Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." On 10th September, 1973, a Government press statement made it known that as from the day following the announcement only citizens of Singapore would be permitted to purchase residential property without any restriction. This decision was arrived at after considerable thought. For many months before that, the cost of real estate had been sharply on the increase and had almost doubled over the previous year. Government was concerned about the rise and decided that it should confine its efforts at keeping down the cost of residential property, leaving the market value of commercial and industrial properties to find their levels by the interaction of factors governing supply and demand. Land is a precious commodity in Singapore. Of Singapore's total area of about 596 sq, km, or 230 sq. miles, about 65% is State land or is held by statutory boards. Only 34% or 20,540 hectares or 78 sq, miles, is still in private ownership. We, therefore, need not only to husband land more carefully but also to ensure that, in so far as residential properties are concerned, citizens of Singapore are able to purchase their own houses. While those eligible for Housing and Development Board flats are catered for, and the well-off can afford the more choice residential property, it is for the middle income groups who find housing of reasonable standards beyond their means - our teachers, administrators, lawyers, engineers, executives, civil servants, etc., those serving in the Police and Armed Forces and others - for whom every endeavour should be made to enable them to enjoy home ownership. Since 11th September, 1973, administrative control in respect of residential properties has been exercised by the Registrar of Titles and the Residential Property Advisory Committee under my supervision. This has given us an opportunity of observing the effect of control and of working out necessary procedures and rulings so that the sum total of all this experience has gone into the drafting of the Bill, which, in consequence, has been revised and amended several times. Government has felt that it should not rush headlong into a legislative measure of this nature and that account should be taken of the effect of the restriction on the property market. Thus, 16 months after the restriction was imposed, it was found that the curbs on non-citizens could be relaxed to some extent. Consequently, on 9th January, 1975, a second Government press statement was issued stating that as from the following day Government would remove restrictions on the purchase by non-citizens of flats or apartments in buildings of not less than six storeys, including the ground floor, and that such flats or apartments could be bought and sold by non-citizens in the same way as commercial and industrial properties. Non-citizens wishing to purchase other types of residential property would have to continue to seek approval in accordance with already established procedures. Sub-clause (3) of clause 2 of the Bill expressly states this particular exemption. At the time of the second press statement in January the Residential Property Advisory Committee had considered and approved 220 applications from non-citizens to purchase residential properties. Sub-clause (4) of clause 30 provides that all approvals granted from the 11th day of September, 1973, to the 11th day of September, 1975, shall be deemed to have been made under the Act. The Bill has been drafted in general conformity with the guidelines laid down by the first press statement but departs from it in certain particulars where this has since been considered necessary. It is the intention of the Government to refer the Bill to a Select Committee so that all interested bodies and members of the public will have an opportunity to present their views which will be carefully assessed. The Explanatory Statement to the Bill sets out in some detail the nature of the provisions of the Bill, and I do not therefore propose to discuss them in detail. However, I would like to touch on some of the more salient points. The Bill expressly prohibits the transfer to, or purchase or acquisition by, "foreign persons" of "residential property". These as well as a number of other expressions are defined in the Bill. It is also provided that no estate or interest many residential property belonging to a deceased person who dies on or after 11th September, 1973, shall pass to a beneficiary who is a foreign person. In the case of such residential property which would otherwise have passed to a foreign person, the legal personal representatives of the deceased person are required to sell such property to a citizen of Singapore or an "approved purchaser" within five years of the death of such deceased person and pay the proceeds, less expenses, to the foreign person so beneficially entitled. It has been found necessary to include such a provision as its omission would constitute a loophole or a method of circumventing the proposed legislation. Clauses 4 and 5 of the Bill require "foreign companies" to dispose of all the residential properties owned by them at the date of the coming into operation of the Act, i.e. 11th September, 1973 (or within such period as may be allowed by the Minister) by transferring these residential properties to citizens of Singapore or approved purchasers, un less such foreign companies are permitted to retain them by virtue of clause 16 or are exempted under clause .
22. Where such foreign companies do not dispose of such properties within that period, the Minister may direct the Controller of Residential Property to attach and sell such properties at any time after three months of the date of such notice. As soon as practicable thereafter, the Controller is required to sell the same to a citizen of Singapore or an approved purchaser and pay the proceeds of the sale, less any costs, to the foreign company concerned. I would like to dwell for a moment on clauses 4 and 5 which are important aspects of the Bill. They achieve the object of the policy as stated in the press statement of 10th September, 1973, though the means employed are, for good reasons, different. It is considered that the provisions in the Bill obliging a foreign company to dispose of Its residential property provide a more workable, less cumbersome and much less restrictive legislative framework than an approach which involves the disposal of shares held by foreign shareholders as envisaged in the first press statement. The Bill provides that where a foreign company holds residential property, it must dispose of such residential property within a period of time. However, the Minister, after considering the recommendations of the Residential Property Advisory Committee, would have discretionary power to allow the foreign company to retain its residential property as provided in clause 16 (4) (a). In the very early drafts of the Bill, an attempt was made to implement the modus operandi outlined in the press statement by adopting the device therein suggested which involved requiring foreign companies to dispose of shares held by foreign shareholders and by making it mandatory for foreign companies to alter their memorandum or articles of association so as to prohibit non-citizens from becoming directors and also to limit shareholdings to Singapore citizens or local companies. But this approach, apart from leading to certain unintended results would create a rather untidy situation whereby the Controller of Residential Property would be obliged to dispose of many millions of shares on the Stock Exchange. This approach was finally abandoned for a number of reasons. For one thing, banks which have many millions of shares held by foreign persons, and which might wish to retain their residential property would be faced with having to dispose of their foreign shareholdings. Further, the procedure suggested could lead to large numbers of shares being disposed of on the stock market, which could well result in the artificial depression of share prices in leading counters and in the Stock Exchange generally. That procedure would also cause the unnecessary disposal of foreign shares by foreign investors who acquired the shares because of the intrinsic investment potential of the foreign company. It would seem to be harsh and unfair to oblige foreign investors to dispose of their shareholdings merely because the foreign company in which they invested happened to hold residential properties in Singapore. Such properties would constitute only a small percentage of the total assets of the foreign company. There were also a number of other reasons for abandoning the original approach which I do not now propose to discuss, but what finally persuaded us to adopt the approach in clauses 4 and 5 of the Bill as now drafted were the advantages of this method which are threefold, namely:- First, the forced sale is in respect of residential properties only (which is, in fact, the Government objective); foreign shareholdings in these companies would not, therefore, be affected once the residential properties are sold as required by these clauses; further, under clause 16, the Minister would have a discretion, where the circumstances so warrant, to permit foreign companies with foreign shareholders to acquire, purchase or retain any specific residential properties; Secondly, administratively it would be much easier for the Controller of Residential Property to deal with property transfers rather than share transfers which it would be best for a civil servant not to handle; and Thirdly, it is generally likely to cause less dislocation and upheaval in the foreign companies concerned and in the stock market. It should be noted that foreign companies only, but not foreign natural persons or societies, are required to dispose of residential properties vested in them as at 11th September, 1973. Such natural persons and societies will be required to obtain approval for the purchase of properties after that date. Foreign persons who are permanent residents or who are of economic benefit to Singapore or who have professional qualifications or experience advantageous to Singapore may be granted approval to purchase residential property for their own occupation as dwelling houses. Similarly, foreign companies which are of economic benefit to Singapore and intend to purchase or retain residential property for occupation by their key personnel, may also be granted such approval. Turning now to clause 14, we find that it follows the intent of the first press statement in providing that residential properties may not be purchased or acquired by a citizen or an approved purchaser as a nominee of a foreign person, but departs from the press statement in not providing in the Bill that the nominee citizen is to be charged income tax on the value of the property. Apart from anything else, such a "taxing" provision could be rendered ineffective or easily circumvented by the Singapore citizen disposing of the residential property in question and pocketing the proceeds and there would be no means whereby the Government could recover such proceeds. A better approach, it is thought, is to provide that any citizen, approved purchaser or foreign person who contravenes this provision should be liable to the general penalty set out in clause 25. It will thus be seen that Government's initial thoughts on the method of implementation have not been carried through where more appropriate methods have subsequently emerged. Further amendments may also be necessary in the light of fresh information laid before the Select Committee. Representations thereto on every aspect of the Bill would be welcome as we are anxious that the legislation which is finally enacted should be workable and beneficial to the Republic as a whole. It is possible, for instance, that representations may be received on the effect on the property market of the implementation of clauses 4 and 5. Could all the relatively expensive residential properties appearing on the market within this period as a result of this provision be beyond the reach of most Singapore citizens, particularly in this present recessional state which is so vastly different from the economic situation obtaining in 1973? Could our economists and financial and property experts advise whether there is or is not a danger of foreign companies being unable to sell choice residential properties they are legally required to sell to Singapore citizens within the required period? Should we therefore exercise caution and keep in abeyance or suspense clauses 4 and 5 and related, clauses and not bring them into operation until a later date? The commencement clause, that is clause 1, would then need to be amended and some tidying up done at the Select Committee stage to render that clause accurate. Perhaps these are unnecessary fears but changed economic conditions do warrant some caution and a careful appraisal of these and other provisions in the Bill. The position of diplomatic and consular missions and religious groups in Singapore (as stated at clause 20) is that they will not be required to follow the formal procedure for obtaining approval as required under clause 16 but will nonetheless have to "seek the permission in writing of the Minister" before purchasing residential property. Clause 21 sets out the position of housing developers who, before purchasing an estate or interest in any residential property, will be required to obtain from the Controller of Housing a "qualifying certificate". The Minister's power to exempt, which is contained in clause 22, would be exercised in circumstances which warrant exempting any person, body or property who or which would otherwise come within the ambit of this legislation. The savings provision at clause 23 makes it clear that the Act is not applicable in certain specific instances. For example, foreign persons are not prevented from entering into a tenancy agreement for the occupation of residential property so long as the agreement does not exceed a term of seven years at any one time. Further, a permanent resident married to a citizen is not precluded from purchasing a flat or house sold under Part IV of the Housing and Development Act (Chapter 271) if the Board has consented to such purchase. The general penalty provided in the Bill for any contravention or failure to comply with any of the provisions of the Bill for which no penalty is expressly provided is, on conviction, a fine not exceeding $5,000 or imprisonment for a term not exceeding three years or to both such fine and imprisonment. Before I conclude I would, once more, like to emphasize that the Bill is to be referred to a Select Committee, that adequate time will be given for the Bill to be studied, and further that all represen- tations made to the Select Committee will be given very careful consideration. Sir, I beg to move.