Hansard, 1999-11-23

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: NameFromTo (1999)(1999) Mr Ong Kian Min16 Oct25 Oct 9 Nov15 Nov 21 Nov24 Nov Dr Ho Tat Kin17 Oct26 Oct 25 Nov2 Dec Dr Ow Chin Hock20 Oct1 Nov NameFromTo (1999)(1999) Mr Inderjit Singh22 Oct24 Oct 31 Oct5 Nov 18 Nov9 Dec BG Lee Hsien Loong23 Oct13 Nov 4 Dec16 Dec Mr Loh Meng See23 Oct5 Nov 6 Dec12 Dec Mr Low Thia Khiang23 Oct9 Nov Mr Abdullah Tarmugi24 Oct27 Oct 22 Nov26 Nov Dr Teo Ho Pin24 Oct28 Oct Mr Ahmad Md Magad24 Oct3 Nov 9 Nov17 Nov Prof S Jayakumar24 Oct27 Oct 10 Nov17 Nov 25 Nov29 Nov BG George Yong-Boon Yeo24 Oct4 Nov 25 Nov10 Dec 13 Dec24 Dec Mr Zainul Abidin Rasheed25 Oct27 Oct Mr Lim Hng Kiang25 Oct27 Oct 9 Dec23 Dec Mr Chan Soo Sen25 Oct3 Nov 6 Dec17 Dec Dr Tony Tan Keng Yam25 Oct4 Nov 6 Dec11 Dec Mr Kenneth Chen Koon Lap27 Oct30 Oct Dr Wan Soon Bee27 Oct31 Oct Mr Mah Bow Tan29 Oct31 Oct 11 Dec27 Dec Mr Thomas Thomas29 Oct8 Nov Mr Lew Syn Pau1 Nov3 Nov 11 Nov12 Nov Mr Tang Guan Seng2 Nov5 Nov Mr K Shanmugam3 Nov6 Nov 23 Nov24 Nov Mr Tan Soo Khoon3 Nov8 Nov 11 Nov12 Nov 15 Nov19 Nov Mr Zulkifli Baharudin4 Nov5 Nov 11 Nov12 Nov 15 Nov17 Nov Assoc Prof Toh See Kiat4 Nov9 Nov 27 Nov17 Dec Dr Lily Neo5 Nov8 Nov Encik Yatiman Yusof6 Nov8 Nov Dr Lee Boon Yang6 Nov8 Nov 24 Nov30 Nov Mr Peh Chin Hua8 Nov12 Nov 24 Nov4 Dec Mr R Sinnakaruppan9 Nov10 Nov NameFromTo (1999)(1999) Mr Lim Swee Say9 Nov20 Nov 4 Dec8 Dec 16 Dec23 Dec Mr Goh Chok Tong10 Nov16 Nov 26 Nov28 Nov Mr Yeo Guat Kwang12 Nov13 Nov Mr Heng Chiang Meng14 Nov18 Nov 23 Nov24 Nov Mr Bernard Chen14 Nov20 Nov Mr Wong Kan Seng15 Nov17 Nov Mr Sin Boon Ann15 Nov27 Nov Mr Tay Beng Chuan16 Nov19 Nov Mr Simon Tay16 Nov19 Nov Mr David T E Lim16 Nov20 Nov 24 Nov4 Dec Mr Charles Chong17 Nov19 Nov Assoc Prof Low Seow Chay19 Nov24 Nov Encik Sidek bin Saniff20 Nov21 Nov Mr Seng Han Thong22 Nov26 Nov 6 Dec16 Dec Mr Davinder Singh 23 Nov23 Nov 26 Nov28 Nov 11 Dec18 Dec Mr Leong Horn Kee23 Nov25 Nov 9 Dec17 Dec Dr Michael Lim Chun Leng23 Nov7 Dec Mr Tay Beng Chuan 24 Nov24 Nov Dr Hu Tsu Tau, Richard24 Nov27 Nov Radm Teo Chee Hean25 Nov26 Nov 8 Dec11 Dec 15 Dec18 Dec Dr Ker Sin Tze25 Nov4 Dec Mr Mohamad Maidin B P M25 Nov6 Dec Dr Tan Cheng Bock25 Nov7 Dec Mr Goh Chong Chia26 Nov20 Dec Mr Goh Chee Wee27 Nov4 Dec 11 Dec18 Dec Dr Wang Kai Yuen27 Nov8 Dec Assoc Prof Ho Peng Kee5 Dec12 Dec Assoc Prof Koo Tsai Kee5 Dec15 Dec 24 Dec29 Dec Dr John Chen Seow Phun9 Dec22 Dec TAN SOO KHOON Speaker Parliament of Singapore

Order. The hon. Member desirous of taking his seat will please come forward when his name is called. The following Member made an Affirmation of Allegiance: Mr Tay Beng Chuan (Nominated Member of Parliament).

I welcome the hon. Member and look forward to his participation in the proceedings of this House.

I have to inform hon. Members that I have on 14th October 1999 communicated to the President the Address agreed to by Resolution of this Parliament on 13th October 1999. I have received a reply from the President acknowledging receipt of the kind message of Parliament.

asked the Prime Minister, in view of Indonesia's present political stability and international confidence, whether there are specific plans for Singapore to strengthen bilateral ties and play a catalyst role to assist Indonesia's economic recovery through significant investments in Indonesia.

Sir, before I ask my question, I would like to declare my interest, if any, that I work for a group of companies that has interests in Indonesia. Question No. 1, Sir.

(for the Prime Minister): Mr Speaker, Sir, if I am not mistaken, the Member had filed the Question before the official visit of the Indonesian President but since then the Prime Minister Mr Goh Chok Tong has set out Singapore's views on the subject quite fully when President Abdurrahman Wahid made his official visit to Singapore on 6thNovember 1999. Indonesia is one of our closest neighbours and a major trading partner. We would like to see a prosperous and stable Indonesia. We are ready to work with Indonesia to assist in its economic recovery. Singapore is a small country and our contribution can only be modest. However, Singapore can play a catalytic role to help restore investor confidence through practical measures. Our existing cooperation platforms can be leveraged to help Indonesia achieve early results in bringing back investor confidence. In particular, we can focus on the Riau cooperation projects, which are symbols of the close bilateral cooperation between Indonesia and Singapore. These projects have withstood the regional crisis. But their potential has not been fully realised. We can explore how the Riau cooperation projects can be further expanded to bring in more foreign investments into the Riau islands - Batam, Bintan and Karimun. This would have a demonstrative effect on international investor confidence for the rest of Indonesia. President Abdurrahman Wahid disclosed in Singapore that Indonesia was thinking of turning Batam into a Free Trade Zone (FTZ). We believe this is a good idea. Batam will then be on par with Singapore because Singapore is also a free trade zone. This will increase Batam's attractiveness for foreign investments and create more employment opportunities for Indonesians. Singapore can also work with Indonesia to intensify tourism cooperation. Indonesia's tourism potential is enormous and we are prepared to work with Indonesia to re-launch the Indonesia-Singapore Tourism Cooperation programme. Apart from bringing in foreign exchange and creating jobs, there will also be positive spin-offs for the other sectors and industries in Indonesia. In the coming months, we will have close consultations with the Indonesian government on these ideas. Prime Minister Goh has announced that he will lead a business delegation to Indonesia sometime early next year. To lay the groundwork for the Prime Minister's visit, Mr Philip Yeo, Chairman EDB, will lead a delegation of senior officials to Jakarta at the end of this month to hold discussions with the Indonesian authorities.

Sir, I would like to find out whether there is a possibility of setting up a Singapore-Indonesia Business Council, as we have done for bilateral business relationships with other countries.

Sir, I would not like at this stage to anticipate too much and try to predict the various outcomes. Let us wait for the mission to be led by Mr Philip Yeo to go and assess the situation. This was the first meeting at the Heads of Government level with the new President. The key, as we have said in many statements issued, is really the restoration of investor confidence, stability and to restore the linkages between the private sector. The question of what kind of mechanism, whether Business Council or otherwise, of course can be explored if and when this question arises later. But at the moment I think the area that we have pinpointed, such as restoring of stability and investor confidence, is the key. The form and the instrument may be looked at later.

Sir, would the Minister update the House on the Singapore-Indonesia Bilateral Trade Finance Guarantee (BTFG) scheme proposed by Singapore in 1998 to help restore established trade between Singapore and Indonesia?

Sir, I think the Member would have read that this proposal has not been acceptable to the Indonesians because the conditions and safeguards which we have proposed were, in their view, not agreeable. So this proposal has not been taken up.

Sir, in this regard, does the Minister see that there is a window of opportunity for better relations and that in this relationship improvements can be made in terms of governance and rule of law to attract more investors?

I am not sure if I understood the thrust of his question. But if his question is that this is a good window of opportunity during which to work with the Indonesian government to improve bilateral and economic relations, the answer is, as we have said, yes because the new government is, in our view, the best possible team in the circumstances. They have both legitimacy and moral authority and during the discussions that took place here as well as in the press conference, President Abdurrahman Wahid made it clear that he is intent on restoring investor confidence and bringing about stability in Indonesia.

May I ask the Minister, digressing a little from the economic ties and cooperation, whether there are any lessons for Singapore to be learned from the political transition that has taken place in Indonesia?

The lesson to all is that Singapore's policies, both economic and political, and the policy of social cohesion and integration which this Government has pursued since independence have worked for Singapore and all of us, both the Government and the people of Singapore, must ensure rigorously that these policies are supported and continue to work in Singapore. This has kept Singapore going despite enormous obstacles, including the financial crisis and the lesson to be learned from what is happening in the rest of the region is that when we have a good formula and recipe for Singapore's success, let us all work together to make sure that it is not in any way undermined.

Sir, does the Government appreciate that Indonesia has opened up a host of freedoms for the people which may lead to Indonesia becoming a democracy? Does Singapore intend to follow in that lead or not?

Mr Speaker, Sir, I humoured him by giving an answer to a question which was really off the point in my view, but his further question would be a repetition of what I believe he is going to raise in his motion which is tabled for consideration in this House later.

asked the Deputy Prime Minister if he will (a) update the House on the latest position on the Central Limit Order Book (CLOB) saga and whether there is a solution in sight; and (b) clarify the role of the Securities Investors Association (Singapore) and whether the Association is in a position to handle the issue satisfactorily.

Mr Speaker, Sir, I last updated Parliament on the CLOB issue in August. The Stock Exchange of Singapore (SES) had submitted a proposal to the Kuala Lumpur Stock Exchange (KLSE) on 5th July of this year, suggesting a staggered release of CLOB securities over 12 months. The proposal was without prejudice to SES' rights under the CDP-SCANS agreement. The KLSE subsequently sought clarification on SES' proposal. In particular, it asked for assurance that the staggered crediting of CLOB shares would not be detrimental to the Malaysian stock market. KLSE wrote to SES twice, on 15th July and 5th August. SES responded with relevant data and calculations demonstrating that the resulting impact should be minimal. SES replied to KLSE's first letter on 23rd July, and KLSE's latest queries by 3rd September. There has been no further response from the KLSE since then. SES sent a reminder to KLSE on 15th November 1999. We believe that SES' proposal is reasonable and addresses Malaysia's concern of volatility on the KLSE if CLOB shares were to be released all at once. The Securities Investors Association of Singapore (SIAS) has also indicated its support for the proposal. Members would have read in the papers about several private sector offers. The offerors have been in contact with the SES, and also with the Registrar of Companies and Businesses. The Central Depository (CDP) as bare trustee will carry out its obligation to inform CLOB investors of these offers when requisite regulatory approvals have been obtained. RCB will register prospectuses that are submitted if they comply with the Companies Act's requirements. The RCB has stated that it will take into account all factors, including the views of SIAS, when deciding whether it is in the public interest to register the offer documents. Some of the private offerors have been in communication with SIAS. But so far none of the proposals have reached fruition. The SIAS has played a useful and independent role, representing the interests of CLOB investors. That interested and public spirited Singaporeans have come forward to volunteer their services to tackle this problem is very heartening, and bodes well for the development of civil society in Singapore. The SIAS has recently formed a financial advisory group comprising experienced practitioners in the securities industry, which will help SIAS to evaluate private sector offers independently and objectively, before making its recommendations to CLOB investors. Recent articles in the Malaysian press have suggested that resolution of the CLOB issue would be a priority for Malaysia after the general elections. Singapore hopes that this will be the case, as it is in the interest of all parties to resolve the issue fairly and expeditiously.

Sir, can I ask the Deputy Prime Minister to clarify the legal position of the CDP as well as the 172,000 CLOB investors?

Mr Speaker, Sir, the CDP has now obtained comprehensive legal advice, including that of Malaysian lawyers and a few Queen's Counsels. The legal advisers are unanimous in their view that CDP and CLOB investors have a strong position in law and their rights over CLOB shares are indisputable. The CDP had complied with Malaysian law. Specifically, the CDP-SCANS agreement which contains precise arrangements for CLOB securities to be transferred into individual accounts with the Malaysian Central Depository for trading on the KLSE is legally binding and is specifically enforceable in Malaysian courts.

Sir, can I ask the Deputy Prime Minister to clarify what would be the status of the CDP's authorised nominee status after 31st December 1999?

Mr Speaker, Sir, the lawyers have also advised on what would happen if the CDP's authorised nominee status is not extended beyond the end of the year. Some CLOB investors are concerned that MCD will transfer the CLOB securities to the Malaysian Minister of Finance after 31st December for subsequent disposal by him. QC has advised that there is no basis in law for such a transfer to the Malaysian Minister of Finance. Indeed, the MCD has a statutory duty to transfer the CLOB securities into the beneficial owners' individual securities accounts under Malaysian laws. The SES wrote to MCD on 26th October to ask if it is their intention to maintain the status quo after 31st December by extending CDP's authorised nominee status. The SES is still waiting for MCD's response.

Sir, can I ask the Deputy Prime Minister whether the Singapore Government has considered taking action at the World Trade Organisation?

Mr Speaker, Sir, the Singapore Government has taken advice on possible proceedings at the World Trade Organisation forum from leading legal counsel that specialises in WTO issues. The counsel has advised that the CLOB issue is within WTO's jurisdiction and Singapore has valid grounds for seeking redress at WTO on the matter. Malaysia's actions are inconsistent with its obligations under the WTO's General Agreement on Trade and Services (GATS). Under the GATS agreement, of which Malaysia is a signatory, countries are entitled to accept most favoured nation obligations that are mutually binding. The obligation is to accord all financial services and service suppliers of other WTO members treatment that is no less favourable than that given to similar service and service suppliers of other countries. There must not be discrimination between countries. Today, scrip-based trading of Malaysian securities continues freely on two foreign exchanges within the European Community - the London Stock Exchange and the Copenhagen Stock Exchange. The Malaysian Securities Commission has issued a statement specifically recognising both of these as exempt markets, and yet Malaysian legislation has forced the discontinuance of CLOB International and caused the securities traded on it to be frozen. And this is a denial of most favoured nation (MFN) status that Singapore is entitled to.

Mr Speaker, Sir, will the Deputy Prime Minister give the House some indication as to when the matter will be settled after next week, ie, after the Malaysian general elections? Secondly, what is the timeframe in which this matter will be taken up with the World Trade Organisation?

Mr Speaker, Sir, I am not able to say when the matter will be settled. It very much depends on the Malaysian authorities. We are raising the matter with them and we will continue to do so. As to whether we would raise the matter in the WTO, that depends on what progress we make in our bilateral discussions with the Malaysians. I think it is an issue to be considered carefully.

Sir, can I ask the Minister whether the Government has a view on Mr Akbar Khan's irrevocable request and authority scheme (IRAS)?

Mr Speaker, Sir, Mr Akbar Khan, in his press statement on 18th November, proposed an irrevocable request and authority scheme. This is in addition to his closed-end fund offer for which he has submitted proposed offer documents to the Registrar of Companies and Businesses (RCB). The RCB is reviewing the documents and has stated that it will take into account all information including SIAS' views in determining if it is in the public interest to register the documents. SIAS has been in contact with Mr Khan and has said that it is waiting for relevant information from him that will enable it to come to a responsible view. Mr Khan's IRAS offer does not require RCB's approval. However, the SES will require clear and legally binding understanding with KLSE on any migration schedule. The KLSE has yet to indicate its position on either the SES' proposal for a 12-month migration of CLOB shares or Mr Khan's proposal for a 15-month migration of shares after a further 12-month lock-up period. The lock-up period is 7 months for warrants and derived instruments, but 12 months for shares. The CDP will not be able to put the migration proposal to investors without an unequivocal and binding commitment from the KLSE. As and when the offers have been given official approval and accompanied by clear commitments from the KLSE, the CDP will be able to put them to CLOB investors. CLOB investors will have to study them carefully and calmly before deciding for themselves whether to take them up. They should consider all relevant factors, including their legal rights as owners of the CLOB shares.

asked the Minister for Manpower what additional safety measures will be in place in construction sites to ensure that accidents such as the toppling of a crane at a North East Line MRT station worksite, do not recur.

Mr Speaker, Sir, in September 1998, my Ministry introduced new regulations to enhance the safety of crane operations in Singapore. Under the new regulations, only operators registered with the Ministry are allowed to operate mobile cranes and tower cranes. The Factories (Operation of Cranes) Regulations prescribe safety rules that these operators must follow. Their registration would be suspended or cancelled if they are found not to have complied with these rules. The Regulations also require that all lifting operations using mobile or tower cranes be supervised by competent lifting supervisors who must have completed a course of training on lifting supervision. Other than these, the Regulations also specify that installation and dismantling of a mobile or a tower crane, or any repair affecting the structural integrity of such crane be carried out only by approved contractors. Crane operators who conscientiously follow the regulations will be able to avoid accidents involving their operations. As for the case mentioned by the Member for Kreta Ayer-Tanglin GRC, where a crane had toppled and fell onto a moving vehicle, investigation is still underway. My Ministry viewed this case seriously as such an accident could take disastrous proportions. Contractors involved in the construction of the North-East MRT lines are reminded that because of their proximity to public thoroughfare, they need to take extra precautions when conducting lifting operations. This is also generally true for those contractors with projects nearby public places. Sir, my Ministry officials have worked with LTA on the measures that could be taken to prevent recurrence. These include the tightening of the system of checks to ensure that all lifting operations are conducted safely. A standardised permit-to-lift system is currently being studied and, if found feasible, will be introduced to these contractors. Under the system, all lifting operations can only be carried out after a written permit for the lift has been endorsed by the lifting supervisor. Before endorsing such permit, the supervisor is expected to check thoroughly the suitability of the crane for the lift, the ground and environmental conditions, the qualification of the operator, the rigging of the load and so on. These checks are to be done with the help of suitably qualified persons on site, such as the site engineer. Only after these checks have been made can the lifting operation commence. Sir, to ensure compliance with the safety requirements in lifting operations, the Ministry will continue to conduct special enforcement exercises targeted at premises which use cranes. Occupiers found flouting these safety requirements would face the issue of stop work orders and be charged in court.

Sir, even today, there is a report in the Straits Times about another accident at a construction site. I would like to ask the Minister of State whether there is an increasing trend of accidents at construction sites this year as compared to past years.

Sir, accidents of this nature are quite rare. In fact, for this year, there were very few cases. I do not have the details now, but if the Member needs the information, I will let him have it.

asked the Minister for Manpower if he will provide (i) data on the number of Central Provident Fund (CPF) members, since 1st January 1999, who had insufficient funds in their CPF Ordinary Account to meet housing loan repayments and had to draw down from their Special Account or had to reschedule their loans or were not capable of servicing their loans, and (ii) comparative figures for the last few years.

Manpower): Sir, as at 31st October 1999, 62,469 members had used CPF savings from their Special Account for their housing loan repayments under the scheme to assist such members following the 10% point reduction in employer's CPF contribution rate. From December 1998 to October 1999, HDB had also assisted a total of 14,877 mortgagors to reschedule their mortgage loan instalments or convert their loans to reduced repayment scheme or to include working family members as joint-owners to help to settle arrears. Another 261 HDB mortgagors were allowed to settle their mortgage arrears by instalment plan. Sir, the percentage of CPF members who has insufficient funds in their CPF Ordinary Accounts to meet monthly housing instalment payments in 1999 is slightly higher than that in 1998. From January 1999 when the CPF cut came into effect to October 1999, about 5% of CPF members who pay their mortgage repayments with CPF savings has insufficient funds in their Ordinary Accounts to meet monthly housing loan repayments for their HDB and private property, as compared with the average of 3.6% in 1998. However, the 5% includes cases where members may have used their CPF savings for other purposes such as insurance and investment.

asked the Minister for Communications and Information Technology if the Telecommunication Authority of Singapore will make public its rationale for its policy decisions so as to improve the development of the communications industry. The Minister for Communications and Information Technology (Mr Yeo Cheow Tong): Mr Speaker, Sir, the Telecommunication Authority of Singapore (TAS) has taken various steps to publicise the rationale for its policy decisions. For example, it has publicly explained its key policy decisions through press releases. Policy papers are also posted regularly on the TAS web-site. In addition, TAS has disseminated such information through its quarterly magazine VISTAS, which is freely distributed and is also on the TAS web-site. TAS recognises that the telecommunications industry is driven by rapid technological advances and changes in business environment. Industry consultation is thus important. In line with this, TAS has recently launched a quarterly info-communications industry forum. Such forums enable TAS to obtain views and feedback on key evolving issues before policies are finalised. In addition, TAS has sent draft policy proposals, where appropriate, to key industry players to seek feedback prior to implementation. This approach will lead to more appropriate and robust policies, and help the industry and the public to better understand the basis and rationale behind the policy decisions. Nonetheless, in the continuing liberalisation of the telecommunications industry, it is inevitable that tough decisions will have to be made from time to time. These decisions may not always be favourable to all the operators. What is important for TAS is to ensure fair and sustainable competition within the industry, as well as safeguard consumer interests. Looking ahead, as fair and market-driven competition develops in the telecommunications industry, TAS will be able to regulate with a lighter touch. This will allow more freedom for telecommunications operators to innovate and compete in a liberalised environment.

Mr Speaker, Sir, will the Minister say that he is satisfied with the performance of TAS despite the comments made by the chiefs of Singapore Telecoms and Pacific Internet?

Sir, as I have mentioned just now, tough decisions have to be made and inevitably when tough decisions have to be made, those who benefit will be very happy, but quietly happy. While those who have been adversely impacted will, of course, have to make their objections heard very loudly. This is what we are seeing.

asked the Minister for Communications and Information Technology if he will explain the rationale for the proposed merger between the Singapore MRT Ltd and Trans-Island Bus Services Ltd and the reasons for its failure to complete. The Minister of State for Communications and Information Technology (Dr John Chen Seow Phun) (for the Minister for Communications and Information Technology): Sir, in the 1996 White Paper on World Class Land Transport System, the Government had envisaged an excellent, integrated and seamless public transport as a cornerstone of our land transport policy. It anticipated the need to expand the rapid transit system (RTS) and to integrate the network of rail and bus systems. Integration of rail and bus services requires public transport operators to plan for multi-modal operations so that they provide services for the entire journey, and not just individual legs of a journey on single modes. Through integration of rail and bus, multi-modal public transport operators will be able to not only improve their services to the commuters, but also optimise resources and reap economies of scale and synergies in operating across the different transport modes. Our view is that the size of our public transport market will have room for two or more multi-modal operators for better competitive services. The benchmarking and competition between two or more multi-modal operators will result in a more efficient public transport industry. The merger discussions between Singapore MRT Ltd and Trans-Island Bus Services Ltd to form a multi-modal operator were based strictly on commercial considerations. The two companies have announced that they were unable to conclude the discussions successfully. SMRT has explained that it has decided to seek a listing on the Stock Exchange of Singapore to enable it to establish the market value of its shares, and give the company greater flexibility in future discussions with possible merger partners. On MCIT's part, our policy on promoting multi-modal transport operations remains unchanged. As both SMRT and TIBS have said that they will consider all options, we should await their proposals.

Sir, will the Minister clarify the position? There seems to be a public perception that this proposed merger between SMRT and TIBS is a Government-sponsored matter. As a result of that, there was a run up in prices and shareholders who bought the shares at $4 have now lost money. Should the Government not have responded much earlier and made the position very clear that this is not a Government-sponsored matter?

Sir, the Government sets the policy direction and the policy direction for the industry is that we want to promote multi-modal players. But how they form a multi-modal company is up to the individual companies to decide. So if they had decided not to proceed but to do other things first, it is purely based on their own consideration.

Is the Minister of State saying that the Government has got nothing to do with this proposed merger between SMRT and Trans-Island Bus Services Ltd?

What I am saying is that the Government had made known its policy of wanting to promote multi-modal operations. It was stated in the White Paper, and with the award of the North-East line to SBS, it is another indication that this is something we want to do. But whether private and publicly listed companies can come to terms is beyond our control.

asked the Minister for Communications and Information Technology, in view of the trend towards multiple providers of multi-modal transportation, if he will ensure that a standard set of symbols or signages be used for rail services in order to help the public achieve the benefits of integrated travel services.

Communications and Information Technology): Mr Speaker, Sir, yes, I would like to inform the Member that the Land Transport Authority will be implementing a system of signage that will apply consistently for the different modes of public transport, as part of the move towards the provision of integrated multi-modal services. The system will use both pictograms and words to denote the different transport modes. For example, a pictogram of a train and the words "MRT" will be used at all MRT stations, regardless of who operates it.

asked the Minister for Communications and Information Technology whether he will consider introducing Certificate of Entitlement (COE) for small cars with engine capacity of less than 1,000 cubic centimetres instead of grouping such cars with the COE of bigger cars and in this way making small cars more affordable for those with lower income.

Communications and Information Technology): Mr Speaker, Sir, the COE categories for small and medium sized cars were merged into one category, Category A, in April this year, after a review of the Vehicle Quota System by the Government Parliamentary Committee (GPC) for Communications, led by the GPC Chairman, Mr Chay Wai Chuen. The GPC had noted that the COE quota for the small cars was becoming too small, and that a separate COE quota for small cars did not necessarily result in lower COE premiums for small cars compared to other COE categories. In fact, Category 1 premiums had at times been similar to or more than Category 2 premiums. It therefore recommended the merger of the COEs for small and medium sized cars to form a larger quota to bring about more stable COE prices. At the same time, car buyers will have greater flexibility in deciding on their choice of car models if the COE category covers a broader range of cars. The GPC is correct. Merging Category 1 and Category 2 into Category A would result in a more efficient market without necessarily raising the COE premiums for small cars. A car buyer with a Category A COE will have a greater choice of car models to choose from. He may decide to buy a smaller car or a bigger one, according to his budget. To cite an example, in 1998 during the economic downturn, many car buyers, having an Open Category COE, decided to buy a small or medium sized car - 41% used the Open COE to register Category 1 and Category 2 cars, instead of large and luxury cars. This is the advantage of collapsing COE categories, as car buyers benefit from having a wider choice over how to use their COEs to purchase cars according to their affordability. Fundamentally, COE premiums are dependent on the demand for cars. This in turn depends on the state of the economy and expectations of future growth. The economic recovery and lower financing costs have helped to increase the purchasing power of consumers, and this has led to a higher demand for cars. This has resulted in a rise in COE prices, despite the 58% increase in the number of COEs from last year to this year. With the recent economic recovery, COE for this month has bunched around $43,000 and $44,000 for the Category A, Category B and the Open Category, despite the existence of the different categories.

By the Minister's argument, there seems to be a compelling case to collapse both categories of cars from A and B to even one single category.

Sir, there is no plan at the moment to do that, but if the Member feels that we should do it, let him write a proposal to the Ministry and we will consider it.

Mr Speaker, Sir, in fact, I mentioned during the Budget discussion that I support a single category for all cars.

All right, we will take that into consideration the next time when we review the Vehicle Quota System.

Would the Minister elaborate, since the introduction of Category A, what proportion of the COE entitlements have been used for cars of 1,000 cc or less? And how does that compare with the allocation under Category 1 previously?

The Member has asked for some figures. As far as I know, the number of small cars registered has dropped. This was because of the competition between the small car dealers and the big car dealers. That is why the new policy is correct. Under the old policy, the small car dealers were in a way protected. With this change in policy, I have received feedback from the small car dealers that they now have to compete with the big cars, because the big cars are not necessarily more expensive than small cars. In fact, data have shown that some of the big cars are cheaper than the small cars. Because of greater competition, I think the motorists benefit. To answer the Member's question, there is, in fact, a reduction in the registration of small cars but that is due to the keener competition between the dealers.

Given the collapsing of the categories into Category A and that more people now buy bigger cars, would it not be true to say that it would not really be consistent with the energy conservation policy in Singapore?

As I said, it depends on competition. So if the small car suppliers and manufacturers can come out with better and cheaper cars, I am sure the buyer will take a close look. As for energy conservation, I do not think that is a problem because nowadays cars are very efficient and the difference is not much between the small cars and those above 1,000 cc.

If I understand the Minister correctly, he is saying that the number of small cars registered has declined because of the inability of the small car dealers to compete but, on average, if competition is on the basis of price, then one would argue that that should not be the case. Could the Minister elaborate what in practice, other than price, have affected the ability of small car dealers to compete in the sale of cars in the market?

Of course, price is definitely a factor, besides the value that they perceive that they would get. What I am saying is that the buyers now have a greater choice. In the past, when he was eyeing for a Category 2 car, and if he could not get the COE, either he brings up his premium or if he does not want to bring up his premium, but he still wants to own a car, he would be forced to go to Category 1 to bid for the COE and buy a small car. With the merger, this restriction is no longer there. It is up to the individual. He can still buy a small car if he wants to. Or if he feels that he can pay a few more dollars and buy a bigger car, and he feels that gives him greater value, so be it. So my point is that the merger removes this artificial restriction and allows the market to decide what cars they want to buy. From experience, as far as COE premiums are concerned, we do not think that because of the merger, small cars will have to pay a significantly higher premium. Basically, if I want to buy a small car, I could bid for the COE and buy a small car without much increase in price. So that is the position.

Would the Minister of State consider tax rebates for small car owners who bid for the COEs, to ameliorate some of their problems?

Why do we give rebates to them? We had already restructured the vehicle tax last year. We had rationalised it, put in a very rational basis for all the tax structure including progressivity. Smaller cars today pay lower road tax compared to bigger cars. So we think that the balance is about right.

Sir, given that the premiums have risen quite a lot since the economy improves, would the Minister consider a recomputation of the premiums payable on 1,000 cc cars, so that those who cannot afford to buy a new car, be it big or small, pay the lower rate so as to keep their old cars?

If the Member is talking about re-validation of their COEs after 10 years, the formula is that they would have to pay the prevailing quota premium which is computed by averaging the last three months of COE premiums. As I said, between the old and new system, we do not think that there is much difference between the COE premium for small cars if we had not merged. So there is no reason why they should have special treatment, because the idea of the PQP is that one should pay the prevailing quota premium; in other words, the quota premium that new car buyers are prepared to pay. That is the objective and principle.

The economic consideration is obviously true. But does it mean that the people, who are poorer and who can only afford the small cars, do not deserve to have a say in buying a car?

Sir, the whole idea of the COE system is to put in place a rational system where people would be prepared to pay what the market decides. Therefore, under the system, there will always be people who are not able to obtain a COE, because the number of COEs is fixed. The people who cannot afford it, in the end, cannot obtain a COE and they will have to try harder the next time.

May I ask the Minister, as a result of merger of those categories, how much additional revenue the Government has collected, because small cars are no longer being registered?

Mr Speaker, Sir, there are a lot of factors that are changing, economic factors being one. But let me give him a theoretical answer. Assuming that nothing changes, everything remains the same, I would say that the Government actually collects less because our system is a Dutch system where the Government only collects the lowest successful bid from all successful bidders. So if I were to split one category into two categories, you will find that Government actually collects more, because successful bidders in the higher category are paying more than if they were merged into one category.

In other words, the Minister is saying that if we merge all the categories into one, the Government would collect less revenue, as I understand it.

That is why Mr Chng Hee Kok supported the merger into one category. But let me say that the primary objective of the COE system is not to collect revenue. There is a transport management objective to ensure that there is ownership restraint. That is the basic objective. We then let the market decide what price they are prepared to pay, and at the same time we fulfill our objective of controlling the number of cars, so that our roads would not be clogged up.

It is heartening to hear the Minister of State say that the Certificate of Entitlement was not introduced for the purpose of collecting revenue. May I ask him whether all this that has been in operation, I do not know how many years, has succeeded in any significant level in reducing the cars on the roads?

Sir, I do not know what question is that. Cars cannot go on the road if they do not have the COE, and the COE number is fixed.

Your objective is less cars on the roads.

Of course.

By how much have you succeeded?

No. The objective of the COE system is not to reduce the number of cars on the road. It is to control the growth. That is right. We have fixed the growth of vehicles at 3% per year, and because the number of COE is fixed according to that growth figure, therefore the control is precise.

asked the Deputy Prime Minister whether insurance companies should be encouraged to compete with each other in terms of lower premiums and better service instead of allowing banks and finance companies to force their mortgagors to take insurance coverage from their own related insurance companies.

Mr Speaker, Sir, this will be a short answer. To protect their interests as lenders, banks and finance companies require that properties financed by their loans be properly insured. Some banks and finance companies which have related insurance companies package their mortgage loans with a built-in fire insurance component provided by these related insurers. As a marketing incentive, these packages often include free insurance coverage for the first one or two years of the loan period. The banks find that using the same related insurance company is a convenient way for them to monitor the adequacy and continuity of the insurance coverage. The market for mortgage loans is a competitive one, with many participants. Consumers can choose which bank or finance company to borrow from, based on the overall terms of the mortgage loans on offer, and the quality of the service. If they are not satisfied with the insurance coverage bundled with the loan, they can instead borrow from other lenders, including those with no related insurance companies. It is desirable for consumers to have the flexibility to choose an alternative insurer when they contract a loan, and forgo the benefits offered had they chosen a bank's related insurer. They should also be able to switch insurers for subsequent renewals of their policies. Most banks require customers to seek their approval for this, to ensure that the terms and standing of the alternative insurer are satisfactory. However, approvals are not always granted readily, and the terms and conditions under which consumers can switch insurers are often not clear. MAS will therefore ask the relevant industry bodies, namely, the Association of Banks in Singapore, the Finance Houses Association of Singapore, and the General Insurance Association of Singapore, to review the present arrangements, and if necessary, develop practice guidelines. The aim should be to preserve consumers' freedom to choose insurers, and set out fair and transparent terms under which consumers can switch to alternative insurers. At the same time, the guidelines should enable banks to cross-sell insurance products efficiently, and ensure that their mortgage loans have adequate insurance coverage.

asked the Deputy Prime Minister (a) whether it is proper practice for the issuers of stored-value cards to claim administrative difficulty as a reason why their cards must expire after a certain time and all the money remaining therein unusable by the cardholder from that expiry date; (b) whether he will introduce measures or legislation (i) allowing the cardholder to claim a refund of the monies; and (ii) obliging the card issuer to forward monies remaining in the card, of which the owner is untraceable, and the interest earned, to the state rather than keep it for the card issuer's own use.

Mr Speaker, Sir, currently a host of proprietary stored value cards are in use. These cards can be broadly categorised as single purpose stored value cards or multi-purpose stored value cards. There is no uniform practice with regard to the validity period of these cards or the treatment of unused balances. The decision to impose an expiry life on cards is based entirely on commercial and practical considerations, for example the physical wear and tear or obsolescence of these cards. For security reasons, stored value cards such as those embedded with smart chips are typically designed with a definite life span. This is because access to "electronic purses" on these cards is controlled by cryptographic keys which, through time and technological advancement, may be duplicated, compromising the security of the smart card. Limiting the duration of a card's use reduces the possibility of a security breach. In these respects, stored value cards are similar to prepaid vouchers with validity periods. Under the current legislative framework, MAS has responsibility over the issuance of multi-purpose stored value cards (for example, the popular CashCards), but not for single purpose stored value cards. MAS views monetary values in these pre-paid stored value cards or any unused balances on these cards no different from deposits. MAS expects issuers to make every effort to identify and repay deposits of the card or account holder. Although expiry of these CashCards effectively means that they will no longer be accepted at points-of-sale, in other words, cardholders cannot effect purchases using the stored value cards, cardholders can nevertheless redeem unused balances on their expired CashCards. On the other hand, the treatment of single-purpose stored value cards such as TransitLink farecards is based on commercial considerations and differs among the various card issuers. The Ministry of Communications and Information Technology is aware that consumers have raised various issues concerning TransitLink farecards, and is looking into them.

Sir, my question is not so much on the validity of the card because of wear and tear, but this question arises because of statements made by a certain issuer recently about the card's validity. They said that it expires after a certain number of years, and whatever money is left inside is no longer traceable because the database is not on line, and therefore they do not know who owns the money, and therefore they cannot give back the money.

If the Member will tell us which card issuer he is referring to, we will look into the matter.

Sir, the card issuer is TransitLink, and they have said that after three years the money is untraceable and therefore they cannot give it back to you. If that is the case, if it is untraceable, then it is a bone of contention, meaning it is property of the State, and it should go to the State, and not enrich the issuer who cannot trace the money.

I have no doubt they can improve their tracing capabilities and MCIT would discuss with them to see how this can be done.

asked the Deputy Prime Minister what categories of civil servants will be paid the bonus and Annual Wage Supplement payments for 1999.

Mr Speaker, Sir, as with previous years, the Annual Wage Supplement and Annual Variable Component will be paid to all civil servants in December 1999, except for employees who are under disciplinary charges and those whose services are under review for poor performance.

May I ask whether the daily-paid workers - I do not know whether you consider them Government employees - will be paid the bonus and annual wage supplement.

I am not exactly sure of the terms. But if the Member will file a question to that effect, I will give him the answer.

Are the road-sweepers and cleaners employed by the Ministry of the Environment not daily-rated and daily paid? Will they benefit?

Mr Speaker, Sir, as I said, if he files a question, we will give him an answer.

asked the Minister for Information and the Arts what are the percentages of subscription for Singapore Cable Vision by Housing and Development Board flats, condominiums and apartments, and landed properties and what measures will be taken to raise the percentages if they are low.

Suan): Mr Speaker, Sir, in February, my Ministry informed this House that the overall subscription rate for cable as at 31st January 1999 was 18.5% or 148,000 households. Since the completion of cable rollout recently, the overall rate has increased to 21% (or 196,000 households) as at 31st October 1999. The subscription rate is highest for private residential homes, with landed property showing a 40% take-up rate. I am unable to provide more detailed information as this is trade information of commercial value. SCV is currently re-packaging its basic tier system to make it more affordable and attractive. The new system is likely to have packages such as news, sports, education, Chinese language, entertainment and minority interests. This would allow subscribers more choice over the channels they want and lower the entry price for those who are only interested in certain types of programmes. SCV is in active negotiations with its programming partners for this move.

Mr Speaker, Sir, will the Minister say that the Ministry has no control on how much SCV charges our consumers for the services?

This is a commercial operation. So it is mainly left to market forces.

asked the Minister for Health if he will indicate the number of foreign nurses registered by the Singapore Nursing Board from 1994 to 1998.

Mr Speaker, Sir, in 1994, the total number of nurses and midwives registered with the Singapore Nursing Board (SNB) was 12,230, of which 2,022, or 16.5%, were foreign nurses. The number of foreign nurses registered in 1995, 1996, 1997 were 1,844, 2,160 and 2,767 respectively. In 1998, of the total number of 15,568 nurses registered with SNB, 3,239, or 20.8%, were foreign nurses. 1.30 pm

Order. End of Question time.

Mr Speaker, Sir, exactly, one year ago, I informed the House of the Government's package of economic measures to counter the regional crisis. The mood was heavy. The region was in turmoil, and global financial markets were nervous. Retrenchments were rising, and we braced ourselves for severe turbulence. The $10.5 billion package was a decisive move to reduce business costs, build confidence, and help companies to tide over the very difficult period. It included significant wage and CPF cuts, and enjoyed the full support of the Government, workers and employers. Our response demonstrated our determination to ride out the storm, and bolstered confidence in Singapore. Now, a year later, the mood has totally changed. Things have turned out much better than we feared. Except for Indonesia's problems with Aceh, the worst of the Asian crisis is behind us. Throughout the region exchange rates have firmed, interest rates have come down, confidence has returned, and growth is resuming. Our own economy has picked up sharply, boosted by our cost-cutting measures and the regional recovery. We expect about 5% growth this year, and between 4.5% and 6.5% next year. Our challenge now is to manage the recovery, to restore the economy to full health without mishap. Growth has become broader based and unemployment is down. But the economy still has some weak patches. We must be especially careful with the manufacturing sector, as several industries continue to face severe cost pressure, including disk drives and petroleum refining. At the same time, restructuring is continuing, and is causing a steady stream of retrenchments. We must redouble efforts to help these retrenched workers find new jobs. In the light of these developments, the Government has reviewed its economic stance, and particularly the measures in last year's cost reduction package. In general, last year's package will continue as committed. However, the tightening labour market has made it necessary to bring forward the restoration of employer CPF contribution rates. The improved economic outlook also justifies a higher quantum of year-end bonus for civil servants, and a restoration of the wage cuts imposed on civil servants. We need to adjust the Skills Development Levy, as skills upgrading is critical to keeping workers employable. In key areas of business costs, namely, industrial land rentals and port and airport dues, we will extend the rebates for an additional year. CPF Let me first take the CPF. The Government has explained the need to bring forward the restoration of CPF contribution rates to next year, instead of 2001 as originally planned. The labour market is tightening. And unless we do this, the CPF reduction will simply be converted to higher wage settlements. And this will make it harder to restore the CPF contributions later on. The employer's CPF contribution rate will therefore be increased by 2% points to 12%, with effect from April 2000. This 2% point restoration will be allocated fully to the Special Account. The Government's intention is to restore employer's CPF contributions fully to 20%, the rate which prevailed before the cut. The reduction to 10% last year was a temporary move to deal with an immediate crisis. It did not affect the desired long-term contribution rate of 20% plus 20%, which had been calculated to provide enough savings for workers' health care and old age needs. The restoration of the CPF rate will be done as soon as possible at a pace which the economy can bear. If conditions are favourable, we should be able to restore it fully within about five years. Our priority will be to build up the Special Account first, as this is the absolute minimum nest egg which all Singaporeans should have when they retire. Civil Service NWC Award Now, the civil service. With the recovery in the economy, the Government has decided to increase the quantum of year-end bonus to civil servants. Last year, civil servants received a total of 3/4 month of AVC (Annual Variable Component): 1/2 month in July and 1/4 month in December. And this was 1 1/4 month less than the two-month worth of AVC which they had been paid in 1997, the year before. This year, the Government has already paid 1/2 month of AVC in July. In December, the Government will pay civil servants another 1/2 month of AVC. This makes a total of one month of AVC for the year as a whole, 1/4 month more than last year. The Government will, as usual, also pay the one month of Annual Wage Supplement. In addition, because the economic outlook has improved significantly since the NWC recommendations were published in May, the Government will pay civil servants a one-off Special Bonus of 1/4 month. Taking the AVC and Special Bonus together, civil servants will receive 11/4 months this year, still less than the two months of AVC which they were receiving before the crisis. For the longer term, the civil service is studying ways to link pay more closely to performance. If the economy remains strong next year, and there is an NWC award for civil servants, I stress "if", the Government will use part or all of this to begin to build up a performance-based annual bonus for all civil servants. Concurrently, the Government also intends to continue to build up the AVC in future years, whenever economic performance justifies it. The Government will discuss the implementation of these changes with the unions in due course. Restoration of Cuts/Freeze in Civil Service Salaries As part of last year's package, the Government took the lead in implementing wage cuts for civil servants and political appointments. Monthly salaries of Staff Grade, Superscale, Division I and Division II officers were cut by 5%, 3%, 2% and 1% points respectively on 1st January 1999. The Government will fully restore these wage cuts with effect from 1st January 2000. Apart from the wage cuts, the salaries of Ministers and senior civil servants, which are normally pegged to private sector earnings, were frozen in 1998 and 1999. However, the private sector benchmark increased by 13% in 1998 and 29% in 1999, based on private sector earnings two years earlier, in other words, earnings in 1996 and 1997 respectively. The figures for next year's benchmark are not yet complete, but IRAS estimates that it has increased further, because some partnerships and companies continued to do well in 1998, despite the economic crisis. Now that the economy is recovering, we must restore the proper relativity between private and public sector salaries. This is crucial if we are to retain and attract talent, and maintain the high quality of our public service and Government. The Public Service Division is currently reviewing the salary formula for Ministers and senior civil servants set out in the 1994 White Paper on "Competitive Salaries for Competent and Honest Government". The White Paper had called for such a review after five years. PSD's conclusion is that the basic framework is sound, and the salary benchmarks selected are appropriate. However, we can refine the methodology for calculating the benchmarks and shorten the delay in applying the benchmarks to the public sector. We also need to review the structure of civil service salaries to create more flexibility, and increase the weight of performance bonuses in the total salary package. PSD is still working out the details. The review should be completed and the changes announced and implemented by early next year. Private Sector Salaries The Government's approach to civil service salaries and bonuses is consistent with the NWC recommendations. In May, the NWC had recommended continued wage restraint, while providing companies that perform well greater flexibility to reward their workers. The NWC set guidelines for these companies to reward workers through bonuses or wage increases, preferably in the form of a monthly variable component. Because of the economic recovery, more companies will now fall into this category (ie, companies which are doing well) but the NWC guidelines for how they should reward workers remain valid. Skills Development Levy Training and retraining is vital to keep our workers employable, and to enable us to compete globally as a knowledge economy. Singaporeans must continually upgrade their skills and embrace life-long learning. The Skills Development Fund (SDF) has been effective in encouraging employers to invest in worker training and skills upgrading. Set up in 1979, the SDF is funded from collections in the Skills Development Levy (SDL) on employers for workers below a monthly salary of $1,000. Today, the SDF supports over 560,000 training places per year, the majority taken up by workers with 'A' levels or below. While training commitments from the SDF have grown substantially over the years, collections from the SDL have fallen. In FY98, the SDF committed more than $88 million in training grants but the levy collection was only $20 million. This is because as wages rise, the number of workers earning less than $1,000 shrinks. The base of the SDL has thus been declining - from about 800,000 workers in 1980 to about 350,000 workers currently. This is even though the size of the overall workforce has doubled and more higher paid workers need training. This is not sustainable or equitable. For the SDF to continue to play its role in worker training and skills upgrading, the SDF levy has to be adjusted. This can be done either by increasing the levy rate, or by raising the salary cut-off below which the SDL is collected. The Government has decided to keep the levy rate unchanged at 1%, but to progressively raise the salary ceiling for SDL contributions from the current $1,000 to $2,000 over the next five years to 2004. The first increase from $1,000 to $1,500 will take effect on 1st July 2000. This will expand the base of the SDL collection to around 670,000 workers, in other words, almost double the number paying today, and increase the SDL collection by $28 million a year, to $48 million. The SDL salary ceiling will subsequently be raised to $1,800 in 2002 and to $2,000 in 2004. Beyond 2004, the Government will revise the ceiling regularly to keep it in line with wage levels. Companies should not treat higher SDL contributions as an additional cost burden, as they can redeem these contributions by training their workers. They should instead look upon them as part of their essential investment in human capital. The wage and CPF reduction for local workers last year was complemented by a reduction in the foreign worker levy. This was to assist companies, especially manufacturers, which depend heavily on foreign workers. Hence, the Government reduced the monthly levy for skilled foreign workers by $70 for all sectors in January this year. The levy for unskilled foreign workers in the manufacturing and services sector was also cut by $90. The foreign worker levy reduction has helped to lower overall business costs in Singapore. Despite the levy reduction, there has been no surge in the number of foreign workers, while the number of Singaporeans in the workforce has gone up. The Government will therefore leave foreign worker levy rates unchanged for another year. Industrial land - JTC and HDB rentals In January this year, as part of the cost-cutting package, JTC reduced its posted rentals for industrial land and flatted and standard factories back to the levels of the early 1990s. This translated to a 20-40% rental reduction for lessees and tenants who are paying above the posted rates. Those on the 4% or 5.5% rental escalation scheme were also granted a 2-year freeze on their rental escalation to the end of December 2000. JTC lessees paying below their revised posted rates were granted an extension of rental rebates up to the end of this year. Recognising the need to continue to be careful over costs for the manufacturing sector, JTC will extend the current industrial rental rebates for another year to December 2000. HDB will similarly extend their rental rebates for lessees of industrial land and tenants of commercial and industrial properties for another year until December 2000. Tenants of HDB commercial and industrial properties who are paying above posted rates will continue to receive rent rebates, but subject to a cap of 10%, instead of the previous 20%. Transport - MPA and CAAS fees Sea and air transportation are important complements to the manufacturing sector and have a significant impact on our export competitiveness. Hence, the Government will extend cost rebates and concessions in these two sectors. The Maritime and Port Authority (MPA) will extend the 20% port dues concession for container ships and harbour craft for another year until December 2000. PSA Corporation will extend the 10% rebate on lift-on/lift-off charges and wharf handling, as well as the 10% rebate on warehouse and office rentals, for another year until December 2000. Similarly, the Civil Aviation Authority of Singapore (CAAS) will extend the 10% rebate on landing fees for aircraft until December 2000. CAAS will also extend the rebate on warehouse, office and retail shop rentals until December 2000. Financial impact The two percentage point restoration of the employer's CPF contribution rate will cost employers $741 million per year, while the increase in the SDL ceiling from $1,000 to $1,500 will cost $28 million per year. These will be offset by industrial land and transport rebates totalling $237 million per year. However, employers will still enjoy substantial cost savings, compared to before the cost reduction package, because we are only restoring 2% points of the 10% point reduction in the employer's CPF contribution rate. The Government remains mindful of the need to maintain cost competitiveness even as the economy picks up. However, we cannot freeze all charges and fees indefinitely, without accumulating distortions that will harm our economy. Charges and fees have to be revised from time to time to reflect rising costs. But the Government will exercise moderation in doing so and it will ensure that the cumulative burden on the economy and on households is not excessive. Conclusion The last two years have been a major challenge for Singapore. It is still too early to declare victory, but so far we have come through without major mishap. We benefited from the strong foundation of sound policies pursued consistently over many years, as well as our prompt, rational and cohesive response to a very grave situation. The restoration of the CPF contribution rate, the civil service bonus award and salary restoration, the increase in the SDL, and the continuation of the rebates on industrial rentals and sea and air transport will help to position us for this phase of recovery. While we are confident of the future, we must never become complacent. Post-crisis, we do not expect to resume high growth effortlessly. While Asia has been busy with immediate problems, globalisation and technology have continued to progress apace. We must keep up with these trends, and continually adjust our policies to meet changing circumstances. Only thus can we stay ahead of the game, strengthen our competitiveness and secure our long-term growth and prosperity. Mr Speaker, Sir, I have a summary (Cols. 505-6) of the measures which I will ask the Clerk to distribute to Members. [Copy of document distributed to hon. Members]. Table - Summary of Adjustments to November 1998 Cost Cutting Package (Cols. 505-6)

Mr Speaker, Sir, I welcome the Government's move. I would like to ask the Deputy Prime Minister whether we are now on track to achieving a long-term economic growth of 4-6%.

Sir, the labour movement has supported the cost-cutting measures. We believe that such collective efforts help to save jobs for our workers. As DPM has just mentioned, it is too early now for us to declare victory and, in fact, we know that the recovery is uneven. Some of our sectors will still have a wage freeze, for instance, the cement industry and so on. May I ask the Minister: is it the right time to have such a big salary adjustment, that is, the 13% and 29% increase for top civil servants and political appointees?

Mr Speaker, Sir, last year when the Government introduced the economic stimulus measures, it was felt that some of them, particularly the lumpy pump-priming type of measures, would take effect over a two-year period. I would like to ask the Deputy Prime Minister, since the recovery at this point appears to be driven more by external demand, whether we envisage greater cost pressures in the year ahead from the follow-through effects of the Government's stimulus measures.

Sir, may I ask whether it is true or not that the unemployment figures have gone up over June. Secondly, as I understand from the Deputy Prime Minister, we are not completely out of the wood but we are well on the way perhaps. Echoing the question that was asked by another Member, why is the Government in a hurry to reward the top civil servants, and I take it that Ministers are also going to be rewarded, when the economy has not fully recovered? Thirdly, does the Government appreciate the message that all these increases may be sending to the workers in the private sector?

Sir, the Government has kept faith with workers by restoring the CPF contribution rate and an increase in bonus for civil servants. Our workers supported the cost-cutting measures to help the economy to turn around. From the DPM's statement, I guess that the Ministers and top civil servants will receive a big pay rise. Could DPM enlighten us on this?

Sir, in the past package, many of the costs that were to be saved were potential. Do we have an assessment of how much was actually saved in the period that the measures have been in force? Secondly, in announcing the earlier package of measures, there was a lot of consideration of the external cost factors and competitiveness. Do we have an indication now whether other countries' costs have also risen and that it is safe for us now to increase our costs? Thirdly, the Deputy Prime Minister has mentioned that certain sectors remain weak and there are restructuring and retrenchments in some. However, the measures he proposes are across the board. Will there be any undue effects on the sectors that remain weak and are experiencing retrenchments?

Sir, I am sure that the workers are very happy that the Government has decided to restore the CPF contribution of the employers one year ahead of time. While the five-year timeframe for restoration of the CPF contribution is an achievable target, would the Government plan to shorten the restoration period should the economy perform better than expected?

Sir, I just like to touch on the CPF restoration. Will the full restoration be done within the five years or is there a possibility of reducing the total 40% to any lower level?

Mr Speaker, Sir, if I may take all the questions together. Mr Chng Hee Kok asked whether we are on track to make 4-6% growth. The answer is yes. The storm is not over yet because we still have to see how the region recovers, particularly Indonesia, where there are political complications which may take sometime to work out. Also, our own internal restructuring is continuing. While we are making the growth, there is restructuring, people are being retrenched, industries are being phased out and new industries are coming in. So we have to continue to make the effort, to be able to manage this turnover and make the growth. If we do well and continue to make 4-6% growth year after year, then as I have said, we should be able to fully restore the CPF contribution rate in about five years to 40%. Of course, once I have said that, MPs have asked whether we cannot do it even faster. Let us not count our chickens because the eggs have not hatched yet. If all goes well and we can do about 2% restoration a year, then in five years, we will get back to 40%. But if there is a setback, we may be unable to restore. We may have to restore 1% or 1/2%. On the other hand, if we do exceptionally strongly, we might be able to get away with 3% in a good year. Let us put that as something to prepare our minds but not a hard target that we definitely will hit. You cannot tell. Mr Iswaran asked about cost pressures from the stimuli. Most of the stimuli are in terms of spending by the Government in infrastructure, meaning schools, MRT, airport, roads and so on. As Members will know, right now the construction sector is still in recession. Volume is considerably smaller than last year. Building programmes have come down, and there is a slack capacity. It is a good time for us to invest in infrastructure, including reclamation. I do not believe that it will cause prices to go up or cause any tightness in the construction industry. Mr Simon Tay asked a series of questions. Firstly, potential versus actual savings. Most of our package were actual savings because it was statutory like the CPF cuts and Government charges. The only one which was potential was adjustment to bonuses in the private sector which we projected would have accounted for about half of the reduction of 15% in wage cost last year. My guess is that it probably accounted for somewhat less than that because as the economy recovered, the pressure on companies to cut back on bonuses and for workers to settle for less diminished. I do not have the number but my feeling is probably we might have made 3% or 4%, rather than 7% or 8%, as we were hoping for. But the CPF cuts, the Government rebates, the rental rebates, all those are actual. As for external comparison with other countries, if you look at the nominal exchange rates of Thailand, even Indonesia and Korea, they have strengthened. In so far as the nominal exchange rates reflect the cost to exporters, because they are exporting in US$ but their costs are in Won or in Baht, then this means that their costs would not have gone up very sharply but would have firmed. Their internal costs within their countries, I believe, have been stable. Their inflation has been stable because they are in the throes of restructuring and unemployment is still quite high. So I would not say that their costs have gone up sharply, which is why we have to watch our costs too. In a tight labour market, wages will settle for higher than last year but, at the same time, we have to try and ensure that the wage settlements are justified by productivity improvements, so that while we pay people more, they are also producing more and, overall, the companies are able to maintain their competitiveness. As regards weak sectors versus across-the-board measures, although the CPF adjustment is across the board, the focus of our continuing rebates on industrial land, flatted and standard factories, as well as the rebates on port and airport dues, is more on the manufacturing sector. The reason is because many of the weak industries are in the manufacturing sector, either weak because of costs like petrochemicals and petroleum, or weak because they are in the process of restructuring, like disk drives or computer manufacturing. So we have tried to make an effort to focus on the manufacturing sector. Beyond that, it is not possible and I do not think it is desirable for us specifically to direct rebates or Government assistance to particular industries, because it is really for the market to sort out which industries do well in Singapore and which do not. We will make sure that there is a manufacturing sector in Singapore, but which particular industry, that depends on supply and demand and on our cost structure. What we can do is to help the industries which are in the process of restructuring to make the transition and help the workers, who are being phased out by one industry, find new jobs in another industry, and that we will continue to do. Lastly, the questions by Mr Yeo Guat Kwang, Mr Ong Ah Heng and Mr J.B. Jeyaretnam on wage freeze and salaries for the public sector. I gave Members numbers just now which showed that the private sector benchmark which the Government is supposed to follow went up 13% in 1998 and 29% in 1999. And this was based on private sector earnings two years before, because there are lags in the way we calculate. Actually, this meant that private sector earnings went up 13% in 1996, calculated in 1997, and applied in 1998. It went up 29% in 1997, calculated in 1998 and to be applied in 1999. And 1996 and 1997 were not bad years for the economy. If we had followed the formula, we should have just applied this to the civil servants, as we applied the earlier reductions in 1997 when the private sector went down 7% and we followed them down 7%. So if you go down, you go up again. But because we could see difficulty coming up over the horizon, so in 1998 and 1999, we froze the adjustment and let the private sector go its own way. Now the economy is recovering. For the year 2000, the adjustment for next year - we do not have the data yet - we think that the figure has gone up compared to last year. And the reason is that even though the economy, as a whole, was not doing well, there were companies which were doing well. Many foreign banks were doing all right. Many multi-nationals had chief executives who had stock options - these are stock options of MNCs on the American market - so they were worth something and benefited the CEOs. Other professions like the lawyers or the accountants, which are not salary-based but are fee-based - they get a profit share from their business - their services were in demand and so their earnings went up. And so our benchmark is likely to go up again next year. The question is what do we do? If we were to apply the formula rigidly, we would simply multiply and apply. I think that would be the wrong thing to do, because it is quite a significant adjustment, and we should take this opportunity to free up our public sector salaries further. Presently, we rely too much on fixed salaries without enough room for adjustment within a grade, and also without enough weight on the performance element of the overall salary package. We have built up the performance element over the years. It is now up to six months out of the 20-month total package for the year, but that is quite small compared to what you can get in the private sector. Because in the private sector, in a good year, you can go to 12 months, sometimes even 18 months in some industries. And then next year, if it is no good, you come down again. Or next year your responsibilities are lighter, you come down again. We do not have that flexibility. Also, in the private sector, you do not have a person at a single grade at a single point. You have a person in the rank and his pay can vary from X to Y, and he might get a pay adjustment without getting a rank upgrade promotion. And it gives you some flexibility to reward individuals in a way which fits the organisation and which fits what he deserves. Whereas in the civil service, you cannot. If I want to pay somebody more, I have to promote him, and similarly with the Ministers or the Parliamentary Secretaries, and this is a rigidity. So we have got to find some way to make this more flexible and to build up the performance bonus for the top, just as we are intending to introduce a performance bonus across the board, even for all civil servants. It is something which we are studying and which we hope to work out by the beginning of next year. We have said that we will no longer be freezing the civil service salaries. How we make the adjustment, what form we will evolve to and how quickly we get there are things which we have to consider. We may take one or two years to get there, but I think it would be the wrong thing for us to say we do not do anything and we freeze it, because we are going to lose good officers. It has happened before and we are already beginning to notice this because the opportunities are in the private sector. You can say, "Tighten your belts." He says, "I will go the other side." So we have to be realistic. We have had a system which has worked and which has got us through quite a major crisis without an accident. I think we had better look to improve and strengthen the system. We will work out the schemes and the sums, and a proper statement will be made in due course.

Sir, I would like to ask the Deputy Prime Minister a few questions. First, with these changes, how much inflation is likely to be generated? Second, whether the Government charges and fees would be revised in the light of all these changes that are being planned? Third, what concrete plans would be undertaken by the Government to help older workers who are less skilled and untrained?

Mr Speaker, Sir, may I ask the Deputy Prime Minister to answer the questions that I asked earlier? One of them was: is it or is it not true that unemployment has risen over the last two months? Secondly - I made it as a passing reference - are Ministers going to be paid this bonus and annual wage supplement, besides top civil servants and Members of this House? And I asked why are we in such a hurry, and will it not send the wrong message to those in the private sector?

Mr Speaker, Sir, may I first respond to Mr J B Jeyaretnam's question which I overlooked. Unemployment is now 4%, slightly higher than what it was in June, but lower than 4.4% in December 1998. I do not believe this rise is significant, from all the accounts. The labour market is tightening. If you ask me what it could mean, one possibility is that it is some indication of a structural problem we have to address and which we are addressing, which Dr Vasoo raised, of older workers who may be having difficulties finding new jobs and for whom we must make an exceptional effort to help to find new jobs. Dr Vasoo asked what efforts are we making. We have the Manpower 21 programme. We are introducing training schemes. We are linking up with the ITEs, polytechnics and the training institutes to work out programmes which are tailored to the older workers, and to present them in a way which will fit them. And also to break them up into small modules, so that you can do it one piece at a time, master that, collect a boys' scout badge, go on, get another badge, and finally you become a President's scout, or you get a new job. I think that is a practical approach. There is no easy way to do this, because for somebody who is in his 40s or 50s with teenage or grown-up children and family responsibilities, to go back to school, learn, sit down, take notes, study, take examinations - you know you did it many years ago but now, when you sit down to try and do it, it does not come so quickly any more. But it is an effort which has to be made and we will help them to make it. Dr Vasoo also asked about the effect of this package on inflation, I do not think there will be, because inflation is generally low. We have been watching it. This year, it should be about 1%, I think. Next year, maybe about 2%, but we keep a very close eye on inflation in Singapore. We are helped because world-wide inflationary pressures are down. So imported inflation would not be significant, and domestic inflation, as long as we manage our economy carefully and do not allow it to overheat, will be controlled. On charges and fees, there were a series of charges and fees which had rebates in the package last year including medical charges, public transport, service and conservancy, and GST rebates which were extended for two years. Some expire at the end of this year and some will expire at the end of next year. We will let them run their course. The economy is recovering. I expect to see wages rising gradually over the next few months. They have already started to rise, and I do not see workers losing their jobs in very large numbers and being unable to find new employment. There will be retrenchments but at this time, the retrenched workers really have the best chance possible to find new jobs. So I think that we should let the rebates and fee concessions to run their course. And, as I have said, beyond that, we have to make some adjustments, but we will be careful and mindful to be moderate and to make sure that the overall impact will be something which people will be able to bear. Finally, Mr J. B. Jeyaretnam asked what signal are we sending to the private sector. The answer is we are sending them the signal that we are still lagging them. We have a benchmark. We should have followed the benchmark. Because of the circumstances, we have not done so. We will make a partial restoration. How? We will settle later on. But at the end of it all, it will still take us some time to catch up, and we have always said that we will lag the private sector, and we are not leading it. But we have to keep in step and we must not be too far behind.

Sir, last year, when we announced the cost cutting measures, there was a 5% rebate for public transport which will also expire at the end of this year. Could the Deputy Prime Minister enlighten us whether this will also be extended?

Sir, despite the fact that the economy is growing, as a result of the restructuring, retrenchment is likely to continue. Will the Deputy Prime Minister indicate his forecast what the retrenchment numbers are likely for at least the next one year?

Mr Speaker, Sir, the public transport rebates will run out at the end of this year. They will not be extended. Mr Chng Hee Kok asked about retrenchment. I do not have an accurate figure but we think it will be more than 15,000 workers this year.

Sir, I am afraid the Deputy Prime Minister does not understand the import of my question. I am not concerned so much with those employees in the private sector against whose salaries the benchmark for Ministers' salaries is fixed. I am concerned with those in the lower ranks in the private sector. What message is the Government sending to them when you are in a hurry to pay Ministers and everyone increased bonuses, including top civil servants?

Mr Speaker, Sir, today is not a debate on Ministers' salaries. We have had several debates on Ministers' salaries in this House. The Non-Constituency Member has participated in many of them. The matter has been deliberated, discussed. White Papers have been tabled. The policy is well established. The message which we have consistently presented to Singaporeans is that we are looking for quality leadership in the public sector, in the political leadership. If you want good people, you have to be realistic. The more you are able to recognise what people are worth and pay them what they are worth, the better the quality of government we are going to have. So I do not think there has been any change. It is a system which we will have to continue to argue, discuss and defend repeatedly because Mr J. B. Jeyaretnam and others will often ask why this is so and it is quite understandable because it is not an intuitive solution. Many countries do not do this. But many countries envy us that we are able to do this. I was in America recently and one person I met, who is head of Brookings, said to me, "We envy your system. We are unable to do it. We have to squeeze our public sector salaries. So we have two or three different grades all paid exactly the same pay because there is not enough room to make a differentiation between them. And we will still get some people coming in because in the public service, there is a strong tradition in America, you come in for one term and you go out, and you have made your reputation. But it is starting to tell, and we are beginning to see a shortage of qualified, high-calibre people in their public sector." So these are issues which confront every country. We have chosen the approach of coming out, discussing it openly and defending what we do rather than making believe, and I think that is a right approach.

May I ask DPM why a 5% rebate for public transport is not considered?

Mr Speaker, Sir, we have to manage the recovery and move on. When we run into a crisis, we have to introduce measures to buffer the crisis. When we emerge from the crisis, and put it behind us, we must gradually wean ourselves off the measures so that the next time we run into a crisis again, we can apply them again. It is like the CPF. When we run into a crisis, we make a 10% cut. As soon as the crisis is over, we have to begin to restore it. If we bring it down and we hold it down, and say, no, it is too comfortable, let us leave it there, we will never come back up again. Similarly, with rebates on transport, on health and on other items. If we bring it in and leave it there, then the next time what do we do? The next time we must have a 10% rebate, and a 20% rebate. Eventually, we will have to give free bus rides, or pay people to ride buses. Therefore, these are adjustments which have to be made. They are not going to disappear overnight because some of the rebates last till next year, some of them run out this year. It is something which is not pleasant to do but which we cannot avoid.

Rather than looking forward to future downturns in the economy, are we going to use CPF as a tool to reduce cost or will there be other tools as far as wages and salaries of workers are concerned?

CPF should only be an absolute last resort. If you are in a very desperate spot and the situation looks very grave, then it is a card which we can play, which nobody else can play. No other country has this possibility. We can do it but only if it is really a very serious situation and only if we make an exceptional effort to explain and justify and get people to understand why it is necessary. But it is not something which you want to use as a standard macro economic policy tool. What we really want to do is to build in flexibility into the wage system so that if there are ups and downs, it can be buffered by the wage system. After the 1985 recession, we built in the variable bonus and the flexible wages over the next 12 years. So this time when we had the recession, we were able to use that to absorb part of the reduction in cost and could make a smaller reduction in the employer's CPF contribution. The conclusion we have drawn from this experience operating the flexi-wage system is that it is very good to have the variable component. But there is a draw-back because the variable component works on an annual basis and most of it are annual bonuses. So by the time you adjust and cut, it may be eight or ten months later, and by that time either you may have hoped for the situation to have changed or the company may already have run into cash flow difficulties and gone under. So we really would like to develop a monthly variable component of the salary which will be adjustable more quickly and flexibly. This is what the Government was able to do because we have this monthly non-pensionable variable component, which we could bring down, and now we can bring up again. The NWC has endorsed it. How to do it is something which we have to study. There is an issue because if you do not do it properly, then although you call it a monthly variable component, it will be monthly but it may not be variable. So you need to have a clear understanding of how it will operate, what the formula will be, either based on the economy as a whole or based on the company and its performance, so that when it is necessary to revise it up or down, it is easy to do.

Sir, on SDL, how would the Government try to encourage more SMEs to retrain their workers, especially the older ones, whom we really want to help, and especially also for companies whose workers may not be able to enjoy the training facilities under the Skills Redevelopment Programme?

It is a difficulty, because the big companies are better organised to take advantage of the SDF. So companies like SIA or DBS, which are very well organised and pay a lot of attention to training their people, are able to take full advantage of SDF. In fact, I believe many of them collect more from SDF than they put in the SDF. They are not wrong to do so, but I think it means other companies are not using the SDL enough. We have to encourage the small companies to do this. We need to design programmes which will fit the small companies. At the same time, maybe we should consider whether there should not be some cap on how much you can take out of the SDF in comparison to how much you put into the SDF. There must be some relationship. It need not be at most one to one, but some reasonable relationship. Then we would be able to free up some money and use it for the smaller companies. I understand from the Ministry of Manpower that in fact last year the withdrawals for small companies from the SDF actually went up by 6%. So while we are concerned, there is improvement.

Would DPM enlighten us whether Government will still be advocating the wage restraint measures, as the measures introduced last year were meant to retain our competitiveness? If we were to restore the wage cut so quickly, then our competitiveness will still be eroded vis-a-vis our neighbouring countries. Besides, some sectors of our economy have yet to recover from the economic downturn.

I referred in the statement to what the NWC had recommended this year. Their overall recommendation was wage restraint but they also made specific provisions for companies not doing well, companies doing well, companies doing very well, and depending on which category you fell into, there were different guidelines. If you are doing well, then you should reward your workers through bonuses or wage increases, preferably in the monthly form, and if you are doing very well, then you should do it and put most of the money into the monthly variable bonus. That was at the time when the economy was forecast to grow between zero to 2% for the year. Since then we have revised our forecast. Now we think the economy will grow by about 5% for the year. I think that overall the recommendations are still valid because they have built into them flexibility to allow for a range of performances of companies and next year in May the NWC will meet and discuss again. I would expect that, from the company's point of view, what really matters is your company's performance. If your company is doing well, and more companies fall into that category, then more companies will be able to pay bonuses, increases and monthly variable components. But if you are not doing well, and you say, "Now, I wish to treat myself more generously because I do not feel quite as pessimistic as before" then I would say, "Have a care." 2.25 pm

"to amend the Futures Trading Act (Chapter 116 of the 1996 Revised Edition)", presented by the Deputy Prime Minister (BG Lee Hsien Loong); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Securities Industry Act (Chapter 289 of the 1985 Revised Edition) and to make related amendments to the Monetary Authority of Singapore Act (Chapter 186 of the 1985 Revised Edition)", presented by BG Lee Hsien Loong; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Legal Profession Act (Chapter 161 of the 1997 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 amend the Factories Act (Chapter 104 of the 1998 Revised Edition)", presented by the Minister for Manpower (Dr Lee Boon Yang); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Second Reading read. The Minister for Communications and Information Technology (Mr Yeo Cheow Tong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Government first announced, in March this year, its intention to merge the National Computer Board, or NCB, with the Telecommunications Authority of Singapore, or TAS. The Bill seeks to effect that merger to form a new statutory board, the Info-communications Development Authority of Singapore, or IDA for short. First, let me explain the reasons for the merger. Information and communications technology, or ICT, will be of increasing relevance to Singapore as we move into a knowledge-based global economy. ICT-related industries will constitute a key growth sector in this knowledge-based economy. ICT will also be the enabling platform for building competitive strengths in other economic and industrial sectors of Singapore. Prior to the merger, the promotion, development and regulation of the ICT sector were undertaken by various Ministries and statutory boards. The NCB, which was under MTI, was responsible for the development of the IT industry. The Singapore Broadcasting Authority, or SBA, under MITA, took charge of the broadcasting industry while TAS, under the then MINCOM, handled the regulation of the telecommunications industry. While this arrangement has worked well in the past, the circumstances and imperatives have changed. Technology changes and business trends are leading to a convergence of the telecommunications, IT and broadcasting sectors. Transmission technologies have become increasingly substitutable. Consequently, the traditional industry-based regulatory boundaries are breaking down. Just a few years ago, telecommunications were related to telephones, telexes, fax machines, radio and handphones, while IT was basically computers used for scientific calculations, financial operations and word processing. And broadcasting was related to radio and television. Today, all three sectors are inter-related. You can send a fax through the computer, talk to friends overseas through internet-telephony or watch a television programme on the computer through the Singapore ONE broadband multimedia network. Equally importantly, we are finding that promotion and development of the info-communications sector can take place effectively only if there is an integrated perspective, one that includes the issue of regulation. It is therefore necessary to review the existing organisational structures to improve policy co-ordination and implementation in the face of rapid technological developments. This will enable us to foster the integrated development and application of ICT in Singapore. It is for this reason that Government has transformed MINCOM into the Ministry of Communications and Information Technology, and decided to merge TAS and NCB into the Info-communications Development Authority of Singapore. Members may ask why not go one step further, and merge the SBA with IDA. After all, convergence also involves the broadcasting sector. We have, in fact, considered this. Up till now, the SBA has been responsible for content regulation across the various mediums, including both broadcasting and the Internet. This responsibility remains separate from the other aspects of ICT industry development, promotion and regulation. Traditional broadcasting can be regulated independently. Therefore, the Government decided that the principal responsibility for broadcasting and content regulation will remain with the SBA. However, the non-content aspects of broadcasting, which are convergent with IT and telecommunications, such as interconnection, the technical standards for cable infrastructure and the re-broadcast infrastructure in tunnels and within buildings, will be transferred to IDA. Both the IDA and SBA will work closely on such issues. Sir, my Ministry will be taking a two-stage approach in establishing the regulatory framework for the info-communications industry. The merger of NCB and TAS is the first phase. Instead of two specific regulators, NCB and TAS will be merged into an integrated agency, the Info-communications Development Authority, to oversee the development and regulation of the ICT industry and infrastructure. The IDA Bill constitutes the new statutory board and lists its broad functions and duties. The Telecommunications and Postal Services Bills provide the detailed regulatory powers of IDA in the telecommunications and postal sectors respectively. The regulatory provisions are generally taken from the existing TAS Act, with some revisions and enhancements. These will be discussed in the second reading speeches for the respective Bills. The second phase will be the introduction of separate legislation to deal with the legal and regulatory issues arising from the convergence of the telecommunications, IT and broadcasting industries. As convergence is a new phenomenon, we are studying the issues involved, as well as learning from the experience and legislation of other countries. I am targeting to finalise this new legislation next year after IDA has sorted out all the technical issues. Mr Speaker, Sir, I shall now touch briefly on the main provisions in the IDA Bill. Sir, this Bill provides for the formation of the IDA as a statutory board, with the transfer of staff, properties, rights and liabilities from NCB and TAS to the IDA. Clauses 6 and 7, together with the Second Schedule, of the Bill spell out the functions and duties of the IDA. Broadly, the IDA will perform three key functions. First, it will promote and facilitate the growth and development of an efficient and internationally competitive ICT sector in Singapore. Second, it will carry out licensing and regulatory functions, and help maintain effective competition in the ICT sector. Third, it will promote an Information Society in which ICT is readily accessible and available to all Singaporeans. Clause 18 provides for the transfer of properties, assets and liabilities of TAS and NCB to the new IDA. Clause 19 provides for the transfer of employees of TAS and NCB to the service of IDA. Sir, the technological advances and market developments in the ICT industry are driving the digital revolution. The merger of the NCB and the TAS to form IDA is an important step to better manage the convergence of IT and telecommunications technologies in Singapore. It will allow us to have an integrated and focused Statutory Board which can then work towards leveraging on the opportunities of the digital revolution. It will help develop Singapore into a progressive Information Society and position us as a dynamic and vibrant knowledge-based economy. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise to speak in support of the Bill in the name of the Minister for Communications and Information Technology. This Bill seeks to merge the National Computer Board with the TAS to form this new IDA (Info-communications Development Authority of Singapore). One of the duties of this IDA is to promote the efficiency and international competitiveness of the information and communications industry in Singapore, as stipulated in clause 6(1)(a). I just want to seek a clarification from the Minister. The term "communications" here, I suppose, refers to telecommunications and not just communications, because in his Ministry, communications may also involve sea, land and air transport. Or does the Bill actually seek to cover these areas? The second point I want to ask is whether the notion of efficiency and international competitiveness mentioned in clause 6(1)(a) refers to our information and communications industry in Singapore in providing efficient services in Singapore or for them to go overseas and compete in the big league internationally. I am not sure whether the first meaning to provide efficient services in Singapore necessarily implies the other. So perhaps a clarification from the Minister as to what extent the aim of this Info-communications Development Authority extends well beyond the shores of Singapore overseas, and, if such is the case, whether such policies that we apply home will also be the best kind of policies that will enable some of our own companies to go overseas. While we would like our own service providers to give the best services and charge the lowest price for these services, does the Info-communications Development Authority necessarily see this issue of service providing as the sole issue for efficiency? Size, for example, is a very big competitive advantage in this sector. So to develop that kind of size for our own local enterprise, Singaporean enterprise, is it the same set of policies that is required for us to develop if we are only interested in providing efficient services at home? Strategic investment that is provided over a long term, for example, will not be undertaken by local service providers, because it may not be profitable over a given time frame. And if we do not do that in Singapore, then we may not have the experience, the know-how and the knowledge base to proceed overseas. So such investments that have to be made locally may be of strategic advantage to our country. So it leads me to the question of whether IDA will be able to achieve its objective of promoting and maintaining fair and efficient market conduct and effective competition. Will the IDA not have its own favourite son? This is particularly so because in clause 6(1)(m), the IDA is supposed "to encourage, promote, facilitate, invest in and otherwise assist in the establishment, development and expansion of the information and communications industry in Singapore". I hope the Minister can clarify.

Mr Speaker, Sir, the Minister has said that IDA is an important step to better manage the convergence of IT and communications. I agree, Sir. Indeed, one of the concerns when I entered this House in 1997 was how we should perhaps restructure our Government and Ministries to cater to this problem. And it was reported in Hansard, 19th November 1997, in columns 1893 and 1894, when I asked the Prime Minister a question whether he would form a Ministry of Information Technology. Then the answer was simply no, that we had a National IT Committee to do that. I followed up on 12th March 1998 with a question in the Committee of Supply which was reported in column 1054 of Hansard dated 12th March 1998. The then Second Minister for Trade and Industry replied in column 1096, and again the answer was no, that it was unrealistic to have such a Ministry. I followed up again, 12th March 1999, reported in column 708, asking for this again. And I am very heartened, Sir, that today we see the culmination of efforts like that. We have now not only an IDA (Info-communications Development Authority of Singapore) but also a new Ministry of Communications and Information Technology. It does show that if we do try, in small persistent pushes, it can indeed, perhaps with faith too, move mountains. Sir, I am very happy that we have this new Ministry and this new authority to better manage the convergence of IT. It is, you might say, the new "darling" of Singapore, and we hope that it would be able to live up to the high expectations. The convergence of broadcast technology, computer technology and telecommunications technology, in fact, should lead us to that further consideration of merging even the SBA, as the Minister has mentioned in his speech, with perhaps IDA. The Minister's answer is that content regulation should be separate and it is still all right that traditional broadcasting can be regulated that way, and that the technical side of broadcasting will be brought under IDA. Half a loaf is better than nothing, Sir. But I would still say that we should actively consider merging even SBA with IDA because out in the industry, it is rather confusing for a broadcaster to say where this goes to - SBA or IDA. If we are concerned about separately regulating content, we can indeed have a separate agency to regulate content. Then, again, in this case, it will be across the board dealing with content not only on radio, TV, computers and Internet, but print media too. So I would indeed urge the Government to continue considering that. Now, moving on to the technicalities, I look at clause 2 which states the definition of "TAS". I believe there is a little inelegance of drafting here. We are told that in clause 2, TAS is defined as "the Telecommunication Authority of Singapore reconstituted under the Telecommunication Authority of Singapore Act". This Act, we will know today, will be repealed. It is strange to me to see words telling me that an Authority would be reconstituted under an Act which will be repealed. I do believe that perhaps what the drafters intended to do was to mention that this new Authority, IDA, is an authority that will replace TAS which was formerly reconstituted under the TAS Act, which is now repealed. Perhaps some additional words would make that clear. Moving on to clause 6(1)(e), there are certain powers mentioned which are given to the new IDA, ie, new powers, new functions and new roles. I am very supportive of those roles. Perhaps clause 6(1)(e) could be further expanded, not just to deal with the IDA representing Singapore in international fora, but also to be given the powers to separately and independently, if necessary, to forge this convergence of laws. Because as IT and telecommunications converge, the laws of the world will need to converge and harmonise. I hope that the power will be given to the IDA to work with international bodies, whether Government or non-government, whether public or private, in efforts to harmonise ICT law and policy and to create transnational and, if necessary, supranational solutions. I move on to clause 6(1)(j), Sir. I would say that, prior to this, it is indeed heartening also to see that the Authority would be given the power to encourage, facilitate and promote the greatest practicable use of industry self-regulation by the information and communications industry in Singapore. I would like to know if the Minister would, in a policy statement perhaps, soon announce how this would be done and whether there will be any budget to do this. It is important for industry to self-regulate but it is also important to give them the right incentives so that they will do it. With that, Sir, I support the Bill.

First, let me thank the two MPs who have spoken in support of the Bill. Let me deal with the points brought up by Mr Chay. Sir, he has asked, since the term "communications" can be interpreted to cover a broad area which includes sea, land and air transport sectors, whether the Info-communications Development Authority will also be charged with the responsibility for the three transport sectors. Sir, if you were to refer to clause 2 of the Interpretation section, it defines "information and communications technology" or ICT as "any technology employed in collecting, storing, using or sending out information and includes that involving the use of computers or any telecommunication system". Sir, this is in fact a widely used term in the information technology and telecommunications industry and is a result of the rapid convergence of these two technologies. As such, the Info-communications Development Authority will only be responsible for the IT and electronic communications industry in Singapore and not the sea, land and air transport sectors. Sir, he has also asked, when we talk about promoting competitiveness in Singapore, whether we mean to let the ICT industry to be competitive in Singapore only or do we intend to let them also compete abroad and, as he says, join in the big league overseas. Sir, the ICT industry is an extremely large sector. It includes the development and management of computer hardware and software, the telecommunications sector, the development and hosting of Internet content, the provision of data services, and so on. As most of these services and products are largely sold on the global market, the industry players must necessarily be competitive, not just locally but, more importantly, internationally. For example, HP's computer and computer peripheral business in Singapore sells the products, such as computers and printers, not just in the region but all over the world. Similarly, with Compaq, Seagate and many other companies. In the software sector, there are already companies in Singapore which are subsidiaries of MNCs, even local companies, whose software are products which are developed in Singapore and are now being used or sold worldwide. Sir, at the same time, the cost of local telecommunication services can be a significant cost factor for companies and it can adversely impact on their international competitiveness. Therefore, we also need to ensure that the local telecommunication services are competitive and competitively priced. As a result of this, we are now seeing good results. For example, Singapore is one of Citibank's global data centre. Citibank has located this very important multi-million dollar facility here because we have the necessary IT expertise, an excellent supporting infrastructure and competitive telecommunications rates. The centre links up with the Citibank branches in over 55 countries worldwide. So IDA must therefore ensure that its policies lead to a more vibrant and internationally competitive local telecommunications sector to the benefit of the whole economy. Mr Chay asked, since size is important, would the same set of policies be valid across the whole range of companies and, more importantly, in cases where strategic investments are required, especially such investments are marginally viable, how can we promote those investments. How do we ensure that those investments are being made for the long-term good of the economy? Sir, IDA's focus is to ensure that our telecommunications industry can respond to the needs of the economy in the range and quality of innovative services offered and also to ensure that these services are competitively priced and give good value for money. At the same time, competitive pricing may not necessarily imply the lowest price levels. I think this is what he is concerned about. If this really implies the lowest pricing, then in the same policy we apply across the board. So the aim is really to ensure that we give good value for money. One way to do that is to ensure that eventually when we move to a situation where market forces force the service providers to do so, ie, innovate, price their services competitively and, even though they are not the cheapest in the region because of the overall quality of service, their services are still very attractive. Sir, with regard to investments that have a strategic national value but which are only marginally viable, we have mechanism to address this. For example, TAS has a development grant scheme and NCB has a cluster development fund which can be used to promote and co-fund strategic investment projects. I will give Members an example. TAS and NCB, together with other Government agencies, had worked with industry and co-funded SingaporeOne which is the world's first nation-wide broadband infrastructure for multimedia applications and services. So in that way, IDA will continue to work with the industry to ensure that there is continued upgrading and enhancement of our infrastructure and network. And we will also co-fund strategic investments when needed. Mr Chay also talked about the danger of having a favourite son because of the duty of IDA to promote the development of this sector. Sir, like TAS and NCB before it, IDA will be a fair and impartial regulator and promoter of the industry. Mr Chay need not fear that IDA will have a favourite son because we will continue to treat all industry players as valued and favourite sons. So it is not just one, we will treat all of them as our favourite sons. As we further liberalise the telecommunications sector and as ICT sector continues to develop, we expect to see more players locating in Singapore. They will serve not just our local market but also the region and globally. The only way for us to attract them in is to ensure that our playing field is level and equally important is that the new and potential players perceive our playing field as being level. So he need not fear about IDA developing a favourite son. Prof. Toh See Kiat has brought up a few points. First, I want to commend him on his persistence in raising this issue of centralising the responsibility for IT. Sir, it shows that the Government does listen to the suggestions of MPs and we do take their suggestions into consideration. He asked why not merge SBA and IDA eventually because the industry players may have difficulty differentiating between what is under SBA and what is under IDA. Sir, the content element is very straightforward. The dividing line is very clear and the industry players know who to go to for which function. The SBA content also spans a large area. It is not just content on Internet, radio and TV, but also, as Prof. Toh has mentioned, also covers the print media. Therefore, it best resides within SBA and IDA as it now stands. He also asked about the definition of TAS. Sir, I had asked about this earlier and I am told that the formulation of words here is correct. But since I am no legal drafter and in view of the point brought up by Prof. Toh, I will indeed seek another opinion. Prof. Toh also asked whether IDA can, under clause 6(1)(e), in fact broaden its function to include being charged with working with international bodies on harmonising ICT law and policy. Sir, indeed, this is what we intend to do. It may not be under that particular section but we intend that in view of the fact that this is such a rapidly evolving section, and in fact many countries are still groping as to what to do, we need to share our experiences as well as learn from the experiences of other countries and where international standards are needed to be formulated, we want to be there right upfront, taking part in the formulation of those standards because they would impact on us as well. Sir, I can assure Prof. Toh that this indeed is what we intend to do. Prof. Toh also talked about clause 6(1)(j) which deals with the intent of IDA to promote self-regulation. I will touch on that in my Second Reading speech for the next Bill which deals with the telecommunications issues. Sir, as to whether a budget is needed, I would think that industry players would in fact be very happy to pay us to allow them to self-regulate because this gives them greater freedom. Sir, I do not think a budget would be needed for IDA to promote self-regulation.

Sir, a point of clarification. The Minister has said the industry's players would do it. Indeed, if the players feel that they should self-regulate, they would come together. But because there are so many players out there, sometimes it is important to have an organisation that gets them all together to do these things as a whole and I declare my interest here. I am the Chairman of CommerceNet Singapore which is trying to do that, but being a non-profit organisation, it may not be easy for us to persuade people to donate money. They would want us to do the work for them and we would be very grateful if Government could consider some sort of assistance where we can do this work.

Sir, I would encourage him to contact my staff on his concerns. But I would think that if he is providing a useful service, surely useful services are saleable.

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 Yeo Cheow Tong]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order. I suspend the Sitting and will take the Chair again at 3.25 pm. Sitting accordingly suspended at 3.03 pm until 3.25 pm. Sitting resumed at 3.25 pm

Order for Second Reading read. The Minister for Communications and Information Technology (Mr Yeo Cheow Tong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill provides the detailed regulatory powers of the Info-communications Development Authority of Singapore (IDA) in the telecommunications sector. It repeals and re-enacts substantively the provisions of the present Telecommunications Authority of Singapore (TAS) Act. As I had pointed out in my Second Reading speech for the IDA Bill, information and communications technology, or ICT, will be of increasing relevance and importance to Singapore as we move into a knowledge-based global economy. We need to not only promote and nurture the growth of ICT, but also transform Singapore into a vibrant and global ICT hub. One feature of the knowledge-based economy will be the widespread use of the Internet and Internet Protocol applications. We will therefore need to actively work to become a regional and global hub for Internet content development, hosting and delivery. To realise this, Singapore will need to become an even more competitive node for global telecommunications. We must ensure that our telecommunications infrastructure is well developed, well connected regionally and internationally, and competitively priced. It is therefore important to increase and broaden our connectivity to key regional and global information infrastructures. From less than an aggregate of 10 megabits per second in 1998, Singapore's Internet bandwidth into the Asian region will grow ten-fold to more than 100 megabits per second by the year 2000. Singapore's Internet bandwidth into the region is expected to grow exponentially into gigabits per second by the year 2005. The locations and bandwidth of such connections would be both market and demand-driven. Sir, the telecommunications sector has become extremely complex and competitive internationally, with service providers innovating furiously, and new value-added services and products being introduced in rapid succession. Development in such a dynamic environment cannot be regulator-driven, nor can the market place be restricted if it is to be vibrant. The Government recognises this. We have therefore progressively liberalised the paging, Internet Access Service Provider (IASP) and mobile telecommunications sectors. By 1st April 2000, the public basic telecommunications service sector will also see the entry of our second operator, StarHub. The entry of new players, as we liberalise, will often involve technical and contractual issues between the new and existing players, particularly where interconnections and interconnectivity are involved. IDA must therefore fairly, transparently and expeditiously manage the implementation issues, such as interconnection arrangements, between the incumbent and the new telecommunications operators. We recognise that the regulatory approach and framework must also evolve as the industry develops and matures. The entry of more service providers will enhance competition, thereby allowing IDA to exercise a lighter regulatory hand. The Government can then let the market self-regulate more, intervening only when anti-competitive practices appear. Mr Speaker, Sir, let me now explain the main provisions of the Bill. Our regulatory approach in the telecommunications sector is structured to allow the IDA to regulate its licensees in a fair and transparent manner. The IDA will rely on licence conditions, directions, codes of practice and standards of performance to safeguard national and consumer interests and ensure the quality of telecommunications services. This is provided for in clauses 5, 26 and 27 of the Bill. The Bill will also enable IDA to address issues that are critical to the development and liberalisation of the ICT industry, such as preventing anti-competitive practices. To protect consumer welfare and public interest, apart from suspending or cancelling a licence, a financial penalty may be imposed on licensees that breach these regulatory requirements. The limit for the financial penalty is generally based on the potential public consequences and the economic benefits a licensee can deliberately reap from the breach, or non-compliance. A breakdown in telecommunication service arising from a breach can cause serious and widespread disruption to business and personal communications. In clause 8 of the Bill, we have thus set the maximum financial penalty for a telecommunications licensee at $1 million. This should be adequate deterrent against errant and irresponsible actions by licensees. Clause 69 contains explicit provisions allowing aggrieved licensees to appeal to the Minister. The appeal can be against any decision of the IDA in the exercise of any discretion vested in it, such as an order for suspension or cancelling of a licence, or the issuance of directions, or anything contained in a code of practice or standard of performance. Going forward, as I mentioned earlier, we recognise the need to regulate with a lighter touch as the industry matures and moves to a more competitive market-driven environment. In such an environment, industry self-regulation will be promoted where possible. Clause 28 of the Bill empowers IDA to issue advisory guidelines. This will allow the IDA to step back in appropriate circumstances and let the licensees work out mutually agreeable solutions among themselves. Sir, given the growing importance of the telecommunications network, we must ensure that due care and diligence is taken by contractors doing work in the vicinity of telecommunication cables, to prevent cable cuts to the telecommunications network. This will be addressed by requiring detection works to be undertaken prior to actual commencement of earthworks, and by properly trained and licensed workers. Clauses 29 and 30 of the Bill provide for IDA to license telecommunications cable detection workers. The provisions will make it mandatory for contractors who undertake earthworks to engage qualified telecommunications cable detection workers to locate the cables in the vicinity before commencing with earthworks. Contractors will be required to take due care and diligence to prevent cable cuts to the network. Clause 29 also stipulates that contractors who fail to do so shall be liable, upon conviction, to a fine not exceeding $100,000 or to imprisonment of up to 3 years or to both. In addition, clause 30 of the Bill states that cable detection workers who are unlicensed shall be liable, upon conviction, to a fine of up to $10,000 or to imprisonment for a term not exceeding 12 months or to both. Sir, the Telecommunications Bill sets out the regulatory framework for the efficient and effective operation of the IDA in a liberalising environment in the short term, and in a fully liberalised environment in the long term. It is the aim of the IDA to ensure that fair and market-driven competition can be introduced as early as possible, so that it will be able to regulate the industry with a lighter touch while protecting the interests of consumers. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, this Bill covers a wide area, as has been mentioned by the Minister, in telecommunication services and setting out the rules and regulations for the provision of such services, the codes of practice, the offences and penalties, enforcement powers as well as the international obligations and areas of strategic interest. It vests the Authority with the exclusive privilege of operations and the provision of telecommunication systems and services in Singapore, including the power to grant licences for operations in specific areas of services. This power to license also includes the power to require licensees to share systems or inter-connection access to systems with other licensees. The spirit of transparency and global competitiveness is quite definitive in this field of telecommunications. I wonder how will the licensees, who have certain competing strengths built up over years of market expertise, human skills or strategic investments in anticipating the market or building synergies in their own businesses, view the directions from the Telecommunication Authority, or IDA subsequently, to share their resources or competencies with other licensees on this sacred altar of transparency and inter-connection access. Also, there is a question of national strategic interest, either in having some critical or important telecommunication systems or features reside in or belong to Singapore. It is a typical free-rider problem that one encounters often in businesses and organisations. The infrastructure is built up by the pioneer. The newcomers come to ride on the infrastructure support built up. How does one price it? By fixing benchmark market cost in equivalent features globally, or in a market asset price of the stockholding company? The danger is always there. Because of our local market limitations we may end up giving up a lot for very little. How does the Telecommunication Authority, or IDA subsequently, make out fair compensation to such infrastructural cost and rewards for risk involved? If such compensating criteria are not well defined in advance or certain businesses are unduly or unfairly penalised by unwitting extraction of its business advantages to some other licensees, there may be reduced incentive for strategic investments and for long-term dynamic growth and development of the industry, which may therefore be affected. I hope the Minister can clarify. The requirement in clauses 53 and 54 stipulating Government's overriding international rights is also important and very reassuring. Singapore has made its stand to fulfil its role as a responsible member of the international community, its intention to override all licensees' conduct of business at variance with such international responsibilities to which the Government is a signatory. The intention to stipulate better telecommunication cable detection work by contractors is also most welcome in clauses 29 to 32. We all know that any damage to telecommunication cabling network costs a lot of money for the businesses affected. And the latest regulatory role of the Bill allows for this detection work by contractors and penalty fines for them are the least we can do to continue protecting our cable network.

Mr Speaker, Sir, I rise to support this Bill. The first thing I would like to say is that the Bill is timely and we have debated on the Info-communications Development Authority of Singapore Bill, and we realise why we have to do this. The first point that I raised earlier on in the debate on the Info-communications Development Authority of Singapore Bill, and now under this Bill, is that in clause 2, there is a definition of "TAS". Here, my argument is even stronger than earlier. It says, ""TAS" means the Telecommunication Authority of Singapore reconstituted by the repealed Act;" My question earlier on and my question now is: how can an Authority be reconstituted under a repealed Act? I believe the words should have been better put as, ""TAS" means the Telecommunication Authority of Singapore formerly reconstituted under the repealed Act." My other more substantial point relates to clause 4. Under clause 4, the monopoly given to the licensee is excepted in that if "a person runs a telecommunication service solely for his own use or solely for the purposes of his business . on a single set of premises in single occupation;" Those are the words in the Bill. This would mean that the exception to the monopoly privilege will not cover, it seems to me, a world-wide or even a nation-wide corporate intranet. It is within one company, but it seems to fall outside this and therefore there is an infringement. The other possibility is that if we have a private network in an intelligent building, it could be one premise, if you see it that way, but there are many occupiers and therefore even though they should not be regulated by the Act, it appears that they will be. I wonder if this is intended. Sir, moving on to clause 33 of the Bill, this is the beginning of the offences and penalties (Part VI), and I believe clause 33 can be read too widely. The clause, as it stands, would seem to require operators of e-commerce businesses which would happen to be riding on an ISP, a licensed ISP at that, to be licensed too. And I hope this would not happen because otherwise, as could be possible, portals like Yahoo and e-mails like Yahoo.com or hotmail.com, or the chat rooms that are set up under e-commerce shopping malls, or perhaps on-line stock trading services - these may all come within the licensing provisions of the Bill. If there is no licence, then it would be illegal, and this would hamper a lot of e-commerce. Further, I do believe that we need to clarify whether technologies used by companies like MediaRing and Net2 Phone would be similarly telecommunication systems that need to be licensed, because they breach the monopoly privilege of the licensee. So we do hope that the Minister would clarify this and, if necessary, this could be done in the regulations under the Bill. Moving on to clause 35 again, I have a clarification. Clause 35 is an offence clause which penalises those who operate a radio communication system or service, and if you do not have a licence, it could well give you penalties under this clause. My question is: would an Internet radio service, which could eventually also be wireless, be covered under this clause? If so, then it should be excluded. Next, my point is on clause 41 and perhaps the clauses after that, clauses 42 to 48 which deal with the interception of telecommunication services and such offences. Looking specifically at clause 41, I regret that this is perhaps not wide enough to cover and protect against electronic snooping which does not touch, tamper, remove or damage any installation or plant under this clause. Certainly, if you were to use current technology to intercept mobile phone messages, it would really not be touching, tampering, damaging or removing any installation or plant under the Telecommunications Bill. Consequently, it could be read as a lacuna in the law because we prohibit people from intercepting messages only if it touches the line or the plant or the installation of the Telecommunication Authority but not if they are clever enough to avoid all these. Sir, I would like the Minister to clarify on this point. Other than that, Sir, I support the Bill.

Mr Speaker, I have not intended to speak on the Bill which I generally support. I would like, however, to raise three points for the Minister's clarification. The first two relate to the Minister's comments on the need for transparency to ensure that anti-competitive measures are struck down and that the new authority will regulate with a lighter touch. In this regard, my first two points relate to the right of appeal and to the question of transparency. It seems to me that the rights of appeal are limited to the Minister. Then, obviously, the reasons for the Minister's decision and the hearings will not be public, and this may not be best practice as regards transparency. Public hearings might be better. The second relates to clause 28(3)(b). Clause 28(3)(b) allows in respect of advisory guideline wherein the authority simply must "publish each advisory guideline in the way it thinks fit". Again, if we are to take best practice transparency seriously, surely public publication either in the Gazette, as with all other laws or regulations, should be the bare minimum and not "in the way it thinks fit". My third point relates to a different issue, and this of course is the relation of international rights to the right of the licensees. Sir, this Bill is taking part in a very dynamic situation in which international negotiations under the umbrella of WTO are opening up and other sectors. There will be an effect on licences. It could be a question of vested rights, a licence already given is then in some way compromised. I would like the Minister's assurance that consultations will be held with licensees prior to these international negotiations that might affect them.

Mr Speaker, Sir, first, let me thank the three Members who have spoken up in support of the Bill. Sir, I will take the points brought up by the speakers one by one. First, let me deal with Mr Chay's comments. The first point he raised was about requiring the existing licensees to share their facilities and he asked how would the licensees view the directions from the regulator for them to share their resources. Sir, as I pointed out earlier in the session on Questions for Oral Answer, tough decisions have to be made and it is very difficult to make all the licensees happy. Of course, those who have been adversely impacted will not be very happy. But the key thing is for us to ensure that the regulatory framework is one which is fair and transparent, so that no one feels that they are being discriminated against or they are being taken advantage of. We have to ensure that there is no free rider. That is one of his main concerns - that new companies will come and free ride on what has been put in by the existing companies. So there will be no free riders. All the services will have to be negotiated. All the interconnections will be negotiated at a price agreed upon. Sir, let me stress that the regulation and liberalisation of the telecommunications sector is not unique to Singapore. Because the telecommunications sector is so vital to the efficient operation of the entire economy, many countries have, in fact, actively proceeded even before us, to open up their telecommunications sector. Therefore, many of the interconnect practices and requirements have already been fairly well established. Why do we need to have the interconnect facilities? In a multi-operator environment, we need to ensure that consumers are able to enjoy seamless and transparent services and that the service providers are able to share scarce infrastructural resources on commercially agreed upon terms. For example, it would not make economic sense nor will it be in our national interest if SingTel subscribers are not able to phone subscribers of M1 handphones and vice versa. Interconnection and access therefore is vital in a competitive multi-operator environment, so that the customers can have a choice of service providers and they can seamlessly and transparently contact and communicate with anyone they want. In the area of infrastructure sharing, we will only direct sharing where there is a real bottleneck situation. For example, all the mobile phones and paging operators are required to share the infrastructure to provide radio coverage in the MRT and our city tunnels, given the sheer lack of space and the operation constraints in these tunnels. The IDA will only issue directions after careful assessment of the circumstances requiring sharing. On interconnection and access, IDA's requirements for the operators to have interconnection and access obligations are very similar to what other countries are practising, because we have taken the opportunity to learn from them. Mr Chay also raised his concern whether we will actually be giving up a lot for very little. In actual fact, we are giving out very little to gain a lot. Because the telecommunications infrastructure is a very fundamental infrastructure for the entire economy. By making sure that we are able to liberalise and introduce competition, our rates have been steadily declining. And as a result, I think it has been a boost to many parts of the economy, especially companies that are engaged in international trade and companies which have very heavy data flow between Singapore and their offices in the region and elsewhere. Mr Chay also asked whether by having the interconnection requirements, we will reduce incentives for strategic investments. As I pointed out just now, if there are strategic investments that are required but which are only marginally viable, we will be very happy to take a look and co-fund those investments, if they are in the national interest. On the other hand, by making sure that we are able to introduce competition, I think this forces the companies to innovate to provide more value-added services and therefore increase their own viability. I think as a result of that, we have in the last 18 months or so been seeing the introduction of numerous new services, all of which add to the bottomline of the operators. Sir, he has also agreed with our requirements for contractors to employ licensed cable detection workers. I thank him for his support. With regard to Prof. Toh's point on the definition of "TAS", in clause 2, I have asked and I was told that the formulation of the words is correct. But, again, as was pointed out earlier on, I will also seek further advice on this from the AG's Chambers. Clause 4 only applies to equipment which is on a single set of premises in single occupation. He asks whether this is deliberate, because it seems to rule out quite a few other situations, for example, companies with multi locations within Singapore which seek to set up their own national Intranet as well as bigger buildings where there are multiple occupants. Sir, the scope of the definition is indeed an intended one. For the case of one user, many premises, the national Intranet situation that he talked about is that the company should take telecommunication services from a public basic telecommunication service provider who then has certain rights to either enter the land for installation and to repair and also to be able to extend the network beyond the boundaries of one particular property owner. So it is intended not to apply to such situation. In the case of one premise, many users or occupiers, the smart building that Prof. Toh was talking about, this would be the provision of telecommunication services to third parties, as the users and occupiers are not related but just happened to be in the same building. And therefore such potential service providers should actually obtain a licence from IDA. Sir, he touched on clause 33 and asked whether this requires e-commerce operators riding on licensed ISPs to be licensed, and he mentioned companies like Yahoo, Chat Room facilities, Media Ring and Net2Phone. In fact, clause 33 is not a new provision. It is an existing provision in the current TAS Act. TAS to-date, in fact, does not license any content or Internet service provider. So portals like Yahoo, free mails given by them, and Microsoft, and Media Ring and Net2Phone are, in fact, already not required to be licensed. The other thing is that Media Ring and Net2Phone actually do provide a service. They provide software or equipment to Internet subscribers, and being not service providers themselves, they do not require to be licensed. He talked about clause 35 - whether service providers who are providing radio service through the Internet need to be licensed. Sir, the answer is yes. Any equipment intended for wireless transmission, regardless of the content to be transmitted, needs to be licensed by IDA. The reason for this is very simple. This is to ensure that the operation of such equipment does not cause interference to any other wireless services or equipment. Prof. Toh commented that clause 41 is not wide enough to cover against, for example, electronic snooping. Clause 41 has a very clear intention. The intent is to protect the telecommunication's installation of plant or the public telecommunication licensee from damage if someone in the course of trying to intercept messages or to commit mischief damages or tampers with the installation or plant. It is not meant to cover or to protect against electronic snooping or unlawful interception. I believe that one of the reasons is that now mobile telephony being encrypted is quite difficult to snoop into versus the old analogue system where actually it is like a radio station where you can just tune in. The new GSM and CDMA systems are encrypted and each generation of new phones involves even stronger encryption and therefore it is now proving to be quite difficult for people to just snoop into such transmissions. Mr Simon Tay commented that while we are talking about transparency and the need to act against anti-competitive practices, the rights of appeal are quite limited and the rights of appeal have to be made to the Minister. The reason for this is that in many cases, the information contained in those appeals are highly sensitive commercially and therefore it is not appropriate for those appeals to be heard openly because it will mean divulging commercially sensitive information. In any case, if such information is not commercially sensitive, if need be, we will be very happy to let the companies publicise the decisions. In any case, the appellants are normally heard by the Ministry as well. Whilst the case may not be heard in the open, they have the ability to make their case heard very clearly by the Ministry and Minister. He mentioned about clause 28(3)(b) where the Authority must publish each advisory guideline in the way it thinks fit. Mr Simon Tay feels that it should be gazetted. Sir, to be published "in the way it thinks fit" leaves the flexibility to the Authority to publish the advisory guidelines. Today, there are many, many channels. For example, TAS now posts many of the requirements and policies on the Internet. So rather than restrict it to only one medium, it is better that we leave the flexibility to the IDA to publish those guidelines. The key thing is that those guidelines would be published. But let us give it the flexibility to choose the medium or better still the media in which to do so.

Order. Mr Yeo, can you allow Mr Wong to move the exemption motion first.

Resolved, That the proceedings on the item of business under discussion and the remaining items on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Debate resumed.

Sir, his last point was on the WTO negotiations and discussions and if those negotiations do impact on the existing licensees, we should hold consultation with the licensees. Sir, indeed this has been the practice and we will continue with it.

Mr Speaker, Sir, I would like to just clarify one point which the Minister touched on just now. In talking about the issue of interconnection access and the free rider problem, I said just now that we might end up giving up a lot but getting very little. What I meant was actually when people, particularly international companies, come into Singapore and operating as licensees, riding on the interconnection access which is built up internally here, there is an issue here. How does one price it? Of course, you can say that by opening up the market, naturally prices are becoming cheaper and cheaper. But if you just look at this kind of benchmark, international prices of operator, it might not mean a thing. The value of the business is resided in the asset value of the company. So the value is actually there - in the control of the operations, in the headquarter company, in the stockholding company which is overseas. So the danger is really there. If you just use the normal standard day-to-day routine measure and say, "Bottomline. That's it. So many cents per call, or whatever." I hope the Minister can dwell into what I mean when I said "giving up a lot for very little".

Sir, I wish to ask the Minister to clarify. Does he not see the anomaly that arises when he says that clause 41 is not intended to cover electronic snooping? If you get a person who taps into a telephone line, that is illegal but if he taps into an aired message through a mobile phone system, then it is not illegal. I do agree that there are encryption systems. But as a matter of practice, most mobile phone messages will remain unencrypted for a long term and also perhaps because it is more expensive. And it does indeed say much of our move into the IT age that we do have laws preventing private communications from unwittingly becoming non-private.

I would like to thank the Minister for his clarifications. I would seek further clarification on only one point. It is regarding the release of decisions to the public. I agree with the Minister that where it is commercially sensitive, it should be withheld. But can I take it that the Minister is reassuring us that where it is not commercially sensitive and where there are principles that apply to other companies or the public, these will be released because there have been controversies before.

Mr Chay sought to clarify what he is talking about. Sir, I do take his point. This is why TAS has put in place a charging framework for interconnection which should be applicable for only three years. This charging framework establishes, among other things, an economic cost model for calculating the interconnect charges and infrastructure sharing. This cost model is based on the current replacement cost principles to ensure that the infrastructure owner is fairly compensated for interconnection and for the use of his infrastructure. This framework is generally an attempt to redress the asymmetry in the bargaining position of the new entrant, vis-a-vis the incumbent, and it gives the right signals and incentives to both the new and old players. The new operator can decide whether to buy or to build his own facilities while the incumbent operator has the incentive to continue to invest in the infrastructure because it is getting a good economic return on whatever he is investing. After three years, the operators will then proceed to commercially re-negotiate the prices. And it is only when they cannot agree on the pricing, will IDA then intervene again. What we would like to do is to leave it to them to establish their own pricing mechanism. If there are enough players, the new entrants will have enough choices to negotiate with. Prof. Toh mentioned about clause 41 again. Sir, the intent, as I said, is to prevent damage to the existing facilities, including line installation, and all that. If someone is snooping and is using our line systems, then we can take action against him. But, as I said, the one which we are unable to cover against, at the moment, is snooping into the wireless media, and the most common one will be the handphone conversation. As I said, at the present moment, encryption is already strong for the GSM and CDMA and I think the future generation of handphones will have even stronger encryption capabilities. If there is a need for us to guard against that in the future, we will be very happy to enact the required legislation. But at the present moment, there is no evidence that this is needed. Regarding Mr Simon Tay's question, yes, where the decisions and the facts of the case are not commercially sensitive, there is no reason why we should not divulge them. But our experience so far has been that many of the cases do involve sensitive information. As we have seen in the recent complaints in the newspapers and our replies, they do involve highly commercially sensitive information.

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 Yeo Cheow Tong]. Bill considered in Committee.

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

Sir, I beg to move, In page 4, line 27, at end to add "but excludes any broadcasting service". Sir, this is to make the definition of "telecommunication service" consistent with its definition in the IDA Act. Amendment agreed to. Clause 2, as amended, ordered to stand part of the Bill. Clauses 3 to 9 inclusive ordered to stand part of the Bill. Clause 10 -

Sir, I beg to move, In page 11, line 14, to leave out "53", and insert "58". Sir, there is a typographical error in page 11, line 14. The number "53" should read "58" instead. Amendment agreed to. Clause 10, as amended, ordered to stand part of the Bill. Clauses 11 to 76 inclusive ordered to stand part of the Bill. Bill reported with amendments; read a Third time and passed.

Order for Second Reading read. The Minister of State for Communications and Information Technology (Mr Lim Swee Say): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, the Bill before this House provides for the regulation of the postal services sector in Singapore. Like the Telecommunications Bill 1999 that was debated earlier in this House, the Postal Services Bill repeals and re-enacts substantively the provisions of the Telecommunications Authority of Singapore (TAS) Act on the licensing and regulatory powers in postal services. Clause 3 of the Bill provides for the appointment by the Minister of any person to be a Postal Authority. The intention is to appoint the new Info-communications Development Authority of Singapore (IDA) as the Postal Authority. Sir, the postal services sector comprises two broad categories - the basic delivery of ordinary letters and postcards, and the delivery of express letters. The latter is a premium service. To meet the needs of the business consumers for secure and fast delivery service, the express letter market has been liberalised since February 1995. This provides consumers with a wider choice of competitive carriers for their time-sensitive and more secured express mails. For the delivery of ordinary letters and postcards, Singapore Post has the monopoly rights until 31st March 2007. Members of this House may ask why not bring forward the liberalisation of this market so that the benefits of competition, such as competitive pricing and higher service levels, can be enjoyed earlier. After all, this was what we did for the telecommunications sector. Sir, we must weigh the possible benefits of liberalisation against the cost of advancing liberalisation with its concomitant compensation and decide what is the best approach. In the postal industry, the key growth areas are the delivery of express letters and direct mails from businesses to households, such as printed matters, advertising materials and publications. These growth areas have all been liberalised. SingPost's monopoly is restricted to a low-growth market of ordinary mails and postcards. In 1998, the volume of ordinary letters and postcards has decreased by 4.5% and is expected to decrease by a further 2.2% in 1999. Looking ahead, this declining trend is expected to continue over the next few years, with the increasing use of mail substitutes such as e-mails and faxes. This is clearly unlike the rapidly expanding telecommunications sector, where the potential benefits of advancing liberalisation are obvious. The postal industry relies on the high volume of mails to achieve economies of scale. This has allowed the postage for ordinary local letters to be kept at an affordable rate of 22 cents. Without the benefits of the economies of scale, postage rates may have to go up. Currently, TAS sets the minimum standards for the quality of service that SingPost should provide to the public for the delivery of ordinary letters and postcards. This includes targets for delivery speeds of local, registered and international mail, and queuing time at postal outlets. For local ordinary mail posted before 7 pm within the CBD or 5 pm outside the CBD, TAS requires SingPost to deliver by the next day at least 98% of all mails within the CBD and 95% of mails outside the CBD. There are both internal and independent external audit checks to ensure that these standards are met. It is also necessary to review these standards regularly to continuously improve the overall postal service enjoyed by Singaporeans. In this regard, IDA, in its capacity as the Postal Authority, aims to raise the minimum standards for quality of service for next day delivery of local ordinary mails that are delivered outside the CBD from 95% today to 98%, and for those that are delivered within the CBD from 98% to 99%. This will be implemented progressively over the next few years and will be completed by 2004. Sir, TAS has also put in place a price control regulatory framework, which benchmarks the tariffs for our basic postal services against countries with similar cost structures. For the delivery of ordinary letters and postcards, TAS requires SingPost's charges to be below the average of these countries. SingPost also needs to seek TAS' approval on any tariff changes for its basic services. The price control framework ensures that the tariffs for our basic postal services are internationally competitive. So, for SingPost's delivery of ordinary letters and postcards, there are sufficient safeguards on service levels and prices to protect the interests of the general public. We will therefore not advance the liberalisation of the ordinary letter market. What we will do is to ensure that the regulatory framework is fair and transparent. In the Bill, the provisions outlining the regulatory approach mirror closely those in the Telecommunications Bill 1999. The IDA, in its role as the Postal Authority, will similarly rely on licence conditions, directions, codes of practice and standards of performance. This is provided for in clauses 6, 24 and 25 of the Bill. Likewise, clause 26 provides for the Postal Authority to issue advisory guidelines. Apart from the cancellation or suspension of a licence, clause 9 also provides for a financial penalty to be imposed on postal licensees that do not comply with these regulatory requirements. Compared to the telecommunications and public utilities sectors, the potential public impact of a breach of regulatory requirements is less serious in the postal sector. The maximum amount of the financial penalty is thus set at $10,000. In addition, clause 56 contains explicit provisions allowing licensees the recourse to appeal to the Minister against any decision of the Postal Authority in the exercise of any discretion vested in it by the Act or anything contained in a code of practice of standard of performance. Sir, the Postal Services Bill 1999 sets out the regulatory framework for the postal industry. Notwithstanding the monopoly in the delivery of ordinary letters and postcards, we do enjoy high quality of service at internationally competitive prices. To ensure that we continue to do so, we will review the minimum standards for the quality of service and the price control framework regularly. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise to support this Bill. Firstly, let me mention that under clause 2 of the Postal Services Bill, there is a definition of "letter". I would like to clarify if such a definition would include services that the Singapore Post is currently promoting, which is the V-post and perhaps even e-mail services, because if this is not within the definition of "letter" in clause 2, there are certain other implications. Secondly, on clause 2, at the risk of sounding like a broken record, I would like to put on record for the Hansard because this would aid in future interpretation of this Act, this question of the definition of "TAS". I just need to clarify that after this Bill is passed today, there will be no new TAS that will be "reconstituted". Thirdly, clause 4 deals with the monopoly, that is, the exclusive privilege that the postal licensee would have. On first reading of this clause, I initially was disappointed because my first reaction was - what has happened to the liberalisation of postal services that we have been promoting and advocating, because if postal services are liberalised, sometimes this would be more business-responsive. And indeed, the growth of the courier business has shown that to be so. I am therefore glad that the Minister of State has actually clarified in his speech that there are certain residual areas of the postal service which would be unattractive to the commercial sector to carry and yet they need to be carried because people need to correspond, and economies of scale are needed so that it would be affordable enough at 22 cents. I thank the Minister for that. At 22 cents, it is a bargain deal and, on top of that, there is quality of service standard requirements by the current TAS and, later on, IDA. I would therefore support this and urge for constant review of this need to liberalise postal services even more. Ultimately, if postal services are not relevant, we should look into making it more responsive to the times and the technologies. Clause 5 deals with letters or postcards which accompany goods. I believe the intention really is that there are certain correspondences that do not really relate to the ordinary letter that we are talking about. This is something that goes along with the delivery of goods and the provision in clause 5 says that if this is accompanied by a "Consignee's letter" then this is not covered by the exclusive privilege. My question, Sir, is that, sometimes some of these cards or covering letters might accompany a delivery of goods, but it is not a trade practice or industry practice to call this letter a "Consignee's letter". And if that is so, then the deliverer of these goods would be breaching the Act if he were to deliver the goods with that letter. It is particularly so when we talk about the e-commerce purchase. The transaction is entered into on the Net. Somebody must physically deliver and perhaps with a covering letter. I hope these delivery services are not covered by the exclusive privilege or the monopoly of the licensee. Sir, I move on to clause 15. Clause 15 raises a concern. It says that, "The addressee of any postal article containing any dutiable goods shall be presumed until the contrary is proved to have imported the same". Sir, this is an evidential presumption which gives the State ease in prosecuting illegal imports and so on. But I would be very concerned that this does not get seen as a kind of indirect import tax on e-commerce because an e-commerce transaction is entered on the Net and something is delivered, and it could be delivered from Amazon.com in America. We do not want to see any indirect import taxes imposed on transactions like that because then e-commerce would be hampered. Next, clause 19. Clause 19 describes essentially what a postage stamp is and what are the protections that are needed to make sure that postage stamps, especially philatelic stamps, are valuable and continue to be valuable. The words "postage stamp" are defined again in clause 2, but reading it together with clause 19, I get the impression that it may not cover the development of e-postage stamps on the Internet. There are many, many proposals for this now and the idea essentially is that on the Internet, you could order a stamp that you can then fix onto your e-mail or to your physical mail and deliver. Such stamps would not have artwork probably. There will definitely not be any printing proofs, no dyes or artifacts will be created and they may not even have adhesive or be printed or stamped directly on the postal article itself. This whole section seems to describe, if you might say, Sir, obsolete technology. I hope that the Minister could look into this and clarify that this does not stop any development in the e-postage stamp category. Finally, clause 28. Clause 28 of the Bill deals with the damage to the installation or plants used for posts and it covers essentially what the old section 77 of the TAS Act deals with, and that is, you cannot intercept the transmission or delivery of a postal article if you were to touch, tamper, remove or damage the installation or plant of the postal services and the postal licensee. I have mentioned this during the debate on the Telecommunications Bill and I want to mention the same point here that in the era of e-commerce, we have to increasingly assure consumers and businessmen that when they go to e-commerce, it does not mean that they will lose all their privacy and it is important that we look at making sure our laws do cover this unauthorised interception of messages and letters and telecommunications. Under this clause, I think that it is not wide enough to cover a situation where if the postman has delivered into a private mailbox. It is no longer a plant of SingPost - and that private mailbox is opened and somebody reads the letter, seals it and puts it back again. And that is not illegal because under this current definition, no plant or installation of SingPost has been touched. I would prefer that to be not so, because we must protect private mail all the way until it is received and read by the addressee himself. If you were to look at it harder, I am concerned that it may not cover a situation where currently SingPost, for example, uses part-timers. Many of them are housewives and they help to deliver the mail. And sometimes they may actually be using paper bags or shopping bags that may not be SingPost's plant or equipment. I am concerned that this would then escape the penalty provisions of clause 28 and I do hope that the clause is not meant to be taken so absurdly and narrowly. If the Minister could clarify that, I would be most obliged. Sir, I support the Bill.

Sir, I would like to thank Prof. Toh See Kiat for his constructive comments. Firstly, on the point about V-post and e-mail services, I would like to clarify that this Bill basically deals with the physical delivery of letters and postcards. For e-mails and so on, it does not come under this Bill. E-mails would be covered under the Telecommunications Bill. Secondly, on Prof. Toh's point about the "reconstituted" TAS, as my Minister has mentioned earlier, we would check with the Attorney-General again. Prof. Toh also spoke on clause 4 regarding exclusive privilege. I want to assure the Member that the exclusive privilege here refers to the privilege given to the Postal Authority, in this particular case, the IDA. The IDA can issue licences for sectors that are deregulated. As I mentioned earlier, for the high-growth sector, we have already deregulated the market. In fact, at this moment, there are 110 companies competing with SingPost in the deregulated segment. On clause 5, Dr Toh asked what happens if the letter does not have the "Consignee's letter" stamp on it. My understanding is that, as long as the letters or postcards in question concern solely any goods or property to be delivered, and do not serve other purposes, these will be exempted under the Act. Prof. Toh mentioned the presumption on imposition of an indirect import tax in clause 15. I would like to clarify that what this Bill does is to make clear that the addressee is presumed under the law to be the importer of the goods. Whether he has to pay duties directly or indirectly, that will be covered under the Customs and Excise Act, and not under this Bill. Prof. Toh mentioned clause 19 regarding e-postage stamp. Again, this Bill covers only the physical delivery of letters. So e-mails and e-postage come under a separate Act, which is the Telecommunications Act. On clause 28 regarding the unlawful interception of letters, basically, this clause covers the protection of installation and plant. If a person were to retain any letters illegally and unlawfully, this would be covered under clause 36. If an employee were to do something wrong with the letters, whether he is a part-timer or full-timer, this will be covered under clause 34. Sir, with that, I believe I have addressed the concerns expressed by Prof. Toh. Once again, I thank him for his support.

Sir, I would like to ask the Minister of State a question on clauses 34 and 36. These clauses relate to retention. But my scenario is one where a person opens up a letter, reads whatever he needs to read, and then seals it and puts it back into the mailbox. Then there is no offence and I think this is an anomaly, Sir.

Sir, clause 36 says, "Any person who . wilfully retains or secretes or makes away with or keeps or detains ..". My understanding is that even if a person were to retain the letter for a short time, that could, in a way, be covered under this clause. But I am not a legal expert and I think we will leave it to the court of law to interpret this particular sentence.

Sir, in other words, the Minister of State says that it is the intention of Parliament that even those few seconds of retention is sufficient under the Bill to constitute an offence.

Sir, as I have mentioned, the Bill states quite clearly that "any person who wilfully retains .". So for a few seconds, I think it would constitute retention. As I said, I am not a legal expert and I think the court of law would do the interpretation. If it turns out to be different from the intention of the Act, then we have to clarify and amend the Act.

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 Lim Swee Say]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read. 4.35 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill seeks to amend the Business Registration Act to update the Act, streamline registration procedures, enhance certain penalties, harmonize the Act with the Companies Act and enhance the computerisation of services offered by the Registry of Companies and Businesses. The Business Registration Act provides the basic framework of governance for unincorporated businesses, focusing primarily on registration, restrictions, offences, and penalties. Apart from two previous consequential amendments, this Bill is the first proposed amendment to the Act since its enactment in 1973. The crux of the Bill is to update our legislation and fine-tune administrative housekeeping matters. Sir, I shall now go on to highlight the main amendments proposed in the Bill. Extension of the validity period of Certificates of Registration Clause 5 of the Bill proposes the amendment of section 9 to extend the validity period of certificates of registration from 1 year to 3 years. This means that a certificate of registration issued upon registration shall be valid for a period of 3 years and shall thereafter be renewable for a period of 3 years in respect of each renewal. Figures from the Registry of Companies and Businesses show that 92% of businesses are still in operation after 1 year and require renewals, whereas only 59% of businesses are still in operation after 3 years. Presently, much time and resources are spent following up on annual cases of non-renewal of certificates. Adopting a 3-year renewal policy will relieve the business community of the unnecessary administrative burden of yearly renewal, and reduce business costs. Empowering the Registrar to accept cashless modes of payment or renewal of businesses Clause 5 amends section 9 to allow the Registrar to make cashless modes of payment (eg, GIRO and other electronic means) a condition for renewals, if deemed necessary. The same amendment grants the Registrar the discretion to accept cash in exceptional circumstances. The amendment is in line with the national effort to promote electronic mode of payment, which will help to reduce the administrative cost to both the public and the Government. Granting the Registrar the power to refuse or cancel registration Clause 20 introduces new sections 31A and 31B that empower the Registrar to refuse or cancel the registration of businesses in instances where it is shown that registration would be for unlawful purposes, purposes prejudicial to public peace, welfare or good order in Singapore or where it is contrary to national security or the national interest. This will bring the Act in line with amendments made to the Companies Act in 1984. Shifting the burden of proof from the Registrar to the defendant in cases where the defendant is alleged to be carrying on business under the name displayed at his premises To facilitate prosecution, clause 14 introduces new section 23A that shifts the burden of proof from the Registrar to the defendant in cases where the defendant is alleged to be carrying on business under the name displayed at his premises. In such instances, the defendant will be required to disprove that he is "carrying on business", based on evidence such as having a sign outside the business premises, rather than the Registrar having to prove that the defendant is doing business. Similar provisions on the reversal of the burden of proof are found in the Misuse of Drugs Act and the Immigration Act. Fixed time frame for appeals Clause 20 introduces new sections 31B(3) and 31C such that any person wishing to appeal to the Minister against a decision of the Registrar to refuse or cancel the registration of a business must appeal within 30 days. This will bring the Act in line with the Companies Act relating to the time-frame for appeals to Minister. Other amendments As the penalties in the Act have not been increased since 1974, opportunity is being taken to revise them now. In addition to these changes, other administrative amendments are proposed to update the Act and provide for the filing, making of payment and other transactions through electronic means. The rest of the amendments are of a drafting nature. Conclusion Before tabling this Bill, we had sought the views of lawyers, accountants and interested parties such as the Institute of Certified Public Accountants of Singapore (ICPAS), the Association of Small and Medium Enterprises (ASME) and the Law Society. In proposing these changes, we have taken into consideration the impact these changes would have on the public. The amendments will help reduce business costs, streamline the business registration procedures and allow for electronic modes of payment. We hope that these changes will provide a more efficient way of registering businesses and a more conducive regulatory environment for businesses. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I would like to start by commending the Minister for this effort to constantly review the business registration processes to keep up with the times, and I am pleased especially with the effort to make it friendly for electronic filing and electronic payment purposes. Electronic filing, of course, eventually we hope, will be one of the ways that we can actually file our company reports, annual accounts and all that. But that is another matter. Sir, I would like to just refer to three points very quickly. First, on clause 2. Clause 2 is an amendment to section 2 of the Business Registration Act. Here, in section 2, we essentially have a section that deals with who is registrable and who is not registrable. I would like to seek the Minister's clarification about certain types of businesses that are now operating from home like tutors. Under the T 21 plan that we have, we are allowing homes to be used for businesses. In the old days, under the First Schedule of the Business Registration Act, there were a lot of businesses that were exempted from registration because they happened to be home-run businesses. And I do hope that the Minister would clarify whether the home operations now that are allowed under the T 21 plan would be operations that need to be registered under this Business Registration Act. My second point relates to clause 3. A clarification needed is whether this amendment would cover companies incorporated under the Companies Act (Cap. 50) and whether these companies can use acronyms and short form names without registering these acronyms and names. For example, "International Business Machines Pte Ltd" could trade as "IBM" without any registration. Or whether "X Malaysia Rubber Traders Pte Ltd" could trade as "XX Rubber" without further registration. This assumes, of course, that the earlier incorporation is all validly done. And how about words that are added on to a company's name? For example, the registered company name is "ABC International Tours Pte Ltd" and they trade as "ABC International Tourists Centre".

4.44 pm Sir, the third point would really relate to the whole process of business registration in Singapore, and I just like to urge the Minister to continue reviewing this process. The Ministry of Finance has done well and the Registry of Companies and Businesses has done well to shorten, for example, some of the processing time for registration, the red tape and all that goes along with registering a business in Singapore. Despite its responsiveness in recent years, I do know and I am told that it is still nonetheless not competitive, in the sense that if I register a company or a business right now in Silicon Valley, California - and indeed I am told that this is being done - at the same time that I register the company in Singapore, my Silicon Valley company would be formed first, and I think this is something which we must correct. Ultimately, we also need to look at further rules that sometimes are accretions to the Act, meaning that they are added on to the Act without really much thought. And this would be certain requirement, for example, for a local resident manager in an Internet world where the people could be operating a business from across the world. It would be very difficult for them to find a local resident manager. Invariably, they may actually appoint a local who has nothing to do with the business to represent them in Singapore. And I think these rules have to be constantly reviewed to make us responsive in a knowledge-based economy.

I thank Prof. Toh See Kiat for his general support of the amendments. He has three points which I will respond to. Firstly, he wants clarification as to whether people operating from home offices or who are doing home tuitioning would be exempted like those operations in the First Schedule. I have to tell him that they are not exempted. Those who are exempted under the present First Schedule are people like taxi-drivers, craftsmen or farmers of low-skilled activity. And the home office is a provision which is to allow people to operate from home where normally they operate from the office and generally of a higher skill level. Therefore, such people who operate from the home still have to apply for registration. Similarly, it will apply for home tutors. They are also not exempted, although we believe a number of home tutors have not registered on the assumption that they are exempted. They are indeed not exempted. Prof. Toh also wants to know, under clause 3, whether companies can use acronyms or other short forms for trading under the Act. I would like to clarify that the amendment in question is simply a drafting change to get rid of superfluous words such as "without any addition". Removing these words will not change the intent of the Act. So the meaning of the provision in section 4 remains unchanged. If companies want to operate under a different name, it will still be required to register. For example, IBM, a foreign company, which operates under its own corporate name wishes to use an acronym for some other purpose, then under that name, they will have to apply for registration. Finally, he compares the speed of business registration at Silicon Valley to Singapore. I would like to assure him that we will do everything possible to shorten the registration period. But even under the existing rules, for business firms, the turnaround time is usually no more than 24 hours, except for a few cases where the questions arise whether the directors involved have records which need to be tracked. For corporations, it normally takes about five working days for the company name to be approved and another five days for the company to be incorporated. This is longer than in the Silicon Valley where we understand that it could take three to five days to register a company, although some businesses have been turned around within 24 to 48 hours. I think our record is not bad. Although the periods are longer than Silicon Valley, they are quite acceptable in normal circumstances. But we will try our best to improve it.

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; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Background The Commercial Affairs Department (CAD) was set up in October 1984 as a specialised agency within the Ministry of Finance to investigate and enforce serious and complex commercial fraud cases. In March 1989, Parliament conferred certain police powers on the Director CAD and Commercial Affairs Officers (CAOs) appointed by the Minister for Finance. Currently, depending on the classification of the offences, most major commercial crimes are investigated either by the CAD or the Criminal Investigations Department's Commercial Crime Division (CCD). The CAD is responsible for investigating and prosecuting complex commercial crimes, including offences under the Securities Industry Act, the Companies Act, the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Acts, and the Futures Trading Act. CID's Commercial Crime Division investigates fraud offences punishable, for example, under the Penal Code, and the Multi-Level Marketing and Pyramid Selling (Prohibition) Act. Over the years, CAD has built up its strength in combating complex fraud, syndicated white collar crimes, securities offences, such as insider trading and market rigging, and serious corporate offences, while CCD has had considerable successes against cheats, credit card fraudsters and syndicates behind scams that promise quick profits. Both Departments have distinguished themselves in their own right. But changes are needed to position them to tackle the changes and new threats in the operating environment. Why Merge - Anticipating Commercial Crime in the Future To have a specialised agency to investigate "serious or complex" commercial fraud remains relevant not only today, but more so in the future. As Singapore opens up its finance sector and further develops as a regional financial hub, the development of our capital market, banking and financial industries and electronic commerce is likely to attract increasingly sophisticated commercial crime frauds. Commercial crimes in the coming years are likely to become more complex and the perpetrators may be involved in a mix of company and penal code offences - expertise to deal with these should therefore be merged. An effective enforcement regime is critical to protect the integrity of our financial markets and business environment. This increasing sophistication and complexity of commercial crimes necessitates the pooling of scarce resources, the enforcement and intelligence capabilities in CAD and CCD, into a single unit. So early next year, the CAD and CCD will merge. The CAD will be reconstituted as a separate department in the Singapore Police Force with the same standing as the CID. The combined department will still be known as CAD to retain its reputation as the premier anti-commercial crime agency. The new CAD will investigate a wide spectrum of major commercial crimes. Other commercial crimes, such as cheating, will still be handled by the Police land divisions. By merging the CCD with the CAD, investigative resources and intelligence capabilities will be pooled, thereby resulting in synergies and even greater effectiveness in combating commercial crimes. The CAD will be working in collaboration with the Financial and Securities Offences sub-division of the Criminal Justice Division in the Attorney-General's Chambers, a dedicated specialist unit formed in August this year. A mechanism will be put in place to ensure that the transfer of CAD to the Police Force will not result in CAD losing touch with MAS and the Finance Ministry on policy development issues relating to the financial sector. Proposed Amendments Currently, the Commercial Affairs Officers appointed by the Minister for Finance already have police powers to investigate offences under the Companies Act, the Securities Industry Act and other seizable offences under any written law disclosed in the course of investigations under the Companies Act and the Securities Industry Act as provided under section 409B of the Companies Act. In order to ensure that the new CAD has the necessary legal powers to carry out their functions effectively, clause 2 of the Bill seeks to introduce a new section 58A to empower the Minister for Home Affairs to appoint Commercial Affairs Officers to investigate any suspected offence under any written law. The new section also confers on CAOs, for the purposes of investigation, all the powers of investigation of police officers under the Criminal Procedure Code or any other written law as the Minister for Home Affairs may prescribe by notification in the Gazette. The Commercial Affairs Officers are also given the immunities relating to acts done in obedience to a warrant under section 37 of the Act. Clause 3 of the Bill seeks to repeal section 409B of the Companies Act as CAD will now be reconstituted as a department under the Singapore Police Force. Sir, this combination of two elite departments marks a new milestone in our efforts to gear up for the challenges of the new millennium. The reconstituted CAD will go beyond a mere transfer of the current functions of CAD to the Police Force and the AGC. We will expand the capabilities of the new CAD to match the increasingly sophisticated nature of commercial crime. The new CAD will strive to be a world class investigative/enforcement agency, in line with Singapore's growing status as a financial hub. Sir, I beg to move. Question proposed.

Mr Deputy Speaker, Sir, I support the Bill and the reasons given by the Minister as to why the CAD will be merged with the CCD. I have only two clarifications to ask of the Minister. Clause 2 inserts a new section 58A which provides for the appointment of Commercial Affairs Officers. By integrating these officers into the Force, they are given the power to investigate any suspected offence under written law. I should like to ask the Minister whether this means that officers will all be retrained to perform a wider role in investigation. By empowering them to investigate any suspected offence, is it the intention that they be regarded as regular Police Officers who may be expected to investigate all manner of crimes? Secondly, these officers are to be invested with the powers of investigation with the rank of not below inspector. In fact, the Commissioner of Police may confer the powers of an ASP (Assistant Superintendent of Police) on such officers. Yet the general provisions of the Police Force Act do not apply to them other than section 37 which is already mentioned by the Minister. That section exempts them from liability if they perform an act that was done in accordance with the warrant. Can the Minister clarify whether these officers are to be subject to the same discipline as the other members of the police force?

Mr Deputy Speaker, Sir, I have a query for the Minister under subclause (2) of this new clause. As it now stands, it reads "A Commercial Affairs Officer may investigate any suspected offence which appears to him to have been committed under any written law." I am puzzled that the legislation proposes to give powers to a police officer to "investigate any suspected offence which appears to him .". Under the Criminal Procedure Code, police can only investigate where there is a report or complaint received at a police station and reduced into writing, or where an offence is committed by any member of the public in the view of a police officer. What exactly is contemplated by the word "appears"? Is this Commercial Affairs Officer to be given power to investigate where there is no complaint or no information received, but where he thinks there might have been an offence committed under a written law? As has been mentioned by the Minister himself, this officer is now not only confined to offences which previously the Commercial Affairs Department was confined to investigate, but now a whole box of offences has been open to him because it is any offence under any written law. Should not some restraint be imposed before a Commercial Affairs Officer begins to investigate? Or is he going to be allowed to investigate anything just because he suddenly gets it into his head that somebody may have committed some offence or some companies have committed some offence? It opens the door to abuse. I think there must be some restraint, as is the case with police officers in the investigation of crimes and other offences. Even the CPIB will have to have a report or complaint received before they embark on any investigation. So would the Minister explain what exactly is meant by the phrase "appears to him"?

Sir, let me deal with Prof. Chin's question first. Would the officers be retrained to perform a wider role? These Commercial Affairs Officers have already been on the job for a long time. They have been conferred with police powers since 1989 to investigate seizable offences under the Companies Act and the Securities Industry Act, or any other seizable offences disclosed in the course of such investigation. So they already know how to exercise such police powers. In the reconstituted CAD, they will be given powers to investigate offences disclosed under other Acts, for example, the Penal Code, Futures Trading Act and a list of other Acts. So they are not fresh or totally new to the way the police conducts its investigation and therefore they are not unfamiliar with the procedures. What they need to do of course is to be familiar with the Acts as well. I can assure the Member that proper training will be given to them. They are not police officers. They are Commercial Affairs Officers, civilian officers who have powers to investigate certain offences, just like the CPIB or Immigration officers who are civilians and who have powers to investigate the offences committed under the Acts under their charge. So this is not something new that we are doing. The Police Force Act does not apply to them, but certainly the civil service rules, the disciplinary procedures and the IMs do apply to them. They are fully aware of what they have to do in order to maintain the reputation that they have acquired over the last 15 years. There has not been any incident that I could recall that these officers have abused the powers when exercising the powers which they have under those Acts which have been prescribed. So I do not worry that, by giving them more powers to investigate offences under other Acts, they will abuse their powers. Mr Jeyaretnam raised this drafting point in clause 2. That is the way the law has been drafted by the AG and I depend on the AG for legal advice on the way the law should be drafted. I have no reason to doubt that that will open itself to abuse. What we know in Singapore is that the laws are clear enough. There are rules and guidelines and there is recourse for people who feel that their rights have been transgressed to take the matter to the proper channels. So if an officer abuses his powers for whatever reason, just because he does not like a certain person and he starts to investigate that person, that would be an abuse of power. I do not think there is anyone here more concerned about abuse of police powers than I am for the reason that our law enforcement agencies have acquired a reputation which is quite high. Anybody who tries to abuse his powers and as a result undermines public confidence in the organisation will be disciplined and, if necessary, charged in the courts. So there will be safeguards and there will be checks and balances. For the CAO who investigates and eventually recommends a prosecution, the decision does not lie with the CAD, nor does it lie with the Commissioner of Police. Unlike now, the decision to prosecute in the great part is being decided by the CAD Director in consultation with the AG. Under the new arrangement, the CAD officers will investigate and send their investigation papers to the Attorney-General's Chambers which has a specialist team to study and eventually decide on prosecution. I do not believe that any investigation can be conducted without a complaint or a report. So if Mr Jeyaretnam thinks that just because somebody does not like another person's face an investigation can be launched, then let me assure him that that would not be the case. If he does know of any case, please let me know and I will certainly look into it.

May I ask the Minister by way of clarification? Instead of saying that if the officers do abuse their powers, there are methods of finding out, is it not better to confine their investigating powers? And would the Minister, I am quite serious about this, refer this back to the Attorney-General to consider whether the word "appears" should be taken out and something else put in place?

Sir, if the Commercial Affairs Officer decides that that is a matter to be pursued and he conducts an investigation but actually there is no basis to do so and therefore abuses his power, the matter will be found out. There will be internal checks. There will be meetings. There will be proper follow-up. There will be operating procedures to ensure that whatever the officer investigates is proper, and there is a basis for such an investigation. As to his question on clause 2, I do not think that this is the only piece of legislation that has the words "which appears to him". I am sure there are also other pieces of legislation that have the word "appears" and I am sure Mr Jeyaretnam, as a lawyer, should know. And, as I said, I depend on the Attorney-General for his advice whom I deeply trust.

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 Wong Kan Seng]. Bill considered in Committee; reported without amendment, read a Third time and passed.

Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Thirteen minutes past Five o'clock pm.

Table - Summary of Adjustments to November 1998 Cost Cutting Package (Cols. 505-6)