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 result was inconclusive as a lot of insider trading provisions are difficult to implement because the self-regulatory system does not permit the Stock Exchange Committee to demand books or to call witnesses to testify. The new Securities Industry Act would give MAS considerably more powers to investigate matters of this type. As a result the conclusions were, I think, not only this one, but many other insider trading investigations came to nought simply because there was insufficient evidence to permit prosecution. The second question was: was MAS aware of massive forward dealings? The answer is yes, except that we did not know the size of these share dealings involved. In fact, it came to the attention of the MAS as early as February 1985 as a result of an anonymous complaint or complaints regarding the Alfa-Pacific stockbroking company. Again, because of the self-regulatory system, the complaints directed to the MAS were referred to the SES Committee for investigations. Unfortunately, again the investigations were inconclusive and the answer given to MAS was that forward contract trading was not prohibited by SES rules. And at that time, MAS had no powers to interfere in these regulations. Hence, the need for a new Securities Industry Act. Although we were aware at that time of the presence of forward dealings, we were unaware of the pervading nature of these large contracts amongst a number of brokers. And we could not be aware of this because the SES was not obliged and, in fact, did not supply any form of returns to the MAS. Again, a defect of our regulatory system which I think one has to admit now. The third question was: did MAS have anyone on the SES Committee? The answer is no. The SES Committee is made up entirely of stockbrokers, no outsiders either.”
“On the issue of corporate disclosures, this is indeed one of the ways to stop manipulation not by the Stock Exchange but by unscrupulous directors who are responsible for the management of public companies. That is one of the biggest problems one faces and corporate disclosures will indeed help in this direction. However, I should make the point that investors with their shares in public companies should pay a great deal more attention to the management of these companies and ask many more questions, and particularly press their auditors to ask questions. On the question from the Member for Anson, I think the first question was investigation into insider trading in Pan-El. Indeed, I think this took place in early 1985 and this was reported through, I think, anonymous letters of complaint from people inside the company. The matter was referred to the Stock Exchange Committee for investigation, which was the proper procedure in those days at that time.”
“On the question regarding foreign ownership, the figure of 8% was a result of surveys conducted by the share registry on companies' ownership, entitlement. So wherever we can, we try to identify holdings. There is a problem, of course, of holding companies where the exact ownership can be a little uncertain. So that figure could be not totally correct, regrettably. On the question of the linking of the SES and the Kuala Lumpur Stock Exchange and the fact that some of the manipulation originated from Malaysian sources, the way to stop it would be when we pass this new Securities Industry Act which, as you will see from the provisions, would impose a number of prudential controls on the stockbroking community which will stop any imprudent speculation on financing. And also it will allow the MAS to have direct access to stockbrokers books and demand information along lines of the powers which MAS now has in obtaining access to banking information. I think, if properly implemented, this should effectively stop such malpractices. On the question from the Member for Alexandra, should we not allow more companies to be listed. I think there are quite a large number of companies already in the pipeline, waiting for listing. I do not think we should ease listing requirements unduly because we want only good companies to be on the Exchange. However, for the more speculative companies, we are considering a second register which would impose less restrictions, provided the investing public recognize that the companies on this register are more speculative. It is hoped that this can be implemented sometime this year.”
“Mr Speaker Sir, I would take the questions in turn. I hope I have got all of them. First, the question from the Member for Whampoa. Why was not the Securities Industry Act introduced much earlier? I think the reason was, in the earlier days, the SES was under a self-regulatory system which was operating quite sensibly and so there appeared to be no immediate requirement to tighten the rules, in the sense that the stockbroking business is different from banks. You do not have deposits of money under fiduciary responsibilities. Technically speaking, a stockbroker is no more than a commission agent. So if they had confined their activity to collecting commissions, none of this would have happened. About two years ago, the MAS, as a result of instability in the financial system worldwide, embarked on a major programme of reform for the legislation in the Singapore financial system. Over this period, we have in fact passed amendments to the Acts - the Banking Act, the Monetary Authority of Singapore Act, the Companies Act, Finance Companies Act. Wehave created SIMEX in order to regularize gold trading, and we have issued proper guidelines for merchant banks. The remaining pieces of legislation would have included amongst them three: firstly, the Securities Industry Act, the Insurance Companies Act which is now being passed at Second Reading today, and finally the Futures Trading Act. With the completion of all these changes in legislation, I think we will be well placed to withstand future shocks in the financial system. Unfortunately, because the Stock Exchange was a relatively small component of the financial system, it was left to the tail-end of the process. In retrospect, we should have brought it forward.”
“The latter arises not only because the stock market capitalization of Singapore/Malaysian shares is small in world terms but also because turnover is even lower, due to the fact that many quality shares are tightly held by local institutions and are infrequently traded. This has tended to discourage the wider participation of foreign equity investors, who have found our markets to be insufficiently broadly based. This should put into perspective alarmist reports in the foreign press which have suggested that the present problems of the Stock Exchange will drive away foreign investors and lead to a collapse of the Singapore financial system. The truth is that foreign investors have never been very important players in local stock markets nor have they been actively solicited, primarily because of the thinness of local stock markets. We want the stock market industry in Singapore to contribute more towards our economy. The reforms proposed under the new Securities Industry Act will provide the necessary regulatory framework for the long term growth of a healthy capital market in Singapore.”
“A draft of the new Securities Industry Act was given to the SES in June last year. However, implementation was held up due to strong objections raised by stockbroking companies. Discussions with the SES were continuing when events were overtaken by Pan-El's problems. Finally, I would like to provide Members of this House with some background facts on the importance of the stock market and its position in our financial system, so that the problems of the Stock Exchange can be viewed in proper perspective. Based on 1984 data, the salient facts are: (1) The stockbroking industry contributed 0.6% towards Singapore's GDP, out of 12.2%, contributed by the financial services sector as a whole. (2) Employment in the stockbroking industry accounted for less than 5% of the total employment of around 35,000 in the financial services sector. (3) Total loans extended to the stockbroking industry by the banks was just over S$1 billion, or 3% of the total loans extended by commercial banks to non-bank customers. (4) Total market capitalization of the Singapore and Malaysia stock exchanges was around S$70 billion, accounting for about 1% of the capitalization of the major stock markets in the world. (5) Annual turnover of the Singapore stock market was around $8 billion, or 0.6% of turnover on the major stock markets in the world. (6) Foreign ownership (excluding Malaysian) of Singapore shares accounts for less than 8% of the total market capitalization of Singapore registered companies listed on the SES. The foregoing facts show that the stockbroking industry in Singapore is a relatively small component of the Singapore economy and that foreign investments in Singapore shares have historically been low.”
“Due to the prolonged decline in stock market prices, many of these contracts could involve losses for end-buyers upon maturity. If end-buyers default, losses will fall immediately on the brokers, and subsequently on lending banks if the brokers then fail. The present position is that the aggregate capital funds of all Singapore stockbrokers stand at S$350 million, with another S$70 million in the process of being raised. These funds, together with the S$180 million line of credit in the lifeboat fund, should meet all contingencies. It should be noted that the practice of entering into forward contracts is not specifically prohibited by SES rules prior to 6th December 1985. What went wrong was gross over-trading greatly in excess of capital funds, thus greatly increasing the risk. The risk was aggravated by heavy concentration in certain shares and by exposure to particular clients. Such practices are distinct from market-churning or price-rigging which, if discovered, would be in contravention of the Securities Industry Act. The events of December last have shown that the SES, as presently constituted, has proved unable to exercise effective self-regulation. A new Securities Industry Act will be presented to Parliament later today, incorporating new regulatory measures adapted from the Bank- ing Act in Singapore and securities industry regulations currently in force in the United States and Australia. The new Act, when approved by Parliament, will provide a sound basis for the development of Singapore's capital markets in an increasingly complex financial environment. It aims to provide a refurbished SES with the autonomy to manage its day-to-day activities, while providing Government with the mechanism to identify and act against malpractices.”
“With this development, the threat of broker insolvency was very real as no assurance could be obtained from lending banks that credit lines would not be withdrawn. In the circumstances, the Committee of the Stock Exchange, after consultation with the MAS and leading local banks, decided to suspend trading temporarily with effect from 2nd December. It was a difficult decision as the damage to the SES and Singapore's reputation was recognized. However, a two- s was considered paramount and superseded all other considerations, including repercussions flowing from a suspension. Without a lifeboat fund and the assurance it gave, defaults by a number of brokers was considered almost inevitable, and this would have led to the withdrawal of credit by banks, leading to more defaults. The ensuing panic amongst investors would have led to a forced suspension of the Exchange under chaotic conditions. I would like to stress again that the lifeboat fund is not meant to bail out individual stockbrokers who have become or may become insolvent through their own imprudence. Such brokers will still fail. Rather, the lifeboat is there to ensure that the obligations of the members of the Stock Exchange as a whole are fulfilled. The fund is a credit umbrella put up by banks and any drawdowns against this fund would have to be repaid with interest by SES member-firms, individually or collectively. The underlying cause is over-trading on the part of a number of brokers who have taken positions or have provided financing for customers in amounts greatly in excess of their capital resources. The problems are centred around some $600 million worth of forward contracts which mature between December 1985 and June 1986.”
“Mr Tan Koon Swan, with interests in Pan-El held, through Sigma Metal, signed on 11th December 1985 a rescue agreement with a consortium of Pan-El creditor banks to undertake the following:- (i) Relieve Pan-El of all its outstanding share purchase obligations by 31st December 1985. This was substantially completed on 31st December 1985; (ii) Inject a total of $40 million into Pan-El by 31st March 1986 in order to restore Pan-El's liquidity and allow it to continue operations. As of today, a sum of $20 million has been transferred to Pan-El. The foregoing measures should improve prospects for restoring Pan-El to financial viability. Prior to the setting up of the Supervisory Committee, the Stock Exchange of Singapore (SES) operated under a self-regulatory system in which the affairs of the SES were managed by a committee consisting entirely of brokers. It set its own trading rules and was not obliged to submit returns to the MAS. When the problems facing Pan-El and its liabilities in forward share contracts first came to light around 15th November, it became evident that a number of stock- broking companies were heavily exposed to the Pan-El group and its associated companies, with exposures to Pan-El reported at around $140 million and total forward contract exposures estimated at around $600 million. These revelations led to widespread concern amongst banks lending to the stockbroking community (as the aggregate capital funds of all stockbrokers stood at $350 million). There was fear that some brokerage houses could become insolvent if Pan-El and its associated companies failed to honour their forward share contract obligations. Matters came to a head on 30th November, when the Pan-El rescue negotiations collapsed and creditor banks called in receivers and managers.”
“The problem of the Pan-Electric Industries and those of the Stock Exchange attracted wide public interest. I therefore propose to give the background in some detail to Members of the House so that they can see the issues concerned in their proper perspective. First, some background on Pan-El. Pan-El is one of 122 Singapore incorporated companies listed on the Stock Exchange of Singapore (SES). At the time trading in its shares was suspended on the Stock Exchange, Pan-El had a market capitalization of some $230 million, just under 1% of the total market capitalization of all Singapore companies listed on the SES. The main business of the company is in three areas, namely, marine salvage/offshore supplies, hotel/travel services and property development. Although the current recession has undoubtedly affected Pan-El's main business, they are not the sole, or even the main, cause of Pan-El's problems. These problems arose principally as a result of a series of massive forward share deals which Pan-El had entered into, utilizing funds borrowed from banks. These forward share deals, which totalled some S$140 million, had resulted in losses to the company of an estimated $40 million at the time its shares were suspended. These losses were greater than Pan-El's entire 1984 pre-tax profit of just over $40 million, and led to its defaulting on a $7.5 million loan repayment which was due on 18th November 1985. This default, and subsequent revelation of its massive forward share liabilities, eventually induced creditor banks to call in the receivers after the failure of the first attempt to rescue the company.”
“Mr Speaker, Sir, it is quite immaterial whether they agree or not. I think these are arrangements entered into privately between the stockbroking companies and their remisiers and there is recourse if they are dissatisfied. Mr Chng Hee Kok rose -”
“Mr Speaker, Sir, the arrangement is between the stockbroking companies and their remisiers. If the remisiers feel dissatisfied, I think this is an issue they can quite legitimately raise with the stockbroking companies.”
“Mr Speaker, this was an arrangement entered into voluntarily between brokers in the SES. The rationale was that, since remisiers are part of the stockbroking community, the deduction of the commission would go into a fidelity fund which benefits all members of the stockbroking community so that trades can be guaranteed and the public would be reassured and therefore would continue to trade on the stock exchange. This is the basic reason.”
“Mr Speaker, Sir, the agreement to roll over or not to roll over is a privilege which only the creditor banks can decide. It is not something which the MAS can rule on.”
“Mr Speaker, Sir, perhaps I should explain the actual application of the lifeboat fund. It is not, in fact, to bail out any individual stockbroking company. That is not the intention at all. It is quite possible that companies which have been imprudent will, in fact, fail. The lifeboat was put together to ensure that individual trades entered into by the investing public will not incur a loss. That is the sole purpose of the fund. If a broker company is in difficulties and has to draw upon the fund, the fund being a credit umbrella provided by banks has to be fully repaid, either jointly or severally, by the stockbroking members. So it is in no way to be interpreted as a bail-out. Any drawdowns against the fund have to be repaid.”
“Mr Speaker, Sir, the issue of imprudence or improper propriety is a matter which is under investigation. So I do not think one should prejudge this. It is precisely for this reason that I think it will be inappropriate for me to quote individual names because, in the context in which they have been raised, it would imply guilt of some form. As far as the investing public is concerned, all these dealings with the Stock Exchange are now guaranteed. So it is quite unimportant which company he is dealing with.”
“Mr Speaker, Sir, the answer is no. I do not see how it is in the public interest to name individual companies which are already generally known and have been published because, as I have said earlier, these forward contracts, however imprudent one might consider them, are neither illegal nor disallowed by SES rules. As far as the investing public is concerned, the SES as a whole is guaranteeing all trades. Therefore, their interests are looked after.”
“Indeed that is a good question. I think the responsibility of the auditors comes into question in this area, and the matter is under investigation.”
“The present laws and the Company law are, I believe, adequate. However, their implementation depends a great deal on the report of the auditors and the vigilance of auditors in ensuring that requirements under the Act are observed by the directors.”
“Mr Speaker, Sir, it would not be appropriate for Government to name the stockbroking companies which were involved in the forward contracts contracted by Pan-Electric Industries. The information is widely known in the market and has been reported in the press. I should point out that prior to their prohibition, forward contracts were not disallowed by SES rules. The problems associated with Pan-El's forward contracts arose because of the large sums involved, losses from which jeopardized Pan-El's liquidity.”
“Sir, the question is irrelevant to the issue under discussion. PAN-ELECTRIC INDUSTRIES LTD (Forward contracts) 6. Mr Chng Hee Kok asked the Minister for Finance if he will provide the names of the stockbroking companies which were involved in the $140 million forward share contracts of Pan-Electric Industries Ltd at the time of its receivership.”
“Mr Speaker, Sir, the decision was taken at Cabinet level.”
“Mr Speaker, Sir, no pension has been paid as he has declined it.”
“159); and (ii) Vocational Rehabilitation and Employment (Disabled Persons) Recommendation, 1983 (No. 168), adopted at the International Labour Conference in June 1983.”
“The distribution of Government hospital beds by class of accommodation over the last five years from 1980 to 1984 is shown in the attached appendix (see below). The reduction in the total number of beds in recent years was due to the closure of Sembawang Hospital in March 1983 and the transfer of 200 beds from Woodbridge Hospital in June 1984 to the Ministry of Community Development for the continued care of destitute ex-psychiatric patients. DISTRIBUTION OF GOVERNMENT HOSPITAL BEDS BY CLASS OF BED, 1980-84 Number Hospital & Class of Bed Acute Hospitals Other Hospitals All Hospitals Year A B1 B2 C Total A B1 B2 C Total A B1 B2 C Total 1980 196 496 66 3874 4632 26 76 -- 3376 3478 222 572 66 7250 8110 1981 211 524 527 3479 4741 26 76 -- 3401 3503 237 600 527 6880 8244 1982 246 592 736 3076 4650 30 82 -- 3404 3516 276 674 736 6480 8166 1983 260 608 1023 2719 4610 30 82 -- 3404 3516 290 690 1023 6123 8126 1984 276 640 1128 2629 4673 30 122 -- 3164 3316 306 762 1128 5793 7989 Footnotes: (1) "Acute Hospitals" are the multi-disciplinary hospitals catering to the acutely-ill (viz. Singapore General, Tan Tock Seng, Kandang Kerbau, Toa Payoh, Alexandra & Changi Hospitals). (2) "Other Hospitals" are specialised hospitals or those treating long term, chronic sick patients (viz. Woodbridge, View Road, St. Andrew's & Middle Road Hospitals). VOCATIONAL REHABILITATION AND EMPLOYMENT OF DISABLED PERSONS 27. Mr J.B. Jeyaretnam asked the Acting Minister for Labour if he will outline in detail against each recommendation why the Government has not felt able to ratify and adopt any of the recommendations contained in the: (i) Vocational Rehabilitation and Employment (Disabled Persons) Convention 1983 (No.”
“The Ministry of Health is currently studying the development of community hospitals as part of the Ministry's total hospital redevelopment programme. It has not yet finalised its plans for building community hospitals. The final decision regarding the size and location of the community hospital will have to take into account the demand for additional hospital beds as projected in the National Health Plan. The Ministry is now exploring with the Housing and Development Board for a suitable site for a community hospital in one of the new towns. The Ministry has not decided on the form of management and administration of the proposed community hospital. BEDS IN SINGAPORE HOSPITALS 26. Mr J.B. Jeyaretnam asked the Minister for Health if he will give the number of beds that have been made available over the last five years, year by year, for Class A, B and C patients in the government hospitals.”
“The strength of the Singapore dollar is not responsible for the present downturn in the Singapore economy. In general, in the absence of foreign exchange controls, the exchange rate of a country's currency is dependent on the country's balance of payments, its foreign exchange reserves, and the direction and magnitude of capital and monetary flows. Over the past decade, the Singapore dollar has appreciated against most major international currencies as a natural outcome of the strength of our economy, strong capital and monetary inflows, a tight fiscal policy which led to steady fiscal surpluses, and large and increasing foreign reserves. The value of the Singapore dollar is determined by these fundamental economic parameters. The Monetary Authority of Singapore intervenes only when foreign exchange speculators distort the value beyond its normal range against a basket of currencies of our main trading partners. COMMUNITY HOSPITALS 25. Mr J.B. Jeyaretnam asked the Minister for Health whether any progress has been made in the proposed plan to set up community hospitals announced in the National Health Plan and whether the hospitals will be operated by the Ministry of Health or as private hospitals under statutory boards.”
“(i) Overall Investment Policy of the Government of Singapore Investment Corporation Pte. Ltd (GIC) The primary objective of GIC is to maximise the real rate of return on the assets under management, consistent with the need to ensure safety of principal and liquidity. The investment orientation is long term and capital appreciation is given priority over current income. As an important element in risk control, investments are to be diversified by asset classes, countries and currencies. (ii) Percentage of Funds Invested Abroad and Locally All the funds under GIC's management are invested abroad. (iii) Countries and Dates of Investment Since its inception in May 1981, the bulk of GIC's assets have been held in the United States, Japan and West Germany. (As at 30 September 1985, 93.6% of GIC's assets are in these three countries). The balance of assets are distributed amongst a number of other countries and this distribution changes from time to time, depending on judgements on the yields from these investments. SINGAPORE DOLLAR 24. Mr J.B. Jeyaretnam asked the Minister for Finance whether he is of the view that the strength of the Singapore dollar may be a contributing cause for the present downturn in Singapore's economy and if it is, does the Government propose to do anything about it.”
“Gratuities and pensions were paid, in accordance with the Parliamentary Pensions Act, to eligible Members of Parliament who relinquished office as Ministers at the end of the last Parliament and to eligible Members of the last Parliament who did not seek re-election. To be eligible for gratuity and pension benefits as a former Minister, a Member must have completed not less than eight years reckonable service as a Minister and attained the age of 50 years. If he has served less than eight years as a Minister, the period of his service as a Minister will be taken into account when his gratuity and pension benefits as a Member of Parliament are calculated. A former Member of Parliament will be eligible for gratuity and pension benefits if he has completed nine years reckonable service and attained the age of 50 years. The full annual pension for a former Minister is computed at the rate of 1/324 of his last-drawn annual salary for each completed month of reckonable service. The full annual pension for a former Member of Parliament is calculated at the rate of 1/360 of his annual salary for each completed month of reckonable service. 1/3 of the full annual pension for 12 1/2 years can be commuted into a lump sum gratuity. The remaining 2/3 of the annual pension is paid monthly. Salaries of Ministers and Allowances for Members of Parliament are matters of public record as are lengths of service of retired Ministers and Members of Parliament. Pensions and gratuity entitlements are therefore calculable by anyone interested in the details. INVESTMENTS OF THE GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION PTE LTD 23.”
“It is too early to say. ANSWERS TO PARLIAMENTARY QUESTIONS DEMANDING STATISTICAL DATA (Cost to taxpayer) 17. Mr Heng Chiang Meng asked the Minister for Finance what is the typical cost to the taxpayer of preparing answers to Parliamentary questions demanding statistical data which are not readily available and, more importantly, which do not appear to be of significance to the public.”
“In the normal way, Government is reviewing its fiscal position and, around early 1986, we will be reviewing the whole tax question in the light of Government's fiscal position at that time. Mr Chng Hee Kok: From the feedback obtained by his Ministry, are these measures having the desired effect?”
“Mr Speaker, Sir, a number of tax concessions were announced on 26th July and 31st August 1985. It was further announced on 24th October that the tax on PUB gas and electricity charges would be suspended for two years. It is estimated that the combined effect of these tax concessions will result in a revenue reduction to Government of around $550 million in a full year. In addition, statutory boards have announced tariff reductions which will result in revenue reductions amounting to $120 million per year. The total reduction in public sector revenue, resulting from the various tax concessions and statutory board tariff reductions announced since the 1985-86 Budget was approved, is estimated at $670 million in a full year. In addition to the foregoing, Government has announced the bringing forward of several public sector projects. Expenditure on these will amount to $245 million in fiscal year 1985-86. Measures to stimulate the economy announced to-date, therefore, total $915 million, taken over a full year.”
“Clause 3 includes an amendment to clarify that such capital expenditure incurred during or after the basis period to the year of assessment 1985 can be written off over three years. At present, computers, robots and office automation equipment can be fully depreciated in one year. Clause 3 also extends this one year write-off to automated production equipment which would take effect from the year of assessment 1985. Unclaimed residual allowances in respect of existing automated production equipment will also be allowed the full set off in one year. Section 25 of the Act provides that capital allowances claimed and granted before separation from Malaysia in 1965 will continue to be recognized under Singapore laws after Separation. Clause 4 of the Bill is a technical amendment to make clear that Part XV of the Act mentioned in section 25 refers to a provision which was in force before the year of assessment 1966 but has since been repealed. 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 Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed. STATE OF THE ECONOMY 3.57 pm”
“Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill seeks to give legislative authority to the income tax concessions announced in the 1985 budget statement. Opportunity is also taken to include four other amendments to the Act. It was announced in the 1985 budget statement that with effect from the year of assessment 1986, all individual taxpayers will be allowed to deduct their course fees incurred towards obtaining professional or academic qualifications. Fees for approved courses related to the individual's trade, business, profession, vocation or employment can also be offset against his income. Tax deductibility is subject to a maximum of $2,000 per taxpayer for each year of assessment. Clause 5 of the Bill provides for this. Under our present laws, a tax credit is available only if income is remitted from a country with which Singapore has an agreement for the avoidance of double taxation or a Commonwealth country. In the 1985 budget statement, a unilateral tax credit was made available for offset against overseas taxes suffered on income derived from services rendered by resident taxpayers in selected non-treaty countries. Clause 6 of the Bill empowers the Minister to prescribe regulations to determine the type of income which will enjoy the concession and the countries from which such income is derived. I now move to the other amendments to the Act. Clause 2 amends section 14(l)(e) of the Act to bring it in line with the increases in CPF contributions by employers, reflecting the increases to 23% in July 1983 and 25% in July 1984. Last year, section 19(A) of the Act was amended to allow all plant and machinery to be depreciated over three years but the effective date of this concession was unintentionally restrictive.”
“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. INCOME TAX (AMENDMENT) BILL Order for Second Reading read. 3.52 pm”
“Also, it was considered that such contributions were not prohibited by law as the various Development Loan Ordi- nances and Acts only specified minimum contributions that had to be made. Sir, the Public Accounts Committee (PAC) of the previous Parliament, in a Report released last year, agreed that it was prudent to make enhanced contributions to the sinking funds. The PAC, however, requested the Auditor-General to seek the advice of the Attorney-General on the law in relation to such enhanced contributions. The Attorney-General subsequently advised that any doubt about the interpretation of the law could be removed by amending legislation to make specific provision in the various Development Loan Ordinances and Acts for enhanced contributions to sinking funds. The Development Loan (Amendment) Bill, 1985, therefore, seeks to provide specific sanction in statute for this long-standing and prudent practice which has resulted in the sinking funds now being more than sufficient to redeem all current domestic loan obligations when these fall due. Clause 2 of the Bill seeks to introduce a new subsection within the existing section on sinking funds in each of the Development Loan Ordinances and Acts listed in the first column of the Schedule to the Bill. The new subsection will enable the Minister to authorize enhanced contributions to be made to any sinking fund subject to the total amount in the sinking fund at any time not exceeding the outstanding principal sum of the domestic loan. Clause 3 of the Bill seeks to regularize enhanced contributions that have been made in the past or that might be made between now and the coming into operation of the amending legislation. Sir, I beg to move.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The various Development Loan Ordinances and Acts authorize Government to raise domestic loans to finance development schemes. The total value of such loans is now $18.2 billion and the bulk of this has been borrowed from the CPF. The provisions in the Development Loan Ordinances and Acts provide firm guarantees that not only will interest on borrowings be paid regularly but also that each loan will be redeemed in full when it matures. In particular, the legislation stipulates that a sinking fund be set up for each loan and annual contributions made from the Consolidated Fund to the sinking fund. The contributions to the sinking fund together with interest earned on these would in normal circumstances be sufficient to redeem the loan when it is due for repayment. Since 1968, in addition to the mandatory annual contributions, Government has made accelerated or enhanced contributions to the various sinking funds. Owing to the enhanced contributions, the total amount in the sinking funds is now $11.5 billion, more than sufficient to meet current domestic loan obligations. The practice of making enhanced contributions is a prudent measure to ensure that there are always sufficient reserves to redeem domestic loans, the bulk of which have been raised from the CPF, when these fall due. In particular, enhanced contributions should be made in those years when revenue performance is good so that contributions could be reduced during lean years while ensuring that there are sufficient funds to redeem the loans on maturity.”
“Sir, since section 149 became operative on 15th August 1984, 68 persons have been affected by it. The Court has received three applications for leave under this section. I do not intend to repeal section 149. Instead suitable amendments will be made to that section. My Ministry is currently studying the matter in consultation with the Attorney-General's Chambers, the Registry of Companies and Businesses, as well as interested business and professional bodies. USE OF CPF SAVINGS FOR CHILDREN'S EDUCATION 10. Mr Leong Horn Kee asked the Acting Minister for Labour, as the Government is considering allowing Central Provident Fund savings to be used for various forms of investments, whether he will also consider allowing CPF savings to be used for children's education such as tertiary education or specialised technical/professional training which is a form of capital investment. The Acting Minister for Labour (Mr Lee Yock Suan): Mr Deputy Speaker, Sir, this question was raised in the last budget debate. My reply then was that we should first look at other alternatives, such as more liberal granting of scholarships and bursaries as well as the possibility of providing interest-free loans to those who qualify for admission to our universities. This way we avoid eating into the low CPF savings of many parents who require the savings for their own financial security and for home ownership. This basically is still my position. We should not lose sight of the priorities of the CPF scheme which are to provide members with financial security and to enable them to own their homes. These priorities must first be met before we consider other possibilities.”
“Mr Deputy Speaker, Sir, the matter is under consideration and I expect that a decision will be made shortly. SECTION 149 OF COMPANIES ACT 9. Mr Heng Chiang Meng asked the Minister for Finance and Minister for Health (a) how many persons have been affected by section 149 of the Companies Act; (b) how many applications for leave have been made to the Court under this section since it became operative on 15th August, 1984; and (c) whether he will consider introducing legislation to amend or repeal this section.”
“The National University Hospital (NUH) is owned and run by the National University Hospital (Singapore) Pte Ltd, a fully-owned subsidiary of Temasek Holdings (Pte) Ltd. As a private company, its management is responsible to the Board of Directors for the operation of the hospital, including the fixing of its various fees. These fees are not required to be approved by the Ministry of Health. A copy of the NUH schedule of fees is attached in the Annex (Annex C) (Cols. 261 - 262). The charges for the subsidised 6-bedded wards are very comparable to the charges applicable to the 10-bedded class B2 wards in the Singapore General Hospital. Annex C - NATIONAL UNIVERSITY HOSPITAL WARD, OPERATION, DIAGNOSTIC, OUTPATIENT AND OTHER CHARGES (Cols. 261 - 262) 25 YEARS OF NATION BUILDING (Cost of celebrations) Consequent on the Question raised by Mr J.B. Jeyaretnam on 14 May 1985, the Second Deputy Prime Minister supplied the following information on 22 July 1985 on the final cost of celebrations to the tax payer: "The net expenditure, after taking into account donations and sponsorships by private organisations, revenue from sales of souvenirs, rentals, etc and other costs recovered, incurred by government for the "25 Years of Nation Building" celebration was $13.05 million." LITTLE INDIA (Cols. 249 - 250) Annex B - PROFITS/(LOSSES) OF GOVERNMENT-OWNED COMPANIES FOR 1983 AND 1984 (Cols. 251 - 260) Annex C - NATIONAL UNIVERSITY HOSPITAL WARD, OPERATION, DIAGNOSTIC, OUTPATIENT AND OTHER CHARGES (Cols. 261 - 262)”
“There is no question that current measures to curb excessive use of cars are achieving the desired effect. My Ministry will continue to assess the impacts of these measures and modify or introduce new measures as and when necessary. FEES AT NATIONAL UNIVERSITY HOSPITAL 11. Mr J.B. Jeyaretnam asked the Minister for Finance and Minister for Health whether the Ministry of Health has approved the fees to be charged to patients at the National University Hospital when it opens and, if the fees have been approved, to state them.”
“Details of Government's share of the profits and losses of each of the companies in which it has an interest for the years 1983 and 1984 are enclosed (Annex B). (Cols. 251 - 260) Annex B - PROFITS/(LOSSES) OF GOVERNMENT-OWNED COMPANIES FOR 1983 AND 1984 (Cols. 251 - 260) EFFECTS OF HIGHER PETROL DUTY 10. Mr J.B. Jeyaretnam asked the Minister for Finance and Minister for Health (a) whether the Government is still of the view in the light of what has happened since that its objective in raising the duty on petrol will be achieved; (b) whether there has been any drop in the revenue collected from the petrol tax after the higher duty was announced; and (c) if the objective does not look like being achieved and revenue has suffered, what steps does the Government contemplate next. Dr Hu Tsu Tau: Ad Valorem duty on petrol was raised on 8 March 1985 from 50 percent to 60 per cent of pump price to discourage excessive use of cars. Following the increase in duty, petrol sales in April, May and June this year averaged 42.8m litres per month. This represents a drop of 8 per cent when compared to the same three months of 1984. Compared to the first three months of this year, it is a 10 per cent drop. The reduction is significant even allowing for the fact that some motorists are buying petrol in Johore Bahru. Therefore the increase in duty has had its intended effect. Although petrol sales have dropped, revenue by way of petrol tax has increased. Duty from petrol sales in April, May and June this year averaged $38.2 million per month. This is about 33 per cent higher than the amount collected in the corresponding months of 1984 and 21 per cent higher than the amount collected in the first three months of this year.”
“Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In the Budget Statement this year, it was announced the legislative control on cinema admission prices would be removed with effect from 1st April 1985, to allow market forces to determine prices. This is in line with our policy of reducing Government regulations on business. It will also remove the anomaly whereby cinemas are the only form of entertainment which is subject to price control. The Cinematograph Film Hire Duty (Amendment) Bill (1985) seeks to effect the removal of control on cinema admission prices by repealing Section 13 of the Cinematograph Film Hire Duty Act. Mr Deputy Speaker, 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 Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed. DEPARTMENTAL TITLES 12.44 pm”
“Also, those who want and can afford a more personalized service can have a choice of treatment from at least 10 private dental clinics presently operating in Ang Mo Kio New Town. The Ministry does not intend to extend outpatient psychiatric treatment to the Ang Mo Kio Polyclinic in the near future. There is no need for this since the Specialist Psychiatric Outpatient Clinic at Woodbridge Hospital and the two Psychiatric Outpatient Clinics at the Lim Ah Pin Polyclinic and Pegu Road Outpatient Dispensary are within reasonable reach of Ang Mo Kio residents. REPORT OF THE COMMITTEE ON THE RECOMMENDATIONS OF THE COMMISSION OF INQUIRY INTO THE SENTOSA CABLE CAR ACCIDENT (Statement by the Minister for Communications and Information and Second Minister for Defence) 12.00 noon”
“Mr Deputy Speaker, Sir, the cost of printing the new currency notes issued by the Board of Commissioners of Currency in 1984 was about $5.5 million. Cash, in the form of currency notes and coins, will always be required for some transactions. The progressive conversion to cashless transactions will probably have only a marginal impact on the current operations of the Board, although it will undoubtedly lower the growth in demand for currency notes in the future. Most of the immediate advantages of cashless transactions will accrue directly to those organizations, firms, etc. which are paying salaries in cash, collecting cash and accounting for cash. The Government is already promoting cashless transactions as part of the productivity movement. A committee chaired by the Head of the Civil Service was established in January 1984 to find measures to minimize cash transactions in both the public and private sectors. ANG MO KIO POLYCLINIC (Dental and psychiatric treatment) 21. Mr S. Vasoo asked the Minister for Finance and Minister for Health (a) whether out-patient dental treatment will be provided in the Ang Mo Kio Polyclinic to meet the growing demand for dental needs of the residents living in Ang Mo Kio New Town; and (b) whether outpatient psychiatric treatment will also be available in the Polyclinic in the near future. The Minister of State for Health and Foreign Affairs (Mr Yeo Cheow Tong) (for the Minister for Finance and Minister for Health): Mr Deputy Speaker, Sir, the Ministry has no plan to set up an outpatient dental clinic within the Ang Mo Kio Polyclinic. This is because the dental clinic at Toa Payoh Hospital and the outpatient dental clinic at Jalan Kayu Polyclinic can also cater to residents of Ang Mo Kio.”
“Sir, the present intention is not to impose anything because we are still studying the situation. CASHLESS SOCIETY (Savings on printing and handling of currency notes) 20. Dr Wang Kai Yuen asked the Minister for Finance and Minister for Health what is the amount of annual expenditure on printing and handling of currency notes that the Board of Commissioners of Currency expects to save if the nation goes cashless and whether such potential savings can be used to promote the cashless society.”
“Mr Deputy Speaker, Sir, I assume that the Member for Rochore is referring to press reports on measures which might be introduced to discourage Singapore motorists from buying petrol in Johore Bahru. These reports remain pure speculation. Judging from the rise in causeway traffic, there has undoubtedly been an increase in motorists visiting Johore Bahru just to buy petrol. Government is monitoring the situation in order to assess the size of the increase and whether it is a temporary or a permanent trend.”
“Sir, the response really is to find a natural case we can investigate.”
“Mr Deputy Speaker, Sir, if the Member for Rochore would let me have his bill, we will look into this.”
“Mr Deputy Speaker, Sir, tax is payable on monthly PUB bills above $80. For domestic consumers, the sanitary appliance fee and refuse charges are excluded from the tax. When the meters are not read, the PUB bills are estimated. The tax is subsequently adjusted when meter readings are obtained, and the Government tax on overestimated PUB bills credited to consumers' accounts. Government tax is not payable on all fixed charges, either for domestic or non-domestic accounts. Examples, besides appliance fee and sanitary charges, are fees charged for pink notices for late payments, re-connection of supply, second test of meter and special meter readings. Prior to November 1977, tax adjustments were calculated manually. As from November 1977, the computer automatically adjusts the tax on accounts which do not involve more than eight months of stored information. For other cases, manual adjustments are necessary.”