Richard Hu Tsu Tau
Singapore
“Sir, I think it is eminently fair, because the proposal really is for the Government to spend money to give shares to Singapore citizens. Either you agree or you do not agree. Or, if you agree, perhaps you consider the amounts insufficient or too much.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2001.”
“I think the Prime Minister and DPM Lee have already explained it will be based on income levels, with people living in flats as a proxy. So there is no political content in it. It depends on the income level, whether you have served national service or whether you are an elderly person.”
“I really do not understand. I know you are arguing on technicality for which I agree that you may have a point. But, nevertheless, because it is a proposal to share Singapore's surpluses with the population, the distribution is not something which you can argue against.”
“As I said, the estimates will be available around mid-October. I do not think, at this time, I want to give a specific date when the second package will be announced, but it will be done as soon as practicable. IN-PRINCIPLE AGREEMENT WITH MALAYSIA ON OUTSTANDING BILATERAL ISSUES (Assessment) 4.”
“Mr Speaker, Sir, when the $2.2 billion off-Budget package was announced in July this year, we said that the Government would do more to assist Singaporeans if the global economic situation worsened in the coming months.”
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“The preferred route of divestment would be through the placement of equity in the stock market so that there is a diversified and widespread public shareholding. This would require that companies floated in this way are viable and profitable. There are, of course, certain small companies where Government has a negligible minority interest which do not meet these criteria and these would be sold off to the majority shareholders. By and large, the record is that the majority of Government companies have been profitable. So one could assume that substantial and significant capital gains would have accrued over the years. CPF SCHEME FOR SELF-EMPLOYED 7. Mr Chng Hee Kok asked the Acting Minister for Labour whether plans have been finalized to include the self-employed in the Central Provident Fund Scheme. The Acting Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, my Ministry is still working on the plan to extend the CPF scheme to include the self-employed. The CPF has so far been developed as a social security savings scheme for employed persons. Although the social needs for housing, health care and retirement of the self-employed are no different from those of the employee, their situation differs. In the first place, the self-employed has no employer to contribute CPF savings on his behalf. It will therefore be difficult for him to save at the same rate as the employed person assisted by his employer. Secondly, CPF contributions by employees are made through 70,000 employers whereas collection from the self-employed will have to be done directly. There are at present about 300,000 self-employed persons in a wide spectrum of occupations and professions earning a wide range of income. Their income also fluctuates from month to month.”
“Mr Speaker, Sir, the basic criteria have been announced previously, and this is that Government will consider the divestment of companies in which there is no longer any reason for Government to retain either partial or controlling shareholdings. These would generally consist of companies which are mature and where we consider that there is no strategic reason for Government to retain the shareholding,and they would include companies which might be in conflict with the private sector. There are a variety of reasons but these would be the principal ones.”
“Mr Speaker, Sir, the Government has so far sold off its shares in four companies on the recommendation of the Divestment Committee. The companies are National Iron and Steel Mills Ltd, United Industrial Corporation Ltd, Dowty Aviation Services Pte Ltd, and the Singapore Airport Duty-Free Emporium Pte Ltd. Two other companies, Singapore National Printers Pte Ltd and Resources Development Corporation Pte Ltd, are seeking listings in the Stock Exchange. These companies will be partially privatized through sale of equity but control will be retained by Government for the time being. The Public Sector Divestment Committee has presented its report and its recommendations are being studied by Government. An announcement will be made in due course. Mr Chew Heng Ching (Kaki Bukit): Sir, may I know what are the criteria for divestment of a Government company?”
“The number of Class C beds in each of the Government hospitals for the years 1970, 1975, 1980 and 1985 is shown in Appendix I (Cols. 823 - 824). Appendix I - CLASS 'C' BEDS IN GOVERNMENT HOSPITALS (Cols. 823 - 824) The reduction in the number of Class C beds in the Singapore General Hospital (SGH) between the years 1980 and 1985 is due to the development of the new SGH in which a substantial number of C Class wards were upgraded to Class B1 wards with improved modern facilities. Please see Appendix II (Cols. 825 - 826). Appendix II - SINGAPORE GENERAL HOSPITAL NO. OF BEDS BY CLASS, 1980 & 1985 (Cols. 825 - 826) In spite of the reduced number of Class C beds in SGH, the demand for such beds, as reflected by their occupancy rate, has fallen from 73% in 1980 to 67% in 1985. UNEMPLOYMENT FIGURES 6. Mr J.B. Jeyaretnam asked the Acting Minister for Labour whether he will give the figures for unemployment and the number who have been found employment by his Ministry in 1986 as at the latest convenient date.”
“INCOME TAX (AMENDMENT) BILL "to amend the Income Tax Act (Chapter 141 of the Revised Edition)", recommendation of President signified; presented by the Minister for Finance (Dr Richard Hu Tsu Tau); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. HUMAN ORGAN TRANSPLANT BILL "to make provision for the removal of organs from the bodies of persons who died as a result of accident for transplantation, for the definition of death and for the prohibition of trading in organs and blood and for purposes connected therewith", recommendation of President signified; presented by the Minister for Health (Dr Richard Hu Tsu Tau); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed. LEGAL PROFESSION (AMENDMENT) BILL (As reported from Select Committee) Order for Third Reading read.”
“Transport and Communications have also expanded rapidly, as international shipping companies have taken advantage of Singapore's lower port charges for transhipment of cargo. The rest of the economy is doing less well. Construction activity continues to shrink, as many projects in the private sector near completion, whilst few new ones are being started. The commerce and financial and business services sectors remain weak, due to continuing economic difficulties in our neighbouring countries. Singapore is closely linked to the economies of Indonesia and Malaysia. Both these countries have been severely affected by low commodity prices. Malaysia has implemented austerity measures to cut the public sector deficit, lower spending on imports, and improve its balance of payments. Indonesia's recent move to devalue the rupiah will cost Singapore traders some re-export business. The increase in exit taxes in Indonesia will further reduce the number of Indonesian tourists coming to Singapore, and that will affect our hotel and retail trades. The regional economic outlook is a major reason for being cautious about our growth prospects. We will have to make up for this by becoming more competitive, by exporting more to OECD countries, and by developing new markets beyond our immediate region. BILLS INTRODUCED 11.50 am STATUTES (MISCELLANEOUS AMENDMENTS) BILL "to amend certain Statutes of the Republic of Singapore", presented by the Second Minister for Law (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.”
“It is not possible to exempt payment of the initial consultation fee for patients referred by general practitioners, as it would mean subsidizing private patients and would lead to an overload of the service. However, patients referred by Government outpatient dispensaries and other Government doctors who ask for a particular specialist by name are required to pay the same consultation fee as referrals by general practitioners. The fee of $12 in the Singapore General Hospital and $10 in the other hospitals is a repeat attendance fee which is applicable to all patients irrespective of whether they are referred by private practitioners or by Government doctors. ECONOMIC PERFORMANCE (Appraisal) 10. Mr S. Vasoo asked the Acting Minister for Trade and Industry if he will give a brief appraisal of the economic performance so far and the likely challenges Singapore will face in the light of the economic slow-down in the Asean region. The Acting Minister for Trade and Industry (BG Lee Hsien Loong): Mr Speaker, Sir, the economy is gradually recovering from the recession of 1985. After declining by 3.4% in the first quarter of 1986, the GDP grew by 0.8% in the second quarter. Preliminary data for the third quarter show that growth will again be positive. For the whole of 1986, the economy is expected to grow by 1% or 2%. Two sectors, Manufacturing and Transport and Communications, have led the economic recovery. Manufacturing has benefitted from a sharp pick-up this year in overseas orders, particularly for electronic goods, and also from a greater competitiveness they now have as a result of our new cost-cutting measures.”
“Mr Speaker, Sir, the Ministry has held a number of discussions on the catastrophic illness insurance scheme with the Council of Health Insurers, which is an organization representing the major health insurers in Singapore. There are still a number of fundamental issues to be resolved. This has taken longer than anticipated, as this is the first time that an insurance scheme covering the bulk of the population and involving a number of insurance companies is being drawn up in Singapore. The Ministry hopes to finalize by the end of this year the broad details of the scheme with the Council of Health Insurers, after which it will present a proposal to the Government for its consideration. HIGHER CHARGES FOR REFERRALS FROM GENERAL PRACTITIONERS 9. Mr Heng Chiang Meng asked the Minister for Health what are the reasons for the initial consultation fee of $35 charged for patients referred by general practitioners, whereas the same patient, had he been referred by an outpatient clinic, will only be charged $12 in the Singapore General Hospital and $10 in other hospitals. Dr Richard Hu Tsu Tau: Mr Speaker, Sir, it is the standard practice to charge an initial consultation fee for all patients referred by general practitioners to the Specialist Outpatient Clinics (SOCs) in all Government hospitals. The consultation fee of $35 has been in existence since 1969. Referrals between doctors within the Government medical services, including referrals of outpatients by outpatient dispensaries and polyclinics to hospital Specialist Clinics are exempted from paying the initial consultation fee. This is because the referred patients would have been examined and screened by Government doctors before they are referred to other consultants.”
“Mr Speaker, Sir, since January 1984, cashless means have been encouraged in the payment of Government fees, salaries and all commercial transactions. In January 1984, about 41% of workers numbering 411,000 were paid through their bank accounts. By July 1986, this figure has risen to about 78% or 766,000. This represents an increase of 86% over the period. In January 1984, there were 410,000 GIRO and Interbank GIRO accounts representing about 11% of the total with Government departments and agencies. This rose to 1.1 million by July 1986, or about 25% of the total, an increase of 168%. To promote cashless payments in the retail sector, about 500 EFTPOS (Electronic Fund Transfers at Point of Sale) terminals were installed at retail outlets by July 1986. Presently, incentives already exist to pay through cashless means such as GIRO. This includes a reduction in the deposit payable for Public Utilities Board bills and allowing instalment payment of property tax and income tax to be spread over the whole year. Overall, I am satisfied with the progress made in persuading the general public to adopt cashless means of payment, particularly through electronic fund transfers. As such, it appears unnecessary for me to introduce financial incentives at this time. INSURANCE AGAINST CHRONIC ILLNESSES (Progress of Scheme) 8. Mr S. Vasoo asked the Minister for Health whether he will give an update on the progress in implementing the insurance scheme covering selected chronic illnesses.”
“Mr Deputy Speaker, Sir, the issue of a specific consultation is considered unnecessary since the change, in fact, had been introduced some years ago for the Division III and IV officers. And as I indicated earlier, the conditions under which Government elects to determine terms of service for new officers is an option which the Government has the right to decide.”
“In answer to the question of the Member for Anson, the Public Service Division of my Ministry carried out a sample survey of 30,000 serving pensionable officers who might be eligible for the option. A stratified random sample of 5,000 officers for the survey was conducted in March 1986 in which the officers were asked to indicate if they would like to opt for the full CPF scheme, reasons for their decision as well as their views on whether offer of the option would be opportune at this time. Just over 3,000 officers responded to the survey and I would just like to recount the main findings briefly. 31% of the respondents indicated that they would choose to convert to the full CPF scheme while 69% chose to remain on the pensions scheme. 44% felt the option was opportune; 56% felt otherwise. The majority of those who chose the full CPF scheme gave, as their main reason, flexibility in their career choice. The majority of those who chose the pensions scheme cited greater longer-term benefits under the pensions scheme. As expected, the younger an officer, the more likely he would opt for the full CPF scheme. In fact, 51% of those less than 35 years old chose the full CPF scheme, whilst only 26% of those who are between 35 and 45 years old chose to remain on the full CPF scheme. Although, on balance, it does appear that it might be that the majority prefer to remain on the pensions scheme, I think the important point to remember is: this is an option. A serving officer has every right to remain on the existing pensions scheme. As to the issue of whether new officers should or should not be on the pensions scheme, I think this is a decision which Government is entitled to make on the terms and conditions of service for new officers entering the service.”
“Clause 4 of the Bill clarifies that where the Public Service Commission has ordered an officer to be retired in the public interest, the officer's service shall be deemed to have been terminated under subsection 8(1) of the Pensions Act for the purpose of granting any pension or gratuity. Finally, clause 5 of the Bill provides for the payment of death gratuity to the dependants of an officer who converts to the full CPF scheme should he die in harness. Sir, I beg to move. Question proposed.”
“Presently, an officer with at least 15 years' service may request and be allowed early retirement under section 7(2)(j) of the Pensions Act. In such a case, he will receive his pension from the minimum age of 50 years or 45 years in the case of some Police and Prisons Officers. The minimum age for drawing pension for officers retired in the public interest or under section 7(2)(j) should now be changed to their optional retirement age. The optional retirement age is 55 years for officers with compulsory retirement age of 60. It is 50 for officers with compulsory retirement age of 55. This change is to ensure that an officer retired earlier than his normal retirement age either in the public interest or under section 7(2)(j) does not benefit much more than one who serves until his normal retirement age. This change in pension-drawing age will, however, apply only to officers appointed on or after the effective date of the proposed legislative amendment because Article 112 of the Constitution protects the pension rights of serving officers. Legislative Amendments To effect the proposals I have explained, it is necessary to amend the Pensions legislation. Clause 2 of the Pensions (Amendment) Bill, 1986, will empower the President to make regulations for an option to be given to any pensionable officer or class of pensionable officers to convert to the full CPF scheme. The terms and conditions of the option will be spelt out in the regulations to be made by the President and will be on the lines I have indicated earlier. Clause 3 of the Bill re-defines the minimum age so that new recruits will only receive their pensions at their optional retirement age when they are retired in the public interest or under section 7(2)(j) of the Pensions Act.”
“If a pensionable officer opts to convert to the full CPF scheme, he will be placed exclusively under the full CPF scheme from the date of conversion. But the pension benefits which he has accrued in respect of his past pensionable service will be frozen. The accrued pension benefits will be paid upon the officer's eventual retirement. If an officer dies in harness on or after the date of conversion, his dependants will be paid a death gratuity for his past pensionable service. An officer who opts for the full CPF scheme will enjoy medical benefits after retirement only if he has at least 10 years' pensionable service. Similarly, an officer who remains on the pensions scheme will also enjoy post-retirement medical benefits if he has at least 10 years' pensionable service. This is an established practice. Deferment of Pension Drawing Age The second purpose of the Pensions (Amendment) Bill is to defer the age for drawing pension in the case of an officer who retires early or in the public interest. I would like to explain this move. At present, an officer could be retired by the Public Service Commission in the public interest on disciplinary grounds with or without reduction in his pension benefits. Presently, these benefits are paid immediately upon his retirement. If the officer is young, he will be receiving pension for many years until his death and the total superannuation benefits he gets may be more than another officer who has records of good conduct and work until normal retirement age. This is, obviously, an anomaly. To remove the anomaly highlighted, Government proposes that an officer retired in the public interest should only start to draw pension at the same age as an officer granted early retirement under section 7(2)(j) of the Pensions Act.”
“The Government has hence decided to also phase out the Pensions Scheme for most Division I and II officers. However, there are a few key Services where continuity of national policies is vital and wherein officers are encouraged to pursue a life-long career. These key Services are the Administrative, SAF (Senior), Police (Senior), Intelligence and the Administrative Service (Foreign Service Branch). These Services have to remain on the Pensions Scheme. Accordingly, with effect from 1st April 1986, all new Division I and II officers in the non-key Services and the Division III Police and Narcotics Officers are appointed on the full CPF scheme. Serving officers in these Services will remain on the pensions scheme. However, since some of these officers may wish to convert to the full CPF scheme, I am pleased to say that Government has agreed to allow all serving Division I and II pensionable officers (other than those in the key Services) and the pensionable Division III Police and Narcotics Officers an option to convert to the full CPF scheme or remain on the pensions scheme. The choice will be entirely theirs. Timing Government realizes that, in view of the recent cut in the rate of employer's CPF contribution, this may not be considered an opportune time to offer the option. However, since the decision to phase out the pensions scheme is basically sound, it should be implemented earlier rather than later. In retrospect, it seems fortunate that the option was not timed before the CPF cut, for otherwise civil servants who would have opted for the full CPF scheme might feel short-changed, though the effect was not foreseen. Terms of Option I would like to briefly describe the terms of the option.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Pensions (Amendment) Bill, 1986, seeks to amend the Pensions Act for two reasons. The amendment is to provide for an option to be given to pensionable officers to either remain on the Pensions Scheme or switch over to the full CPF Scheme on such terms and conditions as may be prescribed. Secondly, it is to defer the pension-drawing age of officers who are granted early retirement or are retired in the public interest. Option to Convert to the Full CPF Scheme Let me first explain the option to be given to allow officers in certain Services to convert to the full CPF Scheme. Prior to December 1972, the Pensions Scheme was the common superannuation scheme for almost all civil servants. However, since then all new Division III and IV officers (except the Police and Narcotics Officers) have been appointed on the full CPF Scheme, and in mid-1973 serving Division III and IV officers (except the Police and Narcotics Officers) were allowed to opt for the full CPF Scheme. The Pensions Scheme has been retained for the Division I and II appointments and the Division III Police and Narcotics appointments. The full CPF Scheme has been found to work well for the Division III and IV officers. It is neater than the Pensions Scheme as Government's financial liability to its officers is entirely discharged on their retirement. For the officers, being on the full CPF Scheme means more CPF savings could be utilized for approved purposes like home ownership. Moreover, since the CPF benefits are not contingent upon the officers remaining in the Civil Service until their retirement, it facilitates their movement from the Civil Service to the statutory boards or private sector.”
“Details of Government's share of the profits and losses of companies wholly or partially owned by the Government for the year 1985 are enclosed. (Cols. 309 - 318). details - PROFITS/(LOSSES) OF GOVERNMENT-OWNED COMPANIES FOR 1985 (Cols. 309 - 318)”
“The Government is in favour of the introduction of legislation for organ donation. Government is finalising the details of the proposed legislation. It will introduce the Bill in Parliament when it is ready. The legislation will make provisions for persons who do not wish to donate their organs after death to register their objections. Safeguards will also be incorporated to ensure that no organ will be improperly removed. After consultation with the Majlis Ugama Islam Singapura (MUIS), it has been decided that Muslims will be excluded from the proposed legislation. For purposes of receiving transplants Muslims who opt in under the existing Medical (Therapy, Education and Research) Act will be treated on the same basis as non-Muslims who have not opted out under the proposed legislation. WORK PERMITS 21. Mr J.B. Jeyaretnam asked the Acting Minister for Labour whether he will give the number of work permits issued month by month from April 1985 to March 1986 under the following categories:- (i) Manufacturing; (ii) Construction; and (iii) Transport and retail services; and how many of the number issued were issued to foreign contractors bringing workers from their own countries or from other countries.”
“(d) Payment of the common Government bills can now be effected through GIRO, Interbank GIRO, telephone banking, and Electronic Funds Transfer at Point of Sale cards. LAW ON ORGAN DONATION 20. Mr Chiam See Tong asked the Minister for Health whether and when the Government will introduce an "Opting-out" law in respect of organ donation and whether Muslims will be affected.”
“The Government's decision to phase out the Multi-Revenue Collection (MRC) centres and other cash payment counters stems from the need to reduce manpower and increase productivity. The quantifiable savings from the closure of the 19 MRC centres are estimated at $710,000 per annum. More important, however, are the savings to the public. Rather than travelling to such centres and queuing up to pay bills, workers can spend their time more productively, whether in their workplaces or in their homes. Imputed savings on travelling and queuing time by the public, if they switch over to a cashless means of payment for just four bills, viz Income Tax, Property Tax, Public Utilities Board and Telecom bills, are estimated at $6 million per annum. The Government has, at the same time, tried to minimise the inconvenience to the public by the following measures: (a) MRC centres were closed in stages. In February 1986, only five of the 19 counters were closed. In July 1986, another seven were closed. The remaining seven will be closed only in January 1987. (b) Care is taken to structure the closure of the centres such that those in the central business district (CBD) were closed first, followed by those on the fringe of the CBD. The centres in the outlying areas will be closed last. (c) A three-month publicity campaign beginning in March 1985 was conducted to inform the public of the merits and rationale of cashless transactions. Various media of communication were employed. These include mobile exhibitions, TV and Radio advertisements, bus panel posters and advertisements in various publications. It was supplemented by an instructional publicity campaign at the end of 1985, outlining in some detail the cashless alternatives available and how to effect such payments.”
“At present all references to the Minister in the Statistics Act 1973 mean the Minister for Finance. Again, this was not amended when the Ministry of Trade and Industry was formed and the subjects covered in this Act brought under the portfolio of MTI. Currently, therefore, although MTI has been administering the collection of national statistics, the legal authority to specify the government agencies which can collect, prepare and publish statistics, and make appropriate rules for statistical collection, etc, still lies with the Minister for Finance. This again is obviously unsatisfactory, and this Bill seeks to rationalize this. Also, to cater for possible future changes in portfolios, the definition of "Minister" is being deleted. The effect of this deletion is that, under the Interpretation Act, the Minister will be the Minister for the time being charged by the Prime Minister with the responsibility for 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. - [BG Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed.”
“The Acting Minister for Trade and Industry (BG Lee Hsien Loong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the purpose of this Bill is to amend Section 2 of the Census Act by deleting the definition of the word "Minister". At present all references to the Minister in the Census Act 1973 mean the Minister for Finance. This was not amended when the Ministry of Trade and Industry was formed and the subjects covered in this Act brought under the portfolio of MTI. Currently, therefore, although MTI has been administering census matters, legal authority to direct that a census be taken, appoint a Superintendent of Census, etc, still lies with the Minister for Finance. This is obviously unsatisfactory, and the Bill seeks to rationalize this. To cater for possible future changes in portfolios, the definition of "Minister" is being deleted. The effect of this deletion is that, under the Interpretation Act, the Minister will be the Minister for the time being charged by the Prime Minister with the responsibility for 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. - [BG Lee Hsien Loong]. Bill considered in Committee; reported without amendment; read a Third time and passed. STATISTICS (AMENDMENT) BILL Order for Second Reading read. The Acting Minister for Trade and Industry (BG Lee Hsien Loong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the purpose of this Bill is similar to the earlier Bill. It proposes to amend section 2 of the Statistics Act by deleting the definition of the word "Minister".”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to give legislative effect to the stamp duty concession announced in the financial year 1985 Budget Statement. Opportunity is also taken to incorporate two other concessions and an amendment to the Act. Specifically, the Bill seeks to extend stamp duty exemption to include the following: (i) Other offshore Asian Currency Unit (ACU) credit facilities such as underwriting facilities, letters of credit (including standby letters of credit), guarantees and performance bonds. This was announced in the financial year 1985 Budget Statement. Clauses 2(b) and 2(c) of the Bill provide for this. (ii) Non-underwritten offshore ACU facilities for the issue of notes, bonds, certificates of deposit or other instruments of indebtedness. Clause 2(b) provides for this. (iii) Any assignment of an interest in a non-ACU offshore facility, provided the assignment is made by a person outside Singapore to an ACU in Singapore. Clause 2(b) provides for this. All the concessions will take effect retrospectively from 8th March 1985. The Stamp Duties Act will also be amended to make it explicit that any assignment of an interest in an offshore facility, where drawdown has not taken place, is exempt from stamp duty. Clause 2(b) provides for this. 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. CENSUS (AMENDMENT) BILL Order for Second Reading read.”
“Take the case of the Housing and Development Board. It is owned by the Government, which means it is owned by the people. There is no need to conceal profits, as profits belong to the people. I think it is a facile argument. However, it is not an issue I want to debate today. Finally, the point raised by the Member for Anson as to the adequacy of powers under the existing Companies Act and the Securities Industry Act. I do not agree with his opinion obviously. He says that sections 230 and 231 give the Minister the power to declare any company a declared company. But what he does not realize is that the Minister cannot do this arbitrarily because he has to have a prima facie case and this is extremely difficult to prove under the present laws. Hence, the need for amendments introduced under sections 8A to 8H, for precisely this reason. Question put, and agreed to. Bill accordingly read a Second time. Resolved, That the Companies (Amendment) Bill be committed to a Select Committee consisting of Mr Speaker as Chairman and seven Members to be nominated by the Committee of Selection. - [Dr Hu Tsu Tau.] SINGAPORE FAMILY PLANNING AND POPULATION BOARD (REPEAL) BILL Order for Second Reading read. 3.16 pm”
“It is also said that section 149 is unfair because there is automatic disqualification. But I would like to point out that directors who are disqualified are permitted to apply to the courts and, indeed, I think the record so far suggests that the courts have been fairly liberal in re-instating them. However, since it is obviously a matter of considerable public interest, I would ask all those who are dissatisfied with the present arrangements to make their views known in writing or verbally to the members of the Select Committee for consideration. On section 46, Insolvency Act provisions, there seems to be general support for these new provisions which are unique in that they try to arrive at a balance in protecting the interests of the shareholder and the interests of the creditor. We have not adopted the Chapter 11 provisions of the US law because they are overly protective of the shareholder and work against the interests of the creditor and cases of abuse have been known. We are proposing a compromise which will strike abalance between the interests of these two groups. I take the point that the qualifications required of a judicial manager seems fairly restrictive, as he would have to be an approved company auditor. There would appear to be a case for widening the scope to include non-accountants who qualified to act as judicial managers. I think I have covered most points, except the two raised by the Member for Anson. As to the question whether statutory boards should be brought under the Companies Act, I think it is unnecessary. The Member for Anson has said that because Statutory Boards do not have to comply with the Companies Act, it allows Government to conceal its profits. I think that is a totally absurd notion.”
“Mr Speaker, Sir, since the Bill will be committed to Select Committee, I will not go into details on individual comments made by Members. But they seem to centre around one main issue, ie. section 149 which has been uniformly disliked by all the speakers this morning and this afternoon. But in defence of this section and the proposed amendments, I would like to make a few points. Firstly, section 149 applies only to companies which fail because they are insolvent, and by that I mean they fail because they owe creditors a lot of money. Companies can fail for a whole variety of other reasons. If they lose only the shareholders' money, they would not be faulted under this section. It is only when they lose large sums of money, public money, that they are caught by this section. Secondly, it is also designed to penalize errors of omission rather than commission. It is arguable whether this is considered better or worse than the UK provisions which are just the other way round, where the disbarments are determined by the courts or by the Secretary of State for Industry against directors who have committed crimes against the company. The rules we are proposing are to discourage companies from appointing name-plate directors, or office boys, for reasons of convenience. As a result, executive directors are often able to manipulate companies at their leisure without restraint. Basically, outside directors represent the shareholders, the minority shareholders of the company who have no direct say in the day-to-day operations of the company. And if they are not required to exercise some responsibilities, as they are not required under present laws, the risk of executive manipulation multiplies manifold.”
“In view of the major reforms that are proposed in the Bill and their implications to the business and financial community and the public at large, I propose that the Bill be committed to Select Committee, as was the case with most of the previous Bills to amend the Companies Act, in order to enable the views of all interested parties to be obtained. Sir, I beg to move. Question proposed.”
“Mr Speaker, Sir, another area where my Ministry believes relief should be given is in relation to retrenchment benefits and gratuities payable to an employee when a company is being wound up. Under existing law, employees have no priority under section 328 for payment of retrenchment benefits and gratuities over other unsecured debts, though they do have priority for wages, including wages payable during a period of notice of termination of employment. Government is of the view that it is fairer to accord priority to such employee benefits and gratuities in the winding-up of a company. Accordingly, the principal amendment to section 328 would ensure that retrenchment benefits and gratuities would be included in the definition of "salary" in subsection (2) and thus have the same priority as salaries and wages. The other amendment proposed to the section is to give a higher priority to pension fund contributions, including CPF contributions, in the event of the winding-up of a company, than is provided for in the existing section 328. There are other clauses in the Bill which are designed to improve the administration of the Act. Together with the amendments which are of a drafting nature or are intended to increase fines, they are sufficiently referred to in the Explanatory Statement. The only other provision in this Bill deserving of special mention appears in clause 10, which would relieve foreign companies that are listed on the Stock Exchange from the obligation to file an abridged prospectus when making a rights issue. This is in line with the desire of Government to develop the capital market in Singapore and to reduce related costs.”
“It is not apparent, therefore, that the section is operating unjustly or that it is causing unnecessary hardship. Government is therefore not minded at this stage to abandon the principle in section 149. Government, however, agrees that the rigour of the application of the section should be modified in four major respects. Clause 22, in amending section 149, would have the effect of lessening the impact of the section on corporate management in the following ways: (a) by excluding from the operation of the section, unregistered companies as defined in section 350(1). The result would be that persons who are disqualified under the section would not be debarred from participating in partnerships or associations. (b) by providing a defence to persons - (i) who resign as directors from newly formed companies before these companies have commenced business or exercised any borrowing powers; or (ii) who can show that they could not, with the exercise of reasonable diligence, have been aware of the fact or occurrence constituting to the offence; (c) by introducing a cut-off period of three years under section 149(1)(b) in respect of the second company that went into insolvent liquidation. No cut-off period was previously given. The three-year cut-off period is the same as presently exists under section 149(1)(a) in respect of the first insolvent liquidation; and (d) by enabling the Minister to exclude from the operation of the section certain companies (and their directors) carrying on business in venture capital industries and thus not discourage entrepreneurial ventures in these high-risk industries.”
“Nevertheless, we believe that only by conducting a judicial enquiry can the true cause of the insolvencies be established and that, until they are so established, it is necessary for the protection of the public that the directors concerned should not continue to manage companies. Section 149 has also aroused considerable criticism from the Law Society and the Society of Accountants which have sought to have excluded from the operation of the section on behalf of their members who act as directors of companies - often as non-executive directors. Company law draws no distinction, it is noted, between the duties and the obligations of executive directors and non-executive directors. Indeed, as non-executive directors, they are expected to contribute their expertise in business affairs for the benefit of the company. Their duties go beyond mere attendance at board meetings. Further, a conscientious non-executive director should, in Government's view, set a practical limit on the number of his non-executive directorships if he is to properly discharge his duties and obligations to his companies. These considerations are regrettably often ignored in Singapore. In the result, Government sees no good reason to favour directors who are members of professional partnerships. Besides, to discriminate in such a manner may be challengeable as being contrary to Article 12 of the Constitution. Mr Speaker, Sir, it is pertinent to note that up to August 1985, out of the 68 persons who were disqualified by the section, only three of them applied to the Court for leave. The Court granted leave in each of the three cases to the directors concerned and allowed them to resume their directorships unconditionally.”
“Mr Speaker, Sir, section 149 raises a presumption that a person who is or has been a director of two companies that have gone into insolvent liquidation within the 5-year period is unfit to act as a director until he satisfies the Court that their collapse was not due to his irresponsible or unscrupulous conduct. The policy in the section is that the public should be safeguarded against unscrupulous or irresponsible directors who trade through the vehicle of two or more companies and allow such companies to become insolvent and then establish a new company to wreak financial havoc, all the while, leaving behind a trail of unpaid creditors and retrenched workers. The section is based, in concept, on section 9 of the UK Insolvency Act 1976 (now repealed) and section 300 of the UK Companies Act 1985 (now repealed also). I should, however, mention that the UK Insolvency Act 1985 makes even more radical changes than those appearing in the abovementioned sections. For example, under the UK provisions, a director could become personally liable for the debts of an insolvent company if he knew or ought to have known that there was no reasonable prospect that the company would avoid going into insolvent liquidation and had not taken steps to minimize the loss to creditors. Further, the Court in the UK may make a disqualification order against a person who is or has been a director of a company where there has been only one company insolvency. Mr Speaker, Sir, Government is aware that section 149 also catches the responsible and innocent director who will have to satisfy the Court that the collapse of the two or more companies was not due to his recklessness, etc.”
“The new judicial management procedure, therefore, provides a legal framework that would, in a suitable case, enable the rescue of a potentially viable business and thus prevent a premature liquidation. Mr Speaker, Sir, perhaps at this point, I should utter a few words of caution. The new provisions under Part VIIIA must not be used as delaying tactics to avoid an inevitable liquidation of a company that is hopelessly insolvent. A Court will make a full enquiry into the financial affairs of a company and its prospects for rehabilitation or reconstruction, etc, before making a judicial management order. Other provisions in this section are designed to deter frivolous applications being made to the Courts. The new provisions are not a panacea for beleaguered companies that are incapable of being rescued and are destined for liquidation. Government's objective is not to tamper with the normal entry and exit of firms in the private enterprise system but to provide a chance to resuscitate some financially troubled companies that are capable of returning to profitability. There are other areas which Government believes it is desirable that the impact of existing law should be ameliorated. Clause 22 amends section 149 of the Act which deals with powers to restrain persons from acting as directors of companies, where they have been directors of two or more companies that have gone into insolvent liquidations within a 5-year period and have been found to be unfit to continue to manage companies. Having regard to the considerable public debate and criticism that section 149 has excited, particularly as regards the principle of automatic disqualification, I think that it is necessary to spend some time to clarify the intent of this section.”
“Under the procedure, the Court may, on the application of an insolvent or near-insolvent company or its creditors, appoint a judicial manager if it considers that the appointment would promote one or more of the following purposes:- (a) the survival of the company, or the whole or part of its business as a going concern; (b) the promotion of a compromise or arrangement between the company and its creditors; or (c) a more advantageous realization of its assets than in a winding-up. The Court may also invite the Minister to make a nomination, or the Minister may himself nominate a person to act as a judicial manager, if he considers it is in the public's interest to do so. It would be noted that the benefits of a successful company rescue accrue not only to its shareholders but to employees, the business community and the general public. A key element in a company rescue is the provision of a breathing space during which plans can be put together to achieve the purposes just mentinoed. The judicial management procedure, accordingly, provides for a statutory moratorium on all actions and proceedings against a company. Government is also aware, however, of the danger of undermining prudent lending practice by prejudicing creditors' rights to enforce their security. Special provision is therefore made in section 227H to give recognition to the rights of secured lenders. With the approval of the Court, the judicial manager may dispose of the property subject to security, other than those under floating charge and the net proceeds of the disposal would be applied towards discharging the sums secured by that security.”
“Other provisions concerned with investor protection include:- (a) Clause 11 which confers upon the Registrar of Companies power to refuse registration of a prospectus if it appears to him that it is not in the interests of the investing public to do so; (b) Clause 14 which repeals and re-enacts existing section 76 prohibiting a company giving financial assistance for the purchase of its own shares. The main purpose of the section is to ensure that the capital of the company is preserved intact; (c) Clause 25 which provides that a company should not, without prior sanction of a general meeting, enter into specified transactions with directors or persons connected with them; (d) Clause 27 which requires a company to disclose directors' emoluments when served with a notice by at least 10% of its members or holders in aggregate of 5% or more of its capital; and (e) Clause 65 which provides that a person shall not make an offer to the general public of any shares for purchase unless the offer is accompanied by a statement in writing containing the particulars set out in the clause. These particulars mainly refer to the identity of the offeror. The exemptions from this clause are broadly similar to those under existing law. Mr Speaker, Sir, the other major reform is found in clause 46 which introduces a judicial management procedure to provide for financially troubled but viable companies to rehabilitate themselves. The procedure has been adapted from the relevant insolvency laws in the United States and the United Kingdom, and strives to strike a balance between the interests of the shareholders and the creditors.”
“Particulars dealing with the method of valuation of assets are also provided for; and (b) Clauses 47 to 53 which strengthen the provisions dealing with investigations of criminal offences and the procedures in relation to disclosure of inspector's reports. Clause 53 confers upon an inspector the power to require a director or past director to produce all documents relating to his bank account if there are reasonable grounds for believing that money in the account is connected with unlawful activities. Also, in order to provide a more expeditious method of conducting company investigation, clause 5 enables the Minister or a person authorized by him to require the production of the books of the company and to take copies of them or extracts from them. These amendments are based on recommendations made by a committee of the United Kingdom Metropolitan Police that was commissioned by Government to examine commercial regulation generally in Singapore. These new powers are necessary if we are to deal effectively with commercial fraud. The House is well aware of the devastation that such fraud could cause. We cannot afford to disregard this threat if we wish to continue to attract investments. This clause, I wish to stress, is included to confer a pre-investigative power on the Minister. It will be used discriminately and safeguards have been inserted to ensure that any information obtained will be kept secret. Honestly -managed companies will have nothing to fear from these new powers.”
“It is also evident that the mortality of companies increases during an economic recession. But even such collapses are not without economic and social misery for various interest groups like shareholders, creditors and employees. Often, collapses are sparked off by the practice of some lenders to foreclose on companies at the first hint of financial trouble caused by temporary liquidity problems. However, some of these companies may have the right products and technology to continue to compete in international markets and given time could actually be cured of their illiquidity. The main objective of this Bill therefore is to provide a legal framework to give such companies which are in financial trouble a more even chance to rehabilitate themselves and be restored to profitability. Accordingly, Mr Speaker, Sir, the major amendments designed for better disclosure of company affairs and greater investor protection are found in:- (a) Clauses 36 to 43 and clause 70, which substitutes a new Ninth Schedule. These amendments are designed to impose upon directors of a holding company duties to lay before the company's general meeting the consolidated profit and loss account and the balance sheet statement for the group. The Ninth Schedule is amended to effect additional disclosure requirements so that the readers of accounts can better assess the financial positions of companies. For example, intercompany transactions and an estimate of the maximum amount of contingent liabilities for which a holding company and its subsidiaries could become liable must be disclosed. Disclosure of director -related loans are also required.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this is, I believe, an opportune moment for me to reiterate Government's belief in the merits of a healthy private enterprise system. At the core of the private enterprise system is the limited liability company and the ability to produce profits is the principal yardstick to judge the success or failure of a company. The limited liability company does not simply represent one interest but a confluence involving the interests of investors, creditors, employees, consumers and the public. It has, therefore, long been recognized and accepted that since the company is an artificial creation of law, it is the duty of Government to ensure that its operations do not prejudice these diverse interests. There are situations where the privilege of limited liability that has been accorded to companies has been abused by those who are concerned with their management. Inadequate disclosure standards allowed such companies to disguise unlawful transactions. As we have seen in the recent past, companies were used as instruments by directors to raise funds, which are then siphoned out fraudulently leaving companies in financial haemorrhage and doomed to destruction. The consequences of such abuse of corporate power and privilege are pervasive. It has thus become necessary for more thorough and realistic appraisal of the laws relating to the disclosure of companies' affairs and the duties and responsibilities of companies' management. This is one of the principal objectives of this Bill. The Government is also aware that not all company collapses are due to fraud or other economic crimes. Collapses could be due to cyclical economic factors and indeed this is part and parcel of the private enterprise system.”
“A member may make gains or incur losses depending on his investment decisions and the timing of those decisions. The investment schemes are optional. If a member prefers not to take any risk, he can choose to leave his entire CPF savings with the CPF Board where the funds are guaranteed by the Government. The CPF interest rate is not only pegged to bank rates, but also tax-exempt. Those members who prefer to invest their CPF savings in expectation of higher returns will have the flexibility to do so. If a member makes the right investment decision, he will gain. If not, he will lose. He will have to live with the results of his own investment decisions. Sir, I beg to move. Question proposed.”
“Sir, as the CPF contribution rate will be lowered from 1st April 1986, clauses 3 (b), (c) and 4 relating to the use of the Special Account balances for housing and the transfer of excess Medisave balances will come into effect on 1st April 1986, after the House has approved this Bill. The other clauses relating to the investment of CPF savings in shares, unit trusts, gold and non-residential properties will come into effect on 1st May 1986, after the necessary regulations for the operation of this scheme are gazetted. I would also like to announce that the amount of CPF savings that members can withdraw for investment in shares, loan stocks and unit trusts will be increased from 10% to 20% of their "Investable CPF Savings". The "Investable CPF Savings" is the balance in the Ordinary and Special Account in excess of the minimum reserve of $30,000. CPF amounts invested in a home will be included in the calculation of the "Investable CPF Savings". The liberalization of the investment limit is to allow CPF members greater scope in managing their CPF savings. Gold investment will for the moment still be subject to the sub-limit of 5% of the "Investable Savings". This 5% can be used for either shares or gold. The Government's intention is to raise these investment limits and widen the investment avenues progressively to allow CPF members maximum discretion in investing their CPF funds, subject to minimum essential safeguards. CPF members must, of course, exercise care and judgment in deciding how to invest their CPF savings and be conscious of the opportunities available as well as the risks involved. The potential for higher returns is associated with a higher degree of risk.”
“Clause 7 of the Bill amends section 45 (1) of the principal Act to empower the Minister to provide for the withdrawals of CPF savings for the purpose of making such investments. Investment in Non-Residential Properties At present CPF members are allowed to use their CPF savings to invest in residential properties but not non-residential properties. In line with the policy to enable CPF members to manage their own CPF savings, the Government has decided last year to allow CPF savings to be invested in non-residential properties, e.g. office space, shops, factories and warehouses. Clause 7 of the Bill amends section 45 (1) of the Act to allow members to withdraw CPF savings for the purchase of immovable properties, including non-residential properties. Use of CPF Special Account Balances for Payment of Housing Loans With the rate of employers' CPF contribution reduced by 15 percentage points to 10% with effect from 1st April 1986, some members may face a shortfall in their CPF savings to service their housing loans. The Government has decided that as a relief measure, those who are still short of funds after making use of all available balances in their Ordinary Accounts to service their housing loans, can use the balance in their Special Accounts. Clause 4 introduces a new section 12B into the Act to empower the CPF Board to allow members to do so. Transfer of Excess Balances from Medisave Accounts to Ordinary Accounts The Ministry of Health has decided that CPF members need to retain only $15,000 in their Medisave Accounts for hospitalization expenses. When the amount is reached, the excess will be transferred to the Ordinary Accounts. The new section 11A (6) in clause 3 will empower the Board to make such transfers in future.”
“Mr Speaker, Sir, I think the Member for Jalan Kayu has a point and we will ensure that the authority does ensure that this happens. 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 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. 4.35 pm The Acting Minister for Labour (Mr Lee Yock Suan): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to provide the enabling legislation for the following policies which have already been announced and discussed in this House: (a) the use of CPF savings for investment in shares, loan stocks and gold; (b) the use of CPF savings for investment in non-residential properties; (c) the use of existing balances in the Special Account for the payment of housing loans by those CPF members who face a shortfall in their instalment payments as a result of the cut in the CPF contribution rate; and (d) the transfer of balances in the Medisave Account, which are in excess of the required amount, to the Ordinary Account. Sir, the details of the amendments are in the explanatory statement. I shall highlight the key provisions of this Bill. Investment in Securities and Precious Metals Sir, on 31st October last year I announced in this House the setting up of a scheme to allow CPF members to invest a portion of their Ordinary Account savings in shares, loan stocks, unit trusts and gold. This scheme will give CPF members the flexibility to manage their own CPF savings once they have saved a minimum reserve for old age and contingencies.”
“Mr Speaker, Sir, I am not a lawyer or a judge. So I have to take the advice from the Attorney-General who considers that the sentence is adequate for the purpose.”
“On the question as to why there is a limitation of two years on claims by clients for compensation, I would like to point out that claims for compensation are a civil matter as no criminal offence is involved. The Member for Chong Boon has also asked for a Select Committee. I would not go through this again. He wants to know why the SES has not opened its doors to 100% foreign-owned stockbrokers. The answer to that is that we will eventually allow this. But for the moment, because of the relative weakness of our stockbroking companies in Singapore, it is not opportune to open the door fully to foreign stockbroking companies because they are much more powerful and experienced. And if we let them in at this stage without restriction, they will swamp our stock exchange members. I think we should give our stockbrokers some time to rebuild their strength but eventually they will have to meet competition.”
“Seven years for insider trading, I think it is quite a stiff sentence. And $50,000 fine, of course, is an option which the judge can use. Mention was also made on whether there would be enough officers to administer the law. I can confirm that specialist officers will be recruited for this purpose. The question was raised on whether the information supplied by electronic means on computer terminals could be caught under the section dealing with the disseminating of information. Information of this sort is not caught under the new laws because such information is of a general nature. I have covered the point about relations with Kuala Lumpur. If the rules are not similar in Kuala Lumpur, then we could have possible loopholes. The best advice one could give is that investors in Singapore should use Singapore investment advisers. The Member for Potong Pasir has said that there is no provision for appeal beyond the Minister in the licensing of stockbrokers. The answer is that there is no God-given right for anyone to have a licence, just as we do not issue licences as of right to banks. And the Minister retains the right to say yes or no depending on circumstances. The Member for Jalan Kayu has a very long list of questions, some of which I have already covered. I was not quite clear about the story of the 1929 crash but it was interesting. I take the point that the revocation of licences would in fact automatically come about if licences were not renewed. But I have said that this is not the intention. Revocation is seen as a much more serious matter because it can take place any time during the year and it would only be invoked for exceptional offences. Routine renewal of licences is quite a different matter.”
“Hopefully, with time, we would end up with similar legislation which would be the ideal solution rather than a separation of the Exchanges, which is bound to depress business on both sides. However, this is something which I think we will have to work at. On the question as to why Singapore shares command such high price earning multiples, is it because there is no capital gains tax? I think the primary reason is that, like Japan, this region is seen as a very high growth area. Where you have national growth rates of around 10% per year, you would expect that industries would also grow at such rates. The prospect of capital gain overrides dividend yield considerations. A similar situation exists in Japan where high price earning multiples are also common place. In fact, for the more glamorous companies and key ratios in the region of 20 or 30 are not uncommon. In the case of Singapore, despite the depressed state of our market, average price earning multiples are now still in the region of 16 or 17, against a booming New York Stock Exchange where stock multiples have risen from around 5 or 6 to around 14 or 15. So we are converging. This suggests that despite the present depressed state of the market, the confidence of investors in the Singapore market still appears remarkably high. The Member for Radin Mas has asked whether the provisions are comprehensive. I think they are because they are based on what we think are the best features of the Australian and US laws, without some of the more restrictive aspects. He has also said that the penalties for insider trading seem to be less tough than under previous legislation. The Attorney-General does not think so and he is the one who prescribes the penalties.”
“And we hope that the same procedure would apply in the application of the Securities Industry Act in view of our experiences. I have often heard that we have been high-handed in some areas. But in the normal course of business, I meet many senior foreign bankers who pass through Singapore and pay me courtesy visits. And I can honestly say that I have yet to meet a really senior banker who has made these allegations. Most of them were in fact quite pleased that MAS is so strict because they feel more comfortable operating in this environment. You may or may not believe me but this is the truth. On the question as to why the Big Four banks which have started stockbroking affiliates are allowed to solicit business by letters, I am not aware of this but I will look into it. The Member for Whampoa wants a Select Committee to consider the Bill. I think it is unnecessary and I would prefer to see it working as quickly as possible. If necessary, amenements will be made. The Member also said that the terms may be too tough and that there is no appeal to the courts. I have said earlier that there is appeal to the courts for the revocation of licences. On the issue of the possible of manipulation of contract notes, the intention is to have all contract notes time-stamped to eliminate manipulation. On the problem of common regulations in Singapore and Kuala Lumpur, this is indeed a problem. But in our discussions with the Exchange on the other side, we understand that they are in the process of introducing amendments to their existing laws. They have asked for a copy of our proposed legislation.”
“Stock- brokers, even though some have turned out to be imprudent, like bankers or finance company people, have every right to protest against regulations which they believe would affect their livelihood. While we are on this subject, I will discuss the question raised by the Member for Potong Pasir on what were the objections raised by the stockbrokers when the draft Bill was introduced. The main objections related to the need to make disclosures to the MAS, for right of the MAS to appoint members to the Stock Exchange Committee, the right of MAS to amend the rules of the Stock Exchange and power of the MAS to issue directives. All these were seen to undermine the concept of self-regulation and would take away the autonomy of the Exchange to make its own rules, a right which was jealously guarded. One point which they raised which is still valid is that if we introduced more restrictive legislation, not in parallel with the legislation in Kuala Lumpur, a lot of their business would be lost across the Causeway. The Member for Alexandra also expressed concern that the MAS may not have sufficient experienced officers to administer the Act. The intention is to set up a new unit within MAS, specifically to administer the Act and, staffed with people experienced in the securities industry. It is well recognized that banking is a distinctly different business from the securities industry. In this connection, I would like to correct the impression of the Member for Alexandra that the MAS has been high-handed in administering the Banking Act. We do not believe so, although some bankers would like to say so. Where regulations are not observed or flouted, I think the MAS has no choice except to take action.”
“And the main reason for introducing the licensing provision is to give investors full protection. The Member for Whampoa has also said that the penalties appear small relative to the millions of dollars which might be involved. I have the opinion of the Attorney-General's Chambers that the penalties are adequate for the size of crimes envisaged. In any case, where a stock manipulator engages in malpractices, often these infringe on areas involving criminal breach of trust in which case the penalties are far more severe under the existing laws. The Member for Alexandra has commented that he was disturbed by the fact that objections from stockbrokers was allowed to delay the introduction of the Bill. I think another Member also suggested this. I did mention earlier that it is MAS's practice to allow full discussion with all parties involved when proposed changes in legislation are considered. The normal procedure is to circulate draft legislation to affected parties for their comments. This is in lieu of Select Committee procedure because it is more practical to do this before the Bill is finalized rather than introduce in Select Committee after the Bill is presented. Usually this process of consultation takes many months. We had similar experiences when we introduced Bills involving the Banking Act, the Finance Companies Act and other Acts which were reviewed by the MAS. The procedure could take anywhere between three and six months so that all parties concerned are able to study the Bills in depth and to raise objections. If the MAS considers that objections are valid, amendments will be introduced.”
“And indeed we cannot really anticipate problems until we have working experience. One could argue and discuss at length in Select Committee and end up with no more than what we have now. On the one hand we could ask for introduction of more stringent regulations, which I do not think anybody really wants. In looking at the provisions of the Bill. Sir, at most, one could probably end up asking for softening of some of the regulations. Against the background of what has already happened, I think that it would be inadvisable. It is better in any case to approve the Bill as it stands and, if problems arise in specific areas, we could consider appropriate amendments. Turning now to the other questions raised by Members. The Member for Whampoa has said that a one year licence is restrictive. Finance companies were also subject to annual licensing and thiw was also the case in many areas of the Banking Act. Licence renewal is routine for companies which do not have any problems. So I do not believe that it is unnecessarily restrictive in application. I would like to point out that appeal to the High Court is provided for revocation of licences but not for the non-renewal of licences, although I take the point of the Member for Jalan Kayu that the passage of time would cause this to happen. I would like to point out again that the issuance of licence is not a right. Under the Banking Act, the issuance of banking licence is reviewed periodically and the Minister has full discretion to say "No" if he considers it in the public interest to do so. And the same situation would apply in the case of the securities industry. I can assure Members that it is not the intention of the Minister to be arbitrary in such decisions because it would serve no purpose.”
“Mr Speaker, Sir, I will deal firstly with the several requests for referring the Bill to a Select Committee. Although I understand the wish expressed by Members, in my view, it is unnecessary. We need the Bill very urgently because of the impending release of CPF monies for use to purchase shares. The reason why I suggest that it is not really necessary is that, if anything, the Bill is probably over-protective of the investor rather than of the stockbroker. So any objections which might arise would probably be from the practitioners or stockbroking community because certain regulations may be seen to be restrictive on their activities. But as far as the investor is concerned, I am convinced that the protection afforded by the new Bill would be more than adequate. The Bill, as I mentioned earlier, was drafted on the basis of legislation as prac- tised in Australia and the United States. We have tried to extract the most relevant provisions and those which are most applicable to our markets, with adequate safeguards to ensure that the market is not strangled because of over-regulation. For this reason, I would strongly recommend that the Bill be approved as it stands. However, I recognize that in its application, the MAS could be seen to be too restrictive and this could result in a "ham-handed" application of rules which might inhibit the development of a securities market. If certain features of the Bill turn out in practice to be overly restrictive, I would be quite happy to introduce amendments. I would prefer the Bill to be approved as it stands, even though it may be over-restrictive in controlling the practitioners. As it is in the interest of investor. If particular provisions turn out to be over-restrictive, I would be quite prepared to consider amendments.”