Lim Hwee Hua
Singapore
“Mr Chairman, Sir, I believe the Minister for Finance has actually addressed that quite adequately in the Budget Statement. I will encourage the Member to read the Hansard. As I recall, he did say that our projections for revenue have been made for the next five years and we do not target a particular source of revenue.”
“Mr Speaker, Sir, I would encourage the Member to file a question for MCYS, if she would like to discuss safeguards further. What I would comment here is that at the outset when we conceived the whole Integrated Resorts idea, there were many business risks: whether it is country risk or the timing of the business cycle and so on.”
“Mr Speaker, Sir, the supplementary questions raised by Ms Denise Phua have actually been debated to some detail under the different heads, in terms of the intended strategy – why we are having Integrated Resorts and casinos in the first place. This has been debated quite extensively by the Ministry of Trade and Industry.”
“Madam, I take the Member's point about the need for checks to be done professionally, and indeed this is the case, and that is why the officers would be sufficiently trained to conduct these checks in a professional manner.”
“The proposed amendments are necessary in order to effect the new financing framework, to allow for greater contestability to be injected into the RTS industry, as well as to ensure security and continuity of the RTS operations. Madam, I beg to move. Question proposed. 4.28 pm”
“Because of the complexity of the issues and the need for us to continue consulting other players who have already been operating in that space, as well as consulting the business community in greater detail, the study would take the better part of this year. OUTCOME OF 50PLUS EXPO 6.”
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“Sir, may I reiterate that the road traffic rules currently prohibit cycling on footways and that would apply to all other towns, other than Tampines Town which is having this trial. Public education will have to continue not just in terms of cautioning people to share space properly. It will be an ongoing effort not only on the part of the Government but also of the various groups that I have named in my speech just now. CPF MINIMUM SUM (Deferment of withdrawal of CPF monies) 21. Mrs Josephine Teo asked the Minister for Manpower over the last five years (a) what percentage of active and inactive CPF members were able to meet the Minimum Sum at the age of 62; (b) what is the median shortfall for those who did not have the Minimum Sum at the age of 62; and (c) how many of such members opted to defer withdrawal of CPF monies so that their future drawdown period can be extended.”
“Hence, with the proposed Bill, the effective return earned by financial institutions on the sale of non-residential arrangements under qualifying Islamic financing arrangements would now also be exempted from GST. So this is really to close the loop. I agree with Mdm Ho that Islamic financing is a promising growth area for Singapore and MOF will actively monitor the developments and consider the need for exemption of GST for new forms of Islamic financing arrangements when they are proposed. 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. - [Mrs Lim Hwee Hua]. Bill considered in Committee; reported without amendment; read a Third time and passed. EMPLOYMENT OF FOREIGN WORKERS (AMENDMENT) BILL Order for Second Reading read. 3.21 pm”
“To date, IRAS has published more than 60 e-Tax guides on the website, clarifying all the various treatments that are applicable to GST. On Mr Banerjee's point about consultation, let me assure him that MOF had carefully considered the various policy changes proposed in the GST Bill, including the advance GST ruling, before we launched the draft Bill for public consultation. So the public consultation is not limited to only the actual process itself. But I agree with Mr Banerjee that we should have made it clear that we welcome feedback, not just on the drafting of the legislation for compliance, but also on the policy changes as well. And I would like to assure him that MOF values the feedback/inputs from the public and the business community, and we will continue to take them into account. Mdm Ho has raised two points on the zero treatment for prescribed tools in the manufacture of goods for exports, whether it is applicable to Original Equipment Manufacturers (OEMs) and contract manufacturers as well. The answer is yes. They will be able to zero-rate the supply of tools if they satisfy the prescribed conditions. The main conditions are that the tools must be supplied to an overseas person and used to manufacture goods for export. On her other point of exemption from GST for Islamic financing, I would like to assure her that this would not be restricted to only non-residential properties transactions. Currently, Islamic loans and deposits as well as sale and lease of residential properties are already exempted from GST. Only Islamic financing arrangements involving non-residential properties would attract GST.”
“Mr Speaker, Sir, first, I would like to thank the Members for the support of the Bill. Let me take the questions in turn. Sir, the comments by Mr Banerjee on the advance ruling and the implementation issues are well noted and well taken. Currently, as he has noted, IRAS gives GST advice free of charge but these are not legally binding on the tax authorities. The proposed Amendment Bill will allow businesses who want certainty to obtain an advance ruling that is legally binding. IRAS therefore levies a fee for advance ruling because more work is needed to do the necessary due diligence and such ruling applications are generally more complex than enquiries and require more detailed analyses. I would like to assure him and Ms Sylvia Lim that the fees are based on a cost recovery basis of the resources needed in issuing the ruling. We are charging a fee, as he has pointed out, in order to deter frivolous requests. The rulings are usually specific to the company and provide the company with tax certainty. Let me recount the experience of the Australian system. When they implemented this legally binding advance ruling system, there was actually an overwhelming increase in the number of requests and therefore the deterrent nature of the levying of a fee is in place. The details of the charging will be reviewed over time, and I would like to give assurance that the applicants will not be charged beyond what is the fair rate, in terms of the actual time used. Let me assure Mr Banerjee and Ms Sylvia Lim that even with a GST advance ruling system, taxpayers can continue to approach IRAS for non-binding tax advice on GST queries. And IRAS will continue to educate taxpayers on the correct GST treatments through the e-Tax guides.”
“Where the nature of advertising relates to the sale of media space or airtime, the supply will be zero-rated when the advertisement is circulated outside or substantially outside Singapore. This change is reflected in clause 4 of the Bill. (c) Time limit for claims relating to over-declaration of output tax in repayment returns Thirdly, the time limit for claims. Presently, there is no time limit provided in law for claims relating to over-declaration of output tax in repayment returns. To provide clarity to taxpayers and to align with the reduced record-keeping period, the GST Act is amended to provide for a time limit of five years for claims of refunds relating to over-declaration of output tax in repayment returns. The amendments are provided in clauses 7(b) and 9 of the Bill. (d) Consequential amendments arising from the reduction of GST record-keeping period Fourthly, consequential amendments. Pursuant to the reduced GST record-keeping period, the time limits for GST-registered businesses to reclaim input tax that is paid late to suppliers and for the Comptroller to raise additional assessments will be revised to five years. Clauses 3 and 7(a) of the Bill reflect these changes. Sir, I beg to move. Question proposed. 3.05 pm”
“These amendments arose from our regular reviews to improve the GST system. (a) Advance Rulings System Firstly, the advance rulings system. To provide greater clarity and certainty to taxpayers, an advance rulings system for GST will be formalised and enshrined in law with effect from 1st July 2007. Any ruling issued under the advance rulings system will bind the Comptroller of Goods and Services Tax to apply the statutory provisions in the manner as set out in the ruling. Clauses 10 and 12 of the Bill provide for binding advance rulings, the circumstances under which the Comptroller shall, may or may not provide the rulings, and their fee structure. This is similar to the advance rulings system for income tax, which was introduced last year. Under the advance rulings system for Income Tax, a non-refundable application fee of $525 is payable on the application for rulings. A further fee of $131.25 per hour is payable for any time beyond the first four hours, spent in considering the ruling by IRAS. More information on the fees for Income Tax rulings is available on IRAS' website. (b) Revise GST rules for zero-rating of advertising services Secondly, to revise the GST rules for zero-rating of advertising services. Sir, to simplify GST rules, the zero-rating treatment for advertising services will be revised from one that is tied to the advertising subject, to one that is tied to the nature of advertising services. Where the nature of advertising services relates to concept development, artworks and media planning, the supply will be zero-rated when it is made contractually to and for the benefit of an overseas person.”
“(c) GST exemption for prescribed Shariah-compliant financing arrangements To promote Shariah-compliant financial activities in Singapore, the effective return arising from the provision of prescribed Shariah -compliant financing arrangements, in relation to the purchase of non-residential property, will be exempted from GST. The change will harmonise the GST treatment of prescribed Shariah -compliant financing arrangements with their conventional loan product counterparts to ensure a level playing field. This change is provided in clause 11 of the Bill. (d) Deemed input tax credits for insurers Presently, there are no input tax credits for insurers on cash payments made upon the occurrence of an insured event even under an insurance contract. As a result, GST is collected on gross premiums which are not reflective of the true value-add of insurance services. To capture the true value-add and to reduce the business costs of insurers, insurers will be allowed to claim deemed input tax credits on cash payments made under certain insurance contracts that are subject to GST. Clause 6 of the Bill reflects this change. (e) Reduction of record-keeping period from seven years to five years Presently, GST-registered businesses are required to keep GST records for seven years. To reduce business compliance costs and to support enterprise and entrepreneurship, clause 8 of the Bill amends the GST Act to reduce the record-keeping period from seven years to five years. This change is in line with the general move to reduce the record-keeping requirement for businesses down to five years to provide consistency for businesses. Other tax changes Let me now move on to the second group of tax changes covered by this Bill.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Goods and Services Tax (Amendment) Bill 2007 comprises two groups of changes. The first group related to changes announced in Budget Statements 2006 and 2007. The second group covers other amendments to the Goods and Services Tax Act arising from regular reviews to improve our GST system. A public consultation on the Goods and Services Tax (Amendment) Bill that was drafted for the 2006 changes was conducted from 8th September to 6th October 2006. The draft Bill has been revised to incorporate the suggestions made by businesses. GST budget changes Let me first highlight the amendments related to the budget changes. (a) GST rate increase To broaden our tax base, and to enable the Government to grow our economy and implement Workfare and other initiatives to strengthen social cohesion, the GST rate will be increased from 5% to 7% with effect from 1st July 2007. This change, which was actively discussed in this House during the recent Budget Statement debate, is reflected in clause 2 of the Bill. (b) Zero-rating treatment for prescribed tools used in the manufacture of goods for export Presently, the supplies of tools made to overseas clients but used in Singapore for the manufacturing process attract GST. To enhance the cost-competitiveness of local manufacturers and to recognise that such tools are business inputs and do not constitute private consumption per se, the supply of prescribed tools made to overseas clients will be zero-rated, if the tool is used in Singapore exclusively for the manufacture of goods for export. Clause 5 of the Bill reflects this change.”
“Sir, allow me to explain how the ERP pricing is done and the whole philosophy behind it. First of all, let me state that without the ERP system, the CTE would today be in gridlock. If we were to take the case of the most congested period of the north-bound CTE, for example, for the period from 6.30 pm to 7.30 pm, the traffic speeds have actually improved from, before the implementation of the ERP, about 26 kilometres per hour to 48 kilometres per hour. Secondly, motorists, by and large, consider the entire journey experience in deciding whether to use a particular route. Hence, to determine if the ERP charge at the gantry on the north-bound CTE needs adjustment, we measure the average speed over the distance from the Bukit Timah entry to the Ang Mo Kio Avenue 1 exit. In this case, the existing ERP gantry is somewhere mid-stream between the start and the end of this stretch. It is possible that on parts of this stretch, the speeds may well fall below 45 kilometres per hour from time to time. However, over the entire stretch, the average speeds would be above 45 kilometres per hour. MAID LEVY (Review) 10. Mr Chiam See Tong asked the Minister for Manpower if he will review the lowered maid levy issue and implement a new set of maid levies to reflect the economic status of employers and take into account the needs of their children and the elderly so that those who can afford to do so will pay more and those who are less well-off will pay less or are even exempted from paying the levy.”
“Mr Speaker, the ferry services actually in a way compete with the monorail services. With the operation of the monorail, the bulk of the mass traffic itself has been transferred onto that. But, certainly, this would be one of those considerations that Resorts World and Sentosa Development Corporation can take into account as well. As for the alternative forms, these are topics under discussion right now between Resorts World, MTI and Sentosa Development Corporation. Insofar as they have implications for the mainland traffic, LTA would also be involved. SHORTAGE OF OFFICE SPACES 6. Mdm Ho Geok Choo asked the Minister for National Development, in light of the redevelopment of buildings resulting in shortage of office spaces in the city area and spiralling rental increases, what plans are there to help businesses relocate and whether his Ministry will publish or give information on alternative availability of office spaces for small and medium-sized companies.”
“Mr Speaker, Sir, Dr Lam Pin Min asked about plans to enhance the transport network serving Sentosa Island given the anticipated increase in visitors to the island when the Integrated Resort opens. Sentosa Development Corporation or SDC has been working closely with Resorts World at Sentosa (RWS) to cater to the expected increase in tourists as well as vehicular traffic entering Sentosa with the opening of Resorts World. The aim is to ensure that the visitor experience into and on Sentosa itself will be a seamless and pleasant one. Infrastructure improvements currently being considered include the addition of two more lanes into the Sentosa causeway bridge, dedicated lanes into and out of Resorts World and also road improvements within the Sentosa's internal network. The Land Transport Authority (LTA) is also considering several improvements works on roads leading to Sentosa Island. This may include widening works along Sentosa Gateway, Telok Blangah Road and Kampong Bahru Road. In addition to increasing the infrastructure capacity, SDC is also proactively exploring the adoption of other measures to encourage the use of public transport. MTI, MOT and other agencies will work together to ensure that the infrastructure both within and leading to the Integrated Resort is able to support the anticipated increase in tourists as well as vehicular traffic.”
“The Government can only go so far as to provide the structures, such as signalised pedestrian crossings or overhead bridges. But, ultimately, the responsibility is for each pedestrian to maintain his own personal safety and to look out for himself. So you could have a signalised pedestrian crossing, but if the user does not want to wait and decides to jay walk across, then he is putting his own life in danger. TRANSPORT SYSTEM AND NETWORK ON SENTOSA ISLAND (Enhancement) 5. Dr Lam Pin Min asked the Minister for Transport whether there are plans to enhance the transport system and network in Sentosa Island in anticipation of the expected increase in tourists as well as vehicular traffic from the new Sentosa Integrated Resort.”
“Mr Speaker, Sir, let me take the questions in turn. Generally, where overhead bridges or signalised pedestrian crossings are built in densely built-up areas, the land take is really quite a severe constraint. Therefore, even though we can plan for new towns and accommodate some of the overhead bridges to provide for ramps, this will still be ultimately a balance between the other users of the overhead bridges as well as the elderly and the disabled. A balance has to be struck because if the gradient is far too gentle, then all those who are more able will actually have to walk a fuller length of the ramp which then might defeat the whole purpose of facilitating a quick crossing of the road. As for the 40% target that we are reaching in 2010, this is really to accommodate the replacement programme of the buses as it is very expensive to replace all buses at one go. And this is already being funded by the Government in terms of providing the cost of equipping the buses with these ramps. Miss Penny Low has also asked whether walkways could be wide enough to accommodate the needs of the wheelchair users. Again, this is a balance that we have to strike as it involves the allocation of space. This applies equally to road space, space at the side table. Generally, at the end of the day, it is a question of the constraints of the area and the needs of the different stakeholders. And, by and large, for some of these where there are possibilities, then grassroots organisations would be involved in the discussion of what might be the most appropriate for that particular situation. Finally, I think Miss Penny Low alludes to the point of public education and personal safety.”
“Sir, essentially, LTA will build more signalised pedestrian crossings as these have proven to be more convenient for the elderly and the less able. However, on stretches like expressways and main arterial roads where the speed is a lot higher, pedestrian overhead bridges would be used. This is the guiding principle. And where there are no land take constraints, ramps could be considered to also facilitate these movements. A lot of what is available is usually constrained by what is possible at the different sites, such as a more gradual gradient for the ramp and this would be taken into consideration whenever LTA decides to construct a pedestrian overhead bridge.”
“NEA will thus focus on public education to encourage households to use more energy-efficient lighting, as well as to make other simple lifestyle changes to reduce electricity wastage. Changes such as raising the temperatures of air-conditioners or turning appliances off at the switch rather than putting them on standby mode would help households save money and curb rising electricity consumption.”
“The common corridors of HDB apartment blocks already use fluorescent lighting, which is energy-efficient. However, there is still potential for improvement, for example, by switching to even more efficient types of fluorescent lighting and by using electronic rather than magnetic ballasts. Over the years, HDB has replaced lighting in the common corridors with more energy-efficient lighting, in tandem with technology advancement. The conventional ballasts have also been replaced with low-loss ballasts. NEA will continue to work closely with HDB and the Town Councils, as well as principal lighting manufacturers, to explore ways to further reduce energy usage in HDB estates. NEA is also working with the Town Councils to improve the energy efficiency of the common areas of existing HDB estates. In 2004, NEA provided co-funding of about $60,000 for an energy audit of common area services in 40 blocks under the Aljunied Town Council. The audit identified potential savings of about 14%-19% of electricity consumption through various measures, such as using more efficient types of fluorescent lights. NEA has shared the audit findings with other Town Councils and also placed the findings on the National Climate Change Committee website to enable others to benefit from the study. Since then, some Town Councils - and I understand about nine Town Councils - such as Holland-Bukit Panjang Town Council, have implemented recommendations from the audit, for example, installing more energy-efficient lighting as well as energy-saving devices, etc. For households, as my Minister had noted in his recent reply to Dr Lim Wee Kiak in Parliament, the lifetime cost savings of using an energy-efficient compact fluorescent lamp can be around $110, far exceeding its higher upfront costs.”
“Sir, the LTA requires all designs of vehicle lights to comply with the Road Traffic (Motor Vehicles Lighting) Rules, and they must bear approved markings to show that they comply with internationally recognised standards, such as those adopted in the European Union countries, Japan and the United States. The lights must also conform to the stipulated illuminated colour and intensity. For example, headlamps must show a white light, brake lights must show a red light. For headlamps, the LTA requires every unit fitted on a vehicle to be capable of casting a white light to the front of the vehicle. The intensity and alignment of the headlamp must also be within the specified limits. USE OF ENERGY-SAVING LIGHTS IN HDB FLATS AND COMMON AREAS 11. Mr Edwin Khew Teck Fook asked the Minister for the Environment and Water Resources whether the Ministry will look into working with the Ministry of National Development and Town Councils in providing funds for and mandating the use of energy-saving lights in all HDB flats and common areas to save energy consumption. The Senior Parliamentary Secretary to the Minister for the Environment and Water Resources (Dr Amy Khor Lean Suan) (for the Minister for the Environment and Water Resources): Mr Speaker, Sir, I would like to thank the hon. Member, NMP Mr Edwin Khew, for raising this important issue of energy-efficient lighting in HDB estates, as the majority of our population live in HDB estates. Lighting consumes about 40% of the energy use of an average HDB housing block. The National Environment Agency (NEA) has thus been working with the HDB and the Town Councils to improve the efficiency of lighting in the common areas of HDB estates for some time.”
“Sir, as I have explained in my reply, road humps are used judiciously, and the overall performance of the road concerned would be a major consideration. COLUMBARIUMS AT PLACES OF WORSHIP (Policy on setting up) 17. Er Lee Bee Wah asked the Minister for National Development what is the policy on the setting up of columbariums at places of worship and whether the Ministry takes into account the location of such places of worship, which are near to residential areas.”
“Sir, road humps are a traffic calming measure normally constructed along minor or local residential roads where traffic volumes are relatively lower and where fast-moving traffic poses a safety concern. Road humps are not used on major roads as they affect the efficient performance of these roads. Instead, road signs or road markings are used to alert motorists to keep to a safe speed. Therefore, where appropriate, road humps have been provided in the vicinity of schools sited on minor or residential roads. The safety of road users, including school children, is a top priority when LTA constructs new roads or modifies traffic schemes to cater to changes in the environment. Recognising the need to pay special attention to the needs of younger school children, LTA has introduced the Enhanced School Zone (ESZ) scheme to all primary schools since 2004. The ESZ comes with special features: a red textured asphalt pavement, road markings and traffic signs placed within the vicinity to alert motorists to slow down and look out for school children. Depending on the specific road conditions, the ESZ may be complemented by other traffic management measures such as road humps, signalised pedestrian crossings, zebra crossings, railings, centre dividers, traffic warning signs or road markings. Ensuring road safety is a shared responsibility. I therefore encourage motorists to drive carefully when travelling on roads near schools, and pedestrians to make use of pedestrian crossing facilities. Schools and parents can also play an important role in inculcating good road safety habits in our young.”
“Sir, I agree with the Member's comment that there is certainly room for more public education and for commuters as a whole to be more civic-conscious. ASEAN COMMISSION ON THE PROMOTION AND PROTECTION OF THE RIGHTS OF WOMEN AND CHILDREN (Establishment) 12. Prof. Thio Li-ann asked the Minister for Foreign Affairs (a) if he will provide an update on plans to establish an ASEAN Commission on the Promotion and Protection of the Rights of Women and Children under the Vientiane Action Programme and what form will such a Commission take in terms of supervisory or monitoring powers; (b) whether Singapore supports an ASEAN mechanism for protecting human rights in general; and (c) whether the ASEAN Charter will incorporate provisions to promote and protect human rights and to adopt measures to realise this objective.”
“Kalyani K Mehta (Nominated Member): Sir, from the feedback that I have received from my students at NUS where I teach, as well as members of the public, at peak time, it is really very chaotic at our MRT stations, especially where there are interchanges, and sometimes I think the safety of passengers is at stake here. As we have made our MRT stations more friendly to physically-disabled persons, I think we need to do the software aspect, now that we have a bit more hardware. I have seen in Hong Kong that they have more staff at the train platforms, and they enforce the yellow lines. So, perhaps for a start, we could think of some idea like that. I personally had an example where a tourist really showed his disgust at some ugly behaviour of Singaporeans when they would not allow a wheelchair-bound person to alight and the person was stuck in the train because of the crowd.”
“Sir, since the early 1990s, our rail operators have regularly implemented public education initiatives, such as courtesy programmes, roadshows, school talks and learning journeys, to promote courteous behaviour on the MRT. These have so far not specifically focused on civil courtesy towards wheelchair-bound passengers using the MRT. However, the Land Transport Authority (LTA) is working with the rail operators to facilitate greater usage of our MRT by wheelchair-bound passengers. On provision of signs to indicate where a wheelchair user could "park" his or her wheelchair in the train, I am pleased to inform the House that for the Northeast Line (NEL), this is already done as the trains have a designated recess area for wheelchair users. There are also signs at designated platform screen doors to guide wheelchair users to the train car with such a recess area for their use. Similar signage will also be introduced along the North-South and East-West Lines where recess areas for wheelchair users have been provided on SMRT's older trains as part of its train upgrade project over the next two years. Assoc. Prof. Kalyani has also asked whether there are plans to enforce the yellow queue lines. As it is with all matters concerning civic consciousness, there is practical difficulty in enforcing commuter behaviour. Nonetheless, station staff patrolling the platforms will advise commuters to follow the yellow queue lines, and regular announcements will continue to be broadcast to remind commuters to give way to alighting passengers. Assoc. Prof.”
“Sir, I believe this point was actually debated and covered during the recent COS debate where my Minister had given a thorough comparison of the Hong Kong taxi situation where, if I recall correctly, the supply of taxis is in greater proportion relative to demand than that in Singapore. Ultimately, it is again a balance that we will have to strike because one way of meeting all the needs is to have the supply at the peak period requirements. But that would mean that, during the off-peak periods, there would be a lot of taxis cruising the streets empty. NEEDS OF WHEELCHAIR-BOUND AT MRT STATIONS AND ON BOARD TRAINS 11. Assoc. Prof. Kalyani K Mehta asked the Minister for Transport whether there are plans to (i) educate the public on civil courtesy towards wheelchair passengers riding the MRT trains especially upon embarkation and disembarkation; (ii) enforce the 'yellow lines' rule on MRT platforms so that embarkation and disembarkation are organised; and (iii) put up signs to indicate where a wheelchair person should 'park' in the train so that public consideration can be given towards his or her needs.”
“Sir, the observation is a valid one. But allow me to put that in perspective. LTA's figures show that only about 10% of taxis on the streets are actually booked during peak hours. In other words, the vast majority of taxis or about 90% are still available for street hailing during peak periods, and these taxi drivers would certainly not want to miss having a fare during these lucrative business time belts. Er Lee Bee Wah: Mr Speaker, Sir, I think MOS did not answer my question on whether there is anything that we can learn from Hong Kong which seems to have a better taxi service than ours.”
“Sir, indeed, there are many surveys that had been carried out on all components of taxi service standards, and waiting time is one of the key factors, and that is where the surcharges come in. Ultimately, we are really aiming for a situation where the market demand would determine the kind of charges that commuters would be prepared to pay and whether they would decide to therefore phone-book a taxi or to wait along the street to hail. At some point, there would have to be a balance that is struck between the commuters and the taxi companies.”
“However, despite the buoyancy enjoyed by the industry and the demand for manpower, Singaporeans' awareness of opportunities in the maritime services is still very low. Whenever I meet shipping and maritime services companies, it is not uncommon for them to praise Singapore as a wonderful location for their business, but lament the difficulty in recruiting people. Raising awareness of career opportunities in maritime services is therefore a key priority for us, and publicity efforts include the ones that Dr Lam has just mentioned - the recently concluded Mandarin TV serial "The Peak", and two TV commercials featuring the maritime industry. These are part of the ongoing efforts to create long-term awareness. 5.00 pm In addition, the Singapore Maritime Foundation is working with the MPA to establish a maritime outreach network, or MaritimeONE. This will be a single platform for Government, industry and the educational institutions to work together in the career publicity and outreach efforts. This MaritimeONE initiative to be launched next month will include student outreach activities, scholarship and book prizes for maritime courses, internship at maritime companies and networking events between students and prospective employers. I would therefore encourage Singaporeans to take advantage of these initiatives to learn more about careers in the maritime services sector. An excellent career awaits them.”
“Our incentive schemes have already met with very positive response. The Approved International Shipping Enterprise (or AIS) Scheme has attracted over 80 ship operating and ship-owning companies to date, generating some $2.8 billion of annual spending. The Maritime Finance Incentive (or MFI) introduced just last year to promote alternative ship finance structures has already been awarded to four companies with more than US$900 million worth of shipping assets portfolio. More proposals are in the pipeline. Sir, we are also constantly enhancing our schemes. As mentioned by Mr Cedric Foo in this year's Budget, the Approved Shipping Logistics Enterprise (or ASL) Scheme has also been enhanced and GST for servicing, sale and lease of containers used for international trade has been zero-rated. By building a conducive environment for maritime services in Singapore, we are increasingly being recognised as a choice location for major shipping groups from all over the world to base their operations in Asia. It is estimated that today, shipping and maritime services companies employ about 14,000 people in Singapore. Many of these jobs are well-paying white-collar jobs with good prospects, jobs which present excellent careers for Singaporeans. For example, shipbrokers are known to offer a starting pay from $1,800 to $3,000 for polytechnic graduates. A good, experienced broker can command a monthly salary of about $10,000 to $15,000. And I am told that the sector is doing so well and supply is so tight that some of them have been receiving bonuses as high as six to 10 months. Opportunities are not confined to those with shipping-related qualifications. The industry needs university and polytechnic graduates with qualifications in business, law, finance, engineering, and so on.”
“Last year, the Maritime and Port Authority introduced a new standard on quality management through the bunker supply chain. This helps to reinforce our position as the world's top bunker port. Third, we need to be on the lookout for new growth opportunities. For example, in order to take advantage of the shifting auto-manufacturing trends, PSA has decided to develop a dedicated car transshipment terminal, complete with a purpose-built car storage facility, to capture the growing market for global car transshipment. Finally, we must ensure safe, unimpeded passage for ships passing through the sea lanes to Singapore. We have thus given much attention to improving the piracy situation in regional waters, including the Straits of Malacca. The Information Sharing Centre, launched by Singapore and 13 other Asian countries last November under the Regional Cooperation Agreement on Combating Piracy and Armed Robbery Against Ships in Asia, or ReCAAP for short, will support inter-governmental action against piracy through better sharing and analysis of piracy data. Sir, Singapore's development as an international maritime centre goes beyond the port terminal operations. Mr Cedric Foo and Dr Lam Pin Min have asked for updates. The strong growth in Asian trade and major expansion of the world's shipping fleet present excellent opportunities for Singapore to establish itself not just as a hub port but also as a base for shipping and maritime services. There is increasing demand for ancillary services such as ship financing, maritime legal services and marine insurance. As a maritime and aviation hub, an established financial centre, with a well-regarded legal system, Singapore is well positioned to take advantage of the cluster opportunities available.”
“Mr Chairman, Sir, I thank Mr Cedric Foo and Dr Lam Pin Min for the questions on the maritime sector. I will now provide an update on our performance as well as what the Ministry is doing to ensure Singapore's continued competitiveness as a global hub port and maritime centre. Sir, indeed, as Dr Lam Pin Min has mentioned, Singapore's port continued to perform strongly in 2006 and occupied pole position globally in terms of container throughput, shipping tonnage and other measures. As Mr Cedric Foo has pointed out, other ports in Asia, especially China, have also been flourishing in tandem with the strong economic growth. For the past five years, Shanghai and Shenzhen have been growing at a blistering 15% to 30% per year. In 2006, these two ports were the third and fourth busiest container ports in the world. Indeed, as Mr Cedric Foo has pointed out, at the rate the Chinese ports are growing, it will only be a matter of time before one or both of them displace Singapore from her position as the busiest container port. But, Sir, this is not a zero sum game. The strong growth of the Chinese ports has also benefited Singapore. Over the last five years, containers shipped to and from China through Singapore grew by an average of 22% per year. As Chinese ports grow, so too can and will ours, and we intend to remain a hub port. Let me just highlight four ways to ensure we stay competitive and in the game. First, we must have sufficient capacity to cater to the rising demand. Ongoing works to expand Pasir Panjang Terminal by 16 berths to a total of 38 will meet our needs. Second, we need to sharpen our edge in efficiency and quality. For example, a reputation for quality is important to a bunker or ship refuelling port.”
“Sir, currently, the KPIs evolve over time and the KPIs would, in most cases, be the minimum standard that Ministries would have to deliver. Should the PPPs be successful, in terms of discovering greater technologies, then the KPIs would be amended accordingly. Column No : 3048 ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 2007 TO 31ST MARCH, 2008 (Paper Cmd. 2 of 2007) Order read for consideration in Committee of Supply [5th Allotted Day]. [Mr Speaker in the Chair] Head O - Ministry of Health (cont.) Resumption of Debate on Question [6th March, 2007], "That the total sum to be allocated for Head O of the Estimates be reduced by $100." - [Mdm Halimah Yacob]. Question again proposed.”
“Sir, the Government would take all steps to ensure that in any Best Sourcing initiative, minimum standards will continue to apply, in terms of service delivery to the public, and that shall be the baseline. Therefore, it will not always be the cheapest tender, but it will be the cheapest subject to minimum standard being complied with. In some cases, the status quo is actually the Best Source, and it remains so. As regards the suppliers who are ultimately awarded, it is actually a slightly different issue. We would certainly expect the suppliers to comply with all the standard labour laws. And certainly, if the Member is aware of anyone who is not complying with them, the Member is welcome to direct this to the attention of the Ministry.”
“Sir, the SRS scheme was introduced only in April 2001. Hence, it would take some time for it to gain momentum. The SRS is not so appealing to the younger people because they would actually need a lot of their resources for other needs, such as housing and other investments. Hence, it tends to favour more the higher income and those in the higher tax bracket with a lot more disposable cash. When we conceived the SRS, it was indeed to supplement retirement savings but it was not meant to be a tax advantage for the higher income groups.”
“Sir, I believe Minister Teo has just earlier on explained the difficulty with tying the KPIs to individual performance evaluation. But, certainly, these are all worked out on an inter-ministerial basis.”
“Sir, for each Ministry, the dashboard is indeed set up actually with many parties involved in it. The Ministry of Finance is the prime mover because it is the allocator of public funds. But that is not to say that the PMO and other Ministries responsible for handing out services to the public are not involved. They are all involved in different ways and there are also a lot of inter-ministerial collaborations for which the respective KPIs would have to incorporate the different inputs as well.”
“Mr Chairman, Sir. It is not clear why if Temasek is to compete for investments, as all other investment houses, that it should be subject to different processes than the other investment houses when it comes to making decisions on investments. It is important to note that Temasek has been set up as a very separate and independent investment vehicle so as not to confuse the issues of what is strategic, what is national with what is commercial, and I think that separation is important to preserve.”
“These KPIs are set with reference to our national strategic outcomes and formulated based on best practices from other countries and international organisations. Ministries continually review these KPIs in consultation with their Government Parliamentary Committees to ensure that they remain meaningful. We employ KPIs in the same manner as many other countries do - to monitor performance and the achievement of stated outcomes. Salient KPIs are scrutinised by Cabinet, and Members of Parliament may comment on them. The Ministry of Finance also uses KPIs to engage Ministries on whether they are measuring the right things, and whether their strategic outcomes are aligned with national priorities. It serves more as a dashboard. Hence, we do not tie budgets to the meeting of KPIs. Budget should be seen as a means to good performance rather than a reward for performances. Indeed, if a KPI is not met, it could mean that the Ministry needs more resources than less. A more indepth understanding on why KPIs are not being met could then lead to more resource adjustments or programme. If there are questions on specific KPIs, Members of Parliament can raise these queries at the COS debate for the respective Ministries.”
“Third, regular evaluations are conducted by the Accountant-General's Department (AGD) on how funds have been used, whether the expenditure has produced value-for-money and whether their targeted outcomes have been achieved. Mr Singh has asked whether the Auditor-General would be able to audit Ministries effectively, given the block budgeting system. Sir, the role of the Auditor-General, as defined in the Constitution, is to audit and report on the accounts of the Government. In this role, the AGO's jurisdiction is wide-ranging and has been focusing on reviewing key financial systems and controls which are applicable, regardless of block budgeting or line budgeting. Going forward, MOF will strengthen the framework by achieving better value and performance by putting in place regular, structured reviews on how agencies are allocating public funds. And to do this, MOF will set up a Value-for-Money Review Office in the Accountant-General's Department (AGD) to expand the performance-based reviews. And as an independent party which is not involved in the budget allocation process, the AGD will provide objective observations on whether Government goals have been achieved with value for money. MOF will work with the Ministries to address any observations that may arise from these reviews. Finally, all Ministries have to submit a yearly Report Card to the Cabinet for their performance on the desired outcomes for the past year and their directions for the years ahead. I wish to thank Mr Siew Kum Hong for his interest in the KPIs or the Key Performance Indicators. I wish to add that some of the key indicators found in the Report Card to the Cabinet are actually reported in the Budget Book. Mr Siew has asked about the relevance of these KPIs.”
“The reporting requirements for purposes of accountability will, therefore, have to be different. Having a separate arrangement for setting accounting standards for private sector entities is consistent with the approach taken by other countries such as Canada, the UK and the US. Finally, Sir, let me now speak about how my Ministry will continue to pursue and enhance public sector accountability and performance. Mr Singh has asked how the Government ensures that under the block budget system, the use of public funds is aligned with the Government's objectives and national interests. Theblock budgeting system sets a ceiling for Ministries' expenditure by capping their spending as a percentage of GDP and gives Ministries the flexibility in how they can achieve their desired outcomes without having to seek approval from the MOF for every item of expenditure. Notwithstanding the discretion accorded by the block budgeting system, there are sufficient checks in place to ensure proper accountability for public funds. After the block budgets are set, MOF continues to ensure that Ministries are doing the right things and doing them right. First, the MOF meets each Ministry at least twice a year to discuss the strategic directions and the longer-term spending needs, achievements and financial management. These discussions seek to ensure that each Ministry's plans and programmes are aligned with the overall national goals and priorities. Second, not all spending is at the discretion of the individual Ministries. Significant development expenditures require approval by the Development Planning Committee (DPC) which rigorously evaluates the worthiness of each project and assesses whether its objectives are aligned with the national interest as well.”
“The Government has, therefore, decided to set up an Accounting Standards Board (ASB) that will issue accounting standards for entities not in the public sector, including companies and other entities such as charities, societies and co-operatives. The ASB will replace the current Council on Corporate Disclosure and Governance (CCDG) and will come into effect on 1st September 2007. Like the CCDG, the ASB will continue to issue accounting standards for companies, taking reference from those issued by the International Accounting Standards Board but evaluating carefully their relevance to the local context. In addition, the ASB will prescribe modifications to accounting standards to make them relevant for other non-public sector entities such as charities, co-operatives and societies. The ASB will comprise key regulators, senior accounting professionals, and leading users of financial information. This new consolidated framework for accounting standards under the ASB will enhance the credibility of financial reporting and achieve consistency in standards across the sectors. But the ASB will not replace the regulators for the various sectors, who will continue to oversee the corporate governance requirements for the entities under their purview. For instance, the Commissioner of Charities will continue to oversee corporate governance requirements for charities, while the MAS and SGX will oversee corporate governance for listed companies. For public-sector entities, like Statutory Boards, the Government will assign the Accountant-General's Department as the legal authority to set accounting standards. Statutory boards do not have public shareholders - they are instead accountable to Parliament.”
“However, we are very conscious that we should not go overboard. Elaborating on the example by Mr Inderjit Singh, we have seen how an over-zealous approach to corporate governance in the US has unwittingly imposed heavy compliance costs, reduced business flexibility, and hampered capital-raising. It is estimated that, since the introduction of the Sarbanes-Oxley Act in 2002, the cost of being a public-listed company in the US has escalated by some 100 to 200 percent and, instead of focusing on growing their companies, senior executives are increasingly distracted by legal compliance and burdened with hefty costs. The US has seen an exodus of IPOs, with smaller US companies choosing to list overseas, such as on the London Stock Exchange. Sir, we must also customise our rules to fit the context. Hence, our corporate regulatory system differentiates between listed and unlisted corporate entities. Unlisted companies typically do not raise funds from the public and, hence, some of the safeguards to protect shareholders' interests, such as the public disclosure of directors' remuneration in bands, are less relevant. And one area for further customisation and improvement is accounting standards for entities such as societies and charities. Whilst we have a proper authority to regulate accounting standards for companies, there is no similar authority when it comes to non-corporate entities such as societies and charities. Many of these entities have simply followed the Financial Reporting Standards which were drawn up primarily for commercial entities and not always suitable for their needs. We, therefore, need a more comprehensive approach to setting accounting standards for the various kinds of entities in the different sectors.”
“And this is how Temasek can develop and transform itself into a leading investment house. Sir, let me just reiterate once again that Temasek is accountable to Government as shareholder for delivering a good rate of return on its overall investment portfolio and not on each and every single investment in isolation. The Government does not influence, nor interfere with, nor micro-manage, nor second-guess any of Temasek's individual investments. And the Government's role is really to ensure that a competent board of directors is in place to guide Temasek's investments, and that the investment process is robust and rigorous. Sir, let me now move on to the issues of governance and accountability, corporate governance for commercial and non-commercial entities and the framework for driving public sector performance. Singapore's reputation on trust and governance as well as effective and efficient public service is well recognised and a key competitive advantage for us. We must continue to build on this reputation and strengthen it. First, strengthening corporate governance and disclosure standards. I agree with Mr Inderjit Singh that we must strike the right balance between having sufficient rules to protect investors' interest and keeping the compliance burden on companies reasonable. We must never make it onerous or costly for companies to operate in Singapore. In recent years, we have taken several steps to strengthen Singapore's reputation, such as launching the Council on Corporate Disclosure and Governance in 2002 which has the authority to regulate accounting standards for both listed and unlisted companies, introducing the Code of Corporate Governance and mandating all companies to comply with the prescribed accounting standards.”
“Temasek's role is still very much relevant today, in terms of delivering good long-term risk-adjusted investment returns. Temasek’s investment decisions will continue to be based on commercial considerations and guided by its four investment themes of getting exposure to: i) rising Asian economies; ii) growing middle class; iii) deepening comparative advantages; and iv) emerging champions. The issues raised by Ms Olsen have been extensively discussed in this House, specifically on the Shin Corp investment, back in November last year. If I may just recap some of the specific issues. She asked if Temasek would be selling all its shares in Shin Corp at a huge loss and what the impact would be. The Government will leave it to Temasek to make all its investment decisions based on commercial considerations. She alluded to how Temasek is going to recover some of these huge losses and what the penalties would be. Temasek manages a diversified portfolio and takes concentrated risks. Its overall investment portfolio has continued to do well, achieving commendable returns with total shareholder return of 17% by shareholder funds and 18% by shareholder value since inception. Temasek is expected to do well for Financial Year 2006 and to pay dividends to the Government as a shareholder. 2.45 pm How will Temasek be held accountable for the losses, if realised? The Government looks at Temasek's overall performance. In this respect, as I have said, Temasek is expected to do well for this year and will continue to pay dividends to Government as a shareholder. Like all professional investment companies, Temasek continues to learn from its experiences with all investment deals, whether positive or negative.”
“In 2005, the Ministry of Finance studied whether to switch to a current year basis of assessment, ie, having the employer deduct the tax payments from the employees' salaries and remitting it to the tax authorities directly. We too felt that there could be some advantages to bring about a better matching of the taxpayers' incomes and their expenditures and to enhance the effectiveness of the tax system as a fiscal stabiliser. However, the feedback from the public consultation exercise that was conducted then was not in favour of switching to a current year basis of assessment. Firstly, taxpayers had concerns over the practical difficulties in estimating their own current year's income, so as to pay their taxes upfront. There was also concern over the high compliance costs to be incurred by businesses and individuals as a result of the periodic filing and the withholding of tax required under the current year basis. The concerns are still valid. We are nonetheless prepared to reconsider this proposal should the reasons for adopting current year basis become more compelling in future. Sir, I will now move on to issues related to financial stewardship of Government's assets. Miss Olsen has asked about the role of Temasek Holdings with regard to its investments and the monitoring of performance. Temasek is Government's investment holding company. It is a long-term investor, with stakes in a broad range of companies principally in Singapore and in the region. Let me just recap to the House that its mission is to create and maximise long-term shareholder value as an active investor and shareholder of a portfolio of assets and investments. She asked if the role is still relevant today.”
“These businesses are thus able to claim their input tax against the output tax charged to customers resulting in a cash flow advantage. SMEs that face cash flow issues and have less than $1 million in annual turnover can also apply to be placed on the cash accounting scheme or, alternatively, the half-yearly accounting period. This helps alleviate the cash flow impact of extending long credit terms to their customers. Under the cash accounting scheme, businesses need only to account to IRAS for output tax on their supply when they receive payments from customers. For these businesses, they are however only entitled to claim input tax on their purchases when they have made payment to their suppliers. The one-off start-up cost of GST registration is about $3,000, which, as Mr Inderjit Singh has pointed out, is subsidised. According to IRAS' survey, the running cost per year of administering the GST system is about $1,800 for a typical SME. Only companies with revenues of more than $1 million are required to register for GST, and I think for such companies, this cost is manageable. As for GST refunds, currently, IRAS' service standard is to process GST refunds within 30 days from the receipt of the return. In practice, over 90% of the refunds are processed within eight days. IRAS will continue to shave down the processing time to make GST refunds. Going forward, IRAS will target to process and send 85% of the e-filed refunds onward to the banks by the next working day, and 90% within two working days. Sir, moving on to the current year basis of assessment, Mr Inderjit Singh has suggested that we consider switching from a present year basis to a current year basis for assessing income tax. We have indeed considered this.”
“Our GST rules are simple and exemptions sparse. This also allows GST rates to be kept low for everyone. Dr Ahmad Magad has asked whether Non-Profit Organisations (NPOs) will incur GST on their operations. Yes, they will. NPOs are treated like any business as far as GST is concerned. NPOs that make taxable supplies can register for GST and claim input tax on purchases. And as with any other business, NPOs that do not make GST-taxable supplies cannot register for GST and claim input tax. For registered NPOs that receive subsidies, some of their expenses would be defrayed by the subsidies. Hence, the input tax on these expenses will not be claimable because no GST was charged on the subsidies. Ms Jessica Tan has expressed concern over SMEs managing their cashflow with respect to the current GST filing and payment schemes. Mr Inderjit Singh has also asked about the cost of operating as a GST-registered company, as well as ways to simplify the refund process so as to reduce the cash flow burden for companies. As I have explained to the Members in this House before, let me reiterate that most GST-registered persons, some 94%, do not have difficulties in making their output GST payments to IRAS. Our GST filing and payment schedules impose a minimal cash flow burden on companies. To facilitate their own cashflow management, businesses can choose a monthly, quarterly or half-yearly accounting period. They have one month from the end of the chosen accounting period to pay the net output tax to IRAS. Businesses that pay via GIRO have an additional 15 days to do so. For businesses that buy on credit, they can claim the input tax at the time of invoicing and need not wait till they have actually made payments on their purchases.”
“Sir, GST is a tax on the final value of a good or service consumed in Singapore. This includes any duties imposed in the course of supplying these goods and services. The duty levied on petrol is a part of the final price payable for the consumption of petrol. In the same way, GST is payable on duties levied on tobacco and liquor. This is also the practice in other countries with GST or value added tax systems. Some have also asked if we should review our diesel taxes. Significant advances have been made in diesel engine technology in recent years that have made diesel cleaner. Indeed, this is why the Ministry for the Environment and Water Resources introduced the Euro IV emission standards for all types of new diesel vehicles from 1st October 2006. Euro IV diesel vehicles are less pollutive than Euro II diesel vehicles, emitting 70% less particulate matter (PM). But Euro IV diesel vehicles are still not as clean as petrol vehicles. In fact, compared to petrol vehicles, they still emit about five times more particulate matter of less than 2.5 microns in size (PM2.5) and oxides of nitrogen. This is of particular concern to us as studies have shown that PM2.5 is linked to respiratory diseases such as bronchitis and asthma. Hence, we will continue to discourage diesel passenger cars on our roads through the imposition of a diesel tax. We will continue to track the development of diesel technologies as they develop, and review our policies. Sir, let me now move on to compliance costs. A key element of a competitive and pro-enterprise tax system is to keep the cost of compliance to businesses and organisations low. This is why we have kept the GST as a broad based tax that applies to almost all goods and services consumed locally.”
“Furthermore, the SRS does not preclude employers from making private arrangements with their employees for them to make contributions to their SRS accounts. The Section 5 funds, however, remain useful as employer-based schemes, for employers to supplement the retirement savings of the employees as well as the talent retention tool. 2.30 pm Sir, let me now move on to vehicle taxes. Mr Ong Kian Min has asked for the rationale of pegging road tax to engine capacity. Road tax is a part of the vehicle ownership tax structure. We have based the road tax formula on engine capacity because we want to have a progressive tax structure. It is not unreasonable that car-owners who wish to drive higher-end performance and luxury cars, which typically have higher engine capacities, pay more road taxes. Using engine capacity is a relatively straightforward and transparent way to ensure progressivity in the road tax structure, as it is part of a vehicle's technical specification and it is also a measure which car owners are familiar with. But I agree that engine capacity is not a perfect proxy for the value of a car. But there are other vehicle ownership taxes, namely, the Additional Registration Fee (ARF) and excise duty of a vehicle, which are pegged to the Open Market Value (OMV) of a vehicle, and these take into account the differences in the market value of vehicles. The Government will continue to review the basis of road tax periodically to ensure that it remains relevant. Mr Ong has asked whether there is double taxation by imposing GST on the total cost of petrol, since there is already a duty paid on petrol. He has proposed that GST should only be imposed on the non-duty portion of the petrol price.”
“The SRS is more generous than the US' 401(k) plans which require the employee to pay income tax on the full 100% of the monies withdrawn during retirement. In the case of the SRS, only 50% of the withdrawals are taxable at retirement and, with proper streaming of the withdrawals after retirement, many people will pay little or no income tax. The SRS allows individuals to accumulate significant levels of retirement savings with tax benefits. A Singaporean or PR who contributes at the current full contribution rate of $11,475 per year, say, from age 30 to his retirement at 62, will accumulate over $620,000 of SRS savings, assuming a conservative 3% rate of return on his investments. This will be over and above his CPF savings. Sir, the SRS appeals to a narrow range of tax-paying employees. It does not appear to be running out of steam; in fact, it has grown steadily by an average of 25% per year, from 11,890 since its introduction in 2001 to 35,724 in 2006. Nonetheless, my Ministry will continue to explore other ways of enhancing and promoting the SRS to increase participation in the scheme. I thank Members for their proposals to enhance the pension funds approved under section 5 of the Income Tax Act, or Section 5 funds for short. We will examine the proposals carefully. But let me just add that, again, we must view the Section 5 funds not in isolation but within the larger context of the CPF and the SRS. In fact, with the SRS, there is less justification to provide tax advantages for the section 5 funds as well. Tax advantages are already given to the SRS which is an employee-based scheme. It provides portability - SRS savings will remain in the SRS accounts even with a change of employers.”
“In the case of assets that are still in the process of being constructed, all expenses, including interest and other borrowing costs, are classified as capital in nature because they are not incurred in the production of income. And since we do not tax capital gains, these expenses are not tax-deductible. Having said that, I should add that we will continue to review our position, taking into account business practices. Sir, our tax system also promotes savings, especially savings for retirement. With an ageing population, enhancing the retirement adequacy of Singaporeans is a major priority for Government. Dr Ahmad Magad and Miss Penny Low have asked what the Government is doing to help the middle income group save for their retirement. In particular, they have asked if it is time to review and revamp the SRS and Section 5 Pension Funds, so as to enhance the retirement savings of the middle-income segment. The tax treatment of contributions to the SRS and Section 5 Pension Funds has to be considered within the larger framework of retirement savings in Singapore. The CPF, as all Members would know, is the central component of this larger framework. The CPF helps Singaporeans save for basic retirement, homeownership and healthcare. CPF savings are given comprehensive preferential tax treatment - contributions, investment returns and withdrawals are all tax-exempt. This is more generous than most pension systems in the world. The SRS is a voluntary savings scheme on top of tax-advantaged, mandatory CPF savings. Contributions to SRS are eligible for tax relief, and investment returns are not taxed at the time of accrual.”
“Sir, as we do not tax capital gains in the first place, we cannot allow deductions for capital funds marked for overseas expansion. We agree, however, there is a stronger case for deferring tax for overseas operations that have yet to turn profitable, as this will ease the cashflow of companies. This is why we introduced the Overseas Investment Incentive (OII) scheme in 1987, and further enhanced it in 2004, to allow an approved company to defer for two years its income taxes from its profitable operations in Singapore, if its approved overseas investments incur operating losses in the first three years of investment. However, this scheme had no takers after the 2004 enhancement. The feedback we got from companies was that they did not see the tax deferment as an "incentive" since they still had to pay the taxes later. The scheme has since lapsed. However, if there is strong interest by companies in the scheme, we will be happy to re-introduce it with modifications, if need be. Mr Inderjit Singh has also asked about incentives to encourage investment activities from Singapore. Sir, we have several tax incentives to promote the fund management and venture capital industries in Singapore, including the foreign investor tax exemption incentive schemes and the venture capital fund incentive. Together with the economic agencies, MOF monitors and regularly reviews the effectiveness of these incentive schemes. My Ministry welcomes suggestions on new incentives or modification of existing ones. Mr Singh has also asked about allowing a tax deduction on borrowing cost during the start-up or construction period of an asset. Sir, our current practice is to allow deductions only for expenses associated with assets that generate an income.”