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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“This question will be answered by my reply to Dr Lim Wee Kiak, Mr Patrick Tay and Miss Cheryl Chan Wei Ling, respectively, for the next Sitting. [Please refer to "Investigations into Whether Singapore-based Individuals or Financial Institutions were Implicated in Pandora Papers Disclosures", Official Report, 3 November 2021, Vol 95, Issue 43, Oral Answers to Questions section.]”
“To support secondary market trading, SGX has been building its ecosystem of market makers and liquidity providers. Government agencies are supporting SGX’s efforts to increase the attractiveness of our equities markets for local and international investors. I will highlight a few recent initiatives. The Government and Temasek are co-investing in a S$1.5 billion fund called "Anchor Fund @ 65", to provide late-stage pre-IPO funding and to attract and anchor new listings of growth companies on SGX. EDBi, the investment arm of EDB, is establishing a new "Growth IPO Fund" to invest in future market leaders and technology innovators that are two to five years away from a public listing, with a view towards having them list on SGX. MAS defrays listing costs for companies looking to list on SGX and encourages more equity research on smaller and less covered Singapore-listed stocks through its Grant for Equity Market Singapore (GEMS). These steps are part of a continuing strategy to develop depth and breadth in our capital markets, including strengthening our role as a capital-raising venue for promising firms in the region and beyond. This is ultimately what will draw retail and institutional investors alike to our capital markets.”
“MAS does not have data on retail investors’ monthly fund outflows to overseas exchanges or where they are deployed, as many trade directly on overseas exchanges without going through retail brokerages based in Singapore. Of those who trade on overseas stock exchanges through such Singapore intermediaries, we estimate1 that approximately half of retail investors’ fund flows remain in Singapore, while the other half flows overseas, with the US, Hong Kong and Thailand being the top three overseas stock markets. Financial institutions in Singapore offer a range of investment options in both local and overseas markets for market participants here, including retail investors. From an investor point of view, it is not undesirable to diversify investments across markets and types of assets, including through instruments offered on SGX, as long as investors understand the nature of the risks and benefits of doing so. Turnover on SGX has increased in the midst of COVID-19, although it has been outpaced by competitor exchanges. SGX’s total equity monthly turnover has grown by about 20% since early 2019. SGX has traditionally had more active volumes in less volatile, income-generating investments, such as REITs, compared to other growth-focused exchanges, such as NASDAQ2. To narrow the gap with other exchanges and help drive turnover growth, SGX has introduced new and more flexible listing pathways to cater to new economy companies. These include listing frameworks for companies with dual class share structures, and more recently, the special purpose acquisition companies framework. SGX is also working with regional exchanges to build linkages and expand investor pools, as well as broaden its equity product shelf.”
“For instance, licensed moneylenders, which typically provide unsecured credit to borrowers with weaker financial standing, are subject to additional safeguards of interest rate and fee caps. FIs regulated by MAS are not subject to these caps but may only provide unsecured credit to individuals with a minimum annual income of $20,000. Our Government agencies will together continue to monitor developments in consumer credit and ensure consistency and coherence in our overall regulatory framework.”
“Our Government agencies work together to oversee the provision of consumer credit in Singapore. About 95% of credit granted to Singapore households by commercial entities is by financial institutions (FIs) regulated by MAS. The remaining 5% includes credit granted by licensed moneylenders regulated by the MinLaw; hire-purchase agreements regulated by MTI; and credit co-operatives overseen by MCCY. We have over time streamlined the consumer safeguards implemented by these Government agencies, so they are largely consistent. They are guided by the shared objectives of encouraging financial prudence amongst consumers and enabling them to make informed choices on credit. For example, a single set of rules on loan tenures and loan-to-value ratios applies for motor vehicle loans, regardless of whether these are granted by FIs, hire-purchase companies or licensed moneylenders. For housing loans, which are mostly provided by FIs, MAS’ rules require all FIs to take into account borrowers’ total outstanding debt obligations, including housing loans from the HDB, motor vehicle loans under hire-purchase arrangements, and loans extended by licensed moneylenders. Likewise, for unsecured loans, caps are applied to the maximum amount of unsecured borrowings that an individual can obtain from an FI, a licensed moneylender or a credit co-operative. All lenders are also subject to fair dealing requirements such as disclosing key terms and conditions of the credit facility, including interest and late repayment charges. Where there are some differences in specific requirements, these are intended to address the unique consumer protection needs of borrowers served by each channel of credit.”
“"Buy Now Pay Later" or BNPL schemes allow consumers to pay for their purchases via instalments. Currently, BNPL schemes do not pose significant risk to household indebtedness. They are not yet widely used relative to other payment methods. For example, industry estimates put the total value of BNPL transactions in 2020 at around $114 million. This is a very small fraction of the $92 billion in credit and debit card payments over the same period. Further, the current features of BNPL schemes in Singapore are effective in mitigating the risk of excessive debt accumulation by consumers. For example, BNPL users’ accounts are subject to credit limits. They will typically be suspended by the BNPL provider – that means no further use of that BNPL scheme – once a payment is overdue. Late payment fees apply, but these are typically capped. As BNPL schemes do not charge compounding interest on the outstanding amount, the risk of rapid debt accumulation is also not large. As of end 2020, the total outstanding value of BNPL transactions was about S$12 million. This includes the value of instalments that had yet to fall due. MAS is, nonetheless, assessing whether a regulatory framework is necessary to guide the evolution of BNPL schemes as they become more widely used in Singapore. This could include adoption of fair dealing practices by BNPL schemes. For instance, clear disclosure at the point of account opening is helpful in ensuring that consumers are fully aware of the late fees chargeable if they do not pay on time. MAS has been engaging BNPL providers and has been reviewing the experience in other jurisdictions where such schemes are more prevalent.”
“Singapore residents and businesses have a wide variety of e-payment options. These include PayNow, PayNow Corporate, and SGQR that have been available for about three years, alongside credit and debit cards which remain popular with Singapore e-payment users. Growth in the value and volume of PayNow and PayNow Corporate transactions has been strong, as reflected in Table 1. PayNow value and volumes doubled in 2020, and maintained robust growth momentum in the first half of 2021.1 Credit and debit card transaction values and volumes have been fairly stable during this period2, while digital wallet use has been growing.3 Take up for SGQR as a payment solution has also been good. SGQR has grown from about 42,000 merchant acceptance points in 2019, to around 120,000 in 2020 and at least 260,000 merchant acceptance points today. More than 150,000 merchants operating across various services industries including retail stores in shopping malls or food stalls at hawker centres now offer SGQR as a means of payment acceptance. This represents around 75% of merchants in Singapore. The Hawkers Go Digital initiative launched in June 2020 has helped to promote SGQR in the heartlands. The adoption and use of SGQR under this initiative has been encouraging, as reflected in Table 2. In August 2021 alone, 11,600 stallholders in hawker centres, HDB coffee shops and JTC canteens made close to two million e-payment transactions representing a value of $18.3 million. Over 94% of these transactions were via SGQR. We have put in place the backbone interoperable infrastructure to enable multiple payment service providers to offer users in Singapore a good array of safe, simple and secure e-payment solutions. We will continue on this drive to enable convenient and low-cost e-payments.”
“This question will be answered by my reply to Dr Tan Wu Meng's PQ filed for a subsequent Sitting.”
“MAS and MTI are keeping a close watch on any indirect or spillover effects on the Singapore economy arising from developments in China.”
“I will answer the Parliamentary Questions (PQs) related to concerns on China Evergrande Group together, including the: (a) oral PQ from Mr Saktiandi Supaat filed for today’s Sitting; and (b) written PQ from Mr Desmond Choo filed for the next Sitting. There are three aspects to the recent developments in China’s property sector that are relevant to Singapore. First, the exposure of Singapore’s financial system to China Evergrande Group and China’s property sector. Second, the exposure of Singapore’s property developers to China. And third, the exposure of Singapore’s economy to a possible growth slowdown in China. First, Singapore’s banking system exposure to China’s property sector is not large. Direct exposures to China’s property sector are less than 1% of non-bank loans. Exposures to Singapore property developers with operations in China are a further 2.5% of loans to non-bank customers. However, this includes all loans to these developers, not just loans related to their Chinese operations. Our banking sector’s loan exposures to China Evergrande Group itself are insignificant. Second, with regard to Singapore developers with operations in China, MAS estimates that about 30% of their revenues in aggregate are derived from China. However, their median interest cover ratio (or ratio of earnings to interest expenses) is in aggregate more than three times. Third, while the Chinese authorities have thus far maintained stability in their financial system, the slowdown in China’s real estate sector could dampen its GDP growth. It is difficult to estimate how significant this will be, and hence how adverse its impact will be on regional economic growth.”
“Merchants are charged a processing fee for credit and debit card transactions by payment service providers (PSPs), be they banks or other providers, such as NETS. The processing fee, commonly known as the merchant discount rate (MDR), includes the interchange fee1 which is set by card schemes, such as Visa and Mastercard. MAS agrees with Mr Pillai that transparency is important to foster an efficient and competitive payments ecosystem. PSPs, currently, already provide information on their MDR to merchants. This enables merchants to negotiate with PSPs for better MDRs and to opt for PSPs that offer the most attractive deal. Merchants can choose cheaper modes of e-payment acceptance, such as PayNow or SGQR, which have been gaining stronger traction over time. As information on MDR is already freely available to merchants, there is no need to mandate disclosure of MDR at this point. The payment services industry has become highly competitive, especially with the influx of new players. PSPs compete with one another to offer cheaper or more attractive services to secure merchants and, indeed, there is a significant churn amongst merchants switching from one PSP to another.”
“There are broadly three types of payment cards – credit cards, debit cards and prepaid cards – which may be issued by banks, non-bank credit card issuers (such as American Express and Diners Club), as well as licensed payment institutions. Examples of prepaid cards are EZ-Link cards, NETS FlashPay cards and Singtel Dash, which is an e-money wallet. Generally, as a matter of commercial practice by banks and other credit card issuers, those under 16 years of age do not have access to credit or debit cards and applications can only be made for them to have prepaid cards. However, to use a prepaid card, they would still need to be able to fund the card using money transferred from a bank account, credit card, or physical cash top-up in a store. Prepaid cards, being a type of e-money wallet, have a maximum funding limit. Different card issuers can provide useful features for parents such as providing access to their children’s transaction records, card-locking capabilities, blocking of certain categories of merchants, setting of spending limits and so on. We urge parents to actively engage their children on the responsible use of money and if appropriate, leverage on such features offered by card issuers to have a conversation around appropriate spending.”
“Since the start of the COVID-19 pandemic, MAS has worked with the financial industry on a comprehensive set of relief measures to support individuals and businesses. They have included full or partial deferrals of principal repayments on loans secured by property, both residential and commercial. The objective is to allow more time for economic conditions to normalise, so that we avoid unnecessary foreclosures on otherwise viable loans. With the gradual opening up of economic activities, most borrowers have been able to resume loan repayments. Those with difficulties can apply to their banks or finance companies for relief measures. Based on the applications for assistance, the number of borrowers in difficulty has been coming down over time. Last year, banks and finance companies granted about 12,000 reliefs on non-residential property loans. Between January and July this year, they received fewer than 650 applications for payment reliefs on such loans. We understand that some landlords may face cashflow constraints as a result of the mandated two-week rental waiver. The three local banks have recently reaffirmed their commitment to provide targeted assistance and restructuring solutions to borrowers. Given the fall in interest rates since the start of the COVID-19 pandemic, landlords with floating rate mortgages would also have seen lower interest rates on their loans and a reduction in their debt servicing burden. Landlords with fixed rate mortgages can refinance their loans at lower interest rates and apply to lenders for waivers of refinancing fees on a case-by-case basis. Overall, we assess the current targeted relief measures to be sufficient to support the much-reduced number of landlords who are facing difficulties.”
“The decision on where to list is a commercial one that rests with individual companies. Companies do not need to seek prior approval to list overseas. Companies that choose to list overseas decide on the data to transfer overseas to meet listing and ongoing disclosure requirements in the foreign jurisdiction. In general, stock exchanges’ listing rules focus on the disclosure of material information that is needed for investors to make informed investment decisions, for example, material events that affect a company’s financial and business performance. Companies that transfer personal data overseas must comply with Singapore’s data protection laws. For instance, Singapore companies are subject to the Personal Data Protection Act (PDPA), which governs the collection, use and disclosure of personal data. The PDPA requires that companies ensure that the standard of protection at the receiving destination is comparable to the protections under the PDPA. To do so, companies can use legally enforceable mechanisms, such as binding corporate rules or contractual clauses. In addition, personal data should only be used for legitimate purposes recognised by the PDPA or with the consent of the individual. The PDPA complements other sector-specific legislative and regulatory frameworks which require regulated entities to maintain confidentiality of customer information. Firm action will be taken against entities or persons who breach the relevant laws and regulations.”
“All major retail banks have committed to deliver affordable basic banking services in line with the Code of Consumer Banking established by the Association of Banks in Singapore (ABS). The major incumbent retail banks have, in fact, been offering basic banking accounts since 2002. Typically, such accounts come with an ATM/debit card, Internet banking and electronic payment services and can be maintained at very low or even no cost. The digital full banks are expected to make similar commitments. Nearly all adult Singapore residents have bank accounts. In last year’s Solidarity Payment payout, around 99% of Singaporeans who received the payments had the amounts credited into their bank accounts. Surveys found that many of the remaining individuals had bank accounts but opted to receive the payment by encashing cheques over the counter. The introduction of new digital services, such as MyInfo, have further reduced barriers to obtaining financial services. Account opening can now be achieved without having to physically visit a bank branch or conduct face-to-face verification. Banks have also started to offer services, such as micro-investment saving plans and personal financial management tools. The digital banks will add diversity to our banking system. With greater scalability of digital channels and lower cost structures from leveraging technology, the digital full banks are expected to deliver lower-cost products, including accounts with no minimum account balance requirements or fall below fees. Innovative use of data and technology should also allow digital banks to reach under-served segments of the population. Notwithstanding Singapore’s very high levels of banking access, MAS will continue to explore ways to ensure financial inclusion.”
“SGX reviews the annual report disclosures of listed companies. Companies may be issued a public query where there is no disclosure made for deviation from a Provision or if the disclosure is not satisfactory. The companies’ responses to such queries can be accessed by the public on SGX’s website. Apart from SGX, if shareholders or the investing public find the disclosures or explanations offered by listed companies unsatisfactory, they can ask these companies for further explanation. Based on the Singapore Board of Directors Survey 2019 jointly conducted by the Singapore Institute of Directors and SGX RegCo, in respect of Provisions 8.1(a) and (b), 46% of the listed companies surveyed disclosed remuneration of their CEO and each individual director on a named basis, and 72% of the companies disclosed the remuneration of their top five key management personnel in bands of $250,000 respectively. Companies which did not comply with these Provisions cited reasons to do with confidentiality of an individual’s remuneration, potential poaching by competitors, internal comparisons affecting staff morale, or upward pressure on remuneration due to potential comparisons. The Corporate Governance Advisory Committee, an industry-led body set up to advocate good corporate governance practices, will undertake a survey later this year to assess the compliance of SGX-listed companies with the Code, as well as the quality of corporate governance-related disclosures. Remuneration-related disclosures will be one of the focus areas. MAS and SGX RegCo will review the survey findings and CGAC’s recommendations.”
“Let me first explain how the Code of Corporate Governance is designed to be applied on listed companies and Provision 8.1 of the Code. The Code comprises two layers: Principles and Provisions. Principles set out the characteristics of good corporate governance and compliance is mandatory. The relevant Principle here is providing transparency on the remuneration of directors and key management personnel of a company. Provisions in the Code are more specific and operate on a "comply or explain" basis to support companies' compliance with the Principles. Provision 8.1 of the Code states that companies should disclose in their annual reports, the company’s policy and criteria for setting remuneration. Specifically, companies should disclose the amount and breakdown of remuneration of each individual director and the CEO. They should also disclose the remuneration of at least the top five key management personnel (who are not directors or the CEO) in bands no wider than S$250,000 and the total remuneration paid to these key management personnel together. Companies may either comply with the Provisions or explain how their practices, which may vary from the Provisions, still comply with the Principles. This "comply or explain" approach recognises the diversity of listed companies and provides them flexibility to adapt the Provisions to suit their business models or commercial circumstances. For example, while one Provision in the Code asks for a Board Risk Management Committee to be set up to specifically oversee risk management and internal controls, some companies with smaller boards have found it more efficient to have a single committee covering both risk management matters as well as the duties of an Audit Committee.”
“MAS will continue to closely monitor the rapid developments in the DPT services sector and will ensure that risks are effectively managed as part of the licensing and supervision process.”
“The new Payment Services Act (PS Act) commenced on 28 January 2020. As part of the transitional arrangements, entities that were engaged in regulated activities before the commencement of the Act were exempted from holding a licence if they submitted licence applications before the end of a specified grace period. The specified grace period for digital payment token (DPT) service providers ended in July 2020, six months after the commencement of the PS Act. The exemption remains in force until the applications are approved or rejected by MAS or withdrawn by the applicant. There are currently around 90 DPT service providers that operate under this exemption. The list of entities that have been granted an exemption from holding a licence is available on the MAS website. Since the commencement of the PS Act, MAS has received over 480 licence applications. Of these, around 170 applicants (or 35%) have applied to provide DPT services. To date, 30 DPT applications (or 18%) have been withdrawn after engagement with MAS and two have been rejected. Thus far, MAS has not issued any licence to DPT service providers, but several applications are in the final stages of review. MAS closely scrutinises all applications and considers various factors. These include the applicant’s understanding of risks relating to money laundering and financing of terrorism (ML/TF) and the technology risks posed by their business model, as well as the adequacy of controls instituted to mitigate such risks. We will reject applicants who fail to meet the required standards for ML/TF and technology risks set out in MAS' regulations and notices.”
“Micro-investment products, as their name suggests, require small minimum investment amounts – some as low as $1. The product range largely mirrors those of investment products available for larger minimum investment amounts. Examples of micro-investment products include regular investment savings plans, investments in exchange-traded funds, as well as private equity or debt investments. Given the small minimum investments required, these products are aimed at retail investors. The offer of micro-investment products1 to retail investors, so long as these are capital markets products, is subject to regulation and business conduct requirements by MAS. These include rules on assessing investor suitability, fair dealing, minimum product disclosures, as well as safe custody and segregation of customers’ monies and assets. The current take-up of micro-investments among Singapore investors remains fairly low. As at end-2020, approximately $3.4 billion was invested in such products with MAS-licensed banks, robo advisers and securities crowdfunding platforms, and this constitutes less than 3% of the financial industry’s total assets under management for retail funds. Nevertheless, there is growing interest amongst investors for such micro-investment products. MAS through MoneySense undertakes ongoing initiatives to educate consumers on the factors to consider prior to committing to an investment. Beside understanding the product’s features, benefits and risks, investors should also deal only with entities regulated by MAS. Investors can access MoneySense content through the MoneySense website and social media as well as public seminars and workshops.”
“We also need to stay innovative and agile, in the face of key structural trends like digitalisation and sustainability that are transforming the landscape.”
“We have seen strong interest of more than 400 licence applications since the start of the Act last year. Another example is the Monetary Authority of Singapore's (MAS) FinTech regulatory sandbox which enables financial institutions and FinTech players to experiment with innovative financial products or services in a live environment but within a well-defined space and duration. Second, a good infrastructure and ecosystem that enables new activities to scale. For example, in green finance, MAS is actively involved in developing an ASEAN taxonomy which will provide a common language on activities that are considered green and transition. This will catalyse more cross-border financing and investment flows to support the region's transition to a lower carbon future. In fintech, MAS has launched an API exchange platform, in partnership with the ASEAN Bankers Association and the International Financial Corporation, that has over the last three years helped more than 500 global FinTechs to connect with over 80 regional and global financial institutions through an online marketplace to co-create innovation solutions. Third, working closely with the industry to build up skills and capabilities has been among the more unique strengths of our financial sector. It also ensures that Singaporeans are able to benefit from the new jobs created. For example, MAS helps financial institutions build their pipeline of talent through programmes such as the Technology in Finance Immersion Programme. Ultimately, the continued growth of Singapore's financial centre depends on how well we connect global markets, support Asia's development, and serve Singapore's economy.”
“Following the recent G7 agreement to endorse a global minimum tax rate of 15%, the Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) has released a statement on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. One of the proposals is a global minimum tax rate of at least 15%. As at 1 July 2021, 130 countries and jurisdictions, including Singapore, have agreed to the statement. However, the detailed design elements and implementation plan for these new rules have yet to be finalised. Singapore will continue to be actively involved in these international discussions, and will engage the industry as the new rules take shape. A conducive tax environment in Singapore has been supportive of the growth of our financial sector. However, it is not the decisive factor. A robust regulatory regime, high quality infrastructure and a skilled workforce, have been far more important. When there is full international agreement on a global minimum tax rate, the expectation is that a financial institution that is subjected to the global tax rules will be taxed at the same minimum rate regardless of where its activities are located. This means that the non-tax factors that I have mentioned will play an even more significant role in ensuring our financial centre stays competitive. Let me illustrate with some examples. First, providing a conducive regulatory environment for businesses to grow remains key, especially so for new and innovative activities. A good example is the Payment Services Act, which provides for payment service providers to innovate and grow in Singapore while being regulated in a risk-proportionate manner.”
“For example, restricting the ability of insurers to adjust coverage and premiums for higher-risk individuals could lead to higher premiums for policyholders who are of lower-risk. MAS expects insurers to deal fairly with all customers, which means assessing all applications carefully and clearly communicating underwriting outcomes to them. The Life Insurance Association is developing a consumer guide to raise awareness and enhance transparency of insurers’ risk assessment approach towards health insurance underwriting.”
“Under our national insurance schemes, there is no difference in coverage between persons with autism and/or mental health conditions, and those without. MediShield Life provides basic health insurance coverage for life for all Singapore Residents, regardless of pre-existing health conditions. CareShield Life, which provides basic financial support in the event of severe disability, covers all Singapore Residents born in 1980 or later. When the scheme is launched for older cohorts, they can all join if they are not severely disabled. Private insurers offer optional coverage on top of the national insurance schemes. Insurers apply the same underwriting approach to all customers, which does mean that they take into consideration their customers’ medical history, health condition and health risks arising from the condition. This is consistent with international practice. Insurers may accept or decline an application or adjust the premiums or coverage to appropriately reflect the customer’s health risk relative to those of others in the insurance pool. This ensures the insurance pool is sustainable, with sufficient funds to pay the anticipated claims. Private insurers have to base such assessments on the evidence. International research has shown that autistic persons often experience co-occurring conditions and that hospitalisation rates among them are typically higher. MAS, together with the MSF, is engaging insurers and other stakeholders on ways to improve autistic persons’ access to insurance coverage. We understand the motivation behind the suggestion to require insurers to apply standardised risk assessment criteria. But this could have unintended consequences.”
““Buy now, Pay later” (BNPL) schemes are typically offered by digital platforms to enable consumers to pay for their purchases in instalments. As in most jurisdictions, BNPL schemes fall outside of MAS’ regulations on credit, which apply to banks and finance companies. Using BNPL schemes, like traditional instalment plans, can make purchases appear more affordable. MAS shares Miss Cheryl Chan’s concern that BNPL could lead to excessive consumer borrowing, especially among youth and impulsive buyers. MAS and other Government agencies are hence examining if some form of regulation is necessary for BNPL schemes. The measures that Miss Cheryl Chan referred to will be considered as part of this study. We will examine the adequacy of existing risk management practices and safeguards against people chalking up excessive debts. Currently, most BNPL schemes are restricted to small-value purchases. Late fees apply instead of interest and the fees are typically capped instead of accruing continuously until the outstandings are paid. Further, existing limits on unsecured consumer credit will cap the spending on BNPL schemes when repayments are made using credit cards. If a regulatory framework is deemed necessary, it will be proportionate to the risks and ensure that any potential convenience afforded by these BNPL schemes are not unduly curtailed. In the meantime, MAS has worked with the media to highlight the pitfalls of taking on excessive credit, including the considerations that consumers should bear in mind before entering into a BNPL scheme. Consumers should be mindful that late fees or charges will apply for missed re-payments.”
“In 2020, 64 or 0.03% of borrowers defaulted on car loans granted by financial institutions (FIs). Twenty-three of these loans were for the purchase of used cars, which translates to a default rate of 0.01%. We understand the concern that car dealers’ practice of overtrade1 may result in financial imprudence. There are safeguards in place to mitigate this. First, FIs will check if the purchase price of the car is reasonable, by referring to car valuations from multiple, independent sources. Second, FIs conduct income and credit bureau checks on borrowers to assess their ability to service the car loans. Third, MAS is also working with relevant Government agencies to monitor car financing and market conduct practices of FIs and non-MAS regulated entities like car dealers. Where practicable, we will consider additional measures to ensure consumers’ financial prudence. We urge consumers to be cautious when car dealers offer overtrades. Before committing to a car purchase, consumers should consider their financial situation and ensure that they can afford the costs associated with ownership, including car loan repayments over the longer term. Overtrade refers to car dealers' practice of offering a higher price when customers trade in their old cars, so as to entice them to make a new car purchase and take up a car loan. As this is an indirect discount to the purchase price of the new car, it will result in a higher car loan amount based on the inflated car purchase price.”
“Some insurers offering health insurance appoint third party administrators (TPAs) to undertake a variety of claims administration services on their behalf. In their statutory submissions to MAS, insurers are required to classify TPA-related expenses directly related to claims paid, such as claims administration expenses incurred for each processed claim, as part of gross claims settled. They must classify other TPA-related expenses, such as on-going panel management fees, as part of management expenses. External auditors check whether these requirements are met, and MAS will take action on any non-compliance.”
“For instance, if an individual is in debt after having incurred investment or financial losses, he or she may be directed to Credit Counselling Singapore, which will work with them to understand their financial situation and facilitate appropriate debt repayment arrangements with their creditors.”
“MAS has repeatedly cautioned that investing in cryptocurrencies is risky and not suitable for retail investors. The prices of most cryptocurrencies are subject to speculative swings. Those who choose to trade in cryptocurrencies should therefore understand the significant risks they are taking on, and verify the credentials of the entities involved before dealing with them. This should include checking the MAS Investor Alert List which identifies businesses that have falsely purported to be licensed and regulated by MAS. Our best defence is an informed public. Earlier this month, MoneySense, Singapore’s national financial education programme, launched a campaign to raise awareness of the risks of investment scams involving cryptocurrencies and online trading. Consumers are educated to spot red flags such as the promise of quick and substantial profits. If promised returns look too good to be true, they are. MAS continues to watch developments in the cryptocurrency space and will regularly review the adequacy and appropriateness of our regulations. Consumers who suspect that a scheme involving cryptocurrencies could be fraudulent or misused for other unlawful activities should report such cases to the Police. Ms Pereira also asked how the Government will help individuals in financial distress. They can call the National CARE Hotline for support. Family members, who observe their loved ones in distress can also encourage them to call the Hotline. The CARE Officers will do their best to offer support and direct them to possible avenues for additional assistance.”
“Regarding the final part of the Member’s question, decentralised finance, or DeFi, refers to the autonomous execution of financial transactions by smart contracts deployed on decentralised blockchains, without the need for intermediaries. These smart contracts replicate the financial intermediation function normally carried out by a financial institution in providing services such as borrowing, lending or insuring. DeFi is a fast-growing part of the crypto-asset ecosystem. However, most DeFi applications are less than two years old. The viability of DeFi has not been proven and its risks are not yet fully clear. MAS has been closely studying developments in DeFi to assess its potential for broader use.”
“Project Ubin is an industry effort led by MAS to explore the use of blockchain technology and a Central Bank Digital Currency (CBDC) issued by MAS to clear and settle payments and securities more efficiently. It demonstrated that multi-currency payment and settlement across borders could be achieved in realtime, and at lower risks and costs. The industry has moved to build on the success of Project Ubin. One example is Partior, a joint venture by DBS Bank, JP Morgan and Temasek, to create a blockchain-based platform that will enable participants around the world to transact with one another in real time using different currencies. Unlike Project Ubin, Partior will be based on digitised commercial bank money rather than CBDCs. MAS continues to collaborate with the industry on potential applications of wholesale CBDCs. For example, MAS is partnering the Bank for International Settlements (BIS) Innovation Hub Centre in Singapore on Project Dunbar, which explores how different multi-currency settlement platforms could be designed to link up with one another. This aims to make cross-border payments faster and cheaper, while remaining secure. A wholesale CBDC, such as the one MAS issued as part of Project Ubin, is used solely for payments within the banking system. It is not available to the general public. A retail CBDC which can be used directly by members of the public is essentially a deposit held directly with the central bank. If a retail CBDC becomes pervasive, it could have significant implications for banks’ deposit base and, more importantly, their lending activities. MAS is carefully studying the costs and benefits of a retail CBDC and has not made a decision on this yet.”
“However, a small segment of households within the private property market could face cash flow strains. The risk of rising interest rates is a reminder that everyone should continue to exercise caution in their property purchase decisions. Buyers should assume that interest rates will rise, and be sure of their ability to service their loans before making long-term financial commitments.”
“Since the start of the year, financial markets have been anticipating a robust US economic recovery, especially in light of the country's large fiscal stimulus package and the ongoing progress in vaccinations. The bond market expects that the strong economic expansion will lead to higher inflation, and has hence pushed up long-term interest rates. Notwithstanding this, long-term rates remain near record lows. The rise in interest rates in the US should therefore be seen in the context of a strong recovery in the US economy, which will benefit the global economy and add some momentum to our own economic recovery in Singapore. The Singapore economy is projected to experience broad-based growth of 4 to 6% this year, a reversal from the 5.4% contraction in 2020. Employment and income prospects are also projected to improve this year. Singapore's domestic interest rates are largely influenced by global market movements and especially by US rates. They can hence be expected to rise going forward. If and when that happens, debt servicing costs for borrowers will also increase. However, most households should continue to be able to service their mortgage loans. This is because all property mortgages taken up since 2013 are subject to MAS' Total Debt Servicing Ratio ("TDSR") framework, which limits monthly loan repayments to no more than 60% of the borrower's income based on a 3.5% interest rate1, which is significantly higher than current rates of less than 1.5% for new private property loans2. MAS' analysis also shows that the median household’s mortgage servicing ratio would remain manageable even under a stress scenario of a 2.5%-point increase in mortgage interest rates and a 10% fall in income.”
“The number of insurance agents – comprising life, general, and composite1 – rose in the first half of the last decade, but has remained stable at around 19,000 since 2015. The breakdown by age, gender, and nationality over time, are available only for life and composite insurance agents. The majority of agents are below 40 years old. The gender balance is very even. Singapore Citizens make up about 90% of the agency force, with Permanent Residents making up most of the rest; the number of foreigners remains small at about 350. The requested statistics for insurance agents are set out in the tables below. The latest statistics on general and composite insurance agents by age and gender is set out below2. The Monetary Authority of Singapore (MAS) and the General Insurance Association of Singapore (GIA) do not make a distinction between full-time or part-time insurance agents and do not collect information on academic qualifications. Life insurance agents must minimally have a GCE "A" level certificate or an International Baccalaureate Diploma qualification or a diploma awarded by a polytechnic in Singapore, or equivalent qualifications. General insurance agents are required to have at least 3 GCE "O" Level passes or equivalent. Life insurance agents have higher minimum academic qualification requirements than general insurance agents as life insurance products are typically more complex in nature.”
“The crypto assets space is constantly evolving. MAS has been closely monitoring developments and will continue to adapt its rules as needed to ensure that regulation remains effective and commensurate with the risks posed. Investors, on their part, should exercise extreme caution when trading cryptocurrencies.”
“However, the Act provides MAS the powers to to impose additional measures on digital payment token service providers as needed. As for securities tokens, they are subject to the same securities laws as traditional securities. Hence, an exchange that enables trading in securities tokens is regulated under the Securities and Futures Act and subject to the same rules, especially on fair, orderly and transparent trading, as any securities exchange. The size of the securities tokens market today is also small. Of more than 60 Recognised Market Operators currently regulated by MAS under the SFA, only three offer the trading of securities tokens, and with very small trading volumes. Recognised Market Operators are also not allowed to offer their products to retail investors. To address the money laundering and terrorism financing (ML/TF) risks associated with cryptocurrencies, MAS has taken steps on three fronts. First, digital payment token service providers, which are entities involved in providing cryptocurrency-related services, need to be licensed by MAS. They must comply with AML/CFT requirements, such as obligations to perform customer due diligence and transaction monitoring. They are also required to file suspicious transactions reports with the Commercial Affairs Department (CAD). Second, MAS has stepped up surveillance of the cryptocurrency sector, to identify suspicious networks and higher risk activities for further supervisory scrutiny. Third, MAS and the CAD will continue to raise public awareness on the risks of investing in digital payment tokens, through our advisories and public education efforts. These advisories provide consumers with information on how to avoid being cheated or inadvertently used as mules to carry out money laundering activities.”
“Mr Speaker, Mr Murali Pillai has also filed a similar PQ for the next Sitting1. My response today will cover the questions raised by both Mr Desmond Choo and Mr Murali Pillai. There are two common types of crypto assets. First, cryptocurrencies such as Bitcoin, which may be used for payment purposes. Second, securities tokens, which are digital representations of traditional securities such as shares and bonds. The risks posed by each type are different and so are our regulatory approaches. Cryptocurrencies can be highly volatile, as their value is typically not related to any economic fundamentals. They are hence highly risky as investment products, and certainly not suitable for retail investors. MAS has issued numerous consumer advisories to warn the public of the risks of trading these products. The size of the cryptocurrency market in Singapore remains small compared to, say, shares and bonds. The combined peak daily trading volumes of three major SGD-quoted cryptocurrencies – Bitcoin, Ethereum and XRP2 – was 2% of the average daily trading volume of securities on SGX in 2020. Cryptocurrency derivatives traded through financial institutions likewise amounted to less than 1% of the derivatives trading activity on SGX. Cryptocurrencies comprise less than 0.01% of the assets in funds managed by MAS-regulated fund managers. Cryptocurrency funds are also not authorised for sale to retail investors. Exchanges offering the trading of cryptocurrencies are regulated as digital payment token service providers under the Payment Services Act. Given their limited scale, these entities are regulated primarily for money laundering and terrorism financing risks.”
“Their interest, and ours, is in having globally competitive local FIs, that can grow opportunities for Singaporeans and for our whole financial sector. That is indeed what we have been witnessing.”
“The key senior managers, including the chief executive officer, of a financial institution (FI) are appointed by its board of directors. The appointments are in turn subject to approval by the Monetary Authority of Singapore (MAS). In approving the appointments, MAS must be satisfied that the board has carried out a thorough assessment of candidates before arriving at the person they consider the best for the job, and that there are no concerns over the professional integrity of the appointee. MAS does want to see our local talents developed for senior management positions in the financial sector. As reported in Parliament recently, the number of Singaporeans in senior positions grew from 1,700 to 2,600 between 2014 and 2019, which is an increase of more than 50% in five years. Our basic approach to achieving this has been to create an enabling environment for our Singaporean talent, not a protectionist environment. We help FIs do well and grow in Singapore, enable them to hire the best talent, and encourage and actively support them to develop our Singaporeans for senior positions in the sector. This is the way to open up opportunities for Singaporeans to hold senior management positions, in both local and foreign FIs. We will undermine our local FIs if we tell them that they must appoint only a Singaporean CEO, regardless of the merits of the candidates. Our major local FIs, such as our local banks, are no longer competing mainly in the domestic market. They are operating in a fiercely competitive Asian and global market. Imposing a nationality restriction on who their boards appoint as CEOs will put our local FIs at a disadvantage. It will not be doing any favour to Singaporeans either, including those holding senior management ranks in the local FIs.”
“We should exercise utmost care when we share personal data online. Finally, Mr Supaat asked about Central Bank Digital Currencies, or CBDCs, and whether they will help consumers preserve privacy. Project Ubin, an industry effort led by the Monetary Authority of Singapore (MAS), has successfully experimented with blockchain technology for wholesale inter-bank payments and settlements, using a digital Singapore Dollar. DBS Bank, J.P. Morgan and Temasek will be jointly developing a multi-currency payments network, based on the findings from Project Ubin. Some central banks are exploring the issuance of retail CBDCs, for use by consumers. However, a highly anonymous CBDC, essentially digital cash, raises the risk that it could be used for illicit purposes such as money laundering and terrorism financing. Further, a retail CBDC effectively enables customers to hold money directly with the central bank, and could have significant implications for the funding of banks and their lending activities. The case for a retail CBDC is being assessed more carefully, beyond the consumer privacy concerns, before any large scale issuance. As one of the pioneers in experimenting with CBDCs, MAS is closely monitoring developments in digital currencies, and learning from the experiences of other central banks.”
“In the course of providing services to their customers, financial institutions (FIs) will use information from their transactions and details, in order to provide services that are more suited to the needs and wants of the customers. For instance, we can obtain better financial advice if FIs have more comprehensive information of our financial positions and commitments. The recent introduction of the Singapore Financial Data Exchange (SGFinDex) in fact enables customers to consolidate their financial data across multiple FIs and share it with FIs of their choice. Notwithstanding, entities with large amounts of customer data could potentially exploit it to restrict competition. The Competition and Consumer Commission of Singapore and Infocomm Media Development Authority have regulations in place that prevent such abuse of dominance, and protect consumers from anti-competitive business practices1. There are measures in place, such as the Personal Data Protection Act (PDPA), to ensure that the confidentiality of personal financial data is safeguarded. Under the PDPA, FIs must obtain the consent of their customers and inform them of the purposes for which they are collecting, using, or disclosing personal data. The PDPA was recently amended to criminalise the knowing or reckless unauthorised use or disclosure of personal data. In addition, FIs, including payment service providers, must adhere to cyber hygiene requirements and meet standards on technology risk management, in order to protect personal data from unauthorised access, use, or disclosure. These include encryption for sensitive or confidential customer information, strong user authentication, and data loss prevention controls. Protection of our personal data is also a personal responsibility.”
“As of end-November 2020, financial institutions (FIs) had received 2,070 applications. They had processed 1,590 of these applications and approved 85% of them. Most of the unsuccessful applications were rejected because the applicants did not meet the eligibility criterion where their incomes are significantly impacted1. As individuals taking up the reduced instalment plan will pay down their property loan over a longer period and thus incur higher interest costs, the income impact criterion had been put in place to ensure that individuals take up this option only if they really need to. Nonetheless, FIs will review each case and work out loan repayment options with individuals, even if they do not meet the income impact criterion.”
“The collaboration between PayNow and PromptPay will enable anyone who has registered for either service to send money directly from Singapore to Thailand, or vice versa, using just the recipient’s mobile phone number. This experience is similar to how domestic PayNow transfers are made today. QR code payments are not part of the PayNow-PromptPay collaboration. Should the collaboration be extended to include QR payments in future, we will ensure that the differentiation with existing QR code schemes such as PayNow QR and NETS QR is clearly communicated to prospective users.”
“MAS' Green and Sustainability-Linked Loan Grant Scheme (GSLS) aims to support companies of all sizes, including SMEs1. MAS will defray up to $100,000 of the expenses incurred by borrowers in engaging independent service providers to verify the green and sustainability credentials of such loans. While the GSLS supports the adoption of such loans, MAS recognises that the cost, time and effort of procuring the necessary sustainability advisory and assessment services may not be commensurate with the loan quantum, particularly for smaller SMEs. The GSLS therefore has another track that encourages banks to develop green and sustainability-linked loan frameworks, which will have to include eligibility criteria that are verified against internationally-recognised green and sustainability-linked loan principles. This removes the need for SMEs to develop their own customised frameworks before obtaining a green or sustainability-linked loan, and reduces the friction SMEs face in accessing such loans. Under this track, MAS provides greater funding support to banks when they develop loan frameworks that are targeted at SMEs. Expenses incurred by banks to develop, verify and report on the green and sustainability credentials of loan frameworks targeted at SMEs will be defrayed by 90%, as compared with 60% of expenses for other green and sustainability-linked loan frameworks. HSBC and OCBC have launched such green and sustainability-linked loan frameworks for SMEs. MAS expects to support more banks in developing such frameworks under the GSLS. To promote awareness and encourage take-up of the GSLS, MAS is partnering Enterprise Singapore (ESG) and banks to reach out to SMEs.”
“The percentage of life insurance policies surrendered averaged 1.1% per year during 2017 to 2019. In the first three quarters of 2020, the percentage of policies surrendered was about 0.7%. Policyholders who surrender their policies may not be able to find a policy with similar coverage at the same cost once it has been terminated. The Monetary Authority of Singapore (MAS) has put out financial education messages targeted at policyholders on the risks or disadvantages associated with surrendering or selling their life insurance policies. For policyholders who are unable to pay premiums, insurers have been providing them some support, such as offering grace period for payment and premium loans. There are also situations where holding on to a life insurance policy no longer makes financial sense. For example, when the insurance coverage is no longer required because the policyholder does not have a dependent anymore, or where the policyholder has more important alternate uses for the cash value in the policy. Under these circumstances, the policyholder may sell his policy in a secondary market for a higher cash value to a third party company, who in turn sells it to investors. These third party companies are currently not regulated in Singapore. This is similar to other jurisdictions such as Hong Kong and Japan. While they are regulated in the US and UK, the focus is on the protection of investors who purchase the re-sold policies rather than the policyholders. We will continue to monitor the market for potential risks, and will introduce regulatory safeguards if necessary.”
“SGX RegCo is reviewing the feedback received, and will be announcing the outcome of its consultation in the coming months. Third, and more broadly, the Corporate Governance Advisory Council (CGAC) will be conducting a survey of listed companies’ compliance with the Singapore Code of Corporate Governance as well as the quality of corporate governance related disclosures. The findings of the survey will be used to improve listed companies’ corporate governance practices and disclosures. Overall, our standards of corporate governance are relatively good and well-regarded, but where there are specific gaps, MAS and SGX RegCo will address them.”
“Singapore has generally fared well in studies of corporate governance. For instance, the Asian Corporate Governance Association in collaboration with CLSA Ltd. publishes a widely-followed corporate governance ranking covering 12 markets in the Asia-Pacific, including Hong Kong, Australia, and Japan. In the last two rounds of assessment in 2016 and 2018, Singapore has ranked among the top three. The recent study by the Securities Investors Association Singapore (SIAS), the NUS Business School’s Centre for Governance, Institutions and Organisations (CGIO) and the ASEAN CSR Network (ACN) is a good initiative, but with quite a narrow scope. It focuses on disclosure practices relating to the anti-corruption policy and strategy, of the fifty largest companies listed on five ASEAN exchanges. The report found that SGX-listed companies performed less well in disclosing matters such as their policies on political contributions and whether their anti-corruption policies extended to their agents or representatives. These are relevant issues in all markets, but I’m sure members would recognise that they are more salient in some markets than others. MAS and SGX RegCo take all aspects of corporate governance seriously, and are taking a number of initiatives in these specific areas too. First, SGX RegCo recommends that companies disclose their anti-corruption policy and safeguards on their websites so that the information is easily accessible to all stakeholders. Second, SGX RegCo has proposed to require listed companies to disclose whether and how they have complied with best practices on whistleblowing, such as the procedures for a whistleblower to make a report and protection from reprisal. The proposal had undergone consultation.”
“It avoids policyholders with lower risks having to pay higher premiums in order to subsidise those with higher risks. These principles are also in line with the United Nations Convention on the Rights of Persons with Disabilities, and with the rules in other jurisdictions such as the UK, Germany, Australia and Hong Kong. MAS and MSF have been engaging individuals and groups representing PWDs as well as industry practitioners in formulating the guidelines. MAS has requested the Life Insurance Association Singapore (LIA) and General Insurance Association of Singapore (GIA) to evaluate data on PWDs who have purchased health or life insurance from private insurers, to ensure that customers have been treated fairly. MAS has also asked LIA and GIA to work with relevant partners to ensure that PWDs and those with mental health conditions, as well as their care-givers, receive adequate guidance and assistance on the purchase of insurance. The guidelines will be issued for public consultation soon. The guidelines are expected to be finalised by June this year after incorporating relevant public feedback. Like all our public consultation exercises, we welcome inputs and suggestions. I want to emphasise again, however, that these guidelines are for private insurance products, which come on top of our two national insurance schemes which are available to PWDs.”
“We have two national insurance schemes – MediShield Life that provides basic health insurance coverage for life, and CareShield Life that covers basic financial support for severely disabled policyholders. Both are applicable to persons with disabilities (PWDs). Private insurers also offer PWDs a variety of life and health insurance products. They have different underwriting practices and risk orientations, and so the coverage of private insurance products varies. The Monetary Authority of Singapore (MAS) and the Ministry of Social and Family Development (MSF) have been working together with the insurance industry to ensure that PWDs are not discriminated against. In particular, MAS and MSF have been formulating guidelines for insurers to adopt fair and responsible practices towards PWDs and those with mental health conditions. Under the proposed guidelines, insurance applications from PWDs should be subject to the same underwriting policy and process applied to those without disabilities. Any differential treatment should be based on an objective assessment of information relevant to the risks to be insured, rather than the fact of a disability per se. In practical terms, this means that insurers should not turn away an insurance application merely on the basis that the applicant has a disability. Whether an application is accepted, or any difference in premium is charged, must rest on actuarial data or reliable information that is pertinent to the risks being insured. This reflects established and fair principles in insurance. Insurers must carefully consider the risks presented by each policyholder, and charge premiums that reflect the risk for each relative to those of others in the insurance pool.”