore FTA has delivered the expected benefits to Singapore.”
“BUILD will also help our PE companies to deepen their capabilities and become more flexible and adaptable, and position them better for the upturn. Sir, MTI agencies are engaged with each sectoral cluster to develop the appropriate response for this downturn. Time does not permit me to go into detail into the other sectors. However, SMS Mr Iswaran will be able to cover the Tourism sector to illustrate how this complementary "vertical" approach works. Sir, to summarise, we recognise the tough challenges that lie ahead of us. But we are in a position of strength because we grew all our clusters and we anchored strategic capabilities here when the global economy was going strong. Singapore is small. We have no choice but to adopt an outward oriented strategy and to make the world our market. We will feel the pain of global market corrections more sharply because we are small and exposed. But because we are small, we are also nimble. This gives us an edge over others in good years as it allows us to take advantage of opportunities when they arise. 1.00 pm Our growth strategy in the last five years has served us well. We managed to grow strongly yet enjoy low inflation. I have distributed a chart comparing Singapore’s growth and inflation record with both regional as well as advanced economies. It shows that we have grown faster than most economies in this region and certainly faster than any other economy with a comparable level of per capita income; while still enjoying lower inflation. While our growth has been more volatile, our average has been higher than in the other economies. This is not bad. The reason why our economy has contracted more sharply than others has to do with our small size, our openness and our dependence on global markets.”
“So in the pharmaceutical industry sector, we are facing competition from traditional areas like Puerto Rico and Ireland, and also new centres, but because our plants are new and more technologically advanced, we believe we can be competitive. Let me now turn to the precision engineering (PE) sector, which is probably one of the most adversely affected by this downturn. As Members know, the demand for precision engineered parts and components across the manufacturing industries has declined sharply. However, this sector has been reinventing itself since the previous downturn and has diversified beyond electronics into medical technology, aerospace, oil and gas equipment and, more recently, clean energy. Even within electronics, our PE companies have moved from producing parts for high-volume consumer disk drives to focusing on parts for higher end enterprise drives and disk media production. Nevertheless, given the fall in demand in all related sectors, our PE sector has to adjust in tandem. They have to shift their production to other sectors which are holding up better than others. They also have to focus on new skills in design, manufacturing technologies, supply chain and materials processing. Already, the original equipment manufacturers (OEMs) are partnering our suppliers to co-design product and manufacturing processes beyond the traditional "build-to-print" model. The additional support that we have for internationalisation would enable our suppliers to develop access to new markets. Our companies can also tap on the BUILD programme to work with the Precision Engineering Centre for Innovation, that we set up in SIMTech, so as to leverage on technologies for innovation and for growth.”
“Seven new plants are expected to open in Singapore in the next three years. We are confident that more will come to Singapore so that they can reach out to the Asian market more effectively. We should also prepare for the upturn by anchoring ourselves in new niches. Within biomedical manufacturing, we need to continue to push into areas beyond small molecule pharmaceuticals, such as biologics and medical technology. Biologics manufacturing is expected to be a key growth driver for Singapore’s biomedical sciences industry. The global compounded annual growth rate for biologics is 13%, compared to just 0.9% for the traditional pharmaceutical market. We will also continue investing in infrastructure development in Biopolis and the Tuas Biomedical Park, and in our strong scientific foundation through R&D. Eli Lilly is one example of a leading company which is investing more in R&D despite this downturn, with their opening of the expanded Lilly Singapore Centre of Drug Discovery in October last year. This expansion, worth US$150 million, is slated to take place over the next five years. We also encourage more companies to explore partnerships to tap on the growth opportunities that result from synergies between our R&D start-ups and mainstream firms based in Singapore. S*Bio, a homegrown oncology-focused drug discovery firm, recently made headlines with its partnership with Onyx Pharmaceuticals, pairing their complementary capabilities, intellectual properties and technologies in a winning combination. We believe that more opportunities similar to that of S*Bio will arise during this global financial crisis.”
“The prospects for our engineering SMEs which provide maintenance services are also very good. In the petrochemical sector, our competitive strength lies in our efficiency, our integration of the various products and processes, our use of technology and our connectivity to the rest of the world. We will continue to invest in the Institute of Chemical and Engineering Sciences on Jurong Island to undertake more world-class research programmes so as to develop new processes and applications that can move our petrochemical industry up the value chain. We will also support our engineering service providers, members of the Association of Process Industry (ASPRI), to upgrade their capabilities in areas such as plant management, design engineering, machinery upgrading, and maintenance management, so that they can handle larger and more complex projects. In this way, both the big MNCs and our SMEs can leverage on each other to compete more effectively. I believe the business community in the petrochemical sector is quietly confident about their future. Let me turn to the pharmaceutical industry. This sector is facing key challenges from the slowing global economy. But demand for effective medicines will continue to grow because people become more affluent and people age. Companies want to gear up to access the expanding market opportunities in Asia, and Singapore is well positioned to tap into this. In fact, this sector will be increasing its hiring by bringing in 900 jobs this year, with expansions by companies such as Wyeth, Abbott, GSK Bio, Schering Plough and Perkin Elmer. Eleven of the world's top pharmaceutical and biotechnology companies have already invested in more than 25 commercial-scale manufacturing facilities in Singapore.”
“MTI agencies will complement this approach by working with our partners at the cluster level to develop appropriate sectoral responses; in other words, addressing the "verticals". This is how we organise ourselves. We have about 160,000 SMEs and more than 1,000 large companies. MTI agencies engage our companies broadly through the SBF, our Chambers of Commerce, SMA, and ASME, etc. We have EDCs as touch points at these organisations. In addition, we have about 30-odd industry and trade associations representing the different sectoral clusters. MTI agencies work with the industry associations through the LEAD programme and other projects. Last year, I spoke of our growth strategy of developing clusters of industries, exploiting synergies across related activities. Mr Inderjit Singh asked about how this downturn has impacted manufacturing. Going forward, we can expect the consolidation process to affect the sectors differently. It will be a changed landscape. Some activities will lose relevance while others will become more important. We will need to be nimble in seeking new competitive positions. Let me illustrate by examining a few of our sectors. In the petrochemical sector, we are experiencing a double hit - falling demand because of the global economic recession and oversupply because of significant new capacity coming up in the Middle East. But our major projects remain very much on track. Shell’s cracker plant will come on-stream in 2010 and ExxonMobil will have its Singapore Parallel Train ready in 2011. Other projects such as Mitsui's TAFMER plant are also scheduled to start up by 2010. These various projects are expected to create approximately 1,000 jobs over the next few years.”
“IE Singapore will launch the Exporter Development Programme to develop the export competencies of promising Singapore exporters, particularly our SMEs which have limited export experience. All in, the enhanced schemes under IE Singapore are expected to benefit almost 5,000 companies. The increased funding will allow IE Singapore to support our Trade Associations and our Chambers of Commerce to organise participation in more than 340 international trade fairs and business missions, an increase of 55% from the 220 business missions that we conducted last year. These efforts will support companies to go into new or niche export markets where opportunities remain despite this downturn and where the Singapore brand is highly regarded. Let me now turn to our strategies to building capabilities for the future, to be ready when the downturn ends. SPRING will enhance its capability development schemes under a new $200 million programme called Business Upgrading Initiatives for Long Term Development (BUILD). Minister of State, Mr Lee Yi Shyan, will elaborate on this later on. EDB has earlier announced a $100 million programme called PREP-UP (PREParing for the UPturn). This programme will assist companies to preserve jobs and develop capabilities, particularly targeting professionals in the field of science and technology. EDB will also set up a $200 million Living Lab Fund to make Singapore a "living lab" for companies and entrepreneurs to nurture new ideas, to test innovative solutions and to develop future global businesses. Sir, I have explained our strategies for the downturn to facilitate credit, to alleviate costs, to boost demand and to build capabilities. This is what we term as improving the "horizontals".”
“To help SMEs manage the rising costs of trade credit insurance, IE Singapore will subsidise 50% of the insurance premium for SMEs. The ECS is expected to support up to $4 billion worth of trade turnover and benefit around 1,000 Singapore-based companies. IE Singapore will separately provide more details of the ECS. 12.45 pm On cost alleviation, the Budget has already provided various measures to help companies manage their costs in order to stay afloat, such as the Jobs Credit Scheme, property tax rebates and rental rebates. However, we should also bear in mind that many of the cost pressures we are facing have to be relieved primarily through market adjustments rather than through direct handouts from the Government. Senior Minister of State, Mr Iswaran, will elaborate on this later. Credit financing and cost alleviation are immediate solutions we have put in place to help companies in this downturn. Members, such as Mr Zaqy Mohamad, Mr Heng Chee How, Ms Jessica Tan and Mr Liang Eng Hwa, have highlighted the importance of helping our companies source for demand by identifying opportunities where they still exist today. Our companies also need to build up their capabilities so that they can produce products and services to meet the opportunities of tomorrow. Sir, as part of the Resilience Package, my Ministry will set aside $660 million over the next two years to assist companies to seek new markets and growth opportunities, and to build up their capabilities. IE Singapore, STB, SPRING and EDB will enhance their existing programmes in these areas and will also introduce a range of new initiatives. IE Singapore will set aside $66 million to enhance its internationalisation and export-promotion activities to help companies seek new markets and growth opportunities.”
“Our first priority has been to address our companies' cash flow issues, by introducing the Jobs Credit Scheme, facilitating credit and alleviating cost pressures. On credit, Members are already very familiar with the Special Risk-Sharing Initiative (SRI) and the other enhanced credit schemes to stimulate bank lending. We introduced a new Bridging Loan Programme to assist companies in their working capital needs. We also introduced Trade Financing Schemes to facilitate trade finance and export credit. As several Members pointed out, the key is in the implementation. Let me assure the House that MTI agencies will actively facilitate this. I have explained previously why it is unwise for MTI agencies to replace our banks in the credit evaluation process, but nevertheless we will work closely with the companies and the participating financial institutions to make sure that credit flows to viable businesses. One outstanding issue is trade credit insurance. We have received feedback from companies that demand for trade credit insurance is growing. Exporters are now more wary of buyers' credit risks and, hence, want to get coverage to protect against the risk of buyers default. But insurers have also become more selective. Furthermore, the cost of insurance is rising. To address this issue, with effect from 1st March 2009, IE Singapore will introduce an Export Coverage Scheme (ECS) to provide better access to trade credit insurance cover for Singapore-based companies. ECS will protect our exporters and traders against the risk of default by their buyers. IE Singapore will, through the pooling of insurers and co-sharing of risk, increase the insurance coverage capacity of this programme.”
“Mr Chairman, first, let me thank Members for their comments and suggestions. Let me respond to the general questions on the economy and explain our strategies for the downturn, Senior Minister of State (SMS), Mr Iswaran, will deal with the questions on resource costs and tourism and then Minister of State (MOS), Mr Lee Yi Shyan, will respond on SMEs, entrepreneurship and consumer protection. Mr Inderjit Singh and Mdm Ho Geok Choo asked about the global economic environment and the outlook for Singapore. Our GDP forecast of between -5% and -2% reflects a sober but realistic view of the economic prospects for Singapore for 2009. The critical uncertainty is the recovery of the G3 economies, particularly the US economy. The higher end of our forecast range is premised on the G3 economies recovering, albeit weakly, in the second half of 2009. The lower end of our forecast range is based on the G3 economies not recovering until 2010. There are many uncertainties in the global economy this year. But what is clear at this juncture are the following: One, the de-leveraging process will continue and credit would be tighter going forward. Two, the synchronised global recession would have a negative feedback loop on the financial sector. Three, the collapse in global demand means overcapacity in many sectors. This is very obvious in the auto and steel industries. Other sectors will face different degrees of overcapacity. There will, therefore, be consolidation and a shakeout. Four, the global imbalances have to be corrected and settled down to a new, more sustainable balance. So, how do we deal with this extraordinary downturn and the expected changes in the global environment?”
“Mdm Deputy Speaker, I beg to report that the Committee of Supply has made further progress on the Estimates of Expenditure for the financial year 2009/2010 and ask leave to sit again on Monday, 9th February 2009.”
“Mr Chairman, as I mentioned just now, the MAS will issue the guidelines in end March. And as part of its supervisory role, MAS will evaluate the FIs' compliance with these guidelines. Some of these guidelines are in hard form, eg, the qualifications of the representatives, so we can make a very objective and quantitative evaluation. Some are softer, trying to build a culture, so we or MAS will have to make the assessment on a broader basis. And MAS uses several mechanisms, eg, the so-called mystery shopper mechanism whereby members of the public, or MAS officers, will pose as clients and customers, and test the systems of the FIs. So there are several mechanisms to do so. The second question on FIDReC, the limit is actually $50,000. This limit is set, so that cases that go to FIDReC are cases where the claims are smaller. Because if it is a big claim, these ought to go through the court processes. But where both sides agree to raise the limits, FIDReC is more than happy to hear the cases. So if the FI agrees to let FIDReC hear a case beyond $50,000 or if the consumer is prepared to limit the claim only up to $50,000, even though his case may be $100,000 or $150,000, FIDReC will be happy to hear the case.”
“Public Sector Jobs The Senior Parliamentary Secretary to the Minister for Community Development, Youth and Sports and Minister for Transport (Mr Teo Ser Luck): Sir, I was at the NTU Career Fair yesterday. More than 107 employers participated in the fair. But the number of private sector companies has reduced and the public agencies have increased by two-fold – 28% for public sector agencies, 72% for private sector companies. The undergraduates heard that there were 18,000 jobs available from the public sector, they were keenly interested. I perceive that there was a sense that all the jobs were available only for graduates. I believe that there should also be positions available for non-graduates and even older workers. So, could the Prime Minister's Office share what jobs are available from the public sector for graduates and non-graduates, "O" levels, "A" levels and above "A" levels? Older Workers in the Government Service”
“And, finally, that the financial institutions handle consumer complaints promptly and in a consistent manner. I would think that in this recent saga that we had on the structured products, the financial institutions, with the help of the independent persons, have discharged their responsibilities well and have shown that they take the consumer complaints promptly, seriously and they have dealt with it in the best way possible. So I believe that the fair dealing outcomes that we want to promote is in keeping with our philosophy, and the way we have resolved the structured products issue brought about by Lehman Brothers' collapse, shows that this can be done. Mr Low asked whether the input of consumers, such as CASE and SIAS, were incorporated in the guidelines. Indeed, they have been. This document was put up for public consultation which involved industry and all these people. His third question is, when MAS intend to implement this? MAS intends to issue these guidelines towards end-March 2009. And how MAS will monitor compliance? Even though these are guidelines, MAS as the supervisory authority would monitor how the FIs go about discharging the spirit of these guidelines. In some of these outcomes, there are also tangible deliverables say, for example, the third guideline of competent representatives. There are clear standards of what the representatives' qualifications, track records and their competencies require. Also, the fifth outcome of dealing with consumer complaints – there will be proper processes. So MAS would be in a fairly good position to be able to monitor the compliance of the financial institutions even though these are just guidelines.”
“And we believe that this culture is in fact in line with the commercial objectives of the financial institutions. The two are not at odds. So even in the resolution of the recent structured products issue, and the appointment of independent persons, we believe the fair dealing guidelines set out the five fair dealing outcomes that we want to bring about, and these five fair dealing outcomes are still germane and relevant. If I may just take a bit of time of the House, essentially, these five outcomes are one, that the consumers have confidence that we deal with financial institutions where fair dealing is central to their corporate culture. So this is something that we want to bring about and to make it part and parcel of the financial institution's corporate culture. Second, that financial institutions offer products and services that are suitable for the consumer segments they target. So, again, it must be appropriate products. They must evaluate the needs of the customer and make sure there is a proper matching of needs and products. Third, that financial institutions appoint competent representatives who provide consumers with advice that meet their financial objectives and suit their personal circumstances. This is very important. We have just recently amended the Financial Advisers Act (FAA) and key changes in the amendments go toward raising the overall standards of financial advisers. This is part and parcel of this whole change that we are bringing about in the financial institutions. The fourth outcome that we want to achieve is that consumers receive clear, relevant and timely information to make informed financial decisions. Again, this is something that we want the financial institutions to bring about.”
“For instance, the Ministry of Education promotes initiatives for the students, CPF Board for the pre-retirees, PA for community groups and low-income families, MAS for working adults, MCYS for senior citizens and the National Library Board for the general public. 4.45 pm The Steering Committee also works closely with the financial industry associations, partners such as the Security Investors Association Singapore (SIAS), Council for the Third Age, NTUC, Singapore Exchange and CASE to develop, implement and fund the various programmes, and the programmes cover a wide range which include seminars, games, publications of guides as well as national financial literacy surveys. So we have the structure in place and we will continue to evaluate this and see whether there is a need for setting up a high-level council as Miss Penny Low suggested to drive this and to give it a higher impetus. Not all solutions need to be solved by kicking it up. So, we will evaluate the effectiveness of this Steering Committee before we embark on this suggestion of a national council. Mr Low Thia Khiang asked about the guidelines on fair dealing. The MAS put up the guidelines for fair dealing for public consultation and the consultation closed in mid-May 2008. The four specific questions which Mr Low asked, whether we can expect the board and the senior management to change the culture of the financial institutions to one that hoist in fair dealing. What we want to try to do in setting up these guidelines is to inculcate this corporate culture of fair dealing in our financial institutions. For this corporate culture to come about, it needs the support and the driving force of the top management, the board and the senior management.”
“To make sure we can come out of this crisis stronger than before, we will continue to invest in capabilities development, particularly in sectors that Singapore is competitive in, which Mr Arthur Fong has identified, for example, in the wealth management and in the fund management sector. MAS announced last November that training incentives under the financial sector development fund would be enhanced in order to encourage financial institutions to continue to invest in financial training and talent development. MAS will also be working with other international regulators to shape the new regulatory environment. So if we respond to this financial crisis capably, then I am confident that Singapore will continue to grow as a financial services centre. Miss Penny Low asked about what we can do to enhance the financial education of Singaporeans. We agree that financial education is very important and as Miss Penny Low pointed out, we have a programme called MoneySense that has been in place since October 2003 and we have set up a Financial Education Steering Committee (FESC) to drive this effort. This Steering Committee comprises CPF Board, the Ministry of Education, MAS, the Ministry of Manpower, MCYS, the People's Association and the National Library Board. The Committee has been fairly effective, setting strategic directions to financial education initiatives and coordinating the efforts of the various agencies. For example, the different agencies will spearhead specific programmes to target different groups under their purview.”
“Mr Chairman, Mr Arthur Fong asked about the impact of the financial crisis on the development of Singapore as a financial centre. Financial services is a key sector in our economy, contributing about 12% of our GDP and employing 8% of our workforce. We think it is very important for us to continue to grow Singapore as a financial centre. This crisis would test us to the fullest. Arising from the crisis are also opportunities for us to develop Singapore as a financial centre. Our immediate objective really is to make sure our financial institutions here remain sound and prudently managed. We need to ensure that our financial markets operate smoothly, credit flows to corporate sectors continued and there is sufficient liquidity in the banking system. How we deal with the crisis will add to our reputation as a financial centre. Over the longer term, once the global economy recovers, we expect financial services to continue to grow significantly. Why? First, because of our competitiveness as an international financial centre which rests on our key attributes, including the rule of law, trust, reliability and our strong governance, our high standards of prudential regulation and supervision and our high quality skilled workforce. These are critical enablers for Singapore to emerge stronger from this crisis and remain competitive. Second, while we expect the global financial industry to undergo important changes during this crisis, we expect the growth prospects and the economic competitiveness in Asia to remain strong and financial services to remain a key pillar in supporting this growth.”
“Sir, as I have explained, by the time these cases surfaced in the late 1990s and in 2002 and 2003, MAS decided, after studying the various options, that they ought to review the Act to give a simple framework for the nomination of beneficiaries. So they started consulting with the industry in 2005 on the principles and the methods. They got the feedback and responded. In 2007, they consulted the industry on the draft of the Bill, and responding to the feedback, took us to 2008. That is the reason why we came to Parliament at the end of 2008 and January 2009. DEBATE ON BUDGET STATEMENT (Business Motion) Resolved, That, notwithstanding the Standing Orders, an additional day, namely, Thursday, 5th February 2009, be allotted for the debate on the motion for approval of the financial policy of the Government for FY 2009/2010 moved by the Minister for Finance on 22nd January 2009. – [Mr Mah Bow Tan]. ANNUAL BUDGET STATEMENT Order read for Resumption of Debate on Question [22nd January, 2009]. "That Parliament approves the financial policy of the Government for the financial year 1st April, 2009 to 31st March, 2010.". – [Minister for Finance]. Question again proposed. 12.20 pm”
“Ms Sylvia Lim asked the Minister for Finance what is the extent of losses (paper or realised) suffered by Government of Singapore Investment Corporation (GIC) and Temasek Holdings arising from the financial meltdown in the United States in 2008 and the related events worldwide.”
“ The number of households that had their electricity accounts disconnected and reconnected from December 2007 to November 2008 is shown in Table 1. On the whole, despite rising electricity tariffs during this period, there is no clear upward or downward trend in the number of disconnections. Table 1: Number of Electricity Supply Disconnections and Reconnections No. of accounts disconnected No. of accounts reconnected Dec-07 3,404 3,238 Jan-08 2,852 2,793 Feb-08 2,288 2,188 Mar-08 2,785 2,761 Apr-08 3,492 3,614 May-08 2,916 3,053 Jun-08 3,252 3,246 Jul-08 2,326 2,749 Aug-08 64 206 Sep-08 775 659 Oct-08 3,426 2,815 Nov 08 1,645 1,811 Source: SP Services There was a drop in the number of disconnections in the months of August and September 2008 because SP Services had held back disconnections when it switched to a new billing system. There is also a close correlation between the number of disconnections and reconnections in each month. Disconnection of electricity supply is done only after various avenues to recover payment by SP Services have been exhausted. This includes sending reminder notices, and alerting the customer of an impending disconnection, as well as visiting the consumer before supply is disconnected. SP Services will also assist customers to work out an instalment plan on a case-by-case basis, to avoid a possible disconnection. HDB households who have had their electricity supplies disconnected are also offered the PAYU (Pay-as-you-use) scheme. With the use of pre-paid meters, PAYU helps the consumer to better manage his consumption, and at the same time, allows the consumer to get back his supply while settling the arrears over an extended period. GIC AND TEMASEK HOLDINGS (Losses) 4.”
“It was widely reported that the deceased took deliberate steps to put himself into harm's way, by jumping into the moat, climbing out of the water, and then advancing towards the tigers. The Police are still conducting their investigations and there will be a more complete picture after that is concluded. Nonetheless, the zoo has reviewed its safety measures following the incident. Specifically, it has stepped up the number of staff patrolling the park, and installed Emergency SOS phones for visitors at the four open-concept dangerous animal exhibits (ie, white tiger, lion, polar bear and chimpanzee). In addition, two emergency alarm buttons with sirens have also been installed at the White Tiger Viewing Gallery. These are part of the Singapore Zoo's ongoing efforts to ensure that it is a safe attraction. STRANDED FOREIGN WORKERS (Cooperation with Foreign Embassies) 40. Ms Denise Phua Lay Peng asked the Acting Minister for Manpower how can the Government work more effectively with the countries of foreign workers stranded in Singapore due to unfulfilled promises for work by employment agents from both countries.”
“ All exhibits in the Singapore Zoo comply with international safety standards established under the guidelines of the American Association of Zoos and Aquariums (AZA) and the European Association of Zoos and Aquaria. This includes the white tiger exhibit. To ensure that facilities continue to be safe and are in good condition, zoo personnel inspect all enclosures on a daily basis, and take immediate action to rectify problems identified. The checks are also subject to a monthly audit by a team of expert staff. The emergency protocols for the zoo are based on guidelines from the AZA. The Singapore Zoo also regularly consults counterparts in the benchmark zoos in the United States, such as The National Zoo in Washington D. C. and the San Diego Zoo, to update and improve its protocols. In the event that a person falls into the moat of the White Tiger enclosure, emergency protocols require staff to use the loud hailer at the nearest Emergency Equipment Box to sound an alert. All field staff are also equipped with walkie-talkies to raise the alarm in the event of an emergency. Following the sounding of an alarm, staff are required take action to distract the animals and open the den doors to allow animals to move away. Staff are also trained to rescue the fallen person using rope ladders, staves and other equipment which are available at the animal enclosures. If human life is threatened or perceived to be threatened, the zoo has licensed shooters to take out the animal. In the 13th November incident, zookeepers were mobilised to the scene within one minute of the alarm being sounded, and licensed shooters arrived within five minutes. The death of the contract worker was an unfortunate incident.”
“As a trustee is deemed not to have an insurable interest in the settlor and the beneficiaries of a trust, the requirement of insurable interest prevents life insurance policies from being issued in respect of trusts. Individuals are therefore unable to include such policies in their trusts. Hence, to facilitate the inclusion of such policies in trust structures, the Insurance Act will be amended to allow life insurance policies to be issued in respect of trusts where insurable interest would have been recognised between two parties within the trust structure were it not for the existence of the trust. In other words, the law will allow a "see through" of the trust to determine whether the insurable interest requirement is satisfied. Mr Speaker, Sir, the nomination of beneficiaries framework contained in this Bill will clarify the current uncertainty surrounding the disbursement of insurance policy proceeds. It will provide policy owners with a clear, simple and economical way to decide how their policy proceeds should be paid out. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. – [Mr Lim Hng Kiang]. Bill considered in Committee. [Mr Speaker in the Chair]”
“This is because an irrevocable nomination would cause the policy owner who is a CPF member to lose control over any insurance policy proceeds paid out during his lifetime, which would not be in line with CPF Board's policy that members must retain complete ownership of their retirement funds as long as they are alive. Annuities purchased under the Minimum Sum Scheme will be carved out from the nomination framework altogether to enable CPF Board to retain full control over the disbursement of proceeds from such policies. On the other hand, annuities purchased under the Minimum Sum Plus Scheme will be deemed no different from any other insurance policy as they are paid for with cash. Insurable interest requirement Apart from the above amendments to introduce the nomination of beneficiaries framework, other substantive amendments to the Insurance Act relate to the insurable interest requirement for life insurance policies. A person is said to have an insurable interest in something when the occurrence of the insured event would cause that person to experience a loss, suffer a diminution of a right recognised by law or incurring a legal liability. Policy owners of life insurance policies are required to have an insurable interest in the life assured (ie, the person being covered) under the policy. This is to minimise the risk of someone purchasing a life insurance policy on an unrelated person and then causing the latter's death in order to collect the insurance payout. While the concept of insurable interest remains relevant, it is unnecessarily restrictive with regard to trust structures.”
“Once an irrevocable nomination has been made, all payouts from the insurance policy, whether made during the policy owner's lifetime or after his death, will go to the beneficiaries. As with revocable nominations, a parent or guardian of a minor beneficiary who is not also the policy owner can give discharge for these payments. Such a parent or guardian can give consent on the minor's behalf for revocation of the nomination as well. As an irrevocable nomination is a serious undertaking which cannot be unilaterally reversed, only the policy owner's spouse and/or children can be nominated as the beneficiaries. Policy owners should only make irrevocable nominations if they are prepared to give away the insurance policy proceeds completely to the beneficiaries. They need to be aware that they will not be able to unilaterally change their nominations later on even if their family circumstances change. Scope of the nomination framework Policy owners may make nominations only in respect of (i) life policies and (ii) accident and health insurance policies that have death benefits. This is because only such policies have a savings and investment element for which nominations will be meaningful. The nomination framework will not apply retrospectively. As such, insurance policies with existing nominations will continue to be subject to the laws in force at the time the nomination was made. For instance, policy owners will not be able to change or revoke existing nominations falling under section 73 of the CLPA. Insurance policies paid for with Central Provident Fund (CPF) monies Insurance policies purchased under the CPF Investment Scheme and Dependants' Protection Scheme will be eligible only for revocable nominations.”
“Inputs received were carefully considered and have been incorporated into the Bill where relevant. Mr Speaker, Sir, I will now touch on the key features of the nomination framework for insurance policies. Nomination of beneficiaries framework Under the nomination framework, insurance policy owners will be able to choose whether or not to make nominations. If they choose to nominate, they then have the option of making either a revocable or an irrevocable or trust nomination. Nominations may be made at any time. Revocable nominations With a revocable nomination, the policy owner will be able to unilaterally change his nomination at any time. Any payout from the insurance policy made while the policy owner is alive will be paid to him; payouts will only be made to the beneficiaries upon the policy owner's death. Hence, should the insurance policy pay out benefits in the event of the policy owner's illness or disability, he will be able to use these monies to meet his financial needs. For minor beneficiaries, a parent or guardian who is not also the policy owner can give discharge for payments received from insurers. Any legal entity may be nominated in a revocable nomination. Irrevocable (trust) nominations An irrevocable nomination will create a statutory trust in favour of the beneficiaries, similar to the regime under section 73 of the CLPA. Once a trust is created, the policy owner will lose all rights and control over the insurance policy concerned. In exchange, the statutory trust will protect the policy proceeds against claims from the policy owner's creditors. An irrevocable nomination can only be changed with the consent of all beneficiaries or a trustee who is not also the policy owner.”
“Mr Speaker, Sir, on behalf of the Senior Minister, I beg to move, "That the Bill be now read a Second time." The Bill seeks to incorporate into the Insurance Act a framework for nomination of beneficiaries in respect of insurance policy proceeds. This framework will give policy owners clear, simple and economical means to decide on how the proceeds from their insurance policies should be disbursed. The Bill also aims to clarify the insurable interest requirement relating to life insurance policies. Currently, the Insurance Act does not contain provisions for the nomination of beneficiaries. Case law suggests that when a policy owner names his spouse and/or children as beneficiaries of an insurance policy effected on his own life, section 73 of the Conveyancing and the Law of Property Act (or the CLPA) will automatically create a statutory trust in favour of the beneficiaries. The creation of such a trust implies that the policy owner will irrevocably lose all rights and control over the insurance policy concerned, including payouts made when he is alive. On the other hand, if the policy owner nominates someone other than his spouse and/or children, no nomination will be recognised under section 73 of the CLPA. Since there is presently no provision for nomination of other types of beneficiaries in the Insurance Act, the status of such nominations is uncertain. Thus, there have been concerns over the apparent ambiguity and inflexibility in the application of section 73 of the CLPA to insurance policies. For this reason, the Insurance Act will be amended to introduce a framework for nomination of beneficiaries in respect of insurance policy proceeds. In preparing this Bill, MAS has consulted the industry and the public on the policy positions as well as on the draft Bill.”
“And I believe the way the MAS dealt with the Lehman Brothers' bonds shows how this is done. To the credit of the financial institutions, they put to practice what they believe in and that is the principle of fair dealing and I think the outcome shows that. I also thank Mr Siew for his suggestions on how to improve the regime. Some of the ideas that he put out is what I have also explained as the kind of measures that MAS is considering and is putting out for public consultation in March, and that is, to consider whether there ought to be a cooling-off period, to look at the incentive structure of the sales process, to separate the financial advisers' processes versus the deposit taking processes in the banks. So these are the same kind of the measures that we are thinking about. And, of course, I have also mentioned during Question Time that MAS is completing its investigation report and is currently in the process of giving the FIs a chance to respond to the report. So, let us not jump the gun. When the investigation is completed, I am sure we will have another chance to debate the proposed amendments to our regulatory regime. 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 Lim Hng Kiang]. Bill considered in Committee. [Mr Speaker in the Chair]”
“Mr Speaker, Sir, I thank the two MPs for their comments on the Bill. Let me address the points raised. Mr Inderjit Singh was concerned about the investigative powers of MAS. Let me assure him that under section 70A(6), it is intended to deal with those situations where somebody comes across a report which is a secret report, he ought to surrender the report back to MAS. The onus is on him to do so unless, of course, he has the desire to keep the report, then he is liable. If he is not and he has taken efforts to surrender or destroy the copies of the report, then I think that is the way for him to justify his action. So this provision is similar to what is available in the Banking Act. It is to ensure that if a secret report is passed to you by somebody, you should hand it back to the relevant authorities and not keep or propagate it. The second issue is on how to preserve confidentiality, and I think this is very important because confidence and confidentiality is at the heart of financial services. And here the intention is that when there is a report and there is an obligation of confidentiality, the report should not be disclosed. But if the investigated person wants to seek legal or other financial consultants' advice, then, of course MAS could grant him permission to show those reports to his advisers. So I think there are enough safeguards. I would also like to thank Mr Siew Kum Hong for his very comprehensive speech about the value of rules-based versus principle-based regulation. As we all know in the real world, in the practical world, it is neither of the ends of the spectrum. We need certain principles to set the framework and then, of course, we need rules or guidelines to be able to make sure that these principles are adhered to.”
“Mr Speaker, Sir, on behalf of the Senior Minister, I beg to move, "That the Bill be now read a Second time." The House has just debated on the Securities and Futures (Amendment) Bill 2008. The amendments in the Financial Advisers (Amendment) Bill 2008 are similar in part to the Securities and Futures (Amendment) Bill 2008. It has the same objectives of enabling MAS to respond more quickly to new market developments, and enhancing the supervisory and enforcement powers of MAS. Key amendments that have been made in the Securities and Futures (Amendment) Bill 2008, which will be replicated in the Financial Advisers (Amendment) Bill 2008, relate to the amendments on capital markets licensing and business conduct. Specifically, these are in relation to: (i) continuing licensing regime for financial advisers' licence holders; (ii) introduction of the Representative Notification Framework; (iii) the control of take-over of licensed financial advisers; and (iv) MAS' powers to make prohibition orders. The rationale for the amendments to the Financial Advisers (Amendment) Bill 2008 has been elaborated on in the House's deliberations on the Securities and Futures (Amendment) Bill 2008. MAS will monitor the evolving financial landscape, and continue to review the regulatory framework for the sale and marketing of products within the ambit of the Financial Advisers Act. Sir, I beg to move. Question proposed. 4.16 pm”
“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 Lim Hng Kiang]. Bill considered in Committee. [Mr Speaker in the Chair]”
“They are likely to come in being an employee of an institution. So they would be assessed and certified by the institution. On the question of the minimum investible sums coming down to $100,000, as I explained in my Second Reading speech, this is a relaxation in line with other jurisdictions but, at the same time, it is quite an onerous requirement, because what we are saying is every individual investor must invest no less than $100,000. So, it is not like the Minibond case where we have a range of investors, like some of your constituents may have invested more than $100,000, but others may have invested $50,000 or $20,000. So that will not qualify and therefore a prospectus is needed. For prospectus that is not needed, each and every investor must invest more than $100,000. So it is quite an onerous requirement. On the point about disgorgement, I think we want to have a fair system where people who have benefited from it, even though they are not directly involved in illegal trade, should disgorge the proceeds of the illegal trade. Even though a person may not know of the trade, because the profits are the proceeds of an illegality, he should not be allowed to retain the profits unless there has been a change of position such that it is unfair to make him disgorge the profits. So that is the reason why there is the word "and" and not "or". Let me respond to Mr Siew Kum Hong's points. Essentially, as I mentioned in my Second Reading speech, these amendments do not take into account what MAS is doing in reviewing the risk assessment and the sales process of structured products, the issue that he is very concerned with. I am sure we will come back to the House again when we make changes in the risk classification and the sales process of structured products.”
“The things that Mr Inderjit Singh talked about, disclosure and letting people know the person is qualified to act as a representative, are taken into account. For the public register, whether there are prohibition orders or black marks against these people, these will all be in the register. The prohibition order is made public. That is the intention. It is time based, usually it is for five years, but the period will be indicated. This is a balance between making it public so that people know the record but, at the same time, giving a chance for people to be rehabilitated and go back into the system. On the definition and certification of "fit and proper", the whole idea of having this continuous system and having this public register is to put the onus on the entities – the licensed holder or the financial institutions – so that when they employ the representatives, they have to be responsible, and the onus is on them to make sure that they are fit and proper. MAS, together with the stakeholders, of course, has a guideline of what are the criteria for deeming people fit and proper. And I would like to assure Mr Inderjit Singh that this is a continuous system. It is not that when an institution employs somebody, it makes an assessment, but we expect the institution, in certifying that the person is fit and proper, to do so on a continuous basis. Mr Inderjit Singh also talked about temporary representatives. I think this is the flexibility we have so that qualified professionals can work in Singapore for short periods for projects or for certain deals. And then if they want to be here on a more permanent basis, then of course they become provisional or permanent. Again, the onus is on the entities who employ them. They cannot just come on their own.”
“Mr Speaker, Sir, I thank the two MPs for supporting the Bill. Let me try and explain the changes and respond to the queries raised. First, on Mr Inderjit Singh's query on widening the definitions of "securities" and "futures". This allows MAS to respond to the classes of products that come into the market, but not to review individual products. So our general regime still remains the same. As Mr Siew Kum Hong says, it is a disclosure-based regime, and we think that that is fundamentally the right approach. But we have different classes of products that come into the market and therefore MAS needs the power to be able to define them whether they are "securities" or "futures". In response to Mr Inderjit Singh, this is not intended to review specific individual products but classes of products, eg, new types of warrants being classified as part of the "securities" that we will regulate. Second, is the perpetual licensing regime. I am glad Mr Singh supports this because it reduces administrative costs. I would like to reassure him that a perpetual licensing regime does not mean that MAS will not regulate the system. It is not just giving an individual a licence and we forget about him. There will be continuous licensing, regulation and monitoring. Here, let me explain. There are two categories. One is the licence holders which are really the entities. I take his suggestion that there ought to be some kind of disclosure of what kind of regulator activities the licence holder can be involved in, and I am sure that is somewhere in the website. If it is not, we will put it out there. The second group is really the representatives. These are the individuals and, as I explained in my Second Reading speech, we have this register which will be publicly available.”
“The power to prescribe products as securities, in particular, will allow MAS to bring new products within its regulatory ambit under the SFA in a timely manner. MAS currently has the power to prescribe new contracts as "futures contracts". The proposed amendments will give MAS the power to also exclude contracts from the definition of "futures contract". These amendments will enable MAS to act more efficiently on market developments. Mr Speaker, Sir, to conclude, the financial landscape is constantly changing. Good regulation is about balancing the needs of the financial markets and the investing public. MAS will keep our regulatory regime under review to ensure that the transparency and integrity of Singapore's financial system is upheld. Sir, I beg to move. Question proposed. 3.20 pm”
“Approved exchanges and designated clearing houses are systemically-important parts of our financial system. Any failure or disruption in these markets and clearing facilities would undermine financial stability and public confidence. Following a general review of its powers to deal with emergencies across the financial sector, MAS has assessed that it is important to extend its existing emergency powers under the SFA to deal with events that would impact approved exchanges and designated clearing houses. First, MAS will be allowed to appoint statutory advisers. These advisers are to provide advice to an approved exchange or designated clearing house on the proper management of its business. The power to appoint statutory advisers can be triggered in emergency circumstances. One such circumstance would be where the exchange or clearing house is likely to become insolvent. Another would be where the entity is being mismanaged to the detriment of MAS' regulatory objectives. Second, MAS will be given powers to obtain information from any person in emergency circumstances to maintain the safe and efficient operation of a designated clearing house. For example, MAS may require information necessary for it to order the liquidation of positions held with a clearing house. This will complement MAS' existing powers in respect of approved exchanges. Regulatory flexibility to deal with market innovation Sir, allow me now to turn to the final category of amendments to the SFA. This touches on enhancing regulatory flexibility. The definitions of "securities" and "futures contracts" are being amended. MAS will have the power to prescribe or exclude products as securities.”
“The S$100,000 minimum investment amount is in line with thresholds set in other jurisdictions, eg, the European Union's threshold is set at EUR50,000, while Hong Kong's is set at HK$500,000. Enhancements to the Real Estate Investment Trusts (REIT) Regime The third change is on enhancements to the Real Estate Investment Trusts (REIT) regime. I now turn to the enhancements being made to the REIT regime. Singapore's REIT market has developed substantially in recent years. Amendments are being made to ensure appropriate rules are in place to govern mergers and privatisations of REITs. With these amendments, the Takeover Code will apply to REITs. The Bill will also allow an offeror making a general offer for units in a REIT to compulsorily acquire the units of the dissenting minority. The offeror can do so if he has obtained acceptances of 90% or more of the units offered. Minority unitholders will also be able to require an offeror to acquire their units if the offeror has acquired 90% or more of the total units in the REIT. Similar amendments will be made for business trusts in the Business Trusts Act. These provisions being introduced mirror the compulsory acquisition provisions in the Companies Act. The Bill also introduces a new provision to protect REIT unitholders. A REIT unitholder will be able to apply to court for an order to seek judicial redress in cases of oppression, unfair discrimination or prejudice. This remedy is currently available in the Companies Act and the Business Trusts Act, and should similarly be afforded to REIT unitholders. Markets and clearing facilities Sir, let me now turn to the amendments that deal with Singapore's markets and clearing facilities.”
“This Bill streamlines and consolidates all notification requirements for directors and substantial shareholders in relation to their interests in listed corporations in the SFA. Directors and substantial shareholders will need to report their interests or changes in interests to the listed corporation, which in turn will inform investors of any such changes. The notification requirement is extended to any CEO who is also not a director. The current obligation for directors and substantial shareholders to separately report changes to the SGX will be removed. While these amendments streamline the current requirements, they will not reduce the amount of information disclosed to the market and investors. Similar amendments are also being made to the disclosure requirements for interests in listed business trusts and real estate investment trusts (REIT). Lowering minimum investment threshold amount for prospectus exemption The second key change is on the lowering of minimum investment threshold amount for prospectus exemption. Currently, offers of investment must be accompanied by a prospectus. The SFA allows offers to be made without a prospectus if the minimum investment amount for the offer is at least S$200,000. This means that each and every investor must invest at least S$200,000 for each transaction before the offer can be made without a prospectus. In response to industry feedback, MAS will lower this minimum investment amount to S$100,000. S$100,000 is a very significant sum of money. MAS considers that a person who is willing to invest S$100,000 or more in a single transaction would possess, or have the ability to get access to, sufficient financial information to protect his own interests.”
“It is the client that has made the profits. The client should not be allowed to keep the profits, even though he was not party to the market misconduct. To do so would mean depriving affected investors of an opportunity to recover their losses. The new remedy will allow MAS or affected investors to apply to court to order a person not privy to the illegal trade or market misconduct to disgorge any gains made from the illegal trades. The gains will be paid into the court. The court will then assess all affected investors' claims and distribute the sum equitably. However, a court will have the discretion not to order disgorgement if the court considers that the circumstances make it unfair to do so. Notification of changes in shareholdings of directors, Chief Executive Officers and substantial shareholders and offers of investments Mr Speaker, Sir, I will now go through the amendments related to changes in the shareholdings of directors, CEOs and substantial shareholders. The legal obligations for reporting of interests by directors and substantial shareholders of listed corporations are currently found in both the SFA and the Companies Act. Under the Companies Act, directors and substantial shareholders are required to notify the listed corporation of their interests and changes in interests. Under the SGX listing rules, the listed corporation is in turn required to notify investors. The aim of these reporting requirements is to ensure that the market and investors are kept informed of any changes in shareholdings of directors and substantial shareholders on a timely basis. There are also obligations for directors and substantial shareholders under the Companies Act and the SFA to notify the Singapore Exchange Limited (SGX).”
“The Bill will introduce a new concept of attributed liability for market misconduct offences. Currently, a company may not be liable when its employees commit market misconduct. For example, if an employee of an asset management company engages in insider trading using company funds, the company would be liable only if the employee was a director or a secretary of the company, or a person employed in an executive capacity. A company may therefore avoid liability by delegating decisions to lower level employees. The amendments address this by making a corporation, partnership or limited liability partnership liable in certain circumstances. Where it is proven that the market misconduct by an employee, officer, partner or manager has been committed with the consent or connivance of an entity, the entity may be subject to criminal liability. Civil penalty liability would be imposed where the entity has, through its negligence, failed to prevent or detect the employee's market misconduct. Disgorgement by persons who benefit from contravening trades conducted on their behalf The third change is on disgorgement by persons who benefit from contravening trades conducted on their behalf. The Bill also introduces a new remedy for affected investors of trades that contravene the market conduct provisions of the SFA. A person who is not party to such illegal trades may sometimes benefit from the profits made. Let me explain with an example. A broker may have used a client's trading account without the client's permission to conduct insider trading. The profits from this illegal trade are credited to the client's account. The broker, as the contravening party, is liable to affected investors for losses incurred. However, he is not in possession of the profits made.”
“A number of the CMS licence holders and exempt CMS licence holders conducting SFA regulated activities are part of larger foreign corporate groups. Foreign regulators may wish to inspect them as part of their consolidated supervision. The Bill will clarify that a foreign regulator that wants to inspect such financial institutions in Singapore will have to obtain MAS' approval. This will align the SFA with the Banking Act which has a similar requirement. Market misconduct enforcement framework Mr Speaker, Sir, I would like to turn next to amendments related to the investigation framework for market misconduct. There are three key changes in this section. First is the ability to transfer evidence between the Commercial Affairs Department (CAD) of the Singapore Police Force and the MAS. Currently, a market misconduct case is taken up by either CAD or MAS at the onset of an investigation, based on the prima facie evidence. The CAD investigates when criminal proceedings are likely, while MAS investigates cases when civil penalties appear appropriate. As the investigation progresses, it may sometimes be necessary for one agency to transfer the matter to the other, based on their preliminary findings. For example, during its investigations, if MAS finds that the case warrants criminal prosecution, MAS will transfer it to CAD. Similarly, CAD may refer cases where civil penalties are more appropriate to MAS. The Bill provides for transfer of evidence between CAD and MAS, so that the agency taking over the investigation does not have to expend resources to re-investigate the case all over again. This will eliminate duplication of efforts. Corporate derivative liability The second change is on corporate derivative liability.”
“This will be remedied under the Bill. MAS will be empowered to issue prohibition orders to the following additional persons: (i) exempt financial institutions and their representatives; (ii) persons previously licensed or exempted from holding a CMS licence by MAS; (iii) persons who were previously an appointed, provisional or temporary representative; (iv) an officer or ex-officer of a CMS licence holder or exempt CMS licence holder; and (v) persons convicted of conducting regulated activities illegally. Under the SFA, MAS may issue prohibition orders where MAS believes a person has contravened the SFA, or when a person has been convicted of an offence involving fraud or dishonesty. The Bill provides MAS additional powers for issuing prohibition orders. MAS will be able to issue prohibition orders to persons who have been ordered by the court, or who have entered into a civil penalty settlement agreement with MAS, to pay a civil penalty for market misconduct. Prohibition orders can also be issued to persons who have been removed, at MAS' direction, from the office or employment of a CMS licence holder. MAS will also be able to ban persons issued with prohibition orders from directly or indirectly managing or influencing the business of CMS licence holders or exempt CMS licence holders. For example, MAS will be able to prevent a person from acting as a director or being a substantial shareholder of these financial institutions. These amendments will better enable MAS to keep out unsuitable persons from the industry. Regulatory assistance to foreign regulators The fifth change is to provide regulatory assistance to foreign regulators.”
“As part of this framework, MAS will maintain a public register of representatives on its website. This register will list information on their representatives, including the type of regulated activities they are allowed to conduct, which institution they work for, and any formal regulatory action taken against them by MAS. Consumers will be able to use the public register to check on the individuals they deal with. Financial institutions can also use this public register to conduct reference checks on potential employees. Control of take-over of CMS licence holders The third change is on control of take-over of CMS licence holders. The Bill introduces a new requirement for potential controllers of a CMS licence holder. They will need to obtain MAS' approval before entering into arrangements that would give them effective control of such licence holders. A person has effective control when he acquires directly or indirectly more than 20% of a CMS licence holder's shareholding or voting power. Trust companies and insurance companies, which are regulated by MAS, are subject to similar requirements. MAS will also have powers under certain circumstances, to order people to relinquish effective control, or stop a person from being a party to an arrangement that could result in the person obtaining effective control. For example, MAS would be able to exercise these powers where a person is not, or ceases to be, a fit and proper person. Prohibition order regime The fourth change is on the prohibition order regime. Under the SFA, MAS can issue prohibition orders to CMS licence holders and their representatives. This is to help ensure that only suitable persons conduct regulated activities. However, there are gaps as MAS is not able to issue prohibition orders to other persons.”
“The Bill introduces a continuing licensing regime for these licence holders where licence holders will not have to renew the licences, to reduce their administrative burden. However, MAS will supervise licence holders on a continual basis, and have the power to revoke licences, if necessary. This brings the CMS licence holders in line with other MAS-regulated institutions, such as banks and insurance companies, which are already operating under a similar continuing licensing regime. Representative Notification Framework Second change is on the introduction of a Representative Notification Framework. Currently, only representatives of CMS licence holders need to apply for a licence from MAS to conduct regulated activities. This is not a requirement for representatives of financial institutions exempted from holding a CMS licence, such as banks and insurance companies. This is not desirable as it creates distortion in the recruitment and retention of representatives. It is also difficult for consumers to check if an individual is allowed to conduct certain regulated activities. To ensure that all representatives, regardless of the institution they work for, are placed under the same regime, the Bill introduces a Representative Notification Framework. This will apply equally to representatives of CMS licence holders as well as representatives of financial institutions exempted from holding a CMS licence. Under this framework, financial institutions will have to notify MAS when they intend to employ someone to conduct a regulated activity. The financial institution will be responsible for ensuring and certifying to MAS that their representatives are fit and proper. Financial institutions and their directors can be held liable for making false or misleading statements.”
“Mr Speaker, Sir, on behalf of the Senior Minister, I beg to move, "That the Bill be now read a Second time." The Securities and Futures Act (SFA) was enacted in October 2001. It seeks to provide a single comprehensive legislative framework for regulating the activities and institutions in the securities and futures industry. This round of amendments aims to achieve greater consistency in Monetary Authority of Singapore's (MAS) regulations and enable MAS to respond more quickly to new market developments. They also enhance the supervisory and enforcement powers of MAS. The MAS consulted the industry and the public on the proposed amendments and draft Bill in 2006 and 2007. MAS has incorporated feedback received into the Bill, where appropriate, and in line with MAS' regulatory objectives. This Bill implements these amendments. In October, in response to questions by Members on the procedures to enhance safeguards for retail investors, I announced that MAS is conducting a separate review to examine the issues regarding the sales and marketing of structured products. Just now during Question time, I updated Members on the progress of this review so far. MAS will conduct public consultation on the proposals arising from this review in March and, therefore, these proposals are not covered in this set of amendments. Mr Speaker, Sir, I will now go through the key amendments in the Bill. Let me begin with the changes to the rules on capital markets licensing and business conduct. There are five key changes in this section. Capital markets licensing and business conduct First, is to have a continuing licensing regime for corporate licence holders. Under the current SFA, capital markets services (CMS) licence holders have to renew their licences every three years.”