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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Every one of 2,416 lines we hold for Tharman Shanmugaratnam, in date order, each linked to its source. Free to read, in full, without an account. Page 19 of 49.
“Mdm Speaker, I beg to move, "That Parliament approves the financial policy of the Government for the financial year 1 April 2013 to 31 March 2014." Our Budget for FY2012 is expected to have a surplus exceeding what we had estimated a year ago. We had estimated an Overall Budget Balance of $1.3 billion or 0.4% of GDP. We now expect a higher surplus of $3.9 billion or 1.1% of GDP. This additional surplus was due entirely to higher revenues from stamp duties and vehicle-related taxes. These are short-term increases in revenues, which we cannot expect to be sustained. The Government expects Singapore's GDP growth in 2013 to remain modest at between 1% and 3%. This is comparable to the 1.3% growth last year, and down from the 5.2% growth in 2011. While part of this slowdown is due to global cyclical factors which affected sectors such as Manufacturing, it is also to be expected as our economy matures and our labour force grows more slowly. In fact, our economy has been at full capacity since our strong recovery from the global financial crisis. This is Page: 39 why we have virtually full employment. It is also why wage costs and many other costs like rentals have been going up. Rising costs remain a concern for both businesses and households. The pass-through of higher business costs into consumer prices, together with the sharp increase in COE prices, has kept upward pressure on CPI inflation in the last two years. Household incomes have risen in 2012 and over the last five years. Adjusted for inflation, the median Singaporean household saw income per member grow by 14% over the last five years, cumulatively. Lower-income households at the 20th percentile also saw real income per member grow by 10% in the last five years.”
“The current high COE prices reflect a confluence of fundamental factors. Healthy income growth, coupled with low interest rates, has underpinned demand for cars. On the supply side, reduction in the target vehicle growth rate and the number of vehicle de-registrations have led to fewer COEs being available. These fundamental factors are likely to persist for some time. The Government is monitoring the situation, as private road transport costs add to business costs and inflation. However, it is important to look at any possible measures holistically, and consider if they can be effective in promoting greater stability in the COE market. The Government is also making major investments to improve public transport which is the more sustainable mode of transport for Singaporeans in the long run. Page: 147 Mr Ong also asked about the impact of every 10% drop in the LTV ratio on the prices of COEs. While lower LTV ratios will have the effect of constraining credit for vehicle purchases, it is difficult to isolate the impact on COE prices of any given change in the LTV ratio, given the many other factors affecting COE prices. Indeed, the introduction of loan limits between 1995 and 2003 had little discernable impact on COE prices.”
“Thirty-one thousand, seven hundred and forty-two companies were set up in 2012 compared to 29,987 companies in 2011. More than half of the new companies formed were from three industry sectors, namely: (i) wholesale and retail trade; (i) financial and insurance activities; and (iii) professional, scientific and technical activities1. Page: 111 The numbers of companies which ceased operations in 2011 and 2012 were 17,930 and 17,218 respectively. I am circulating the breakdown by industry, for companies that were set up as well as those that ceased, for Members' reference. MOF is unable to identify the SMEs2 among the companies which ceased operations because not all companies, for example, solvent exempt private companies, are required to file their accounts with ACRA. As such, ACRA is also unable to tell whether such companies are SMEs. However, as SMEs form the bulk of our companies, it is therefore also likely that most of those that ceased operations are SMEs. Page: 112”
“The exchange rate is not the only instrument we use in managing inflationary pressures. The Government has adopted a multi-pronged strategy, as I have elaborated earlier this year. These include specific measures to ameliorate domestic supply-side constraints and to provide help to households with their costs of living. To help lower income households, the Government gives substantial transfers. These include subsidies for healthcare, childcare and education, as well as the GST Voucher Scheme which was introduced in this year’s Budget. On the supply side, the Government is engaging in major initiatives in public transport, housing and productivity. Together with MAS’ exchange rate policy, these initiatives will help to contain inflation over the medium term. We have committed to significantly expand bus and MRT capacity, so as to reduce demand for cars over time. In housing, the supply of Build-to-Order (BTO) flats has been increased significantly, as well as supply of land for private residential development. We have also taken further steps to ease pressures on housing prices by implementing another round of cooling measures in October 2012. Page: 1426 However, the most important solution to the cost pressures that will arise from a permanently tight labour market is to raise productivity. We are putting much resources into helping companies raise productivity. It is the only way we can sustain growth as our domestic labour supply grows slowly, without either an increasing dependence on foreign workers or a rise in inflation over the medium term. Page: 1426”
“Let me first put Mr Teo’s question in perspective. CPI-All Items inflation remains high at 4.2% in Q3 2012, although it has eased from 5.1% in the first six months of the year. For 2012 as a whole, it is expected to be slightly above 4.5%. Page: 1425 This higher than normal inflation has been mainly due to the sharp increases in COE premiums this year, as well as in imputed housing rentals on owner-occupied homes. These imputed rentals are not cash expenditures by households; excluding this item, inflation is expected to be slightly below 4% this year. Imputed rentals and COEs may, however, continue to add to the CPI-All Items inflation in 2013. There are also upward pressures to inflation due to two other factors. First, the labour market is expected to remain tight, and second, there has been a surge in global food prices arising from weather-related disruptions in supply, which could filter into domestic prices over the next few months. CPI-All Items inflation is thus expected to stay elevated at 3.5%-4.5% in 2013. A strong Singapore dollar policy helps to dampen imported prices and, in so doing, also helps moderate domestic inflation. We recognise that some of the domestic cost pressures reflect supply constraints, such as the tight labour market and ceiling on COEs. However, MAS is also alert to the risk that inflationary expectations will build up, or that households and businesses could come to expect large and volatile price increases as the norm. Thus, MAS’ monetary policy stance, including its latest October 2012 decision to continue the gradual appreciation of the Singapore dollar against a basket of currencies, has been carefully calibrated to guard against an increase in inflation expectations.”
“MAS’ regulatory reforms will place Singapore’s fund management industry on a strong footing to achieve sustained growth over the long term, while ensuring that we remain aligned with global regulatory standards observed by regulators in other fund management hubs. Page: 1424”
“The internal controls required of a small firm are in fact lighter than those imposed on firms with a larger pool of assets under management or those who deal with retail customers. Page: 1424 Globally, fund managers are adapting to the new regulatory landscape and heightened investor expectations. The criteria for selecting managers have become more stringent and investors’ due diligence has become more rigorous. These developments have contributed to higher business costs and an increased difficulty in raising funds from investors, leading to a higher failure rate for fund managers. Taken together with rising regulatory standards globally, a possible outcome of these changes is that some small firms in Singapore which are unable to adapt will close. A similar trend has been observed in other fund management centres. That said, MAS does not expect the recent changes to the regulatory regime for fund management companies in Singapore to deter fund managers from setting up business in Singapore. Since the introduction of the new regime on 7 August 2012, 58 exempt fund managers (EFMs) have either registered to operate as a RFMC or applied for a licence under the enhanced regime, while 101 have shut down. Those operating under the previous exempt fund manager regime have until 6 February 2013 to either register as a RFMC or apply for a licence. A survey of exempt fund managers conducted by MAS in March 2012 indicated that about 90% of exempt fund managers would either register to operate as a RFMC or apply for a licence under the enhanced regime. Singapore’s competitiveness as a financial centre is built on a pro-business environment, a skilled workforce, and a solid reputation for trust and sound regulation.”
“MAS is not alone in strengthening the regulatory regime for the fund management industry. In the aftermath of the global financial crisis as well as the Madoff scandal, regulators around the world have increased oversight of the industry to restore investor confidence and avoid a build-up of systemic risks in the industry. MAS gave notice of its intention to enhance the regulatory regime for fund managers as early as April 2010. MAS has held extensive consultations with the industry on the proposed changes. We recognised the difficulties that some of the changes could pose, especially to smaller hedge fund managers with fewer resources, and worked closely with industry to ensure that the changes would be calibrated accordingly. The admission requirements for fund managers have been carefully adjusted according to the size and nature of the fund manager’s business activities. Fund managers managing assets of more than $250 million or serving more than 30 qualified investors are required to obtain a licence from MAS. Those who fall below these thresholds may either apply for a licence or register with MAS. The required base capital ranges from S$250,000 to S$1 million and is tiered, based on the type of clientele served by the manager. For a Registered Fund Management Company (RFMC), the base capital requirement is pegged at S$250,000 to provide a buffer for unexpected costs arising from turbulent markets or operational shocks. To further safeguard investors’ interests, all fund managers are required to comply with rules relating to the segregation of investors’ assets, independent custody, and valuation. They are also required to implement compliance, risk management and internal audit arrangements. These requirements are broadly in line with global standards.”
“Mr Speaker, that is a useful point. Indeed, the MAS does look at gross exposures of financial institutions and would want to discriminate between firms which have large gross exposures and subject them to greater or higher requirements. And that is the way we have to calibrate things generally. It cannot be one-size-fits-all. There are some players that are doing something dangerous but they are small and they do not pose systemic risks, and they do not have retail customers. We should not have to subject them to a large amount of regulation and a large amount of compliance costs. But there are other players which, by virtue of their size, do get involved in large bilateral exposures, as well as just large risks to their balance sheet, and which do have retail clients. We have to subject them to greater scrutiny, which means greater supervision as well as, possibly, a higher standard of rules that they have to comply with. [(proc text) Question put, and agreed to. (proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Tharman Shanmugaratnam]. (proc text)] Page: 1370 [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)] Page: 1370”
“The FAIR panel is expected to issue its report within the next two months. Finally, the need for knowledgeable investors, well-informed investors. We recognise fully the continuing need to raise financial literacy amongst investors themselves. We were talking about this during Question Time earlier as well. Better understanding of the basic risks involved in different investment products, different types of investments, and what information the customer should ask for before investing, will help customers and retail investors to evaluate the financial advice they receive and make informed investment decisions. The more informed customers are, the more the discipline that will be brought to bear on FA firms as well. It is a process that involves raising standards on both sides but there is a relationship between the two. The higher the standards of advice demanded by customers and the greater knowledge they have in evaluating the advice, the more we are likely to see the raising of standards amongst financial adviser firms. But investor education will continue to be our focus at the MAS in this coming year and, particularly, through the MoneySENSE programme. Mr Speaker, Sir, to conclude, I stress again the package of amendments to the FAA as one that will seek a better balance in regulation; one that will encourage the development of a culture of financial advice that is centred on the needs of the customers. I urge the industry to view the amendments as a means to improve professionalism as a basis for sustained growth of the financial advisory business. Quality financial advice, coupled with competitive and transparent costs, will build consumer trust in the industry and enable the industry to grow on a sustainable basis in the years to come. Page: 1369”
“As Ms Foo has pointed out, the skills and competencies of practitioners in the industry and the empowering of investors are two important elements in the equation. MAS has taken several steps to raise competencies, besides the measures that we have introduced in the past two years to enhance the sale and advisory process for listed and unlisted investment products. MAS has also required representatives to provide advice on more complex products, what we call "specified investment products", to pass additional examinations on product knowledge and analysis. This aims to ensure that representatives are apprised of developments relating to specified products and are quick to advise clients on their key risks and features. And I quite agree with Ms Foo that we should explore the development of practice-oriented degrees in Applied Finance. I am sure MOE will consider this together with our tertiary institutions. It is probably helpful that the present Minister for Education is a former Managing Director of MAS and, indeed, the present Minister in charge of the MAS is a former Minister for Education. Page: 1368 At a broader level, the on-going Financial Advisory Industry Review (FAIR) process that I mentioned earlier, is looking into enhancing the professionalism and quality of financial institutions and their representatives so that they can deal with customers fairly. The FAIR process is an extremely important process and we are going about this carefully. The FAIR panel includes representatives from the financial advisory industry, as well as from investor and consumer bodies, academia, the media and other stakeholders. So, I think this diversity of the panel will ensure that the balance of perspectives is heard and that the recommendations are realistic and achievable.”
“Therefore, I can assure Members that as part of the ongoing review of the financial advisory industry, MAS would take into account the experiences of other jurisdictions when it calibrates the rules and best practices that are appropriate to our situation in Singapore. We are mindful of the risks of over doing things; over doing the documentation and leading to excessive compliance costs. On FIDReC, Ms Foo has suggested the FIDReC's jurisdictional limits be raised. I should first clarify that FIDReC operates as an approved dispute resolution scheme under the MAS Act, but it is an independent institution that operates in accordance with its own terms of reference. The jurisdictional limits of FIDReC or the claim limits are set out in its terms of reference, which FIDReC will review from time to time. The current claim limits were established in 2005, taking into account FIDReC's role as an affordable dispute resolution option for the average consumer. That was the intent, as well as the fact that its awards bind financial institutions but do not bind the consumers. The limits were set to cover the majority of retail transactions. Currently, if a complainant wishes to bring claims which exceed FIDReC's jurisdictional limits, FIDReC can hear the claim if, firstly, the financial institution agrees to allow FIDReC to hear the claim; and, secondly, if the complainant agrees that any award will be capped at FIDReC's jurisdictional limits. MAS will bring Ms Foo's suggestion on the claims limit to FIDReC's attention as part of the continuing dialogue with FIDReC on how to ensure the relevance and efficacy of this alternative dispute resolution scheme. Competency – a very important issue. Rules alone cannot work to raise standards or practice.”
“Ms Foo's observation on clients in other jurisdictions being subjected to excessive documentation to absolve FAs of liability is worth bearing in mind. In formulating our proposed amendments, MAS' aim has been to improve the financial advisory process in the way that better serves the investors and develops a culture of advice over the long term that will benefit retail investors in particular. In this regard, I strongly urge both the industry and investors to view the documentation process and the compliance cost that FA firms will have to bear, not merely as regulatory requirements, but as a process, as part and parcel of a process that enables FA firms to carry out their duties in the best interest of their clients. We must have a robust process, one that ensures that the FA has obtained the necessary information about the client and, therefore, understands the client's ability to take on risks and his investment time horizon before recommending an investment product. The process must also ensure that all relevant and material information is disclosed to investors to enable them to make a well-informed investment decision. Page: 1367 Putting one's savings into an investment product is an important decision for anyone, and especially for retail investors. Even if the product remains the same, the circumstances of the investor may have changed. MAS, therefore, encourages investors to take their time and not rush into making an investment decision. They should ask the FA the right questions and not sign on documents that they do not understand. I cannot emphasise enough. Never sign documents that you have not fully understood.”
“Specifically, with regard to the question that Ms Foo has posed, the law will not impose liability on FA representatives – in other words, the individuals who represent the FA firms – when they use statements that have been approved for dissemination by the FA firms which they represent. Where the representative uses statements approved by his or her FA firm, the representative cannot be said to have been negligent or reckless. In taking the decision to distribute certain investment products, an FA firm needs to ensure that it has reviewed and understood the key features of the product, and is able to explain the product to its clients. An FA firm should seek explanations from the issuer or the manufacturer, as they call it, of the product, if necessary, as part of its due diligence process. Mr Gan Thiam Poh raised a useful point, which is that you have situations in rapidly changing markets where investments go wrong for reasons that are quite unrelated to the advice that has been provided by the FA firm. Sometimes, an investor turns around and accuses the FA firm of having misled him. Let me just make two points in that regard. First, it is important for an FA firm to inform customers upfront of the key risks involved in an investment, not just the potential upside. Sometimes, we notice the tendency to place great emphasis on the potential upside and only routine or passing mention of the potential risks. So, that is a duty. It is a duty that the FA firm owes its customers. The second point I like to make is that the Act makes the FA firm liable only if a false or misleading statement is made recklessly or negligently, and the loss incurred by the investor can be attributed to the statement.”
“Mr Speaker, Sir, I would like to thank both Ms Foo and Mr Gan for their support of the Bill, and the pertinent issues that they have raised. Mr Speaker, if I may make a broader observation of the three speeches we just heard from Mr Ong, Ms Foo and Mr Gan. Legislation concerning the financial markets often appears and is abstruse and highly technical. But it is critical to the smooth functioning of our financial markets and our economy, and it is critical to preserving investors' confidence in our market. I think the speeches we have heard from Mr Ong, Ms Foo and Mr Gan, and the very thoughtful points they have made illustrate the real value of having in this House a few Members with experience in the financial markets. I just like to make that broader observation. Page: 1366 The first question that has been raised concerns how far we should go in requiring Financial Advisory firms to exercise care and diligence when making representations on products they recommend to their clients. How far should we go? The proposed amendments in section 26 of the Bill set out this duty and penalise recklessness or negligence when making representations to clients. The amendments are, in this regard, similar to the standards in other jurisdictions, certain other major jurisdictions like the United Kingdom and Australia. The amendments do not seek to impose liability on FA firms or their representatives where they have acted honestly, carried out the necessary due diligence and have reasonable basis for the statements that they make.”
“To conclude, MAS will continue to review its regulatory framework for the provision of financial advisory services to ensure that investors are treated fairly in their dealings with FAs, while allowing for competition and sustainable growth in the financial advisory industry. Page: 1362 In April this year, MAS set up the Financial Advisory Industry Review (FAIR). The FAIR panel will make recommendations aimed at enhancing the quality of financial advice, and ensuring a more competitive and efficient system for the distribution of life insurance and investment products in Singapore. Legislative changes arising from the recommendations of the FAIR panel, where accepted by MAS, will be introduced in Parliament subsequently. Sir, I beg to move. [(proc text) Question proposed. (proc text)] 2.10 pm”
“It will also be an offence to do so if the FA firm has not cared to ascertain if a statement is true or false. These amendments do not seek to impose liability on FA firms or their representatives if they have acted honestly, carried out the necessary due diligence and have reasonable basis for the statements that they make. Clause 7 of the Bill will also make it an offence under the Financial Advisors Act to engage in any conduct to defraud or deceive any person in connection with the provision of any financial advisory service. This provision mirrors similar provisions in the Securities and Futures Act, and will subject the conduct of FA firms to the same standard as that expected in the context of securities and futures. The Bill will also extend the provisions on civil liability to breaches of an FA firm's business conduct obligations, specifically, the obligations to furnish product information to investors and to avoid making false or misleading statements. This will enable investors to obtain compensation from FA firms for any loss or damage suffered as a result of breaches of these obligations. However, while the Bill extends the civil liability of an FA firm, it also encourages investors to resolve disputes with FA firms through channels other than court action. The Bill will enable the Court, in making an order in a civil action commenced by an investor, to have regard to whether the investor has made reasonable efforts to minimise his loss and resolve the dispute with the FA before commencing the court action. This includes the use of alternative dispute resolution processes, like mediation or adjudication through the Financial Industry Disputes Resolution Centre (FIDReC).”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The House has just debated the Securities and Futures (Amendment) Bill 2012. The changes we have adopted are complemented by the proposed amendments in the Financial Advisers (Amendment) Bill 2012. Firstly, the Bill introduces amendments which mirror those in the Securities and Futures (Amendment) Bill 2012 relating to: (a) the enhancement of MAS' powers to investigate and take regulatory action; and (b) the extension of MAS' powers to make prohibition orders. Secondly, the amendments will strengthen safeguards for the investing public. The Bill widens the scope of a Financial Adviser (FA) firm's obligations when communicating and dealing with customers. Currently, it is an offence under the Act to make a false or misleading statement only where the statement is made with the intent to deceive. Further, it only applies to statements relating to the amount payable for an investment product, such as the premium or benefits under an insurance policy, or to the effect of a provision in a contract for an investment product. That is the current scope of the provisions in the Act. Page: 1361 The scope of this provision will be expanded in two ways. First, it will cover all statements made by the FA firm in connection with its financial advisory services, such as statements relating to the features or risks of an investment product. Second, the Bill extends the law to cover negligent or reckless dissemination of false or misleading information, and not just statements made with the intent to deceive. It will make it an offence for an FA firm to disseminate such information as long as it ought reasonably to have known that a statement is false or misleading.”
“(proc text)] [(proc text) Bill considered in Committee; reported without amendment; read a Third time and passed. (proc text)] Page: 1360”
“It has and will continue to align its regulatory approach, such as to relieve global market participants of undue compliance burden, while at the same time ensuring that the objectives of the FSB recommendations are met. With regard to the definition of "specified derivatives contract", MAS will consider the significance of a product in Singapore's OTC derivatives market, international developments, as well as market feedback, when deciding on the products to include in the reporting and clearing requirements. Where the characteristics of certain OTC products are not standardised, subjecting these not very standardised products to mandatory clearing requirements may not be appropriate. Instead, industry efforts to standardise some of these contracts would usually be a more sensible first step to facilitate moving these products to a central clearing platform. These products should, however, still be monitored by MAS on an on-going basis, for instance, through the trade reporting requirements. Page: 1360 Mr Speaker, Sir, let me briefly conclude. The proposed reforms to OTC derivatives regulation in Singapore have been designed to provide flexibility to respond to international developments and to take into account our local market conditions. I believe MAS has struck an appropriate balance in its approach, and the steps being taken will enhance the safety, efficiency and reputation of Singapore's financial markets. [(proc text) Question put, and agreed to. (proc text)] [(proc text) Bill accordingly read a Second time and committed to a Committee of the whole House. (proc text)] [(proc text) The House immediately resolved itself into a Committee on the Bill. – [Mr Tharman Shanmugaratnam].”
“There is a need for close coordination internationally to address and prevent, where possible, unintended consequences on reforms in any one of the major jurisdictions. The global regulatory landscape for OTC derivatives markets is also still evolving. MAS will develop a regulatory regime with the flexibility to adapt to these on-going international developments. This evolving regulatory landscape is also one of the reasons why we have phased our reforms in Singapore. This Bill will implement the mandatory reporting and mandatory central clearing requirements as the first phase. The information gathered through this phase of reforms will enable MAS to monitor their impact on our markets and adapt the implementation of further reforms accordingly. Mr Ong's final points on the scope of the definitions of "specified person" and "specified derivatives contract" are pertinent and are issues that MAS has considered carefully. MAS has considered the definition of "specified person" in the context of our industry players. Foreign financial institutions form the bulk of the participants in our market, trading significant volumes of OTC derivatives locally. So, if we confine the definition of "specified person" to Singapore-domiciled companies, it would decrease the effectiveness of our regime in mitigating systemic risks, including the build-up of risky bilateral exposures. On the other hand, expanding the definition to include all overseas entities which trade in Singapore would be counter-productive. MAS has, therefore, defined "specified persons" to cover entities with local presence which are already regulated by MAS in Singapore. MAS is keenly aware of Singapore's positioning as a hub for global financial institutions.”
“There is flexibility for the rules to apply differently or not at all, depending on the nature of the derivatives trade or the participants, and for the rules to evolve over time. Mr Ong Teng Koon rightly said that rules have to stand the test of time and they will only stand the test of time, if we allow them to evolve. MAS will consult the industry in setting out these detailed regulations to ensure that they achieve the broad objectives of the international regulatory community that we are part of while having due regard for the characteristics of the Singapore market. Mr Ong had also rightly pointed out that it is not Singapore's prerogative to be a first mover in OTC derivatives regulation. We are not a large player in the derivatives space, at least by standards of London, New York and some others. However, we have to recognise, too, the cross-border nature of OTC derivatives transactions, and the need to preserve Singapore's role as a reputable global marketplace. I would add that our reputation as a well-regulated financial centre is itself a competitive advantage for a broad span of financial businesses. Further, Singapore plays a not insignificant role in global trading of certain OTC derivatives, such as interest rate derivatives. Page: 1359 The European Union, United States and Japan – jurisdictions with the authority over the largest and most developed OTC derivatives markets – are in various stages of establishing legislative and regulatory frameworks to regulate these markets. I would like to assure Members that MAS has been in active engagement with its regulatory counterparts on each of the reforms being undertaken.”
“Mr Speaker, Sir, I thank Mr Ong Teng Koon for his comments on the Bill. Mr Ong has provided an useful perspective on whether Singapore should adopt a prescriptive rules-based approach in regulating OTC derivatives or opt for a principles-based approach. He argues rightly, in my opinion, against imposing one-size rules on an extremely diverse OTC derivatives marketplace. MAS' approach is to avoid moving towards either of two extremes in financial regulation. To avoid relying solely on prescriptive rules for every type of instrument or market participant on the one hand, or solely on issuing broad principles and guidance, which can be then interpreted in different ways by different market participants, and hence, introduce uncertainty in markets. Neither of these polar extremes in financial regulation – relying solely on prescriptive rules or solely on principles and guidance – has worked well in international experience. They certainly would not work well in preserving stability or enabling sustained growth in today's world. MAS has taken very seriously the high-level recommendations of the international standards setting bodies, especially the Financial Stability Board, in designing the regulatory framework for OTC derivatives. The proposed legislative framework for trade reporting and central clearing rests on clear principles. But the framework also allows MAS the flexibility to set more detailed requirements through regulations. In other words, the rules are not all written out in the law but our subsidiary legislation will be able to write rules that are carefully calibrated to the circumstances that our markets face. These regulations will provide clarity and certainty where necessary.”
“The Bill introduces significant changes to our capital markets legislation, particularly to strengthen MAS' oversight of OTC derivatives markets and to strengthen safeguards for retail investors. MAS will propose further amendments to the SFA at a later stage to implement other elements of the FSB's recommendations on OTC derivatives. MAS will continue to review our regulations and policies to ensure that they remain effective in preserving the integrity and stability of Singapore's financial system, and the confidence of investors in our markets. Sir, I beg to move. [(proc text) Question proposed. (proc text)] 1.47 pm”
“This would give MAS investigation powers similar to what securities regulators in Australia and the United Kingdom have, for example, the ability to enter premises without a warrant is also similar to powers that the Competition Commission of Singapore currently has. MAS is currently empowered to impose prohibition orders (POs) on representatives who are registered on the Public Register (Register) under the Representative Notification Framework. The Bill will extend the class of persons against whom POs may be issued to include representatives who are not required to be registered on the Register. For example, employees of financial institutions who undertake proprietary trading for the institutions are not required to be registered on the Register as they do not deal with customers. However, as the nature of their activities is similar to that of regulated persons, they should be subject to similar regulatory actions as representatives on the Register if they commit a serious offence, such as fraud or dishonesty. Consistent with MAS' existing practice, all POs issued will be published. Page: 1355 Lastly, arising from judicial guidance in the MAS' first civil penalty court action under section 197 of the SFA, the Bill will give greater clarity with regard to the mental state required for liability to be established against a person with respect to false trading or market rigging. In summary, the person must have done the prohibited act knowingly or recklessly, or with the purpose of creating a false or misleading appearance with respect to the market or the price of securities. Mr Speaker, Sir, let me conclude.”
“These amendments will enhance civil remedies, strengthen MAS' supervision and enforcement powers, and make other ancillary changes. The Bill will enhance civil remedies available to investors in cases of market misconduct. It will allow investors who have suffered loss as a result of relying on false or misleading statements or omissions to obtain compensation, regardless of whether the contravening person had gained a profit or avoided a loss. For insider trading cases, the Bill will provide compensation to be based on the difference between the price transacted by the claimant and the notional price if the inside information had been generally available, instead of the notional price if the contravention had not occurred. This will ensure that compensation awarded more accurately reflects the loss suffered by the claimant. To better ensure compliance with the SFA, the Bill will also strengthen MAS' powers to investigate and take regulatory action. For example, MAS' powers to revoke capital market service licences or revoke the status of an individual as a representative on the Public Register will be extended to a wider range of situations. These include situations where directions issued under the SFA have been breached or where the licensee or representative has not acted in the client's best interests. MAS' investigation powers will also be extended to allow MAS to enter premises without a warrant in certain circumstances and to apply for search warrants without having to first issue a production order, if there are reasonable grounds for suspecting that documents required as evidence would be concealed, removed, tampered with or destroyed.”
“The Bill will also enhance the regime governing advertisements of certain offers of securities by empowering MAS to prescribe additional requirements and restrictions on advertisements, such as the requirement for fair and balanced advertising. Next, to provide a further safeguard for investors, the Bill will require issuers of a debenture offered with a prospectus, including unlisted debentures, to appoint a trustee for the entire tenure of this debenture. Currently, only issuers of listed debentures are required to do so under the Listing Rules of the Singapore Exchange. The amendments will ensure that there is an independent party vested with the legal right and obligation to take timely collective action on behalf of retail investors in the event of default by the issuer. Currently, firms which are holders of a capital markets service licence are permitted to withdraw customers' monies maintained in segregated trust accounts, subject to customers' written authorisation. For instance, with the authorisation that a customer gives at the point at which he enters into a contract, the firm can withdraw and place the customer's monies with other counterparties to meet the firm's own obligations incurred in connection with the customers' transactions. Customers in such an arrangement will lose the trust protection accorded under the SFA or find that their monies are not readily recoverable should the licensee default. Such arrangements expose customers' monies to risks and will often not be in the best interest of retail investors. The Bill will disallow such arrangements as MAS may prescribe. Page: 1354 Sir, I will now turn to the last category of amendments to the SFA.”
“In January 2012, MAS introduced new requirements for intermediaries to formally assess a retail investor's investment knowledge and experience before selling more complex investment products, termed as "Specified Investment Products" (SIPs). These requirements were aimed at ensuring that intermediaries recommend investment products that are suitable to the investor, taking into account his ability to understand and bear the risks inherent in that product. The Bill will formalise the obligations of issuers to properly classify capital markets products, and provide certainty with regard to the products subject to the new requirements. Page: 1353 The Bill will also introduce amendments to promote more effective disclosure to enable investors to make better-informed investment decisions. Specifically: (i) Prospectuses for offers of asset-backed securities, structured notes, unlisted collective investment schemes and exchange-traded funds are to be accompanied by Product Highlights Sheets (PHS). The Product Highlights Sheets must summarise key information in a clear, objective and simple language. A similar requirement has been introduced in other jurisdictions, such as in the European Union, Hong Kong and Australia. (ii) Issuers of unlisted debentures with tenures of 12 months or longer will be required to immediately disclose any material information concerning the debentures. They will also have to make available to debenture holders semi-annual reports containing pertinent information on the debentures, and semi-annual and annual financial accounts. Where the terms of the unlisted debentures allow for redemption at the option of the holder of the unlisted debenture, issuers will be required to make available, publicly and regularly, bid or redemption prices.”
“Such clearing facilities are regulated as designated clearing houses only if they are systemically important to Singapore's capital markets. The Bill will, therefore, amend Part III of the SFA to introduce an authorisation regime for all clearing facilities, including securities, futures contracts and OTC derivatives clearing facilities. Under the authorisation regime, systemically important locally-incorporated clearing facilities, including CCPs, will be regulated as approved clearing houses, while all other clearing facilities will be regulated as recognised clearing houses. The proposed amendments set out statutory obligations on the safe and efficient operation of regulated clearing facilities similar to what are currently imposed on designated clearing houses. I would like to assure this House that MAS will continue to engage the industry to ensure that these wide-ranging reforms do not impinge unduly on the smooth and efficient functioning of the markets. The OTC derivatives reforms are taking effect in the US, and have begun to be implemented in other jurisdictions. Some of the reforms have cross-border impact on foreign entities, including entities operating in Singapore, resulting in potentially overlapping requirements and increased compliance burdens. MAS is sensitive to these issues and is working closely with our regulatory counterparts abroad to minimise unintended consequences of the OTC derivatives reforms. Mr Speaker, Sir, I would like now to turn to the amendments relating to the strengthening of safeguards for retail investors.”
“The proposed amendments set out statutory obligations on the safe and efficient operation of regulated trade repositories and ensure that the authorities are able to access the information reported. The second major initiative is to subject certain OTC derivatives trades to central clearing. Traditionally, OTC derivatives trades are privately negotiated bilateral transactions, where a participant assumes the credit risk of its counterparty and manages the risk bilaterally. Systemic build up of large counterparty exposures among market participants, if not properly managed, can, however, destabilise the financial system and cause stress to market participants generally in the event that one large participant fails. Requiring OTC derivatives trades to be centrally cleared aims to mitigate such risks by substituting the credit risk of the counterparty with the credit risk of a regulated, well-capitalised Central Counterparty (CCP). At the same time, it allows the CCP to reduce overall credit risk in the system by netting risks across participants. Page: 1352 The new Part VIB sets out the obligation for financial institutions and large non-financial entities to clear certain prescribed derivatives contracts booked in Singapore on CCPs. MAS will prescribe certain OTC derivatives contracts for clearing, taking into account factors, such as the level of systemic risk they pose and the characteristics and degree of standardisation of the contract. Mr Speaker, Sir, to reap the benefits of central clearing and preserve stability of the financial system, the sound functioning of clearing facilities for OTC derivatives is vital. The current regulatory regime in the SFA extends only to clearing facilities for securities and futures contracts.”
“We are carefully deliberating how best to implement the remaining reforms in the context of the nature and state of the OTC derivatives markets in Singapore, and with due regard to international developments. MAS will issue further consultations on these remaining aspects of the OTC reforms, which include the introduction of mandatory trading obligations where appropriate and the regulation of OTC derivatives market operators and market intermediaries at a later stage. I will now describe the first of the two main thrusts to implement OTC reforms in this Bill – the reporting of OTC derivatives trades. The crisis highlighted a lack of transparency in OTC derivatives markets globally, which compromised the ability of regulators to assess the build-up of systemic risks and detect market misconduct. The new Part VIA in the Bill requires financial institutions and large non-financial entities which book or trade prescribed OTC derivatives in Singapore to report such trades to a trade repository licensed by MAS. MAS will prescribe OTC derivatives trades for the purpose based on their significance in Singapore's OTC derivatives market, as well as international approaches towards reporting of such trades. Trade repositories are a new class of financial infrastructure, whose main function is to collect and maintain information on financial transactions. To support the reporting mandate, the new Part IIA introduces a framework for the regulation of trade repositories. Any trade repository that intends to facilitate the reporting of transactions subject to the reporting mandate under the SFA will have to obtain a licence issued by MAS.”
“This Bill seeks to give legal effect to the proposals that require legislative changes. The Bill will also strengthen the protection of retail investors' monies that are placed with capital market services licensees. To support a tighter regulatory framework in the two major areas I have just mentioned, the Bill will also enhance and refine MAS' supervision and enforcement powers, and make other ancillary amendments to the SFA. The MAS has consulted the industry and the public on the proposed amendments this year. It has considered all the views and feedback received, and taken them into account in the amendments where appropriate. Page: 1351 Mr Speaker, Sir, let me expand first on the amendments relating to OTC derivatives. The Financial Stability Board (FSB) has made specific recommendations for regulators globally to institute reforms in the following four areas: (i) reporting of OTC derivatives contracts to trade repositories; (ii) central clearing of all standardised OTC contracts; (iii) standardisation of OTC derivatives contracts; and (iv) trading of standardised OTC derivatives contracts on exchanges or electronic platforms, where appropriate. Singapore is committed to implementing reforms in accordance with the FSB recommendations. In view of the wide-ranging amendments necessary for effective implementation, MAS is undertaking this exercise in two phases. The first phase, proposed in this Bill, involves the mandatory reporting of OTC derivatives trades to trade repositories, and mandatory central clearing of OTC derivatives trades at central counterparties (CCPs).”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Since its introduction in October 2001, the Securities and Futures Act (SFA) has undergone several reviews to ensure that Singapore's regulatory framework remains robust and keeps pace with developments in the capital markets. The last amendments to the SFA were passed by this House in 2009. The 2008/2009 global financial crisis has led to significant reforms in the regulation of financial markets. This Bill seeks to amend the SFA in line with reforms being implemented in most other major financial centres. It concerns two key areas. First, over-the-counter (OTC) derivatives. These are derivatives that are not traded on exchanges. The events surrounding the collapse of major financial institutions, such as Bear Sterns, Lehman Brothers and AIG, exposed significant weaknesses in the structure of OTC derivatives markets. The Financial Stability Board (FSB) has, after extensive deliberations, issued recommendations to strengthen the regulation of OTC derivatives markets and improve their transparency, in order to mitigate risks to the broader financial system, as well as to guard against market abuse. Singapore, through the Monetary Authority of Singapore (MAS), is a member of the FSB and has contributed to formulating these global reforms. Second, the crisis highlighted the need to strengthen safeguards for retail investors, particularly in light of the mis-selling of certain Lehman Brothers-related investment products. There were other examples as well. From 2009 to 2010, MAS conducted a review of its regulatory regime for the sale and marketing of investment products, and put forward a number of proposals to protect the interests of retail investors.”
“That is a very useful point. One of the things that we do have to look into is tightening of the rules on advertisement, particularly for any investment scheme. I think what was implied in the question is the old adage, which is that if something is too good to be true, it is not true. Unfortunately, people keep forgetting this adage. So, it is important also to try and minimise the scope to mislead through advertisement. It is something which the MAS is now following up with MCI and other agencies to see whether we can tighten the rules on advertisements. Page: 1334”
“Genneva has been on the Investment Alert List for some time. I think there were some members of the public who did notice this.”
“Not specifically to publicise the Investment Alert List, but it is something which we can consider. We have to make sure that there are no competitive implications. But it is something which we will consider.”
“We certainly will. We have been stepping up our activities through MoneySENSE in the last two years quite considerably, engaging in many more activities in the neighbourhoods, for instance. We have been using the non-English language media actively and we will continue to find every way of reaching out particularly to people who do not normally look at the financial pages in the newspapers. So, we are very keen to do more in this regard. Page: 1334”
“Er Dr Lee Bee Wah (Nee Soon): Sir, I would like to thank the Deputy Prime Minister for his answer. I realise that quite a number of those who are so-called being cheated or swindled are the elderly who hardly read English. I have come across some of them, who are my residents. I would like to ask the Deputy Prime Minister whether MAS would consider working with other organisations in order to reach out to more residents on the IAL, for example, the Consumers' Association.”
“Page: 1333 However, the fact that a company is listed on the IAL does not necessarily mean that it has breached any of MAS' regulations. Nor does it mean that MAS has the power to monitor its activities or to investigate its operations. Where there is evidence of fraud or any other breaches of law, action will be taken by the appropriate enforcement agency, which typically is the CAD. There are currently five companies operating buy-back schemes, which Mr Teo and Er Dr Lee Bee Wah had mentioned, which are listed on the IAL. Some companies are currently under investigation by CAD. The exact number of affected investors is not known at this point as the investigations are still ongoing. In the meantime, the public can refer to CAD's website for updates on the investigation. MAS will continue its efforts in educating Singaporeans on the pitfalls in dealing with unregulated entities and the risks of unregulated schemes, such as gold buy-back schemes. The public has to play its part. Before committing to any investment scheme, any investor should first check if the entity is licensed by MAS and what regulated activities it is authorised to conduct. The second critical step is to assess if the potential returns that are offered are realistic and seek to understand how these operators generate their returns and what the risks are. Thirdly, consumers should assess if there is any protection or recourse if the entity should fail. These are the three basic steps, and they are very important steps when you are dealing with unregulated schemes. It is truly unfortunate when people lose their money in schemes that turn out to be fraudulent or unsustainable. But if every consumer were to follow these steps, we would have far fewer cases of people losing their money this way.”
“The MAS Investor Alert List (IAL) contains a list of companies which are not licensed by MAS but, based on information received by MAS, may have been wrongly perceived as being licensed or authorised by MAS. MAS assesses public feedback as well as documentary evidence on the entity in question before deciding whether to place it on the IAL. The list is updated regularly. The IAL is publicly available on the websites of MAS and MoneySENSE, which is the national financial education programme. Er Dr Lee Bee Wah has suggested that MAS should publicise companies listed on the IAL through the media. Indeed, we do so. MAS works with the media, both the English and vernacular media, on programmes to educate consumers about unregulated investment schemes. In 2012 alone, so far this year, we have about 20 media stories about unregulated schemes and entities listed on the IAL. They have been carried in the papers as well as on TV and radio. Such media programmes often include consumer tips from MoneySENSE on the risks involved in dealing with unregulated entities. Likewise, the MoneySENSE website has a Consumer Alerts section which publicises media articles and consumer guides on schemes, such as landbanking and gold trading. The IAL is not exhaustive. The fact that a company is not listed on the IAL does not mean that the company is sound or credible. Consumers must exercise caution when dealing with all unregulated entities, not just entities that are listed on the IAL. Consumers can check if an entity is regulated by MAS, as well as the activities it is licensed to conduct, by referring to the Financial Institutions Directory on the MAS website.”
“Singapore does not have a capital gains tax. Taxpayers are, therefore, not required to report their capital gains to the Inland Revenue Authority of Singapore (IRAS). Page: 1310”
“Data on the incomes of the top 1% of individual income earners is only collected by the Inland Revenue Authority of Singapore (IRAS). However, individuals are only required to declare income that is taxable in their income tax returns. Income that is not taxable, such as capital gains, need not be reported to IRAS. Page: 1154 At different points over the past 10 years, certain types of income have been exempted from tax. Comparison of declared incomes over the 10 years is, hence, not meaningful, as the income base would, in fact, differ. As the main exemptions from tax were introduced prior to Year of Assessment (YA) 2009, incomes from the past four years allow for a better comparison. Based on IRAS' records, the number of income earners in the top 1% grew from 29,524 in YA 2009 to 32,285 in YA 2012. The average taxable income of this group was $0.7 million in YA 2009 and YA 2012. Please refer to table below for the average income of the top 1% of income earners from YA 2009 to YA 2012. Page: 1154”
“Is the operator able to explain the risks of such investments, and is there any protection or recourse should the operator itself fail? Unless one is very knowledgeable about the product and understands and is willing to take the risks, it is better not to get involved in any scheme that offers very high returns. High returns are only possible with high investment risk. In some instances, they may also be fraudulent. Through MoneySENSE, the national financial education programme, MAS has highlighted the risks of unregulated schemes, such as gold buy-back schemes, and the pitfalls of dealing with unregulated entities. There have also been newspaper articles to warn consumers against such gold buy-back schemes. More generally, MoneySENSE has repeatedly emphasised the need to exercise extra caution when consumers receive offers that seem too good to be true. We will put effort into this education campaign. Page: 1011”
“Schemes that claim to provide high returns with seemingly low risk will crop up from time to time. In the current low interest rate environment, people may, indeed, be more easily tempted to put their money into them. But there is a lot of sense in the old investment adage if an investment looks too good to be true, it is probably not true. I, therefore, urge Singaporeans to exercise great care and vigilance before committing themselves to any investment scheme that claims to give high returns. There are a few things they should do. First, they should check if an entity is regulated by MAS. MAS publishes a Financial Institutions Directory on the MAS website. It also publishes an Investor Alert List (IAL). The IAL contains a list of unlicensed entities which, based on information received by MAS, may have been wrongly perceived as being licensed or authorised by MAS. For example, Genneva Pte Ltd was listed on the IAL in February 2011. For financial market investments, retail investors should deal only with firms regulated by MAS, such as banks, insurance companies, licensed financial advisers and brokers. Doing so will accord them several levels of protection. Regulated firms are subjected to prudential requirements which provide financial safeguards. Second, they are required to comply with market conduct rules which guard against mis-selling and require adequate disclosures, including how the products will generate the returns and the risks involved. Finally, should a dispute arise, there are established dispute resolution processes in the firm and with the Financial Industry Disputes Resolution Centre (FIDREC). Page: 1011 Second, investors should consider how the returns in any investment scheme are generated. Are they realistic?”
“There is a wide range of products and schemes, both in Singapore and globally, that claim to offer consumers potential profits. Some of these are offered by entities that are regulated, while others are transacted outside the reach of financial regulators. MAS regulates the financial markets and the activities of financial market participants. It seeks to protect investors by setting out the rules for issuers of shares, bonds, unit trusts or other capital market products. It also regulates the financial intermediaries and infrastructure operators, such as exchanges and clearing houses, for capital markets products. Page: 1010 Regulations cannot cover every type of investment. MAS has to judge where to draw the line on what it regulates, taking into account the scale of the investment activity, its role in financial markets and whether failure by a firm will pose broader risks to the system. Like most other financial regulators around the world, MAS does not regulate schemes that involve investors acquiring direct ownership of physical assets, such as property, gold, art or wine. The gold buy-back schemes which Er Dr Lee Bee Wah enquired about are not regulated by MAS. MAS will continue to monitor market practices and the investment landscape trends, and refine the regulatory framework where necessary over time. However, regardless of whether these activities are regulated, it is an offence under the law to operate a fraudulent or deceptive scheme. As Members know, some of the operators offering gold buy-back schemes are currently under investigation by the Commercial Affairs Department (CAD). If there is evidence of fraud or other breaches of the law, CAD will take firm and appropriate action.”
“We understand that some investee companies intend to use the seed funding for acquisitions, expansions, and investing in capital expenditure for upcoming multi-year projects with key customers. We will continue to assess the impact of the CIP as investments are made and mature over time. Page: 1006”
“Mr Ong Teng Koon has asked about the progress of the Co-Investment Programme (CIP), where Government provides seed capital to catalyse patient growth capital from the private sector to nurture Singapore-based globally competitive companies. Phase 1 of the CIP was launched in December 2010, with Heliconia Capital Management Pte Ltd ("Heliconia") as Government's fund manager. The CIP comprises two funds. First, the SME Catalyst Fund, which is the primary mode of operations of the CIP, whereby the Government's capital will be managed and matched by private equity fund managers. And second, the SME Co-Investment Fund, which is used to co-invest with fund managers on a deal-by-deal basis. To-date, we have committed a total of S$135 million of seed capital to two private equity funds and two co-investment deals under the CIP. This has catalysed over S$200 million from the private sector. Heliconia is evaluating a pipeline of investments and we are optimistic that Phase 1 of the CIP with remaining seed capital of $115 million would be fully taken up with more investment commitments over the next few years. The length of the investment horizon will vary from investment to investment. The individual private equity funds that the CIP invests in will typically be for a term of eight to 10 years. Whilst the CIP was set up with the objective of nurturing globally competitive companies, it is healthy to subject the management of Government's CIP capital to commercial discipline. This will mean that we expect the investments to make reasonable returns. Page: 1006 The CIP has been in operation for only about a year. As it is meant to provide patient growth capital to investees, it may be premature to judge its effectiveness at this point.”
“Small enterprises can plan ahead and, if necessary, enter into joint collaborations, such as forming a consortium to bid for high value Government contracts. To help them gain better access to Government procurement opportunities, these enterprises can opt to receive alerts on tenders and quotations relevant to them via GeBIZ's Really Simple Syndication (RSS) or via email on SPRING's EnterpriseOne portal (http://www.enterpriseone.gov.sg/SignUp.aspx). Page: 1005 Small enterprises1 do stand a fair chance of being awarded Government tenders. In 2011, about 20% of the total number of Government tenders were awarded to small enterprises. In fact, two out of three tenders whose value is $100,000 or below, were awarded to small enterprises. As for measures to help SMEs in the event of a downturn, this would depend on the severity of the downturn and the specific conditions that are affecting businesses. Page: 1005”
“Singapore is party to the WTO Agreement on Government Procurement (GPA) and 18 Free Trade Agreements that are in force. These agreements commit parties to ensure that their respective Government procurement regimes are based on the principles of open and fair competition, transparency and value-for-money (VFM). All Government procurement opportunities are posted on the GeBIZ portal (www.gebiz.gov.sg) and are easily accessible by all suppliers. Bids are evaluated based on whether they meet requirements and objectives of the tender. Both local and foreign suppliers are given equal opportunities to be awarded the Government tenders. Over the past three years, about $60 billion worth of Government contracts have been awarded to companies registered with the Accounting and Corporate Regulatory Authority (ACRA). This compares to only about $1.8 billion or 3% awarded to suppliers that are not registered with ACRA. As we do not differentiate between bids that are from Singapore companies and foreign companies based in Singapore, we are unable to give a further breakdown by country of origin. To help local SMEs, our focus is on strengthening their capabilities and competitiveness and to do so without distorting the market, for example, by diverting purchases to them. In Budget 2012, the Government had announced a $200 million boost to further build capabilities for our local enterprises to help them improve their market competitiveness. In addition, the Government will ensure that local enterprises have continued access to Government procurement opportunities. The Government shares pertinent information on public sector medium term pipeline projects.”
“Singapore does not tax capital gains. Only gains which are income in nature are taxed. Business entities that are in the business of trading in properties are taxed on their property disposal gains as trade income. This tax treatment is no different from income tax on any other type of trade income. IRAS does not track trade income by how the trade income is generated. For other taxpayers, whether the gain derived from the sale of a property is capital or income in nature is determined based on the actual facts and circumstances surrounding the sale. The facts and circumstances that IRAS considers, similar to other tax authorities and based on case law, include the situation leading to the sale, the holding period of the property and the frequency of such sales. IRAS then informs the taxpayers accordingly if it assesses after its review that their property gains are income in nature and hence taxable. In the recent two years, only 201 individuals (less than 0.05% of total individual taxpayers) and 39 companies (less than 0.1% of total non-individual taxpayers) have been subject to income tax on their property disposal gains. To assist taxpayers, they can apply to IRAS before selling their properties for an advance ruling to ascertain whether the disposal gains are taxable. Page: 922”