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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“But I do have a small concern about the proposal to remove the requirement that after his retirement in future, the Auditor-General can now find other jobs, which, in some cases, may be deemed to be not so suitable for him, since he has already held an esteemed post of Auditor-General. This point may lower the high office of the Auditor-General, because he is supposed to hold a very independent view of Government's accounting policies. I would prefer that this office be preserved at the highest level. Therefore, if it can be advised that even after his retirement, the Auditor-General should only take up jobs that would seem to pose no conflict of interest to his earlier job. Therefore, on this basis, I also support the proposal to have contract appointment on a 6-year renewal basis for the Auditor-General. Sir, the more important amendment is the second component with regard to the Government's proposal on the treatment of the net investment income (NII). One principle that can be adopted is the treatment of the NII from a purely accounting approach. Under this approach, interests, dividends and other investment incomes earned from the past capital or equity of a company (ie, in the case of the Government's account and this will be the reserves) are treated as current account items, which means that such incomes including interests earned from past capital will be treated as items in the Working Capital, Cash Flows and Profit & Loss accounts of a company, and in this case of the Government's accounts. Under the same principle, a company that has borrowings from loans that were taken in the previous years, then the interest payable in the current year is also treated as a current account item, and netted off the yearly income.”
“Secondly, once appointed, the Auditor-General's pensionable remuneration and other terms of service, including his pensionable status, cannot be altered to his disadvantage while he remains in office. This protection in the Constitution remains unchanged; and Finally, the Auditor-General continues to report directly to the President and Parliament under the Audit Act. Sir, I beg to move. Question proposed. Mr Leong Horn Kee: Mr Speaker, Sir, the proposed amendments to the Constitution have two components. The first is the change to the tenure of the members of the Council of Presidential Advisers and the Auditor-General. The second is the new treatment proposed by the Government of the net investment income. Sir, with regard to the first issue on the change of tenure of Presidential Advisers, I would like to voice my support that it is appropriate that members of the Presidential Council be appointed, firstly, on a six-year term and thereafter to be re-appointed for further terms of four years each. I agree with the shorter term of four years each for re-appointments. This will enable the suitability of these Advisers to be reviewed over a shorter period for future renewals, after the first initial appointment of six years. In fact, if we add the first six years to the further re-appointment term of four years, a re-appointed Adviser would have served for 10 years, and further renewal should, of course, be reviewed and for a shorter period. Therefore, I support this proposal. Sir, on the second point about the re-appointment of the Auditor-General, the proposal is to first appoint him on a 6-year contract basis, and thereafter for renewal of another six years. This is quite fair as well.”
“We need to find and appoint good individuals to the post of Auditor-General and ensure that the office is regularly rejuvenated. "Permanency" of office and prolonged exposure to repetitive audit cycles could also lull an incumbent into complacency. In the private sector, it is considered good practice to regularly rotate auditing partners, if not the auditing firms, about once every five years. The same principle should apply in the audit of the Government and the public service. Article 148F of the Constitution will therefore be amended to provide for the appointment of the Auditor-General for a fixed term of six years, with the possibility of re-appointments for further terms of six years each. As a corollary to appointing the Auditor-General on fixed terms which may end before he reaches retirement age, the prohibition of a person who has held the office of the Auditor-General from taking up any other appointments as a public officer after leaving office will be removed. There is no reason why we should prevent a good individual from re-joining the public service after he has finished his term as Auditor-General. Having a fixed six-year term appointment, subject to renewal, should not adversely affect the organisational independence of the Auditor-General. The Auditor-General remains organisationally immune from any Executive interference and influence in his job. Firstly, he enjoys security of tenure during his fixed term, unlike ordinary public officers who hold office at the pleasure of the Executive. The Auditor-General can only be removed on grounds of misbehaviour or inability to discharge his functions, as determined by a high-level tribunal, and even then only with the concurrence of the President.”
“In addition, he is not eligible for any other appointment as a public officer after stepping down as Auditor-General. The underlying rationale of these provisions is to safeguard the powers and independence of the Auditor-General, so that he can carry out his duties firmly and fairly, without fear or favour. These Constitutional provisions have worked so far. But moving forward in an environment of rapid change, they need to be fine-tuned. Appointment till retirement age creates rigidity in the talent management process. It does not allow for systematic renewal and rejuvenation of the office, which is always desirable, regardless of the abilities and performance of the incumbent. This is particularly so as we want to appoint able officers to the post of Auditor-General at a younger age, to inject new, fresh perspectives and update the office, rather than appoint individuals who are approaching retirement age. Deputy Prime Minister Lee had informed the House of the need to have a healthy turnover of people in the public service, especially those holding top Public Service Leadership jobs. The public service needs to develop and stretch our younger officers, giving them larger and more challenging responsibilities earlier. Conversely, it also means that not all officers who assume leadership positions early can stay in those positions till retirement age. Systematic but judicious renewal is also desirable, as it will prevent the organisation from becoming too settled in its ways. Permanent Secretaries and other officers holding Public Service Leadership jobs are now appointed on fixed terms. The same should apply to the office of the Auditor-General.”
“If a future Minister for Finance refuses to issue such a certificate for whatever reason, 50% of the NII earned from past reserves will nevertheless be protected when the Government Financial Statements are presented to the President. The amendment also puts into the Constitution a new definition of NII. The definition will be expanded to cover more than what is currently defined as NII in the Budget Book. NII will now include interest earned from developmental loans given by Government, mainly to statutory boards. The interest on these loans was previously treated as Operating Revenue, because developmental loans were not classified as investments under the Financial Procedure Act. Now that we will be protecting at least 50% of NII, excluding interest earned from developmental loans from NII would leave a potential loophole. Such interest earnings will therefore be included in future. As the amendment concerns the protection of past reserves, albeit to tighten the protection, Government has briefed the President and the Council of Presidential Advisers, who agree with the amendment. Tenure of the Auditor-General Mr Speaker, Sir, I now turn to the third amendment. This pertains to the tenure of the Auditor-General. Currently, Article 148F of the Constitution provides for the Auditor-General to hold office until he attains the age of 60 years, regardless of when he was appointed. Before reaching the retirement age, he can only be removed from office by the President if he is found to be unable to discharge the functions of his office whether for infirmity of body or mind, or for misbehaviour. His remuneration and other terms of service are also protected under the Constitution.”
“We cannot afford to emulate resource rich countries in which government's share of expenditures has risen as high as 40% of GDP. Such expenditures are unsustainable in the long term and will ultimately strangle the growth of the private sector and the economy. The Government has therefore decided to protect, on an annual basis, at least 50% of the NII earned from the past reserves of the Government. NII earned from the current reserves will continue to accrue to the current reserves, in line with the principle that the government of the day should benefit from its work. The protection of NII will apply only to the NII earned from Government's own reserves. It will not apply to the NII earned by statutory boards and Government-linked companies contained in the Fifth Schedule to the Constitution. Just as normal commercial companies have full access to the investment earnings from all its accumulated funds, statutory boards and Government-linked companies should also be given access to their NII as part and parcel of their normal income. Locking up their NII will take away their flexibility and responsiveness in making business and operating decisions. The amendment to effect the protection of NII I have just described is set out in clause 3 of the Bill before the House. Article 142 of the Constitution will be amended to provide for not less than 50% of the NII earned from past reserves in a financial year to be added to, and protected as, past reserves. The exact amount, which cannot be less than 50%, will be specified in a certificate that the Minister for Finance shall present to the President after the close of the financial year. The protection will take effect from the date of the certificate and will be final.”
“This is a complex issue as we need to project the state of the economy and the Government's budget position over the long term, and strike a proper balance between restraining a profligate government on the one hand, and allowing a responsible government enough flexibility to operate on the other. The future cannot be predicted with certainty. However, we do know that an ageing population will impose greater demands on health and social expenditures, and reduce the proportion of Singaporeans in full employment and paying taxes. At the same time, globalisation will make it more important for us to attract and retain talent, businesses and investments. This calls for competitive tax rates, and will put pressure on Government revenues. It is therefore likely that over time, expenditures will grow more rapidly than revenues. In the long term, we may therefore need to draw upon part of NII to supplement tax revenue, although we cannot know for sure how much of NII we will need. It could be argued that so long as the Government's budget position is healthy and in surplus, all NII should be protected, since a responsible government could always seek the President's concurrence to draw on past reserves when the need arises. However, we have to bear in mind that such draws may be needed on a regular basis in future if all NII is protected. To seek the President's approval on a regular basis will undermine the foundation in the "second key" system as draws on past reserves should be called upon only in exceptional circumstances. Nevertheless, we should not provide for too much flexibility. Our current budgetary discipline of keeping Government small and focused on basic public services is sound and should be continued.”
“Article 37(B) of the Constitution will therefore be amended to provide for the appointment of a member of the CPA for a tenure of 6 years on his first appointment, and re-appointment for further terms of 4 years each. Net Investment Income Mr Speaker, Sir, I turn now to the amendment pertaining to the protection of net investment income (or NII) earned from past reserves. Sir, in my Statement to the House on 17th August 1999, I said that the Government needed time to study how best to protect NII and this could lead to an amendment of the Constitution. The amendment before the House now is a result of the study. Before I go into the amendment proper, let me quickly re-cap what is NII and what is its current Constitutional position. NII is defined as the interest and dividend income earned from investing the Government's reserves, net of debt servicing and expenses on investment. It does not include any capital gains or losses arising from the disposal of investments. Under the present Constitution, "reserves which were not accumulated by the Government during its current term of office" are protected and subjected to the President's second key. On the other hand, NII, whether derived from past or current reserves, is accumulated during the current term of office of the Government and is thus not protected under the present Constitution. Although NII is thus clearly "current money" under the Constitution, the Government has carefully studied whether part of NII ought to be locked up, especially the NII that is derived from past reserves.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Constitutional Amendment Bill before the House contains three amendments. The first pertains to the tenure of members of the Council of Presidential Advisers, the second to the protection of net investment income earned from the past reserves of the Government, and the third to the tenure of the Auditor-General. Tenure of Members of the Council of Presidential Advisers Mr Speaker, Sir, I turn first to the amendment pertaining to the tenure of members of the Council of Presidential Advisers or CPA. Under Article 37B(3), members of the CPA are currently appointed for a fixed term of 6 years and are eligible for re-appointments on a 6-year term. The main reason for appointing CPA members to specified, fixed terms is to give them standing on their own once they are appointed. They are expected to exercise independent judgment on issues, rather than reflect the views of the person who advised the President to appoint them, be it the President himself, the Prime Minister, the Chairman of the PSC, or the Chief Justice. Hence, they have tenure in office, and cannot be removed at will by their nominators. The President, however, has pointed out that 6 years for each term is a long time, especially if the CPA members are already in their 70s. Health considerations may not permit them to commit to serving the full 6-year appointment although they may still be able to make valuable contributions for a shorter term. The President suggested that the Government consider whether re-appointments could be for terms less than 6 years. The Government has considered the President's suggestion.”
“A new subsection 71(3A) would be inserted to empower the Minister to exempt any person from having to apply for a licence for the sale of liquors subject to conditions imposed by the Minister. This amendment will allow individuals who sell small quantities of liquors to be exempted from applying for a licence. An example would be a person who wants to auction a few bottles of his personal collection of wine through the Internet. We have decided to cap the sales limit at 9 litres per calendar year. Section 75 provides for specific duties and requirements to be imposed on persons licensed for the sale of intoxicating liquors. This section will be repealed. The new section 75 will enable the Minister to prescribe by regulations certain duties and requirements of persons licensed to sell liquors. This will give us the flexibility to revise those duties and requirements to keep up with changing circumstances without having to amend the Act. Lastly, a new section 90E will be inserted to require every importer and exporter of dutiable goods and his agents to retain specified documents relating to the goods for not less than seven years. This new section will facilitate the enforcement of other provisions of the Act. 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. CENTRAL PROVIDENT FUND (AMENDMENT) BILL Order for Second Reading read.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill seeks to amend the Customs Act to give legislative effect to a change of definition of customs duty to exclude excise duty. It also incorporates three other amendments to the Customs Act. Re-definition of Customs Duty Currently, our Customs Act defines customs duty as `any import or excise duty imposed by or under this Act'. The common international practice is that customs duty refers exclusively to tariffs applied on imported goods for protective and other trade policy purposes. Our current definition of customs duty may therefore cause confusion to our trading partners since it also includes excise duty which is applied in a non-discriminatory manner on imported goods and locally manufactured products for fiscal and other domestic policy purposes. To make clear to our trading partners the respective purposes of our customs duty and excise duty, our definition of customs duty should be amended to exclude excise duty. In this connection, a new subsection 10(1A) will also be inserted to state clearly that excise duty shall be imposed in a non-discriminatory basis regardless of the place of origin or manufacture of the goods. For equal treatment of imported goods and locally manufactured goods, section 22 will also be amended so that the same basis of valuation will be applied on imported goods and locally manufactured goods for the purposes of levying excise duty. Other Changes to the Act In addition to the aforementioned amendments, the following amendments will also be made to the Customs Act. Currently, all sellers of liquors must apply for a licence.”
“Sections 33(3) of the GST Act will be amended to specify the rules to be used by a local taxable person who is entrusted by his overseas clients to import and supply the goods in Singapore. The rules will provide greater clarity to businesses to determine the circumstances in which they can claim the GST paid on the goods imported and to account for GST on any supply of such goods in Singapore, as if he is the person making the supply. Arising from this, a consequential amendment will also be made to section 33(1). These amendments will serve to provide clarity to businesses. A new section 34A will be inserted to the Act to deem input tax as being deducted by the transferee for assets transferred under a "Transfer of Business as a Going Concern (TOGC)" arrangement. This is to place a transferee who acquires assets under a TOGC on par with other GST-registered traders who purchase assets and pay the GST. 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. CUSTOMS (AMENDMENT) BILL Order for Second Reading read.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Introduction The Bill seeks to amend the Goods and Services Tax Act to give legislative effect to the change in tax treatment for trustee services announced in the 2000 Budget Statement. It also incorporates two other amendments to the Goods and Services Tax Act. Change in tax treatment announced in the 2000 Budget Statement I have earlier in the fiscal year 2000 Budget announced that trustee services supplied by trustees situated in Singapore that satisfy the following two conditions can be zero-rated. Firstly, at least 80% of the value of the trust property is contributed by overseas settlors, and secondly, at least 80% of the beneficiaries and settlors are non-residents of Singapore. A cardinal principle underlying the Goods and Services Tax is that it is a tax on domestic consumption of goods and services. Before the above changes were announced, the provision of trustee services by a trustee to the trust is standard-rated even if the settlors and beneficiaries of the trust are all or mostly foreigners, as the trustee representing the trust is situated in Singapore. In such cases, there is in-principle no domestic consumption, as the recipients of the services are in fact the beneficiaries and the settlors who are foreigners. Therefore, to put Singapore trustees on a more competitive footing with offshore trustees, I have decided to zero-rate the trustee services provided by the local trustee for such cases. Section 21 of the GST Act will be amended for this purpose. Changes to the Act not arising from the 2000 Budget Statement In addition to this amendment, the following amendments will also be made to the GST Act.”
“The Civil Service Pension Fund is currently paying 24,660 pensioners. Total payment made from FY95 to FY99 is $3.5 billion. The Singapore Armed Forces has the SAVER-Premium Fund to cater to the savings and retirement needs of its officers. The number of pensioners under the Fund is 104, and total payment made from the time the Fund was set up in April 1998 is $69.1 million. ARREST WARRANT 2. Mdm Claire Chiang See Ngoh asked the Minister for Home Affairs, in the event of a police officer appearing in a house with an arrest warrant for the parents, what is the management guideline that has to be observed when the children of the offenders are minors and alone without any relatives to look after their welfare.”
“We can look at it. But if ICPAS makes the recommendations, I think the Public Accountants Board will consider them very seriously. 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. EXEMPTED BUSINESS (Motion) Resolved, That the proceedings on the remaining items on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].”
“This is because accounting corporations will be auditing other companies, and we need to ensure that these audits are independent. Fourth, to ensure that parties contracting with an accounting corporation are adequately protected in the event of a breach of contract or negligence on the part of the accounting corporation, it is mandatory for accounting corporations to take up professional indemnity insurance. The minimum amounts are as stated in the Bill. Conclusion Allowing for the incorporation of accountants will facilitate the creation of a more vibrant and competitive accounting services sector in Singapore, to better meet the challenges of the global economy in this new millennium. Finally, I would like to express my appreciation to the Public Accountants Board's Sub-Committee, chaired by the then Accountant-General, Mr Goh Khee Kuan, and members from the Institute of Certified Public Accountants of Singapore, the Nanyang Technological University, the Singapore Exchange, the Attorney-General's Chambers, and the Registry of Companies and Businesses, for working on the issues which form the content of this Amendment Bill. Inputs were also obtained from the Association of Banks in the drafting of the Bill. Sir, I beg to move. Question proposed.”
“Third, it allows non-public accountants to be directors and shareholders in an accounting corporation, subject to regulatory safeguards. In an accounting partnership, only public accountants can be partners. Regulation of accounting corporations Accounting corporations will be incorporated under the Companies Act and will be subject to the Companies Act. The corporation must also be approved by the Public Accountants Board. Some of the key safeguards to maintain the independence and professional standards of public accountants, who are key players in ensuring effective compliance with disclosure requirements and the integrity of our corporate environment, include: First, the primary object of the accounting corporation must be to provide public accountancy services. These services include audit and reporting on financial statements and other acts that are required to be done by an approved company auditor under the Companies Act or under any other written law. They do not include services such as taxation and consultancy services. Second, accounting corporations must have a minimum authorised share capital of $50,000. To ensure that ownership and control of accounting corporations remain in the hands of public accountants, at least two-thirds of the voting shares of an accounting corporation must be owned by corporate practitioners. A corporate practitioner refers to a director or an employee of the corporation who is a public accountant and is practising as such in that corporation. Third, to ensure the independence of the accounting corporation, all shareholders must be natural persons. Shareholding by nominees and securitization of any share in an accounting corporation are prohibited.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The Bill before the House seeks to amend the Accountants Act (Cap. 2A) to enable accounting firms to be formed as accounting corporations with limited liability; and to improve the registration and de-registration procedures; as well as the disciplinary and inquiry proceedings for public accountants. Allowing incorporation as an additional business structure Currently, accounting practices in Singapore can operate only as sole proprietorships or partnerships. Hence, all partners in an accounting firm can be sued if a single partner is errant. This may have been all right in the past when accounting firms were expected to be small set-ups. However, in today's globalised environment, this is no longer realistic. The Bill will allow for accounting corporations, in addition to existing business structures. The Government is not advocating that accountants adopt any particular business structure or model. The main features of accounting corporations are: First, it allows for a better framework for professional accountability, where the innocent public accountants practising in an accounting corporation will not be jointly liable with the errant ones. The errant public accountant will still be liable under the law of tort, without a statutory cap on his liability. This is to ensure that public accountants maintain high standards of professional duty and care. Second, corporatisation allows accounting practices to raise external capital. Access to external financing increases the competitiveness and global reach of accounting corporations, and is in line with the Government's drive for regionalisation and globalisation.”
“My Ministry will look again into this particular clause, but I want to point out that if the transaction is made within the 5-year period, then of course the issue does not arise. It is only when a person dies before the 5-year period that the gift condition applies. 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. ACCOUNTANTS (AMENDMENT) BILL Order for Second Reading read. 3.00 pm”
“There will be a standard form for dutiable estates, and another standard form for non-dutiable estates. The return for non-dutiable estates will be much simplified compared to the current affidavit: it will ask for fewer details. The return continues to be a legal document admissible as evidence in court. The administrator has to make sure that the return is free of error or misrepresentation. The second proposal allows the Commissioner of Estate Duty to delegate his authority to his senior officers to sign the certificates, schedules of assets and Notices of Assessment under the Estate Duty Act. The delegation of authority will improve overall efficiency and allow IRAS greater flexibility in case processing. The quality of the assessment will not be compromised as the authority will be delegated only to experienced senior officers in supervisory positions. Sir, I beg to move. Question proposed.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In my Budget Speech this year, I announced a series of measures to encourage innovation, creativity and enterprise in Singapore. To create a more conducive environment for entrepreneurial development, one of the measures was to allow a Singapore residential property used for business activities to also qualify for estate duty exemption. This is allowed so long as the residential character of the property is not materially affected. This change will support the Technopreneur Home Office Scheme introduced last year. It will also allow small businesses to be carried out from a residential home without the property being automatically disqualified from estate duty exemption. Accordingly, the proposed amendment to section 14(5A) seeks to include residential properties used for businesses under the $9 million exemption for residential properties. The amendment in section 14(6) is a change in the definition of "dwelling house" as used in the Estate Duty Act. This amendment will explicitly exclude quarters and hostels from dwelling houses. This will make it clear that residential properties used as hostels and quarters will not qualify for the $9 million exemption. The other two amendments in this Bill seek to improve the estate duty procedures administered by IRAS. First, the estate duty affidavit will be replaced by an estate duty return. At present, affidavits are required for estate duty submissions, one for non-dutiable estates and another for dutiable estates. These are sworn documents which require the endorsement of a Commissioner of Oaths or the Commissioner of Estate Duty. The estate duty return will do away with the need for the oath.”
“The proposed amendments seek to make clearer the circumstances under which a company or business may be wound up on grounds of national security or interest. The winding up process in the Companies Act as well as the cancellation process under the Business Registration Act will be harmonised with the dissolution process under the Societies Act. It clearly spells out that the Minister for Home Affairs is the definitive authority on what constitutes a threat to national security or interest, and the process by which such companies or businesses can be wound up. Other Miscellaneous Amendments The other miscellaneous amendments are essentially to update the Act, streamline the procedures and to clarify existing provisions. These include amendments to allow the Registrar to rectify the registers where there is a typographical or clerical error, to clarify that no person shall make a public offer unless a prospectus or a profile statement has been registered with RCB, and that options or warrants would also require prospectuses if they are offered to the public. Sir, I beg to move. Question proposed.”
“Extension of Buy-back Provisions Besides all these changes to the disclosure requirements, we are also making some amendments to the other segments. Let me now turn to the extension of the buy-back provisions. Currently, companies are allowed to buy back up to 10% of their issued ordinary share capital within a period of 12 months. Clause 13 amends section 76B to extend the share buy-back to preference shares, both redeemable and non-redeemable. The purpose is to give companies more flexibility in determining their capital structures and improving the efficiency of their capital deployment. There will be no volume limit on the buy-back of redeemable preference shares as such shares are not part of a company's permanent capital. In contrast, non-redeemable preference shares are part of a company's permanent capital. Hence, they cannot be returned or otherwise cancelled except in the event of a capital reduction exercise or liquidation of the company. To protect the interests of creditors, the same safeguards for the buy-back of ordinary shares will apply to the buy-back of non-redeemable preference shares. Companies will be allowed to buy back up to 10% of their issued non-redeemable preference share capital within a period of 12 months. Improvement on the Winding-up process of Companies and De-registration of Businesses In the existing Companies Act and the Business Registration Act, there are currently provisions for the winding-up of companies by the Court and cancellation of businesses by the Registrar if the company or business is used for unlawful purposes, or for purposes prejudicial to public peace, welfare or good order, or on grounds of national security or interest. However, the actual process and procedures of winding up or cancellation are not spelt out.”
“Clause 11 amends section 55 to expand the scope of civil liability for false or misleading statements or omissions in a prospectus or profile statement. The new section 55A provides that the person liable for the prospectus or profile statement is required to notify the issuer or offeror if he is aware of any material deficiencies. Section 55B provides for the defences to persons potentially liable for the prospectus or profile statement under section 55(1). Clause 12 repeals and re-enacts section 56 to provide for criminal liability for false or misleading statements, or omissions in a prospectus or profile statement, which are materially adverse from the viewpoint of an investor. Improvements on submission of financial statements Clauses 20, 21 and 22 seek to improve the submission of financial statements. Clause 20 introduces a new section 200(2A) to allow a subsidiary, which is a foreign company, to end its financial year within two months before its holding company. This is to facilitate timely reporting of group accounts. Clause 21 amends section 201 to shorten the time given for publicly listed companies to present their annual reports. Instead of the current 6 months, a public listed company must now present its profit and loss account not more than five months after the financial year-end. Clause 22 amends section 201A to allow the Registrar to exempt the directors of a holding company from complying with the requirement for consolidated accounts to be issued only after receiving the accounts of subsidiaries. This will allow auditors to express their opinion on the consolidated financial statements of the subsidiaries without all the financial statements of the subsidiaries having been signed off by their respective auditors.”
“Exemption from disclosure requirements The amendments under clause 16 are intended to improve the existing provisions on exemptions from prospectus requirements under section 106D which are either too restrictive or outdated. For offers to sophisticated investors, the limit of 50 persons will be removed. The definition of "sophisticated investor" will also be refined. Individual sophisticated investors are now defined as individuals with total net personal assets exceeding $2 million or whose income in the last 12 months is not less than $300,000. For corporations, the total net assets must exceed $10 million. Clause 7 amends section 46 to allow the Registrar to make an Exemption Order in relation to a class of prospectuses. This allows the Registrar to grant blanket exemptions and stipulate the conditions to be complied with for the issue of "preliminary" prospectus, used by issuers to gauge market interest before the actual issue. Clause 18 amends section 119 to allow any person or class of persons to seek exemption from compliance with the requirements relating to interests other than shares and debentures. Currently, the exemption may only be granted to a public company in Singapore or a public company of a proclaimed country and is registered as a foreign company in Singapore. Clause 27 amends section 400 to allow for direct sales of unit trusts to the investor, subject to certain safeguards. Civil and criminal liability for breach of disclosure requirements In line with the shift from merit-based regulation to a disclosure-based regulatory regime, all parties that are seeking funds from the public are expected to have collective responsibility to issue accurate documents that the public can rely on.”
“We are also taking this opportunity to incorporate miscellaneous amendments to streamline the procedures and clarify existing provisions of the Act. Improvement on disclosure requirements Section 45 of the Companies Act currently sets out the requirements for the content of a prospectus. Clause 5 repeals and re-enacts section 45 to replace the current checklist approach with a general test of what investors and their professional advisers would expect to find in a prospectus to make an informed investment decision. The new provision provides for the general disclosure test in the main Act whilst retaining the Fifth Schedule as a checklist. A new section 45A will be introduced under clause 6 to provide for a mini-prospectus or a profile statement in addition to a prospectus, subject to certain conditions. The profile statement will be an abridged version of the full prospectus. It is meant to provide essential information at a glance, and make the information easier to read and digest. Investors who wish to do so can still refer to the full prospectus. Another step to improve the disclosure requirement is to allow the issuance and lodgment of a supplementary or replacement document after the original prospectus has been lodged. This is provided under clause 10, which inserts a new section 50A that specifies the circumstances under which a supplementary or a replacement document could be lodged with the Registrar and issued to the public. This is to enable the issuer to update or rectify any statement that has already been made in a prospectus or profile statement. Currently, issuers have to either issue a fresh prospectus or press advertisement to inform investors of such changes. The new approach will be less time-consuming and costly.”
“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. COMPANIES (AMENDMENT) BILL Order for Second Reading read. The Second Minister for Finance (Mr Lim Hng Kiang): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Companies Act was last amended in 1998 whereby a set of amendments was made as part of a wider exercise to update and modernise company legislation. The Bill before the House today represents the outcome of the review of the company legislation since then. The greater part of the present Bill is devoted to the disclosure requirements in the Companies Act for offers or invitations to the public in respect of shares and debentures. This is essentially in response to the recommendations of the Corporate Finance Committee (CFC) to make Singapore a key financial centre for international corporate fund-raising activity. The main thrust of the Corporate Finance Committee's recommendations is that Singapore should shift from merit-based regulation to a disclosure-based regulatory regime to promote innovation, entrepreneurship, efficiency and business flexibility, while protecting the integrity of the securities market. Accordingly, the present Bill seeks to improve provisions relating to the disclosure requirements in the Companies Act, exemptions from such disclosure requirements, the penalties for breach of disclosure requirements and submissions of financial statements. The other amendments are intended to enlarge the scope of the share buy-back provisions, improve the winding-up process of companies that are being used for purposes against national security or national interest, and make related amendments to the Business Registration Act.”
“Under this scheme, Singapore citizens aged 21 and above on 31st December 2000 will, depending on their income levels and NS status, receive top-ups of $500 to $1,700 in their CPF Ordinary Accounts if they have contributed at least $100 as CPF contributions during the qualifying period between 1st January 1998 and 31st December 2000. The budget surplus sharing package also included a contribution of $300 million to the ElderCare Fund which was established in March this year as an endowment fund for Government funding of the entire range of elderly and continuing care services by voluntary welfare organisations. This contribution will bring Government's contribution to the Fund to $500 million, one-fifth of the targeted amount of $2.5 billion. 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 the Bill be now read a Second time." The purpose of this Bill is to make provision for additional expenditure of $5.2 billion which was not foreseen at the time of the FY2000 Budget when it was prepared. Of the additional provision, about $1.9 billion is required by the Ministry of Communications and Information Technology for payment to SingTel and StarHub, to compensate them for potential loss of revenue arising from Government's decision to bring forward the introduction of full market competition in the basic telecommunications sector by two years, from 1st April 2002 to 1st April 2000. The net of tax compensation sum was arrived at using the discounted cash flow approach, which is the mainstream approach used by the financial and investment community to value businesses, to determine the difference in net present value terms for the two telcos under the duopoly and the accelerated liberalisation scenarios. The telcos have agreed to the compensation offers. The balance of $3.3 billion is required for the Head of Expenditure on Financial Transfers. Of this, $2 billion is for transfer to the Developmental Investment Fund which came into operation on 1st April 2000. The Fund was established to finance investments with developmental objectives so that such outlays would be properly treated as investments and not as straight expenditure, which would be the case if the outlays were funded through the Development Fund. Another $1 billion is required to fund the first tranche of the CPF Top-Up Scheme, part of the budget surplus sharing package announced by the Prime Minister in his National Day Rally Speech for this year.”
“Monthly revenue from petrol duties has not risen significantly despite the increase in petrol prices. Monthly collections from April to August this year were $39.5 million, $40.8 million, $38.2 million, $42.4 million and $42.5 million respectively. During this period, the average pump price for petrol rose from $1.27 per litre to $1.42. In April 1999, when the pump price was at $1.12 per litre, the duties collected for that month was $39 million. This is equivalent to the amount collected this April when pump price was at $1.27. TERMINATION OF PREGNANCY ACT 2. Mdm Claire Chiang See Ngoh asked the Minister for Health if he will consider introducing legislation to amend the Termination of Pregnancy (TOP) Act to provide for parental consent for an abortion decision made by youths between 13 and 21 years of age and what are the legal, medical and social implications of such an amendment.”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolution. Resolution reported. "That the sum of $5,241,000,000 shall be supplied to the Government under the Heads of Expenditure for the Public Services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1st April 2000 to 31st March 2001, contained in Paper Cmd. 9 of 2000", put and agreed to. Question put, and agreed to. Resolution accordingly agreed to. STATUTES (MISCELLANEOUS AMENDMENTS AND REPEAL) BILL 2.10 pm Order for Second Reading read.”
“I did not say that it does not have any impact. The capital cost of cars influences the increase in car population. But the price of petrol helps to regulate the use of cars which are already in the market. The high cost of cars influences the increase in the car population whereas the cost of petrol influences the usage of cars. 'BABY BONUS' SCHEME (Inclusion of first child and effective date) 7. Mr Ang Mong Seng asked the Prime Minister whether he will consider granting the 'Baby Bonus' to include the first child, and whether the effective date for this scheme will be the date of announcement instead of 1st April 2001.”
“It has a contributory effect. We have a package of measures to regulate the growth and usage of cars in Singapore. The most important is the capital cost, which includes import duties, additional registration fee and COE. So the capital cost of a car is substantial. As I have said earlier, petrol duty accounts for only 5% of the operating cost of a typical 1.6 litre car. It is therefore relatively insignificant. For example, a 1.6 litre Toyota Corolla car could cost $96,000. The capital charge would therefore be large relative to the cost of petrol duty.”
“Why do you not let me have your calculation? We will make a reconciliation with our figures?”
“I do not have the detailed figures but I am assuming that the figures I gave Members for the utility charges would include the size of utility bills borne by the various family sizes. So they should account for all the changes that take place. But if the Member wishes, I will send him the details of the breakdown.”
“Nor should we subsidise the consumption of oil or electricity, not even by lower income households. But we will help them in other ways. If the economy continues to perform well, in future budgets we will again be in a position to consider further rebates for lower income households.”
“In fact, when crude oil prices increased by 26% from US$25 in December last year to US$32 in September this year, average pump prices of petrol increased by only 15%, from S$1.23 to S$1.42 per litre. We did not place a cap on petrol duty on previous occasions, when oil prices rose sharply, and were in real terms much higher than today. I therefore do not see a need to do so now. Mr Ong and Mr Low have also asked the Government to consider measures to help households cope with rising utility bills. In the last sitting of Parliament, Minister George Yeo gave a full explanation of the measures the Government has taken. To help lower-income households cope with the changes, the Government has granted them rebates on their utility bills. This year, the rebate is $200 for 1- to 3-room HDB flats and $100 for 4-room flats. The amount will be credited to their utilities accounts in mid-October this year. For 1- to 3-room HDB households, the $200 rebate is more than the average annual increase in utility bills. For 4-room HDB households, the $100 rebate is about half the average increase in utility bills. In addition the Government has also given service and conservancy charge rebates for these flats. These rebates help the lower income households to cope with price increases. Overall, despite the higher oil and electricity prices, CPI inflation will be less than 2% this year, including for the lower income households. Therefore, while the price increases are not welcome, they should not cause significant hardship or disruption to households. We should see the current oil price levels in perspective, and should not over-react to them. As a price taker who imports all our oil, we cannot shield ourselves from global fluctuations in oil prices.”
“Mr Ong and Mr Leong have asked that the Government lower petrol duty to mitigate the cost pressures on the economy, by lowering the ad valorem rate or placing a cap on petrol duty. Let me first point out that at present customs duty is imposed only on petrol. There is no tax on diesel fuel or jet fuel. There is also no tax on fuel used for the generation of electricity. The impact of customs duty on the cost of public transportation, commercial traffic and household electricity bills is thus very limited. Our petrol tax is used primarily as a traffic management tool. It amounted to $466 million in FY99. I do not propose to lower the duty on petrol or put a cap on it. For a typical 1.6 litre car in Singapore, even at present prices, petrol duties paid as a percentage of total operating cost of the car is only 5%. Our pump prices and petrol duty are not excessive compared with those of many other countries. For example, in the UK, the price per litre of petrol is about S$2.22. In South Korea it is S$1.98, in France S$1.97. In Singapore the average price is about S$1.50. In Malaysia and Indonesia the retail prices of petrol are lower, but that is because of heavy subsidies by the governments as they are oil-producing countries. As for petrol duty, at 40% ad valorem, Singapore's rate is lower than all the European countries and Australia. Only the US is lower2. Pump prices of petrol 2 Countries Tax Rate on Petrol (% of retail price) USA 22 UK 74 France 67 Germany 65 Holland 64 Italy 63 Belgium 63 Spain 58 Denmark 43 Australia 47 Singapore 40 (pre-GST) Thailand 29 Source: MAS Note and diesel oil also do not fluctuate as widely as crude oil prices.”
“Mr Speaker, Sir, may I have your permission to take Question Nos. 3 to 6 together?”
“Proposed Amendments The Bill makes the following amendments to the Auctioneers' Licences Act: (a) to change the title of the Act to Appraisers and House Agents Act; (b) to remove the definition of auctioneers and the requirements imposed on them in conducting auctioning activities; (c) to remove any reference to auctioneers in the various sections of the Act; (d) to have the transitional provision to deem all auctioneers to have the appraiser and house agent licences until 31st December 2000; and (e) to amend the schedule to the Act. Transition Measures As a transition measure, auctioneers, who hold licences for the auction of land and building and immovable properties and are engaged in the appraisal or sale or rental of such properties, will be deemed to hold an appraiser or house agent licence as the case may be until the expiry of their licences on 31st December 2000. Thereafter, those who wish to continue to perform appraisal or house agent services will have to apply for the appropriate licence of appraiser or house agent. 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. NATIONAL COUNCIL OF SOCIAL SERVICE (AMENDMENT) BILL Order for Second Reading read.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill seeks to amend the Auctioneers' Licences Act to give legislative effect to remove the need for licensing of auctioneers. Rationale The Auctioneers' Licences Act, which was enacted in 1906, licenses auctioneers, appraisers and house agents. The Act serves to regulate persons who conduct the sale of goods or any other properties through open bidding. We have looked at the relevance of licensing auctioneers today, and have concluded that there is no need to license auctioneers. Auctioning is a mode of sale. A good sold by auction could be similarly sold by direct sale, telemarketing or exhibition sale. Other modes of sale such as direct sales, telemarketing or exhibition sales are not licensed. An auction sale is open and subscribes to willing buyer and willing seller principles. Buyers and sellers enter into mutually agreeable contractual terms in the sale. Therefore, they are in the position to determine what are mutually agreeable terms of sale without the need for another safety net via licensing. Feedback from auctioneers who are currently licensed indicate that the various trades see little value in the licensing requirement. The removal of licensing is not expected to have adverse impact on their activities. In addition, removing the need to apply for a licence would make it easier for auctioneers to carry out their work, and could encourage more professional auctioning activities to be based in Singapore.”
“To ask the Minister for Home Affairs if he will explain why no action was taken by the police against the illegal assembly outside the Singapore Recreation Club at its annual general meeting and the reason for not proceeding against the organisers.”
“The "Chiang Mai" Initiative was an outcome of the ASEAN plus three Finance Ministers Meeting held in Thailand in May this year, and was in recognition of the need to establish a regional financing arrangement to supplement existing international facilities. The "Chiang Mai" initiative can essentially be broken down into two parts: (a) An expansion of the ASEAN Swap Arrangement to include all ASEAN countries; and (b) The establishment of a network of bilateral swap and repurchase agreement facilities among the ASEAN countries and the plus three countries of China, Japan and the Republic of Korea. However, the details of the Initiative and its implementation are not yet finalised, and are still being worked out by the central bank officials. Mr Tay also asked what impact this swap arrangement will have on Singapore's reserves. In short, there will be none. The currency swap arrangement is a form of collateralised short-term loan. It is no more than a conversion of one form of asset to another, that is, from US dollars to its equivalent in another currency, with the commitment that the transaction will be reversed at a future date at a predetermined exchange rate. Thus, there will be no impact on our reserve position. Because of our close links with our neighbours in the East Asia region, Singapore is affected by the economic well-being of their economies. This was clearly demonstrated by the recent financial crisis. It is therefore in our interests to do what we can to maintain economic and financial stability in the region. The "Chiang Mai" initiative is just one step towards this larger goal. ILLEGAL ASSEMBLY OUTSIDE SINGAPORE RECREATION CLUB (Police action) The following Question stood in the name of Mr J. B. Jeyaretnam - 16.”
“Mr Speaker, Sir, Singapore has an existing commitment to the ASEAN Swap Arrangement, or ASA for short, which was established on 5th August 1977, together with the central banks of Indonesia, Malaysia, the Philippines, and Thailand. It is a co-operative financing facility aimed at alleviating temporary balance of payments needs among the five member countries. The total facility under the ASA amounts to US$200 million, which is to be contributed in equal amounts by each participating member, that is US$40 million each. The participating member is permitted to draw on the facility for up to a maximum amount of twice their contributions, which is US$80 million. Allow me now to explain a little about the mechanics of this swap arrangement. A member country with liquidity problems or needs can exchange or swap its local currency for US dollars provided by the other member countries of the swap arrangement. A currency swap is effected through a spot purchase of US dollars against the domestic currency of the borrower, accompanied by a forward sale of US dollars by that borrower against the same amount of domestic currency. The interest on the swap facility is the difference between the forward and spot exchange rates, determined by the interest rate of the Eurodollar deposits for the relevant period of the Arrangement as quoted by the Bank of International Settlements in Basle, two working days prior to the value date. A swap transaction shall be for a period of one, two or three months, and may be renewed once for a maximum of another three months. The swap facility is made available only to the central banks and monetary authorities of the participating ASEAN countries. A participant may choose not to participate in a swap transaction.”
“By paying cash, you require someone, a clerk, at the counter to receive and process the cash. For GIRO, you do it by just pressing a button. Surely, the difference is quite significant, in terms of cost processing. Lower cost of electronic processing is not only applicable to business registration but to other activities where you are moving away from counter services to electronic services. LICENSING AND CONTROL OF CATS The following Question stood in the name of Mr Simon S C Tay - 4. To ask the Minister for National Development what are the policies and practices relating to the licensing and control of cats.”
“Mr Speaker, Sir, the differential fee structure for the renewal of Certificates of Registration for Business Firms was implemented on 1st April 2000 to reflect the different costs of processing the different modes of payment. Before 1st April, the annual renewal fee was $25. This rate has remained unchanged since 1974. As a result of increasing costs over the years, the fees for renewal by cash and cash equivalents had to be increased to $105 for three years to reflect the higher operational costs. If, however, renewals are done by GIRO, the processing costs are lower. Therefore, MOF is able to pass on the cost savings to the business firms, and keep the renewal fees unchanged at $75 for three years, or at $25 per year.”
“I think it is very difficult to reconcile human nature. CERTIFICATE OF REGISTRATION OF BUSINESS FIRMS (Renewal fee) 3. Mr Chiam See Tong asked the Minister for Finance, in regard to renewal fees of Certificates of Registration of Business Firms, what is the reason for those who pay by Giro paying less (i.e. $75) and those who pay by cash paying more (i.e. $105).”
“To do that defeats the purpose. I think he would appreciate that the locations selected are reasonably far away from places where children will gather, schools, places of worship, and so forth. Pools will exercise due care and not to place outlets at places where children might be attracted to, although legally children are not allowed to patronise them anyway.”
“I do not think so. We have 150 outlets. Another 50 outlets will be provided to make it more convenient. We believe that unless you can say that gambling can be wiped out altogether, which I think it is impossible, then we have to make it reasonably convenient for those who want to have a flutter to be able to do it conveniently, and that is the main purpose. From 150 to 200 outlets over 14 years is not a large number.”
“On the first question, it is impossible to obtain accurate statistics. We would have to ask the public at large: do you patronise illegal outlets? What do you think the answer is going to be? So I think it would be quite difficult to obtain the figures he wants. On the issue of a public education campaign, I think that is something we can do, although excessive gambling is undesirable. But I do not think the level of gambling in Singapore has reached a stage where we need to mount a major campaign. We are nowhere near the propensity of gambling compared to many other countries.”