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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“Extension of Operational Headquarters (OHQ) Incentive The Operational Headquarters or OHQ incentive scheme was introduced in 1986 to attract multinational companies to set up their headquarters in Singapore to service the needs of their subsidiaries and related companies in the region. With the growth and expansion of investments and trading opportunities, OHQs are increasingly called upon to provide finance and treasury services to their related companies. In the course of providing such services, they may also derive income from trading in foreign exchange and offshore investments, on their own account. As these are high value-added activities and in line with our objective of developing Singapore into an international financial centre, I intend to extend the OHQ incentive to cover such income. The income will now qualify for the 10% concessionary tax rate. This concession will take effect from Year of Assessment 1991. Mr Speaker, Sir, I will now turn to tax on individuals. Tax on Individuals Personal Income Tax I am satisfied that our existing personal income tax rates remain fair and equitable so that there is no immediate need to alter the tax schedule. However, to reward effort and enterprise, I propose to give an across-the-board once-off rebate of 5% on personal income tax for Year of Assessment 1990. The estimated revenue loss is $60 million. Procreation Incentives Our population problems have been aggravated by a trend of delayed childbearing, especially for lower order births. From 1980 to 1989, the median age of mothers at first birth increased from 25.3 to 27.4 years of age. For second births, the median age of the mothers increased from 27.6 to 29.8 years. The delay in the second birth follows inevitably from the delay in the first birth.”
“However, to prevent our tax base from being eroded, Singapore dividends and interest from investing the shareholders' funds and the offshore insurance fund, apart from interest from ACU deposits, will be excluded from the tax concessions. Offshore Life Insurance Incentive In keeping with the objective of promoting offshore insurance business, I propose also to extend to the offshore life insurance business, tax concessions that are similar to those granted to the offshore general insurance business. A concessionary tax rate of 10% will therefore apply to interest and dividends from investing the offshore life fund and the shareholders' funds supporting the offshore life business. Singapore dividends and interest, apart from interest from ACU deposits, will similarly not qualify for the tax concessions. This will take effect from Year of Assessment 1991. Extension of Post Pioneer Incentive In my 1986 Budget Speech, I announced the introduction of a post-pioneer incentive to be made available to companies upon expiry of their pioneer period. The incentive provides for a concessionary tax rate of as low as 10% for companies undertaking approved activities, and is granted for a period of up to 5 years. It was introduced to cushion pioneer companies from having to pay the full corporate tax rate, upon expiry of their pioneer incentive. I now propose to extend the post-pioneer period by 5 years. This means that a company can enjoy the concession for up to 10 years. This is in keeping with our intention to remain competitive. Furthermore, the concession would be useful as a promotional tool to encourage pioneer companies to continue upgrading their operations in Singapore. This extension will take effect from Year of Assessment 1991.”
“This restriction on capital allowance deduction will not apply to operating leases, such as the hiring of vehicles. The revised guidelines are attached as Appendix I (Cols. 51 - 52) to my Budget Statement. Appendix I - TAXATION GUIDELINES FOR FINANCIAL LEASING (Cols. 51 - 52) Following the revision in the leasing guidelines, I propose to encourage offshore leasing activities by taxing incomes from offshore leasing at a concessionary rate of 10%. This is in keeping with existing incentives for promoting offshore financial services. However, capital allowances for assets leased overseas will only be allowed to be deducted against the offshore leasing income. This will take effect from Year of Assessment 1991. Extension of Offshore General Insurance Incentive Currently, underwriting profits from insuring offshore general risks and the interest and dividends from investing such profits are taxed at a concessionary rate of 10%. Although this incentive has helped the offshore insurance business to grow by over 10% per year since 1980, the absolute size of the business is still minuscule by world standards for it started from a very small base. The insurance industry is an important leg of our financial services industry. There is high potential for growth, especially in reinsurance and captive insurance. To promote further growth, I propose a tax incentive to broaden the capital base of insurance companies. With effect from Year of Assessment 1991, a concessionary tax rate of 10% will apply to interest and dividends from investing the whole of the shareholders' funds which are used to support the offshore insurance business.”
“Last year I introduced the Approved Oil Trader Scheme under which oil traders were granted a concessionary tax of 10% on approved offshore oil trading activities. The AOT scheme has already brought additional business to Singapore. To develop Singapore as a Global Entrepot and to promote international trading of other major commodities in Singapore, I have decided to grant the 10% concessionary tax rate to Approved International Trading companies, trading in approved commodities. The approved commodities would include rubber, timber, edible oils, coffee, cocoa, metals and minerals and bulk chemicals. This scheme will essentially be similar to the Approved Oil Trader Incentive and will be administered by the Trade Development Board in consultation with the Revenue Division of my Ministry and the Inland Revenue Department. The incentive will take effect from Year of Assessment 1991. Tax Guidelines on Financial Leasing and Incentive for Offshore Leasing Tax guidelines were first proposed in 1982 to regulate the tax treatment of financial leasing transactions. Based on feedback from the leasing industry, I have decided to simplify the guidelines and to relax the criteria for determining whether a leasing contract will be treated as a genuine lease agreement for tax purposes. Constraints will no longer be placed on the total rental payment and duration of the initial lease term, the rental reduction on extension of lease, and the way payments are scheduled. However, to prevent financial leasing transactions from being used as a tax shelter, capital allowances for leased assets will not be allowed to be deducted against non-leasing incomes of the lessor. This will apply to assets leased under lease agreements made on or after 1 April 1990.”
“This will cost the Government a revenue loss of about $35 million per year. Finance and Treasury Centre (FTC) Incentive The last decade has been characterised by sweeping de-regulation in the global financial markets. International capital flows have become larger and more variable, leading to increased volatility in exchange and interest rates. Consequently, more multinationals have found it necessary to hedge their financial risks through treasury and risk management activities. MNCs which have worldwide businesses and financial activities, have established separate divisions to manage their treasury and financial operations. Such divisions of MNCs are now among the major participants in international foreign exchange and capital markets. To encourage them to set up and expand their operations here, I propose to grant a tax incentive for the establishment of Finance and Treasury Centres in Singapore. This incentive will spur such institutions to perform treasury, financing and other financial services for their own account and for companies in their group. Income accruing to such centres from trading in foreign exchange, offshore investments and provision of financial services to related companies will be taxed at a concessionary rate of 10%. This incentive will take effect from Year of Assessment 1991. Approved International Trader (AIT) Incentive Scheme Singapore has prospered as an entrepot centre due to its conducive business environment, free trade policies and good infrastructure. It is ideally suited to service the trading requirements of the Asia Pacific region, in the same way that London and New York support their respective geographical regions and time zones.”
“I therefore intend to introduce additional incentives and improve on existing ones. On this note, I now turn to the proposed tax changes. TAX CHANGES Tax on companies Company Income Tax Last year, the rate of corporate tax was reduced from 33% to 32%. This year, I intend to reduce the corporate tax rate by an additional 1%, from 32% to 31%. This further reduction of the tax rate reaffirms Government's objective of taxing productive sectors as lightly as possible, so long as economic conditions allow. The move also ensures that our tax rates will remain competitive worldwide. The 31% tax rate will take effect from Year of Assessment 1991. Hence, any dividends paid on or after 1 January 1990 would carry a tax credit of 31%. The revenue loss is expected to be $70 million annually. For many companies, this will offset some of the additional business costs which they have to pay, such as higher foreign workers levies and premiums for vehicle quotas. Stamp Duty for Share Transactions The Stock Exchange of Singapore will commence scripless trading on its Main Board from April 1990. Under this electronic trading system, stocks and shares transacted will be automatically registered without any transfer document. Currently, a stamp duty of 20 cents per $100 or part thereof of the value of the stocks or shares is payable on such transfer documents. To keep our stock market competitive, I have decided not to levy stamp duty on transfers done electronically. This will lower the costs of transacting securities on the scripless system. Transactions on the scripless trading system will therefore be subject only to the existing stamp duty on contract notes of S$1 per $1,000 or part thereof of the stock or shares transacted.”
“In nearly all developed countries, a value-added tax is an integral component of the system of revenues. It will complement our system of direct taxes and would provide Government with a stable source of revenue, less dependent on economic conditions. In the coming financial year, I intend to introduce legislation on a comprehensive goods and services tax. The intention is to have the legislation in place, but to defer its actual implementation for as long as the revenue position permits. This will allow ample time for public discussion and education, uncomplicated by the need for immediate application. The introduction of a comprehensive goods and services tax will mean a major change in our tax system. Experience in other countries has shown that public understanding and acceptance of its workings can only be achieved over an extended period of time. The economy has responded well to the various fiscal measures implemented over the years, and has consistently performed beyond expectations. With the present tight labour situation and rising prices, there is no immediate need for any additional fiscal stimulus. However, specific tax incentives will promote investments and growth in particular sectors of the economy and help to ensure that growth continues. I therefore intend to introduce new tax incentives this year to promote industries with high potential for growth and greater sophistication. Several special tax incentives to encourage procreation were announced in the FY87 and FY89 Budgets. These have been followed by an encouraging increase in the number of new births, demonstrating the efficacy of financial incentives for this purpose. Unfortunately, the increase in the birth rate is still insufficient to reverse the decline in fertility.”
“We cannot therefore afford to indulge in profligate spending on account of anticipated surpluses. Instead, we should allow surpluses to accumulate when times are good so that when necessary, such as during recession years, we can fall back on the reserves to tide us over. However, prudence should not be equated with miserliness. Over the years, when the economic situation allowed, the Government has channelled some of its surpluses back to the economy through generous tax reductions and incentives. This is in line with the Government's philosophy to tax factors of production as lightly as possible to encourage enterprise and ensure that our industries are internationally competitive. The tax rebates and rate reductions which have been given since FY80 now total more than $1 billion a year. Consequently, our effective corporate and individual tax rates are still among the most competitive in the world. There is thus no compelling need to adjust our tax rates at the moment. However, there is scope this year for the Government to share the gains of a buoyant economy with the private sector. I will elaborate on this later. In past Budgets, I have mentioned the possibility that a broad-based system of consumption tax may need to be introduced when revenue from our existing tax package becomes insufficient to support expenditure. As the FY90 budget outlook is favourable, such a tax will not be needed this year and probably not for some years, as long as our economic growth remains strong and government expenditures are kept under control. However, we should not assume that this happy state of affairs will continue indefinitely. If ever the Government is pressed for revenue to finance its programmes, it will need new sources of taxation.”
“In developing management accounting systems, it is necessary to introduce certain aspects of accrual accounting to supplement the Government's cash basis of accounting. In particular, a Fixed Assets System is being installed to record the stock of public capital assets and compute depreciation expenses. This system should be ready by May 1990 for use by Ministries under Phase 1 of the Management Accounting Systems project. Parallel with these developments, the Management Services Department and the Management Services Units within Ministries will continue to review the organisation, systems and procedures of Ministries to improve their efficiency and effectiveness. Periodic zero-based reviews will be conducted to ensure that outdated practices are weeded out and operating procedures meet present day needs. PART III - REVENUE AND TAX CHANGES Mr Speaker, Sir, I shall now turn to Government's revenue position and proposed tax changes for FY90. The Government's revenue position has strengthened as the economy continued to expand into 1989. It is estimated that total revenue for FY89 will reach $15.3 billion, a 12.4% increase from the $13.6 billion of FY88. The substantial increase arises from the two years of high growth in 1988 and 1989. This year, our economy is expected to slow down, in line with the world economy. Revenue growth is therefore expected to be lower in FY90. Total revenue for FY90 is estimated at $15.6 billion. With total expenditure budgeted at $14.1 billion, a budget surplus of $1.5 billion is expected. This happy outcome is the result of our sound revenue position and prudent expenditure policies pursued over the years. As I pointed out earlier in my speech, Singapore is a small country without natural resources.”
“The provision for R&D would be increased gradually over the next five years to about 1% of GDP. MANAGEMENT AND CONTROL OF GOVERNMENT EXPENDITURE The Block Vote Budget Allocation System which was introduced in FY89 provides Ministries very considerable autonomy in managing funds and manpower. The system enables Ministries to respond speedily to changing needs and circumstances. The objective in decentralizing financial control is to encourage managerial initiative and to promote the import of the techniques and ethos of business management into the public sector. While Ministries are given greater flexibility in managing their allocated resources, they are also expected to regularly monitor key activities to ensure that programmes are relevant and cost-effective. Ministries must hold themselves accountable for the costs they incur and the results they produce. My Ministry has, therefore, started the setting up of Management Accounting Systems in Ministries to provide them with the tools to track the costs of their services, products or activities. Phase 1 of the Management Accounting Systems project covers five Ministries, namely, the Ministries of Finance, Education, Health, National Development and Environment. As the Accountant-General's Office and the Management Services Department, which is the Government's in-house management consultancy arm, have limited manpower resources, external consultants have been engaged to assist in the implementation. By the end of FY90, these five Ministries should have a working management accounting system which will allow them to exercise effective control over costs and facilitate management decisions on resource usage. It is my Ministry's plan that by FY93, all Ministries should have management accounting systems installed.”
“This estimate includes a sum of $800 million as the second reimbursement to HDB for infrastructure and resettlement costs incurred on land returned to the Government earlier. The initial reimbursement amounting to $1.07 billion was made in FY89. Excluding both these transactions, the projected FY90 development expenditure would be $3.82 billion, which is marginally higher than the revised FY89 development expenditure of $3.68 billion. Excluding public housing expenditure, direct government development expenditure and capital grants for approved projects would amount to $3.06 billion or 5.2% of GDP. The major development outlays in FY90 are to meet expenditures on the final phase of the MRT system and the second passenger terminal at Changi Airport; construction of the Senoko Refuse Incineration plant; development of infrastructural and tourist facilities on Sentosa; construction of civil defence shelters and prisons; the development of independent schools, aided schools, junior colleges and higher education institutes. Capital grants for public housing, including capital subsidies to the HDB and Town Councils, are expected to decline by 60% from $981 million in FY89 to $423 million in FY90. The major reduction is due to lower capital subsidies required by the HDB as a result of the reduced scale of its public housing programme. The reduction, however, is partly offset by a provision of $51 million for the HDB upgrading programme. The projected development expenditure includes a contingency provision of $333 million for new development projects that may be submitted by Ministries for implementation in FY90. An allocation of $150 million would also be provided for Research and Development (R&D) expenditure in FY90.”
“The larger than normal rise in OOE is attributable to a number of factors, the most important being substantial increases in financial subsidies to child care centres, higher grants to the Citizen Consultative Committees, increase in rental for government offices, implementation of the recommendations of the various Advisory Councils, and expenditure on the 1990 Census of Population. Grant-in-Aid (GIA) will be increased by $152 million or 14.7% to $1.18 billion. Of the increase, $47 million is for additional subventions to the restructured hospitals, particularly Kandang Kerbau and Toa Payoh hospitals. Another $27 million has been budgeted as a grant to the Singapore Broadcasting Corporation for public service radio and television programmes. The provision for operating subsidies to the Town Councils is increased by $15 million to a total of $42 million. The balance of the GIA increase is to meet the higher operating deficits of tertiary educational institutions and other government-funded statutory boards. Expenditure on Pensions is expected to rise by $32 million or 12.4% to $294 million. Of the increase, $17 million is statutory expenditure consequential to a projected rise in the number of retirees. The remaining $15 million is to meet increases in medical and dental expenses incurred by pensioners and also for ex-gratia payments arising from the restructuring of government hospitals. Debt Servicing costs are expected to increase by $249 million to $1.8 billion. The increase is to meet interest payments on domestic loans that were raised in the second half of FY89 as well as new loans that are expected to be raised in the first half of FY90. Development Expenditure Development expenditure is projected to be $4.62 billion.”
“The increases are to cater for normal salary increments, the planned increase in employers' CPF contribution, salary revisions and the need to fill vacancies in essential services. The Health Ministry's EOM, however, shows a decrease because manpower costs associated with the newly restructured Kandang Kerbau and Toa Payoh hospitals will be met from Grant-in-Aid allocations. The increases in manpower costs have been moderated by reductions in the staff establishments of a number of Ministries. The reductions arise from deletions of redundant posts, streamlining of work procedures and organisational reviews. The total authorised staff complement of Ministries including government-funded statutory boards, will be reduced to about 109,000 posts, a drop of more than 2,600 posts. Of the reduction, about 1,700 posts are from the permanent establishment. The bulk of the reductions is from the staff complements of the Ministries of Health and National Development. Staff increases are, however, supported for the Courts, the Auditor-General's Office and the Ministries of Education, Home Affairs, Labour and Law. The total manpower establishment in FY90 would grow only by 239 posts, or 0.2% higher than the zero-growth target. Other Operating Expenditure (OOE) for FY90 is projected to be $860 million. This is 16.9% or $124 million more than the OOE in FY89. The increase is partly due to a contingency provision of $25 million as Government's contribution, on a dollar-for-dollar basis, to the 25th Anniversary Charity Fund. Excluding this one-off item, the increase in OOE would be 13.5%, a relatively high rate of increase compared with the average annual increase of 6% over the last five years.”
“The Minister for Education has already announced plans to improve, both qualitatively and quantitatively, our schools and tertiary institutions. We will be committing substantial new funds on research and development. Public housing estates will be upgraded and there will be major investments on facilities for arts, culture and recreation. THE FY90 BUDGET ESTIMATES The FY90 Budget reflects the steady progress made in achieving our long-term policy objectives. Government expenditure as a proportion of GDP will be maintained at the present level while the manpower establishment as a proportion of the total workforce will be reduced. Government's total expenditure in FY90 is projected to be $14.14 billion, an increase of $1.18 billion or 9.1% over the revised FY89 expenditure of $12.96 billion. The estimated expenditure of $14.14 billion will amount to 24% of GDP, which is consistent with our objective of maintaining expenditure at a level no higher than 25% of GDP over the long-term. Of the total expenditure, recurrent expenditure accounts for $9.52 billion or 67.3% and development expenditure for $4.62 billion or 32.7%. Recurrent Expenditure Total recurrent expenditure for FY90 is projected to be $9.52 billion, an increase of $1.31 billion or 16% over the revised FY89 expenditure. The rate of increase for FY90 is higher than the average for the past five years, but as a proportion of GDP, it remains at about 16%. Expenditure On Manpower (EOM) is projected to rise to $2.09 billion. This is an increase of $201 million or 10.6% over FY89. EOM for most Ministries will rise, with increases ranging between 10% to 21%.”
“Barring these major uncertainties, the Ministry of Trade and Industry estimates that the Singapore economy will grow in 1990 at between 6 to 8%, above our long-term sustainable rate, but less quickly than in 1989. PART II - THE FY90 BUDGET Mr Speaker, Sir, I shall now move on to the Budget for the coming financial year. FISCAL POLICY OBJECTIVES With the recession behind us and the economy buoyant, we are well placed for the 1990s. We have a strong balance sheet and sound reserves and we must maintain this position. Although our objective is to achieve a balanced budget over the long term, given the limitations of our natural resources and our heavy dependence on external trade, our aim must be to augment our reserves with surpluses from good years so that we will have the financial strength to see us through periodic downturns in the international business cycle. We will continue to foster the growth of the private sector. On the revenue side, our taxation policy will be designed to encourage corporate and individual entrepreneurship. On the expenditure side, our policy will be to contain the share of the nation's resources consumed by the public sector so as to facilitate private sector growth. Improvements in work methods and productivity increases will ensure that the quality of public services is maintained while growth in recurrent expenditures is restrained. On the other hand, we must continue to invest for the future. With the completion of major programmes in basic infrastruc- ture and public housing, more funds will be devoted to investments which will promote future growth and improve the quality of life in Singapore.”
“The Sembawang Group will also be developing an industrial park alongside the yard where Singapore investors can relocate labour-intensive industries. Joint committees have been set up to further enhance economic links and to promote cross border investments with our immediate neighbours. There is a Johore-Singapore Committee on Business Co-operation between private sector businessmen of the two states. Similarly, a Joint Committee on Batam has been set up. Local and foreign MNCs have been encouraged to work with these committees to expand into the region. OUTLOOK FOR 1990 There are some uncertainties in the outlook for 1990. The Singapore economy is sound, and well-poised to take advantage of the opportunities open to us. In the latest (1st quarter 1990) survey of business expectations, Singapore entrepreneurs, especially those in the financial sector, continue to be optimistic about business prospects for the 6 months ending June 1990. However, much depends on the international outlook. World trade and output may be slightly slower than 1989. The majority view of economists is that a recession is not imminent in the United States. The economic impact of the strategic changes in Eastern Europe, and the impending formation of EC 1992 is still uncertain. The rapid opening up of Eastern Europe, and especially the swift moves towards reunification in Germany, offer new opportunities for increased trade and economic growth. However, the need for investment funds and the release of pent-up consumer demands in these countries will place heavy strains on the international capital markets and the international monetary system.”
“Although domestic realities like fiscal imbalances and problems of structural adjustments may sometimes put pressure on governments to consider restrictive trade practices to protect domestic producers, we will continue to be outward-oriented and work with like-minded countries within international and regional forums to advance the cause of free trade. We are constantly forging more direct and deeper economic links with economies around the world. On a regional basis, Singapore's prosperity depends on the prosperity of her neighbours and vice versa. We should allow our growth to spill over into our neighbouring economies so that the region can become more closely integrated economically and together we can become a strong centre of growth. A nearby example of such complementary development is the economic ties between Hong Kong and China. Singapore, being earlier down the road of economic development, can be a catalyst in helping the region to grow. For example, we are encouraging global companies which set up operational headquarters in Singapore to distribute production and other labour intensive activities to our neighbouring countries. Our neighbours, who have a comparative advantage in terms of abundance of land and labour, will be able to provide these inputs more competitively. Our neighbours, especially our closest neighbours Malaysia and Indonesia, have recognised the value of integrated economic development and growth, and are actively pursuing appropriate investment strategies. We have also encouraged our Singaporean entrepreneurs to seek out opportunities offered by our neighbours. For example, the Indonesian government recently supported the Sembawang Group's acquisition of a second ship-repair yard in Dumai.”
“A varying mix of research and development, product design, production, marketing, distribution and servicing uses, covering the full spectrum of modern business, will be allowed within such parks to meet the specific needs of each clients in the park. The Government has endorsed this concept and the Ministry of National Development is proceeding with the development of planning guidelines for business parks. The first business parks will be developed in the Jurong East, Tampines and Rochester Park area. Seletar aerodrome is being considered as a possible aviation business park and other sites are under active consideration for development of a maritime business park for comprehensive shipping and maritime activities. At the same time, the Jurong Town Corporation is continuing to upgrade the design and quality of new and existing factories and to develop industrial parks to meet changing needs. This process illustrates the need for us to constantly anticipate new needs created by the demands of businesses on our infrastructure. It applies to all areas of our economic activities. E. Enhancing the Prosperity of Our Neighbours Globally, the prospects of peaceful co-existence have never been higher since World War II. More and more, the pre-occupation of most nations will be to increase the share of their economic pie. We believe that economic growth is synergistic and not a zero-sum game. Regional and world growth depends much on freedom of trade and economic linkages among economies.”
“The Government will continue to provide financial and developmental assistance to small and medium enterprises to help them upgrade their operations. Industrial and Commercial Infrastructure We have managed to attract many investment projects because we have the ancillary industrial and commercial infrastructure to support large sophisticated investments serving the international market. Investors search worldwide for locations to site their plant or offices. Many countries will be only too pleased to host them and to attract them with investment incentives. If we wish to continue to attract investments in the face of stiff international competition, we must continue to provide for infrastructure ahead of demand and to cater to changes in the demand for facilities arising from the changing business environment. In particular, there is a new class of business that is no longer conveniently classified as production, manufacturing or commercial activities. Regional data processing centres are one example. They are not typical commercial operations which can be sited in city centres to compete with retail or commercial offices. Neither can they be sited in industrial estates alongside traditional factories. To meet the needs of such businesses, a new class of land use has to be created to provide for "business parks" just as Science Parks were created to meet the needs of those who do research and development work. Such parks will provide integrated facilities with adaptable buildings capable of incorporating state-of-the-art telecommunication facilities in a well-planned park environment.”
“For example, Tradenet has linked up with the US-based Infonet, an international electronic data interchange service and product company, to exchange formatted trade documents which will speed up processing. The Trade Development Board's Globalink, which is currently being tested with 100 companies, is an on-line computerised system to disseminate global trade information for traders. It is expected to be ready for subscription in early 1990. We have also established international linkages in the services industry. One example from the service industry is Abacus Distribution Systems Pte Ltd which is the first computer reservation system formed by a consortium of Asian airlines for international air-ticket reservation, and will be the largest computer centre in Singapore. Similarly, the fastest growth in the financial sector has come from the treasury and foreign exchange activities of banks which have global networks to enable them to serve regional and international markets. For Singapore to continue to grow, local companies have to expand overseas to overcome the constraints of a small local market and get access to new markets, resources and technologies. The Economic Development Board has set up a strategic business unit to assist forward-looking local enterprises to go international through direct investment overseas or through the establishment of global business linkages. It is gratifying to note that our local companies have responded positively, especially the larger ones. The growth of our larger local companies will generate additional business opportunities for many smaller ones. These smaller companies must also learn to survive in an increasingly competitive international environment.”
“Times Publishing became the first local MNC to be given OHQ status for providing management and support services to its subsidiaries abroad. Our efficient air and sea transport infrastructure and telecommunications links are key factors why many MNCs are using Singapore as a major transhipment and distribution hub to markets in Europe and North America. They need to be continually upgraded to ensure that they remain state-of-the-art and competitive. In 1989, the Civil Aviation Authority of Singapore granted British air carriers the rights to base a portion of their fleet in Singapore to fly to different parts of the region. SIA also tied up with Delta Airlines and Swissair to create the world's first global aviation network. This air traffic hubbing privileges and tie-ups will generate multiplier benefits for Singapore by expanding tourism and through its impact on other related sectors. The Port of Singapore Authority (PSA) is aiming to make Singapore a total maritime centre. The 3 PSA Distriparks at Pasir Panjang, Alexandra and Keppel provide complete warehousing amenities like storage, distribution, packing, labelling, sorting and grading for the Asia-Pacific region and beyond. PSA has introduced Portnet which is an electronic data interchange for port documentation and communication between port users and the port. PSA has also developed Teleport links with other major ports like Hong Kong and Bremen in West Germany. Telecommunications links with commercial centres around the world are vital for time-sensitive business transactions. Singapore's telecommunications facilities and infrastructure have to keep up with technology.”
“As Singapore is neither a major producer or consumer of any particular commodity, it has prospered on entrepot activities by creating a conducive business environment supported by an open-door policy on trade and an efficient ancillary industrial and commercial infrastructure. While our entrepot activities in the early days of our industrialisation were mainly in raw materials and finished commodities, they now encompass raw industrial and other intermediate inputs as well. Many multi-national corporations, both local and overseas, are distributing their activities to other regional economies besides Singapore, to capitalise on the differences in comparative advantages. Singapore is competitive in its communication links and business infrastructure as well as being situated in a strategic geographical location and possessing a highly skilled and educated workforce. We can tap onto the growth not only in the South-East Asian region but in the Asia-Pacific region as well, in the same way that London and New York support their respective geographical regions and time zones. In the area of trade, the Government in 1989 introduced the Approved Oil Trader (AOT) Scheme under which concessionary tax rates were given to approved oil traders. The AOT Scheme has enhanced our business environment for international oil trading and encouraged companies to site their trading operations in Singapore. It has also generated significant spin-offs for Singapore. For example, S$21 billion worth of trade-related financing have already been committed over the next 5 years. In the services sector, we have the Operational Headquarters (OHQ) scheme where headquarter services provided to related overseas companies from Singapore are given special tax concessions.”
“In 1989 it reached 95, still slightly below the level in 1981 when costs were not yet a problem. Chart 3 - UNIT BUSINESS COST INDEX OF MANUFACTURING, 1980-1989 OVERALL (Cols. 49 - 50) This means that despite our higher wages, we are still competitive. There is no immediate danger of our pricing ourselves out of the market again. However, businesses and Government will need to watch our wages and business costs carefully, to ensure that we do not overshoot again in a general euphoria at the tail end of an economic expansion. The Government recently announced that depending on the economic performance in the first quarter, the employers' CPF contribution rate will be raised by up to 3 percentage points to 18% and the employees' contribution rate will be lowered by up to 1 percentage point to 22% in July this year. These are progressive adjustments towards the long-term rate of 40% with equal contribution from the employer and the employee. The Government has calculated the impact of the proposed CPF changes and increases in foreign worker levy on overall business costs. The effect should be small - just over 1 percentage point increase in Unit Business Cost. This should not affect our competitive position significantly. The Government will restore CPF savings to workers who made sacrifices during the recession. But it will not do so in a way that damages our competitive position. D. Tapping Regional and World Growth International Linkages Another source of domestic growth is to tap upon regional and global growth.”
“Over the same period, exports from Thailand and Malaysia grew at impressive annual rates of 25% and 15% respectively. Thailand and Malaysia are quickly emerging as competitors to Singapore and the other NICs. Increasingly, the exports of these two countries are overlapping with Singapore's exports. Compared to the other NICs, Singapore's cost structure is still competitive. Our unit labour costs in manufacturing have been declining, relative to unit labour costs in the other NICs (see Chart 1) (Cols. 45 - 46). However, that is due more to steeply rising wages in the other NICs than to low wages in Singapore. The share of GDP going to wages increased from 40% in 1988 to 41% in 1989. Correspondingly, the share of GDP going to profits declined, from 60 to 59% (This is shown in Chart 2) (Cols. 47 - 48). This is a turnaround after 3 years of continuous decline. In the tight labour market, which recorded a record low unemployment rate of 2.2% in June, wages rose faster than productivity last year. We should be cautious about allowing this to continue. Charts 1 & 2 - SINGAPORE'S RELATIVE UNIT LABOUR COST AGAINST THE OTHER NICs IN MANUFACTURING, NOMINAL GDP - WAGES & PROFITS (Cols. 45 - 48) What matters to companies is not just labour costs, but overall costs of doing business here. The Ministry of Trade and Industry computes an index of Unit Business Cost of our manufacturing sector and this is shown in Chart 3 (Cols. 49 - 50). Taking 1983 as the base year, when the index was 100, the Unit Business Cost reached a peak of 104 during the 1985 recession. After the Government implemented the cost cutting measures recommended by the Economic Committee, it declined to 88 in 1987. In 1988, the Unit Business Cost began to pick up again.”
“Increasing Productivity To sustain future wage increases and a higher standard of living for Singaporeans, we have to constantly upgrade our skills and productivity. We must therefore not only continually upgrade existing industries, but also seek to attract new investments that bring in higher value-added activities. Over the last decade, we have moved from labour-intensive activities to knowledge-intensive and high-technology industries and services to sustain higher wages and a higher standard of living commensurate with better skills and productivity. In recent years, the quality of our investments has improved. They now encompass high-value manufacturing activities like automated production, research and development, product design, and export-oriented services like regional software or computer centres and regional management centres. These investments are not only big per se, but are world-scale. The projects are highly automated, employ highly skilled persons, and capitalise on our strategic location to produce a sizeable share of the world's supply to serve international markets. C. Staying Competitive A major lesson the Government has learnt from the 1985 recession is the need to remain competitive. We monitor very carefully the developments around the region, particularly those within the countries of our main competitors, and the effect of any fiscal measures on competitiveness. Our fellow Asian Newly Industrialising Countries (NICs), namely, Taiwan, Hong Kong and South Korea, have continued to record strong export growth, of around 20% annually for the past 5 years. Hong Kong and South Korea have continued to perform well despite domestic problems.”
“However, because the labour shortage has spread to all parts of the economy, employers in the non-approved sectors have clamoured for relaxation of the foreign worker policy. In recognition of their needs, especially those of the smaller local companies, Government has decided to extend, gradually, the admission of a controlled and revolving pool of foreign workers into the hitherto non-approved sectors. The intention is eventually to allow the market to determine where foreign workers should go to maximize their contributions to the economy. Sectors which have higher value-added will then get foreign workers ahead of those with lower value-added. The Minister for Labour will be announcing details of the proposed changes next week. We will try to absorb as many of the foreign workers as possible who are skilled and can be assimilated into our society. However, the Government is mindful that the presence of a large pool of unskilled foreign workers may obscure the comparative advantage of Singapore and hinder our efforts to move into higher value-added activities. We do not wish to grow faster merely by importing foreign workers to drive down wages. We also want to ensure that the local workforce share of our GDP is not eroded. We want to grow at a pace that can give our people challenging jobs at good wage rates. To contain the demand for foreign workers and quicken the pace of automation and upgrading, the foreign workers levy is used to increase the cost of employing foreign workers. The foreign workers levy was raised by $30 to $280 in February and will rise by another $20 to $300 in August. The levy will be further adjusted, as and when necessary, to control the level of demand for foreign workers. B.”
“The increased purchasing power has been translated into buoyant private consumption expenditure which grew by 7.9%. Strong overseas and domestic investment commitments over the last few years have resulted in capital spending rising by 18% in 1989, double the rate in 1988. The investment commitments of very nearly $2 billion in 1989 lay the foundation for further growth in the future. These commitments are indicative of our continued competitiveness and the confidence of investors in Singapore as a business location. MANAGEMENT OF ECONOMIC GROWTH We have managed to achieve growth that is higher than the 4 to 6% that our indigenous factor endowments, namely, land and labour, and productivity can support. We will strive to continue to grow at high rates for as long as it is sustainable. There are five ways in which this can be done. We can increase our workforce, we can increase our productivity, we must remain competitive, we should tap into regional and world growth and finally, we should enhance the prosperity of our neighbours. A. Increasing the Workforce As we move into the 1990s, we will continue to grapple with the evergreen concern of how to manage and optimise the use of our scarce human resources. Our labour force growth of 1 to 2% constrains the growth opportunities available to us. The labour shortage problem, which was in abeyance during the recession, has returned. The unemployment rate in June 1989 was a record low of 2.2%. One way to boost the local labour force is to admit foreign workers. Out of the 68,000 jobs created in 1989, half went to foreign workers, mainly in the construction and manufacturing industries.”
“Mr Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1990 to 31st March, 1991. PART I - REVIEW OF THE ECONOMY ECONOMIC PERFORMANCE IN 1989 In last year's Budget speech, I announced that 1988 had turned in the best economic performance in 15 years, with all major sectors, except construction, performing better or equally well as compared with 1987. Today, I am pleased to report that the strong growth had continued into 1989. Overall, the economy expanded by 9.2%. This is higher than the projected growth rates for Hong Kong (3%), Taiwan (7.2%) and South Korea (6.6%). The expansion was broad based, and even the construction sector had turned around, registering positive growth of 1.3% for the first time since 1984. We have firmly left the shadows of the 1985 recession behind us. Our traditional engine of growth, the manufacturing sector, has been overtaken by the financial and business services sector as the leading growth sector. The financial and business services sector grew by a sparkling 15% while the manufacturing sector grew by a creditable 9.9%. The other sectors also expanded but more moderately than in 1988. The commerce sector grew by 8.3% while the transport and communications sector expanded by 9.4%. The performance of these two sectors was affected by the slower growth of trade in 1989. The volume of total trade grew by 8% in 1989 compared to the 30% registered in 1988. Prospects in the construction sector are promising. Its turnaround in 1989 after more than 4 years of decline will probably continue. The broad-based growth has benefited our workers. According to CPF data, our nominal wages have risen by 12.5%. With inflation at 2.4%, this means a real wage increase of 10.1%.”
“Mr Speaker, Sir,I beg to move the Motion* standing in my name under item No. 2 in the Order Paper. *The Motion reads as follows: That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44) resolves that the Schedule to that Act be varied by deleting the figures "$830,400", "$1,681,200", "$289,500" and "$80,600" in the second column and substituting the figures "$837,400", "$1,744,400", "$310,000" and "$94,800", respectively. Sir, it is proposed to increase the provisions for the Privy Purse and salaries of personal staff to $837,400 and $1,744,400 respectively. These marginal increases are necessary to provide for normal salary increases as well as a contingency provision for the possible increase in the rate of CPF contribution. An increased sum of $310,000 is required to meet Expenses of the Istana household. The increase of $20,500 is due to the provision for maintenance of vehicles which was previously undertaken by Public Works Department and increased purchase of horticultural consumables. The allocation for Special services is increased from $80,600 to $94,800. This is because of the provision for the replacement of horticultural machinery. It is, therefore, necessary to vary the provisions in the Schedule to the Civil List as indicated in the Motion before the House. Sir, I beg to move. Question put, and agreed to. Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44) resolves that the Schedule to that Act be varied by deleting the figures "830,400", "$1,681,200", "$289,500" and "$80,600" in the second column and substituting the figures "$837,400", "$1,744,400", "$310,000" and "$94,800", respectively.”
“Mr Speaker, Sir, I beg to move that Parliament doth agree with the Committee on the said resolutions. Question put, and agreed to. Resolutions accordingly agreed to. CIVIL LIST”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. Resolutions reported - "The sum of $61,290,490 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, 1989, to 31st March, 1990, contained in Paper Cmd. 4 of 1990." "The sum of $1,055,014,100 shall be supplied to the Government under the head of expenditure for the Public Services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1st April, 1989, to 31st March, 1990, contained in Paper Cmd. 5 of 1990."”
“Sir, on the first point, I will certainly look into it. But I think the limitation was probably found necessary because people get divorced and then they get married again. On the second point, I think it is necessary to impose some criteria for assess- ment, although it is arguable whether it should be at 3 "O" levels or otherwise. Because our aim is to try and encourage those women in the higher income groups to have as many children as possible. But I will, of course, review this since the Member has asked for it. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee. [Mr Speaker in the Chair] Clause 1 -”
“Why should there be such a provision? A person may be a drop-out at primary six. But later on, by self-study, she may gain an educational level higher than 3 "O" levels, but she did not bother to go and re-sit the examinations. She may be successful in life. She may be one of those slow developers. Why punish these people? I think the academic qualifications should not be included. I hope the Minister will look into these two points.”
“Finally, Mr Speaker, Sir, clause 8 amends section 35(2A) of the Income Tax Act to enable a person deriving Singapore dividends in 1988 to be assessed to tax at 33% in Year of Assessment 1989, where such dividends would, by virtue of his accounting period, be assessed to tax at 32% in Year of Assessment 1990. This is to avoid a mismatch whereby dividends derived in 1988 are taxed at 32% while tax credits of 33% are allowed on such dividends. Sir, I beg to move. Question proposed. Mr Chiam See Tong: Sir, I just have two queries for the Minister. The first is in regard to clause 12. If the Minister can look at clause 12, paragraph (iv), whereby a person is entitled to a rebate of $20,000 and also a rebate of 15% of the wife's income. It says here: 'where a person is entitled .... and his marriage is dissolved by divorce or annulment within 5 years of the birth of the third or fourth child, the rebate or balance, if any, of the unabsorbed rebate shall not be available for deduction against the tax payable for any year of assessment following the year of the order of divorce or annulment.' To me, this is rather unfair. As the Minister would be aware, any divorce case involves two parties and usually one party is at fault. So if a wife is divorced through no fault of hers, she would have suffered a loss unnecessarily. I think this clause is unnecessary and in fact should not be included because it will cause unfairness to a party to a divorce which may not be her fault at all. The other clause I would like a clarification from the Minister is clause 20, new paragraph 7. As for the 15% rebate of the wife, there is a proviso which limits the claims to only persons with a minimum of educational qualification of at least 3 "O" levels passed all at one sitting.”
“This concessionary rate of tax is also granted to SIMEX members transacting in petroleum futures, with approved oil trading companies. Clauses 14 and 15 amend section 43D(1) and insert a new section 43F to the Act to provide for this. At present, under section 78(1) of the Income Tax Act, the Minister may appoint members of the Board of Review for a fixed period of three years. To provide for greater flexibility, this section is now amended to allow the Minister to appoint members of the Board for a variable period. Clause 19 amends section 78(1) of the Act to give effect to this. Under the present Income Tax Act, capital allowances for motor cars registered as "Q" cars are each restricted to $35,000. Deductions for running costs are also given as a proportion of $35,000. Exceptions are allowed only for taxis, motor cars used as school transport and private hire cars. Clauses 4 and 6 amend sections 14(4) and 19(2C) of the Income Tax Act to exclude motor cars, owned by driving schools and used for providing driving instruction, from these restrictions. This is to ensure that the restrictions do not pose difficulties to those categories of taxpayers who depend on cars for their livelihood. At present, section 14(1)(e) of the Income Tax Act imposes a limit of 10% for the deductions allowed in respect of an employer's contributions to an approved pension or provident fund. This section is now amended through clause 4, to allow for the increase in the limit previously announced by the Ministry of Labour, to 12% commencing on or after 1st July 1988 and before 1st July 1989, and 15% on or after 1st July 1989.”
“This is also extended to the fourth child born on or after 1st January 1988. (e) Enhanced child relief for the second, third and fourth child below 12 years of age, from 10%, 15% and 15% respectively of the mothers' earned income, to 15%, 20% and 25% respectively. The maximum claim for the enhanced child relief is also raised from $10,000 to $15,000. Clauses 10 and 20 amend section 39(2) and the Fifth Schedule to the Act to give effect to this concession which is an indication of the Government's support for family formation, care for the aged and the handicapped. The fifth Budget concession extends the special tax rebate of $20,000 claimable either by the husband or wife against their tax liabilities to their fourth child born on or after 1st January 1988. An additional rebate equivalent to 15% of the wife's earned income claimable only by her, is also granted for the birth of the fourth child in lieu of maternity leave. Clause 12 amends section 42A of the Act to allow for this. I will now move to the other amendments. With effect from Year of Assessment 1990, the highest effective tax rate imposed under Part B of the Second Schedule to the Income Tax Act, will be limited to 32%. This is to ensure that those who are taxed under the existing Part B marginal rates, such as management corporations and cooperatives, will not be taxed above the effective corporate tax rate of 32%. Clause 11 amends section 42(5) of the Act to give effect to this. To enhance Singapore as an international centre for oil refining and trading and also as a financial centre, the income of approved oil trading companies derived from transactions in petroleum, petroleum products and petroleum futures, is now taxed at a concessionary rate of 10%.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment No. 2) Bill 1989 gives legislative effect to five income tax concessions announced in the 1989 Budget Statement. Opportunity is also taken to include six other amendments to the Act. The first Budget concession relates to the reduction in the tax rate for companies, trustees and non-residents from 33% to 32%. This is to ensure that our tax structure remains competitive and is indicative of the direction in which corporate taxation will move if economic conditions require. Clauses 13, 16, 17 and 18 amend the Act to provide for this concession which will take effect from the Year of Assessment 1990. The second Budget concession allows companies, donating computer equipment and peripherals to prescribed educational and research institutions, a tax deduction on such donations. This is to help to upgrade the quality of training in Information Technology in Singapore and will take effect from Year of Assessment 1990. Clause 9 amends section 37 of the Act to provide for this. The third Budget concession allows employers who carry out building alterations or additions, so as to facilitate the mobility of their disabled workers, a deduction for such expenditure, subject to a maximum of $100,000. This is to facilitate the employment of our disabled. Clause 5 inserts a new section 14H to the Act to give effect to this. The fourth Budget concession relates to increases in the following reliefs, effective from Year of Assessment 1990: (a) Wife relief, from $1,000 to $1,500. (b) Aged parent relief, from $1,000 to $2,500. (c) Handicapped dependants' relief, from $750 to $2,500. (d) Normal child relief for the first, second and third child, from $750 to $1,500 each.”
“A great deal depends on the type of foodstuffs that he is talking about. HOTEL ROOMS (Shortage) 17. Mr Teo Chong Tee asked the Minister for Trade and Industry whether his Ministry anticipates an acute shortage of hotel rooms in the next two to three years in view of the expected increase of tourists in Singapore; and what plans there are to meet the demand. SINGAPORE TOURIST PROMOTION BOARD (Effectiveness of tourist promotion programmes) 18. Dr Wang Kai Yuen asked the Minister for Trade and Industry how effective the Singapore Tourist Promotion Board's tourist promotion programmes will be in view of the escalating hotel room rates in Singapore.”
“Mr Speaker, Sir, the figures requested are as follows. The number of pensioners who receive pensions of less than $400 per month is 6,647; those with less than $600 per month is 8,753; those with $800 per month or less is 9,746. The Member raised the same issue in the last Budget debate in March 1989 and I have explained that the Singapore Allowance was revised in 1980, 1982 and finally in April 1986. I also stated that there was no basis for further revision at that time as the change in the Consumer Price Index between 1986 and March 1989 was small. The position has not changed. There is no justification to revise the Singapore Allowance again at the present time.”
“Mr Speaker, Sir, the Inland Revenue Department (IRD) has been experiencing some staff shortages in recent years. This is a problem which is not just peculiar to the Department but is one encountered by all major employers in the public and private sectors who have to cope with the tight labour market brought about by the strong economic growth in Singapore. The Collection Division of the Inland Revenaue Department, in particular, has been operating with about 15% of its posts remaining vacant over the last two years. To cope with an increasing workload despite the staff shortage, the Inland Revenue Department has extensively computerised its operations and simplified work procedures. The staff shortage is expected to ease as a result of the recent revision of salaries and promotion guidelines for the Department. This will help IRD to retain experienced staff who have marketable skills widely demanded by the booming financial sector. FOREIGN MAID LEVY (Rationale for increases) 8. Mr Chew Heng Ching asked the Minister for Labour if he will explain fully the rationale for the proposed increases in foreign maid levy to $230 in February 1990 and $250 in August 1990. TAX RELIEF FOR WORKING WOMEN WHO ENGAGE FOREIGN MAIDS (Extension to single working parents) 9. Mr Teo Chong Tee asked the Minister for Labour whether the tax relief to be granted to working women as a result of the increased levy on foreign maids will be extended to single working parents like widowers and male divorcees who also engage foreign maids to look after their young children.”
“Yes, Sir, I am well aware of that. As far as I am aware, there is no great public pressure for detailed disclosure of individual director's emoluments. If the Member believes that this is so, I think he will need to demonstrate that this is indeed the case.”
“Mr Speaker, Sir, the Ninth Schedule to the Companies Act already provides for the disclosure of directors' renumeration not only for public-listed companies but for all companies. The audited accounts of a company presented to shareholders at the company's Annual General Meeting must disclose the total amount paid to directors as remuneration for their services inclusive of fees, percentages, bonuses and commissions or other emoluments. Should a shareholder require further details or clarification, he is entitled to question the directors at the company's Annual General Meeting. Similarly, there is nothing to prevent shareholders from querying directors at the Annual General Meeting on the emoluments and perks paid to the senior management of the companies. In addition to the Ninth Schedule requirement, section 164A of the Act provides that shareholders may at any time by notice require the company to disclose the emoluments and other benefits received by the directors. There is therefore already in existence an adequate framework for the disclosure of directors' emoluments. There is therefore no need for further legislation in this area at this point of time.”
“There was broad agreement, however, that since the object of the amendment is to bring to light serious frauds that have been or are being perpetrated against the company, the duty on auditors to report the matter should be confined to only the more serious offences. Otherwise, auditors would be unduly burdened with the obligation to report even minor offences, such as defalcations of petty amounts. Accordingly, an amendment has now been made to confine the reporting obligation to only those offences that are punishable by imprisonment for a term not less than two years, and where the value of the property obtained or likely to be obtained is not less than $20,000. Similarly, since the object of this amendment is primarily to protect public shareholders and debenture holders against management frauds, the mandatory repor- ting requirement has been confined to public companies and their subsidiaries. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Third time and passed. ADJOURNMENT”
“For this reason, and also to enable shareholders to receive a report on the work of the audit committee, subsection (9) originally required the audit committee to furnish a certificate to the auditor stating that the audit committee had discharged all its functions under subsection (5) conscientiously and to the best of its ability. Many representors, however, felt that the requirement to furnish a certificate was superfluous as directors appointed to audit committees could be expected to be responsible and competent persons who would discharge their duties earnestly. The Select Committee has therefore decided to delete the requirement for the audit committee to furnish a certificate. Instead, new subsection (9) will now require directors to describe in their report to shareholders the nature and extent of the functions performed by the audit committee pursuant to subsection (5). The Committee deliberated at some length on the potential interpretational difficulties in distinguishing executive directors from non-executive directors for the purposes of complying with the requirement that the majority of audit committee members must be non-executive directors. Arising from this, it was thought that the problem could be best resolved by amending subsection 10 to provide a definition of non-executive director, with the definition of executive director following accordingly. Finally, clause 22. This clause amends section 207 of the Act by imposing a statutory duty on the auditor to report to the Minister cases of actual or suspected fraud uncovered in the course of his duties as auditor.”
“Subsection (i), which has now been renumbered as subsection (e) and which imposes a duty on the Registrar to refuse registration of a prospectus on grounds of public interest, would suffice. This is because the Registrar would, in deciding to invoke subsection (e), pay due regard to matters earlier prescribed in subsections (e) to (h). Some representors also felt that the Registrar should be accorded protection against suits for actions taken in good faith under section 50. Such protection has been provided under the proposed subsection 50(2C). I shall now touch on the amendments to clauses 20, 21 and 22, all of which are concerned with providing more effective means to prevent and detect fraud in companies. For consistency, clause 20 has been amended to place a duty not only on public companies but also on their subsidiaries to maintain a system of internal accounting controls to ensure that assets are safeguarded and transactions are properly authorised and recorded. Audit Committees. Old subsection (3) of the proposed section 201B, which stipulated a term of 3 years for the appointment of audit committee members, has been deleted. The broad consensus that emerged was that a statutory term of appointment for audit committee members, could conflict with their terms of appointment as company directors which are governed by the Memorandum and Articles of Association of the company in accordance with the wishes of the shareholders. For audit committees to be an effective check against financial mismanagement and manipulation by management, audit committee members must take their responsibilities seriously.”
“Proposed section 106B(2)(a) has been amended to extend the Ministerial powers of exemption to secondary as well as primary offers of shares or debentures under the specific circumstances prescribed therein. A new subsection (4) has been added to proposed section 106D to limit to once in every 12-month period the frequency at which an offeror can make an offer of shares or debentures to "sophisticated" investors. This is to prevent offerors from making repetitive use of the exemption provisions under the proposed section 106D in order to overcome the limit of 50 persons to whom such an offer could be made. Proposed section 106E(2) has been simplified to take into account the fact that as shares or debentures acquired under sections 106C or 106D may have been acquired in the secondary market, it is not practicable or useful to expect the original issuer of the securities to keep track of the particulars of their proposed disposal under section 106E. Proposed sections 106F(2), (3), (4) and (5) have been deleted. The Select Committee was of the view that the disclosure requirements prescribed in the proposed Statement of Material Facts would be adequate for the purposes of investor protection, and that the additional protection accorded by a 3-day "cooling off" period was unnecessary as the shares or debentures being offered would be uniform in all respects with those already listed on the stock exchange. Clause 6 of the Bill, which provides for additional grounds for the Registrar to refuse registration of a prospectus, has also been amended by deleting proposed subsections 50(2) (e) to (h). The general consensus was that these subsections could place the Registrar in a difficult position.”
“Now, Sir. I beg to move, "That the Bill be now read a Third time." Sir, the Companies (Amendment) Bill 1989 was referred by the House to a Select Committee for consideration. The Select Committee received 12 written representations. The Committee heard oral evidence from 26 persons in respect of 10 of the written representations over a period of seven meetings. The representations were generally well-argued and useful and many of the suggestions made have been accepted by the Select Committee. I wish to record my appreciation to the various persons and organisations who gave their views on the Bill. The Report of the Select Committee was presented to this House on the 27th October 1989, as Paper Parl. 4 of 1989. The Bill as set out at Appendix I of the Report incorporates the amendments made by the Select Committee. Many of the amendments are of a drafting nature. They serve to improve the language, remove ambiguities or provide greater certainty in certain provisions of the Bill. These do not need elaboration. Allow me, however, to elaborate on the more substantive amendments. As Members are aware, a major part of the Bill is devoted to liberalising the prospectus requirements of the Act so as to facilitate the development and advancement of our bond and equity markets, both on the domestic and international levels, the underlying objective being to further Singapore's growth as a financial centre. Representors offered constructive thoughts on how the proposed amendments could be improved. Accordingly, proposed section 106B(1)(f) has been amended to exempt from the prospectus requirement not only shares issued under an employee share investment scheme but also shares issued under an employee share option scheme.”
“Sir, I beg to move, In page 22, to leave out lines 37 and 38 and insert "(4) For the purposes of subsections (2) and (3) - ". The purpose of this amendment is to rectify clerical errors in the clause. Amendment agreed to. Clause 17, as amended, ordered to stand part of the Bill. Bill reported with amendments. Third Reading”
“Sir, I beg to move. In page 22, line 19, after "deemed", to insert "to control". Clause 17 of the Companies (Amendment) Bill 1989, was redrafted substantially in Select Committee. Because of incorporating the various amendments, the words "to control" were inadvertently omitted. The purpose of the amendment is to rectify this omission. Amendment agreed to.”
“Dr Lee Siew-Choh asked the Minister for Foreign Affairs whether he will say what is the Government's policy on Cambodia.”