Richard Hu Tsu Tau
Singapore
“Sir, I think it is eminently fair, because the proposal really is for the Government to spend money to give shares to Singapore citizens. Either you agree or you do not agree. Or, if you agree, perhaps you consider the amounts insufficient or too much.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2001.”
“I think the Prime Minister and DPM Lee have already explained it will be based on income levels, with people living in flats as a proxy. So there is no political content in it. It depends on the income level, whether you have served national service or whether you are an elderly person.”
“I really do not understand. I know you are arguing on technicality for which I agree that you may have a point. But, nevertheless, because it is a proposal to share Singapore's surpluses with the population, the distribution is not something which you can argue against.”
“As I said, the estimates will be available around mid-October. I do not think, at this time, I want to give a specific date when the second package will be announced, but it will be done as soon as practicable. IN-PRINCIPLE AGREEMENT WITH MALAYSIA ON OUTSTANDING BILATERAL ISSUES (Assessment) 4.”
“Mr Speaker, Sir, when the $2.2 billion off-Budget package was announced in July this year, we said that the Government would do more to assist Singaporeans if the global economic situation worsened in the coming months.”
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“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. UNITED NATIONS BILL Order for Second Reading read. 1.05 pm”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2001. The additional sum has been presented as Supplementary Estimates which have been considered and approved by the House as Command Paper No. 8 of 2001. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolution." Question put, and agreed to. Resolution accordingly agreed to. SUPPLEMENTARY SUPPLY (NO. 2) BILL Order for Second Reading read.”
“I really do not understand. I know you are arguing on technicality for which I agree that you may have a point. But, nevertheless, because it is a proposal to share Singapore's surpluses with the population, the distribution is not something which you can argue against.”
“I think the Prime Minister and DPM Lee have already explained it will be based on income levels, with people living in flats as a proxy. So there is no political content in it. It depends on the income level, whether you have served national service or whether you are an elderly person. I do not see the political connection in such a distribution scheme. Do you?”
“Sir, I think it is eminently fair, because the proposal really is for the Government to spend money to give shares to Singapore citizens. Either you agree or you do not agree. Or, if you agree, perhaps you consider the amounts insufficient or too much. All other matters relating to the details of the allocation are the privilege of the Government, in much the same way you may or may not object to a tax cut. But you are in no position to query what the form of the tax cut should take. That is the prerogative of the Government.”
“At the end of the 5-year period, any person who has not cashed in any of the shares will get the full principal plus the interest accumulated. On the second question of the $200 million, it is the money given to the Community Assistance Fund (CAF). Let me explain what the Community Assistance Fund is. The Community Assistance Fund was formed by the pooling of two charitable funds, ie, the 25th Anniversary Endowment Fund and the Silver Jubilee Fund in the year 2000. The CAF funds the following financial schemes: special grants; rents and utilities assistance scheme, interim financial assistance schemes, centre-based financial assistance schemes for back-to-work childcare schemes, and other approved voluntary programmes for low income individuals. These schemes are administered by the Community Development Councils which act as one-stop agencies to administer social assistance. A Board of Trustees appointed by the Ministry of Community Development and Sports decides on the allocation policies and budget for the financial assistance expenditures. A committee of management headed by the People's Association, with representatives from all CDCs and National Council of Social Services, allocates the budget to each CDC and voluntary welfare organisation. The CAF's principal currently stands at $43 million, plus the $200 million grant, which is the subject of today's approval. The principal sum will be invested by professional fund managers to generate an annual income of approximately $5 million to fund all these financial schemes. The requirement for the CAF will be reviewed in 2005.”
“Sir, on the first question asked, on the adequacy of the notice, I think the Standing Order requirements have been met. If the hon. Member needs any further elaboration, he should address this to the Leader of the House. This is not my responsibility. The second question is on the New Singapore Shares - how many shares will be allocated - and Mr Low also wants to know why Parliament is asked to approve the sum of money without details being known. I can only suggest that this is a giveaway scheme. Where money is being given, unless you are objecting to the principle of giving New Singapore Shares to citizens, I do not see how this question is relevant. As to how many shares will be given, this will be announced by me at the Ministry of Finance tomorrow at a press conference at 9.00 am, in which all the details will be released. The principle is to allocate qualifying citizens with New Singapore Shares amounting to between 200 shares per individual, up to 1,700 shares per individual. Those who are in the lower income groups and elderly persons will get somewhat more shares; those who have served National Service will get more shares. Of course, the lower sum of $200 will apply to those who are in the higher income groups. I can give Mr Low a categorical assurance that there is no political link. All residents who qualify within Hougang constituency will receive their fair share. As to the value of these shares in the year 2007, I cannot give him a fixed figure because it depends on the basic interest rate, which is fixed at 3% per year, plus the real GDP growth rate of the preceding year. So, I do not know what the GDP growth rates will be in the year 2002, 2003, etc. But it will certainly be more than the principal sum, plus 3% per annum.”
“That this Parliament, in accordance with section 3(1) of the Local Treasury Bills Act (Chapter 167, 1988 Revised Edition), resolves that the Minister for Finance be authorised to borrow, by the issue of Treasury bills in Singapore, a revolving sum not exceeding twenty thousand million Singapore dollars (S$20,000,000,000). ADJOURNMENT TO A DATE TO BE FIXED Resolved, "That, at its rising today, Parliament do now adjourn to a date to be fixed." - [Mr Wong Kan Seng]. ADJOURNMENT MOTION”
“Mr Speaker, Sir, I beg to move, That this Parliament, in accordance with section 3(1) of the Local Treasury Bills Act (Chapter 167, 1988 Revised Edition), resolves that the Minister for Finance be authorised to borrow, by the issue of Treasury bills in Singapore, a revolving sum not exceeding twenty thousand million Singapore dollars (S$20,000,000,000). Sir, on 4th May 1999, Parliament resolved, in accordance with section 3(1) of the Local Treasury Bills Act (Chapter 167), that the Minister for Finance be authorised to borrow, by the issue of Treasury bills in Singapore, a revolving sum not exceeding S$15 billion. This limit applies to the outstanding amount of Treasury bills. The demand for Treasury bills has grown rapidly in the past two years due to an expansion of banks' liabilities base. The outstanding amount of Treasury bills issued as at end-July 2001 amounted to S$14.6 billion. The banks' liabilities base is expected to continue to expand over the next few years, thus increasing their demand for Treasury bills as liquid assets. In addition, MAS' efforts to increase the issuance of Treasury bills to support capital market development have also contributed to the need to increase the borrowing limit for Treasury bills. It is proposed, therefore, that the current ceiling for borrowing by Treasury bills of S$15 billion, be raised by another S$5 billion to a total of S$20 billion. Parliament is requested to enable the Government to issue the Treasury bills up to a total amount not exceeding S$20 billion. Question put, and agreed to.”
“BG Lee Hsien Loong: Mr Speaker, Sir, since we do not track all of the individual contracts for consultants, I do not have a total tally.”
“I have said that several times. I do not know why he needs elaboration. FOREIGN CONSULTANTS TO GOVERNMENT AND/OR STATUTORY BOARDS (Number and fees paid) 10. Mr Chiam See Tong asked the Prime Minister for the period from 1997 to the present date, (a) how many foreign consultants have the Government and/or statutory boards consulted; and (b) what were the fees paid to them. BG Lee Hsien Loong (for the Prime Minister): Mr Speaker, Sir, the Government is constantly grappling with new, complex issues in a rapidly changing environment. Ministries and statutory boards engage external consultants when they lack internal expertise and experience in these new issues, or when an external view will be helpful. External consultants can bring knowledge of best practices from all over the world. In some cases, such as the liberalisation of the telecommunications and power industries, external consultants have acquired considerable proprietary expert knowledge, gained from having worked on similar projects in other countries. They can therefore provide valuable inputs to Government agencies formulating policies to meet our needs and conditions. However, the Government does not track how many external consultants Ministries or statutory boards engage, or how many of these consultants are foreign. Government agencies make no distinction between local or foreign consultants. Consultancy contracts are awarded to the vendor who is best qualified to do the job and offers the best value for money, usually through an open tender. Consulting firms typically work in teams which include both foreigners and Singaporeans, based on their individual competencies and what is needed to deliver the job. Mr Chiam See Tong: Sir, the key part of my Question has not been answered.”
“I thought I had answered that question. I said that we should accumulate as much as we can afford above the seven months, because of our great dependency on imports. We have no natural resources whatsoever. If there should be a prolonged downturn, then I think every cent we put aside would become very useful. There is no limit. We are talking about putting aside as much as we can without affecting our ability to finance our needs and without taxing the people unnecessarily.”
“I was talking about US$75 billion. This is probably equivalent to your figure in Singapore dollars.”
“Who publishes it? Singapore dollars probably. Mr Chiam See Tong: Yes, Singapore dollars.”
“I do not know where you get such a figure.”
“The circumstances would probably be what we are facing now. The reserves would be available for use if there should be a major economic dislocation in the world affecting us. The size of that is not something we can pre-determine but it is a bulwark which we can fall back on. I can assure the Member that it is not the intention to lock up our reserves permanently but it should be used with discretion and care.”
“Budget surpluses only account for part of it. Our land sales are also transferred to reserves. That is the other large component.”
“Part of it, yes, of course, those which we have not spent. When we have surpluses beyond what we need, during times of good economic growth, this will be added to our reserves for a rainy day.”
“I am afraid Mr Chiam is mistaken. The upgrading programme was funded from surpluses. And when the surplus moves up and down, the programme will be adjusted accordingly.”
“Other reasons have already been said in the past. The Senior Minister had said, when asked questions about the assets managed by GIC, that Singapore needs large reserves to defend our currency against speculative attacks.”
“Mr Speaker, Sir, this question has been asked several times in the past, but let me explain again the Government's policy on reserves. It is generally accepted internationally that countries should have foreign hard currency reserves of between three to six months of imports. Depending on a country's degree of economic self-sufficiency, reserves at these levels should be sufficient to support a temporary dislocation in the country's economy. In the case of Singapore, with its high dependency on imports, our level of reserves should clearly be in the upper bound of the three to six months' range and more, if possible. Our current official foreign reserves of around US$75 billion is equivalent to about seven months of imports. However, as a country without natural resources, our aim should be to accumulate, over time, as much reserves as we can afford to do so without over-taxing our people and without denying ourselves the expenditures necessary for economic growth. Over the years, Mr Chiam will have noted, Government has lowered personal, corporate and property taxes substantially in order to stimulate growth. At the same time, the Government has spent many billions of dollars to build up world class infrastructures in health, education, housing and transportation. I should also point out that our reserves cannot be allowed to remain static. It must increase in line with our GDP growth. As our population grows and our standard of living increases with economic growth, so will our imports grow.”
“As I said, the estimates will be available around mid-October. I do not think, at this time, I want to give a specific date when the second package will be announced, but it will be done as soon as practicable. IN-PRINCIPLE AGREEMENT WITH MALAYSIA ON OUTSTANDING BILATERAL ISSUES (Assessment) 4. Mr Inderjit Singh asked the Prime Minister whether Singapore got a fair deal out of the recent agreement with Malaysia on the outstanding bilateral issues. 5. Mr Noris Ong Chin Guan asked the Prime Minister if he will give an assessment of the recent in-principle agreement with Malaysia, announced by the Senior Minister and the Malaysian Prime Minister. 6. Mr Tay Beng Chuan asked the Prime Minister when will the price increase to 45 sen per 1,000 gallons for the purchase of raw water from Malaysia take effect and whether it will significantly affect the retail price of water in Singapore.”
“Mr Speaker, Sir, when the $2.2 billion off-Budget package was announced in July this year, we said that the Government would do more to assist Singaporeans if the global economic situation worsened in the coming months. In the intervening months, leading indicators suggest that the economy has worsened further and it is likely that the third quarter results will be substantially weaker. The Minister for Trade and Industry has also noted that the events in the United States due to terrorist attacks would depress the global economy further. So the outlook is pretty gloomy. Government has therefore been working on a second, more substantial, off-Budget package, which will be finalised when the third quarter results are known around mid-October. At that time, the full impact of the terrorist attacks on the US and its impact on our economy will be clearer.”
“Finally, I would like to thank Mr Leong again for his comments and ideas. But as SRS has just been introduced, we will monitor its progress and if improvements are warranted they would be introduced when appropriate. 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. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed. OFFICIAL SECRETS (AMENDMENT) BILL Order for Second Reading read.”
“The 50% tax concession on withdrawals is, therefore, very attractive considering that a retiree's tax rate is likely to be lower than his normal terminal salary due to a reduction in his income after retirement. A retiree also has the option to spread out his withdrawals over 10 years after retirement to further lower his tax liability. Allowing SRS withdrawals to be fully tax-exempt would make the SRS scheme a completely tax-exempt scheme like the CPF scheme. This would be too generous. If it is allowed, the Government would indeed be seen to be favouring higher income persons. Mr Leong believes that the age limit of 62 should not be imposed on participation in SRS. He suggests that the age cap be lifted. The Government, in deciding the age limit for participation in SRS, had to weigh the desire of those who want to withdraw their SRS savings as early as possible, with the accompanying tax benefits, against those who want to contribute to the SRS for as long as they wish. A fair solution is, therefore, to peg the age limit to the prevailing statutory retirement age currently at 62. This means that beyond 62, the SRS account will be closed to contributions but the SRS savings will be freely withdrawable without penalty and would enjoy a concession of being taxed only on 50% of the sum withdrawn. I do not think the moratorium proposal as suggested by Mr Leong would be a satisfactory solution. The date on which SRS participants can start withdrawing their savings is also the date the new contributions would stop. Otherwise, as Mr Leong has noted, the possibility of round tripping could arise. I would like to point out that the age limit for participation in the SRS would rise over time along with any rise in the statutory retirement age in the future.”
“There is, therefore, no need for Government to dictate or encourage employers to pay part of the wages in the form of SRS contributions. Mr Leong is also concerned that the higher contribution cap allowed for foreigners in the SRS would be seen as discriminatory against Singaporeans. He suggests that the same cap be applied to both Singaporeans and foreigners alike. I would point out that it is not true that Singaporeans are treated less favourably. Foreigners are allowed a higher percentage cap on their SRS contributions because they are not permitted to participate in the CPF scheme and therefore do not enjoy the tax benefits of the CPF contributions. Singaporeans and PRs who contribute towards both CPF and SRS will, in fact, enjoy tax reliefs of up to 51% of their gross income, subject to a cap of $6,000 per month. This is, therefore, more favourable than the 35% SRS tax relief, subject to the same cap, enjoyed by foreigners. One of the reasons why foreigners are allowed to participate in the SRS scheme was because when the CPF scheme was removed from them, there was concern that the lack of a retirement scheme might discourage foreign talents from working in Singapore. The SRS was introduced to offset that change. Mr Leong also suggests that Government should be more generous and allow SRS withdrawals to be fully tax-exempt, instead of enjoying the tax benefit of about 50%. I believe that our SRS provisions are already very generous. Firstly, we have allowed tax relief to SRS contributions. We also allow investment income, except for dividends, to accumulate tax-free and subject only 50% of the savings withdrawn from SRS to tax, even though in the normal tax deferral scheme, usually the entire sum withdrawn is fully taxed.”
“Mr Leong has made several proposals for changes to the SRS scheme and I will respond to them in turn. First, he says that the structure of the SRS scheme seems to favour the higher income persons. I would like to assure him that this is not so. I think Mr Leong misunderstands the intent of the SRS scheme. Let me explain. To begin with, I have to stress that SRS is a supplementary savings scheme and not an enhancement of the basic CPF scheme. The CPF is the primary scheme for retirement savings. At the long-term CPF contribution rate of 40%, a typical Singaporean's CPF savings provide individuals with a reasonable monthly retirement income in addition to a fully paid-up home of his own, all paid from CPF savings plus additional monies for his medical needs. However, the contributions towards CPF are capped at a salary of $6,000 a month. This means that earnings beyond this amount will not enjoy tax-free status for savings under the basic CPF scheme. Thus, the SRS scheme has been set up to allow those who wish to increase their retirement savings beyond what is allowed under the CPF scheme to do so. The SRS will allow them to supplement their CPF savings, but on a tax-deferrable and not a tax-exempt basis. Mr Leong also suggests that employers should be allowed to contribute to the SRS. I do not think this will be a wise proposal. Singapore already has an employee and employer scheme in the CPF, totalling 40%. Allowing employers to make contributions to SRS would put further pressure on them to contribute beyond 20% and thus raise their business cost. SRS is structured as a voluntary scheme and any individual can choose to place part of his earned income in SRS up to the prescribed cap.”
“The main tax benefits are: contributions to the SRS will be tax deductible, investment returns with the exception of dividends will accumulate tax-free, and only 50% of the withdrawals from an SRS account at retirement will be taxable. Clauses 2, 3, 7, 8(a), 14, 19 to 22 and 29 amend the Act for these purposes. Mr Deputy Speaker, Sir, I commend the Bill to the House. Sir, I beg to move. Question proposed.”
“With the implementation of the baby bonus and paid Third Child Maternity Leave, the Government has also decided that the amount of further tax rebate granted in respect of third and fourth child born on or after 1st April 2001 be subject to a cap of $20,000 and $40,000 respectively. Clauses 3(b) and 24 amend the relevant sections of the Act for this purpose. Singapore Exchange The Income Tax Act has been amended last year to provide for Singapore Exchange Derivatives Trading Limited, which took over the activities of the former SIMEX, to continue to enjoy tax exemption until 2003. Since October last year, certain functions of the above company had been transferred to the Singapore Exchange Derivatives Clearing Limited. Clause 8(b) amends the Act to provide for tax exemption on the prescribed income derived by the Singapore Exchange Derivatives Clearing Limited from the commencement of its business up to 31st December 2003. Additionally, the Act is amended to provide exemption of dividends paid out of those exempt income derived by the Singapore Exchange Derivatives Clearing Limited, subject to certain conditions. Clause 11 amends the relevant section of the Act for this purpose. Annual Limits of General Provisions Made by Finance Companies In 1999, the Government decided to temporarily suspend the annual limits of general provisions made by finance companies for a period of two years. As the two years have passed, clause 13 amends the relevant section of the Act to reinstate these annual limits. The Supplementary Retirement Scheme (SRS) Finally, the last change pertains to the Supplementary Retirement Scheme (SRS). This scheme encourages Singaporeans to save voluntarily over and above their CPF savings by allowing a range of tax benefits.”
“Buyback of Preference shares This amendment will make the tax treatment for buyback of preference shares the same as the existing tax treatment for the redemption of preference shares. The company will be regarded as distributing dividends to the shareholders from whom the shares are acquired, but the shareholder will not get a tax credit attached to the payment from the company. Clauses 4 to 7 amend the relevant sections of the Act for this purpose. Interest Income from POSBank Following the merger of POSBank and DBS Bank, the Government had announced that tax exemption on all interest income from POSBank savings deposits will continue until 31st December 2001. Tax exemption would apply only to the first $100,000 balance of each POSBank savings account-holder from 1st January 2002 to 31st December 2004. Before the merger, interest income received from POSBank savings deposits was tax-exempt. The phasing out of tax exemption was to give DBS Bank time to restructure POSBank's assets to yield higher returns, so that it can offer POSBank depositors deposit rates that are comparable with those offered by other commercial banks. Clause 8(c) amends the relevant section of the Act for this purpose. Third Child Maternity Leave Payment In his National Day Rally Speech, the Prime Minister announced that Third Child Maternity leave will allow working mothers to take time off to bond with their new-born baby without suffering a loss of wages. Third Child Maternity Leave payments will be treated as earned income for tax purposes.”
“e) To encourage self-employed persons to save more for their retirement by voluntarily contributing more to their CPF accounts, I announced an increase in the tax exemption limit for CPF contributions made by the self-employed such that self-employed persons will basically receive the same tax benefits from the CPF scheme as both employer and employee combined. This is currently 36% of their income, or $25,920, whichever is lower. Clauses 12 and 19 amend the Act for this purpose. f) To motivate employees to greater innovation and enterprise, a new tax exemption scheme for employee stock options, the Company Stock Option scheme was introduced. Clauses 10 and 11 amend the Act for this purpose. g) To encourage greater philanthropy, donations to Institutions of a Public Character of shares that are listed on the SGX as well as unit trusts that are readily tradable in Singapore will be made tax deductible. Clause 18 amends the Act for this purpose. Tax Changes Not Announced in the 2001 Budget Statement I shall now move on to tax changes not announced in the 2001 Budget Statement. Proceeds from the Disposal of Assets Held by Charities Currently, the Government grants tax exemption on the income of a charity if it spends at least 80% of its income and donations on charitable activities in Singapore. Proceeds from the disposal of assets are, however, not subject to the 80% spending rule. To correct this anomaly, clause 11 amends the Act to ensure that all receipts, including proceeds from the disposal of assets of a charity, will be subject to the 80% spending rule with effect from 1st June 2001.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill 2001 seeks to give legislative effect to the income tax changes that I announced in this year's Budget Statement. I have also taken the opportunity to incorporate seven other amendments to the Income Tax Act. Tax Changes Announced in the 2001 Budget Statement I shall begin with the tax changes announced in the 2001 Budget Statement. They are as follows: a) To help us maintain our tax competitiveness and lower the tax burden of businesses, a new corporate tax regime will be introduced from the Year of Assessment 2002. There are two components to this: (i) a reduction of the corporate income tax rate by one percentage point to 24.5%; and (ii) a tax exemption scheme for companies whereby three-quarters of up to the first $10,000 of a company's chargeable income, and one-half of up to the next $90,000 will be exempt from corporate tax. Clauses 17, 23 and 25 to 30 amend the Act to provide for these changes. b) To reduce the tax burden of individuals, as well as to reward individual effort and enterprise, individual income tax rates will be reduced by between two and five percentage points. Clause 31 amends the Act for this purpose. c) Because of the good performance of the economy in 2000, I had announced a one-off, across-the-board rebate of 10% on individual income tax to share the budget surplus. Clause 32 amends the Act for this purpose. d) To encourage businesses to make the best use of technology, a tax write-down of allowances over a 5-year period has been granted for certain capital expenditure incurred to acquire approved intellectual property rights. Clause 15 amends the Act for this purpose.”
“In deciding the age limit for participation in the SRS, the Government has to weigh the desire of those who want to withdraw their SRS savings as early as possible with the tax benefits, against those who want to contribute to the SRS for as long as they wish. A fair solution is to peg the age limit to the prevailing statutory retirement age, currently 62. This means that beyond age 62, the SRS account will be closed to contributions but the SRS savings will be freely withdrawable without penalty, and will enjoy the concession of being taxed only on 50% of the sum withdrawn. The date on which SRS participants can start withdrawing their SRS savings is also the date new contributions will stop. Otherwise there will be "round-tripping" simply for the purpose of gaining the tax benefits without subjecting the contributions to the investment risks which justified the 50% tax concession on sums withdrawn. The age limit for participating in SRS will rise along with any rise in the statutory retirement age in the future. The SRS has just been introduced. The Government is monitoring its progress, and will introduce improvements as and when appropriate. If the age limit for contributions is subsequently adjusted to go beyond the statutory retirement age, the contributions may have to be subject to a minimum period before they may be withdrawn with tax concessions. SAFETY OF THE ELDERLY 4. Mdm Claire Chiang See Ngoh asked the Minister for Home Affairs, in view of the vulnerability of elderly persons to physical assaults and robbery by strangers in lonely public places, what more can his Ministry do to safeguard the safety of the elderly in Singapore.”
“The Government is monitoring the economy very closely. The Minister for Trade and Industry has informed the House that the Government would announce at the end of this month specific measures to cushion the impact of the downturn on companies and workers. SUPPLEMENTARY RETIREMENT SCHEME 3. Mr Tay Beng Chuan asked the Minister for Finance whether his Ministry will consider removing the age limit of 62 years for workers to qualify for participation in the Supplementary Retirement Scheme (SRS) as long as they continue to work.”
“Deputy Prime Minister Lee Hsien Loong, in his Ministerial statement on "Civil Service NWC Award, Public Sector Salary Revisions and Review of Salary Benchmarks" in Parliament on 29th June 2000, and in the two-day debate that followed, announced and explained the new salary structure and benchmarks for the Administrative Service, Political and Statutory Appointment Holders. He also gave the monthly and annual salaries of key political appointment levels (eg, Prime Minister, Ministerial Range 3 and Ministerial Range 4). The individual remuneration packages of Cabinet Ministers, Ministers of State and Parliamentary Secretaries for the year 2000 were determined by the Prime Minister in accordance with this Ministerial statement. They constitute confidential information that it would not be appropriate to publish. However, the total amounts paid out to Ministers and Ministers of State in Financial Year 2000 were given in the reply to Mr Jeyaretnam's earlier Parliamentary question on 19th April 2001.”
“I think the Member has to file a separate question. I do not know the identity of that particular property. I have to inquire into the valuations of that particular row of properties affected. FOREIGN LORRY OPERATORS OR TRADERS (Transportation of products via Woodlands/Tuas Checkpoints) 9. Mr Tay Beng Chuan asked the Minister for Trade and Industry whether the Government should allow foreign lorry operators or traders to transport all kinds of products, including perishable items such as fruits and vegetables, via the Woodlands or Tuas checkpoints into Singapore for direct sale or distribution to customers and, if not, whether any action has been taken to prevent such practices from being increasingly adopted by foreigners. The Senior Parliamentary Secretary to the Minister for Trade and Industry (Mr Tang Guan Seng) (for the Minister for Trade and Industry): Mr Speaker, Sir, Singapore is a small nation that is highly dependent on trade. Our trade is three times our GDP. Goods flow almost totally tariff free into Singapore. They are consumed in Singapore, or are further processed before being exported to the rest of the world. Our free trade policy therefore allows companies to source for inputs at competitive rates. Consumers also benefit from being able to buy a wide variety of goods, including fruits and vegetables, at competitive prices. Our current laws do not prohibit foreign lorry operators or traders from transporting goods for direct sale to wholesalers or retailers in Singapore. These foreign operators must however abide by various rules. To illustrate, they must pay GST for the goods they sell; and for perishable items such as fruits and vegetables, they are subject to AVA rules.”
“Is the Member referring to a particular property?”
“Sir, the annual value of a property is derived from the market rental value of the property taking into account the state and physical condition of the property at the time of review. The annual values of some properties may not move in tandem with the general movement in property values. For example, the property might have undergone some improvements or there could be an improvement in rents due to local factors or due to policy or law changes such as the abolition of rent control, therefore affecting the rental value of that property, which will then be reflected in upward revision of the annual value. In FY98 and FY99, the percentage of the total stock of properties that had a downward revision in annual values was 21% and 7% respectively. A total of 2% have their annual values reviewed upwards in FY98 and FY99. For FY2000, about 4% of the total stock of properties have had an upward revision in their annual values. Most were due to additions and alterations to the properties, therefore enhancing their rental values. 1% had a downward revision and 95% had experienced no change to their annual values. For owners who are dissatisfied with their annual value revisions, there is an appeals process, where those who disagree with the revaluations proposed by the Chief Assessor can submit their cases, and the appeals can finally go to a Valuation Review Board. The Valuation Review Board is an independent tribunal established to adjudicate disputes between taxpayers and the Inland Revenue Authority. It comprises members with no connection with IRAS and who are professionals in the field.”
“Indeed, there are two parts to this petrol tank rule. One is to set the price high enough to discourage excessive use of cars. In the process, of course, Government gains revenue. And I can assure Members that the revenue gained is not insignificant. In fiscal year 2000, petrol duties collected were $500 million. So if we lifted the three-quarter tank rule, based on the average of 3.4 million cars which crossed into Johor Baru last year, the estimated loss in tax for 95 octane petrol - based on the assumption that an average 1.6 litre car would be able to buy, say, 50 litres of petrol - would be in the region of $80 million, and this is not peanuts. ANNUAL VALUES OF PROPERTY (Rationale for upward revision) 8. Mr Goh Chong Chia asked the Minister for Finance if he will explain the rationale for the Inland Revenue Authority of Singapore revising the annual values of property upwards at this point in time despite the fact that there has been a general decline in property values.”
“I think this is the nature of retail oil in a country like Singapore, where the oil business is dominated by major companies who have very long supply lines. If you are operating a retail outlet in the United States, the situation is quite different because the US has many independent oil producers with widely varying oil production costs, and that allows them to have different pricing structures. I hope I have explained the matter.”
“It has got to be shipped 10,000 miles, through a long supply chain, to a refinery. It may be three months before crude purchased at higher prices would actually reach the pump. So a lag is inevitable. The reverse works the same way. If prices of crude fall, the lower crude price will not be reflected in the pump price until after a lag. So these lags must occur because of the nature of the supply chain. In the second paragraph, MTI has said that it "has found no evidence of price fixing by the oil companies. Because the industry structure is oligopolistic, . price movement tends to be sticky and the companies prefer to compete on free gifts and loyalty benefits." Generally, in the market of this sort where you have a few major producers or retailers of petrol, prices tend to equate largely because the cost of producing a litre of petrol nowadays is not very different between one company and another. The difference is quite small. Companies are all equally large, they buy crude from the same people, their refinery costs are not significantly different, shipping costs are not significantly different, they tender for their sites in Singapore, so their retail costs are not that different. So in the end, differences in pump prices will not be very large. That being the case, the market leader who has the largest network of retail sites would probably have the lowest unit cost. Therefore, he sets the price and he becomes the market leader. The other companies who have comparable retail prices would then just follow the leader. If they try to compete by slashing price directly, I think, in the end, they would not succeed.”
“I think this is a very sensitive subject. We understand his concern. But petrol stations are sited by the Ministry of National Development in places where they do not disrupt the environment, and are tendered out. So that, in some way, fixes the cost of retailing petrol. The proposal to set up "white sites" would allow more non-major oil companies, presumably, to set up petrol retailing sites, although where they would buy the raw petrol from, I am not clear, because we are not a country which is near major sources of refined products. The only suppliers of petroleum here are the major oil companies. So unless you are proposing to import finished fuel directly from the Middle-East, then you are really going to find it very difficult to compete. On the issue of price-fixing and cartel procedure, the Minister for Trade and Industry had, in fact, addressed this particular problem, in response to a series of questions in January this year when Dr Teo Ho Pin asked him what measures could be taken to address the apparent oligopolistic behaviour of oil companies in Singapore. And he had given a very comprehensive answer. I would refer Mr Tay to read the details in the Hansard. But I would just quote briefly from his first paragraph: `MTI's study shows that petrol pump prices have moved in tandem with crude oil prices in the past, but with a time lag.' In fact, petrol pump prices generally move with crude prices after a lag, both upwards and downwards. In other words, if crude oil prices move up, petrol pump prices will not move up simultaneously but with a pronounced lag, and the reason for this is quite clear if you look into how petroleum products are produced. Crude oil is bought in the Middle-East from OPEC producers.”
“I am afraid that is not possible. If you look at the difference in price, there is no way, even if we remove all duties in Singapore, for the Singapore oil companies to compete with the price in Johor largely because Johor petrol prices are fixed by the government at a level which they believe they want to sustain in a country which not only produces petroleum on its own but has a large car population which they want to promote. So I do not think it is feasible.”
“I am afraid I do not follow this logic at all. I think Mr Tay might want to explain to us in detail how this particular mechanism will work.”
“Sir, the reason why the half-tank rule was changed to the three-quarter tank rule was because the half-tank rule was manifestly inadequate to achieve the purpose which we have set out to do. There was still considerable leakage due to motorists leaving their tanks half full and filling up in Johor. Bearing in mind the very large differential in price between Johor and Singapore, the half-tank rule would not have been effective. I do not see the direct correlation between high duty price and the oil companies' prices, which are set independently of the level of Government duties.”
“Mr Speaker, Sir, the three-quarter tank rule was introduced to ensure that cheaper petrol in Johor would not undermine our use of petrol duties to curb vehicle usage and limit traffic congestion in Singapore. It is therefore not appropriate to suspend the three-quarter tank rule on account of higher petrol prices in Singapore. The Minister for Trade and Industry had informed the House in January this year that his Ministry is studying how more competition can be introduced into the petrol retail business and is working with the Ministry of National Development to study the feasibility of allowing 'white pump' sites to dispense petrol without compromising on fire safety and environmental requirements.”
“The CPF balances are managed by the Government through a mechanism in which the net surpluses of the CPF are acquired by Government through the issue of long-term Government bonds to the CPF Board. These long-term Government bonds guarantee an interest yield to CPF which is then passed on through their internal mechanism to CPF members. The Government investments, which will be clarified later on, have been profitable over the years and I think this is clearly reflected in the substantial increase in the total size of our reserves over the last 10-20 years. So there is no risk whatsoever that any single and relatively small investment setback encountered by a particular GLC would have any impact whatsoever on the viability of CPF funds. This is quite assured. DEATHS CAUSED BY MENINGOCOCCAL INFECTION 4. Dr Lily Neo asked the Minister for Health (a) whether he will comment on the two recent deaths in Singapore due to meningococcal infection as a result of close contact with pilgrims from Mecca; (b) how many such infections were there in Singapore over the past two years from 1999 - 2000; and (c) whether he expects an increase in the incidence of meningococcal infection due to the W135 strain.”
“Not all overseas investments will yield immediate benefits but it is a direction which all the larger GLCs will have to take if they are to participate in an increasingly globalised economy.”
“We have announced that it is our policy to try and divest as much as possible of Government's holdings in established companies which are ready to be sold to the public. Generally, the preferred way of doing this is through the public listing of shares. I do not think we have deviated from this policy for many years. The problem is that some of these companies are so large that placing of the shares in large amounts would destabilise the market. So we have to do it gradually. I do not think there is any change from our traditional policy. OVERSEAS INVESTMENTS OF GOVERNMENT AND GOVERNMENT-LINKED ORGANISATIONS (Performance) 3. Mr Thomas Thomas asked the Minister for Finance if he will give an evaluation of the performance of overseas investments made by Government and Government-linked organisations, particularly its performance since the 1997 Asian currency crisis. Dr Richard Hu Tsu Tau: Mr Speaker, Sir, the Government's overseas investments are managed by the Government of Singapore Investment Corporation or GIC. As Mr J B Jeyaretnam has raised a query on GIC in Question No. 11, I suggest Mr Thomas Thomas awaits Government's response later in Question Time. As to the GLCs overseen by Temasek Holdings, most of the larger companies would have made investments overseas in order to seek growth outside the constraints of the small Singapore market. Several are publicly listed companies and their overseas investments have been well publicised. As I have explained in my response to the questions on SingTel's and DBS Bank's acquisitions, the GLCs operate strictly on a commercial basis. The Government does not interfere in their business decisions, which are the responsibility of their boards of directors.”