Tharman Shanmugaratnam
Singapore
“EDB conducts regular reviews to GIP to ensure its effectiveness in attracting only top-tier business leaders who are interested to drive the growth of their businesses and investments from Singapore.”
“MAS may vary the size of the additional capital requirement imposed on the bank and take other regulatory actions depending on the outcome of ongoing reviews. MAS requires all retail banks in Singapore to ensure that their mission critical systems supporting digital banking are resilient.”
“This question will be answered in the reply to Dr Tan Wu Meng's Parliamentary Question filed for tomorrow's Sitting. [Please refer to "Probe into Recent Disruptions of DBS' Digital Bank and Physical ATM Services and Preventive Measures Implemented", Official Report, 5 July 2023, Vol 95, Issue 107, Written Answers to Questions for Oral Ans…”
“Borrowing from the banks is one of the ways in which MAS carries out MMOs to soak up such excess liquidity. Like other central banks, MAS does this daily through an auction system, enabling MAS to withdraw liquidity through the Primary Dealers that submit the most competitive prices.”
“To mitigate consumer over-indebtedness, the Monetary Authority of Singapore (MAS) requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit.”
“The Monetary Authority of Singapore imposes on external asset managers the same stringent regulatory standards for anti-money laundering and countering the financing of terrorism that it imposes on banks.”
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“Foreign contractors intending to tender for public construction projects in Singapore must be registered with the Building and Construction Authority. Like local contractors, they will be assessed for their capacity to finance the project till completion. In addition, to be considered for larger projects, all contractors also have to undergo credit rating by an independent credit rating bureau. There are two ways in which foreign contractors may be registered in Singapore. If they register a local subsidiary, the Singapore company is a separate legal entity and not liable for the debts of its foreign parent company. If a local subsidiary company is liquidated as a result of financial difficulties faced by its foreign parent company, the Companies Act requires the creditors Page: 132 of the local subsidiary company to be paid before payment is made to the foreign parent company as a shareholder. Alternatively, a foreign contractor can register a branch which is part of the same legal entity as its parent company. Foreign contractors registered as branches are required to submit information on the parent company's finances, including audited accounts. If the parent company goes into liquidation, the law also requires that its assets in Singapore be used for payment of debts incurred here before any of it can be transmitted overseas. Regardless of which contractor is appointed, public agencies continue to monitor the progress of public projects and watch for signs that they may be running into financial difficulties, for example, a sudden slowdown in work progress or an unexpected reduction in manpower assigned to the project.”
“Benefit Corporations are a new class of corporations that was started in the United States in 2010. To date, 19 of the 50 states have adopted Benefit Corporate legislation, the most recent being Delaware (July 2013). About 400 Benefit Corporations have been formed since. The key benefit seen in such corporations appears to be protection from legal challenge, for example, for not maximising shareholders' returns. This may be an important consideration for corporations with a strong public benefit orientation in the US context. Page: 126 In Singapore, a company incorporated under Singapore's Companies Act can include in its Memorandum and Articles of Association that its main purpose is to pursue specific public benefit goals. For listed companies, we amended the Code of Corporate Governance in 2012 to expand the roles of Company Boards. Apart from their duties to shareholders, Company Boards are now also responsible for identifying key stakeholder groups, recognising their impact on the company and ensuring that obligations to these stakeholders are understood and met. Companies must also consider sustainability issues, for example, environmental and social issues, in formulating their business strategies. Thus far, there have been no concerns raised that companies could face legal challenges for addressing these multiple stakeholder needs. The Government is also doing more to support social enterprises (SEs). This includes providing tax incentives and seed funding to help cover start-up and operating costs, and a mentoring programme to strengthen the organisational capabilities of SEs. We will monitor the US experience with Benefit Corporations and consider their relevance to Singapore at an appropriate time. Page: 127”
“During the National Day Rally in 2013, the Prime Minister announced that the Government plans to honour our Pioneer Page: 124 Generation. The Pioneer Generation is a special group of seniors who worked hard when we started out as a new nation, and laid the foundation for today's Singapore. They paved the way for subsequent generations to live a better life. They are now in their golden years and it is timely for us to recognise their contributions and sacrifices. We are currently developing a Pioneer Generation Package to honour this special group of elderly Singaporeans. The Government has received several useful suggestions on how to define the Pioneer Generation. We have consulted different groups of Singaporeans to get more views. We continue to welcome suggestions on this issue through REACH or the MOF website. The Government will provide details of how the Pioneer Generation is defined by the time of Budget 2014.”
“The last time it raised capital before this round – this was the 2011 round – and the last time before that was 1988. So, even conservatively, let us, say, 10 years, that is US$38 million, or about S$50 million, over 10 years, which is about S$5 million a year. So, it is S$5 million a year which, I think, is not an inordinate amount to contribute to the World Bank, an institution whose effectiveness we have a clear and vested interest in sustaining. On the secondary question, the Member asked about whether we are obliged to cough up callable capital when asked, this is an interesting question because there has been no precedent for it. They have never called on the callable capital. There has been no precedent for it and, in fact, no one expects it to ever become necessary. In theory, a country can pull out of its membership if it could not meet its obligations but I think that is the last thing we will want to do because our credibility in the world is extremely important, it is an extremely important asset. The main point I am making though is that you do not expect the callable capital to be called; that is not the way the IBRD is run. The whole purpose of callable capital is for it to maintain its AAA rating. The budgetary cost for us is the paid-in capital. That is something which was reflected in this fiscal year's budgetary estimates and that is the true charge on us. As I mentioned, it really amounts to – when you look at it amortised over 10 years – about S$5 million a year, which is not an inordinate sum. Page: 104”
“24%, slightly lower than the voting share but that is technicality. So, 0.24%. In fact, that is still significantly lower than our share of the global economy in GDP, for instance. Our share in global GDP is about 0.4% and our share in global trade is significantly more than that. So, our share in the World Bank, an institution responsible for supporting sustainable growth in the developing world, is, in fact, much lower than our share in global GDP and in global trade or in global cross-border investments. So, we are not over-committing. The reason why we are still below our share, as dictated by GDP or trade or cross-border investments, is because we were a developing country. Our starting point was one of a very small contribution. And we are still not an Page: 103 advanced economy. So, we are increasing our share, increasing our contributions, but we are doing it in the right proportion. We are not over-committing. Playing our responsible role, making a significant increase, but we are not over-committing. I am satisfied with that. The amount looks large because we have included the callable capital. In the nature of our contributions to these organisations, the callable capital is significant but it has never been called. In the history of IBRD, it has never been called because the purpose of callable capital is merely to allow the IBRD to issue bonds to finance its operations, and to maintain its AAA rating. The true budgetary cost is what we will pay in, that is, the paid-in capital. And that is the US$38 million increase. That is not an annual figure. That is US$38 million that I expect to last for quite a while because the IBRD only raises capital once every 10 to 20 years.”
“Mr Gerald Giam has asked valid questions. Perhaps, the best way I can answer them is to state in a different way what I mentioned in my speech. There are essentially two propositions which shape our commitments to organisations like the World Bank. It is a key international organisation. First, having strong and effective multilateral institutions is in Singapore's interests. We are small, we are dependent on the rest of the world. We are dependent on a stable and growing world for our people's livelihoods. So, we have a vested interest in strong multilateral institutions. At our current stage of development, quite different from 1966 or even different from 10 or 15 years ago, and given our growing links with developing Asia and the developing world at large, we have to play a responsible role in the multilateral institutions. We cannot be a free rider. We cannot be a free rider expecting to reap the benefits, directly or indirectly, without paying our membership fees. So, that is a basic proposition. But the second proposition is equally important, which is, that we should only commit to what we can afford and in proportion to our size and role in the global economy. That is something which we study very carefully: how does it fit within our overall budgetary commitments, each year and over the long term? Secondly, how do we compare with other countries: our neighbours, those in the region, as well as those further afield? We should commit in proportion to our size and role in the global economy, and not beyond what we can afford. That is what instructs our calculation of how much we should contribute. How much have we contributed? The amount that we are contributing will give us a share in the World Bank's capital of about 0.”
“Our subscriptions to the IBRD are, hence, unlike MAS' subscriptions to the IMF's capital, or what is called the "IMF quota subscriptions", or its loans to the IMF, which are neither expenditures nor liabilities, but assets that remain part of our Official Foreign Reserves. With this new subscription to IBRD capital, Singapore's total subscription would be in excess of the current US$40 million cap prescribed in section 7(3) of the Bretton Woods Agreements Act. Parliament is, therefore, requested to approve that the subscription of Singapore to the International Bank for Reconstruction and Development be increased to a sum not exceeding US$672 million, thereby authorising the Government to take up the additional subscription proposed. Singapore's total paid-in capital will amount to US$41.86 million. That includes the paid-in capital that we had previously put in. Mr Deputy Speaker, I beg to move. [(proc text) Question proposed. (proc text)]”
“Our economic ties are also growing with developing countries in Asia and beyond. For example, Singapore-based companies stand to benefit from the World Bank's extensive network and resources through partnership projects in urban development within Asia and elsewhere. In subscribing to the IBRD's capital increase, Singapore would also be playing its role in the region's contributions to the IBRD – the Southeast Asian region's contributions. Before this new subscription, Singapore is ranked eighth amongst ASEAN in terms of contribution, in fact, behind Brunei, Myanmar and Vietnam. With our increase, Singapore will be the fifth largest shareholder amongst the ASEAN countries, behind Indonesia, Thailand, Malaysia and the Philippines. As I mentioned earlier, as part of our increased subscription, we will be paying 6%, or US$38 million, as paid-in capital. This amount will be met from Page: 100 the Government Budget, and was included in the estimated operating expenditures presented to Parliament as part of Budget 2013. The remaining 94%, known as callable capital, will not be drawn by the IBRD except in extreme circumstances, when it cannot meet its obligations on borrowings or guarantees. To date, the IBRD has never had to call on the callable capital in its history. It is an AAA-rated institution with a sound balance sheet for over 50 years. Nevertheless, the full increase in Singapore's subscription to IBRD's capital will be charged to the Consolidated Fund, as the callable capital represents an increase in the Government's financial liabilities.”
“Mr Deputy Speaker, I beg to move, "That this Parliament, in accordance with section 7(3) of the Bretton Woods Agreements Act (Chapter 27 of the 2012 Revised Edition), resolves that the subscription of Singapore to Page: 99 the International Bank for Reconstruction and Development be increased to a sum not exceeding Six Hundred and Seventy-Two Million United States dollars (US$672 million)." Mr Deputy Speaker, the Board of Governors of the International Bank for Reconstruction and Development, or IBRD, has adopted in March 2011, resolutions to increase the capital of the IBRD by US$86.2 billion. The IBRD is the main institution of the World Bank Group that lends to developing countries. The IBRD intends to use the capital to promote growth and sustainable development amongst its middle income and credit-worthy poorer member countries. It does this, for example, by supporting investments in infrastructure in those countries. At present, Singapore's subscription to the capital of the IBRD totals US$38.6 million, of which we have paid US$3.86 million as paid-in capital. We propose to increase Singapore's capital subscription by US$633.2 million, bringing our total subscription to close to US$672 million. However, out of the total increase, we will be paying only 6% or US$38 million as paid-in capital. This is our first increase in capital subscription to the IBRD since 1966. It will mean an increase in our voting power in the IBRD from 0.05% to 0.25%. Let me explain why Singapore has to play its part in the global effort to supplement the World Bank's resources. Given our role as a major financial centre and the importance of a healthy global economy to our economic prospects, we should participate in this global effort.”
“Government procurement rules require agencies to evaluate tender proposals against the set of criteria specified in the Invitation to Tender. For construction-related tenders, it is already a requirement for Government agencies to specify the price-quality ratio and the weighting of the main criteria that are used for tender evaluation. Under the Quality Fee Method for construction consultancy services, the weighting given to the quality of the proposal would range between 60% and 80%, and this would be clearly specified in the Invitation to Tender and made known to all suppliers. However, it is not always applicable to specify price-quality ratios. For example, in a relatively straightforward and simple procurement where cost is the primary consideration, using weighted criteria is not needed since the procurement decision can be made based on price. MOF is currently in the process of revising our procurement rules to be aligned with our obligations under the World Trade Organisation's revised Agreement on Government Procurement (WTO-GPA). Under the revised WTO-GPA, signatories are required to provide greater clarity on their tender evaluation criteria. This means that Government agencies will be required to not just spell out the criteria used for evaluating the tender, but also highlight the relative importance of each evaluation criterion. For instance, if a particular quality criterion carries more weight than price or another quality criterion, this should be specified upfront so that tenderers will know which criterion is more important when the Government agency is evaluating the tender. Page: 179”
“– (1) A contracting authority may use limited tendering for procurement in the following circumstances: (a) when the open procedure or selective procedure was used but no tender was received; (b) when the tenders received under the open procedure or selective procedure – (i) are collusive; (ii) are not in compliance with the essential requirements specified in the contract documents; or Page: 176 (iii) were submitted by suppliers who failed to comply with the conditions for participation in the tendering procedure; (c) when, for technical reasons, or for reasons connected with the protection of exclusive rights, or by reason of being a work of art, the goods or service to be procured can only be supplied by a particular supplier; (d) when (but only if it is strictly necessary), for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the goods or service cannot be obtained in time by means of the open procedure or the selective procedure; (e) when the goods to be procured are required by the contracting authority as a parts replacement for, or addition to, existing goods or installation, and when to obtain the goods from a person other than the person who supplied the existing goods will result in the contracting authority obtaining goods not meeting its requirements of interchangeability with the existing goods or installation; (f) when the service to be procured is an extension of an existing service, and when to obtain the service from a person other than the person who performed the existing service will result in the contracting authority obtaining a service not meeting its requirements of interchangeability with existing goods, installation or service; (g) when the goods or service to be procured are a prototype, or a first product or service, which is to be manufactured or performed, at the contracting authority’s request, in pursuance of a contract for research, experiment, study or original development; (h) when the services to be procured are construction services: (i) which were not included in an earlier contract for construction services (referred to in this sub-paragraph as the initial contract); (ii) which were within the objectives of the initial contract; (iii) which have, through unforeseeable circumstances, become necessary for completing the construction services under the initial contract; Page: 177 (iv) which are difficult to separate from the construction services under the initial contract for technical or economic reasons; (v) which will, if separated from the construction services under the initial contract, cause significant inconvenience to the contracting authority; (vi) which have to be awarded to the contractor of the initial contract for the reasons set out in sub-paragraphs (i) to (v); and (vii) the total value of which does not exceed 50% of the value of the construction services under the initial contract; (i) when the services to be procured are construction services (referred to in this sub-paragraph as the new services) which consist of the repetition of similar construction services which conform to a basic project for which a contract (referred to in this sub-paragraph as the initial contract) had earlier been awarded using the open procedure or selective procedure, and when the contracting authority had indicated in the Invitation to Participate for the initial contract that limited tendering may be used in awarding a contract for the new services; (j) when the goods to be procured are goods on a commodity market; (k) when the procurement concerned is subject to exceptionally advantageous conditions which will only apply for a very short period, including any disposal of a non-routine nature by a person who is not normally a supplier and the disposal of assets of any business in liquidation or receivership; (l) when the contract is to be awarded to the winner of a design contest, being a contest: (i) organised in a manner which is consistent with the principles of national treatment and non-discrimination, especially with regard to the publication, in a manner similar to that of the Invitation to Participate, of an invitation to suitably qualified suppliers to participate in the contest; (ii) which is judged by an independent panel of judges; and (iii) which is organised with a view to awarding the contract to the winner.”
“As with the practice in most countries, procurement of R&D is not covered by our international obligations and HDB’s tender was not a contravention. [(proc text) ANNEX A Extract from the Government Procurement Regulations, section 25 Division 3 – Procurement by Limited Tendering When limited tendering may be used 25.”
“Singapore is a signatory to the World Trade Organisation's Agreement on Government Procurement (WTO-GPA) and various Free Trade Agreements. Our obligations under these Agreements are legislated in Singapore's Government Procurement Act and its relevant subsidiary legislations12. A procurement is deemed as a "covered procurement", which is subject to these Agreements, if it meets the following three criteria: (a) the procuring entity is listed as covered by the Agreements; (b) the value of the purchase exceeds the threshold value stated in the Agreements; and (c) the type of procurement is listed as covered by the Agreements. A covered procurement must be conducted in accordance with the Government Procurement Act and Regulations. This includes allowing for free competition between foreign or domestic suppliers. Page: 175 The Government's policy, in general, is to procure through open tenders, whether or not the procurement is covered by international agreements. Over the past five years, about 80% of all the awarded tenders were conducted via open procurement process. Procurements can only be conducted via limited tender if they are among specified permitted scenarios [Please refer to Annex A below] or are not covered by our Free Trade Agreements and the WTO-GPA. Limited tenders are not confined to any industries in particular. The recent tender by HDB cited by Mr Yee was a research and development (R&D) project. The project, which was aligned with the objective of the Public-Private Co-Innovation Partnership programme, aimed to establish collaborative research with a local company on innovative roofing systems for future public housing.”
“Small and medium-sized enterprises (SMEs) accounted for 27% of total business credit extended in Singapore in 20129. This is slightly higher than in many of the advanced countries, such as France (21%), Italy (18%), the UK (20%), Canada (18%) and the US (26%)10. However, it is lower than in Taiwan (50%), Japan (67%) and South Korea (76%)11. The differences across countries in the shares of SMEs in overall credit have to be interpreted in the context of different definitions of SMEs in each country. Further, different overall credit shares for SMEs do not necessarily mean different degrees of access to credit for SMEs. For example, large corporations in some countries may rely more on funding from the capital markets and therefore account for a smaller share of bank lending. Fifteen percent of SME loans were mortgage equity withdrawal loans secured on residential property collateral. We do not have data on credit extended to SMEs broken down by size. There is also no hard data on the total stock of capital invested in SMEs by private equity, venture capital and angel investors. The availability of bank funding for SMEs should also be viewed in the context of the various Government-financed schemes for SMEs. SPRING Singapore offers a range of financing schemes to cater to SMEs of different Page: 170 sizes – the Local Enterprise Financing Scheme is available to local SMEs with sales turnover of not more than $100 million, while the Micro Loan Programme targets small SMEs with turnover not exceeding $1 million. SPRING also provides schemes, such as the Angel Investor Tax Deduction Scheme, to encourage investments in local companies.”
“Green procurement within the public sector has been actively encouraged since 2006, when we began the initiative Public Sector Taking the Lead in Environmental Sustainability (PSTLES). The public sector has also put in place several environmental sustainability measures that promote recycling, and efficient use of energy and water resources. Following the 2010 recommendation of the Economic Strategies Committee (ESC) on applying a green lens to Government procurement, further measures were taken under the PSTLES initiative. Measures include requiring all new office information and communication technology equipment to meet the latest ENERGY STAR standards. In addition, we are greening our public sector buildings. To date, 36 public buildings have attained Green Mark Platinum or GoldPlus ratings. The Government's tender processes already take into account long-term costs and savings wherever possible, whether through the use of energy- Page: 150 efficient equipment or processes, or other green measures. When evaluating tenders, besides considering the quality of the product and its ability to meet performance specifications, agencies are also expected to consider factors like energy efficiency and cost-effectiveness over the entire period of use. Tenders are awarded to proposals that best meet the assessment criteria and provide the overall best value. In summary, we have put in place several measures over recent years to encourage adoption of greener alternatives, and will continue to review our policies from time to time.”
“Since July this year, MOF has advised all Government agencies to make clear to contracted firms that they should adhere to National Wage Council (NWC) recommendations on wage increments for the duration of the contract, and factor expected wage increments into their bid price when tendering for projects. For multi-year contracts, contractors may also present a year-by-year break-down of their bid price, to reflect wage increments over the contract duration. Page: 149 In the cleaning sector, where a Progressive Wage Model has been implemented, the Government supports the tripartite plan to factor in NWC recommendations when considering adjustments to the wage levels. This approach can also be applied to the security sector, where a tripartite committee has been formed recently to formulate a Progressive Wage Model for the sector. The Government will certainly continue to work with the tripartite partners to promote sustainable wage progression for low-wage workers.”
“The Productivity and Innovation Credit (PIC) Bonus, announced in Budget 2013 as part of the Three-Year Transition Page: 139 Support Package, rides on the PIC scheme to further encourage businesses to invest in productivity and innovation and defray rising operating costs for businesses. There is no requirement for businesses to have a minimum number of employees to claim the 400% PIC tax deductions. It is only for the PIC Bonus and cash payout that businesses must have at least three local employees to qualify. The important point here is that these are both cash benefits, not tax deductions. Given the risk of abuse for a broad-based cash scheme, the condition of at least three local employees is necessary. As a result of this condition, the risk of abuse is significantly reduced and we can, therefore, incorporate features, such as more timely and regular payouts, to benefit genuine businesses. Businesses with fewer than three local employees can still benefit from the PIC tax deduction and other grant schemes, such as SPRING's Innovation and Capability Voucher (ICV) Scheme and e2i's Inclusive Growth Programme (IGP). MOF is currently reviewing the PIC scheme. We will take into account the utilisation rate, effectiveness and feedback from businesses when assessing whether or not to extend the scheme beyond 2015.”
“Our VWO dialysis providers will, nonetheless, provide financial assistance to such patients where necessary.”
“We have a broad-based GST system, with minimal exemptions. We have chosen this approach so as to keep the GST rate relatively low, rather than have many exemptions and a higher GST rate. With this broad-based GST, our approach to helping the lower-income group is to do so through subsidies and grants that are targeted at benefiting them. The Government provides means-tested Government subsidies, including an absorption of the GST payable, to lower- and middle-income dialysis patients in Government-funded dialysis centres which are run by Voluntary Welfare Organisations (VWOs). This approach is aligned to the treatment in other parts of the healthcare system, such as the intermediate and long-term care sector, where GST absorption is only provided to subsidised patients. To ensure that dialysis treatment remains affordable for Singaporeans, the Government had recently extended these subsidies from the 30th percentile to the 67th percentile of households in April 2013. This has increased the number of dialysis patients receiving subsidies and GST absorption by around 40%. There is generally adequate capacity within Government-funded VWO dialysis centres for subsidised dialysis patients, which already serve around two-thirds of the patient population today. However, we recognise that there could be certain regions where demand is higher, and will continue to work with Government-funded VWO dialysis centres to ensure that there is sufficient Page: 164 capacity to serve the subsidised dialysis population in these areas. We acknowledge that there could be dialysis patients who are unable to seek treatment at these dialysis centres due to their specific medical conditions.”
“Page: 163 With the introduction of MediShield Life, which will provide universal coverage and greater assurance for Singaporeans, further Government support will be provided to help older and less well-off Singaporeans pay their MediShield premiums and keep premiums affordable.”
“We have a broad-based GST system, with minimal exemptions. We have chosen this approach so as to keep the GST rate relatively low, while we help the lower-income group through subsidies and grants that are targeted at benefiting them. In healthcare, we provide significant subsidies to Singaporeans who are less well-off. We also absorb the GST for all subsidised patients, whether in polyclinics, public hospitals or the intermediate and long-term care sector. In effect, a subsidised patient in a hospital will have GST deducted from his total bill, regardless of whether it is paid by MediShield, MediSave or cash. Further, the Government's assistance to our lower-income and elderly Singaporeans through the GST Voucher (GSTV) and Workfare Income Supplement (WIS) includes top-ups to their Medisave accounts. Lower-income and elderly residents are, therefore, getting help to pay for their MediShield premiums and other medical expenses. For example, a retiree household in a 3-room flat can receive a total of $500 in GSTV – Medisave a year which covers more than 40% of their current MediShield premiums. This year, with the GSTV – Medisave Special Payment, and the one-off $200 Medisave top-up for all older Singaporeans, the total Medisave top-up for the household will be $1,400, which will more than offset their MediShield premiums. Likewise, a typical working, lower-income household in a 3-room flat can receive more than $500 in MediSave benefits a year through their Workfare payouts. This will more than offset the household’s total MediShield premiums.”
“Through Credit Counselling Singapore and the banks' own efforts, some efforts can be made, case by case, to try and restructure their debts. But it is important for them not to extend themselves even further. The easiest way to extend yourself even further is to go to the moneylenders or the illegal moneylenders. There, the interest compounds at a rate where you are almost guaranteed to have to increase your indebtedness.”
“Mdm Speaker, I thank Ms Foo for those useful questions. They, in fact, come from two different directions, or they reflect quite different concerns. First, what happens between now and June 2015? Ms Foo is concerned that borrowers can still extend themselves even further in the meantime. What we have done is that we are starting off with some softer rules and, eventually, it becomes quite a hard rule in June 2015. Immediately, from December this year, banks will already be required to do a check with the Credit Bureau, as well as income checks on the borrowers, before increasing the credit limit. For those who already are over-extended, we are giving them time to bring down their debts and the financial institutions have to work with them to try to make this possible. But when it comes to increasing the amount of debt that they have, the rules in effect kick in quite early. We are not specifying that the 12-month limit is a hard limit now, the banks do have to make checks with the Credit Bureau to find out that total debt with all the financial institutions, and they have to also do a check on their income status. Page: 11 It has to be updated as well. That, I think, will have the right effect. Banks can make their own judgement and they do not want to force people into the unregulated market. The banks are able to make a good judgement on that between now and 2015. The Member's second and third questions, I think, are essentially similar. We have to calibrate these rules such that we do not drive people into the unregulated, let alone, illegal markets. That is an important balance that we have to find, especially for those who already have significant debts. That is why we are giving them time to work their debts down.”
“Under the "national treatment" obligation of the US-Singapore FTA (USSFTA) and the Singapore-European Free Trade Association FTA (ESFTA), Singapore is obliged to accord Nationals of the United States of America, and the Nationals and Permanent Residents of Switzerland, Norway, Liechtenstein and Iceland, similar tax treatment as Singaporeans in the purchase of residential properties in Singapore5. These are the only two FTAs where "national treatment" has been accorded to foreign individuals in respect of taxes, which include stamp duties. Otherwise, foreign entities do not enjoy Additional Buyer's Stamp Duty (ABSD) remission. For the period 8 December 2011 to 11 January 2013, there were 138 residential property transactions by foreign individuals granted ABSD remission due to the two FTAs. For the period 12 January 20136 to 31 July 2013, there were 114 transactions granted ABSD remission. These transactions were Page: 119 about 1.5% of all property transactions that attracted ABSD during the period. The amount of ABSD which has been remitted for these 252 transactions was $81.2 million. Negotiations on other FTAs like the Trans-Pacific Partnership are still ongoing. MTI will continue to seek a balanced package in our FTA negotiations to ensure that the FTAs provide meaningful benefits for Singapore, while taking into account the costs.”
“With this cap, financial institutions will not be allowed to grant further credit to individuals whose aggregate unsecured borrowings across all financial institutions exceed 12 months of their income for 90 days or more. This cap is designed to discourage individuals from prolonged reliance on credit cards and unsecured credit. MAS has set the limit at 12 months' income, for a start, and will adjust the limit, if necessary, to further encourage financial prudence. Aside from this, financial institutions will not be allowed to grant further credit to individuals whose debts with a financial institution are more than 60 days past due. These recent policy changes complement MAS' existing credit card rules in preventing debt from spiralling out of hand for individuals across all age groups. Ultimately, while MAS has rules in place to help Singaporeans avoid accumulating excessive debt, Singaporeans have to take personal responsibility for their finances. They have to exercise prudence when deciding whether to sign up for a credit card, understand their ability to repay the debt incurred when they use the card and ensure that they do not incur excessive debt. The MoneySENSE national financial education programme has Page: 118 collaborated with the media, the industry and consumer organisations to educate consumers on factors to consider before taking on debt and the consequences of late payments. MAS hopes that these efforts will help Singaporeans manage their finances proactively, use credit responsibly and prevent over-dependence on credit.”
“The average age of individuals seeking help from Credit Counselling Singapore (CCS)4, mostly for credit card debt, is 40 years. In the first half of 2013, about 31% (250) of those who sought help from CCS were 35 years old and younger. Based on Page: 117 data from Credit Bureau Singapore (CBS), the majority of credit cardholders who are past due or who have defaulted on their credit card loans are in their 30s and 40s. Overall, credit card debt distress levels do not differ significantly across age groups. In fact, across all age groups, credit card default rates are consistently low, at below 0.2%. But low default rates should not lull us into complacency. We should reduce the risk of people borrowing beyond their means. To ensure that those who use credit cards have sufficient financial means to service their debts, MAS has imposed minimum income eligibility criteria for the issue of credit cards. Individuals who are 55 years old and below must have an annual income of at least $30,000 before they can qualify for credit cards; those above 55 years of age must have an annual income of at least $15,000. In addition, MAS has a limit of up to four months' income on the total amount of unsecured credit that can be extended to any credit cardholder. Credit card issuers are also required to conduct comprehensive credit bureau checks on an individual's credit history before issuing new credit cards. To further promote the prudent use of unsecured credit, MAS announced on 11 September new measures targeted at those who are at greatest risk of debt problems. A key change is the introduction of an industry-wide aggregate cap on individuals' unsecured borrowings.”
“We are placing greater emphasis, therefore, on supervision and top-level oversight, by requiring the Heads of Government agencies to assess and report to MOF on follow-up actions where problems are found, and on their pre-emptive plans. MOF itself will monitor the timeliness and effectiveness of these actions, and review further practical ways in which we can preserve the well-functioning of Government procurement.”
“Where warranted, officers were penalised in their performance bonuses or increments. There have been cases in previous years where AGO has basis to suspect corrupt or fraudulent intent. It refers all such cases to the Commercial Affairs Department (CAD) or the Corrupt Practices Investigation Bureau (CPIB) for further investigation. Mr Zaqy Mohamad and Mr Teo Siong Seng have asked about the impact of our tightening measures in recent years on procurement efficiency and vendors. Our main aim is to improve compliance, build capabilities and strengthen audit. These do not impact vendors directly. A number of the rules that were refined can, in fact, improve procurement efficiency and benefit vendors. For example, since we introduced new rules last year on single bids, and extended the minimum quotation period from four working days to seven, the percentage of quotations receiving single bids has decreased to about 4% in 2013 from 15% in 2012. Mr Zaqy and Mr Teo's questions, however, relate to a broader point. We should not overburden Government procurement with ever-increasing rules and procedures. Doing so would slow down the Government's functions and its responses to needs, and often impose higher costs. It can also deter some businesses from participating in Government tenders. We should keep instead to a sensible balance of rules, audit and enforcement actions, so as to minimise risk of wrong-doing without hindering the vast majority of legitimate procurements, or causing civil servants to Page: 157 become risk-averse and bureaucratic in handling procurements. We have been taking steps in recent years to strengthen the procurement system. However, the public sector's procurement needs will grow and become more diverse in the years to come.”
“In addition, AGO conducts audits of internal controls of nearly all Statutory Boards at least once every five years. AGO's resources have been significantly enhanced – its manpower has grown by over 50% over the last five years. AGO has also focused particularly on procurement issues in recent years. Every finding by the Auditor-General of a procurement lapse is taken very seriously within the Government. It leads to improvements in procurement processes, and an awareness not just in the agency concerned but other agencies of the need to avoid recurrence of the same problems. AGO's audits are, for practical reasons, conducted on a test-check basis. AGO cannot realistically cover all aspects of procurement in all agencies. However, from time to time, the Government does conduct thorough, one-off reviews of specific aspects of procurement across the public sector. For Page: 156 example, before we tightened our procedures in 2012 for handling single bids, we reviewed the procurement transaction data for the entire public sector. Let me go on to disciplinary actions, which some Members asked about. The cases highlighted in the FY2012/2013 AGO report were administrative or procedural lapses. There was no evidence of fraud or corrupt intent. That is, in fact, the case with most procurement-related lapses – they are either due to a lack of knowledge, carelessness or poor supervision. But that does not mean that officers are not responsible for the lapses. Agencies will still assess their officers' roles in each of the lapses and take follow-up actions. In the last two years, 60 officers and supervisors have been counselled, reprimanded or issued warning letters, depending on the severity of the lapse.”
“Our approach, therefore, is to make every reasonable effort to minimise lapses, while undertaking regular audits to check for any that Page: 155 do occur and keeping open channels for suspected irregularities to be reported. Where any lapse is detected, we take actions to minimise recurrence. MOF has required all Government agencies to ensure that they have an effective system of internal audit and control. It is crucial that the top management sets the right tone. MOF has reminded the Permanent Secretaries and other Heads of Government Agencies to maintain active oversight of Internal Audit. They will also henceforth be required to report to MOF with an assessment of findings on procurement audits and follow-up actions in their agencies each year, as well as pre-emptive plans to avoid future weaknesses. This would include follow-up on audit observations by both their internal auditors and the Auditor-General. We will also keep up with the latest knowledge and techniques in supervision and audit of procurement, including good practices developed in the private sector. MOF will be making available additional analytical tools to help both auditors and senior management of the various agencies review procurement activities more effectively. Let me turn next to the external audit of our agencies by the AGO. AGO conducts annual checks of Ministries with regard to financial statements, as well as internal controls and processes that directly impact on the financial statements. On a less regular basis, AGO also selectively audits other aspects of internal controls in the Ministries, either based on its assessment of risks or arising from public feedback. The Statutory Boards are audited annually by private external auditors.”
“We are, nevertheless, reviewing if there is a need to further tighten approval processes for transactions involving related parties. The procurement lapses cited in this year's AGO Report are, in fact, all due to non-compliance with established rules, rather than gaps in the rules. It should also be noted that the majority of the findings concern lapses committed before 2012. This partly reflects AGO’s recent focus on Government procurement in its audits, which have included looking at procurements in previous years. Government agencies have since last year made special efforts to improve procurement processes. MOF has also strengthened training programmes for procurement, and developed and disseminated checklists to guide supervisors and officers on what to look out for at the various stages of the procurement process. We are doing more to build up capabilities, to help officers and supervisors implement the rules well. That includes having the skills and knowledge to seek value for money, and not just accept the cheapest tender bid. As Minister of State Teo mentioned during this year's Committee of Supply debate, we are developing a Procurement Specialist Track to build up a strong pool of officers with the skills needed, and with good career progression pathways. The new specialist track will be launched next year. Details will be announced in March. However, in a system with 80,000 procurements each year, we cannot realistically expect to eliminate all lapses or human error. To seek to do so would be too costly and time-consuming, not just to Government but also to businesses and the public.”
“It is not just about rules to ensure fair competition and value for money in public tenders, but also regular audits to detect lapses and, where appropriate, disciplinary actions against those responsible, including supervisors. And where there is any suggestion of corruption or fraud, it is investigated promptly and thoroughly, and the officer faces the full measure of the law, regardless of who he is. So, it is a whole system, and it is working, which is why Singapore is widely recognised internationally as having one of the cleanest and most efficient systems of government anywhere. Nevertheless, we take each finding of a procurement lapse seriously, and take action to minimise recurrence. Our rules and procedures for procurement are comparable with those in most other reputable jurisdictions, and in line with World Trade Organization Page: 154 standards on open and fair competition. We review the rules regularly, and especially when we observe weaknesses. Members may recall that in 2010 and 2011, we took major steps to reduce opportunities for procurement fraud. In 2012, we introduced further checks to ensure that single bids received offered competitive terms. We also extended the minimum opening period for suppliers to submit bids for quotations from four to seven working days. This year, the AGO Report highlighted that a Statutory Board had procured a service from a related party in a manner that did not comply with our rules. The procurement rules require that any bid by a related party be treated on a strictly arms-length basis, and that a successful bid has to comply with the tender specifications, regardless of ownership. The rules are clear.”
“This question covers areas addressed in the combined oral reply to Question Nos 5 to 11 on the Order Paper for today. The oral reply is reproduced below. This question also refers to two specific issues: (a) The Auditor-General's audit of the Khoo Teck Puat Hospital project examined transactions that were carried out before 2010. This was a continuation of AGO's audit of the project, from the previous year's audit, and Page: 153 did not concern fresh recurrences since the last audit. Since the audit observations made in last year's Auditor-General's Report, MOH had appointed external auditors to check for similar cases elsewhere and advise on improvements to their payment processes. (b) On the recurrence of lapses in computer access controls, the Government agencies cited have taken steps to improve their internal systems to prevent future occurrence. MCI and IDA are working with all agencies to enhance and strengthen the management of ICT system access controls. MCI and IDA have also stepped up the number of independent audits to help ensure that the agencies comply with the ICT policies. [Below is Deputy Prime Minister Tharman's reply to the Parliamentary Questions on Government procurement on 12 August 2013] Members are rightly concerned about the lapses highlighted in this year's Report of the Auditor-General (or the AGO Report). As Deputy Prime Minister Teo, as Minister in Charge of the Civil Service, has just stated, the Government is determined to uphold the highest standards of integrity and professionalism in the Public Service. This resolve certainly applies to the question of public sector procurements. Before I get into the specific improvements being made, I want to emphasise that the system of checks and balances in procurement operates as a whole.”
“8%, less than one-fifth of the contracts were awarded to subsidiaries by their parent Statutory Board or Ministry. A substantial majority of the contracts awarded were for research and development services and prototype studies provided by the Universities or research institutes.”
“There are currently 105 subsidiaries set up by our Statutory Boards and Ministries. The majority of these subsidiaries are set up to perform functions to safeguard vital security interests or serve other needs, such as in education, healthcare, R&D and the arts, that are not adequately provided by the private sector. Some examples of these subsidiaries include Government restructured hospitals and research institutions under A*STAR, DSO National Laboratories, The National Art Gallery Singapore and The Esplanade Company Ltd. Several subsidiaries, like the National University of Singapore (NUS) and Nanyang Technological University (NTU), were former Statutory Boards which were corporatised to give them greater operational autonomy and are now corporatised entities under MOE. The Government is fully aware that even where it needs to be involved in business, it should not hinder the growth of the domestic private sector or create market inefficiencies. In general, these subsidiaries are expected to be divested once they no longer meet the objectives for which they were set up. Page: 152 Our procurement regime requires all Government agencies to adhere to procurement rules and processes, which include ensuring a level playing field for all companies bidding for Government tenders, regardless of their ownership status. All tenders have to be evaluated and awarded on the basis of the best Value-For-Money offer. Any non-compliance with these requirements or unfair treatment would be improper, as in the cases highlighted by the Auditor-General in his report this year. In the last five years, 0.8% of public sector tenders have been awarded to these subsidiaries. Of this 0.”
“First, MAS has an obligation to keep confidential the information provided by financial institutions in conducting the tests. Second, releasing the results could encourage financial institutions to focus on achieving the right grade for the test and, in the process, take a narrow view of identifying risks and appropriate mitigating measures. Regulators in certain jurisdictions facing severe financial stresses have felt it necessary to disclose stress test results for individual banks in order to calm volatile markets and restore public confidence in their banking systems. Singapore, like jurisdictions whose banking systems have remained sound and stable, has not seen the need to do so. There are, however, several readily available sources of information which the public can use to assess the risks carried by banks. These include publications by MAS, such as the Financial Stability Review, as well as the banks' annual reports and financial statements.”
“MAS conducts regular stress tests on all the local and major foreign banks in Singapore. These stress tests are carried out annually, but more frequent stress tests may be conducted when necessary, for example, during the 2008/2009 financial crisis. The aim of the stress tests is to assess the banks' ability to withstand adverse financial and economic shocks, and to evaluate the potential impact on Singapore's financial stability. MAS uses stress tests as a pre-emptive supervisory tool to encourage financial institutions to build adequate buffers and put in place risk mitigation plans across a range of adverse conditions. Earlier this year, MAS completed a stress test exercise based on end-2012 data. The results showed that the banking system, as a whole, remained sound and able to withstand adverse scenarios. The local banks, in particular, would be able to maintain adequate financial buffers above MAS' regulatory requirements under the prescribed stress scenarios. Moody’s and Standard & Poor's (S&P) reached similar conclusions. Moody's found that the three local banks have enough capital to withstand even the severe stress test scenarios the agency considered. Moody's continues to assign the local banks the highest average credit ratings (Aa1) amongst banking systems globally, but has placed this rating on a "Negative" outlook, that is, to indicate the possibility of a downgrade, especially if loan defaults were to rise when interest rates go up. S&P recently affirmed the local banks' strong AA- Page: 149 ratings and a "Stable" outlook, based on their strong financial profiles and prudent management strategies. MAS does not publish stress test results. There are a few reasons for this.”
“There are about 40 financial institutions in Singapore offering private banking services. Singapore is one of the leading international centres for private banking. Bankers cite our reputation for sound financial regulation, strong rule of law, and political and economic stability as the fundamentals underpinning our success as a wealth management centre. In addition, Singapore has built up a strong eco-system of capabilities to support the growth of private banking. This includes skills and expertise in asset management, particularly with regard to Asian investments, and in foreign exchange and derivatives trading. The availability of a diverse pool of local and international talent, and our relatively developed capital markets, are also important to this eco-system. Our location in Asia is also a key advantage, in view of both the wealth being generated in Asia and the opportunities to invest clients' monies in the region. These are the main reasons why we have seen financial institutions expanding their private banking business here. Many good quality jobs have been created for Singaporeans in the private banking sector in recent years. The sector employs about 9,000 individuals, of whom over two-thirds are Singapore Citizens. These jobs include roles in management, client relationship management, risk management, legal and compliance, as well as back office functions. The financial institutions are aware of the need to develop a strong Singapore Core in private banking as the basis Page: 148 for sustainable growth over the long term. MAS is working with the industry to create opportunities for Singaporeans to build up the skills, experience in overseas markets and management capabilities required to excel.”
“As GIC and Temasek have to manage investment portfolios that are spread worldwide and need a diverse range of knowledge and expertise, it is inevitable and necessary that they would have some non-Singaporeans amongst management. However, a substantial majority of Temasek and GIC's senior management teams remains Singaporean. Nurturing a Singaporean Core is important not just for GIC and Temasek, but for our enterprises and financial institutions based here. Deliberate efforts have to be put in succession planning and talent development to give Singaporeans opportunities and exposure to nurture their skills, build up experience locally and beyond, so that they can take on larger responsibilities in time to come.”
“Mr Lim Biow Chuan was concerned about building up management teams that are comprised of Singapore Citizens for companies listed under the Fifth Schedule of the Constitution of Singapore. He may have been referring to GIC and Temasek, rather than the Statutory Boards under the Fifth Schedule. The Government is not a disinterested observer in key management appointments at GIC and Temasek. As shareholder, the Government has a clear interest in the companies continuing to have strong leadership teams. However, the Government does not intervene directly in the management appointments of GIC or Temasek and it will be ill-advised to do so. The decisions on key management appointments must remain the responsibility of the respective Boards of GIC and Temasek. They must decide based on the merits and suitability of any candidate. The Government's role, instead, is to ensure that capable and trustworthy individuals are appointed to the Boards of GIC and Temasek, with the concurrence of the President. Both GIC and Temasek have strong and robust processes to track and evaluate potential candidates for key management positions. In both cases, candidates are assessed based on their professional expertise and knowledge of markets, leadership skills and alignment with the organisation's core values. As shareholder, it is also in the Government's interest to see GIC and Temasek appoint the best persons based on these criteria, so that the Page: 130 organisations can deliver good returns over the long term. At the same time, everything else being equal, when you look at two candidates who are equally suitable, we should prefer to have a Singaporean. The Boards know that these are our broad preferences.”
“I am always happy to review this, but, as of now, no Government agency perceives the AGO to have a scope that is too limited. In fact, the AGO is – how do I put it – feared. Agencies take very seriously the coming of the AGO for an audit. When you talk about Government financial statements and internal controls and processes that impact on those statements, they can cover anything. They can cover a very wide area because everything, ultimately, comes down to that dollar. Interpreted correctly, the current ambit of the AGO allows it to look at virtually all the internal controls and processes because everything at the end of the day does have some implication on Government financial services. I do not want to compare too literally with other countries but I think it stands recognised around the world, Singapore is regarded as having a cleaner and more efficient system of government than many others. Page: 27”
“Okay. First, audit as a norm, not just in our public sector but the private sector and indeed internationally amongst the public sectors, is performed on a test-check basis. Otherwise, if you were to scrutinise every transaction, then audit becomes part of the approval process in the first instance. So, audit is done on a test-check basis, based on where risks are thought to be higher. It is a risk-focused exercise. Not everything needs to be checked every year, or even across a period of years, but focus on where the risks are likely to be. Occasionally, we would do this very thoroughly and on a very resource-intensive basis. For instance, in 2009, we did a thorough health check of IT. There were some problems we observed and we did a thorough health check of IT in the Government sector. I will tell you how long it took – two to three years – just for audit of IT processes; a very resource-intensive exercise. So, it is not something that you do often. Page: 26 The system rests, ultimately, not on waiting for audit, let alone enforcement actions. It rests on having, first, sensible rules not overdone but, very importantly, honest and diligent officers and supervisors with the tone being set at the top.”
“Well, first, can I just clarify whether Mrs Chiam is talking about internal audit or external audit or are you referring generally to both?”
“Absolutely. There is an important set of techniques that has been developed, particularly when it comes to larger organisations or common procurements across many organisations and we are making greater use of IT. We are providing these additional tools to our agencies. Some of our agencies, for instance, within the defence establishment, already use these tools quite effectively. It is becoming a bit of a science in the private sector and we are keeping close track of that and trying to make sure that we are never far behind.”
“This is the usual question that, indeed, is one that we are addressing. We do it each year but we are looking at this very seriously internally. First, capabilities need to be built up, up and down the procurement chain; not just the officer who is responsible for administering the tender, but the supervisors and top management. So, we are doing two things. First, we are taking significant steps to build up capability, through training in general, and, indeed, there are some agencies, such as MDA, that are requiring all their Division 1 officers to go for procurement training even if they are not directly involved in procurement. That is one aspect. Secondly, it is important that we have the Procurement Specialist track. It does not mean that everyone doing procurement has to be on the Procurement Specialist track because there is some merit in officers rotating in and out of procurement within an organisation. But you do need a core of people who take pride in being procurement specialists and have a career progression pathway, culminating in being a Chief Procurement Officer within the Government. It is important to build up that core, just as we have done for certain other services. Thirdly, however, we are placing emphasis on top management responsibility – setting the tone within each agency, as well as overseeing internal audit. The external auditor is not the fulcrum. At the end of the day, supervision within an organisation, the tone that they set and internal audit are critical to a well-functioning procurement system; and we are taking further steps in that regard.”
“First, with regard to this year's procurement lapses, there was no basis to suspect gratification. There was certainly no evidence of it; no basis to suspect fraudulent or corrupt intent. Where there is any evidence of gratification, then by definition and presumption, there is corruption. In fact, in some of the cases in the last five years – not this year's report but previous years' – there was reason to suspect that there might be some fraudulent or corrupt intent. In those instances, AGO refers the cases to either CAD or CPIB. That, in fact, is being done. Assoc Prof Tan Kheng Boon Eugene (Nominated Member): While I am assured that most of the lapses were due to non-compliance with the rules, the question is: what can the Government do to ensure that there could be Page: 24 better compliance? Year in, year out, we get the same sort of issues arising. There is this public concern out there. I would like to ask the Deputy Prime Minister what the Government intends to do to ensure that rules are complied with. Is it because there is a lack of training, an ignorance of the rules, weak enforcement or that the penalties are too light?”
“There has been some trend for the evaluation periods to go up. I do not think this is a bad thing. On average, the Page: 23 evaluation period over the last five years has increased from about two weeks previously – the start of the five-year period – to about three to four weeks currently. This is not simply because of greater caution. It is also because of the change in the nature of public sector tenders. More tenders are now being specified in terms of outcomes. In other words, rather than specifying things upfront in terms of what the contractors should not do in terms of the technique or the process, you specify an outcome. And you get bids that then provide for different routes of achieving that outcome, sometimes even from the same bidder providing a range of alternatives. This requires more time to evaluate. It is less straightforward than it used to be. So, four weeks are, to my mind, not excessive, and, indeed, for the large public sector infrastructure projects, it is more than four weeks. I do not think we are in a situation where we have gone past the tipping point and we are now being inefficient because of excessive caution.”
“Doing so would slow down the Government's functions and its responses to needs, and often impose higher costs. It can also deter some businesses from participating in Government tenders. We should keep instead to a sensible balance of rules, audit and enforcement actions, so as to minimise risk of wrong-doing without hindering the vast majority of legitimate procurements, or causing civil servants to become risk-averse and bureaucratic in handling procurements. We have been taking steps in recent years, Mdm, Speaker, to strengthen the procurement system. However, the public sector's procurement needs will grow and become more diverse in the years to come. We are placing greater emphasis, therefore, on supervision and top-level oversight, by requiring the Heads of Government agencies to assess and report to MOF on follow-up actions where problems are found, and on their pre-emptive plans. MOF itself will monitor the timeliness and effectiveness of these actions, and review further practical ways in which we can preserve the well-functioning of Government procurement.”
“Let me go on to disciplinary actions, which some Members asked about. The cases highlighted in the latest AGO report for fiscal year 2012/2013 were administrative or procedural lapses. There was no evidence of fraud or corrupt intent. That is, in fact, the case with most procurement-related lapses – they are either due to a lack of knowledge, carelessness or poor supervision. But that does not mean that officers are not responsible for their lapses. Agencies will still assess their officers' roles in each of the lapses and take follow-up actions. In the last two years, 60 officers and supervisors have been counselled, reprimanded or issued warning letters, depending on the severity of the lapse. Where warranted, officers were penalised in their performance bonuses or increments. There have been cases in previous years where AGO has basis to suspect corrupt or fraudulent intent. It refers all such cases to the Commercial Affairs Department (CAD) or CPIB for further investigation. Mr Zaqy Mohamad and Mr Teo Siong Seng have asked about the impact of our tightening measures in recent years on procurement efficiency and vendors. Our main aim is to improve compliance, build capabilities and strengthen audit. These do not impact vendors directly. A number of the rules that were Page: 22 refined can, in fact, improve procurement efficiency and benefit vendors. For example, since we introduced new rules last year on single bids, and extended the minimum quotation period from four working days to seven days, the percentage of quotations receiving single bids has decreased to about 4% in 2013 to date, from 15% in 2012. Mr Zaqy and Mr Teo's questions, however, relate to a broader point. We should not burden Government procurement with ever-increasing rules and procedures.”
“MOF will be making available additional analytical tools to help both auditors and senior management of the various agencies review procurement activities more effectively. Let me turn next to the external audit of our agencies by the Auditor-General's Office (AGO). AGO conducts annual checks of Ministries with regard to financial statements, as well as internal controls and processes that directly impact on the financial statements. On a less regular basis, AGO also selectively audits other aspects of internal controls in the Ministries, either based on its Page: 21 assessment of risks or arising from public feedback. The Statutory Boards are audited annually by private external auditors. In addition, AGO conducts audits of internal controls of nearly all statutory boards at least once every five years. AGO's resources have been significantly enhanced – its manpower has grown by over 50% over the last five years to about 180 staff currently. AGO has also, as I mentioned earlier, focused particularly on procurement issues in recent years. Every finding by the Auditor-General of a procurement lapse is taken very seriously within Government. It leads to improvements in procurement processes, and an awareness not just in the agency concerned but other agencies of the need to avoid the same problems. AGO's audits are for practical reasons conducted on a test-check basis. AGO cannot realistically cover all aspects of procurement in all agencies. However, from time to time, the Government does conduct thorough, one-off reviews of specific aspects of procurement across the public sector. For example, before we tightened our procedures in 2012 for handling single bids, we reviewed the procurement transaction data for the entire public sector.”