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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“The fact that the Minister for Finance is concurrently the Chairman of MAS is not a new arrangement. It has been so for many, many years. You may remember that when Dr Richard Hu was the Minister for Finance, he was also concurrently the Chairman. As for the second question, although I am deputising for DPM, I cannot answer that question.”
“Mr Speaker, Sir, ideally the Chairman of MAS should not hold multiple roles. But there are practical constraints in Singapore that make it difficult to avoid completely senior elected officials holding multiple responsibilities. There is no immediate need to change the status quo. First, the assessors from the IMF and the World Bank have acknowledged that there are legal and institutional safeguards against any potential conflicts of interest. For example, while the MAS Board sets the broad policy directions, it is the Managing Director and his management team who execute the day-to-day operations according to these policies. In addition, MAS' long tradition of sound licensing and supervisory decisions and its increasing transparency will continue to ensure that the MAS carries out its responsibilities in an independent manner. Second, unlike in some countries where the central banks have been pressured to finance the fiscal deficit and so failed to maintain price stability, the Singapore Government maintains a prudent fiscal policy. There has never been any need for MAS to finance any Government deficit, nor is such a need likely to arise in future. MAS has full freedom to carry out its primary role of maintaining price stability. It has established credibility with the market, through its track record of running a monetary policy that has yielded low inflation and sustained economic growth over a long period. Nevertheless, we will continue to review the MAS Act to further strengthen accountability and transparency.”
“Mr Speaker, Sir, my comments on the competitiveness of the Singapore economy is already elaborated in my answer. The Singapore economy does not just depend on the Singapore dollar for its competitiveness. Ultimately, it depends on how we improve the competitiveness through productivity, new products, innovation and looking for new markets. As for Singapore exports, compared to China and India, as I explained, from 1997 till now, the Singapore dollar in fact depreciated quite sharply against the US$. Since the Chinese renminbi is pegged to the US$, for that period 1997 to 2001/2002, in fact we had gained competitiveness on the basis of currency. But then, we strengthened recently from the bottom of 1.85 to about 1.66. But the renminbi is still pegged to the US$. So, during this period, of course, we lost some competitiveness because of the currency. But, as I said, we cannot depend on the Singapore dollar for the crux of our competitiveness. In the end, it boils down to the fundamentals, which are productivity, innovation, new products and markets. MONETARY AUTHORITY OF SINGAPORE (Change of management structure) 11. Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance if he will adopt the recommendation of the International Monetary Fund and World Bank to change the management structure of the Monetary Authority of Singapore, in specific, that of its chairman from holding multiple roles that can give rise to potential conflicts of interest.”
“As I have explained, the Singapore dollar is managed against a trade weighted basket. So the weighting has some relation to the trade that we have with our partners, and the currencies we choose are those of the major trading partners and also our competitors.”
“Mr Speaker, Sir, I still cannot figure out how she came to that conclusion. If you remember, before the Asian financial crisis in 1997, the Singapore dollar was probably 1.42 or 1.45 to the US dollar. Then, with the Asian financial crisis, the Singapore dollar depreciated. So the lowest we reached was probably 1.85 and now it has rebounded, strengthening to 1.66 and, in recent weeks, it has weakened to 1.72. If you look at this fluctation, nowhere has the Singapore dollar strengthened by 25% to the US$. Anyway, we have to move with the external economic situation. As I explained earlier, the role of MAS is to make sure that the Singapore currency responds appropriately to the external conditions.”
“There are many jobs and livelihoods at stake if industrial harmony is undermined. But the Government cannot, through changing laws alone, improve labour-management relations. This must be built by management, employees and their unions, company by company. Let me close by calling on the management, employees and unions to continue to foster strong partnerships based on mutual trust and purpose. Sir, I beg to move. Question proposed.”
“Presently, only Alpa-S will be affected by this change, and the amendment will also override any future rule or resolution by a trade union which requires agreements to be ratified by union members. Sir, I do not want to give the wrong impression that this amendment alone will improve relations within the union or their relationship with management, be it in SIA or elsewhere. The ratification clause is one of many aggravating factors, and this change is necessary. But management continues to bear the responsibility for restoring, building and nurturing the relationship between them and their employees. Leaders and members of unions, however, can accelerate productive outcomes with positive attitudes. In this regard, the tripartite partners, comprising the employers, unions and the Government, have formulated a Code of Industrial Relations Practice. This Code is to promote and guide both employers and trade unions to conduct industrial relations and deal with labour-management relations in a responsible and constructive manner for the benefit of the company and its workers. I am pleased to present the Code for Members' information, which I now ask the Clerk of Parliament to distribute. [Copies of Code distributed to hon. Members.] Again, this Code is unique to Singapore and it reflects that special bond, the spirit of tripartism which I spoke about earlier. In conclusion, I would like to emphasise that the harmonious industrial relations in Singapore are essential for economic growth and social stability. It is important that Government guides the framework for industrial relations so that it supports the development of harmonious relations. This includes being vigilant and taking action to prevent practices that are contrary to this objective.”
“Again, the ratification provision did not serve its original purpose of securing a mandate for the Ex-Co from union members because, as this case illustrated, members could, even after ratifying an agreement, change their minds and their leaders subsequently. Other unions have been able to adequately protect and reflect their members' interests without this onerous stipulation. Unions affiliated to NTUC, which represents 99% of all unionised workers, vest the mandate in their Ex-Co to negotiate and commit to an agreement with the management. Doing so does not in any way compromise the membership's interest, as the Ex-Co is fully accountable to their membership and the decisions they make during negotiations. The Ex-Co is duty-bound to act responsibly in the interests of their membership, failing which the membership still retains the constitutional powers to vote the Ex-Co out through the AGM. Similar provisions on the representation rights of trade union officers are found in the labour laws of other countries. Let me just quote one. For example, Article 6 of Japan's Trade Union Act delineates the authority of a trade union to negotiate as follows: "Representatives of a trade union or those to whom the authority has been delegated by the trade union shall have the authority to negotiate with the employer or the employer's organisations on behalf of the trade union or the members of the trade union with respect to conclusion of a collective agreement and other matters." The Bill will, therefore, facilitate a more efficient process of collective bargaining and will not compromise or diminish the rights of unions and members in collective bargaining.”
“Ostensibly, through this check mechanism, members could, by their approval, affirm that their interests had been protected at the conclusion of the CAs and endorse the leadership of the negotiating team that negotiated this collective agreement. But, in practice, members' interests have not been safeguarded, as thereafter protracted and futile negotiations worsened relations between union and management, to the detriment of all. In some instances, negotiating positions had progressively hardened and precipitated deadlocks, as the Executive Council (Ex-Co) sought ratification from the members. For example, in 2001, the collective agreement between Alpa-S and SIA management could only be concluded after 27 months of tedious negotiations. Even after this, the in-principle agreement between Alpa-S and the SIA management was short-lived, as it was overwhelmingly rejected by the Alpa-S membership during an EGM to ratify the agreement. This case was eventually referred to the Industrial Arbitration Court (IAC) and subsequently settled out of court. Both management and union must share the blame for this unproductive exercise. But the point is this: that the interests of both union members and the company suffered from these cycles of acrimony aggravated by the ratification clause. Last year, a wage cut was proposed by the management after SIA suffered losses due to the impact of the Iraqi war and the SARS outbreak. The dispute between the two parties was settled after the case had been referred to the IAC and mediation by MOM. But even after the Alpa-S members had ratified the agreement, 55% of their members subsequently voted out the President and his negotiating team for the agreement.”
“They, therefore, decided to adopt a tripartite partnership approach, with the Government as a facilitator, to bring about labour-management cooperation. A new spirit of tripartism unique to Singapore was thus born. This provided a consultative platform for industrial relations issues to be addressed and resolved amicably, and laid the foundation for the development of a disciplined and productive workforce. This special bond between the three partners spurred growth, created job and raised standards of living for all. We should vigorously guard this framework and be alert to practices that can, over time, if left unchecked, undermine our labour relations. It is with this caveat that I put to the House today the Trade Unions (Amendment) Bill. While amending this Act, let me reiterate the Government's commitment to preserve the rights of workers and the unions that represent them to voice their concerns, bargain collectively and to seek redress. This Bill seeks to amend the Trade Unions Act to confer on the officers of a trade union and any other persons appointed by the trade union to represent its members in collective bargaining the authority to bind all the members by the collective agreement reached through negotiation with the management without the need for ratification by the members. Let me elaborate on our reasons for proposing this amendment. The ratification clause exists only in the constitution of one union in Singapore - the Airlines Pilots Association of Singapore (Alpa-S). In 1999, Alpa-S was restructuring to accommodate members from subsidiaries of SIA, such as Silkair. Alpa-S took the opportunity to introduce a clause into its constitution which required collective agreements (CAs) to be ratified by members.”
“But particularly because we have had industrial peace for so long, some may mistakenly take these relations for granted, and assume that this state of affairs is the natural order of things. Nothing could be further from the truth. We have achieved industrial harmony not by change, but by choice, hard work and constant tending to the ground. All three social partners interact constantly and often accommodate the other partners' concerns to achieve the greater good. We did not inherit these virtuous conditions. Indeed, industrial relations in Singapore in the 1950s and early 60s were adversarial and confrontational. Frequent work stoppages, a lack of discipline and teamwork resulted in a poor investment climate, economic stagnation, high unemployment and social unrest. When independence was thrust upon us in 1965, and faced with dire economic conditions aggravated by the withdrawal of the British forces, the crucial challenge then was to move away from the adversarial labour-management relations to a cooperative one, and to develop a disciplined, motivated and productive workforce as part of the national effort to create a favourable environment for investment. To achieve this objective, the existing legal framework was overhauled by introducing a rational framework for collective bargaining, conciliation and arbitration of industrial disputes, and also by establishing basic employment terms for employees. More importantly, the three social partners, ie, the employers, trade unions and the Government, realised that, for the industrialisation programme to succeed, confrontation had to be replaced by cooperation and collaboration.”
“Sir, let me clarify. I do not know the details of whether the PCF has put up any applications or whether they have been approved. I am just speaking from first principles. PCF is a charitable foundation and there is no reason why any charitable foundation, whether it is PCF or any other foundation, is not allowed to put up any applications to Singapore Pools or the Singapore Totalisator Board. But, clearly, the PAP, as a political party, will not find any support from the Singapore Totalisator Board or Singapore Pools, and the PAP will not put up applications to them. But there is no reason for PCF not to put up. But whether they put up or not, or whether they have received or not, I do not have the data with me and I cannot answer that question. 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; reported without amendment; read a Third time and passed. TRADE UNIONS (AMENDMENT) BILL Order for Second Reading read. The Acting Minister for Manpower (Dr Ng Eng Hen): Sir, I beg to move, "That the Bill be now read a Second time." Singapore enjoys a peaceful and productive industrial climate that is the envy of many nations. We have not had a strike since 1986. The state of our industrial relations is a key competitive advantage that attracts investments and businesses into Singapore. Our unions, principally led by the NTUC, and employer organisations, together with the Government, are equal social partners in the spirit of tripartism that work together for the common good and prosperity of this country.”
“PCF is a community development organisation with very worthy causes, whether it is health screening or charity causes or the education of young children. And if it has sensible projects, it can put them up for consideration by the Singapore Totalisator Board and Singapore Pools, just like any other VWOs.”
“Basically, the Tote Board and the Singapore Pools, as a combined entity, would donate about $300 million a year. So this is quite a significant sum. And they approach this donation by first making general allocations to the various areas which they are supporting, for example, the arts, health, education, sports, charity and community. So there are general allocations out of the $300 million, and where are the areas that they would support. And having made these general allocations by the various sectors, they either go through an intermediary, as I said just now, which is the wholesale approach, say, for example, in health. If they want to support, say, $10 million in health research, their approach is to go through the National Medical Research Council rather than inviting research applications and then making a decision. So they go through the intermediary. For the charity, the community development and the sports, they work through both the wholesale and the retail approach. The wholesale approach would be through Community Chest, National Council of Social Services, etc, and retail by inviting direct applications, and then they will make an evaluation. To make this evaluation, they set up small committees of people who are in that sector, eg, people in the charity sector and the various community services sector. These people would know what are the applications coming from the area, and they will be able to make an informed judgement which are the areas they want to support. The Singapore Totalisator Board and Singapore Pools have never supported the PAP financially, because this is a political party and donations of their surpluses do not go to any political parties.”
“She does not want to speculate and she does not expect an answer from me. So I shall leave it at that. But my own personal view is that the casino ought to be run by a private operator. So I think the Tote Board would be running the current operations and there is no intention, for the time being, to expand its operations. Whether we have a casino or not, it is still subject to evaluation by the Ministry of Trade and Industry. So I think we just have to wait six or nine months for that study to be completed before letting our imagination run wild. Let me, again, reassure all beneficiaries of the Singapore Tote Board and the Singapore Pools that they will continue to be supported by this new merged entity.”
“Let me just explain, as Dr Amy Khor asked, how the Board intends to allocate its funds. As I explained in my speech, the Board does so through a wholesale approach as well as a retail approach. By wholesale approach, what I mean is that they allocate a sizeable quantum to an overall agency, say, for example, the National Medical Research Council and then allow the National Medical Research Council to sub-allocate the funds to the research projects that are most worthy. This is because the Tote Board does not see itself having the capability to differentiate the medical research projects and, therefore, they work through an intermediary agency, like the NMRC. Similarly, for the sports community, they adopt both the wholesale and the retail approach. They fund the Singapore sporting funds. They also fund individual National Sports Associations. So they do both on a wholesale approach through the bigger organisations as well as a retail approach through the individual organisations. For the charity and community development, the Board would have to take a more retail approach rather than a wholesale approach. And this, the Singapore Pools has done so in the past and intends to adopt this same aproach. For example, last year, there were more than 1,000 applications from all the small organisations. The Singapore Pools would have to evaluate these and make its judgement on who to support. Of course, they cannot support all 1,000 applications. What they do is they form small sub-committees with expertise in the various areas, whether it is community development, charity or sports, which would then evaluate these proposals and allocate the donations accordingly. Dr Amy Khor asked whether this merger is a precursor to the Tote Board operating the casino.”
“Mr Speaker, Sir, first, I would like to thank both Members for their support of this Bill. And I would also like to reiterate what I said earlier that there would be no change in the donation outreach and commitments arising from this merger of the Totalisator Board and the Singapore Pools. What we are trying to achieve in this exercise is, first, to make the operations more efficient because there is some overlap in the 4D operations by the Singapore Tote Board and the 4D operations by the Singapore Pools. So by combining these two, I think we will run a better and more efficient operation. Second, we want to achieve a holistic approach to the donation of the surpluses even though in the past, we had segmentised the areas by which the Singapore Tote Board would support the other areas where the Singapore Pools would support. Even though we segmentised them, there is still some overlap, particularly in the charitable and community development sectors. With this merger, the Board can take an overall view and allocate the funds more efficiently and more optimally to areas worthy of their support. When the merger takes place, I can assure Members that the priorities currently given by both entities will remain and this rationalisation or holistic approach would be taken over a longer timeframe. In particular, I would like to assure the smaller charities that they will not be left out. They will continue to be strongly supported by the Tote Board and also the sporting community. Last year, for example, the overall sporting community received something to the tune of $120 million from the Singapore Pools. This is a very significant amount. I am sure the Tote Board will continue to support the sporting community in Singapore.”
“Mr Speaker, Sir, this is the whole basis of a disclosure-based regulatory regime. The onus is on the person to disclose. Of course, the regulatory agencies have other means of getting feedback and sources of information. But, no, we do not actively sit out there and check on the shareholding of everybody. We leave it to the shareholders to disclose their shareholdings if they cross the bar of what is deemed as a substantial shareholder. UNSOLD NEW HDB FLATS 7. Dr Teo Ho Pin asked the Minister for National Development (a) what is the number by estates of unsold HDB new flats; (b) will HDB consider reducing the prices of these unsold flats; and (c) what further measures are being taken to sell or rent them.”
“As I explained in my answer, the onus for disclosure is upon the shareholder. If he fails to disclose, then he faces a conviction and a fine.”
“Mr Speaker, Sir, under the Companies Act, it is the responsibility of a substantial shareholder of a listed company to disclose his shareholding to the company, within two business days after becoming a substantial shareholder or when his shareholding changes. Failure to comply with the requirement is an offence, with a fine of up to $5,000 on conviction, and a further fine of $500 for each day the offence continues after conviction. In addition to reporting to the company, it is also a requirement under the Securities and Futures Act (SFA) for the substantial shareholder to report his shareholding to the SGX. Failure to comply can attract a fine of up to $25,000 and a further fine of $2,500 for each day or part of the day the offence continues after conviction. The Accounting and Corporate Regulatory Authority (ACRA) and MAS investigate cases of failure or delays in reporting substantial shareholdings under the Companies Act and SFA respectively. Where a listed company suspects that there has been non-disclosure of substantial shareholdings, it can enquire further into the beneficial ownership of the shares held by any shareholder and bring it to the attention of ACRA and MAS. Suspected breaches are either investigated by the agency concerned or referred to the Commercial Affairs Department (CAD) of the Police Force for further investigation. CAD is currently investigating the under-disclosure of substantial shareholdings in several listed companies involving the late Mr Khoo Teck Puat. Adequate, accurate and timely disclosure is key to a disclosure-based regulatory regime and any non-compliance will be investigated thoroughly.”
“Sir, the general term of reference of the Council is to look at the corporate governance of charities. I think the Council, having drawn from representatives from different parts of the charitable sector, has a very good feel of what is needed, and I think it will look at the interests of the smaller charities as well as the interests of the larger charities. COMPANIES AND SECURITIES AND FUTURES ACTS (Compliance with public disclosure) 6. Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance, in view of the Goodwood Park Hotel's substantial shareholders disclosure reporting fiasco (a) whose responsibility is it to ensure compliance with the Companies Act and the Securities and Futures Act concerning public disclosure; and (b) how do the authorities intend to detect non-compliance.”
“Sir, the Council has started work recently and I think they have made good progress. They understand the need for their rules, code of conduct, practices and regulations to be completed as soon as they can. I think they are working very, very hard. I do not know what the deadline they have given themselves. But I can assure Members that Ms Lim Soo Hoon is diligently working and I am sure she will put up the rules for consultation and implementation as soon as the Council is able to. As for the definitions, I think we will try to improve the definitions as we go along. But I would like to urge Members to understand the charitable sector. It is a wide range and I think it is very hard to have one set of rules to regulate everybody. Sir, I still believe that our approach of regulating with a light touch is the right approach. I do not think we want to over regulate this sector.”
“Sir, I would not disagree with that motherhood statement. We would like all charities to disclose fully. I think what the Member is probably referring to is the NKF. As the NKF has explained in their press releases, when they take on a kidney dialysis patient, it is not for one month, it is not for one year. They are committed to the patient for the rest of his life. And I think it is a very prudent policy for them to maintain sufficient reserves to keep the organisation going for many years. If we look at the reserves of the NKF in relation to their annual expenditure, their annual expenditure is in the region of $50-$60 million, and their reserve is about three or four years' worth, that, in my opinion, is not unduly large.”
“Mr Speaker, Sir, the NKF is in full compliance with the regulations.”
“Sir, as I mentioned, there is a wide range of charitable causes. Some require long-term commitments when they take on the role of looking after their beneficiaries and, therefore, it is prudent for them to have a sensible policy, especially those which are able to raise sufficient funds that will see them through multi-year projects. So, we do not have a specific rule on how much chari ties should set aside for their reserves. But we urge all charities to disclose this adequately in their statments.”
“Mr Speaker, Sir, our general approach to regulating the charities is to adopt a very light approach. I think we do not want to over burden the charity sector with very tight regulations. As Members know, the charity sector comprises a wide range of causes. Some are very small organisations, others are larger organisations. So, when we had this rule of 30% for fund-raising expenses, we were looking more at the majority of charities, which are much smaller organisations, and therefore to stipulate a 30% rule is not unreasonable, because the amounts they raise are small and the costs of overheads of raising funds are also high. But, of course, if the organisation is large, then I will agree with the Member that 30% seems on the high side. We urge all organisations to always look carefully at the amount they spend in raising each donation dollar and to make sure that this expense is kept as low as possible.”
“Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. ACKNOWLEDGEMENT TO THE CHAIR”
“This is what some other Members like Andy Gan and a few others have raised, and I can assure you the staff will look at this. Miss Penny Low also asked about foreigners and permanent residents contributing to SRS. I believe this is available to them. There is, of course, an early withdrawal penalty. This is to encourage that they do so for bona fide reasons. So the SRS is not just restricted to Singaporeans. It is also open to foreigners. But, of course, there is an early withdrawal penalty so that they do so for the right purpose. As to her suggestion of having employers contributing towards this, I think this is a whole new employers' pension scheme and this is something that we have to study more closely together with MOM.”
“Right now, as a start, we try to bring in certain partners, VWOs and NGOs. I agree with her that we have to cast the net wider and bring in private companies which are better able to do this education process for us. So I can assure the House that as MoneySense develops, the scope of what it is doing and the breadth of the people they are reaching to will get bigger and bigger. On the issue of SRS, as I have explained in my earlier answer to Dr Tan Boon Wan, it really depends on the philosophy of how we set up the SRS. Basically, when we set up the SRS, the philosophy was that we will encourage people to provide for their retirement needs and we should encourage the vast majority of Singaporeans, up to perhaps the 80th percentile group, and people beyond that, people who are rich and wealthy, should be able to look after themselves. That is the reason why we kept the ceiling to the CPF contribution ceiling. If you say, look, we also want the better-off to also provide for their retirement, then there is the question of to what extent we want to provide the tax advantage for them to do so. This is a completely new area that we will be going into. Today, the way we strike a balance is that we provide this mechanism and this is for the vast majority, up to 80%, and those who have higher income than that, I think they can look after themselves and they do not need all these schemes. People who want to put aside more money for their retirement beyond this contribution cap can do so outside the SRS scheme. The SRS scheme is targeted for this critical group of people that we want to make sure that they are self-reliant in their old age. Of course, with our recent change of exempting Singapore source income, I think the balance may have to be relooked again.”
“Sir, I thank Miss Penny Low for her comments on the MoneySense programme. These are all very good suggestions. I can assure her that we will take all these in and we will be able to expand the scope as we go along. As we all know, MoneySense is a national programme that tries to raise the financial understanding of Singaporeans and raise the basic financial literacy of all Singaporeans. Since this programme has only started, the people implementing it, of course, go about it systematically, first by making sure that Singaporeans understand basic skills in budgeting and saving, and the responsible use of credit. Later on, it will expand the scope to look at long-term financial planning and then go into more sophisticated investment skills and investment products. So I think they prefer to go about it on a step-by-step approach. But notwithstanding what I have said, they have also targeted at certain groups, eg, low income families under the Home Ownership Plus Education Scheme are given such basic money management skills to help them live within their means. Also, they have targeted newly-weds who undergo marriage preparation programmes organised by MCDS and their partners. They also bring them into the programme and teach them basic budgeting and joint financial decision-making in running their households. Also, for senior citizens and people reaching retirement age, there are talks and seminars to start them off on the initial stages of financial planning for their retirement. Anyway, I do take Miss Penny Low's comments. As we progress in MoneySense, we can be more proactive. We can customise the programmes and seminars and the skills to be imparted. We can look at the specific needs of different market groups.”
“On the disclosure of foreign exchange rates used by banks for credit card transactions overseas, Dr Chong's view is that these transactions and the rates used for the processing should be made more transparent. I think we can suggest to ABS to see how this particular issue can be addressed when they update their practice code. But we have to be aware that there are limits to the amount of disclosure that a bank can provide and in the end, the consumer must understand what he is buying and what are the charges that he is getting into with the particular credit card company that he has enrolled. Members of the public must be aware of these charges and the basis of these charges that is imposed by their banks. As part of the consumer education process perhaps Mr Yeo Guat Kwang, through CASE, can also help the consumers by doing comparisons of such rates, practices and fees that are charged by the different credit card issuers as CASE has done for the other consumer products. This is part of the joint effort that all of us can take to make sure that consumers are well-informed in their decisions.”
“I think the critical year issue illustrates how MAS goes about its responsibilities. I think Mr Yeo Guat Kwang himself also commended IDRO for the way it is able to handle the disputes in the insurance sector. For the banking sector, the Association of Banks (ABS) also has in place a similar mediation process. There may not be a specific body but the process and the principles behind the redress and the mediation is similar to IDRO. Mr Yeo also questioned the high interest rate and the late payment penalties charged on credit card balances. Dr Chong Weng Chiew also raised a similar point. Basically, MAS does not interfere in the setting of interest rates and other prices set by the financial institutions. This is between the financial institutions and the consumers. It is not desirable for the MAS to prescribe how these products should be priced or what terms and conditions should govern commercial transactions. We leave it to the financial institutions. But what we do is to make sure that the regulatory framework provides for the necessary disclosure and the proper business conduct standards to be undertaken so as to ensure that the consumer is fairly treated. For the specific issue that Dr Chong raised about credit card charges for foreign transactions and the exchange rate used, the ABS, in their code of consumer banking practice, do try to set out in clear and plain language the type of interest rates, the fees, the charges, and the penalties associated with the products put up by their members. The ABS also tries to encourage their members to make sure that this information is disseminated and consumers understand what they are getting into whenever they buy such products.”
“Let me now turn to MAS' philosophy towards market conduct regulation and how this was done in the critical year dispute. First of all, we ensure policy holders have clear, complete and comprehensible information that will enable them to make an informed decision on what course of action to take. That is very important. If the financial institutions do not provide complete and clear information, then we will insist that the disclosure is done correctly. Next, we issue a policyholders' guide to help the affected policy holders to understand their own policies and the options available to them. We do realise that sometimes, some of these options are not so easily comprehensible by the consumers and, therefore, we took it upon ourselves to make sure that these are set out in clear, simple language and people understand what are the options available to them so that they can make the right decision. We also support the access by consumers to bodies, such as the Insurance Dispute Resolution Organisation (IDRO) because we believe in providing consumers an avenue for seeking redress for their grievances. In fact, the critical year issue illustrates very well how MAS sets about its role. First, to make sure that regulations are correct and the financial institutions abide by these regulations. Second, to make sure that there is good disclosure of information so that consumers can make an informed decision on the options available to them. Third, to make sure that consumers understand what is available to them because if it is not clear or too confusing, consumers may not be able to make an informed decision. Finally, to provide the avenue for redress that is fair and equitable for the consumers.”
“I think it is very odd to say that we should spread bank directors around as a way of spreading wealth. Our main concern is whoever sets up a bank in Singapore must be well-capitalised, must take in deposits carefully, look after the depositors' interest, ie, when they lend credits, they must do so with proper credit assessment, because it is not just the health of the bank that is important but it is also the implications to the whole economy. Mr Yeo Guat Kwang raised the concerns about consumers and the increasing number of complaints against financial institutions. He asked why MAS has not played a bigger role in intervening on behalf of consumers to settle the commercial disputes with financial institutions. First, let me clarify that the aim of MAS' market conduct regulation is to ensure that the financial institutions deal fairly with the consumers. To achieve this objective, MAS undertakes three main functions. First, the MAS sets and enforces strong sound market and business conduct standards, including disclosure of material information to the consumers. Second, the MAS has a role as well in helping consumers to understand the products that they are buying through financial education. And third, the MAS also facilitates consumer redress against market misconduct. Let me assure the House that MAS takes seriously any conduct that is in breach of our regulations and will take appropriate action against a financial institution that is found to be in breach. MAS' dealings with individual financial institutions are not disclosed. However, MAS does not consider its role to include directly settling commercial disputes between financial institutions and their customers.”
“Mr Chandra Mohan puts up some unusual suggestions about spreading wealth through the banking licence. I am not so sure I got the drift of his suggestions. We should not see a banking licence as a licence to print money and, therefore, a way that everybody should get a chance and is a way of spreading wealth. Banking is a very serious business. The banks are in the business of taking deposits and granting credits. When we give a licence to somebody to take deposits, we have to make sure that that entity is well-capitalised, have strong management, a proper board of directors to oversee its operations, because these are deposits of all Singaporeans we are talking about. Before we give out a licence, we have to make sure that all these are in place. Secondly, banks play a very important role, not only in the financial sector, but in the economic well-being of Singapore. They are what we call systematically important institutions. A bank failure is not just a failure of one company. It has implications on the entire financial sector and also on the economy. We have to set very stringent prudential requirements on the setting up of banks. The appointment of bank directors also carries very heavy responsibilities. It goes beyond just the responsibilities of directors of any companies because of the import of banks to our economy. So we have to make sure that the appointment of the bank directors is done appropriately. All directors nominated for appointment are subject to review and endorsement by the board nominating committee before their appointments are approved by the shareholders at the annual general meeting. I think there is a due process and there are very strict prudential requirements for the appointment of bank directors.”
“15 pm I remember, last Budget, Mr Inderjit Singh also raised about other models of SME lending. Our approach to all this is that we will always look at such proposals. If they are feasible and suitable, if they are commercially viable, we will allow them to grow. Specifically, any institution that only wants to engage in financing activities, including specialising in SME financing, does not need a licence from MAS. A banking or finance company licence is only required if the institution also collects deposits. MAS is open to admitting banks with specialised expertise in SME financing, so long as they meet our prudential requirements for licensing. Mr Inderjit Singh also suggested that we should allow the finance companies to extend the range of services, particularly servicing the SMEs. This is something we do encourage. MAS will study the proposals put up by the finance companies. We assess the capabilities of the finance companies in doing so because it is important that the finance companies that want to provide such extension of services are able to do so prudentially. Mr Inderjit Singh asked the Government to facilitate asset securitisation. I think this is very much in line with what we are trying to do. We are trying to build up the breadth and depth of the capital market and we see asset securitisation as one of the important areas by which the financial market can provide a fuller range of services. There are some requirements on asset securitisation for the different players. We have to look at these requirements carefully. We cannot dispense with these requirements because certain prudential requirements have to be met. I take his point that we should constantly review these requirements to make sure that we do not hinder the growth of asset securitisation.”
“At the same time, there are very well established, very capable SMEs which enjoy this full range of financial services, like trade and project financing, loans, etc, or they can tap the capital markets for their financial requirements. So, our job is to try and build up the full capacity and the facilities provided by the financial sector, and then leave it to the SMEs to tap into whichever services or facilities that best meet their needs. It is not true that the consolidated banks and the foreign banks go for big companies and not the small SMEs. You will know from the market that a few of the foreign banks in fact target the SMEs as a very important business clientele. As for small depositors, Members will remember that the Association of Banks in Singapore (ABS) introduced the Basic Bank Account (BBA) package in December 2002. This Basic Bank Account sets out a minimum package of banking services, and eight major retail banks in Singapore are committed to provide such services to small depositors and, out of these eight banks, the foreign banks are also represented. So, it is not true that the foreign banks do not provide services to the SMEs or the small depositors. But we do realise that a segment of the SMEs may have difficulty accessing the financial sector for their funding needs, and this is where the Government comes in with a wide range of financing facilities for the SMEs. We have the Local Enterprise Finance Scheme run by SPRING. We also have the Loan Insurance Scheme, and I think some Members here are spearheading the SME loan securitisation project which will allow a wider pool of SMEs to gain access to such financing. We are always looking at different ways of encouraging the market to meet the needs of the SMEs. 3.”
“Sir, Mr Leong Horn Kee asked about the current state of consolidation of the local banks. In 1999, MAS introduced a 5-year programme to liberalise access by foreign banks to Singapore's domestic banking market. We realise that we have to open up the domestic banking market and we are doing so gradually, so as to give the opportunity for our local banks to consolidate and build up their capacity to face this competition. The idea is that, through competition, our local banks would grow and develop and be strengthened, and that we will provide Singaporeans with higher quality banking services and build up Singapore as an international financial centre. Our local banks have responded well to this change. They have been building up their capabilities, and they have been seeking opportunities to expand their presence in the region. So, what used to be five local banking groups have now become three larger ones. Any further consolidation would be a decision for the banks and their shareholders to make, taking into account the evolving comparative environment in which they operate. MAS will continue to monitor the progress made by our local banks before considering further liberalisation measures. Mr Leong Horn Kee also raised the difficulties that SMEs and small depositors face because of this consolidation process. Singapore is a significant financial centre. We have altogether 580 local and foreign financial institutions offering a wide range of financial products and services. At the same time, SMEs constitute a wide spectrum. There are start-ups which do not have access to some of these financial services.”
“Realistically, what will happen is that the smaller companies would have to start with the smaller contracts and they will build up their track record and credentials, and then they go on to bigger and bigger contracts. That must be the way they have to go. I think there is no short cut. What we are trying to do is to make sure that we do not impose unnecessary hurdles in their progression up this ladder.”
“We have had other exercises to try and inject this concept of value-add. The private sector has EVA, in the public sector, we modify the concept through the NEV. Again, the exercise is part of the ongoing process of getting the public sector to work more like the private sector and to understand how their performance will be measured. Next, let me turn to Government procurement policies. Our procurement objective is straightforward. We want to get the best value for money through an open and transparent procurement system that is competitive. The objective is clear. The problem is how to get there and how to strike the right balance. As they say, the devil is in the details. And many times, if Government agencies do not specify their requirements properly, they may be tilted in favour of a specific established vendor, or they may be tilted in favour of the bigger player. So it is very important that when Government agencies specify their requirements, based totally on their needs, bottoms-up, and these specifications of the tender must be generic, they must be performance-related and they must not be tilted towards a certain product, or certain vendors. Mrs Lim Hwee Hua also raised the issue of the minimum level of capital required for the suppliers and also their track records. Here, we have to strike a balance. I think as a purchaser, you want to have some confidence that whoever succeeds in the tender can deliver the products on time and according to the price. To do so, you want the company to have some capital basis. At the same time, they must have some track records so that it gives you confidence. So where do we draw the line? We will have to constantly review this to make sure that the bar we set is not unrealistic.”
“30 pm Mrs Lim asked about the running of the statutory boards and how they can have a better sense of profit and loss discipline, and that they understand the use of capital more appropriately. This is a big challenge for us in the public sector. Even though we set up the statutory boards to try and run them as close to private companies as possible, sometimes, as Mrs Lim Hwee Hua herself put it, it is very difficult to measure profits, revenue or return on capital. But this is something that we are constantly trying to do, to come up with proxy performance indicators which resemble private sector norms and private sector parameters as closely as possible. So on this use of capital, in the past, what would be done was the Government would give a grant to the statutory boards and that may not be the best way to inject discipline. So what we have done is we have introduced debt equity financing structure for statutory boards, instead of just financing them only through the grant. So by injecting capital into the statutory boards, either as equity or as debt, I think the management and the board of directors will be more aware of the cost of capital and also on the efficient use of capital. So far, we have done so for the Singapore Land Authority and this makes the SLA the second statutory board to have equity after the Monetary Authority of Singapore (MAS). And we have plans to inject capital into other statutory boards when there are major investments justifying such injections. I think with such a measure, of course, the statutory boards would be under greater pressure to make use of the capital appropriately and they will also realise that there is a cost to capital. If they raise capital through bonds, I think that cost will be very clear to them too.”
“Then we have the DPC Committee which looks at the project proposal and see whether the funding is appropriate. The project funding came up to the DPC in May 1994. The DPC Ministers approved a lower sum of $623 million for the Arts Centre. But the Minister for Finance then felt that this is a big sum to be funded on budget. So he tasked the MOF's staff to look into other ways of financing such a project. The staff had several meetings - MOF staff, MITA staff, Totalisator Board and Singapore Pools - and they came up with different ideas, like financing the Esplanade through a special lottery. They tried to think of different ways of raising the funds. So, everybody was in it - the Totalisator Board, Singapore Pools - how to go about building the Esplanade. In July 1994, MOF put up a paper to Cabinet and recommended that the Esplanade be built in phases, and not in one big go, so as to stage the expenditure. That was agreed to by Cabinet. Subsequently, PM met BG George Yeo and they discussed how this should be implemented after the Cabinet's decision. So, based on this record of what happened, that we pulled together from our files, I think Members can see that the procedures were followed. There was a Cabinet's decision, DPC's decision and then it went back to Cabinet to see how it could be implemented. We are all very happy that the Esplanade has been built. The way to fund it through the Totalisator Board and the Singapore Pools was an appropriate way of funding, because these agencies have the mission of funding the arts, sports, community services, charities, etc. Because it was a big sum, we had to bring in both the Singapore Pools and the Totalisator Board in this exercise. 2.”
“We have a variety of checks and requirements aimed at ensuring accountability and transparency. But these are not all in one Act. They are in different Acts. Currently, they serve our purposes adequately. As for the implementation of the Sarbanes-Oxley Act it is still early days. If you talk to different groups of people, not everyone thinks that that is the best legislation to go about ensuring best governance. But we will monitor the implementation of that Act. ACRA will look at the Act as well as the practices and, together with the business community, we will see whether elements of that Act are applicable to Singapore. So we are not ruling it out, but we have not come to the conclusion that that is the best model for us. The verdict is still not there yet. Whether we should have safeguards for corporate whistle blowers, which is one of the key features in the Sarbanes-Oxley Act, I think this is something that we also have to study very carefully. Mr Steve Chia also asked about the funding of the Esplanade and the version given by Mr Ngiam Tong Dow. Let me just explain that Mr Ngiam is a very respected ex-civil servant. But sometimes his recollection of what happened may not be totally correct. It is like being an ex-SAF officer, many times we gather together over beer. We talk about old times and relate what we call war stories. As you get older, the war stories add more colour. What actually happened was that in June 1991 - and this was way back in 1991 - Cabinet approved the construction of the Singapore Arts Centre, the old name of the Esplanade, at an estimated cost of $780 million. That was a big decision made by Cabinet. As you know, the Government makes its decision at several levels. First, the Cabinet gives its in-principle approval.”
“As a starting point, we do not see a need to provide operating grants to ACRA, and that is the reason why ACRA is set up as a self-financing statutory board, meaning that ACRA should be able to finance its activities through cost recovery of the services that it provides. As Mrs Lim Hwee Hua pointed out, in fact, the company registration fees have come down. She suggested several things that we can do to make sure that ACRA does not become a monopoly and raise fees and increase the cost for the business community. First of all, I would like to explain that the regulatory fees put up by ACRA will need to get the approval from the Ministry of Finance. So there is check and balance. The other suggestion that she pointed out is that there should be an annual review of these rates. I think we can do that. There should be periodical review of the surpluses and that there should not be excessive compliance cost. I think MOF will do all these as the parent Ministry supervising ACRA. But more importantly, is that the mindset of the management of ACRA is aligned in that way. The board of directors of ACRA will include members from the business community and members from the private sector. At this level, the board can oversee the management and make sure that we do not have excessive compliance cost and that the business community's inputs about best practices are incorporated. And if there are any surpluses by the board, that these are not excessive and do not accumulate over time. I think we have in place sufficient checks and balance for ACRA. Mr Steve Chia suggested that we annex something akin to the Sarbanes-Oxley Act. Let me assure the House that most of what is in the Sarbanes-Oxley Act are actually available in Singapore.”
“Mr Inderjit Singh proposed a competition for Temasek, and suggested that we create more vehicles like Temasek. I think we have enough problems with many Members here with one holding company. If we create more holding companies, there will be more accusations that we are elbowing the private sector in the market. To put this in perspective, the entire GLCs and Temasek-linked companies constitute only 13% of our GDP. So, it is not that Temasek companies take up such a big segment of the GDP. Our GDP is largely generated by multi-national companies. They constitute 42% of GDP. The entire Temasek GLC stable only provides 13% of the GDP. So it is not true to say that Temasek is crowding out the private sector. I think there is a role for the MNCs. There is also a role for the big companies, of which Temasek is a part, and there is also a role for the SMEs. In fact, the SMEs are a very significant group in terms of employment and also in terms of GDP generation. Sir, as I explained earlier, the running of the companies in Temasek is done by the various individual companies, and not by the holding structure in Temasek. So there is very little value in creating more vehicles. Mr Inderjit Singh also requested that the bigger companies undertake prompt payment as a way of helping out the SMEs. I think that is a fair request based on commercial terms. If the contract calls for payment by 90 days, then I think the companies ought to abide by the contract and pay by 90 days. There is no reason for them to use their muscle and delay payments. I think that is good corporate practice. Mrs Lim Hwee Hua raised the issue of ACRA.”
“There is a separate mission for Temasek and that is to grow our companies into regional and international companies. This is very important for Singapore in the long term, and this is where the energies of Temasek are currently directed. So, when we look at the divestment process of Temasek, I think it is going at a good pace. All those companies which are not strategic or do not have the potential to grow into regional or international companies, Temasek would eventually divest them. I think Temasek would do so as and when the market is right. I do not think it is correct for us to set them a schedule or to identify these companies and give a very strict deadline, because that will not be the right way to get the best fair value for Government in divesting these companies. On the approach for the divestment, again, we will leave it to Temasek and to the market, whether it is through management buy-outs or buy-ins. I think we will find the best method to make sure there is a strong management to run the company after it has been divested, and to make sure that we have fair value for the divestment process. Mr Leong Horn Kee proposed that the GLCs work with the SMEs in overseas ventures. Again, this is indeed what Temasek is doing. But I would urge that this be done on a commercial basis. We all agree that there is value in partnerships between GLCs and the SMEs, but this should not be national service. It is best that Temasek goes about its mission with a clear mandate, and that if we want to do national service, this be done as we are currently doing by Government agencies - the EDB, SPRING and IE Singapore. Temasek should just be given the task to run the companies on a commercial basis.”
“First, on the questions of Government-linked companies. In his Budget speech, DPM gave an Annex of the companies that Temasek has divested its stakes, a total of 12 companies in 2003. In his round-up speech, the DPM explained the process that the MOF has undertaken to review Government-owned companies. We have asked all the Ministries and statutory boards in Government to look at the companies that they have set up within their control, and to review them and see whether such companies should continue or should be divested, etc. Although this exercise is still on-going, we have already identified 80 companies which we will scrutinise in greater detail and we will ask the Ministries to justify why these companies should be retained. Let me clarify that these 80 companies are not GLCs under Temasek. These companies have been set up by the Ministries and the statutory boards. On the oversight of Temasek, we have discussed and debated this many times in this House over the last few years. We have set out the Charter for Temasek. We have set out the benchmarks. I think if Members look at Temasek, we can look at it in different categories. The first category is those companies which are strategic to Singapore for which the Government will continue to have an interest. The role of Temasek in such companies is really to maintain a stewardship role. As Members would know, many of these companies are listed on the Stock Exchange of Singapore. They all have their separate boards. They all have their separate managements. And it is not the role of Temasek to micro-manage these companies or to run these companies. Basically, Temasek just maintains a stewardship role and make sure that the shareholders' interest, ie, MOF's interest, is well looked after.”
“My apologies. I missed that out. I think that is a good suggestion. As you know, the way the Government proceeds is when we introduce a scheme we start off reasonably conservatively. We see how it goes and, if there are merits for extending the scheme we will look at it. So I will take in his suggestion and pass it on to my staff. As to whether to recognise and designate a special day for the samsui women, I think that is something that we have to study very carefully. Government-Linked Companies”
“Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$2,391,600", "$113,000", "$2,653,200", "$945,600" and "$1,000" in the second column and substituting them for the figures "$2,126,000", "$116,000", "$2,376,300", "$941,600", and "$11,500" respectively.”
“Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." Question put, and agreed to. Resolutions accordingly agreed to. CIVIL LIST (Motion) The Second Minister for Finance (Mr Lim Hng Kiang): Mr Speaker, Sir, I beg to move, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44), resolves that the Schedule to that Act be varied by deleting the figures "$2,391,600", "$113,000", "$2,653,200", "$945,600" and "$1,000" in the second column and substituting them for the figures "$2,126,000", "$116,000", "$2,376,300", "$941,600", and "$11,500" respectively. Sir, I propose that a provision of $2,245,600 be supported for Class I expenditure for FY 2004. Class I expenditure would cover the President's salary, his entertainment allowance and the acting President's allowance. The lower provision is to cater for the wage cuts which have been applied to the Privy Purse since November 2001 with the agreement of the President and which are in line with the wage cuts for political appointments. The provision for Class II expenditure is meant for the salaries of the Istana personnel. The provision is lower at $2,376,300 because of wage cuts and a further reduction in the CPF contribution rate for employers from FY 2004. A provision of $941,600 is required for Class III expenditure to meet the expenses of the Istana's household. This provision is slightly lower than the amount required in FY 2003. A higher provision of $11,500 for IT-related expenses is required for Class IV expenditure. It is therefore necessary to vary the provisions in the schedule to the Civil List and Pension Act (Chapter 44) as indicated in the Motion before the House. Sir, I beg to move. Question put, and agreed to.”