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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“The Bill also proposes liberalisation of existing provisions to: (a) relax the requirement on banks to publish their financial accounts in newspapers; (b) exempt banks with a small portfolio of Singapore dollar loans from complying with the substantial loans limit; and (c) lift banking secrecy to facilitate head office supervision of their Singapore branches and for other purposes. Let me now explain in more detail the major provisions of the Bill. The first major group of amendments proposed in the Bill concerns the capital requirements of banks. These appear in clause 3 of the Bill. Since 1970, local banks have been subject to a minimum paid-up capital requirement of S$3 million. This amount is now grossly inadequate. Total assets of local banks have increased to S$111 billion as at the end of 1992, a growth of more than 300% over the past decade. Capital funds of these banks have also increased substantially through retained earnings as well as through new equity raised from the capital market. To reflect the growth of the banking business, it is therefore proposed that existing local banks be required to have minimum capital funds of S$800 million. Banks with capital funds below this level will be given five years to comply. Subsidiary banks of local banks will be given a longer period to meet the requirement if their parent banks are already able to comply with the new capital requirement. Generally, local banks are able to meet the new capital requirement. The Bill also proposes that new locally-incorporated banks would be required to have a minimum paid-up capital of S$800 million. The reason for using paid-up capital is because such banks would not have any retained earnings or general reserves.”
“The BIS has also issued guidelines to enhance coordination among national bank regulators in supervising cross border activities of banks. We must adjust our financial regulations to keep pace with developments in international financial markets. It is therefore timely to review the Banking Act to ensure that the financial sector is able to cope with new risks as well as changes in the structure of financial markets. New provisions are required to improve bank supervision without stifling growth. At the same time, certain rules will be liberalised without compromising prudential standards. These proposals were finalised after extensive discussion with the Association of Banks in Singapore and the local and foreign banks. With these introductory remarks, I will now deal with the main provisions of the Bill. The main proposals in the Bill, in general terms, will: (a) increase the capital requirements for banks in order to strengthen their financial position; (b) tighten prudential requirements on single customer limit and unsecured loans to related parties; (c) lift banking secrecy to facilitate investigations under the Drug Trafficking (Confiscation of Benefits) Act; (d) allow the Monetary Authority of Singapore (MAS) to regulate the issue and operation of pre-paid stored value cards; (e) remove exemptions granted to DBS Bank from complying with certain prudential requirements under the Act; and (f) facilitate the merger of a bank with its wholly-owned subsidiary banks.”
“In the last decade, financial deregulation and technological developments have resulted in tremendous changes to the structure of international financial markets. Firstly, globalisation has led to the interlinking of the world's financial markets. Disturbances in one market are now rapidly transmitted to other markets. This was amply demonstrated in the 1987 stock market crash when a sharp 508-point drop in the US Dow Jones Industrial Average Index triggered similar falls in major stock markets around the world. Indeed, the Singapore stock market suffered an even larger fall of 31% compared to the 22.6% drop in the US stock market during the October 1987 crash. Secondly, the world of finance has grown increasingly complex, as reflected in the increased use of sophisticated financial derivative instruments such as swaps, options and futures. The volume of outstanding interest rate and currency swaps is estimated by the Bank of International Settlements (BIS) to be US$3.9 trillion as at the end of 1991. The proliferation of such derivatives has resulted in new sources of risks which financial institutions must learn to manage. The interlinkage of financial markets has raised concern over systemic risks in the international financial system. Regulators recognise the need to strengthen supervision of banks and improve international coordination of regulation in order to avoid a systemic collapse of the global financial system. One result of such efforts was the recommendation of the BIS to require international banks to adhere to common minimum capital adequacy standards. This is to ensure that banks are adequately capitalised in relation to the size of their business.”
“Immediately after the LDC debt crisis, banks in several industrialised countries again encountered problems as a result of imprudent lending for speculation in the property and stock markets in the late 1980s. They suffered huge losses when property and stock markets declined sharply as their economies went into recession. In a number of countries governments had to spend large amounts of taxpayers' moneys in bailing out insolvent banks in order to preserve the integrity of their financial systems. In some countries, financial crises have developed because lax supervision allowed fraud and mismanagement to be left unchecked. A prominent example is the collapse of the Bank of Credit and Commerce International (BCCI) in 1991 which led to large losses for depositors and triggered a crisis of public confidence in some banking systems. Against this background of international financial instability, the growth of the financial market in Singapore over the past decade has been achieved with high standards of financial soundness. We have been able to avoid many of the scandals and crises that have plagued other financial markets, and have established a reputation as a properly regulated financial centre. Financial business depends critically on the confidence and trust of investors and depositors in the soundness and reputation of the institutions they deal with. Without such confidence and trust, it would be difficult for any financial market to gain international prominence. However, we cannot rest on our laurels. We must ensure that our financial regulations adequately address the full scope of financial risks, which are constantly evolving.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Banking Act was last amended in 1984 in response to the impact of the Third World debt crisis on the international banking system in the early 1980s. Many banks experienced severe losses because of heavy exposure to Third World debtors, raising concerns of a systemic collapse of the world banking system. The Banking Act amendments then were aimed at insulating the Singapore banking system from adverse developments in the international financial markets. This was achieved by strengthening prudential requirements for banks in Singapore. Singapore has since developed further as an international financial centre. The financial services sector has become an important contributor to our economy. In the first half of 1993, the sector expanded strongly by 14.6% compared to the same period a year ago. The number of internationally reputable banks with branches and merchant bank subsidiaries in Singapore has grown from 182 in 1984 to a total of 206 from 35 countries today. Their total assets have more than doubled from S$349 billion in 1984 to S$744 billion in 1992. The average daily volume of foreign exchange traded by these banks has increased eight-fold over the same period to reach US$81 billion last year, making Singapore the fourth largest foreign exchange trading centre in the world after London, New York and Tokyo. Against this background of rapid expansion, both local and foreign banks in Singapore have performed well. Total pre-tax profits of local banks rose by 13.3% in 1992 and 24.4% in the first half of this year while the aggregate pre-tax profits of foreign banks surged by almost 20% in 1992. The past decade has seen continued turbulence in many major financial markets.”
“The total health bill to Government of civil servants and their dependants in FY 92 was $29.44 million, of which about 60% was spent on civil servants and the remaining 40% on dependants. The total bill constituted 1.43% of the payroll. MEMBERS WITH MINIMUM BALANCE IN THE CPF ACCOUNTS 5. Dr Kanwaljit Soin asked the Minister for Labour what percentage of members who withdrew their Central Provident Fund savings at age 55 years had the minimum required balance in their accounts.”
“The health bill for pensioners was $16.05 million in FY 92 and this worked out to $1,076 per capita. HEALTH COST OF CIVIL SERVANTS AND THEIR DEPENDANTS 4. Dr Kanwaljit Soin asked the Minister for Finance what is the health bill to the Government per annum of (i) civil servants and (ii) their dependants and what percentage of the payroll does the total bill constitute.”
“CCCs may propose community improvement projects in HDB areas administered by Town Councils as well as projects in non-HDB areas which are not administered by Town Councils, for funding under the CIPC. HEALTH COST OF PENSIONERS 3. Dr Kanwaljit Soin asked the Minister for Finance what is the health bill per annum for pensioners and what does this amount work out to per capita.”
“HDB estates built in the 1960s and 1970s, such as Queenstown and Toa Payoh, have GPRs of about 1.9, while estates such as Ang Mo Kio and Clementi, which were developed in the 1980s, have GPRs of about 2.5. The newer estates such as Pasir Ris and Tampines have a higher GPR of about 2.8. The higher GPR is because we are building bigger flats whereas family size is getting smaller. Singaporeans have generally accepted the higher GPR in the newer HDB estates because the ambience and quality of the external environment is maintained. Further increases in GPR must be considered carefully to avoid a deterioration in the environment in HDB estates. COMMUNITY IMPROVEMENT PROJECTS COMMITTEE FUNDS ALLOCATION 1989-1992 2. Mr Chiam See Tong asked the Minister for National Development if he will state (i) the total amount of funds allocated by the Community Improvement Projects Committee to Town Councils for community projects in the years 1989 to 1992; and (ii) which Town Councils were granted such funds and how much was given to each of them in each of these years. Dr Richard Hu Tsu Tau: Community Improvement Projects Committee (CIPC) funds are allocated to the Citizens' Consultative Committees (CCCs) for projects in the whole constituency and not to Town Councils. Hence, no CIPC funds were allocated directly to Town Councils for community projects in the years 1989 to 1992. Since the implementation of the CIPC scheme in April 1990, a total of $65 million has been allocated to constituencies through the CCCs. The amount of funds allocated annually ranged from $80,000 to $527,000 per CCC, depending on the size of the constituency.”
“HDB purchases its land from the Land Office at market rates assessed by the Chief Valuer. Factors such as location and intensity of the development are taken into account in determining the market land rate. From 1985 to 1992, land cost for HDB flats rose at an average of 4% per year. In the last 5 years, however, from 1988 to 1992, land cost rose at an average of 11% per year. HDB currently buys land for public housing at about $1,000 psm for a Gross Plot Ratio (GPR) of about 2.8 to 3. By comparison, successful tenders for residential land in HDB estates under the Sale of Sites Programme are typically in the region of about $2,000 psm for a lower GPR of 2. Public housing land prices have therefore risen much slower than tender prices for sale of sites. Pricing of HDB flats is primarily cost driven. The two major components of total development cost for HDB flats are land and construction costs. Land cost rose by about 55% and construction cost by about 97% over the period 1988 to 1992. As a result, total development cost for HDB flats increased by about 81% over the same period. By comparison, the average price increase for all flat types over the period 1988 to 1992 was only 75%. Price increases over the same period for the smaller flat types which are meant for the lower income groups was only about 32%. Government has absorbed part of the cost increases over the period 1988 to 1992 so that housing continues to be affordable for Singaporeans. Given the limited land available in Singapore, HDB has always strived to optimise the use of public housing land without unduly compromising the quality of the living environment in HDB estates. HDB has, in fact, been increasing the development intensity of public housing estates over the years.”
“The public housing programme and its associated policies are designed to provide affordable housing to Singaporeans. HDB flats are, therefore, intended for owner-occupation and not as an investment to generate rental income. It is for this reason that HDB lessees are not normally allowed to sublet their entire flats. Subletting of whole flats is permitted by HDB only under special circumstances such as when lessees have to study or work overseas for extended periods. HDB's approval is required for subletting of entire flats. The policy to allow subletting of rooms in HDB flats was implemented in 1973. The objective was to allow HDB lessees with small families to sublet spare rooms in their flats. This is to encourage more productive use of space. However, lessees must continue to live in their flats. Besides fulfilling the owner-occupation condition, this requirement also has the advantage of ensuring that tenants abide by the subletting conditions and do not become a nuisance to their neighbours. The policy on owner-occupation is still necessary for the reasons stated. The subletting conditions are designed to support this policy. USE OF MEDISAVE FOR HOSPICE CARE 29. Dr Kanwaljit Soin asked the Minister for Health if he will consider the use of Medisave for hospice care.”
“GATT does not impose requirements on the internal taxes of a country. That is the privilege or the sovereignty of the country. You can impose any taxes you like on your own people but not on imported goods. I accept that the effect is the same but, nevertheless, that is the law. 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. ADJOURNMENT Resolved, "That Parliament do now adjourn to a date to be fixed." - [Mr Wong Kan Seng]. Adjourned accordingly at Five Minutes to Two o'clock pm to a date to be fixed. Chart 1 - REAL WAGE GROWTH AND PRODUCTIVITY GROWTH (Cols. 373 - 374) Table 1 - TRAINING INVESTMENT AS PROPORTION OF PAYROLL, 1992 (Cols. 375 - 376) WRITTEN ANSWERS TO QUESTIONS FOR ORAL ANSWER NOT ANSWERED BY 1.30 PM GOVERNMENT RESTRUCTURED HOSPITALS (Waiting time of patients) 14. Mr Teo Chong Tee asked the Minister for Health what measures are being taken to reduce the waiting time of patients seeking treatment at Government restructured hospitals.”
“Under the GATT rules, countries which accede to the GATT arrangements are required over time to lower import tariffs to an undetermined figure. Our import duties on cars are quite high now. If we accede to GATT, assuming the GATT requirement is approved in the near future, we would be faced by this requirement to lower import duties. In order not to allow this requirement to reduce the price of cars, we will replace the decrease in import duties with an exact equivalent in excise tax. So the cost of the car to the buyer will remain exactly the same.”
“Other Minor Amendments The remaining seven amendments, which are minor, are to provide for the following: (a) Customs officers to be allowed to make copies of documents in the course of conducting any search on premises; [Clause 19] (b) notices to a body of persons or company to be deemed served when they are delivered to the secretary or any officer of the body of persons or company; [Clause 17] (c) the Director-General to be allowed to waive the recovery of revenue which is less than $20, in each case; [Clause 6] (d) licensed liquor establishments to accept payments for purchases through credit cards, charge cards, gift vouchers and other modes approved by the Director-General; [Clause 15] (e) the appointment of new grades of Customs officers; [Clauses 3 and 4] (f) the Minister to prescribe regulations for the ranks, uniforms, accoutrements and equipment of Customs officers; [Clause 32] and finally, (g) the adoption of the International Organisation of Legal Metrology (OIML) standard for measuring alcoholic strength. [Clause 2] Sir, I beg to move. Question proposed.”
“This should also apply to returning residents, as well as to purchases from overseas. The Act will thus be amended to extend the provision to all travellers and their duty free entitlements, including those purchased overseas. Clause 27 amends section 130 to effect this change. The three-quarter tank rule at present only applies to Singapore cars leaving through the Causeway at Woodlands. The rule will be extended to cover such cars leaving Singapore through all exit points. Clause 28 amends section 136A to effect this change. Regularising Current Practices I am also amending sections 34, 37 and 42 of the Act via clauses 7, 8 and 12 to formalise the following Customs practices that are not currently provided for in the Act: (a) dispensing with the need for permits for goods which are transhipped within the same Free Trade Zone; (b) requiring permits for goods removed from the Free Trade Zone; and (c) making the pilot, owner or agent of an aircraft similarly liable as the captain, owner or agent of a ship, in respect of payment of duty on unaccounted goods.”
“Clauses 9 and 10 amend sections 39 and 40 of the Act to effect these changes. In view of the higher duty rates for cigarettes and liquor, a higher penalty is necessary to deter smuggling. The maximum fine for compoundable offences would be raised from $2,000 to $5,000. The maximum fine for refusing to answer or giving false information would also be raised from $1,000 to $5,000; and the maximum prison sentence from 6 to 12 months. This will bring it in line with the penalty for making incorrect declarations and falsifying documents, which currently carries a maximum fine of $10,000 and a maximum prison term of 12 months. Clauses 24 and 26 amend sections 126 and 129 to effect these changes. Improving Administration of the Act Recent developments in the shipping industry have given rise to third party agents, who coordinate the shipping of cargo on behalf of shipping agents. The Act, however, does not allow such third party agents to submit cargo manifests. Those who do so on behalf of shipping agents are therefore not accountable for their submissions. I have thus amended the Act to allow shipping or aircraft agents to authorise another person to submit cargo manifests on their behalf; and for such authorised persons to be accountable for their submissions. Clause 9 amends section 39 to provide for this change. The detention period of arrests without a warrant would be extended from 24 to 48 hours, to be in line with provisions in the Criminal Procedure Code. It will give Customs officers enough time to ensure that investigations are more thorough. Clause 22 amends section 112 to effect this change. Currently, it is an offence for tourists to sell, exchange or give away any duty free entitlements purchased in Singapore.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Customs (Amendment) Bill 1993 seeks to amend the Customs Act to provide for excise duties on imports, prevent smuggling, improve administration of the Act and to regularise current Customs practices. Levying Excise Duties on Imports The outcome of the Uruguay Round of GATT negotiations may require us to lower our ad valorem import duties. In particular, import duties on motor vehicles would be affected. In order to comply with the possible GATT requirement, without at the same time undermining our objective of containing car growth, we would have to provide for the levying of excise duties on imports. Excise duties at present can only be levied on locally-manufactured goods. Traders and importers will not be affected as excise duties will be levied such that the total quantum of tax payable at the end of the day will be the same. Hong Kong, Thailand and many of the EC countries also impose excise duties on imports. Clauses 2 and 5 amend sections 3 and 10 of the Act to effect this. Preventing Smuggling At present, the Act allows agents to make changes to their cargo manifests for any reasonable shortfall or excess in the cargo, as well as for "any other cause". This presents a loophole for smugglers to amend the description of the goods once an offence is detected. I have therefore replaced the "any other cause" provision with "such other cause as the Minister may by order specify". The Act would also be amended to require cargo manifests for goods brought into Singapore, and not just for goods destined for Singapore, as is now the case. This is to prevent the smuggling of goods on the pretext that they are not destined for Singapore.”
“As I mentioned, this issue is being discussed by the CPF Board together with the Stock Exchange and they will come up with the procedure which does not interfere too drastically with the use of CPF funds which is against the interest of the stock buyers and yet safe enough to protect the interest of the public at large. I suggest that we wait for their conclusion. HOUSING AND DEVELOPMENT BOARD FLATS (Increase in supply) 7. Mr Chng Hee Kok asked the Minister for National Development if he plans to increase the supply of Housing and Development Board flats in view of the strong demand. The Minister of State for National Development (Mr Lim Hng Kiang) (for the Minister for National Development): Mr Speaker, Sir, the HDB has been monitoring the demand and supply situation for its flats very closely. In view of the strong demand for HDB flats, the HDB has in fact been stepping up its annual building programme steadily from about 24,500 flats in 1992, to about 28,000 flats in 1993. HDB will be stepping up its annual building programme further to about 30,000 flats in 1994. The increase in the supply of flats will meet the demand. It will also not overstretch the capacity of the construction industry. Otherwise, prices will increase sharply. HDB will continue to monitor the demand for its flats and review the supply accordingly.”
“However, there is a need to balance the benefits of additional controls in the trading system against the possibility that they would stifle genuine trading activity. This is a complex issue which requires careful and thorough study. As the irregularities in transactions involving the shares of NOL, Keppel Bank and IFS are being handled by competent authorities including the Commercial Affairs Department, the Stock Exchange and the CPF Board, there is no need to conduct a full inquiry into these incidents.”
“Second, the procedure does not ensure that an investor using CPF funds to apply for the shares has or maintains sufficient funds in his CPF account. These weaknesses were exploited by unscrupulous investors in the Keppel Bank and IFS initial public offers. The abuses that occurred can be prevented if there are measures to verify that share applications involving use of CPF funds are genuine and that such investors have or maintain sufficient funds in their CPF accounts to pay for any shares allotted to them. The CPF Board, the SES and the agent banks are reviewing the existing procedure with these objectives in mind. In NOL's case, there is reason to believe that certain parties may have caused the fall in NOL share prices on 12th July 1993 to ensure a low conversion price for NOL preference shares. The relevant authorities are investigating into the incident and if there is evidence of criminal offence being committed, the authorities will press charges against those concerned. The NOL share incident happened partly because NOL had fixed the conversion price of its preference shares based on the last done price for its ordinary shares on a single day. It would be much more difficult for share prices to be manipulated over a sustained period. Hence, such an occurrence can be prevented if the conversion price of preference shares is based on the average of the last done price of ordinary shares over a number of days instead of a single day. The Stock Exchange is therefore studying with the relevant agencies to tighten the procedures for application for shares using CPF funds and whether further safeguards are needed for the Stock Exchange trading system and conversion of preference shares to prevent similar occurrences from happening in future.”
“Mr Speaker, Sir, the irregular practices in share transactions and applications which have surfaced in recent weeks are a sad reflection of the avarice of a small minority of the investing public. Their actions disrupted the proper functioning of the market, undermined market integrity and caused considerable inconvenience and uncertainty to the public at large. The irregular practices found in the application for tender shares of Keppel Bank and International Factors (Singapore) (IFS) were possible because of the simpler procedures currently in place for share applications using CPF funds. Presently, investors who use cash to apply for new shares are required to buy a bank draft or cashier's order for each application and submit it together with the share application form. Applications which are not accompanied by a bank draft or cashier's order for the correct amount are rejected. This system ensures that successful applicants pay for the shares allotted to them since they are already paid fully for the number of shares applied for. However, investors who use CPF funds to apply for new shares are presently not required to furnish evidence of their ability to pay or maintain sufficient funds in their CPF accounts. Instead, they are only required to provide their CPF account numbers in the application forms. Their CPF accounts will only be debited if their applications are successful. As evident in the recent initial public offers of Keppel Bank and IFS, this relatively simple procedure for share applications using CPF funds is not satisfactory for two reasons. First, there is no verification of the name and CPF account number furnished in the share application form to ensure that the application is genuine.”
“Such a committee, if it really can exist, would be ideal, but I cannot imagine a committee trying to anticipate problems. There is no way. There are thousands of transactions taking place every minute, every day. How would such a committee operate? I do not think it is a practical proposal, although, theoretically, of course, if you can have it, it will be fine. STOCK EXCHANGE OF SINGAPORE (Inquiry into price manipulation and irregular practices) 6. Dr Toh Keng Kiat asked the Minister for Finance, in view of recent reports suggesting price manipulation and irregular practices in the conversion of preferential stocks of Neptune Orient Lines Ltd and the initial public offers of shares of Keppel Bank of Singapore Ltd and International Factors (Singapore) Ltd, whether a full inquiry will be held to prevent similar occurrences.”
“I suggest that the Member write in to us and give us examples, and we will look into this. Assoc. Prof. Walter Woon: Thank you.”
“Indeed, I would have thought that in order to prove a claim, you would in fact need to have some support from the prosecution side. Otherwise, in the absence of any proven case that a criminal offence has taken place, how would you put together a case for civil compensation? Assoc. Prof. Walter Woon: May I quote an example? In the Pan Electric case, for example ---”
“Right. Assoc. Prof. Walter Woon: Therefore, a person who is cheated by market manipulation depends upon a conviction before he can claim compensation.”
“We will look into this, although I am not familiar with the case where a conviction is not possible and yet a civil action may be possible. Assoc. Prof. Walter Woon: This is precisely my point. If there is no conviction, there cannot be a civil case.”
“For the moment, we have not in fact come across any case of this type. Is there a pending case he is concerned with, on the principle? Assoc. Prof. Walter Woon: I am concerned, precisely. If indeed there is market manipulation, it again seems rather unjust that a few manipulators should be let go before we discover the loopholes. I am merely raising this for the Minister's consideration. Will he consider amending the Act?”
“As I understand it, it is a case where the offender has been convicted, and subsequently, the person affected may then take action to recover damages. Is that the question? Assoc. Prof. Walter Woon: May I clarify, Mr Speaker?”
“Under our legislation, a person convicted of market rigging and related offences is liable to a fine not exceeding $50,000 or to imprisonment for a term not exceeding seven years. The penalty for a corporate body is a fine up to $100,000. In addition, the convicted person or corporate body is liable to forfeit the ill-gotten gains, compensate the parties who have suffered losses as well as to bear the cost of the investigations. These penalties, in particular the 7-year imprisonment term, are at the moment considered adequate to deter such behaviour. Government has always taken swift and effective action against securities offenders. We will continue to monitor the industry closely and to act swiftly to weed out any bad practice. If necessary, the penalties will be increased and further measures introduced to protect the interest of investors. Assoc. Prof. Walter Woon: Is it not true that when you are talking of compensation for the victims of the crime, it depends on the victims starting an action against the manipulators, and that under the Securities Industry Act, such an action can only be commenced after a successful prosecution? Does the Minister consider that this is sufficient to protect the victims, considering that no such prosecution may be brought?”
“The bonds issued to CPF Board carry an interest rate. The interest is tax-free to the CPF Board and this accumulates to the CPF funds. The money collected by Government through the issue of these bonds is then invested in a variety of instruments, both domestically and externally, by the Government Investment Corporation.”
“CPF funds are managed by Government through the issue of bonds. The money is transferred from the CPF to the Government in exchange for Government bonds in which they earn interest, and the returns are adequate. As far as the proportion is concerned, the figure I mentioned earlier is the official foreign reserves. In addition, the Government has other reserves held in Singapore and elsewhere. CPF funds are totally protected.”
“Mr Speaker, Sir, the answer is yes, we have instituted proper control systems to monitor and keep track of our country's financial reserves. There are adequate checks and balances in the system to ensure that investment operations are properly accounted for. Key investment decisions are made by top management of the agencies managing the reserves, namely, the Monetary Authority of Singapore and the Government Investment Corporation. Regular reports are made on the performance of the investments and the position of our reserves. The accounts and control systems are subject to the examination of internal auditors within the respective organisations as well as the Auditor-General. Furthermore, Articles 22B, 22D and 148A of our Constitution protect reserves accumulated by past governments from being drawn down by the current Government. It should also be noted that the income earned by the investment of the protected reserves is not available for spending by the current Government but accumulates to the reserves. This means that the size of the reserves will grow over time. Let me assure the Member that our reserves are safe and intact and unless we become spendthrift and profligate, will keep growing.”
“Mr Chia Shi Teck asked the Minister for Finance, in the light of the recent report of the disappearance of huge sums of money in a country's financial reserves, whether Singapore's reserves are safe, intact and growing, and whether our control systems are adequate to prevent a similar occurrence.”
“For workers already in employment, the Government has already set up various programmes to help them acquire skills and upgrade themselves, eg, BEST, MOST, WISE, FAST FORWARD and TIME programmes. The Government has also encouraged restructuring of the economy towards higher value-added and knowledge-intensive activities, including research and development. These efforts have borne fruit, as evidenced by the higher skill and knowledge content of new investments in the manufacturing sector. In 1992, 16% of workers in the manufacturing sector were professional and technical workers, compared with 6% in 1982. At the same time, the Government has encouraged the private sector to distribute their more labour-intensive activities to other regions. The Government can only ensure that the education system and worker training programmes are relevant and sufficient for the needs of industry. But productivity improvements in the workplace must primarily be the responsibility of employers. Employers must invest in training for their own needs. In 1992, the Government set a target for companies to double their training investment from 2% of payroll to 4% of payroll by 1995. This is the amount that world-class companies spend on training. In Singapore, while larger companies (ie, those employing 500 or more workers) exceeded the 4% target, smaller companies were still some way behind. This is seen in Table 1 (Cols. 375 - 376). Table 1 - TRAINING INVESTMENT AS PROPORTION OF PAYROLL, 1992 (Cols. 375 - 376) Singapore can retain its position as the most competitive NIE if all groups continue to concentrate on the fundamentals. SINGAPORE'S FINANCIAL RESERVES (Adequacy of control systems) 4.”
“The Second Minister for Trade and Industry (Mr Lim Boon Heng): Sir, Mr Chua is right that real basic wage growth has outstripped productivity growth for five years, based on figures released by the National Wages Council (NWC). The picture painted by the Ministry of Trade and Industry's more general measure of wage growth (which includes non-bargainable employees, unlike the NWC figures) is similar to real wage growth has outstripped productivity growth in the last four years. Please refer to Chart 1 (Cols. 373 - 374) which has been circulated by the Clerk of Parliament. Chart 1 - REAL WAGE GROWTH AND PRODUCTIVITY GROWTH (Cols. 373 - 374) Since the second half of last year, the wage-productivity gap has narrowed as economic growth picked up. For the first quarter of this year, productivity growth was 4.7% and real wage growth 3.7% In the short term, it is not possible to manage growth such that real wage growth and productivity growth are always in line. With cyclical changes in demand and restructuring, over- and under-shooting are to be expected. For example, real wage growth was below productivity growth during the period 1986-88. Over the longer-term, the only sure way of maintaining competitiveness is to improve productivity and ensure that labour cost increases do not exceed productivity increases. Government's measures have concentrated on the supply-side to improve the quality of our human resources. Each cohort of students entering the labour market is better educated than its predecessors. For example, 24% of the labour force now have post-secondary and university education, compared with 14% in 1982. The improvement will continue as the education system has been restructured to give every student at least 10 years of basic education.”
“As this may take some time, Government has recently introduced several interim measures to weed out bogus sale of foreign properties - local estate agents are now 2required to check the credentials of the foreign developers and their projects before acting as their marketing agents - advertisements on new foreign properties must list the necessary permit numbers from the relevant planning and building authorities. Prospectuses for the properties on offer should also be published or made available to potential buyers - permits for property exhibitions will only be granted if the developers can furnish documentary proof of their planning and building authorities' approvals for their projects. These measures will help to establish that foreign properties marketed in Singapore are from bona fide developers who have obtained the necessary approvals from their relevant authorities. However, I must stress that we do not have any control over the development of foreign properties outside Singapore. Nor is it possible for the Government to check on the authenticity and accuracy of the descriptions of foreign properties offered for sale in Singapore. Like other forms of foreign investment, Singaporeans purchasing foreign properties should carefully weigh the risks involved. WAGE-PRODUCTIVITY GAP 3. Mr Robert Chua Teck Chew asked the Minister for Trade and Industry, as the 1992 basic wage increases continue to outstrip productivity growth for the fifth consecutive year, what measures have been taken to narrow this wage-productivity gap to ensure that the Singapore economy remains internationally competitive.”
“In recent months, there has been a sharp increase in the promotion and sale in Singapore of overseas properties. This is to be expected as, with our growing affluence, many Singaporeans will consider investment opportunities, both local and foreign. Developers of properties overseas and their agents will naturally target Singaporeans as potential buyers. Those who purchase overseas properties do so for investment purposes. As with other investments, potential investors should do their homework carefully, weighing the risks involved against the possible returns. It must be stressed that Singaporeans buying properties overseas do not enjoy the protection of the Housing Developers (Control and Licensing) Act and its subsidiary legislation. The laws in place to protect the interest of home-buyers in Singapore do not cover Singaporeans investing in overseas properties. Different countries have different rules and regulations to control their property developments. It is not feasible for Singapore to extend the Act to regulate purchase of foreign properties. At the present time, there is no existing legislation dealing with the advertising, promotion and sale of foreign properties in Singapore. This has not been necessary in the past because there have been few such offers and, when made, they have been generally directed at companies or sophisticated buyers. However, the recent spate of advertisements and promotional road shows are directed at the public at large, including a large number of first-time buyers of foreign properties. As this trend is likely to persist, Government is considering the introduction of specific legislation to regulate the marketing of foreign properties in Singapore.”
“Mr Speaker, Sir, with your permission, I would like to take Questions Nos. 1 and 2 together as they are related.”
“The staff of Telecommunication Authority of Singapre, being public officers, will not be given any preferential allotment of ST shares. As for the employees of the Singapore Telecom group of companies, the matter is being studied and a decision will be made in due course. LEGISLATING FOR BETTER CONTROL AND ACCOUNTABILITY OF CO-OPERATIVE SOCIETIES' FUNDS 3. Mr Tong Kok Yeo asked the Minister for Community Development whether he will consider introducing legislation to amend the Co-operative Societies Act to provide for better control and accountability of the utilisation of funds. Note: The Member has stated: "In asking this question, I wish to declare my interest as the Secretary of the UTES Multi-Purpose Co-operative Society Ltd."”
“The Upgrading Programme involves a large number of flats. The Programme has to be implemented in stages and spaced out over a number of years. A number of factors are taken into account in selecting precincts for upgrading. In addition to the age of the flats, factors such as geographical spread, condition of the environment and whether blocks can be grouped to form a contiguous precinct, are also taken into account in selecting precincts for upgrading. The first 2 batches of precincts to be upgraded under the steady state phase have already been announced. MND is currently identifying the next few batches of precincts for upgrading. It is not possible to indicate at this stage when Blocks 22 to 26, Sin Ming Road will be scheduled for upgrading. ALLOTMENT OF SINGAPORE TELECOM SHARES 2. Mr Tong Kok Yeo asked the Minister for Finance, in view of the impending flotation of Singapore Telecom shares, whether employees of Singapore Telecom group of companies and the Telecommunication Authority of Singapore will be given preferential allotment of shares. Note: The Member has stated: "In asking this question, I wish to declare my interest as the General Secretary of the Union of Telecoms Employees of Singapore; Executive Secretary of the Telecommunication Authority of Singapore Staff Union; and an employee of Singapore Telecom."”
“Clause 23 of the original Bill, which amends section 328 of the Act, accords certain preferential debts priority over floating charges, in the event that the assets of a company available for general creditors are insufficient to meet these debts. Floating charges, however, crystallise upon the liquidation of a company and would become fixed charges. Hence, upon winding up, there may be no more floating charges for the preferential debts to take precedence. Clause 23 has therefore been amended such that a floating charge, even if it crystallises, would not affect the preferential debts. This clause has also been amended to provide that all costs, charges and expenses of winding up, including the remuneration of liquidators, shall have priority over floating charges. This is done so as not to disadvantage the liquidators. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Third time and passed. MONEYLENDERS (AMENDMENT) BILL Order for Second Reading read.”
“Under clause 18, as originally introduced in Parliament, the Court has the discretion to disqualify a person from being a director, or to participate in the management of a company if he is convicted in Singapore for any offence involving fraud, or in connection with the formation or management of a company. It has been suggested that the clause should be amended to cover overseas convictions involving fraud or dishonesty. This suggestion has been accepted and appropriate amendments have been made to clause 18. As Members would recall, the proposed new sections 216A and 216B provide for statutory derivative actions by minority shareholders on behalf of their companies. Only one representor has questioned the need for such a provision. The representor was concerned that the new statutory right might be open to abuse by minority shareholders. The Committee recognised that the new sections would provide more effective avenue for minority shareholders to protect their interests and that of the company. Nevertheless, to meet some of the representor's concern, the statutory derivative action will only be available in respect of unlisted companies. The Committee is of the view that the proceedings and performance of public-listed companies are already monitored by the various regulatory authorities and disgruntled shareholders of such companies have an avenue in that they can sell their shares in the open market. To further deter frivolous applications, the Committee has also decided to give the Court the discretion to order the complainant to furnish security for costs.”
“Several representors commented that the Depository should certify the names of persons on the Depository Register to a company upon a written request being made by the company, and not only under the circumstances specified in the proposed section 130E. That provision has been amended accordingly. In response to the concern expressed by several representors, section 130H has been amended to clarify that the Depository will be protected from liability only if it has acted in good faith and without negligence. Several representors have raised the concern that damages may not always be an adequate remedy if a depositor's book-entry securities are wrongly or erroneously transferred out of his securities account. They have suggested that the provision in the proposed section 130J against rectification of the Depository Register be amended, so that remedies other than damages are allowed. To address the representors' concern but without creating the practical problems in unwinding transactions in a scripless system, the Committee has amended the proposed section 130J to allow other remedies such as the re-transfer of shares where no third-party rights are involved. Corresponding amendments have been made to proposed section 130L. The proposed section 130M makes an amendment of a similar effect to sections 21, 76A and 106E of the Act. The original proposed section 130N provides for legal and equitable mortgages of book-entry securities. The view has been expressed that it may not be feasible to create a legal mortgage of book-entry securities. This section has now been revised to provide for creation of security interest in book-entry securities by way of assignment, or by way of a charge. I will now go on to the amendments relating to the non-CDS provisions.”
“Besides the substantial savings in backroom support service and the shorter time required to effect transfers, the transaction cost under the book-entry system will also be lower for investors. Appendix VI of the Select Committee Report sets out in detail the benefits and mechanics of scripless trading, as well as the safeguards that have been built into the system to enhance the protection accorded to investors. I will now proceed to deal with the main amendments to the CDS provisions. In the scripless environment, a company may face the possibility of not having an exhaustive list of its members for the purpose of its general meeting. This is because an investor could have his name entered in the Depository Register right up to the time when a company holds its general meeting. A new subsection (3) has therefore been added to proposed section 130D to provide that a depositor shall not be regarded as a member of a company entitled to exercise rights as a member in relation to meetings, unless his name appears on the Depository Register 48 hours before the general meeting. The present practice for the distribution of dividends is that a company will pay the dividend to the Depository, which will in turn distribute it to the shareholders so entitled. The Select Committee agreed that a company should be relieved from liability to depositors to the extent of the amount of dividends it has paid to the Depository. The Committee has therefore decided to add a new subsection (4) to the proposed section 130D to discharge a company from liability in respect of dividend payable to a depositor, when such dividend has already been paid by the company to the Depository.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Third time." Sir, the Companies (Amendment) Bill 1993 was read a Second time on 14th September 1992 and referred to a Select Committee for consideration. The Select Committee received 14 written representations and heard oral evidence from 17 persons in respect of eight of the written representations. I would like to thank representors for contributing their views, many of which were helpful. The Report of the Select Committee was presented to this House on 26th April 1993. The Bill, as set out in Appendix I of the Report, incorporates various amendments made by the Select Committee. The explanations for all the amendments are contained in Appendix V of the Report. Many of the amendments are of a drafting nature. They serve to improve the language, remove ambiguities and provide certainty in certain provisions of the Bill. These do not require further comment. Instead, I will cover the substantive amendments recommended by the Select Committee. These amendments may be classified broadly as those relating to the Central Depository System (CDS) and those which concern other aspects of the Companies Act. As Members are aware, a major part of the Bill is devoted to the CDS, or the book-entry or scripless system for the transfer of investors' rights and entitlements of listed securities. These provisions have generated considerable public interest and discussion. The book-entry settlement is a more efficient system than the paper-based settlement. It also reduces the attendant problems of failed deliveries, late settlement and share forgeries that can arise with physical deliveries.”
“a) HDB will not extend the Temporary Occupation Licences which are currently issued to 4 boatels and 4 restaurants operators at Punggol Point beyond Dec 93. HDB will initiate action in 1994 to clear the occupiers on land affected by the reclamation project. b) The reclamation work is scheduled to commence in 1996 and complete by 2000. c) In HDB's current 5-year Building Programme, Punggol is scheduled for housing development from 1997. According to HDB's projection, about 28,000 dwelling units (or an equivalent of three-quarters of the size of Punggol New Town) will be built by the year 2001. However, the land at Punggol Point in the vicinity of the existing boatels and restaurants will be developed after 2001 when the reclamation work is completed. It is too early now to have a firm projection of Building Programme for housing development beyond year 2001 on this land or the reclaimed land.”
“In addition to new provisions to regulate the plant industry, the Bill also re-enacts, with some amendments, existing provisions to prevent the introduction and spread of agricultural pests and plant diseases, prohibit the cultivation of undesirable plants, and control the export of plants. In the interests of public health, it is timely for us to introduce the Control of Plants Bill. This Bill will enable the Primary Production Department to exert effective control on imported as well as locally produced fresh fruits and vegetables to ensure that these are safe for consumption. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed. RETIREMENT AGE BILL Order for Second Reading read.”
“It is now timely to introduce a new and comprehensive legislation to regulate the plant industry, to help ensure a safe supply of fresh fruits and vegetables. The Control of Plants Bill will consolidate, update and replace the three existing Acts regulating the plant industry. The Bill will also introduce new provisions to regulate the safe and wholesome import of fresh fruits and vegetables, control pesticide use in Singapore, authorise issue of plant health export certificates, and regulate the plant industry through licensing. The Bill contains provisions to ensure that imported fresh fruits and vegetables are free from harmful levels of toxic chemical or pesticide residues, and are safe for public consumption. Under the Bill, it is an offence to import for sale or supply, fruits and vegetables that contain excessive levels of harmful residues. All imported consignments are required to bear identification marks so that the source of contaminated fruits and vegetables can be traced. The Bill also contains provisions to control the use of pesticide in Singapore. This is to ensure that fresh fruits and vegetables produced locally are safe from pesticide residues. Under the Bill, only approved pesticides may be used in cultivation. The Bill provides the Primary Production Department with the authority to issue phytosanitary certificates to certify that plants and plant products exported from Singapore are free from plant diseases and pests. These certificates will facilitate our export of plants and plant products. The Bill will regulate the plant industry by licensing importers of fruits and vegetables as well as persons who cultivate plants commercially.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." There are now three Acts that regulate the plant industry in Singapore. These are the Agricultural Pests Act, the Controlled Plants Act, and the Export of Plants (Control) Act. These Acts originated many years ago as Ordinances. The Agricultural Pests Act was enacted in 1918 and the other two Acts were enacted in the 1940s. Some of the provisions in these Acts are now obsolete. More importantly, these pieces of legislation, individually and as a whole, are limited in scope and inadequate in regulating the production, import and export of plants, especially fruits and vegetables. In particular, the Acts do not have provisions to control the import of fruits and vegetables to ensure that they are safe for consumption, or to regulate the use of pesticides in farming. In recent years, the use of chemicals and pesticides in agriculture has increased. Excessive levels of toxic chemical or pesticide residues in fresh fruits and vegetables pose a danger to the health of consumers. We import about 95% of our supply of fresh fruits and vegetables. To protect our consumers, we have to make sure that imported fresh fruits and vegetables do not contain excessive levels of harmful residues. The Primary Production Department, together with the Ministry of the Environment and other Government agencies, has put in place a comprehensive system of safeguards that help to ensure that fresh fruits and vegetables sold locally are safe for consumption. Some of the measures have been carried out administratively, or by using powers available under the Sale of Food Act and other public health legislation.”
“That is true. But if we limit our imports to food and medicine, then we will have no imports to produce manufactured goods for export to earn future income. So we will then totally rely on living on our reserves and that will not last very long if we have to consume all of it. SPORTS COMPLEX IN JURONG EAST (Building and location) 12. Mrs Yu-Foo Yee Shoon asked the Minister for Community Development, in view of the announcement a few years ago that a sports complex would be built in Jurong East, next to the Chinese Garden, and the subsequent announcement that the complex would have to be resited elsewhere so as not to affect the ambience of the Chinese Garden, if he will say when the sports complex in Jurong East will be built and where will it be located.”