Hansard, 1996-07-12

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parliament to which they have been appointed) for the periods stated:- Mr S. Dhanabalan -- from 29th May to 1st June, 1996. Dr Yeo Ning Hong -- from 30th May to 24th June , from 30th June to 2nd July and from 17th to 28th July, 1996. Assoc. Prof. Walter Woon -- from 1st to 21st June, 1996. Dr Aline K. Wong -- from 2nd to 4th June and from 24th June to 7th July, 1996. Dr John Chen Seow Phun -- from 2nd to 3rd June, from 10th to 15th June, from 16th to 19th June, from 15th to 19th July and from 26th to 28th July, 1996. Prof. S. Jayakumar -- from 2nd to 8th June, from 16th to 18th June, from 24th June to 1st July, from 19th to 25th July and from 27th to 28th July, 1996. Mr Loh Meng See -- from 3rd to 17th June, 1996. Mr Charles Chong -- from 3rd to 9th June, 1996. Encik Ibrahim bin Othman -- from 3rd to 5th June, from 9th to 14th June and from 2nd to 6th July, 1996. Mr K. Shanmugam -- from 3rd to 7th June, from 17th to 20th June and on 12th July, 1996. Mr Lee Yock Suan -- from 4th to 11th June, 1996. Mr Chng Hee Kok -- from 4th to 5th June, 1996. Dr Tony Tan Keng Yam -- from 5th to 9th June and from 13th to 23rd June, 1996. Dr Hu Tsu Hau, Richard -- from 5th to 7th June, 1996. Mr Lau Ping Sum -- from 5th to 9th June and from 15th to 21st June, 1996. Dr Wong Kwei Cheong -- from 6th to 7th June, from 10th to 15th June, from 20th June to 5th July, from 10th to 12th July and from 15th to 16th July, 1996. Assoc. Prof. Low Seow Chay -- from 6th to 16th June, 1996. Mr Leong Horn Kee -- from 7th to 18th June, from 8th to 13th July and from 22nd to 24th July, 1996. Dr Beng Kian Lam , Arthur -- from 7th to 10th June and from 9th to 11th July, 1996. Mr Peter Sung -- from 7th to 27th June, 1996. Mr Wong Kan Seng -- from 8th to 19th June, 1996. Encik Othman bin Haron Eusofe -- from 8th to 20th June, 1996. Mr Abdullah Tarmugi -- from 9th to 15th June, 1996. BG Lee Hsien Loong -- from 10th to 15th June, 1996. Dr S. Vasoo -- from 10th to 20th June and from 1st to 5th July, 1996. Mr Davinder Singh -- from 10th to 18th June, 1996. Assoc. Prof. Ho Peng Kee -- from 10th to 12th June, 1996. Mr Matthias Yao Chih -- from 10th to 22nd June, 1996. Mr Kenneth Chen Koon Lap -- from 10th to 14th June, 1996. Dr Ker Sin Tze -- from 10th to 13th June and on 17th June, 1996. Mr S. Chandra Das -- from 12th to 19th June and from 24th to 26th June, 1996. Mr Tan Soon Khoon -- from 13th to 15th June and from 1st to 4th July, 1996. Mr Chay Wai Chuen -- from 13th to 21st June, 1996. Mr Lim Boon Heng -- from 15th to 26th June and from 10th to 13th July, 1996. Mr Mah Bow Tan -- from 16th to 17th June, from 21st to 23rd June, from 1st to 2nd July, from 14th to 16th July and from 24th to 25th July, 1996. Encik Sidek bin Saniff -- from 17th to 20th June, 1996. Mr Bernard Chen -- from 18th to 28th June and from 7th to 11th July, 1996. Mr Teo Chong Tee -- from 18th to 25th June, 1996. Mr Lew Syn Pau -- from 18th to 21st June, from 1st to 4th July and from 7th to 10th July, 1996. Encik Mohamad Maidin BPM -- from 20th to 28th June, 1996. Dr Ow Chin Hock -- from 21st June to 3rd July, 1996. BG George Yong-Boon Yeo -- from 22nd to 24th June and from 17th to 23rd July, 1996. Encik Yatiman Yusof -- from 23rd to 30th June and on 5th July, 1996. Mr Chin Harn Tong -- from 23rd to 30th June, 1996. Mr Heng Chiang Meng -- from 25th to 27th June and from 23rd to 31st July, 1996. Radm Teo Chee Hean -- from 27th to 30th June and from 10th to 17th July, 1996. Dr Ong Chit Chung -- from 27th to 29th June, 1996. Mr Choo Wee Khiang -- form 28th June to 4th July, 1996. Dr Wan Soon Bee -- from 30th June to 3rd July and from 7th to 10th July, 1996. Mr Zulkifli bin Mohammed -- from 30th June to 4th July, 1996. Dr Koh Lip Lin -- from 1st to 6th July, 1996. Mr Lee Yiok Seng -- from 2nd to 6th July, 1996. Mr Koo Tsai Kee -- on 1st July, on 12th July and from 14th to 22nd July, 1996. Mr Goh Chee Wee -- from 7th to 14th July, 1996. Mr Stephen Lee Ching Yen -- from 11th to 14th July, 1996. Mr Lee Kuan Yew -- on 12th July, 1996. Mr Peh Chin Hua -- from 13th to 18th July, 1996. TAN SOO KHOON Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the date stated: 20th June 1996 (i) Departmental Titles (Alteration) (Amendment) Bill 1996, (ii) Banking (Amendment) Bill 1996; and (iii) National Parks Bill 1996. TAN SOO KHOON Speaker Parliament of Singapore

asked the Prime Minister whether the Electoral Boundaries Review Committee has been appointed.

Mr Speaker, Sir, the answer is No.

Sir, when is the Committee expected to be appointed?

Mr Speaker, Sir, some time after my National Day Rally. And it will be done before April next year.

Sir, is the Prime Minister saying that if the Committee is appointed it will take such a long time to complete its work by next April?

I did not say that. What I meant was the Committee would be appointed after the National Day Rally and before April next year.

How long does the Committee expect to complete its work -- three months or six months?

If we go by precedents, I think it may take two to three months for the Committee to finish its work. Of course, if the Committee works overtime, I suppose it could do it within one or two months.

Is the Prime Minister saying that the Committee would need a minimum of two months to complete its work?

I would not know. If you go by previous experience, it could take one to two months or two to three months. I think what the Member is actually fishing for is when the election will be held. Am I right?

No.

In that case, I would not give him an answer then.

Would the Committee be asked to look into the possibility of increasing the number of constituencies?

I have not yet decided on the terms of reference for the Committee. I suppose we will follow the usual terms of reference as in the past. If the voter population has increased, we will certainly ask the Committee to look into the possibility of increasing the number of seats. But nothing has been decided yet.

Would the Prime Minister agree, when he appoints the Committee and sets down the terms of reference, to make public the terms of reference for the Committee?

I will follow what we have been doing all these years, ie, appoint the Committee with a certain set of terms of reference. When the Committee's report is out, it will be tabled before Parliament and made available to Members of Parliament. I will not do anything different from previous practices.

Sir, it seems to me that just now the Prime Minister wishes to offer some suggestion on the date of the election in connection with the question I asked. I would appreciate it if he could proceed to tell us.

Yes, I can tell him that it will be after August and maybe a few weeks before April next year.

asked the Prime Minister whether the investigation by the Corrupt Practices Investigation Bureau into the bribe scandal involving Keppel Shipyard and an employee of Exxon has been completed.

Mr Speaker, Sir, the CPIB's investigation is actually an extension of an earlier investigation by the Fraud Squad of the Hampshire Constabulary of the United Kingdom. Through the cooperative efforts of both CPIB and the Hampshire Constabulary, Van der Horst, the Repair and Technical Manager of Exxon Corporation's Southampton-based subsidiary, Petroleum Shipping Ltd, has already been charged in the UK for accepting bribes totalling £1.6 million (S$3.4 million) from Keppel Shipyard. Van der Horst pleaded guilty and was sentenced to three years' imprisonment which he is currently serving. The CPIB, however, has not completed its own investigation into the matter. It will only be able to make a recommendation on what action to take against the involved parties after completion of the investigation.

Sir, roughly, when will the investigation be completed?

I do not know the exact answer because the CPIB is in the process of doing it and it has not given me an indication as to when the investigation will be completed.

When it involves $3.4 million, could the House be told how this was entered in the books of Keppel Shipyard?

I would not know. As I said, the CPIB is in the process of investigation and I cannot go beyond what I have told him at this moment. When the investigation has been completed, further questions can be asked and the details can be given.

asked the Prime Minister whether the Public Service Division will revise the reimbursement of dental claims by civil servants.

Mr Speaker, Sir, civil servants may claim reimbursement for dental treatment at a Government or private dental clinic on a 50% subsidy basis, up to a maximum cap of $70 per year. Data on actual claims submitted show that the $70 claim limit is more than sufficient for the present because the average claim size is only about half this amount.

asked the Minister for Labour (a) whether the Central Provident Fund (CPF) Board will consider computing the monthly interest on CPF savings in the members' accounts based on the average daily account balance instead of the minimum account balance for the month; and (b) whether the monthly interest on CPF savings will be credited into members' accounts monthly.

Mr Speaker, Sir, the interest paid by the CPF Board for savings in the Ordinary and Medisave Accounts is computed on a monthly basis and the rate is pegged to the average of the savings and 12-month fixed deposit rates of the Big Four local banks. Although the CPF savings are readily withdrawable by CPF members for housing, medical and investment needs, not unlike deposits in savings accounts, the CPF interest rate has been consistently higher than the banks' savings rates. Furthermore, while banks may pay daily interest rates on savings deposits, they do not guarantee a minimum interest rate of 2.5%. Hence, during periods when the average of the savings and 12-month fixed deposit rates dips below 2.5%, CPF Board continues to pay members the guaranteed interest of 2.5%. This was the situation between July 1993 and December 1994. It is therefore not appropriate to compare the CPF Board's practice with that of banks. Sir, as the CPF Board's present interest formula and computation provide a guaranteed and reasonable rate of return to its members, it is unnecessary to review the basis for computing and crediting interest rates for CPF balances.

Sir, does the Minister agree with the present method of computation under which any amount withdrawn on the last day of the month would not earn any interest between the first day of the month and the date of withdrawal? In other words, if the withdrawal is made on the 30th, then no interest will be earned even for the first 29 days of the month?

Mr Speaker, Sir, I think we should look at the system in totality rather than on individual cases. The CPF Board's interest rate is already higher than what the banks normally pay out for savings in the savings accounts. On top of that, for the participants of the CPF investment scheme, they can always programme their withdrawal so that it is after the monthly interest computation period. In fact, the CPF Board notes that many of its members participating in the investment scheme tend to withdraw more money than they actually need to purchase shares. As a result, the Board had to institute a mechanism since last year to sweep back all the unused CPF savings that are deposited in the members' investment accounts and hence earning less interest than what they would earn if they had been left with the members' CPF accounts. On balance, I think the present system is fair. The CPF Board offers its members an interest rate which is already higher than what they would earn in the savings accounts in the commercial banks.

asked the Minister for Finance whether a review has been made on the rebates granted to 3-room Housing and Development Board flat dwellers, in terms of rental, service and conservancy charges as well as the rebates on public utilities bills; and, if so, whether he will inform the House of the outcome of the review.

Mr Speaker, Sir, I have earlier announced that Government would review the package of rebates given to 3-room households. This was because the total benefits, including the various rebates and tax savings arising from the reduction in individual income tax rates, given to 3-room households in the FY96 Budget were comparatively lower than those given to 1-, 2-, 4- and 5-room HDB households. The reason is that 3-room flats are mainly owner-occupied and households could not be assisted through rental rebates. Also, unlike 4- and 5-room households, the majority of 3-room households would not benefit from any tax savings arising from the announced reduction in income tax rates. The Government has reviewed this and has decided to raise the total amount of rebates for 3-room households by $55. The increase is made up of two components, namely, a one-month increase in net S&C charges of about $25 after deduction of the GST offset rebate; and a $30 increase in utilities rebates to $150. The increase would bring the total rebates given to 3-room households to around the average given to 1- and 2-room households. The estimated cost of the increase is about $13 million. The extra month of S&C rebates for 3-roomers will take effect on 1st August this year. This is on top of the one which has already been given on 1st July and the two to be given on 1st September and 1st December later this year. As for the utilities rebates, they will be paid in two equal instalments for all eligible households. The first payment will be given for the September bill and the second for the November bill. As the utilities charges for each month can only be billed after that particular month, the actual cash flow will take place in October and December. Households with smaller bills will continue to enjoy the balance of the rebates until they are used up. The effects of the changes I have announced above are summarised in the Annex (Cols. 471 - 472) which has been distributed to Members of the House. Annex - Table 1: Rebates Granted in FY96 Budget ($), Table 2: Rebates Granted After Revision ($), Table 3: Schedule of Utilities Rebates (Cols. 471 - 472)

Sir, let me thank the Minister on behalf of the 3-room flat dwellers. My supplementary question is: in future, if any rebates are given, will the Minister consider making the amount of the rebates inversely proportional to the size of HDB flats, in other words, the smaller the flat the greater the amount of rebates?

It is difficult to produce an exact formula because of the way in which rebates are distributed. They are in the form of S&C rebates, so many months, rental rebates, so many months, and utilities rebates are in a fixed amount. If rebates are always given in this combination, the Member's suggestion might be possible because we can round them off using the utilities rebates. But, in general, if rebates are given in the form of S&C or rental rebates it will be difficult to follow the formula without arriving at some rather awkward situation. However, I will take the Member's suggestion into consideration.

asked the Minister for Law whether a Member of Parliament, who is a lawyer by profession, will be allowed to postpone a court hearing when it coincides with a Parliament sitting.

Mr Speaker, Sir, whether the courts will grant an adjournment of the hearing of a case on the ground mentioned by the Member, or indeed on any other ground, is a matter which is entirely for the courts to decide.

asked the Minister for Education whether the Government will consider higher funding for aided-schools, to help defray the costs of land and buildings.

Mr Speaker, Sir, the Ministry of Education has reviewed the funding formula for the building of Government-aided schools, taking into consideration the improvements in standards of school buildings and increases in construction and land costs since the current funding formula of 90:10 was set in 1990. To reduce the burden of fund raising by and for the aided schools, my Ministry will increase the capital grant rate for land premiums and building costs to aided schools and junior colleges from 90% to 95% with immediate effect. This halves the amount of funds to be raised by aided schools for standard school facilities and land premiums.

Mr Speaker, Sir, I want to thank the Minister for the very generous revision. I would like to ask whether the Government would consider giving longer land leases, 60 years or 100 years, to the aided schools. At present, some schools are on a 30-year lease.

I think a 30-year lease is adequate for school purposes and the schools have been able to function within this limit. If there is a need to renew the lease and there is no more urgent need for the land, I am sure the land would be made available. But this question really should be answered by the Land Office.

asked the Minister for Education whether the Mechatronics course will be introduced into the universities to enable students who have completed the 3-year diploma course in polytechnics to continue pursuing this course to obtain a degree, and if this course is being pursued by students in foreign universities, whether the degree will be recognised by the Professional Engineers Board in Singapore.

Mr Speaker, Sir, Mechatronics is a discipline which evolved from the growing trend in technology to merge electronics engineering with mechanical engineering. It is a multi-disciplinary activity involving the integration of mechanical devices, actuators, sensors, electronics, intelligent controllers and computers. The Mechatronics courses at the polytechnics, like other courses, are designed to enable their graduates to meet the needs of industry. The diploma may be accepted for admission into the second year of Mechanical Engineering and Electrical Engineering courses at NUS and NTU if the candidate meets the admission requirements. The universities currently do not have plans to introduce a Mechatronics course at the undergraduate level. The Professional Engineers Board in Singapore is the professional body which sets the criteria and guidelines for recognition of Engineering degrees for purposes of registering its members. It is up to the Board to decide whether to recognise any foreign Mechatronics degree.

asked the Minister for National Development what the specific plans are for the development of Executive Condominiums and when the first few lots of the Condominiums will be ready for occupation.

Mr Speaker, Sir, for a start, my Ministry has identified six sites for the development of about 2,100 units of Executive Condominiums in the first year. These sites are at Pasir Ris, Jurong East, Simei, Tampines, Bukit Panjang and Choa Chu Kang. Pidemco, the first developer appointed under the scheme, has opened Eastvale at Pasir Ris and Westmere at Jurong East for booking. The expected date of Temporary Occupation Permit is 25th June 2000. A site for 602 units of Executive Condominiums at Simei has been allocated to NTUC. Singapore Technologies plan to build about 700 units of Executive Condominiums at Bukit Panjang and Choa Chu Kang. Pidemco will develop about 300 units in Tampines. All these projects are still in the design stage and the completion dates have not been finalised.

Does the Ministry intend to have these flats sold at more or less the same prices as for Eastvale and Westmere?

The price for each project will have to depend on the market conditions prevailing at the time of the launch. The first two projects showed that the price set at $400 per sq ft was fair and reasonable, and Singaporeans have responded positively.

With the release of these Executive Condominiums, what is the Ministry's assessment regarding the market for private condominiums? In particular, would the Ministry assess that it actually has a dampening effect on the price of similar types of private condominiums?

The Executive Condominium Scheme was conceived as a way to help Singaporeans to own properties, particularly that group who now find private properties beyond their reach. So it is to help the so-called "sandwich" group. As a result of the restrictions on the Executive Condominium, the land prices and therefore the selling prices of the Executive Condominium can be priced more competitively. In a sense, this is a separate segment of the market compared to those who are buying private property, particularly those aiming for freehold private property in choice areas. We are still studying the income profiles of the applicants for the first two projects and analyse which segment of the income they come from. Then we will have a better feel whether the Executive Condominium is drawing demand from the segment that we are aiming to help or is drawing demand from that segment which could have afforded private condominiums with their own resources.

asked the Minister for National Development whether there will be further policy changes to assist young couples to be allocated new flats earlier and to reduce financial outlay of those buying resale flats.

Mr Speaker, Sir, the Registration for Flat System introduced in October 1994 recognises that first-timer applicants have more urgent need over upgrader applicants in getting a flat. Hence, 60% of the flat supply in non-mature estates are apportioned to first-timers and 40% to upgraders. With about equal numbers of first-timers and upgraders currently in the queue, the allocation of HDB flats already favours the first-timers as they will get their flats earlier than the upgraders. HDB is monitoring the situation and will adjust the allocation proportions, if necessary, in future. In addition, rather than queue for new flats, first-timers can also choose to buy resale flats, with the help of the CPF Housing Grant. The grant quantum is $40,000. It is $50,000 for those who purchase a resale flat near their parents' home. This scheme is very much more attractive than before. HDB will also continue to monitor the scheme and will refine it, if required.

Sir, would the Minister review particularly the waiting time for first-time young couples applying for flats? The second supplementary question is whether the Ministry would actively review the burden of cash outlay, particularly for young couples who are purchasing resale flats, so that we could encourage more young couples to live nearer their parents.

We are monitoring the waiting time for all categories, whether they are first-timers or upgraders, and we will have to adjust if the situation calls for it. As regards the need for cash upfront, since 1995 my Ministry has made many modifications to the procedures so as to minimise the need for cash upfront, particularly for first-timers who are buying resale flats. For example, we have brought our valuation closer to market. We have allowed back-to-back transactions for upgraders. We have allowed 10% downpayment for certain categories. We have allowed 5% downpayment for those with very low income. So there are many measures to help first-timers, particularly the low-income families, to buy their flats. But I must stress that buying a property is a major investment decision of any family and therefore they should build up their savings resources for this very big investment decision. Young couples should not expect to be able to buy a property without setting aside cash savings for this very major investment decision.

asked the Minister for Health, in 1994 and 1995, how many patients were admitted to B2 or higher class wards in Government restructured hospitals such as Singapore General Hospital, Toa Payoh Hospital, Tan Tock Seng Hospital and Kandang Kerbau Hospital due to C class beds being not available at the time of admission.

Mr Speaker, Sir, the number of C class patients who were lodged in B2 or higher class wards in 1994 and 1995 was small. It ranged from none to very few in a year in most of the acute public sector hospitals, such as Toa Payoh Hospital, the National University Hospital, Alexandra Hospital and Changi Hospital, to about two a day in SGH and three to four a day in Tan Tock Seng Hospital. The demand for beds of the various classes is closely monitored. It covers demand by patients for beds of lower class as well as for beds of the higher classes. Bed provision is adjusted, if necessary, to meet the changes in demand. When bed occupancy is high with the efficient use of beds, there can be situations when there is a shortage of beds in certain wards, because of the need to designate wards by gender, by class and, at times, by medical specialty. More C class beds will be added if there is a demand for them.

Sir, my question was: what was the number in 1994 and 1995? I think the answer the Senior Minister of State gave was on the number of patients per day. But I would like to know what is the total number in 1994 and 1995.

I am afraid I have only got the average number per day. But if he can just multiply it by the number of days in a year, he can get the total number.

Sir, my question was: what was the total number in 1994 and 1995? The question was very clear and I do not understand why the Senior Minister of State gave me an average, and I do not think I could see the full picture in terms of the number and whether there are sufficient C class wards. Anyway, I would also like to ask whether the Ministry of Health segregates the figures of C class ward patients who were admitted to B2 or higher due to (1) either there was no bed available at the time of admission; or (2) because certain treatments were not available in C class ward. Will the Senior Minister of State be able to highlight this?

I am sorry for the not-so-specific answer to his question about the number in 1994 and 1995. If there are no C class beds available for patients at the time of admission, they will be lodged in B2 class. And if there is a C class bed available later, the patient can downgrade to C class ward. If there is no C class bed available for the length of his stay, then the patient is requested to pay at B2 rate. But if he cannot pay, he can always request for downgrading and the Medical Social Worker would look into it. If he is in financial difficulty, he can be helped by Medifund or waiver. What is the exact nature of the Member's second question, please?

Sir, my second question was whether the Ministry segregates the figures of patients who were upgraded at the time of admission due to unavailability of C class beds and the other situation where certain treatments were not available in C class.

The other class of patients would be told at the point of admission, especially if it is an elective case or elective surgery, that for certain sub-specialities, C class bed is not available. But this situation applies only in very few tertiary sub-specialities in SGH. The figures I have do not segregate between these two. But further to my point, my answer to his question about the number of patients not being able to be admitted to C class because of shortage of beds, I think the picture per day is actually a more accurate picture because the hospital has to watch bed turnover and bed occupancy per day. So at the time of admission, it depends on that particular day. I think this is a clearer picture in answer to his question. But in any case, I apologise for not giving him the exact figure.

Sir, I do not quite agree. Because if you know the exact figure for a year, then you can track the trend, rather than per day or based on admission. Sir, the Senior Minister of State has mentioned just now about patients who are upgraded to B2 or higher class if C class beds are not available and, of course, they can apply for Medifund or waiver. My question is: if a patient at the time of admission requested to be admitted to a C class ward, and because there was no C class bed available and was put into a B2 class ward, will he be charged at C class rate?

I have already answered that question. If he requests to be admitted to C class bed and there is no C class bed available at the time of admission, then he will be put into B2 class. He will be asked to pay at B2 rate because he, in fact, consumes B2 class services. If he cannot pay, he can apply to downgrade to C class

Sir, for instance, at the time of admission, a patient was upgraded to B2 class and stayed for three days. On the fourth day, he requested to be downgraded to C class. Altogether, he stayed in hospital for five days. For the total hospital bill, will he be charged based on C class rate or B2 rate?

For the first three days when he stayed in B2 class, he is charged at B2 rate. For the last two days, when he was in C class, he is charged at C class rate.

What happens when a patient says that he does not want to apply for Medifund? Because, to qualify, he has to meet the criteria. If a patient does not qualify for Medifund and his intention is that he wants to stay in a C class ward, but he is being upgraded and asked to pay B2 rate, is this fair? Because it is not the patient's choice. Because of circumstances, he is upgraded and thereby asked to pay a higher rate. Is this fair?

He is staying in a B2 ward and he consumes the services provided to him at B2 rate. So it is not a question of fairness. Also, from the point of view of the hospital, it is impossible to predict, on a daily basis, how many patients would request to go to which class of ward.

Sir, would the Senior Minister of State please tell the House whether there are C class beds available for the speciality of burns?

No. There are no C class beds for burns patients at SGH. This is a highly specialised sub-specialty and it is not possible to have that kind of ward and medical sub-specialisation where we can provide for C class beds.

Sir, would the Senior Minister of State agree that many of the patients who sustain burns, especially children, come from the poorer families? Medically, it is accepted that many of the children who sustain burns do come from the lower-income families. Would the Senior Minister of State agree that there is a need, where burns are concerned, for C class beds?

I do not see any logical reason why the C class wards would be occupied specially by children from the low-income families. I think it caters to all families from all kinds of backgrounds. But, as I said, if the patient or his family cannot afford to pay, he can always apply for a waiver or Medifund help.

Sir, is the Senior Minister of State aware that burns usually occur to children from the low-income families because of the lack of supervision? I would like to tell the Senior Minister of State that this is from my own personal knowledge and having worked in a Burns Unit for quite a few years.

Sir, I can only take note of the Member's concern. I think this supplementary question is a bit out of the original question.

You are right.

asked the Minister for Health whether there is any shortage of house officers in approved hospitals and, if so, what measures are being taken to remedy this.

Sir, house officers are deployed to public sector hospitals for the purpose of training so as to enable them to be fully registered medical practitioners. Over the last five years, the number of house officers posted to public sector hospitals has remained constant at about 170. The distribution of house officers to public sector hospitals is determined by the number of approved training positions and not by service requirements. House officers, however, do contribute to service in the course of their training, such as performing night duties, and so on. To ensure that the service workload of house officers is reasonable, the Ministry of Health has issued guidelines to the hospitals to pool the duties of house officers with junior medical officers, when necessary.

Would the Minister have, in hand, figures to show how many Singaporeans who go abroad to study medicine come back to do their housemanship in Singapore for the last three years?

I do not have the figures on Singaporeans who come back to do housemanship for the last three years.

asked the Minister for Communications (a) how the Certificate of Entitlement (COE) quota allocations are made among the various categories of vehicles; (b) whether the COE system contributes to a steady increase in the population of bigger capacity cars in proportion to those of smaller engine capacities and, if so, whether this is a desirable trend; and (c) whether his Ministry intends to try out the-pay-as-you-bid system for COE which was proposed long ago.

Mr Speaker, Sir, the COE quota every year is made up of two components: (i) Additional COEs representing the allowable increase in the vehicle population which is then distributed among the different vehicle categories according to their respective proportion in the vehicle population; and (ii) Replacement COEs from vehicles which are deregistered in the previous year, 75% of which are put back into their respective vehicle categories. The remaining 25% are pooled into the Open Category, which can be used to register any type of vehicle. The Open Category is to ensure that the relative proportions of different vehicles in the total vehicle population is not fixed for all time. By allocating some COEs which can be used to register any type of vehicle, the Open Category allows market forces to determine the vehicle mix. This way, the vehicle population truly reflects what the market wants. The method of allocating COEs among the different vehicle categories has remained unchanged since the COE system was introduced in May 1990. From 1990 to 1995, the population of cars above 1600 cc grew by 72% while the population of cars of 1600 cc and below grew by 13%. This shows an increasing demand for bigger capacity cars during this period. This trend is also reflected by the higher number of "open" category COEs being used for registering bigger capacity cars. The higher growth in the number of bigger capacity cars is simply market forces at work. It shows that more and more people are able to afford bigger and better cars. This is a result of a healthy economy over the last five years and reflects how some people choose to spend their money. Whether this is a desirable trend or not is not for me to comment. As for the "Pay-As-You-Bid" system, this matter was considered by the Committee to Discourage Double Transfers, chaired by Mr Heng Chiang Meng. If the Member may recall, in March 1994, the Government accepted the recommendations of the Committee and implemented, on a trial basis, measures to curb the practice of double transfers. To allow the Committee to assess the impact of the measures more accurately over the next one year, the Government then decided to consider "Pay-As-You-Bid" only after the completion of the double transfers trial. The Committee studied the results of the one-year trial and found no conclusive evidence to show that the measures to curb double transfers had any impact on COE prices. The stabilised COE prices over the past year was likely due to other factors, such as the MAS's restrictions on car loans and slower stock market which affected demand. Sir, the number of Singaporeans that can own cars is ultimately determined by how many COEs are issued. Curbing double transfers or implementing "Pay-As-You-Bid" does not change the number of COEs or the number of people owning cars. So our immediate tasks are to regulate the demand for driving and to improve public transport for those who do not drive. Our traffic conditions will then improve, and we will have scope to release more COEs, which in turn will stabilise COE prices.

Sir, I thought that the COE was part of the quota system. Now the Minister has said that additional COEs are allowed. In other words, this will be breaching the quota. Can the Minister explain further?

Sir, the additional COEs that I referred to are the COEs that are allowed under the quota system. Based on the increase in our road space and based on the increase in the number of new roads and expressways that we have built, we have set a figure of about 3% a year to be the allowable increase. So when I referred to the additional COEs, I am referring to this additional 3%. But on top of that, in addition to this 3% increase, we also recycle COEs. We recycle the COEs from those cars which are deregistered and these are also included in the COEs. So this is why I tried to explain that there is a quota. But this quota is made up of two components, the additional 3% plus the replacement or recycled COEs. The recycled COEs do not breach the quota because it is a one-for-one replacement.

This 3% allowable COE is based on what figure? Is it for that month or what?

The Ministry sets the quota at the beginning of each quota year which is May. There is a 3% increase which is based on the vehicle population as at that point in time.

Do you vary the 3% figure and give a further increase after May?

When the quota is set for each quota year, that quota is fixed for the whole year. However, as a result of changes in the transportation conditions and perhaps because of further restrictions on the usage of vehicles, the 3% figure is varied from time to time. I will give the Member an example. When we introduced the Whole Day Area Licensing Scheme which further restricted the usage of vehicles and as a result of which the roads were freer, the number of COEs allowed was increased slightly from, say, 3% to something like 3 1/2%.

Would the Minister agree that the COE system now favours the bigger cars since the Open Category is mainly used to purchase bigger cars? This is also reflected by the lopsided value of the COE at the moment where the COEs for bigger cars are lower and the trend is actually going up for Category 2. Would the Minister agree that the COE system now favours the bigger cars, ie, the larger capacity cars?

Sir, this question of equity has been addressed when we first designed the COE system in that we segmented the total COEs into four categories: Category 1 for cars below 1000 cc, ranging to Category 4 for cars above 2000 cc, the so-called big cars. Within each category, we have endeavoured to try and put in the number of COEs which reflects more or less, at that particular point in time, the number of vehicles of that category in the population. That is the supply of COEs in each category. The demand for COEs and the prices in each category will then, in turn, depend on how many people are in the market for cars in that category. So the fact that COE prices in a particular category are high or low is simply a reflection of how many people are in the market for cars in that category. For example, if COE prices for the large cars are low, it simply means that there are less people bidding for COEs in that category, and vice versa. So the COE system per se, in itself, does not favour any particular category of cars, whether big or small. We have tried to build in some equity considerations, in that we do not have all the COEs in one category. If we were to do so, then I would agree with the Member that while this is a more correct, more economically rational solution, it would pit the small car buyer against the large car buyer, and the small car buyer inevitably loses out. But we have endeavoured to segment the car population in such a way that we try and minimise this. But within each category, as the Member may allude to, for example, within category 2, there is a range of cars from 1000 cc to 1600 cc. Some people will still favour buying a bigger car with a category 2 COE, but that is the market. That is what he chooses to do. Similarly, in the large category, if he chooses to buy the biggest car in that category, so be it. That is his choice and if he is able to afford it and he wants to spend his money that way, then so be it. But the COE system in itself does not try to favour the big car owners, as the Member has suggested.

Can the Minister give concrete examples of actual bids and actual numbers given for COE licences for last month?

Sir, if the Member will file a Question, I will provide him with the answers.

Sir, I would like to know how does the Ministry allocate the number of COEs for the different categories that will be available for bidding? Is it on an equal number basis?

As I explained in my answer to Mr Imram just now, the COE categories are made up of two components. The recycled COEs come from the cars that have been scrapped or deregistered. So there is no relationship to the existing proportion. If there are many big cars that are replaced, there will be many big car COEs in the system. That is one component. The second component is the additional COEs - 3%, 3 l/2% or whatever number for each particular year. This number is then distributed among the different vehicle categories according to their respective proportion in the vehicle population at that point in time when we allocate the COEs, which we do once a year.

What is the proportion and ratio for the different COE categories?

That is determined based on the different proportions of the four categories as at the start of the quota year. I do not have the figures offhand, but I will be able to give the Member the answer very easily. There is a registration table of all the vehicles of each category. So it is a very transparent system in that respect.

Sir, can I get a clarification from the Minister? He mentioned recycled COEs. The life of a COE is 10 years. What does he mean by "recycled" COEs? If a person has used his COE for three years and gives up his car, does it mean that the balance of seven years is recycled?

Sir, another word for "recycled" will be replacement. For cars that are replaced or scrapped and sent to National Iron and Steel Mills or exported, a scrap certificate is given and is delivered to the Land Transport Authority (LTA). The LTA will take that particular vehicle off the vehicle register and, in return, issue one more COE to be put into the pool. This is the replacement part. The increase in the vehicle population will come from the 3% and this is where every year we have got COEs which are more than the 3%.

Sir, perhaps the Minister may like to explain why the recycled COEs are not included in the total pool and are allocated based on the vehicle population, which may be easier for the general public to understand.

Sir, it would be logical to do that. But if we did that and if we started on that premise in 1990, today we will be having a vehicle population mix which is exactly the same as that in 1990, and similarly further down the road. So the replacement COEs, as I have explained to Mr Chiam, are not all put into the existing categories, but 25% of them are used for the Open Category. However, not all of them are put in the Open Category. Ideally, we should put all the recycled or replacement COEs into the Open Category and let the market decide for itself what it wants. However, again, we come back to this question of equity and trying to protect the small car owners from the big car owners. So we have put 25% of them into the Open Category. Of course, at this stage, the Open Category is more popular with the larger car owners, but it does not necessarily follow that this will always be so.

Sir, the Minister clarified just now that there are two portions to the allocation. The first portion is based on the population of the cars. Should the allocation not be based on the demand rather than the vehicle population?

Yes, ideally, that should be the case. If we wanted to do that, we will be putting all the COEs into the Open Category and let the market decide what it wants. But if we were to do that, I think there will be a big hue and cry because then all the small car buyers would have to bid against the luxury car buyers. So we have decided that it is equitable or fair for us to try and protect the various categories of car owners. Hence, the segmentation. But the Member is right. Strictly speaking, there should be one class of COEs, whether it is additional COEs or replacement COEs. All the COEs should go into a pool. Everybody bids and then everybody decides what car he or she wants. Is that the system that the Member is proposing?

Sir, I do not mean bidding in the Open Category. We could gauge the demand of the various categories and then allocate the first portion according to the demand of each category, rather than on the vehicle population.

As a close proxy to what the Member is suggesting, we take that demand to be what is the proportion of the vehicle population as at 1st May or 30th April before that quota year. That is the first approximation. Anything other than that, I think, would be a guesstimate. It would be trying to second guess what the market is and, more importantly, trying to second guess what the economy is going to be like. I do not think anybody in the Ministry is capable of doing that.

Sir, would the Minister consider encouraging the use of small cars for the sake of pollution control and therefore allocate more COEs in the small car category and fewer COEs for cars above 1600 cc?

Sir, the question of pollution control is a separate matter. We are always very conscious about keeping our air quality at its highest level. And this is the reason why the Ministry of Communications and the Ministry of the Environment introduced compulsory catalytic converters, introduced frequent inspections, checks and so on, to make sure that our vehicle population does not contribute to air pollution. Whether it is big or small cars, there is no strong correlation to justify the proposal that the Member has made earlier. Small cars without catalytic converters, which are not well maintained and do not go for regular maintenance and check-ups, may be more pollutive than large cars. So I think there is more to the question of pollution than just the size of the car.

asked the Minister for Communications, following the proposal to extend the life span of a taxi beyond seven years, whether he will also consider extending the validity of the Certificate of Entitlement (COE) for private cars from the present 10-year restriction to, say, fifteen years without having to pay for the prevailing quota premium on the expiry of the COE's 10-year validity.

asked the Minister for Communications whether he will consider (i) extending the validity of the Certificate of Entitlement from 10 years to 20 years and (ii) abolishing the surcharge imposed on vehicles which are more than 10 years old.

Mr Speaker, Sir, may I have your permission to take Questions 14 and 15 together as they are related?

Yes.

Mr Speaker, Mr Teo and Mr Cheo's questions seem to suggest that the lifespan of a COE should be related to the actual mechanical life of a vehicle. Let me take this opportunity to clarify that the two are quite separate. They are not inter-related. The COE is like a land lease, which is independent of the lifespan of the home or flat which sits on the land, if I may use that analogy. We have set a fixed lifespan for the COE because road space is a scarce resource. It is the common property of all Singaporeans, and it should not be given away freely, nor should it be retained by any individual in perpetuity or over a prolonged period. A 10-year COE represents a right for a vehicle to take up road space for 10 years, no more no less. When the validity of the 10 years is over, the owner can choose to renew it by paying the Prevailing Quota Premium, or he can give it up, in which case the COE will be recycled for bidding amongst all prospective owners. Amongst all the COEs released for bidding this year, more than half are such recyled COEs. This present system therefore allows ownership of COEs to change hands and to circulate amongst Singaporeans. If we were to extend the validity period of COE, say, to 15 years, 20 years or even longer, there will be fewer and fewer COEs available for future generations. The result is that COE prices will soar. Existing owners, of course, will benefit from a windfall, but prospective buyers, including younger Singaporeans, will find the aspirations of owning a car fading away. Sir, my Ministry does not intend to change the 10-year lifespan of the COE, as it is a fairer system for both existing as well as prospective car owners. As for the road tax surcharge, it is part of a package of measures to ensure that all vehicles on our roads are in good condition and do not cause excessive pollution. These measures are needed because, as a general rule, older vehicles are less roadworthy and more pollutive. Inspection statistics show that cars above 10 years old are almost twice as likely to fail the regular inspection tests on their first try compared to younger vehicles. Additional statistics from the Automobile Association, which operates a fleet to look after vehicles that break down on the road, show that the breakdown rate for cars above 10 years old is 50% higher than for cars under 10 years old. Further, older vehicles are not as well-designed and are not fitted with gadgets that make them less pollutive. For example, the fitting of catalytic converters was made compulsory only in 1994. Nevertheless, we recognise that there are owners who take great care in maintaining their cars in mint condition. That is why there is no statutory lifespan for cars, unlike taxis. In other words, car owners can keep their vehicles for as long as they like, provided they have a COE or pay the Prevailing Quota Premium. They can continue running their old cars so long as they are also able to pass the regular inspections and, of course, pay the road tax surcharge. These measures have kept the fleet of vehicles here relatively young, roadworthy and help to check pollution. We enjoy smoother journeys and better air quality. As our city becomes more compact and traffic becomes heavier, it will be even more necessary to continue with these measures. 1.30 pm

Order. End of Question Time. [Pursuant to Standing Order No. 21(3), Question Nos. 16 to 20 have been postponed to the next available sitting of Parliament.]

With the consent of Mr Speaker and the general assent of Members present, Question put, and agreed to. Resolved, That, notwithstanding the Standing Orders, the First Supplementary Estimates of Expenditure for Financial Year 1st April 1996 to 31st March 1997 be taken after 1.30 pm today. -- [Mr Wong Kan Seng].

Mr Speaker, Sir, the First Supplementary Estimates of Expenditure for the Financial Year 1st April 1996 to 31st March 1997 will be introduced to Parliament in the Committee of Supply later today. In it, the FY96 Main Estimates approved by Parliament for FY96 will need to be augmented by $4.2 billion under the Financial Transfers head of expenditure. $2.7 billion of this sum will be required to pay for Government's subsidy in its second offer of Singapore Telecom shares later this year. The remaining sum of $1.5 billion is the compensation Government will pay to Singapore Telecom for the earlier termination of its exclusivity rights. In addition, the FY96 Development Estimates approved by Parliament will also have to be augmented by $3.05 billion through Supplementary Development Estimates. The additional sums requested are to meet several items of expenditure for which no provisions were made in the FY96 Budget. I will now explain the reasons for these requests. Item 1 -- Government subsidy for the second offer of Singapore Telecom shares (ST2) In the Budget Statement this year, I announced that the Government will be making a second offer of Singapore Telecom (ST2) shares to Singaporeans this year. This is part of Government's effort to build a share-owning society, to enhance the assets of Singaporeans, and to give Singaporeans direct stakes in the growth and prosperity of Singapore. The shares will be offered at a discount to the market price. They will also come with a loyalty bonus package, similar to that offered in the first Singapore Telecom issue (ST1) in 1993, to encourage Singaporeans to hold on to the shares as long-term investments. Hence, Singaporeans will not only pay less than the market value for the shares, but will also receive bonus shares which they do not have to pay for, provided they hold on to their shares. Every Singaporean who takes up the offer will therefore enjoy a direct subsidy on the ST shares. The present Government will bear the cost of the subsidy. It will pay out of the Budget to Temasek Holdings a sum equal to the difference between the market price and the discounted price of the shares, plus the value of the loyalty shares. This will make the subsidy explicit. We have not yet finalised the details of the share offer. We will announce the number of shares per citizen, and the price of the shares in due course. I have budgeted a sum of $2.7 billion in the Supplementary Supply Bill for the total subsidy, based on preliminary estimates. This is about the same amount as the subsidy involved in the first Singapore Telecom shares issue. But for ST1, we did not bring the subsidy out explicitly, so that Singaporeans were unaware of the large subsidy they had received. Hence, the Government has decided to treat ST2 differently. The eventual subsidy will depend on the discounted price of the shares, the prevailing market price of the ST shares at the time of share issue on allotment, the number of shares offered, and the take-up rate. If the $2.7 billion turns out to be insufficient, we will increase the budget further. The subsidy of $2.7 billion will be paid from the budget surpluses accumulated by the present term of Government. It is a major expenditure, equivalent to 2% of GDP, or more than $1,000 per adult citizen. It is also more than 40% of the budget surplus originally estimated for FY96 of $6.4 billion. The Government is able to offer this subsidy only because the economy has done well, and we have achieved healthy budget surpluses. As long as Singapore continues to prosper, Singaporeans can look forward to more of such discounted share offers, and other asset enhancement schemes. And they will see their assets grow together with the economy. The Government's Asset Enhancement Programme will ensure that Singaporeans will always be able to share in the success of Singapore. Item 2 -- Payment of $1.5 billion compensation to Singapore Telecom On 1st April 1992, Singapore Telecom (ST) was granted a licence which gave it exclusive rights to provide telecommunication services in Singapore for a period of 15 years until the year 2007. At the time, it was not possible to foresee the speed with which the telecommunications market worldwide and in the region would be opened up, and the rapidity with which technical advances would revolutionize the telecommunications and information transmission markets. These changes make it necessary for the telecommunications market in Singapore to be opened up to international competition much earlier than envisaged, so as to allow Singapore to harness the full benefits of the technological changes in order to maintain our position as a telecommunications hub in the region. As a result, Government announced on 11th May this year its intention to introduce competition in the telecommunication industry in the year 2000, to allow Singapore to benefit from the full range of capabilities and opportunities made possible by the deployment of the latest technology, services and applications and to prepare the industry for the intensifying of world-wide competition. This required a modification to the licence granted to Singapore Telecom on 1st April 1992. The granting of a licence and the rights, terms and conditions under the licence are rights conferred by Government to a public telecommunication operator granted the licence. These rights could be modified subject to compensation, where appropriate, for any damage arising from the modification. This is provided under the Telecommunications Authority of Singapore (TAS) Act 1992. TAS has to make sure that the Government is fair to these operators who have made substantial investments in infrastructure and network facilities in order to provide services within the understanding of the licence given to them earlier. This reputation of fairness is something we want to uphold. The Government engaged Deloitte & Touche, an international accounting and financial consultancy firm, to give an independent computation of the compensation amount. It has the necessary expertise and understanding of the global telecommunications market and development to recommend to Government a compensation amount that is fair and reasonable to ST. The consultants used an economic model to derive the compensation amount. The model projected ST's earnings based on the current situation, ie, with competition in the year 2002 and expiry of exclusive rights in the year 2007. They compared this against ST's projected earnings when its exclusive rights expire in 2000. The difference between these two figures is ST's likely loss. The consultants have computed this amount to be $1.5 billion. In computing the amount, the consultants established all cost and revenue drivers, and took into account all key factors such as service streams, price erosion, market share loss, stimuli in market growth, and Singapore's operating environment to simulate as closely as possible the impact of competition to ST. Government has accepted their recommendation and will compensate ST the sum of $1.5 billion to be paid in full on 31st March 1997. ST, who engaged its own consultant, has, after due deliberation, accepted the compensation amount. Item 3 A supplementary sum of $3.05 billion is required under the Development Estimates. This is composed of $2.76 billion required to compensate statutory boards for lands returned to the Land Office. These lands are surplus to the statutory board's requirements and are not germane to their operations. A further sum of $0.29 billion is required for payment of lands acquired as a result of the construction of the North-East MRT line.

Mr Speaker, Sir, I have three questions for the Minister. The first question relates to ST shares. Unlike ST1, now there is a market price for ST2. As a result, a large volume of vendor sale of shares may have a negative impact on the share price at the time of sale. If this is the case, this adverse impact may translate into a price drop. Therefore, the subsidy of $2.7 billion may disappear. My question to the Minister is, how will he ensure that when the new shares are sold at a discount from the market price, that it would not have a serious negative impact on the share price, whereby it will be perceived that there is no subsidy? My second question is, learning from the experience of ST1, will the shares be sold on the basis of the A, B and C tranches? My third question is on the exclusive rights or the monopolies granted to ST. I have spoken in this Chamber before on why it is very important for ST to be competitive, not from the consumer's point of view, but from the national point of view. Is there any other exclusive rights or monopolies that are granted to ST that we should consider taking them off?

On Mr Chng's question whether the sale of the new shares will have a depressive effect on the existing shares, I think it is not possible to give an exact answer to his question because it depends on the reaction of the market. But our experience with the ST1 issue was that the majority of the shares issued had been held and the volume of shares which were sold was very small. It was less than 1%. That being the case, I think the effect of this issue of shares on the market is likely to be quite moderate, if at all. But a great deal depends on the sentiment of the market at the time of issue. The other point, of course, is that Government will have to ensure, at the time of issue and allocation, that the discount offered is sufficiently large to absorb any temporary fluctuation of the share price at the time of issue. As to his second question whether there are other exclusive rights, I will have to refer his question to the Minister for Communications, who is more familiar with the intricacies of telecommunications business.

The Minister has not answered my question on the A, B and C tranches.

As I have mentioned earlier, the exact formulation for the issue has not been finalised. This will be announced in due course.

Sir, I just want to take this opportunity to answer Mr Chng. I would like to inform Mr Chng that the exclusive rights that have been granted to ST, which will be removed by the year 2000, refer to all the services currently under exclusivity. So there will be opportunities for full competition by the year 2000 in all these areas. 1.45 pm

"to amend the Criminal Procedure Code (Chapter 68 of the 1985 Revised Edition", presented by the Minister for Law (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

"to provide for making supplementary provision to meet additional expenditure for the financial year 1st April 1996 to 31st March 1997", recommendation of President signified; presented by the Minister for Finance (Dr Richard Hu Tsu Tau); read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

"to amend the Estate Duty Act (Chapter 96 of the 1985 Revised Edition)", recommendation of President signified; presented by Dr Richard Hu Tsu Tau; read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

"to amend the Income Tax Act (Chapter 134 of the 1996 Revised Edition)", recommendation of President signified; presented by Dr Richard Hu Tsu Tau; read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

"to amend the Hijacking and Protection of Aircraft Act (Chapter 124 of the 1985 Revised Edition) and to make a consequential amendment to the Extradition Act (Chapter 103 of the 1985 Revised Edition)", presented by the Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

"to make provisions for the investigation and determination of subsidies being provided on, and the dumping of, goods imported into Singapore, the imposition of countervailing and anti-dumping duties to offset such subsidies or dumping and for matters connected therewith, and to repeal the Customs (Dumping and Subsidies) Act (Chapter 71 of the 1985 Revised Edition)", recommendation of President signified; presented by the Minister for Trade and Industry (Mr Yeo Cheow Tong); read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

"to amend the Sentosa Development Corporation Act (Chapter 291 of the 1985 Revised Edition)", presented by Mr Yeo Cheow Tong; read the First time; to be read a Second time on the next available sitting of Parliament; and to be printed.

Order read for consideration in Committee of Supply [Allotted Day].

First Supplementary Estimates of Expenditure for the financial year 1st April 1996 to 31st March 1997, contained in Paper Cmd. 6 of 1996. No notice of amendment has been received. Question, "That the sum of $4,200,000,000 for Head Z as shown in Paper Cmd. 6 of 1996 stand part of the First Supplementary Main Estimates", put and agreed to. Question, "That the sum of $4,200,000,000 shall be supplied to the Government under the Head of Expenditure for the Public Services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1996/1997", put and agreed to. Resolution to be reported. Question, "That the sum of $3,046,000,000 for Head T as shown in Paper Cmd. 6 of 1996 stand part of the First Supplementary Development Estimates", put and agreed to. Question, "That the sum of $3,046,000,000 shall be supplied to the Government under the Head of Expenditure for the Public Services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1996/1997", put and agreed to. Resolution to be reported. Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. Resolutions reported -- "That the sum of $4,200,000,000 shall be supplied to the Government under the Head of Expenditure for the Public Services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1st April 1996 to 31st March 1997, contained in Paper Cmd. 6 of 1996". "That the sum of $3,046,000,000 shall be supplied to the Government under the Head of Expenditure for the Public Services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1st April 1996 to 31st March 1997, contained in Paper Cmd. 6 of 1996".

Mr Speaker, Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions."

Question put, and agreed to. Resolutions accordingly agreed to.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Customs (Amendment) Bill 1996 seeks to amend the Customs Act to: (a) provide for the operations of TradeNet; (b) allow preservation of records in alternative forms (eg, in electronic form); (c) prohibit the disclosure of information declared by traders; (d) combat cigarette smuggling; and (e) facilitate the administration of the Act. Provide for Operations of TradeNet Sir, TradeNet is the electronic data interchange (EDI) system that is currently used for the submission, processing and approval of Customs permits. Using TradeNet, traders can apply for permits for their imports, transshipments, and exports, and pay their duties through electronic means. At present, 99.9% of Customs permits are processed through TradeNet. The Customs Act now needs to be amended to provide for: (a) the setting up and operation of TradeNet; (b) the transmission of documents required by the Customs Act through electronic means; (c) the admissibility and evidential value of documents generated through the computer service; (d) making the unauthorised modification of any data or program for the purpose of evading tax or duty an offence; (e) the appointment of any independent record keeper who will keep a record of all the electronic notices and transactions made through the computer service for a specified period of time. This period of time will be prescribed in the regulations; and (f) the periodic review of the operations of the computer service provider. Clauses 2, 4, 6, 8 and 15 amend sections 3, 90A, 92(1), 96 and 130(A) of the Act to effect these changes. The Ministry of Finance has adopted a consultative approach in drafting the TradeNet provisions. Relevant agencies, including the Law Society of Singapore, the Law Faculty of NUS, Law Reform Committee, National Computer Board, the Trade Development Board, Singapore Network Services Pte Ltd, and the various trade associations and Chambers of Commerce were consulted. Their inputs have been incorporated into the Amendment Bill. Preservation of Records The Act has been amended to allow books of account, registers, stock books and other records to be preserved or kept by such means as the Director-General may approve. This would allow records to be kept in electronic or other forms. Such records, or documents forming part of the records, will be admissible as evidence only if in accordance with the Evidence Act. Clause 4 inserts a new section 90B to provide for this change. Prohibition Against Disclosure of Information Currently, there are no provisions in the Act to prohibit the disclosure of information which traders are required to furnish to the Customs and Excise Department under the Act. The Department had relied on the provisions in the Regulation of Imports and Export Act to reject requests for information. Nevertheless, it is desirable for the Department to have a non-disclosure provision under its own Act. In addition, certain information, such as duty payments made by traders or duty exemptions granted to traders made under the Customs Act, are not covered under the Regulation of Import and Export Act. The Minister has therefore introduced provisions in the Customs Act to prohibit the disclosure of information to protect traders' interest. Clause 4 inserts a new section 90(D) to provide for this. Combat Cigarette Smuggling Cigarette smuggling has been rising over the last few years. The number of cigarette smuggling cases detected had surged from 36 in 1990 to 177 in 1995. The quantity of duty-unpaid cigarettes seized by the Customs and Excise Department had also increased from 300 kg in 1990 to 20,300 kg in 1995. To deter cigarette smuggling, the penalties for smuggling of cigarettes exceeding 2 kg would be enhanced by providing a higher fine and longer terms of imprisonment for both first time and repeat offenders. In addition, severe penalties have been provided for convicted financiers who are masterminds of smuggling syndicates. Clauses 12, 14 and 15 amend sections 119, 130 and 130(B) of the Act to effect these changes. To help the Customs and Excise Department trace offenders who are not caught red-handed in the commission of the offences, the Act has been amended to shift the burden of proof onto the owners/hirers of vehicles or lessees/tenants of premises used in smuggling attempts, to compel them to disclose their knowledge on the offenders concerned in order to exculpate themselves. Clause 11 inserts a new section 115(A) to provide for this change. Amendments to Facilitate Administration of the Act The Minister has also made the following amendments to facilitate the administration of the Act: (a) allow Customs officers to conduct field auditing at a trader's premises, to obtain documents and other records, and to inspect computers and associated devices. This is provided in clauses 4 and 9. (b) allow Customs Officers to demand for travelling documents or other forms of identification of travellers. This is provided in clause 5. (c) legalise the operations of the Green and Red Channels at the various checkpoints. This is provided in clauses 2 and 7. (d) make it an offence for any person to resist arrest or refuse to produce documents as required. This is provided in clauses 13 and 16. (e) allow the Magistrate's Court to impose the full penalty under the Act . This is provided in clause 10. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. -- [Mr Koo Tsai Kee]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read. 2.00 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the GST (Amendment) Bill 1996 seeks to amend the GST Act: (a) to provide for zero-rating of international telecommunication services; (b) to allow refunds of input tax to local agents of overseas clients; (c) to tighten provisions for the Tourist Refund Scheme; (d) to forfeit goods involved in fraud; (e) to provide for the recovery of GST due from joint-interests; and (f) other technical amendments to facilitate the administration of the Act. Zero-rating of international telecommunication services The GST Act lists a number of international services which have been zero-rated in order to maintain our local companies' competitiveness vis-a-vis their overseas competitors. International telecommunication services will be added to this list. Besides the fact that the services provided are international in nature, the international communication market is also very competitive. As such, the 3% GST would cause competitive disadvantage to our local service providers. This would erode Singapore's efforts to build itself up as a telecommunications centre. Pending this amendment, remission of GST has been given to our local service providers under section 89(2) which empowers the Minister to remit GST. Clause 4 amends section 21 of the Act to effect this. Refunds of input tax to local agents of overseas clients. Under the existing GST Act, local agents who import and re-export on their overseas clients' behalf are unable to claim back the GST paid at the point of import because of certain technicalities in the Act. The GST Act will be amended to allow for the refund of GST paid to the local agents since the goods concerned are actually re-exported. This should remove the competitive disadvantage in the form of irrecoverable import GST faced by the local agents as compared to their overseas counterparts. Pending this amendment, remission of GST has been given to the local agents under section 89(2). Clause 7 inserts a new section 33A to effect this change. Tourist Refund Scheme In the first tourist refund fraud case committed in April 1994, the Customs and Excise Department was unable to take action against the persons involved because the details and conditions of the Tourist Refund Scheme were not specified either in the GST Act or the Regulations. Goods for which a tourist refund had been claimed were found in Singapore, but it was difficult to prove that they were not meant to be exported subsequently. To tighten the Tourist Refund Scheme provisions, the Act will be amended to prohibit the handling of such goods under prescribed circumstances. Clause 6 amends section 25 of the Act to effect this. Forfeiture of goods involved in fraud Sir, the UK Value Added Tax Act and the UK Customs and Excise Management Act provide for the power of forfeiture of zero-rated exported goods found in the UK and goods in respect of which tourist refund had been claimed but were not brought out of the country. The GST Act will be amended to similarly provide for the power of forfeiture of such goods. This will serve as a further deterrence for the offence. Clause 14 inserts new sections 83A to 83D to provide for the forfeiture of goods involved in fraud. Recovery of GST due from joint-interests The GST Act currently allows the recovery of tax arrears from a debtor's bank account or other properties through an appointed agent, such as a bank. However, it is still possible for debtors to get away by putting their money in joint accounts. The GST Act will be amended to allow for the recovery of GST due from joint-interests, with the presumption of equal shares for the joint holders unless proven otherwise. This provision is similar to that provided for in the Income Tax Act. Clause 13 amends section 79 of the Act to effect this change. Technical Amendments Sir, the following technical amendments will also be made: (a) to specify that money held by an appointed agent on the day or within 90 days of receiving a notice of appointment as an agent from the Comptroller can be used to pay the outstanding GST. The 90-day time frame is currently not specified. Clause 13 of the Bill makes this effective; (b) to amend the definition of "taxable persons" to make it clear that a registered person who makes out-of-scope supplies can recover input tax. Clause 3 makes this effective; (c) to amend the electronic data interchange (EDI) provisions to be consistent with the latest EDI provisions in the Customs Act since both sets of provisions refer to the TradeNet system. Clauses 2, 8 and 15 make this effective; (d) to allow for the remission of GST on the local supply of services, in addition to importation and local supply of goods, with regard to international agreements or arrangements. Pending this amendment, the remission of GST on local supply of services to organisations like the diplomatic missions is currently being done under section 89(2). Clause 5 of this Bill makes the amendment. (e) other minor technical amendments to simplify or clarify the provisions of the Act, and to remove the anomalies. These are effected in clauses 2, 9, 10, 11, 16 and 17. Sir, a consequential amendment will also be made to section 13 of the State Immunity Act (Chapter 313) via clause 18 to provide for foreign states to be subject to provisions relating to their liability for GST. Such an amendment will remove any doubt as to whether GST is payable by the investment and trading arms of foreign governments and state trading corporations. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. -- [Mr Koo Tsai Kee]. Bill considered in Committee; reported without amendment, read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Government recently introduced a package of measures to discourage speculation in the residential property market. The aim is to stabilise the market and prevent prices from overshooting. The Stamp Duties (Amendment) Bill 1996 and the one following it, the Income Tax (Amendment) Bill 1996, will provide for the legislative effect of the announced measures. The Stamp Duties (Amendment) Bill 1996 seeks to do the following: (i) to extend the coverage of stamp duty to every sale and sub-sale of properties; (ii) to levy additional stamp duty, to be payable by the seller, if any residential property is sold within three years of its purchase equal to the existing stamp duty payable by purchasers if the sale is within one year of the purchase, 2/3 if in the second year and 1/3 if in the third year; (iii) consequential amendments to stamp duty changes announced in the 1996 Budget. Stamp duty to be extended to all sales and sub-sales of properties Previously, a buyer who purchases an uncompleted property from a developer need not pay stamp duty until the title is transferred to him. If he resells the property before the transfer of title, he does not pay stamp duty at all. This means that property speculators who quickly resell properties pay no stamp duty. Clause 6 of the Stamp Duties (Amendment) Bill repeals the existing section 22 and inserts a new section 22 to provide for stamp duty to be imposed in respect of every sale and sub-sale of property and for the duty to be payable at the time of agreement to purchase the property. This makes speculative activities more costly. This provision will apply to residential as well as other types of properties. Additional stamp duty to be paid by the seller if any residential property is sold within 3 years of its purchase As part of the new tax measures, stamp duty is payable by the seller if any residential property is sold within three years of its purchase. The stamp duty on sellers is equal to the existing stamp duty on purchasers in the first year after the purchase, 2/3 of this in the second year and 1/3 in the third year. Clause 6 of the Stamp Duties (Amendment) Bill inserts a new section 22A to provide for this. Clauses 18 and 19 amend the First and Third Schedules to specify the rates of the additional stamp duty payable by the vendor or transferor. Consequential amendments resulting from stamp duty changes announced in the 1996 Budget Clauses 3, 4, 8, 9, 10, 11, 12, 13, 16 and 17 amend and repeal various provisions in the Stamp Duties Act to reflect stamp duty changes announced in the 1996 Budget. In addition, to facilitate the enforcement of the new stamp duty measures, the Stamp Duties (Amendment) Bill provides for the Commissioner of Stamp Duties to appoint agents to recover unpaid duties, similar to that presently provided for in the Income Tax Act. The Commissioner of Stamp Duties is also empowered to impound any document for which insufficient duty or no duty has been paid. This is to ensure that in cases where stamp duty is payable by both buyer and seller, both sets of duty are paid before the document is stamped. Clauses 14 and 15 provide for these changes by inserting new sections 72A and 73A. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, the Stamp Duties (Amendment) Bill seeks to provide for stamp duty to be payable by the purchaser in respect of every sale and sub-sale of properties, and also to impose an additional stamp duty payable by the vendor and transferor of residential property where the property is disposed of within three years of its purchase. These are contained in clause 6 of the Bill which repeals the existing section 22 and introduces two new sections 22 and 22A. Clauses 18 and 19 specify the rates of the additional stamp duty payable under the new section 22A. This is part of a package of measures to curb speculation in the property market with effect from 15th May 1996. In this context, speculation is defined as sale of property within three years of its purchase by any individual or a company. The Feedback Unit held a dialogue session on the property market on 17th June 1996. I have sent the notes of the dialogue to the Minister. Most participants supported the package of measures to curb speculation in property. Also, out of 150 inputs received so far by the Feedback Unit, 130 inputs or 86.6% supported the measures to cool the property market, although there were some reservations on stamp duties, and the timing of the package. This amendment is an effective measure to curb speculation in the property market by making speculation more costly. Indeed, a number of participants in the dialogue session on17th June 1996 considered the new rule on stamp duty as a more effective measure than income tax on gains derived from real property transactions in curbing speculation in the property market. This is because under the new rule on stamp duty, speculators will be hit twice -- first, when they buy and, subsequently, when they dispose of their properties within three years. However, some participants expressed concern that the genuine buyer may also be hurt because the stamp duty is payable upfront when he signs the sale and purchase agreement, instead of when the property is completed. Also, under the new rule, stamp duty is payable on the full value of the property on every sale and sub-sale, regardless of whether the property is completed or uncompleted. The new stamp duty would therefore add to the cash flow problem faced by young couples. Sir, there were some suggestions by the participants in the dialogue: (i) Since speculative activities focused on new projects and not older projects, should stamp duty be levied only on new projects? (ii) Should the first-time property buyer be exempted from paying the stamp duty upfront? In other words, the old rule should apply. (iii) Should the first-time property buyer be allowed to use his CPF to pay for the stamp duty? (iv) Should there be a greater flexibility in the refund of stamp duty? For instance, should the refund be extended to include a situation where any one party cannot proceed with the transaction, especially because of circumstances beyond his control? Could the Minister consider these suggestions since the main objective of the amendment Bill is to curb speculative activities in the property market, and not to impose financial difficulties on the genuine buyers and first-time home buyers? Sir, I support the Bill.

Mr Speaker, Sir, before I commence my speech, I would like to declare my interest as a director of a company involved in property development. But my remarks are made in the interest of the public on this subject. The recently announced measures to cool property speculation were sudden, and they had an immediate impact on the property market. Press reports said that property sales have dropped to 10% or less of the original volume. I wish to state that, in principle, I agree with the need to curb excessive property speculation. To make a quick buck through blatant property speculation is not compatible with our desire to promote good work ethics. It makes a mockery of the ethos of thrift and diligence, when someone can simply turn around to re-sell a property in a few days and make $50,000 or more, a sum which an average worker cannot earn in a whole year! However, on the other hand, I wish to remark that the set of new measures announced did come too suddenly and forcefully. While the measures were needed to cool the high speculative fever, the measures had caught many genuine investors and home buyers off guard. Sir, allow me to comment on some of these measures, particularly with regard to stamp duties. Stamp duty to be paid by a buyer at the signing of the sale and purchase agreement The new ruling requires stamp duty to be paid by a buyer at the signing of the sale and purchase agreement. This usually occurs within two weeks of the date of option. The shortened timeframe to pay the 3% stamp duty will pose an immediate heavy cash burden on the buyer. I feel that for the sale of a completed property, the previous rule of paying stamp duty upon completion of a sale, which is usually in about three months' time, is more reasonable. However, for an uncompleted property, ie, a property under development, it may be fairer to set a new rule to impose stamp duty at, say, three months after the signing of the sale and purchase agreement. The previous rule of 2-3 years later at the temporary occupation permit (TOP) stage is understandably too long, and it has the effect of encouraging speculation. Hence, I feel that a good compromise is three months from the sale and purchase agreement. The current new rule of two weeks from the sale and purchase agreement is too tight a timeframe. Moreover, because of the shorter period, there is insufficient time to obtain approval for CPF funds to be used for payment of the stamp duty. And this, of course, has posed an additional cash burden on genuine buyers. Stamp duty to be paid by the seller if the property is sold within three years I feel that this new rule to impose stamp duty on the seller if the property is sold within three years is unnecessary. Not all sellers who sell their properties within three years are speculators. Many may be selling for financial or other personal reasons. There are already other new rules to curb speculation. For example, there is a new rule that income tax is payable if the seller makes a profit from the sale. However, if the seller had to sell at a loss, and he has to pay stamp duty on top of that, his financial loss will be aggravated. Sir, I feel that the Government must guard that the new measures to cool property speculation do not become an overkill. Experiences in both Singapore and other countries have shown that the confidence in the economy is closely linked to confidence in the property and share markets. These linkages are more evident in Singapore as 97% of our people own their homes (87% own HDB flats and another 10% own private properties). At the same time, more and more people are encouraged to own shares. Hence, any sharp drop in the property market will have a wide cascading effect on consumer spending, the retail trade, the share market, bank loans, the construction industry and related industries and, ultimately, on the overall business confidence. In conclusion, while I support the principle that we must cool a feverish property market, I wish to urge the Government to watch carefully over the state of the property market. Ideally, this market should be just nice and warm, but not too hot and not too cold.

Mr Speaker, Sir, over the last three years, private residential property prices have more than doubled. According to a recent paper by a major stockbroking company, the reasons for the strong residential property market are sustained economic growth, the high prices of resale public housing which facilitate upgrading to the private residential ownership, the high returns of housing investment in Singapore which is made more attractive by political stability, the presence of a large speculative element in the market, the low interest rate environment and a significant foreign interest in the market. As prices looked increasingly to spiral out of control and as the implications of this are not only economic but also socio-political, the Government stepped in to cool the overheated market with a set of wide-ranging measures which include credit measures, supply measures, income tax measures and stamp duty measures. Sir, there are two views on the effect of these measures. Some experts think that the residential market was already on its way to an over supply situation and the Government's curbs will compound the situation. Rents will fall and so will the property prices in the region of 20%. Other experts think that the 15th May curbs are likely to cause only a knee-jerk correction over the short term. But by 1997, prices will return to their long-term growth rates. Whatever the scenario, we still have to deal with the new measures which are being proposed by the Government. Where the tax measures are concerned, there are some substantive issues that have to be raised and these are: (1) Where a real property is sold by way of a mortgagee sale within the 3-year period, is the owner of this property subject to vendor's stamp duty and income tax, considering the fact that this was a forced sale situation? (2) Does the Comptroller or the Commissioner, as the case may be, have power to grant waivers for deserving or hardship cases, eg, intra family transfers, a husband wants to include his wife's name in the house that was bought before marriage and intended to be used as a matrimonial home. Of course, I am referring to within the 3-year period. (3) The Bill only recognises two situations where stamp duty can be refunded: (a) vendor's lack of title; and (b) approval under the Residential Property Act not obtained. This provision is not generous enough. It is understandable that there should be no refund when the contract falls through because one party defaults and the contract is rescinded. However, when the contract is conditional on certain matters, eg, satisfactory requisitions, and these conditions are not fulfilled, stamp duty should be refundable. Why should the law appear to give higher recognition to the Residential Property Act approval condition than to other conditions to which the sale is subject as agreed by the parties? (4) A question arises about nominations by option holders of third parties to exercise their option. Is the letter of authority appointing a third party nominee to exercise the option stampable? What if some consideration is given for this nomination? What if the option period is for a long period of time? If the letter of authority is not stampable, then this may become a recourse of getting around the stamp duty and income tax rules affecting sub-sales. Another issue to be considered is the timing of the payment of stamp duty. With the amendment, this has to be paid at the time of the signing of the sale and purchase agreement. This new imposition does not differentiate between genuine buyers and speculators and puts, as has been suggested by Dr Ow, a strain on the cash flow of genuine buyers. We should consider retaining the old practice of paying stamp duty only at the time of the legal completion of the project. Also, Sir, with the new amendments to the Stamp Duties Act, will the renewal of the lease of premises be subject to stamp duty? If this is so, then what is the position for voluntary welfare organisations which have to renew the lease of their premises? Will the new amendment add to their financial burden? Would the Minister please be good enough to respond to these queries?

Order. I suspend the Sitting and will take the Chair again at 2.50 pm. Sitting accordingly suspended at 2.29 pm until 2.50 pm. Sitting resumed at 2.50 pm.

Debate resumed.

Dr Ow has asked whether the new stamp duties should not be applied to new projects only. The answer is no, because speculation can take place on both new and existing completed properties. If we confine the new stamp duties to new projects only, I think the effect of curbing speculation would be diminished. He has also asked whether first-time property buyers should be exempted from paying stamp duty upfront. Again, I have to say no, because it is very difficult to define whether a first-time property buyer is or is not a speculator. Someone who has not owned a property before can quite easily also become a speculator, if he finds that after he buys a property, he can make a profit quickly. He will buy a second property and sell off the first property. He is still a first-time buyer. So the definition of a "first-time" buyer, whether he is a speculator or not, will be very difficult to define. So I think the answer has to be no. He has asked whether a first-time buyer can use his CPF funds to pay for the stamp duty. The answer is no. This is because the restriction on the total credit of 80% is imposed in order to reduce the ability to finance new purchases. So we should not allow this to be eroded by any use of CPF funds for this purpose. He has asked whether there should be more flexibility in the refund of stamp duty in situations where the sale cannot proceed because of circumstances beyond the seller's control. There is some flexibility in this area. We will deal with it on a case-by-case basis depending on the circumstances. The Minister has the power in the Stamp Duties Act to grant exemptions, and I have done so in some cases. Finally, on the question raised by Dr Ow, I would like to say that the whole purpose of introducing this package of measures was to curb speculation. Any attempt to try and change it by softening some parts of it will reduce the effectiveness of these measures. It does not really benefit the genuine buyer either, because the effect of these measures is already visible in the market. Whether you say prices have softened by 5% or 10%, the fact is that it has, in fact, stopped price rises, and actual prices may have softened 5% or 10%. This is already advantageous to the genuine buyer. These reductions in prices more than offset the 3% duty levied. An indication of this is that some developers have actually volunteered to pay for the duty, or by other means to absorb these extra measures. Mr Leong Horn Kee has suggested some variations on the payment period for the new duties. Again, the answer is no, for the same reasons I have explained that any attempt to do so will merely make the measures less effective. I can assure him that it is not the Government's intention to over-kill the market or cause it to crash because, as he says, this is in no one's interest. Events have in fact proved that this is not the case. The market, although softened, remains fundamentally sound, as seen from some recent sales of new properties in the market. We will, of course, keep a very close eye to ensure that nothing drastic happens. But I think the package of measures has achieved, at least for the time being, the desired effect. Dr Soin has posed a series of questions. I hope I have got the questions correctly. In the case of a mortgagee forced sale, she asked whether the sale is subject to stamp duty. The answer is yes, unless specific hardship can be proven. Any waiver would be on a case-by-case basis, because we want to avoid a blanket exemption. Otherwise, a mortgagee may voluntarily force a sale in order to benefit from any property gains. But on a case-by-case basis where genuine hardship can be proven, we will consider it. She wants to know whether the Commissioner has power to grant a waiver, the answer is no. The power rests with the Minister. Applications can be put to him and he can implement it, if the Minister agrees. She has said that the scope for refunds is limited at the present time. There is scope for extension of the relief mechanism. This, again, will be on a case-by-case basis, eg, in cases where properties were acquired compulsorily by Government, or where genuine hardship is provable. We have some flexibility in this area because the Minister is empowered in the Stamp Duties Act to make exemptions. She has asked whether a letter of authority is subject to stamp duty. The answer is yes, and is payable within 14 days of the date of the letter of authority. Like Dr Ow and Mr Leong Horn Kee, she has also asked whether there can be an extension of the date of completion and also to reduce the cash flow problems of genuine buyers. I have already explained the reasons why not. In fact, the measures have already caused a fall in prices which is beneficial to genuine buyers. She has also asked whether the renewal of leases should be subject to stamp duty, the answer is yes. Stamp duties have always been payable upon renewal of leases.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. -- [Dr Richard Hu Tsu Tau]. Bill considered in Committee.

Clauses 1 to 3 inclusive ordered to stand part of the Bill. Clause 4 --

There is one amendment. Dr Hu.

Sir, I beg to move, In page 2, line 33, after "10(a)", to insert ",(aa)". Section 15 presently allows for relief from stamp duty in cases of reconstruction or amalgamation of companies. The amendment seeks to extend these concessions to section 15 with respect to the new seller's stamp duty. Amendment agreed to. Clause 4, as amended, ordered to stand part of the Bill. Clause 5 ordered to stand part of the Bill. Clause 6 --

There are 24 amendments. Amendment No. (1), Dr Hu.

Sir, I beg to move, In page 3, to leave out line 37 to line 18 in page 4 and insert -- "(4) Where a person, having contracted jointly or otherwise for the purchase of any property but not having obtained a conveyance thereof, directs the vendor of the property in writing to convey or transfer the property or any share therein --

Amendment No. (2), Dr Hu.

Sir, I beg to move, In page 4, line 35, to leave out "the" and insert "a". Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (3).

Sir, I beg to move, In page 4, after line 38, to insert -- "(c) the property is acquired or is proposed for acquisition by any public authority pursuant to the provisions of any written law authorising or empowering the public authority to acquire land compulsorily.". This is to allow for refund of stamp duty where a contract is rescinded because of compulsory acquisition. Amendment agreed to.

Amendment No. (4).

Sir, I beg to move, In page 5, to leave out lines 28 to 30 and insert -- "(8) Subject to the provisions of this Act, this section shall apply to instruments made on or after 15th May 1996.". This is an amendment consequential upon the introduction of new section 22B. Amendment agreed to.

Amendment No. (5).

Sir, may I have your approval to move amendment Nos. (5) to (7) together as they are drafting amendments?

Yes. Please proceed.

Sir, I beg to move, In page 5, line 33, to leave out "residential". In page 5, line 34, to leave out "under section 22" and insert "pursuant to section 22 (including any instrument chargeable in like manner)". In page 5, line 38, after "sale", to insert "as if it were an actual conveyance on sale of residential property". Sir, these are drafting amendments. Amendments agreed to.

Amendment No. (8), Dr Hu.

Sir, may I have your approval to move amendment Nos. 8 and 9 together?

Yes.

Sir, I beg to move, In page 6, line 1, to leave out "the residential property" and insert "residential property or any part thereof". In page 6, line 5, after "property" where it secondly occurs, to insert "or any part thereof". Sir, the reason for these amendments is to make clear that an instrument is chargeable if a residential property is being disposed of, whether it has been sub-divided or amalgamated previously. Amendments agreed to.

Amendment No. (10).

Sir, may I have your approval to move amendment Nos. 10 to 12 together as they are drafting amendments?

Yes.

Sir, I beg to move, In page 6, lines 10, 14 and 21, to leave out "residential" in each case. In page 6, to leave out line 24 and insert "a conveyance on sale of". In page 6, line 29, to leave out "residential". Sir, these are drafting amendments. Amendments agreed to.

Amendment No. (13), Dr Hu.

Sir, may I have your approval to move amendment Nos. 13 and 14 together?

Yes.

Sir, I beg to move, In page 6, line 32, to leave out "the residential property" and insert "residential property or any part thereof". In page 6, line 36, after "that property", to insert "or any part thereof". Sir, this is to make clear that an instrument is chargeable if a residential property is being disposed of, whether it has been subdivided or amalgamated previously. Amendments agreed to.

Amendment No. (15), Dr Hu.

Sir, I beg to move, In page 6, after line 36, to insert -- "(3) Subject to the provisions of this Act, any instrument made on or after 15th May 1996 whereby an exchange of any property is effected shall be treated for the purpose of this section as a conveyance on sale of residential property if residential property or any part thereof is being disposed of under the instrument by any party thereto before the expiration of 3 years from the date on which the party acquired the residential property or any part thereof; and that instrument shall be charged with additional ad valorem duty under subsection (1) as if it were an actual conveyance on sale of residential property by the party who acquired his property later for a consideration equal to the value of the property of greater value.". Sir, the reason for this amendment is to deal with instruments of exchange. Duty will be imposed on the higher of the value of the property that is exchanged. Amendment agreed to.

Amendment No. (16).

Sir, I beg to move, In page 7, line 7, to leave out from "a" to "residential" in line 8 and insert "conveyance on sale of". Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (17).

Sir, I beg to move, In page 7, to leave out lines 15 to 33 and insert -- "conveyance or transfer, residential property or shares in one or more relevant investment companies, or both such property and shares, constitute in the aggregate at least 75% of the market value of the total tangible assets of the private company as at the end of the accounting period of that private company immediately before the date of the conveyance or transfer.". Sir, the reason for this amendment is to make the provision consistent with the Income Tax (Amendment) Bill 1996, which is that the disposal of shares in a private company will be subject to stamp duties if the company holds at least 75% of its assets in real property and shares in another private company of which not less than 75% of the market value of its total tangible assets comprises real property. Amendment agreed to.

Amendment No. (18).

Sir, I beg to move, In page 7, line 34, to leave out from "Where" to "the" in line 39 and insert "in any conveyance on sale of residential property (including any instrument which is chargeable in like manner)". Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (19), Dr Hu.

Sir, I beg to move, In page 8, line 6, to leave out from "upon" to the end of line 17 and insert -- "a conveyance on sale of residential property (including any instrument which is chargeable in like manner) --

Amendment No. (20).

Sir, I beg to move, In page 9, line 12, to leave out "by transmission on death or". Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (21).

Sir, I beg to move, In page 9, after line 24, to insert -- "(b) a reference to a relevant investment company is a reference to any private company which has residential property the value of which comprises at least 75% of the market value of its total tangible assets as at the end of the accounting period of the company immediately before the date of the conveyance or transfer of shares referred to in subsection (4);". Sir, the reason for this amendment is to clarify the definition of investment company in this context. Amendment agreed to.

Amendment No. (22).

Sir, I beg to move, In page 9, after line 31, to insert -- "(d) where a person entitled to any property by way of security or to the benefit of a charge or incumbrance on any property deals with the property for the purposes of enforcing or giving effect to the security, charge or incumbrance, his dealings with it shall be treated as if they were done through him as nominee by the person entitled to it subject to the security, charge or incumbrance;". Sir, the reason for this amendment is to allow the mortgagee to sell foreclosed properties in the capacity of a nominee. This means that no stamp duty is payable if the property has been owned by the mortgagor for more than three years. Amendment agreed to.

Amendment No. (23).

Sir, I beg to move, In page 10, after line 25, to insert -- "(b) any person disposing of residential property in accordance with any of the provisions of the Residential Property Act (Cap.274) or any notice or direction issued thereunder; or". Sir, this is to exempt involuntary disposals acquired under the Residential Property Act. Amendment agreed to.

Amendment No. (24).

Sir, I beg to move, In page 10, after line 29, to insert -- "Exempted 22B.-

The following 13 consequential amendments will be made: (1) In page 4, line 27, to leave out "(8)" and insert "(7)". (2) In page 4, line 34, to leave out "or". (3) In page 4, line 38, to leave out the full-stop and insert "; or". (4) In page 4, line 39, to leave out "(7)" and insert "(6)". (5) In pages 4 and 5, to renumber subsections (6), (7) and (8) as subsections (5), (6) and (7), respectively. (6) In page 5, to leave out the marginal note and insert -- "Contracts and instruments chargeable as conveyances on sale of residential property.". (7) In page 8, line 18, to leave out "(6)" where it secondly occurs and insert "(5)". (8) In page 8, line 35 to leave out "(8) and (9)" and insert "(9) and (10)". (9) In page 9, to re-letter paragraphs (b), (c) and (d) of subsection (8) as paragraphs (c), (e) and (f), respectively. (10) In page 10, line 25, to leave out "or". (11) In page 10, line 29, to leave out " "."." (12) In page 10, to re-letter paragraph (b) of subsection (10) as paragraph (c). (13) To re-number subsections (3), (4), (5), (6), (7), (8), (9) and (10) as subsections (4), (5), (6), (7), (8), (9), (10) and (11), respectively. Clause 6, as amended, ordered to stand part of the Bill. Clauses 7 to 17 inclusive ordered to stand part of the Bill. Clause 18 --

Clause 18. There are two amendments. Amendment No. (1), Dr Richard Hu.

Sir, I beg to move, In page 15, to leave out lines 19 to 36 and insert -- "In addition to duty under paragraph (a) or (b), where the property, or any share in a private company referred to in section 22A(4), is disposed of in the following periods from the date of its acquisition: Amount of Exceeding Exceeding consideration or one year 2 years value of property, but not but not whichever Within exceeding exceeding is applicable one year 2 years 3 years (i) for every $1 $0.67 $0.33 $100 or any part thereof of the first $180,000 (ii) for every $2 $1.33 $0.67 $100 or any part thereof of the next $180,000 (iii) thereafter $3 $2 $1.". for every $100 or any part thereof Sir, this is to enable the new seller's stamp duty to be computed on the basis of a rate. Buyers under en bloc sales will have their duty computed on the global price. Amendment agreed to.

Amendment No. (2).

Sir, I beg to move, In page 15, after line 36, to insert -- "(2) The First Schedule to the principal Act is amended by deleting Article 31 and substituting the following Article: 31. SURRENDER OF LEASE (a) for consideration The same duty as for a conveyance on sale for a consideration equal to the amount of such consideration (b) in any other case $10". Sir, this is to make clear that the surrender can be stamped as a conveyance on sale if there is a consideration. Amendment agreed to.

The following consequential amendment will be made: In page 15, line 15, to renumber existing clause 18 as sub-clause (1). Clause 18, as amended, ordered to stand part of the Bill. Clause 19 --

Clause 19. There is one amendment. Dr Hu.

Sir, I beg to move, In page 16, to leave out lines 6 to 10 and insert -- "(a) Paragraphs (a), (b) to (g) The grantee or transferee. (b) Paragraph (aa) (i) instrument effecting The parties in equal exchange shares unless only one party is disposing of his property under the instrument before the expiration of 3 years from the date on which it was acquired, whereupon duty shall be paid only by that party. (ii) in any other case. The grantor, transferor or lessor."; and". This is to provide that the new duty on instruments of exchange will be paid by the parties in equal portions unless only one is disposing of his property within the three-year period, in which case only he bears the duty. Amendment agreed to. Clause 19, as amended, ordered to stand part of the Bill. Clause 20 ordered to stand part of the Bill. Bill reported with amendments, read a Third time and passed.

Order for Second Reading read. 3.15 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Income tax and stamp duty measures to discourage speculation in the residential property market were announced on 14th May 1996. The Income Tax (Amendment) Bill 1996 seeks to tax, as income, any gains arising from the sale of any real estate within three years of its purchase, as follows: (a) The tax shall be on the whole gain if the sale is within the first year of the purchase, 2/3 of the gain if within the second year, and 1/3 if within the third year; and (b) For sellers who are not tax residents, a lawyer shall be required to withhold tax (which is not a final tax) at 15%, 10% or 5% of the value of the property if sold within the first, second or third year of purchase respectively. Gains from sales of properties within 3 years to be taxed as income Gains made by property developers and traders from the sale of properties are already taxable as income. However, similar gains made by individuals and other companies are not subject to tax. To discourage speculation, clause 2 of the Bill inserts a new section 10F to deem gains from the sale of property within three years of purchase as income, to be taxed at individual and company rates respectively. However, even with the above tax treatment to discourage property speculation, Members of Parliament may be aware that taxpayers could circumvent this measure by transacting in shares in property holding companies instead. As such, it is necessary to amend the Income Tax Act to subject to tax the gains derived from the disposal of shares in a private company if the company holds at least 75% of its assets in the form of real property or shares in another property investment company. The tax payable by the seller of such shares will vary according to the period over which he holds his shares, his percentage shareholding in the company as well as the period over which a property is held by the company. Clause 2 thus also inserts a new section 10G for this purpose. In recognition that such share owner could be compelled to dispose of his property or shares within three years of its acquisition, clause 2 of the Bill also specifically excludes disposal under circumstances such as upon the death of the owner of the property or shares or as a result of bankruptcy from the proposed tax treatment. Withholding tax on non-resident sellers of property At present, the Income Tax Act provides that a person who makes payments which are income chargeable to tax in Singapore to a non-resident, the payer must withhold tax on such payments. Clause 3 inserts a new section 45D to provide that tax must be withheld at the rates of 15%, 10% or 5% of the value of the property if the sale of the property or shares is made by a non-resident person. The percentage of withholding tax will depend on the holding period of the properties or shares. The party responsible for the withholding tax will be the advocate and solicitor acting on behalf of the buyer of the real property or shares, or in the absence of a solicitor and advocate, the buyer himself. Sir, I beg to move. Question proposed.

Sir, I support the Income Tax (Amendment) Bill. The main objective of this Bill is to empower IRAS to tax as income any gains derived from short-term transactions in real properties. Speculation in the property market would be discouraged or deterred if part or whole of its gains is siphoned off by tax. I would like to seek a few clarifications from the Minister with regard to the amendment Bill. First, clause 2 inserts new section 10F. The proposed subsection (1) states that "the relevant amount of any gain arising from the disposal of property shall be deemed to be income of the person chargeable to tax under section 10(1)(g)". In other words, the tax on the gain will be determined according to the property owner's chargeable income tax bracket. My question is: would this not create a tax loophole for a person who may purchase a property under the name of his family member or a relative who is in the lower income tax bracket, and hence pay lower tax on the gain of the property when he disposes of it within three years from the date of its purchase? This will reduce the effectiveness of the anti-speculation measure.

3.20 pm Second, clause 2 also inserts new section 10G which sets out how such gain is to be taxed and the relevant definitions relating to the tax. In particular, the proposed section 10G, subsection 7(b) (in page 9 of the Bill), spells out the formula which determines the relevant amount of the gain to be taxed. The formula includes four variables and coefficients, namely, Ms, Cs, Xs and an A. The "Ms" define the market values at the date of disposal of the property within the first, second and third year of purchase. The "Cs" define the costs of such a property acquired within the first, second and third year. The "Xs" define the tax rates of the respective time periods. May I ask a few specific questions about this formula: (1) Why are the tax rates defined in terms of Xs as coefficients of the differences between Ms and Cs (in other words, Ms minus Cs) rather than the specific numerical percentages, namely, 100%, 66.6% and 33.3% respectively? Does it mean that the tax rates will be varied in future? (2) Is it correct to say that only one of the three Xs is applicable at any one time? For example, if X3 is applied or operational, then X1 and X2 should be zero? (3) Does the cost of real property acquired in this formula include stamp duty, legal cost, interest cost, insurance cost, renovation cost, etc.? My third question is related to the definition of "company". The parameter `A' is the percentage of the shareholding in a relevant company disposed of on the date of disposal. A "relevant company" or a "relevant investment company" is defined in the Bill as any private company which has at least 75% of the market value of its total tangible assets in the form of property. May I ask why is the benchmark set at 75%? Is this based on empirical evidence? Sir, clause 3 of the Bill inserts a new section 45D to provide for the withholding of tax for a non-resident who disposes of his property within the 3-year period at the rate of 15%, 10% and 5% respectively. My question is: for a property which is co-owned by a non-resident and a Singapore resident, how will the tax on the gain from the short-term property transaction be determined, particularly if the share between the two owners is not stipulated? Sir, I see in the Order Paper Supplement that there will be some amendments to this Bill and, earlier, the Minister has also moved amendments to the Stamp Duties (Amendment) Bill. My final question is: why are there so many amendments for these two Bills? Are the draftsmen of these two Bills in a great hurry?

Sir, I would like to question the Minister on the principle behind the Income Tax (Amendment) Bill. Singapore has not, so far, subscribed to a capital gains tax. But this new amendment is introducing a selective capital gains tax. How do we reconcile this from a policy point of view? Sir, for most middle income families, the only property they own is the family home. If misfortune or other unforeseen circumstances should arise and force the family to sell their family home before the three-year period is up, then any gain derived from the sale of this property would be subject to income tax. This does not seem to be in line with the Bill's main objective of curbing property speculation. Does the Minister have power to grant waivers for deserving or hardship cases and also in forced mortgagee sales? Also, would the Minister consider exempting from tax disposals of real property held for a period of three years or less when the property comprises an individual's principal place of residence? Sir, a related issue to consider is the holding period of three years. Is this too long if the measures are meant solely to weed out speculators? The period could be shortened. Other issues, Sir, in cases of options granted after 15th May 1996 and where the property is held on trust, who is liable for income tax? For a developer's project and in cases with more than one purchaser, how will their respective shares be determined? At this stage, the documents will not state how the parties are holding the property, ie, the proportion of shares. The nature of shared holdings will be specified at the transfer stage. Therefore, in relation to withholding tax, how will the purchaser's solicitor know how much tax to withhold? As the main reason for the Income Tax and Stamp Duty amendments is to curb speculation and spiralling property prices, would the Government consider non-fiscal measures, as have been tried in Hong Kong? I will just give two examples: (1) private sales of uncompleted flats subject to a quota of 10%; (2) prohibit sales of uncompleted flats before assignment to make buyers hold on to their properties. I would like the Minister's response to this, please.

Dr Ow has asked whether there might not be a tax loophole if a person transfers his sale of a property to his relative who has a low income. I think there are two restraints for such a move. In the first place, if the taxable component is substantial, it automatically increases the tax rate for the individual even at the lower end. Let us say, you make half a million dollars in the sale of a property. You transfer to somebody who is paying $10,000 tax. His tax for that year is over $500,000. So the tax liability rises immediately to a very much higher level. That is one constraint. If the profits are substantial, it will automatically raise the level of tax which applies. Secondly, whoever does this is carrying a considerable risk. In transferring the title, he may not get it back, even between relatives and this has happened.

Between father and son.

Even between fathers and sons, there have been cases of transfers which have been disputed afterwards. So I think there is an in-built deterrence to any such device. Besides, I think repeated offences of this type would be watched very closely by IRAS, although it may be difficult to catch them. However, I do not think such a situation is likely to develop. Dr Ow has also asked for an interpretation of the formula used to compute the taxable gain of a person owning shares in a property company. The use of coefficients, rather than absolute figures, in the equation is because a company can buy and dispose of shares and make profits during the 3-year period in a variety of ways. In the first year, for example, it could be selling properties A, B and C; in the second year, it could be selling C, D and E; and in the third year, it could be selling F, G and H. Each of these sales will have a separate tax liability. So we need a complete formula for calculations. I think we will be happy to show you an example of this, because you are buying shares in a company which owns a large number of properties. So the tax liability is not as straightforward as the sale of one property. The Member has asked for the reason why 75% is considered a benchmark figure. It is a figure which we have considered reasonable. 100% would be unreasonable. 50% would be too low. 75% is half way in between. I think this is a reasonable compromise. He has also asked about withholding tax where there is a co-ownership which is not specified. In the absence of any specified shareholding, it will be assumed that the joint partners share equally, unless they can prove otherwise. If there is no specified share ownership, we will assume that they own equal shares, half-half. If there is a dispute between the parties, it is up to them to settle their differences. Finally, he has asked why there are so many amendments. These amendments have arisen because of appeals which were received subsequent to the announcement of the two Bills. We have been very careful to ensure that where the appeals are justified, appropriate amendments have been made to the Acts. That is the reason why we have to go through this exercise today.

What about the definition of "cost"?

The cost of a property will include the cost of the purchase, the cost of any duties paid, stamp duties, legal fees and any other costs which contributed to the transaction in a normal way. Dr Soin has asked why we have introduced a capital gains tax. I would like to tell her that it is not a capital gains tax. We do not have a capital gains tax. Property gains have always been taxable in Singapore for companies trading in properties. It has never been easy, however, to tax individuals who do not transact on a regular basis, and the present Bill corrects this anomaly. She says that for a forced sale, it is not fair. This is true. We have said that for cases where sales are involuntary and for cases of hardship, exemptions could be made. She has asked for tax exemption for a principal place of residence. Presumably, she means that tax exemption should be granted when the principal place of residence is sold. Exemption from tax cannot be granted if a gain is made within 3 years, unless the sale is involuntary. After the property is sold and a new property is acquired, it becomes a new principal place of residence. Should we exempt that too if it is later sold? It is very difficult. So I think the answer has to be no. She has questioned whether the 3-year holding period is too long. I think it is a reasonable period if we assume that people who buy properties for genuine purposes, either for own use or for investment, would not normally sell in under three years. Shortening the period could be done, but I think it will not be as effective in curbing speculation. We could say two years. It is arbitrary. Three years is reasonable. Anybody who buys a property for genuine use or for genuine investment would not normally sell it in under three years. On the question of multiple ownership of a property where shareholdings are not specified, I think I have already answered this in my response to Dr Ow's question. If shareholdings are not specified and there are more than two owners, for example, it will be divided equally between shareholders until proven otherwise. I am not clear exactly what the last question was. It had something to do with non-taxable properties?

Where the property is held in trust after 15th May option, who is liable for income tax?

Whoever sells it. The question is: who has effected the sale? Where do the proceeds lie? The person to whom the proceeds accrue will be liable to tax.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. -- [Dr Richard Hu Tsu Tau]. Bill considered in Committee.

Clause 1 ordered to stand part of the Bill. Clause 2 --

Clause 2. There are 11 amendments. Amendment No. (1), Dr Hu.

Sir, I beg to move, In page 2, line 38, to leave out "Where" and insert "Unless regulations made under subsection (9) otherwise provide, where". The reason for this amendment is to enable regulations to be made with regard to the determination of the date of purchase or sale of different classes of properties. Amendment agreed to.

Amendment No. (2), Dr Hu.

Sir, I beg to move, In page 4, to leave out line 3 (including marginal reference) and insert "any written law". Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (3), Dr Hu.

Sir, I beg to move, In page 4, to leave out lines 6, 7 and 8 and insert "without any option to purchase and which is for a term not exceeding 7 years in the aggregate;". This amendment is to exclude leases which do not have an option to purchase and which is for a term not exceeding seven years from the ambit of the tax measures. Amendment agreed to.

Amendment No. (4), Dr Hu.

Sir, I beg to move, In page 4, to leave out line 9 and insert -- "(e) as a result of repossession and termination of a lease by any statutory body under the written law establishing that statutory body; (f) in accordance with any provision of the Residential Property Act (Cap.274) or any notice or direction issued thereunder; or". This is to specifically provide the disposals under the following circumstances will be excluded from the ambit of the tax measures: (i) disposal as a result of repossession and termination of a lease by a statutory body; and (ii) disposals required under the Residential Property Act. Amendment agreed to.

Amendment No. (5), Dr Hu.

Sir, I beg to move, In page 6, after line 12, to insert -- "(d) for prescribing a different time of acquisition or disposal of any real property or class of real property, or by any person or class of persons; and". The reason for this amendment is similar to amendment No.

Amendment No. 6, Dr Hu.

Sir, I beg to move, In page 7, line 16, to leave out "of such" where they secondly occur. Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (7), Dr Hu.

Sir, I beg to move, In page 8, line 13, after ""acquire"", to insert ", in relation to any shares in a relevant company,". This is to make clear that this section is referring to acquisition of shares in a relevant company. Amendment agreed to.

Amendment No. (8), Dr Hu.

Sir, I beg to move, In page 8, to leave out line 32. Sir, there is no need for such an exclusion provision with regard to the disposal of shares. Amendment agreed to.

Amendment No. (9), Dr Hu.

Sir, I beg to move, In page 11, line 12, to leave out "a" and insert "one or more". Sir, this is a drafting amendment. Amendment agreed to.

Amendment No. (10), Dr Hu.

Sir, I beg to move, In page 11, line 13, to leave out "company" and insert "companies". Sir, this is a consequential amendment. Amendment agreed to.

Amendment No. (11), Dr Hu.

Sir, I beg to move, In page 12, after line 16, to insert -- "(f) the date of acquisition or disposal of any real property shall be determined in accordance with section 10F.". Sir, this is to make clear that the date of acquisition or disposal of property held by a relevant company will be determined in the same manner as that under section 10F. Amendment agreed to.

The followng six consequential amendments will be made: (1) In page 4, line 10, to re-letter paragraph (f) as paragraph (g). (2) In page 6, line 12, to leave out "and". (3) In page 6, line 13, to re-letter paragraph (d) as paragraph (e). (4) In page 8, line 31, after "winding-up;", to insert "or". (5) In page 8, line 33, to re-letter paragraph (d) as paragraph (c). (6) In page 12, line 16, to leave out the full-stop and insert a semi-colon. Clause 2, as amended, ordered to stand part of the Bill. Clauses 3 and 4 ordered to stand part of the Bill. Bill reported with amendments; read a Third time and passed.

Resolved, "That Parliament do now adjourn to a date to be fixed." -- [Dr Lee Boon Yang]. Adjourned accordingly at Fourteen Minutes to Four o'clock pm to a date to be fixed.

asked the Prime Minister if he will consider reinstating the Rochore and Telok Ayer Constituencies in recognition of the tremendous contributions made by the former Members of Parliament for these constituencies, namely, Dr Toh Chin Chye and Mr Ong Pang Boon, during the struggle for nationhood and the early years of post-independence economic and social progress.

The electoral boundaries of Rochore and Telok Ayer had to be changed in 1988 to reflect population shifts and the creation of Group Representation Constituencies. Dr Toh Chin Chye and Mr Ong Pang Boon have made significant contributions to Singapore. But we need not recognise their contributions by reinstating the Rochore and Telok Ayer Constituencies. They can be remembered in other ways.

asked the Minister for Home Affairs (a) what are the functions of the Gurkha guards; (b) how many of them are employed by the Government; and (c) what is the annual expenditure needed to maintain the Gurkha contingent.

The function of the Gurkha Contingent is to guard selected key installations and locations in Singapore. These include the Istana, the penal institutions, the drug rehabilitation centres and the premises of the Board of Commissioners of Currency. The Gurkhas belong to the Gurkha Contingent of the Singapore Police Force. Its present strength is 1,177 men, comprising 36 senior officers and 1,141 junior officers. The operating budget for the Gurkha Contingent in FY 96 is $40.22 m. This comprises $34.25 million in manpower costs, and $5.97 million in other operating expenditure.

asked the Minister for Education if he will clarify whether relief teaching is a prerequisite for admission to the National Institute of Education and, if so, what are the details of this requirement and the rationale for it.

Relief teaching is not a pre-requisite for admission to the National Institute of Education.

asked the Minister for National Development whether the Housing and Development Board allows supermarket tenants to partition and sublet part of their unit to sell cooked food.

Supermarkets in HDB estates are of varying sizes, ranging from about 300 sq m to 5,000 sq m. For the larger supermarkets, HDB allows tenants to sublet a small portion of the supermarket space for the sale of pre-cooked food/snacks for off-premises consumption. This is provided the tenant fulfills HDB's criteria for subletting.

asked the Minister for National Development if he will give (i) more details on the compensation package for the affected tenants of rental flats and the affected owners of 1-room flats in the Ang Mo Kio Selective En-bloc Redevelopment Scheme; and (ii) an assurance that these people will not be affected adversely.

The Government has put together a very attractive compensation package for lessees affected by the Selective En-bloc Redevelopment Scheme (SERS) so that no one would be deprived of a home. The compensation package for lessees in the Ang Mo Kio site is the same as that announced for the other sites. This is as follows: (A) Compensation Package for Flat-Owners (including 1-room flats) Under SERS, owners of flats, including the 1-room flats at Block 309 Ang Mo Kio Avenue 1, are compensated at the prevailing market values of their existing flats as at 30th June 1996 when SERS was announced. For the 1-room flats, this is estimated to be about $50,000 to $70,000. In addition, the flat owners are given a package of rehousing benefits as follows: (a) assured allocation of a new replacement flat (4- or 5-room) at the vacant site south of Townsville Primary School; (b) discount equivalent to 20% of the selling prices of the replacement flats, subject to a maximum of $30,000 for eligible owners. If they sell their flats to eligible buyers, their flats command a significant premium because of the SERS benefits. The selling prices of the new replacement flats are frozen as at the date of the SERS announcement ranging from $182,000 to $232,000 for a 4-room flat (90/95 m²) and $303,000 to $369,000 for a 5-room flat (110 m²). For some of the affected 1-room flat owners who are unable to afford the new 4-room replacement flats, the following options are available: (a) they can include their parents/children as co-lessees of the new replacement flats to assist in the payment of the new replacement flats; (b) they can purchase directly from HDB 3-room buy-back flats or 2-room upgraded flat (subject to availability); (c) they can sell their existing flats with their rehousing benefits to eligible buyers (who must be eligible to buy flats directly from HDB). The sale will fetch a premium for the rehousing benefits. Combining the sale proceeds with their CPF savings, they should be able to buy a 2-room or 3-room resale flat from the open market. (B) Relocation Benefits to Tenants of Rental Flats In tandem with the redevelopment of Blocks 307,308, 309, 315 and 316 at Ang Mo Kio Avenue 1 under SERS, 6 units of 1-room rental flats at Block 309 and 154 units of 2-room rental flats at Block 310 Ang Mo Kio Avenue 1 will be relocated. The relocation benefits for the affected eligible flat tenants are as follows: (a) Priority allocation of: (i) surplus new flats to be built at the vacant site south of Townsville Primary School for tenants of Block 309 and at the present site of Blocks 309, 315 and 316 for tenants of Block 310 (see site plan at Annex A (Cols. 473 - 474)); or (ii) new flats in non-mature estates under the Registration for Flat System; or (iii) 2-room upgraded flats or 3-room buy-back flats (subject to availability). (b) waiver of registration fees for tenants purchasing flats under the Registration for Flat System; (c) waiver of booking fees for tenants purchasing 4-room (90 m²) or smaller flats; (d) higher quantum of mortgage loan for tenants if they purchase an HDB flat as follows: (i) for 4-room (90 m²) or smaller flats, up to 100% of the selling price or the market valuation, whichever is lower; (ii) for other flats, 90% of the selling price or 90% of the market valuation, whichever is lower. (e) for those whose new sold flats allocated are under construction, allocation of rental flats as temporary accommodation; (f) for tenants wishing to continue to rent a flat, priority allocation for rental flats in the same or nearby estates; and (g) a removal allowance of $1,000. Annex A - ANG MO KIO/AVE 1/ST 32 REDEVELOPMENT (Cols. 473 - 474) In all the seven SERS sites announced to-date, the response from the lessees and tenants has been very good. Most residents opt for bigger flat-types as their replacement flats. This is so even for those living in smaller flats. For example, from a survey done amongst 1-room lessees in the Redhill SERS site, 68% indicated that they would opt for a 4- or 5-room flat. Only 32% of the lessees indicated that they would opt for a 2-room upgraded or 3-room buy-back flat.

asked the Minister for National Development, for each of the years from 1990 to 1995 and the first two quarters of 1996, how many foreigners bought residential properties in districts 9, 10 and 11 and what was the percentage of foreign ownership in these districts.

Detailed data on foreign ownership of private residential properties are not available as they were not fully captured in the past. URA is now working with IRAS to track and update the data on foreign ownership of private residential property stock. These will be released in URA's quarterly Stock & Occupancy Data starting in the second quarter of 1996. Annex - Table 1: Rebates Granted in FY96 Budget ($), Table 2: Rebates Granted After Revision ($), Table 3: Schedule of Utilities Rebates (Cols. 471 - 472) Annex A - ANG MO KIO/AVE 1/ST 32 REDEVELOPMENT (Cols. 473 - 474)