Hansard, 2002-10-31

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: FromTo Name(2002)(2002) Mr Tharman Shanmugaratnam7 Oct8 Oct 16 Oct19 Oct Mr Tan Soo Khoon8 Oct11 Oct FromTo Name(2002)(2002) Mrs Lim Hwee Hua7 Oct12 Oct 21 Oct22 Oct Mr Othman Haron Eusofe11 Oct12 Oct 23 Oct25 Oct Dr Michael Lim13 Oct17 Oct Mr Lee Hsien Loong14 Oct18 Oct 31 Oct- 6 Nov16 Nov Mr Matthias Yao15 Oct19 Oct Mr Lee Kuan Yew15 Oct30 Oct Mr K Shanmugam15 Oct- 21 Oct1 Nov 6 Nov14 Nov Mr Nithiah Nandan15 Oct18 Oct Mr S Iswaran15 Oct18 Oct Mdm Halimah Yacob15 Oct19 Oct Mr Arthur Fong15 Oct19 Oct 31 Oct4 Nov Mr Yeo Guat Kwang15 Oct19 Oct Dr Amy Khor16 Oct17 Oct Ms Penny Low16 Oct19 Oct Dr Mohd Maliki Osman16 Oct21 Oct Mr Leong Horn Kee16 Oct24 Oct 14 Nov29 Nov Dr Balaji Sadasivan16 Oct25 Oct Dr Low Seow Chay17 Oct18 Oct Mr Chan Soo Sen17 Oct19 Oct Mr Ong Kian Min17 Oct23 Oct Mr Lim Swee Say19 Oct25 Oct Mdm Ho Geok Choo19 Oct25 Oct Mr Ang Mong Seng21 Oct1 Nov Mr Lee Yock Suan21 Oct31 Oct Dr Vivian Balakrishnan21 Oct25 Oct 28 Oct29 Oct Mr Yeo Cheow Tong21 Oct31 Oct Mr Sin Boon Ann22 Oct24 Oct Mr Charles Chong24 Oct25 Oct 3 Nov9 Nov Mr Wee Siew Kim25 Oct27 Oct Dr Lee Boon Yang26 Oct- Dr Tan Cheng Bock26 Oct1 Nov Mr Ng Ser Miang26 Oct7 Nov Dr Jennifer Lee27 Oct31 Oct 12 Nov18 Nov Mr Khaw Boon Wan27 Oct1 Nov FromTo Name(2002)(2002) Mr Lim Boon Heng27 Oct2 Nov Mr Loh Meng See28 Oct30 Oct 2 Nov6 Nov Assoc Prof Chin Tet Yung31 Oct- Mr Davinder Singh31 Oct8 Nov Dr Ng Eng Hen1 Nov4 Nov Dr Wang Kai Yuen1 Nov4 Nov Mr Goh Chok Tong3 Nov5 Nov Prof S Jayakumar3 Nov6 Nov Dr Ong Chit Chung4 Nov8 Nov Mr Andy Gan Lai Chiang4 Nov10 Nov Dr Tony Tan Keng Yam4 Nov8 Nov Mr Cedric Foo4 Nov8 Nov Mr Lim Hng Kiang4 Nov8 Nov Ms Irene Ng4 Nov7 Nov Mr Ong Ah Heng5 Nov7 Nov Dr Warren Lee8 Nov15 Nov 13 Dec15 Dec BG George Yeo13 Nov16 Nov Mr Heng Chee How18 Nov21 Nov 2 Dec6 Dec Dr Ong Seh Hong25 Nov5 Dec Mr Raymond Lim4 Dec21 Dec RAdm Teo Chee Hean6 Dec18 Dec ABDULLAH TARMUGI Speaker Parliament of Singapore

asked the Minister for Foreign Affairs whether he will give the House an update on the latest developments in (i) the Singapore/Malaysia bilateral talks on water; and (ii) other bilateral issues in the package of negotiation.

asked the Minister for Foreign Affairs to clarify (a) whether, under the provisions of the 1961 and 1962 water agreements, Malaysia has any legal basis to ask for (i) a price review of raw water after failing to do so in the two years, 1986 and 1987, or (ii) a price revision to be backdated to 1986 and 1987 and (b) if not, why Singapore is prepared to consider a price review now.

Mr Speaker, Sir, can I have your permission to take the first two Questions together?

Yes.

Thank you. Mr Speaker, Sir, I believe these two Questions are timely as they enable me to brief the House on the state of play since I last spoke on this subject at the sitting on 23rd July 2002. There have been quite a number of developments and much has been said. I hope Members will bear with me as I take them through these developments. The key developments have been: The Second Ministerial Meeting in Singapore from 2-3rd September 2002; PM Goh's meeting with PM Mahathir in Putrajaya on 8th October 2002; Exchange of letters between PM Mahathir (7th October 2002) and PM Goh (14th October 2002); and Senior officials' meeting in JB from 16-17th October 2002. I will touch on each of these developments. Second Ministerial Meeting in Singapore, 2-3rd September 2002 On price revision of water under the current Agreements: In July 2002 I informed the House that Singapore's position is that the 1961 and 1962 Water Agreements do provide for a review after 25 years. However, if Malaysia wanted a price review, this should have been undertaken in 1986 and 1987. Notwithstanding the fact that it is 15 to 16 years late, we told the Malaysians at the First Ministerial Meeting in KL (1-2nd July) that in the interest of making progress in our package talks, we were prepared to consider Malaysia's request to discuss the price revision but as part of the package. At the September Ministerial meeting in Singapore, the Malaysians presented a formula for pricing current water, which in effect, was based on our peg price formula meant for future water. We asked them to justify this in relation to the specific clauses in the two Agreements which set out very clearly the factors and criteria. They have not given us an answer. They have also not given us an answer to our question on which provision in the Water Agreements authorised their claim for retrospective application. We reiterated our position that Johor should have invoked the review clauses in 1986 and 1987 and that Johor has lost its right of review. If Malaysia insists on a review outside the package, Singapore will have to challenge every aspect of Johor's claims. Malaysia insisted that Johor had not lost its right of review and that the matter of price revision be discussed between both sides but not as part of the bilateral package. On the supply of future water, Malaysia indicated that "the detailed discussions (on a new water agreement) should be undertaken two years before the expiry of the 1962 Agreement." As Members know, for Singapore, a key element of the package is the long-term supply of water. To say that we should talk about this issue only in 2059 was not realistic and showed that they were not being serious. Malaysia also wanted to delink the proposed bridge to replace the Causeway from the package. We explained that we saw no need for the bridge but were prepared to go along and spend several hundred million dollars provided it is part of the package. The Malaysian side wanted to delink the bridge from the package even though the bridge was listed as a package item in PM Mahathir's letter of 4th March 2002. On POA, Malaysia indicated that the KTM station would remain in Tanjong Pagar. While the Malaysians did not question the legal validity of the POA, they took the position that the POA would become operative only after the KTM vacates the Tanjong Pagar station. This is contrary to the fact that the POA is a G-to-G agreement which took effect and became operative on the date of signing (ie, 27th November 1990). On CIQ, Malaysia reversed its earlier position to relocate its CIQ to Johor. Malaysia now wants to have its rail CIQ in Tanjong Pagar. At the end of the Second Ministerial Meeting, both sides agreed to have a meeting at the officials' level to focus on the water issue on the understanding that it would be part of the package and without prejudice to our legal position. PM's meeting with PM Mahathir on 8th October 2002 PM Goh visited KL to participate in the World Economic Forum meeting (7-8th October 2002). PM Goh requested a meeting with PM Mahathir which was fixed on 8th October 2002. They discussed terrorism as well as the on-going package negotiations. PM Mahathir said that Malaysia wanted to "decouple the water issue" from the other items in the package. PM Mahathir added that if both sides could resolve the water issue, the other issues could then be resolved. PM Goh explained why all items had to be taken as a package. If water were taken out of the package, then Singapore would have less leeway to make concessions on other issues, for example, the POA. On revision of price of water under the current Agreements, PM Goh said that Singapore was agreeable to discuss this but as part of the package. The two Prime Ministers expressed hope that the officials meeting to be held on 16-17th October would make progress. Immediately after the meeting on 8th October 02, Foreign Minister Syed Hamid announced to the media that Singapore had accepted "Malaysia's prerogative to review the water rates" and that Singapore had agreed to delink water from the package. This was a gross distortion, as the two Prime Ministers never discussed the issue of legal right of Malaysia. PM Goh had only agreed to a discussion of price revision of water as part of the package. Press Secretary to PM therefore clarified on 8th October 2002 that the legal point about Malaysia's right to review the price of water had not even been discussed by the two Prime Ministers. Singapore's position was that Malaysia has lost the legal right for reviewing the price of water under the current Agreements 15-16 years later but Singapore was prepared to discuss a price revision as part of the bilateral package. PM Mahathir's letter of 7th October and PM's reply of 14th October 2002 On 10th October, two days after PM Goh's meeting with PM Mahathir, he received a letter from PM Mahathir. It was dated 7th October, that is, one day before his meeting with PM Goh, and sent by a Third Party Note dated 9th October from Wisma Putra which we received on 10th October. In his letter, PM Mahathir told PM Goh that he was discontinuing the package. He wrote: "The approach that both sides had adopted so far in dealing with the outstanding issues in a package, has not yielded any meaningful results. In view of this, Malaysia has now decided to discontinue the package approach and to give the highest priority to first resolving the long-delayed water issue, particularly the price review of raw water. Once this issue is satisfactorily and amicably resolved, I am confident that Malaysia and Singapore would be able to move forward much faster in finding solutions to the other outstanding issues that stand in the way of our bilateral relations." Members should note two important aspects of PM Mahathir's letter. Firstly, the letter was dated 7th October, ie, written one day before PM Goh met PM Mahathir. But this letter was never mentioned at the meeting. Secondly, the discontinuation of the package was a unilateral Malaysian decision. It was not a proposal that was put to PM Goh for consideration. PM Goh was not asked if he agrees with this new approach. PM Goh replied to PM Mahathir's letter on 14th October 2002 to remind PM Mahathir that they both had agreed on a package approach, as PM Mahathir himself had acknowledged in his letter, and this was why Singapore had been prepared to make concessions. But now that Malaysia has unilaterally discontinued the package and wants Singapore to deal with the water issue separately, trade-offs would no longer be possible and each issue would have to be dealt with individually based on their stand-alone merits. PM Goh said: "As you wrote in the opening sentence of your letter of 7 October, you and I had reached a decision 'on 27 December 1998 in Hanoi for Malaysia and Singapore, to resolve, once and for all, the outstanding issues between our two countries in a package.' In other words, we had agreed to trade-off, in a package, the benefits to each other from the various issues, namely, water, POA, airspace, CPF and the bridge to replace the Causeway." PM Goh added: "I had been prepared to make concessions in varying the POA with extra pieces of land, allowing an early withdrawal of CPF deposits, and building our part of the bridge to replace the Causeway at our expense, as trade-offs, so that you could give us airspace and future water at a fair price. Regarding water, you had written in your letter of February 2001 that Johor believed that a fair price for raw water was 60 sen". Continuing, PM Goh stated: "Since you now want to deal with the water issue separately and discontinue the package approach, these trade-offs are no longer possible. And as the package deal is off, I have instructed my officials to deal with water and the other issues individually and separately, on their stand-alone merits, and no longer as a package. I hope our officials can make some progress at their coming meeting with your new approach". Since PM Mahathir had not mentioned the fact of this letter when the two Prime Ministers met on 8th October 2002, PM Goh in his reply said: "Had you, at our 8 October meeting, told me that you had already written and signed this letter on 7 October, I would have elaborated on the pros and cons of your new approach. We would then have jointly decided on the basis upon which our officials would negotiate." Mr Speaker, Sir, I have referred to this correspondence at some length because there have been many statements in the Malaysian media and from Malaysian politicians that have deliberately misrepresented what transpired at this meeting between PM Goh and PM Mahathir. Here is a sampling: PM Mahathir was reported to have said: "This is very clear. As I understood it, Goh Chok Tong agreed that there should be a review and a formula to determine the price of water." and "Singapore's denial of what had been agreed would only complicate the talks." [Utusan Malaysia, 12th October 2002] Foreign Minister Syed Hamid was reported to have commented on Press Secretary to PM Goh's clarification on 8th October 2002: "We think our comprehension of the language (sic English) is very reasonable (but) every time we come to an understanding, they later deny it." [New Straits Times, 14th October 2002] These statements have impugned PM Goh's integrity and imply that PM Goh was not telling the truth about what transpired during his meeting with PM Mahathir. Singapore's leaders stand by their words. It is in our fundamental interest to preserve our credibility. The Malaysians also alleged that the package was discontinued because Singapore always wanted to discuss the water issue only, as can be seen from the quotes that I read out. It was Malaysia that unilaterally discontinued the package. And it was Malaysia that wanted to discuss only water. Senior Officials' Meeting in Johor Baru from 16-17th October 2002 Although PM Mahathir's letter announcing the discontinuation of the package came just days before the Senior Officials' meeting of 16-17th October in Johor Baru on the water issue, our officials still attended that meeting in good faith. We were prepared to discuss all aspects of the water issue. However, at the Johor Baru meeting, Malaysia was only prepared to engage in discussions on the price review of current water, as evident from the wording of their agenda and the banner. They amended these only after we protested and stressed that the discussions should also be on treated water and the future supply of water to Singapore. Malaysia presented the same pricing formula for current water as at the Second Ministerial Meeting, namely, the price of raw water today as the average cost of desalinated water and NEWater less the treatment cost in Johor. We took the position that Malaysia had lost the right of review, and even if Singapore was willing to consider such a review, it would have to be based on the express provisions or factors listed in the review clauses. The Malaysians again could not justify their pricing formula for current water under the review clauses in the existing Water Agreements. We reminded them that the provisions in the Water Agreements allow for a price review using the rise and fall in the purchasing power of money and the rise and fall in the cost of labour, power and materials for the purpose of supplying the water, and there are no provisions for retrospective payments. Since PUB incurs all these costs, the only relevant factor is the change in the purchasing power of money. Using the Malaysian Consumer Price Index (MCPI), we calculated that the revised price of raw water would be no more than 12 sen per thousand gallons. But we made it clear to them that the 12 sen was not an offer but a calculation based on the review clauses. The Malaysians asked if we could consider going beyond the figure of 12 sen. They pointed out that Singapore had previously offered 45 sen. We said Singapore could not go beyond the review clauses and we had no leeway to make any concessions because the package is off due to PM Mahathir's letter of 7th October 2002. On treated water, we informed the Malaysians that if we applied the MCPI to the review of price of treated water, we would get a figure around RM2 per thousand gallons. Again, we made it clear that this was not an offer. It was our calculation going by the terms of the review clauses. On future water, ie, post-2061, the Malaysians actually were not interested or serious in wanting to have any detailed discussions. They continued to take the position that both sides could discuss the issue two years before the expiry of the 1962 Agreement. We stressed that this was not a realistic proposal. Our position is that current water and future water are linked and we cannot discuss price review of current water now and future water only in 2059. It is difficult for Singapore to agree to Malaysia's proposal because we need to plan our long-term needs well in advance. Singapore would need to work out in detail the complex issues involved in regard to a future water agreement, including water demand management, capacity building and technological advances. Price Review Ms Irene Ng has asked questions specifically on the review clauses in the Water Agreements. She wants to know whether Malaysia has any legal basis to ask for this price review after failing to do so in 1986 and 1987, and if they have any legal basis also to backdate such price revision; and if not, she asks why is Singapore prepared to consider a price review now. My answer is that we have been advised that they do not have a legal basis. I do not want to go into all the legal arguments here. But let me say that we have taken legal advice. That is why we maintain that they have lost the legal right. And even if they have the right to review the water price now, there is no legal basis in the Agreements to backdate it. We also added that if there were to be any review, it must logically also cover treated water. If they have no legal basis, Ms Irene Ng asks: why are we prepared to discuss it? Well, Sir, the answer to that question is that they have said it is important to them. We said: alright, we understand that it is important to you and we are prepared to discuss as part of the package but not as your legal entitlement. In the same way as we do not have a legal right to insist on airspace rights and we do not have a legal right to ask for water supply after the expiry of the 1961 and 1962 Water Agreements when they expire in 2011 and 2061. But let us, nevertheless, take the approach of trying to accommodate each other's concerns as best as we can for reaching a mutually beneficial agreement. Our position on price review is clear. Malaysia has lost its right of review. If Malaysia claims that it has the right now to invoke the review clauses, we will contest it. Concluding Remarks Mr Speaker, Sir, from what I have said, Members can see that there have been many twists and turns in our negotiations with Malaysia. If I may sum up: First, both Prime Ministers agreed on the package approach in 1998 to resolve the outstanding issues, including the long-term supply of water, CPF, POA, CIQ and airspace. Later, the Malaysians wanted to include the bridge to replace the Causeway. When we said we are prepared to spend several hundred millions to build our part of the bridge as part of the package, they said the bridge is no longer part of the package. In 2000, they said price revision of water under the current agreement (which was never part of the original package agreed by PM) should be included in the package. In February 2001, Malaysia had informed us that "Johor believes that a fair price would be 60 sen". We had then counter-proposed 45 sen for current water and 60 sen for future water. An in-principle agreement was reached on this in September 2001. But in its letter of 4th March 2002, Malaysia changed its position and tabled new proposals, including raising the price of current raw water to RM3. This meant that they rejected our 45 sen offer. Consequently it was no longer on the table. We have told them so. Now the Malaysians wanted water to be taken out of the package. Finally, six days before the Senior Officials' Meeting, we received PM Mahathir's letter stating that the "package is discontinued." Then at the Johor Baru meeting (16-17th October 2002), Malaysia went further to take the position that the water issue involves only the price revision of current water and that, as far as future water is concerned, we can discuss this two years before it expires in 2061. So, at present, Mr Speaker, because Malaysia has unilaterally called off the package, the concessions which Singapore was prepared to offer, for example, on the POA, the bridge, the CPF, are off and each issue has to be discussed and agreed on its stand-alone merits. In the meantime, the usual barrage of accusations, allegations as well as threats continue to be hurled at us. This includes the threat last week that they can enact a new law to render the Water Agreements null and void. As usual, we are also accused of being "insincere", and that we are told to be "sincere" by accepting their demands. As I have repeatedly said in this House, we should take the Malaysian criticisms and attacks against us in our stride. There is no need to over-react to these pressures and efforts to intimidate us. We will continue to state the facts and stand our ground, in a quiet but serious manner. Sir, I think it is a pity that they have taken matters to this point. We have expended a great deal of time and effort in trying to reach a win-win solution for both sides. Since December 1998 when PM Goh agreed, at the request of PM Mahathir, that the outstanding issues be discussed as a package, we have had three Senior Officials' Meetings in 1999, and two Ministerial Meetings this year. Senior Minister had visited KL twice (August 2000 and September 2001) to see how to move the package forward. In closing, let me say that the sooner we can put these issues behind us the better. As PM Goh told PM Mahathir on 8th October 2002, Malaysia and Singapore really face very serious problems in the region posed by terrorism. It is in the interest of both countries to settle these bilateral issues so that we can deal with the real threats and problems that confront us in the region.

On behalf of hon. Members, I welcome the delegation from the Committee on Culture, Education, Youth and Children from the National Assembly of Vietnam, led by Prof. Tran Thi Tam Dan, who are present in our Gallery. [Applause].

Sir, first, I want to thank the Minister for a very comprehensive answer. Very clearly, the twists and turns in the Malaysian position have made negotiations extremely difficult. Try as we must and try as we will. In this context, I want to ask the Minister what will happen next in our negotiations. Will there be further Senior Officials' Meeting or Ministerial Meeting? And what will be Singapore's position and approach in these future series of meetings?

Sir, to answer Dr Ong Chit Chung, I would say that the ball is in Malaysia's court. Because at the Second Ministerial Meeting in Singapore in September, Foreign Minister Syed Hamid said that after the Senior Officials reported the outcome of the discussions to the two Ministers, both sides would then decide on a date for the next Ministerial Meeting which Malaysia would be prepared to host. He said this. But we have not heard from Malaysia on any follow-up meeting to discuss the water and other issues after the recent Senior Officials' Meeting in Johor Baru. As far as Singapore is concerned, we stand ready to meet them to discuss the water issue further and to continue the negotiations. But I should stress that the negotiations cannot be on the basis that: please show your sincerity by caving in to our demands. If you want to talk about water, I think Malaysia has to be very serious. We understand Malaysia's priority is to increase the price of current raw water. That is why we have said that we are prepared to discuss the price revision of water, even though our stand is that they have lost the legal right. But they, at the same time, must show seriousness in discussing future water and not fob us off by saying that we can discuss this in 2059, just two years before the expiry of the 1962 Water Agreement. So I would say Singapore's position is that we are committed to seeking a solution to resolve the water issue and other bilateral issues but we cannot go by vague assurances from Malaysia that it is prepared to supply future water to Singapore because, as I have said, we must plan our long term water needs in advance. And we have to work out the details years before the expiry of the 2062 Agreement, issues such as water demand management and capacity building. As to what our approach will be, from my main answer, it is quite clear that by abandoning the package, Malaysia has fundamentally changed the basis of the bilateral talks. Singapore's position has always been on the basis of a package approach and, in his letter of 14th October 2002, Prime Minister Goh made it clear that since Malaysia had decided to discontinue the package, each issue will have to be discussed on its stand-alone merits, and it is not possible to maintain our previous concessions. So, in future, Singapore has no choice but to deal with the water and other issues individually on a stand-alone basis.

Could I ask the Minister what is Singapore's position with regard to a preposterous statement made by a Malaysian Minister by the name of Mr Rais Yatim, that Malaysia would enact a local law to make the Water Agreements null and void?

I think honourable Members will recall that, last week, my Ministry actually issued a statement on those remarks by Minister Rais Yatim. The Ministry of Foreign Affairs statement pointed out that what Minister Rais Yatim said was not in accord with repeated assurances by Malaysian leaders that they would honour the 1961 and 1962 agreements until the date of expiry. These assurances actually date back many years ago and have been repeated very recently. In fact, in 1988, Prime Minister Mahathir said: "We cannot set aside the treaty (referring to the water agreements) as it is an agreement between the two countries registered with the United Nations. We cannot break our word."

This is from Malaysia's Business Times of 23rd January 1988, also carried in Singapore's Straits Times. Then, this year, Dr Mahathir said in the New Straits Times of 3rd May that Malaysia was "bound" by the water agreements and "cannot just break the agreements". Prime Minister Mahathir also said: "The fact is, according to the agreements, we, Malaysia, must supply them with water. We will continue. We promise them that we will supply them with water." And Foreign Minister Syed Hamid, in his opening statement at the talks held in Kuala Lumpur in July 2002, said: "Malaysia has repeatedly said that it will honour the 1961 and 1962 agreements until their expiry in 2011 and 2061 respectively."

He also said: "During the Separation of Singapore, Malaysia did not propose for the agreements to be reviewed. It continues to honour the agreements, and such commitment is further reinforced when Malaysia signed the Separation Agreement in 1965."

So, in answer to Mr Ravindran, I would say that these clearly are then legally binding agreements which were guaranteed by both governments under the 1965 Separation Agreement. And, as Prime Minister Goh said in Parliament in April this year, the Separation Agreement is fundamental to Singapore's existence as an independent nation and has been registered at the United Nations. So, any attempt to repudiate the guarantees set out in the Separation Agreement, any attempt to vary the terms of the Water Agreements without the express consent of both governments, will be a serious breach of the Separation Agreement. On his specific proposal of enacting a law, let me say that Malaysia cannot enact a domestic law to avoid meeting its international treaty obligations. Actually, this is a very established principle of international law. If a country can get out of one treaty obligations through the use of domestic law, it signals to the world that it can and will do so for any other international agreements, and this will destroy the sanctity of all international agreements.

Will the Minister comment on our position in referring the water issue to international arbitration, as has been proposed by some Malaysian leaders?

Indeed, Sir, I have noted that both Foreign Minister Syed Hamid and the Menteri Besar of Johor have referred to this. I believe that is what has prompted Mr Sin's question. Foreign Minister Syed Hamid did say that if the talks on water ended in a stalemate, his government will refer the matter to the Permanent Court of Arbitration at The Hague. Johor Menteri Besar Abdul Ghani also said that the Water Agreements provided an option for Malaysia to refer the matter to the Permanent Court of Arbitration if the talks failed. Sir, if both sides cannot agree through negotiations on the water issue, then we are ready to have the matter referred to the PCA for international arbitration.

Can I ask the Minister if the price review clauses provided for a review after 25 years, have the Malaysians ever explained why they did not raise the issue of price review all these years and why have they only done so recently?

They have not explained officially why they did not raise it before. I think honourable Members would have noted that they have publicly admitted that it was not a mistake and it was not an oversight but a deliberate move. Johor State Assembly Speaker, Zainal Abidin Mohd Zain, said in the State Assembly that the Johor State Government had not made a mistake in not pressing for a review in 1986. He said: "There was no point in doing so because Johor was dependent on Singapore for its treated water supply, and Singapore would have also increased its price of treated water sold to Johor."

This was in the New Straits Times of 3rd July this year. Dr Mahathir also said that Malaysia did not revise the water pricing when it was due then because it thought that Singapore would also revise the price of treated water supplied to Malaysia. This was in Bernama, 11th October this year. In other words, they had deliberately, as a matter of conscious policy, chosen not to review the price of water in 1986/1987. Actually, even up to the point of the 1990 Agreement concerning the Linggiu Dam and related matters being signed, Malaysia did not raise any issue concerning the price of 3 sen per thousand gallons of raw water. I think the reason was obvious. Johor was benefitting handsomely from the 50 sen it was paying to Singapore for treated water under the 1961 and 1962 Water Agreements.

In view of the twists and turns on the issue of the ongoing negotiations, I would like to ask the Minister what is his assessment on: 1) the overall current relations between Singapore and Malaysia; and, 2) what is the medium-term prospect of Singapore and Malaysia reaching a mutually beneficial agreement?

Mr Speaker, Sir, the water negotiations or the package negotiations are only one of the facets of our overall relations with Malaysia. It is not the sum total of our relationship with Malaysia. As Deputy Prime Minister Lee Hsien Loong said the other day, we will persevere and try to have discussions going but, if we cannot agree, it does not mean the end of the relationship. There are other aspects of the relationship. What is the medium-term prospect of resolving this? It is very difficult to predict. I have stated Singapore's readiness to continue. Like all Foreign Ministers, I think one has to be optimistic, whatever the obstacles and hurdles, and we will persevere as best as we can, but it must be on a certain basis. It must be on the basis of reciprocity, it must be on the basis of mutual benefit, and it cannot be on the basis of a one-sided approach to the negotiations.

Could the Minister comment on reports that Malaysian leaders have said that, yes, they are prepared to supply water to us, but only for human consumption and not for ships and industry?

Actually, if one studied the Water Agreements, there is no such restriction stipulated in the Water Agreements. For today, I have brought along several quotes on various matters. I have a quote here which shows that Prime Minister Mahathir himself has admitted as much, because he said at a press conference with Senior Minister Lee on 4th September 2001 and I quote: "Malaysia's policy is to supply Singapore with water for the needs of the people of Singapore, including the industries. We will not cut off water for so long as Singapore needs the water. Whatever may be the terms, we will negotiate the cost, the price and all that [he was referring to the negotiations on future water] but there will be no cutting off of water supply to Singapore."

Mr Speaker, Sir, we seem to have accepted the unilateral decision by the Malaysians to discontinue the package negotiations, and the Minister's account of the negotiation on the water issue individually appears to sound intractable. The question is: is it worth our while perhaps to have a cooling-off period, giving the Malaysians time to reflect on the value of the package negotiations and the merits of that, and then to revisit the matter?

As I said, the ball is in their court. Foreign Minister Syed Hamid did say at the conclusion of the last Ministerial talks that after the officials have reported, Malaysia is prepared to host the next Ministerial meeting. So, how quickly they respond to us will depend on whether they also want a cooling-off period or not.

Sir, I would like to ask the Minister to confirm whether the Malaysians are buying more water than what they are obliged to buy under the existing Water Agreements with Singapore. Secondly, if so, what is the price, as well as the quantity that they are taking which is extra, ie, beyond what they are obliged to take? Thirdly, can the Minister confirm whether it is true that the Malaysians are actually buying treated water at 50 sen from Singapore and selling it to the Malaysian public at about RM4 and, in the process, profiteering at Singapore's subsidy, and then, at the same time, attacking Singapore that we are the ones profiteering at their expense?

A lot of allegations have been made about Singapore profiteering, selling to industries, profiteering from the treated water. We have made the facts known before. The first point to realise is that what Malaysia does not say is that the raw water that we get from them is not drinkable as such. It has to be treated. And when it is treated, it is at the cost of RM2.40 per thousand gallons, and we sell it to Johor at 50 sen. Therefore, Singapore is really absorbing RM1.90 of the cost. Malaysia then sells this treated water at RM3.95 per thousand gallons. So, we can make the calculations. In answer to the Member's question, Singapore is only obliged, under the Agreements, to sell 17 million gallons a day (mgd) of treated water. That is what we are obliged to. But Malaysia buys well above that amount. They buy 37 mgd of treated water, well above the amount that Singapore is contracted to provide and calculations make it clear as to why they are doing that.

Sir, we know that there are a lot of accusations that the Malaysians have given. One of the things that the Malaysians had alleged is that the 3 sen price was fixed by the British in 1927 because they favoured Singapore. Can the Minister clarify whether there is any basis for such an allegation?

Sir, there is no basis. We have also, at one previous occasion, rebutted this point. The Members are right. Malaysia has repeatedly said that the Water Agreements, including the 3 sen price, was settled by the British who favoured Singapore. Dr Mahathir, for example, had said that the Water Agreement drawn up by the British was in favour of Singapore because the British advised the Johor government then. This is not true. As we have pointed out in our own MFA press statement in January 2002: "The Tebrau and Scudai Rivers Water Agreement and the Johor River Water Agreement were signed by the Johor State Government and the City Council of Singapore in 1961 and 1962 respectively. By then, Malaya was already an independent and sovereign nation. Singapore had achieved self-government. How could the British play any role in an independent and sovereign Malaya? Would the federal government of an independent and sovereign Malaya allow the Johor State Government to sign any agreement that was against Malaysia's national interest?" Let me add two further points. Firstly, Malaysia had agreed in 1965, when we separated, to guarantee the observance of the Water Agreements, and this guarantee is enshrined in the Separation Agreement. Secondly, Johor confirmed the price of 3 sen in 1990 when it signed the agreement with PUB for the construction of the Linggiu Dam. Had Johor exercised its right to review the price in accordance with the agreement in 1986 and 1987, the PUB would have taken that revised price into account before proceeding to invest in the building of the dam and all ancillary works that actually amount to some S$1 billion. Therefore, it is simply ridiculous to claim that the British fixed these Water Agreements in favour of Singapore against the interest of Johor.

Mr Speaker, I would like to go back to the earlier response by the Minister. I would like to ask the Minister whether or not we are selling the Malaysians, for the amount that is in excess of our obligations under the Water Agreements, treated water at a price of 50 sen per thousand gallons. If we are selling them at 50 sen per thousand gallons for the amount that is in excess of our obligations under the agreements, why are we not selling them at a price which is sufficient for us to cover our cost of treatment?

Then we will be accused of profiteering, will we not?

I would like to ask the Minister whether in the treaty agreement between Singapore and Malaysia that was established by the British, were there any treaties that were biasedly in favour of Malaysia, for instance, the use of rail road land in Singapore where Singaporeans had no say whatsoever on the use of the land as long as it is used by Malaysian railway?

That is a good point which I will consider using in future negotiations.

I would like to ask the Minister whether he could clarify on the Water Agreement on the Linggiu Dam. Could he throw some light on it and whether this Water Agreement would have any impact on our future discussions?

If the Member is interested in further information and details of the terms of the agreement, I would be happy to provide her with the facts later. I do not have the agreement with me here. On the second part of her question whether the agreement would have an impact on future discussions, no, because what we are discussing now are really agreements for supply of water after the expiry of the 1962 Water Agreement and the Malaysians on their part want to discuss the price review of current water under the 1961 and 1962 Water Agreements.

Sir, I would like to ask the Minister whether the Malaysians are well aware of the development of NEWater and that it is now acceptable in Singapore and whether they have factored this into their negotiations. Also, have they taken note of our announcement earlier that when the first Water Agreement ends in 2011, we are prepared to let it lapse and not pursue further?

Yes, they know of our plans. In fact, in the July talks in Putrajaya, we gave them a briefing on the whole NEWater process and so on. But whether they have factored it or not, we do not know. But the point is that their formula for current water is based on our formula, which is meant for future water. The answer to your question is, yes, we have given them a briefing on our NEWater plans.

Sir, since the Malaysians have made the unilateral decision to drop the package approach and we are also quite comfortable that we do not need the renewal of the 2011 supply, why do we not make a unilateral decision down here not to talk about water anymore with Malaysia? Because we are leading them on by making them think that there is room for price increase when actually that is not in our agreement. So we might as well end it down here and say that we will talk about other things but not water. Would the Minister consider that?

So long as it is possible to continue the talks, I think my position would be: let us continue the talks. I do not think we have reached the position that Singapore should take the approach of not talking. For example, take the situation when Prime Minister Mahathir's letter came on unilaterally discontinuing the package. We could have decided and said that, in that case, we are not going to Johor Baru. But I think, in good faith, we showed that we are reasonable and went to Johor Baru to discuss both aspects of the water issue. This has been our approach, as Members would have seen in this whole saga, that although they said that we have been unreasonable and we have been delaying, the facts that I have unfolded today should make it clear to everyone that we have gone the extra mile. We have tried to accommodate their concerns. They are the ones who keep changing the goalposts, keep changing the parameters. The package - did not include the bridge, then it is included, then it is out; then never included raw water, price revision in; then water is out, and even when it is out, it is only price revision, and future water discussed after some of us or most of us are dead. So, the point I want to make is: as far as there is scope for discussions, my recommendation is we continue to talk. But it must be on a basis of reciprocity and with the objective of having a mutually beneficial pact.

May I ask the Minister, in view of the recent revelations that the Jemaah Islamiyah is actually playing on the sentiments of both countries and amongst them, the water issues and all that, with these constant flip-flops on the Malaysian Government side and the newspaper reports from time to time in Malaysia playing on this, is that not still playing into the hands of the larger Jemaah Islamiyah plans? Can the Government impress on the media to be more responsible?

That is the ideal solution. In fact, that is the message which we have been giving, which Prime Minister Goh conveyed to Dr Mahathir that there are very major and serious issues confronting the region, confronting Malaysia and Singapore, and instead of keeping this on the boil and being unresolved, we should really join forces together with other countries in the region to address these bigger issues. Let us hope that this approach will also be a shared view by the leaders of that country.

The Minister has made it clear that the 12 sen figure being bandied about is not an offer put on the table by Singapore. But Malaysian leaders have said that Singapore has cut back its offer from 45 sen to 12 sen. I have two questions. First, does the Minister sense that there is a big communication gap between Malaysia and Singapore when it comes to negotiations? Second, is Singapore prepared to put an offer on the table for water if Malaysia is prepared to consider, for instance, future water?

Some of these are hypothetical and I do not want to speculate too much. The answer to the second part of Ms Irene Ng's question is that we have made it clear what our position is on current water but we have also said that the two issues are linked - current and future water. But they will have to show that they are serious in discussing future water if we are to advance or make any progress. For so long as they say: future water, please take our assurance that we will continue to supply you water, but we can only talk about it in 2059, then it is really not practicable to talk on that basis.

Sir, I would like to ask the Minister that upon lapsing of the first Water Agreement in 2011, what is the amount of treated water Singapore will remain obligated to supply Malaysia?

That reminds me that I have forgotten to answer Dr Ong Chit Chung's question. Yes, we did indicate to them that, as far as the 1961 Water Agreement is concerned, we can let it lapse, if need be. When we talk about future water, that is the 1962 Water Agreement, which will be our basis of negotiations, then it is water after the expiry of 2062 deadline. The answer to your question is whatever are the provisions for supplying of water under the current agreements, after the 1961 agreement, we will continue to provide. We will keep our side of the bargain.

Would the Minister comment, if we pursue the question of negotiations and come to an agreement, whether such negotiations and agreements would not suffer the same fate as the 1990 POA? How sure would we be that any bargain struck would be kept?

Mr Speaker, Sir, I would not want to venture into speculation as to "what if" and so on, because it does not really aid our discussions on this matter. We have to proceed on the basis, and that is the only basis that we can proceed, whether on this agreement or any other agreement, when an agreement is concluded, we must expect that it will be honoured and its terms fulfilled. We will fulfill our part of the bargain and we expect any other countries with which we have entered an agreement to observe the provisions of the agreement.

asked the Minister for Foreign Affairs whether and how will the Government respond to Singapore being listed as a high-risk country by the Australian Government after the Bali bomb incident on 12th October 2002.

Mr Speaker, Sir, the Ministry of Foreign Affairs has raised the issue several times with the Australian government through its High Commission in Singapore and directly with the Department of Foreign Affairs and Trade in Canberra. We have asked the Australians to explain the basis on which they have concluded that Singapore is a country with high security risk. The Australians have admitted that they do not have any new intelligence to suggest a greater security risk in Singapore. The information available is of a generic nature indicating that there is a greater likelihood of terrorist incidents in Southeast Asia in general. This was well known prior to the 12th October Bali terrorist attack. The Australian High Commissioner in Singapore has admitted that Australia did not have any information relating to a specific threat in Singapore. After the Bali terrorist attack in which so many Australian citizens tragically lost their lives, the Australian government is politically compelled to be seen to be doing something. As Prime Minister Goh Chok Tong said, while he could "understand why the Australians do so, because they are looking at the whole region .... it is totally unfair to put Singapore on the list". We are puzzled and disappointed that in the absence of specific intelligence on a threat in Singapore, the Australian government has reacted in such an undifferentiated way. We have told the Australians that this could be counter-productive. Terrorism is a global threat. Post 9/11, this global threat has certainly been enhanced. Indeed, the media has reported the presence of JI cells in some of Australia's major cities. We do not think that undifferentiated and alarmist assessments serve to advance our common commitment to fight terrorism. We will continue to press our concerns home to the Australians. The Australian government has told us that they understand our concerns and they will keep the matter under review. We hope that the Australian government will correct its travel advisory as soon as possible.

Sir, what would be the impact on Singapore in terms of perception by the other countries, because we are being listed by Australia as a high-risk country?

Mr Speaker, Sir, in terms of the economic impact, I will leave it to Senior Minister of State Tharman as he will be answering after this and he will go into greater detail. The short answer is that it is unhelpful. It creates greater uncertainty in the region. I think the war against terrorism is one that should be fought not just through guns but through butter. And it is important that one does not over-react and be alarmist about it, because it erodes confidence in the region. What is critical for the economy is confidence. And having an alarmist assessment of the security situation in this part of the world is, as I said, unhelpful.

Sir, has the Australian government responded to our concern that we impressed upon them?

As I said, they have taken note of our concern. What is important is for us to continue to press our concerns and to make it public that we think their assessment of the security situation in Singapore is unwarranted. I think there are two metrics here in which we can assess the security situation in a country. One is whether or not the security agencies are on top of it. And in our case, we believe that our security agencies have severely disrupted the JI network in Singapore. The other metric is the extent of the resident terrorist asset in Singapore, whether it is high or whether it is low, and this is related to the first metric. Our security agencies are effective and they have severely disrupted and crippled the terrorist network. And I would think that it is much safer than in a place which has not done so.

asked the Minister for Trade and Industry on the Ministry's assessment of (I) the impact of the Bali bomb blast on South-east Asian economies in general and the Singapore economy in particular; and (ii) the outlook for the Singapore economy in the next six to twelve months.

asked the Minister for Trade and Industry, in view of the weak flash estimates of the gross domestic product (GDP) figures for the third quarter, whether he will give an update on the status and outlook of the Singapore economy and what measures are being undertaken or considered to stimulate the economy.

asked the Minister for Trade and Industry what is the Ministry's projection of the economic outlook for the fourth quarter of this year as well as for next year.

Mr Speaker, could I have your permission to take Question Nos. 4, 5 and 6 together as they are related?

Yes.

Sir, the outlook for the Singapore economy is now weaker and more uncertain than it appeared just a few months ago, in the middle of this year. Developments in the region and in the world economy are now less favourable in a number of important respects. First, the US economy, which remains the main driver of global growth, is losing momentum. US consumers, who have so far held up the US economy, are beginning to spend less. Consumer confidence in the US in October, if we go by the latest indicators, was at its lowest level in nine years. Taking their cue from consumers, business investments in the US remain weak. New orders for durable goods fell by nearly 6% in September, which is the sharpest decline in 10 months. The outlook for the US economy has therefore weakened considerably. Second, our other major markets like Europe and Japan are experiencing very slow growth - close to recession - due to their structural problems, and their structural inhibitions. China, while growing rapidly, is still a relatively small source of international demand. Therefore, with no major engines driving the global economy, Singapore cannot expect to avoid slow growth. A third factor is the weaker outlook in the infocomms sector - basically, the PC and communications industry - which has direct knock-on effects on Singapore's exports. In the US, new orders for computers and electronic products fell by 6% in September - again, the most severe decline in about a year. The global semi-conductor market, which bottomed out early this year and began recovering in the first half of the year, is now softening. Forecasts of growth in global semiconductor sales for 2002 are down to 2% or less. Growth in 2003 is expected at about 9%, but this is far below the 22% that was predicted just a few months ago. Even then, there is downside risk in the industry. An absolute contraction in global semiconductor sales, which is a bellwether for the electronics industry, cannot be ruled out next year. A further downside is the potential impact of a US-Iraq war. However, in the event of a quick US victory, the consensus is that higher oil prices will not be sustained, and the impact on the global economy will be contained. A fifth negative is the recent terrorist attack in Bali. It has cast a shadow on the economic outlook for the region as a whole. The travel and hospitality industries will have to brace themselves for a drop in tourist arrivals over the short term. The immediate impact on arrivals has not been major, but it will be evident over the next couple of months. The consequences will be broader, and more serious, if the Bali attacks lead to a sustained fall in investor confidence in the region. It is too early to assess the impact, especially as events in Indonesia and in ASEAN continue to unfold. The ASEAN region has underlying economic strengths, and initial assessments of the damage may well prove exaggerated. But confidence matters, and investors will believe in the region only when they see credible efforts to deal with the terrorist threat. There are, fortunately, some bright spots in Singapore's economic outlook. Our exports to China, including electronics exports, continue to grow rapidly. Our chemicals and biomedical industries are also doing well, although growth fluctuates from quarter to quarter. Overall, the recovery in the Singapore economy this year has been narrow-based and uneven. The external environment has weakened considerably in recent months. This has also muted expectations of a recovery in consumer confidence and in domestic spending. The manufacturing recovery is slowing, while growth in most of our services industries remains weak. It is therefore likely that growth for the year will fall below the 3-4% range that we had forecast in August. The outlook for next year is uncertain. But there is more downside than upside on the horizon in the world economy, at least for the first half of 2003. We therefore do not expect robust growth in the Singapore economy next year. MTI is watching these developments very closely. We will review and announce our growth estimate for 2002 and the forecast for 2003 when the results for the full third quarter are out in mid-November. Mr Leong Horn Kee asked about economic stimulus measures. Some of the measures implemented in July and October last year are still in place. These include rebates on personal, corporate and property tax, JTC and HDB rental rebates, support for worker training. They also include rebates on service and conservancy charges and rentals, which were extended for five more years in this year's Budget as part of the GST offset package. The second tranche of the New Singapore Shares distributed last year can be withdrawn from tomorrow. And personal and corporate tax rates will be reduced with effect from Year of Assessment 2003, which will not only give an immediate boost to individuals and companies, but also, more fundamentally, help Singapore to become more competitive. When we announced the $11 billion off-budget package in October last year, we did not expect it to be followed by a quick recovery. We stated then that we expected the economy to take some time to pick up. Indeed, last October and subsequently in November, we had forecast that growth for this year would be between -2% and +2%. Compared to this, the actual out-turn for this year is likely to be a little better than we had expected a year ago when the stimulus package was introduced. We cannot overcome the weak global and regional environments through a further domestic stimulus package, or increase Government spending each time there is a dip in our growth figures. However, MTI is monitoring the economy closely. If conditions continue to weaken over the next few months, the Government will consider extending various measures to help businesses and Singaporeans tide over the difficult period.

Sir, in view of the fact that the Singapore economy depends to a certain extent on tourism, I would like to ask the Minister whether the recent events in Bali have affected the number of tourist arrivals in Singapore.

Visitor arrivals for the first nine months were slipping. It was already fairly weak. Before the Bali attack in October, we were actually seeing a recovery. Visitor arrivals in the first 12 days of October, before the Bali terrorist attack, were actually growing at about 15% year on year. Remember, of course, that the fourth quarter of last year was a very weak period in visitor arrivals, coming after the September 11 attacks. It is too early to tell what the impact of the Bali attack will be. We have seen some fall off in arrivals, some fall off in the number of meetings and conferences that had been organised, but have subsequently been cancelled. So far, the impact is not major but we expect there will be contractions in the next few months. Since the Bali attack, we still have positive year on year growth in visitor arrivals, something like 11%. But that is largely because of the weak base in the fourth quarter of last year.

Sir, could the Minister tell us what is the amount of investments that has been committed for next year, and how does that compare with this year? Secondly, based on what he has just described for our economic outlook for next year, what is the Minister's assessment of the impact on jobs for next year?

Sir, on the first question, we continue to have a healthy investment pipeline. Confidence in Singapore is strong, because there is confidence in our economic fundamentals and there is confidence in the Government, as well as the people of Singapore. Our ability to respond with difficult measures, and to adjust when necessary, has been registered on investors. So, the EDB in its contacts with foreign investors has found that there is still a certain commitment to Singapore, a recognition that we are competitive and that we will make adjustments to ensure that our investment environment is a superior one. I do not have the exact numbers for the commitments for next year, but they remain healthy. And, indeed, for this year, it remains healthy. On the Member's second question, I believe the Minister for Manpower will be taking a question shortly on the unemployment situation. So, it is best that I leave it to him.

The Senior Minister in his answer says that it is too early to assess the impact of the Bali bombing on the economy. I would like to know from him when he thinks he will be able to make a proper assessment.

Mr Speaker, just to clarify that I am not the Senior Minister, but the Senior Minister of State. In the middle of November, MTI will issue its revised forecast for 2002 and estimates, as best as we can, for 2003. To be absolutely frank, the impact of the Bali bombing is an ongoing matter. It is a fluid environment. There is going to be no easy quantitative estimate of the impact. We know how many tour groups have been cancelled, how many conferences have been cancelled, and so on. That is finite. But how the situation is going to unfold in the region is still highly uncertain. And confidence is, by its nature, an intangible. We cannot put a number on it. My own assessment is that, as Mr Raymond Lim has also said, we should not over-react, we should not overstate the impact. There are certain underlying strengths in the region, and obviously the competitive strength in Singapore. But we have to watch the situation closely. Confidence will be shaped by how governments in the region respond to the terrorist threat.

Sir, I would like to ask the Senior Minister of State, in view of the bleak outlook that he has just portrayed to us, what would the unemployment situation be like in the forthcoming quarter and next year. And in view of this weaker economy, should the Government not reconsider continuing with the Economic Downturn Relief Scheme, in the light that there may well be a continuation of the downturn and more help will be needed by the people?

On the first part of Mr Leong's question, again, as mentioned, I will leave it to the Minister for Manpower who is going to address the issue of unemployment. On the second part of his question with regard to the EDRS, as I have explained, we should not react by off-Budget packages or stimulus measures every time we see a dip in the growth numbers. We are no longer in recession. We are going through a dull recovery, but we have to prepare for what might be a long haul, a difficult period where the numbers fluctuate somewhat from quarter to quarter, and we have got to adjust to the situation. The EDRS has served its purpose. It was introduced at a time of severe economic difficulty and it has served its purpose. I think we should not institutionalise it. In fact, we should not institutionalise any relief scheme. We should retain our ability to respond where really necessary, and respond in a focused fashion, and make sure that we are always helping those who are truly needy. We will continue to monitor the situation carefully. We cannot say for sure how the economic situation will unravel in the coming months. So, we will continue to watch it carefully. If the situation gets much worse, then Government will have to consider what measures to introduce. But I do not want to jump the gun on this. Those who are needy can get help. As all of us know, they can go to their MPs, and those who are assessed to be truly needy and are trying to help themselves will receive help from us. The CCCs are quite willing to extend assistance, case-by-case, to any Singaporean who is needy. So, we are very mindful of the fact that Singaporeans are going through a difficult period and some are in need of help. We should continue to help them. But let us not institutionalise schemes which were intended to serve a one-off purpose, like the EDRS.

Because of the heightened security in the port, especially in the United States, and the transportation of goods, I would like to ask the Senior Minister of State what impact it will have on the local businesses and what measures the Ministry has taken, or is going to take, to help alleviate the higher cost of business.

I take it that the Member is referring to the US West Coast port strikes and the aftermath of the strikes. There is an impact. Fortunately, a good part of our exports are not bulky. They are transported by air rather than by sea. So the composition of our exports has fortunately allowed us to avoid a major impact arising from the West Coast port strikes. But what is more important is how it is going to play out in the US. The stay order that the court has issued is for 90 days. That takes them past the congressional elections. It will be interesting to see, and we will want to watch very closely, what happens after that cooling-off period. Productivity is down very sharply in the US ports. Latest news indicates that it is down about 25%. So, things are moving slowly, goods are being jammed up, and they are not reaching the stores in time for the festive shopping period. That could weaken the US economy and have repercussions on us. So the direct impact of the West Coast port strikes is not very significant because we were transporting principally by air, various electronic components and so on. But there could be an indirect impact, depending on how this plays out in the US, how it affects consumer sentiment, and how it affects business investment.

Sir, in order to counteract the misconceptions and the over-cautious attitudes of some countries in the region, like we have just heard earlier about Australia's situation, what measures would the Senior Minister of State and his Ministry adopt to actually publicise to help travel agencies and conference groups that have already planned for conferences to be held in Singapore next year, for instance, so that they can go out and correct the misconceptions and to indicate that the security situation in Singapore vis-a-vis the region is still very secure for us? This will, therefore, counteract some of these negative images that possibly would be portrayed out in the press.

As Mr Raymond Lim indicated, STB is stepping up its marketing, particularly in Asian countries. Apart from the Australians, and we have seen some cancellations of Australian groups, conference groups, meeting groups, and so on, there has not been a gross misconception on the part of other countries so far as we can tell. I think, over the months, people will get more discerning. Certainly, our economic agencies and STB, in particular, will drive home the point that we are a secure place, we have taken quick measures and, indeed, ASEAN by and large is taking measures to address the problem. But there is a limit to what marketing can do. Ultimately, people will believe in the region, they will believe governments, when they see actions being sustained.

asked the Deputy Prime Minister and Minister for Finance whether the Government will consider deferring the date of implementation of the Goods and Services Tax (GST) increase from 3% to 5%, in view of the still uncertain economic outlook for next year.

Mr Speaker, Sir, since the Budget Statement in May this year, external conditions have been more difficult, and Singapore's economic recovery less vigorous than we had hoped. This uncertain environment makes it more urgent and crucial for us to restructure and reinvigorate our economy. We cannot delay reducing our direct taxes, in order to boost businesses, retain talent, and generate economic growth and jobs. We have already lowered corporate and top personal tax rates to 22% this year, and committed to lowering them further to 20% within three years. The increase in GST on 1st January 2003 is an integral part of this tax restructuring package. If we cut direct taxes now, but postpone raising the GST until later, the Government will not be able to balance its budget, or adequately provide Singaporeans with key public services, such as education, healthcare and defence. Hence, we cannot defer the increase in GST. For households, the additional GST that they have to pay will be fully neutralised by the comprehensive package of offsets, including the Economic Restructuring Shares (ERS), rebates for service and conservancy charges and rentals, and increased subsidies on state education and healthcare. The value of the assistance package will be enough to offset the increase in GST for all households for at least five years. For lower-income households, the package is worth up to 10 years of increased GST. A few households may find the standard offset package inadequate, but they can turn to their Citizens Consultative Committees (CCCs) for additional help through the CCC Assistance Scheme. We are proceeding with the tax changes while buffering their impact on Singaporeans, in order to strengthen ourselves to compete in this very difficult environment. I understand and empathise with Singaporeans' worries over the economic and regional outlook, especially in the wake of the recent terrorist attack in Bali. We cannot, however, avoid tightening our belts and cutting back on less essential spending. But I assure Members that the Government will do everything necessary to help Singaporeans tide over this difficult period, especially lower-income families in genuine need. It is difficult to predict with any certainty now what next year will bring. By the time of the Budget Speech next February, we will reassess the position and decide what fiscal measures will be necessary.

Sir, when the GST increase proposal was made, I think one of the assumptions was that the economic situation will be much better next year. In view of the scenarios that have just been painted and the fact that the economic situation and outlook next year will still be quite uncertain, will this not form the basis for the Government to consider deferring the GST for at least a few months?

When the Deputy Prime Minister raised the issue of the GST in Parliament this year during the May Budget speech, we made it very clear that we face very difficult times. And it is because of these very difficult challenges that we need to restructure the overall tax regime of Singapore. As it turns out, the situation is indeed very difficult, more difficult than we have envisaged, and, therefore, I think it makes it all the more urgent that we pursue with this tax restructuring. 2.00 pm

Order. End of Question time. [Pursuant to Standing Order No. 21(3), Written Answers to Question Nos. 8-13, 18 and 19, 21-24 and 27-29 on the Order Paper are reproduced in the section, "Oral Answers To Questions Not Reached" (Cols. 1451-1470). Question Nos. 14-17, 20, 25 and 26 have been postponed to the sitting of Parliament on 25th November 2002.]

"to amend the Goods and Services Tax Act (Chapter 117A of the 2001 Revised Edition)", recommendation of President signified; presented by the Second Minister for Finance (Mr Lim Hng Kiang); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Income Tax Act (Chapter 134 of the 2001 Revised Edition)", recommendation of President signified; presented by Mr Lim Hng Kiang; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Stamp Duties Act (Chapter 312 of the 2000 Revised Edition) and to make consequential amendments to other written laws", recommendation of President signified; presented by Mr Lim Hng Kiang; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to make provision for the protection of payment and settlement systems from disruptions that may lead to risks to the financial system and for purposes connected therewith, and to make related amendments to the Banking Act (Chapter 19 of the 1999 Revised Edition), the Monetary Authority of Singapore Act (Chapter 186 of the 1999 Revised Edition) and the Securities and Futures Act 2001 (Act 42 of 2001)", presented by Mr Lim Hng Kiang; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for making supplementary provision to meet additional expenditure for the financial year 1st April 2002 to 31st March 2003 (both dates inclusive)", recommendation of President signified; presented by Mr Lim Hng Kiang; read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Registration of Criminals Act (Chapter 268 of the 1985 Revised Edition) to provide for the taking and analysis of body samples from persons who are arrested for or convicted of registrable offences, and from volunteers in connection with the investigation of such offences; to provide for the removal from the register of the records of certain persons who have been convicted of registrable offences, and to provide for matters connected therewith", presented by the Minister for Home Affairs (Mr Wong Kan Seng); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to control the transfer and brokering of strategic goods, strategic goods technology, goods and technology capable of being used to develop, produce, operate, stockpile or acquire weapons capable of causing mass destruction, and missiles capable of delivering such weapons; and for purposes connected therewith", presented by the Minister of State for Trade and Industry (Mr Raymond Lim Siang Keat); 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.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Investigation officers in Corrupt Practices Investigation Bureau (CPIB) have played a key role in combating and curbing corruption in Singapore. The success in this vital task over the years has resulted in a corruption-free public service and has made Singapore attractive to foreign investments. In recognition of the vital role played by the investigation officers in CPIB, the salary schemes of the junior and senior Corrupt Practices Investigation Officers have been pegged to the junior and senior Police Officer schemes respectively in order to make their salary terms attractive enough to recruit and retain good officers. When the Ministry of Home Affairs Uniformed Services (HUS) implemented a superannuation scheme in the form of an HUS Invest Plan in October 2001, CPIB sought and received approval from the Public Service Division and the Finance Ministry to implement a similar scheme to the CPIB Investigation Officers. The proposed superannuation scheme for the junior and senior Corrupt Practices Investigation Officers would provide for the following: (a) Lowering of the current compulsory retirement age from 62 to 55 years for both junior and senior officers; and (b) Implementing a CPIB Invest Plan to build up a superannuation fund to help them transit out of service earlier than other civil servants. The rationale for the CPIB Invest Plan for the CPIB officers is similar to that for the Home Affairs Uniformed Officers. The retirement age for the new CPIB officers has been lowered from 62 to 55 years because they need to be physically fit, agile and alert, especially when dealing with suspects who resist arrests. There are a few desk-bound officers in CPIB to which the older investigating officers could be re-deployed. Exemption under the Retirement Age Act has already been obtained from 1st November 2001 to provide for the new CPIB officers to retire at the age of 55. Serving officers can choose to opt into the new superannuation scheme with the lowering of the compulsory retirement age. The CPIB Invest Plan under the superannuation scheme will have to be implemented with retrospective effect from 1st November 2001, in tandem with the effective date of the lowering of the retirement age. The mechanism of the CPIB Invest Plan is also similar to that of the HUS Invest Plan. Apart from the full CPF contributions, CPIB will, under the CPIB Invest Plan, contribute an amount based on the percentage of the officer's monthly salary into a Retirement Account kept for the officer, which is 6% monthly for both junior and senior CPIB officers starting from the 7th year of service. In addition, junior officers will receive retention payments in a separate Retention Account. The retention payments will be credited into the officer's Retention Account on satisfactory completion of each year of service during the officer's first 10 years of service. The payment is one month of salary for each year of service during the first six years. In the 7th to the 10th year, this payment increases to 1.5 months of salary for each completed year of service. The funds in the officers' Retirement and Retention Accounts will be pooled to form an invest fund known as the CPIB Invest Fund. The CPIB Invest Fund will be managed by professional fund managers. Based on returns from investments, dividends will be credited into the individual accounts of the officers. The accumulated amounts in the CPIB Invest Accounts can be withdrawn by the officers progressively. If the officer resigns prematurely, CPIB will retain part of the amount in the officer's account. The officer can only withdraw the full amount in his account if he serves the full career with CPIB when he retires at the age of 55. CPIB expects the progressive withdrawal feature of the CPIB Invest Plan to enhance retention, thus helping to attract good quality officers to join and remain with CPIB for a full career. As it would not be cost effective for CPIB to set up a special machinery to manage the CPIB Invest Fund because of the small approved establishment of 62, the Home Affairs Ministry has acceded to CPIB's request to pool the CPIB Invest Fund with the HUS Invest Fund for management by the HUS Board of Trustees. The Director, CPIB, would be made a member of the Board of Trustees to oversee the interest of the CPIB officers. This would require consequential amendments to the Home Affairs Uniformed Services Superannuation Act 2001 and associated Regulations. At the same time, the Home Affairs Ministry is taking the opportunity to amend the Home Affairs Uniformed Services Superannuation Act 2001 to offer the HUS Invest Plan to junior intelligence officers recruited from outside the Home Team. Previously, the HUS Invest Plan was only available to intelligence officers who were already the HUS Invest Plan members in their respective Home Team Departments before they were appointed as intelligence officers. The proposed amendments give similar terms to what is available for officers appointed to other Home Team Departments, that is, the HUS Invest Plan can also be offered to intelligence officers recruited from other departments in the civil service, or from the open market. Sir, the Bill will provide for the following: (a) The legislative framework under the Prevention of Corruption Act for CPIB to implement the CPIB Invest Plan; (b) Amendment of the Home Affairs Uniformed Services Superannuation Act 2001 to provide for the management of the CPIB Invest Fund; (c) Amendment of the Pension Fund Act to allow for the accrued pension benefits of the CPIB pensionable officers who have opted for the CPIB Invest Plan to be transferred from the Pension Fund to the CPIB Invest Fund; (d) Amendment of the Home Affairs Uniformed Services Superannuation Act 2001 to offer the HUS Invest Plan to junior intelligence officers recruited from outside the Home Team. Sir, I beg to move.

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

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In his Budget speech this year, the Deputy Prime Minister and Minister for Finance announced a series of measures to promote the spirit of philanthropy among our people. One of these measures requires a change in the Estate Duty Act. With effect from 1st January 2002, administrators and families of deceased individuals will be allowed to donate the estate of their next-of-kin to Institutions of Public Character (IPC) and the value of the donation will be exempt from estate duty. Prior to this change, it was possible to apply for exemption from estate duty for such donations on a case-by-case basis. But to make the process less cumbersome and more transparent, donations from estates to IPCs will be exempted automatically as soon as they are made on or after 1st January 2002. The second amendment to the Act is a policy change introduced to encourage more foreigners to hold Singapore dollar denominated assets. A non-domiciled individual who passes away on or after 1st January 2002 will not be subject to estate duty on the value of his movable assets. This is an initiative to improve Singapore's position as an international private banking centre. The last two amendments in this Bill are consequential non-budget related amendments to the Act. First, the term "National Museum" in the Act will be replaced by "Approved Museums" as the "National Museum" is no longer in existence. Secondly, the administrator of the Technopreneur Home Office (THO) Scheme is no longer the National Science and Technology Board but the Economic Development Board. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, thank you for allowing me to speak. The move to refine the Estate Duty Act by amending section 11 to provide that estate duty be exempted in respect of any movable property passing on the death of a person dying on or after 1st of January 2002 who is not domiciled in Singapore at the time of his death, is laudable, as it will encourage foreigners to invest more in Singapore. While it is necessary to draw more expatriates to put their money into our banking sector, we should also bear in mind the effects of the Estate Duty Act on Singaporeans. While foreigners are building their wealth with no fear of having to pay estate duty, those domiciled in Singapore have to prepare for another round of taxes on their estate before the beneficiaries are able to receive the proceeds. As we aspire to improve our economic well-being, more and more citizens may reach the tax range of the Estate Duty Act, as their assets, both movable and immovable, build up over their lifetime and, in the course of which, they already pay taxes. Having to levy estate duty on top of that is a very traumatic way for the Government to raise money from a family which, while suffering from the loss of a loved one, also has to cope with the uncalled for hardship to pay estate duty. This is especially so in a depressed market and the family suddenly has to sell its assets to raise cash to pay the estate duty, plus interest on late payments. But it can also be said that most people do not have to worry about estate duty, as there is an exemption of $600,000 in respect of the deceased's movable assets which include CPF money, plus an exemption of $9 million in respect of all dwelling houses. Thus, if during his lifetime, a person plans his estate in such a manner that what he leaves behind is within the limits of the exemption granted, his estate would not have to pay any duty. However, the fact remains that the surviving family members will still be required to file a return to prove that the deceased's estate is fully exempted from estate duty. And that is a long tedious process by itself. Section 35 of the Act requires the personal representative to file particulars relating to all the properties of the deceased, including the value thereof, in respect of which estate duty is payable. Furthermore, under the Estate Duty Act, the Commissioner is empowered to assess the estate of a deceased person, even when no estate duty return is filed. In the meanwhile, the beneficiaries, if dependent on the deceased's money, could not use it for their day-to-day purpose. There is nothing wrong for a taxpayer to pass his assets on to his loved ones without being taxed again. Hence, many are at a loss as to why such a discriminatory taxation law still exists when the majority of Singaporeans has been spared such an ordeal. Another point which may be of interest in determining the benefits of keeping the law on estate duty is the question of the amount of estate duty collected each year, as compared to the cost of collecting it. If the sums collected do not justify the cost incurred, and if the amount is negligible as compared to other forms of taxes, then we should be looking at also extending section 11 of the Estate Duty Act to resident taxpayers who are Singaporeans. This will help alleviate the burden of taxes on those with substantial movable assets that are above the exemption limit. The Government should have tax laws that not only encourage the creation of wealth but also discourage measures taken in avoiding estate duty, especially when Singaporeans have to resort to transferring their wealth to other countries like Malaysia, India and Australia, where estate duty has been abolished. Mr Speaker, Sir, I support the amendment with the hope that this action by the Government will be the start of a series of bold steps to examine the Estate Duty Act again and, perhaps, at the next Budget exercise, all Singaporeans can look forward to the day when they can be spared the trauma of having to live with this form of outmoded tax law.

Mr Speaker, Sir, I thank Mr Andy Gan for his comments. I think there are three issues that he raised. First, a very fundamental issue, is should there be estate duty in Singapore. This is a continuing debate - whether or not we should have a death tax regime. Most countries do have it - the UK, USA, Hong Kong, Ireland. They have either inheritance tax or estate duty. Some countries do not have an inheritance tax or estate duty, but they have a gift tax, ie, those who receive them have to pay a tax on the gifts that they are given. So this is a fundamental issue: when somebody builds up the wealth and you transfer the wealth as an inheritance, whether that should be taxed. As I said, a few countries have dispensed with this tax, but the majority of tax regimes still continue with this tax. So we will continue to review this. The second issue is whether or not we should treat immovables and movables differently. In Singapore, our estate duty is already very benign. Immovables are exempted up to $9 million, ie, if you have properties in Singapore, only properties above $9 million would be subject to estate duty. For movables, the exemption limit is $600,000. The exemption limit for movables covers both movables in Singapore as well as outside Singapore. So it is not true that Singaporeans can avoid estate duty by investing in movable assets outside Singapore. The tax treatment for movables is anything above $600,000, both within Singapore and outside Singapore. So, that is the second clarification I would like to make. The third clarification is how do we treat people who are not domiciled in Singapore. That is section 11 that Mr Andy Gan refers to. For people who are not domiciled in Singapore, the estate duty only covers immovables in Singapore, because we want to make sure that foreigners who buy property, the property will be subject to a tax above the exemption limit. But foreigners who are not domiciled in Singapore are only taxed for movables within Singapore. So they could put their movables outside Singapore, and that would be outside the ambit of our tax. So, to encourage such foreigners not to keep their movables outside Singapore but to encourage them to invest in Singapore dollar denominated assets, this is the reason for the section 11 amendment. The reason why we are making this change with respect to foreigners is because, for foreigners, we are already not taxing them on movables outside Singapore. Therefore, we are now also exempting them on movables in Singapore, so that it is a level playing field, and we hope that they will in fact invest in Singapore assets. That is the reason for the change. But I take note of Mr Andy Gan's comments, and I am sure this whole debate on estate duty will continue.

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 Hng Kiang]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Mr Speaker, Sir, this Bill will amend the Property Tax Act to give legislative effect to the following measures: 1) To change the billing cycle for property tax from twice a year to once a year in January; 2) To abolish the practice of opening up the Valuation list, in the month of August, for public inspection and objection; 3) To allow taxpayers to lodge objections on the annual value of their properties at any time within the current year; 4) To allow the Comptroller to impose a penalty not exceeding 5% of the amount of outstanding property tax immediately upon the expiration of the time period stipulated for payment; and 5) To establish a Street and Building Names Board which will determine or alter the name of any building, estate or street. Let me now explain the main amendments in the Bill. At present, property tax is payable half-yearly in advance in the months of January and July. Clause 3 of the Bill amends section 6(2) of the Act to provide for property tax to be payable yearly in advance in January. Property tax bills will then be sent out only once a year. This will bring about cost and manpower savings. Taxpayers paying their property tax through GIRO will not be affected, as they are already paying their property tax payments in 12 equal, interest-free, monthly instalments. Hence, IRAS will encourage those taxpayers currently paying their tax by cash or cheque to pay their tax through GIRO by sending them a package containing information of how to effect payment through GIRO. The second amendment is on objections to the Valuation List. Currently, the Valuation List for the ensuing year is open to the public in August for inspection. Any owner aggrieved by the inclusion in the Valuation List of any property or by the annual value ascribed to a property may, at any time within the period allowed for inspection of the Valuation List, write to the Chief Assessor to object. As taxpayers are informed of the annual values of their properties through their property tax bills or valuation notices, there is no need to publish the Valuation List for the public to inspect. Thus, clause 5 of the Bill removes this practice. Clause 7 introduces a new section 20A to the Act, which will allow taxpayers to object to the Chief Assessor with regard to the annual values ascribed to their properties at any time of the year. If the Chief Assessor rejects a taxpayer's objection, the taxpayer may proceed to lodge an appeal with the Valuation Review Board within 21 days of the service of the notice of the Chief Assessor's decision. This amendment effectively gives the taxpayer more flexibility to lodge an objection to the annual values of their properties. The next change is on the penalty for non-payment of tax. Under the current Act, if the property tax remains unpaid at the end of January or July, a notice would be served on the person liable. The taxpayer is required to pay the outstanding tax and a fee for the cost of the notice within 15 days from the service of the notice. A penalty may only be imposed upon the expiration of the requisite 15 days. To encourage property owners to pay their taxes on time, clause 16 introduces a new section 36 to the Act to impose a penalty at the point the payment is due rather than upon expiration of the notice demanding payment of outstanding tax. The penalty will be capped at 5% of the amount of outstanding property tax. However, the Comptroller will be given the discretion to waive the penalty imposed on late payment where there are exceptional circumstances. Finally, the Street and Building Names Board (SBNB). Currently, the Minister for Finance has authority to determine or change the name of any street, building and estate. He is assisted in this task by an advisory committee. In practice, most of the applications for names submitted to the committee are straightforward, and the committee's recommendations could be accepted without any amendment. Hence, clause 18 amends section 49 of the Act to establish the Street and Building Names Board and to vest in the Board the authority to determine or alter the names of any street, building and estate. The Chairman and members of the Board will be appointed by the Minister for Finance. There will also be an avenue to appeal to the Minister for Finance, against decisions made by the Board. Sir, I beg to move.

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

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, this Bill amends the Arms and Explosives Act to give effect to the Convention on the Marking of Plastic Explosives for the Purpose of Detection. As the Act was last reviewed in 1973, my Ministry has also taken the opportunity to fine-tune some provisions to keep them up to date. I shall first cover the amendments to give effect to the Convention on the Marking of Plastic Explosives for the Purpose of Detection. Convention on Marking of Plastic Explosives for the Purpose of Detection This Convention addresses the need to mark plastic explosives for the purpose of detection. Unmarked plastic explosives are hard to detect because they elude x-rays, as well as metal and most vapour detectors. Marking plastic explosives enables vapour detectors to pick up the presence of such explosives. This Convention, concluded in 1991, was set against the backdrop of the blowing up of Pan Am flight 103 in the air on 21st December 1988. The British Air Accident Investigation Branch concluded that the crash was caused by an explosive device that was intentionally detonated while the plane was in flight. Singapore is acceding to the Convention to show our support for the fight against terrorism. This Convention protects international civil aviation by requiring the marking of plastic explosives for detection so as to prevent the use of such explosives for terrorists and other unlawful purposes. In acceding to the Convention, we join 85 other countries which are already State Parties to the Convention to combat terrorism. In addition, Singapore has already acceded to four other international conventions on civil aviation security, namely, the Convention on Offences and Certain Other Acts Committed on Board Aircraft, the Convention for the Suppression of Unlawful Seizure of Aircraft, the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation and the 1988 Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation. Amendments to Give Effect to the Convention The key obligations of the Convention are for State Parties to adopt measures to prohibit the manufacture of unmarked plastic explosives and to impose strict control over the movement of such explosives. The Convention also requires State Parties to destroy, consume, mark or render permanently ineffective all stocks of unmarked plastic explosives within 3 years, if not held by military or police authorities, and within 15 years, if held by military or police authorities. Clause 2 of the Bill amends the Act by inserting a definition of an "unmarked plastic explosive" as any plastic explosive that does not contain a detection agent. A detection agent means any substance that enhances the detectability of explosives by vapour detection means. Clause 23 of the Bill introduces a new Schedule that lists the detection agents and specifies the minimum concentration level that should be present in plastic explosives. Clause 20 introduces a new section to empower the Minister for Home Affairs to amend the Schedule by order published in the Gazette. Sir, to meet the obligations under the Convention, clause 4 of the Bill makes it an offence for a person to manufacture, possess, transfer, import or export unmarked plastic explosives. A person convicted of any of these offences would be sentenced to a fine not exceeding $10,000 and imprisonment for a term not exceeding three years. Exceptions to this are made, however, for unmarked plastic explosives used for research and development, testing, training or for forensic science activities. Exceptions are also made for authorised military and police personnel to destroy, consume, mark or render permanently ineffective the existing stock of unmarked plastic explosives within 15 years of the Convention coming into force. These grace periods will allow time for the existing stock of unmarked plastic explosives to be destroyed, consumed, marked or rendered permanently ineffective. These exceptions are all in accordance with the Convention. Amendments to update the Act Mr Speaker, Sir, I now briefly outline other amendments to fine-tune the existing provisions in the Act. Definition of "Arms" to include "Noxious Substance" Currently, the Act defines "arms" as including firearms, automatic guns, and any other kind of gun from which any shot, bullet or other missile can be discharged or noxious fumes emitted. The current definition does not include guns which can discharge noxious substances which are non-gaseous but could also produce a noxious effect. For example, a pepper spray discharges noxious substances and falls outside the existing definition of "arms" under the Act. Clause 2 of the Bill addresses this by amending the Act to include "noxious substance" in the definition of "arms". Manufacture, Dealing in and Export of Noxious Substance With the inclusion of noxious substance, clause 6 of the Bill amends the Act to make it an offence for unauthorised possession, manufacture, import and export of noxious substances. Appointment of Licensing and Assistant Licensing Officers Sir, the Act currently empowers the Minister to appoint a Licensing Authority. Over the years, the workload of the Licensing Authority has increased substantially. Clause 7 of the Bill therefore amends the Act to empower the Minister to appoint Assistant Licensing Officers to assist the Licensing Officer. However, the Licensing Officer will remain overall responsible. Deposit of Guns, Arms or Explosives Sir, currently, any person whose licence to possess a gun, arms or explosive has expired or has been cancelled or suspended, is required to deposit the gun, arms or explosives at a Police station. This arrangement is not satisfactory. Police resources are unnecessarily tied up to receive and safekeep such guns, arms and explosives when it could be better utilised in performing Police core functions. The Police will therefore outsource the receipt and safekeeping function to the Commercial and Industrial Security Corporation (CISCO) which has the capability to perform this task. Clause 9 of the Bill amends the Act to require any person whose licence to possess a gun, arms or explosive has expired, or has been cancelled or suspended to deposit the gun, arms or explosive with CISCO or any other auxiliary police force which is authorised by the Licensing Officer. Forfeiture of Guns, Arms and Explosives The Act currently provides that any gun, arms or explosive which is deposited with the Licensing Authority, if not claimed by its owner within six months from the date of the deposit, shall be forfeited to the Government. Clause 10 of the Bill amends the Act by replacing the Licensing Authority with the Licensing Officer and CISCO or any other auxiliary police force which is authorised by the Licensing Officer. Possession and Use of Arms by Schools and Clubs Clause 19 of the Bill amends the Act to empower the Minister for Home Affairs to make rules to regulate the possession and use of arms, namely, air rifles held by schools and shotguns and pistols held by clubs for sporting activities. It also exempts any school or club from the requirement of a licence, subject to prescribed conditions. Currently, without the power to make such rules, schools and clubs have to be subject to all the requirements under the Act. For example, if a school or club intends to acquire arms for sporting activities, it has to first obtain a licence to purchase the arms. Having purchased the arms, the school or club has to apply and obtain a licence to possess the arms. Also, each time the arms are transported out of the school or club to another location for a competition, prior approval has to be obtained from the Licensing Officer. Clause 19 is therefore intended to allow rules to be made to reduce the administrative work and the number of licences that a school or club needs to obtain to acquire arms for sporting purposes. However, let me assure the House that the streamlining of administrative work and exemption from having to obtain certain licences will not undermine the safekeeping and proper custody of arms by schools and clubs. Power to Search Vessels or Aircraft while in any Port or Airport Sir, currently, the Act provides that the Port Master and Licensing Authority may search or issue a search warrant to search any vessel or aircraft about to leave any port of Singapore, if it is suspected of having on board illegal guns, arms or explosives. It is the Airport Police and the Police Coast Guard who are activated to conduct the search. Clause 17 of the Bill therefore amends the Act to extend the power of search and issuance of search warrants to the Commander of the Airport Police and the Commander of the Police Coast Guard. Clause 17 of the Bill also amends the Act to make it clear that any vessel in the port, aircraft in or about to leave any airport of Singapore may be searched if it is suspected of having illegal guns, arms or explosives on board. Repeal of section 17 Clause 11 of the Bill repeals section 17 of the Act. Section 17 provides that a permit must be obtained to land any guns or arms for transhipment by any vessel or aircraft arriving at any port of Singapore. However, in practice, the cargo handler acting on behalf of the vessel and aircraft would have already obtained an import and export permit which covers the transportation of guns, arms and explosives. Section 17 is therefore redundant. Amendments to penalties Finally, Sir, clauses 6, 12 to 16 and 22 of the Bill amend the Act by increasing the existing fines for various offences by between three and 10 times. These offences include unauthorised manufacture, possession or import of guns, arms, explosives, poisonous and noxious substances. The existing fines have not been amended for over 30 years. The increase in the fines is to take into account the increase in income levels over the years and to maintain their deterrent effect. Conclusion Mr Speaker, Sir, by passing this Bill and acceding to the Convention on the marking of plastic explosives for the purpose of detection, we join many other countries in taking concrete steps to reduce the availability of unmarked plastic explosives by prohibiting the manufacture and movement of unmarked plastic explosives and requiring the destruction of all unmarked explosives. This will contribute to ensuring greater aviation security for passengers, crew and aircraft and make it more difficult for terrorists who plan to use explosives on aircraft and other means of transportation. Sir, I beg to move.

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

Order for Second Reading read. 2.45 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill introduces four main changes to the existing CPF Act, namely, to accommodate bank-originated loans for HDB flats; facilitate e-submission for CPF submissions and payments; shorten the interval for CPF withdrawals after age 55 and provide a cap on voluntary CPF contributions. Changes arising from Bank-Originated Loans for HDB Flats Sir, in July this year, the Government announced that the Housing and Development Board (HDB) would transfer HDB market rate loans to the banks from 1st January 2003. This Bill addresses changes that impact CPF savings arising from this move. Currently, when HDB grants mortgage loans, it has first priority or charge over sale proceeds from such flats. The CPF Board has second charge if CPF savings have been used to make payment towards the purchase of the flat. This means that when the flat is sold, HDB will first deduct the amount owed to it, before transferring any balance back to the member's CPF account. From 1st January 2003, the lending banks will have first charge when they grant loans to HDB flat buyers. To secure the refund of monies due to CPF, the CPF Board would have to lodge a charge with the Registrar of Titles for each HDB flat purchased with bank-originated loans. However, this would lead to higher cost and longer processing time for the release of members' CPF savings for the purchase of flats. To avoid these problems, clause 7 of the Bill inserts a new section 21B to create an automatic charge on an HDB flat in favour of CPF Board when a member withdraws CPF savings to purchase or upgrade the HDB flat. It also confers on the CPF Board the power of sale to recover the CPF savings used for the flat, as is the case for private properties. With the automatic charge, there exists the possibility that the need to refund CPF savings used by the seller could be overlooked during the transactions of HDB flats, especially when HDB is no longer an active intermediary in flats purchased with bank loans. However, with due diligence by the parties' lawyers to ensure that the title of the flat is passed on to the buyers free from all encumbrances, including the return of the sellers' CPF, there will be no need for CPF Board to exercise the power of sale which, in any event, will be used only as a last resort. For HDB flats purchased with bank-originated loans, the priority ranking of the CPF charge is as listed in the circulated Table (Cols. 1479-1480), and I will leave it to Members to peruse this. Essentially, the bank has the first claim, and the CPF follows. Table 1 - Priority of claim Implementation of Electronic Submission and Payment of CPF Contributions by Large Employers Sir, let me move on to implementation of electronic submission and payment of CPF contributions by large employers. Employers can currently submit CPF contributions and payments manually or electronically and the CPF Board does not impose any processing fee. All public sector employers pay CPF through electronic means. The corresponding figure for larger private sector employers, ie, those with 100 or more employees, is 94%. Despite the obvious savings through electronic submission and CPF Board's promotional efforts, a remnant 6% of larger private employers continue to submit and pay CPF contributions manually. To encourage all employers to submit and pay CPF contributions electronically, clause 10 of the Bill enables the CPF Board to prescribe regulations to implement the payment, collection and refund of contributions through electronic means and empower the Minister to prescribe such fees and charges that may be levied for manual submissions. For a start, the CPF Board will impose processing fees on those larger companies which continue to utilise the manual mode after 1st April 2003. This is justifiable as the Board has to incur greater cost to process manual submissions and payments. The Board will monitor the progress of large employers going into e-modes before imposing the processing fee on smaller employers. Even then, we will give smaller employers sufficient time and assistance to adjust to these changes. The CPF Board will also continue to explore and develop means to make e-submission and payment of CPF more convenient and easier for all employers. Withdrawal of CPF after age 55 Currently, CPF members aged 55 years or older can withdraw their CPF savings at 3-year intervals after setting aside the required Minimum Sum. CPF members who have not set aside the Minimum Sum can withdraw half of their savings at 3-year intervals, with the other half being used to top-up the Minimum Sum shortfall. With greater operational efficiency, the Board is able to shorten the interval period for withdrawals. Clause 5 of the Bill, therefore, amends section 15(3) to allow withdrawals at 1-year intervals or such other interval as the Minister may direct. Voluntary Contributions Sir, preferential tax treatment is currently given to compulsory CPF contributions from employer and employees, including voluntary contributions from the self-employed. Although there is a need to encourage Singaporeans to save for retirement, CPF savings beyond a certain limit should not be allowed to become a tax shelter. Voluntary CPF contributions beyond the tax exemption limit currently enjoy a less explicit tax benefit, which is the acronym TEE, ie, Taxable at contribution, Exempt during accumulation and Exempt on withdrawal. Clause 4, therefore, amends section 13B of the CPF Act to limit CPF contributions made by a Singapore citizen or permanent resident, including voluntary contributions paid by their employers, to the mandatory contribution amount, or the sum of $28,800 in any year, whichever is the higher. The amount of $28,800 is derived from the 40% CPF contribution rate of a $6,000 monthly salary. This policy change affirms the fundamental objective of CPF, which is to provide for basic retirement needs. Singaporeans and permanent residents who wish to save more for retirement may instead contribute to the Supplementary Retirement Scheme (SRS) which provides tax deferral benefits for voluntary contributions up to 15% of one's income, subject to a salary ceiling of $6,000. Clause 4 of the Bill also amends section 13B to disallow voluntary CPF contributions by any person who is not a citizen or permanent resident of Singapore. Such foreigners already enjoy higher SRS relief of 35% of income, as compared to 15% for Singapore citizens and permanent residents. With this 35% benefit in deferred tax plus 50% exemption on tax at withdrawal offered by SRS, foreigners already have a tax-advantage vehicle to save for retirement. We understand that some employers currently contribute CPF voluntarily for their foreign employees working in Singapore. From 1st January 2003, these employers are encouraged to adjust the employees' remuneration package accordingly. Other amendments This Bill also introduces other amendments to enhance the administration and operation by the CPF Board. These include: Clause 2 to enable CPF Board to authorise any 2 of its officers to sign documents under seal, instead of restricting it to only the General Manager and Deputy General Managers; Clause 3 to change the title of the General Manager and the Deputy General Manager in the CPF Act to chief executive officer and the deputy chief executive officers accordingly; Clause 8 to amend section 24 of the Act to clarify that monies in any fixed deposit account maintained by a member with a bank under the CPF Investment Scheme or CPF Minimum Sum are protected; and Clause 9 repeals and re-enacts section 66 to clarify that the section also applies to the Board's insurance funds, and removes the need to gazette authorised officers who may be required to give evidence in court so long as an officer is duly authorised by the Board. Conclusion In conclusion, Mr Speaker Sir, the amendments proposed in the Bill will enable the return of CPF savings upon sale of HDB flats which were purchased with bank-originated loans; facilitate electronic submission and payment of CPF by all companies; introduce flexibility on the interval of CPF withdrawals after the age of 55; and limit the amount of voluntary CPF contributions. The amendments are in line with the overall objectives of the CPF system. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise in support of the Bill. The key amendment in the Bill is the creation of an automatic charge on the HDB flats in favour of the CPF Board when a CPF member withdraws CPF funds to finance or refinance the purchase of the HDB flat. These changes are part of the broader recommendation on the CPF which the ERC recommended, and they have already been debated in Parliament. I would thus not revisit the arguments again. However, I would like to raise two key points related to the amendment. First, consumption and investments in housing. A key thrust of the ERC recommendations on CPF is the safeguarding of the CPF funds for retirement. To do so, one of the strategies is to safeguard funds withdrawn for housing purposes by limiting CPF withdrawals. However, this point seems to have been lost amongst Singaporeans. With the lower 10% cash downpayment, we see Singaporeans snapping up private properties. They do not seem deterred by the fact that the banks now have the first charge on the mortgage loans that they give. I hope that beyond these amendments, the CPF Board and the Government can do more to educate Singaporeans on the impact of these changes on their CPF and their retirement savings. This will certainly help them better plan their finances, including consumption and investments in housing. My second point is on the CPF default rate and electronic submission. The CPF (Amendment) Bill seeks to enable the CPF Board to implement electronic submission and payment of CPF contributions. With e-submission, the CPF default rate by employers can be reduced further. Mr Speaker, Sir, on 6th September, the Business Times reported that the CPF default rate had declined in the second quarter of this year. In the April-June period, 0.61% of the employers defaulted on payments, compared with 0.8% in January-March. Although the figure is low, what is worrying is that the rate had risen gradually over the last four quarters, and up to the second quarter of this year. I would like to ask the Minister of State what the CPF Board is doing to further reduce the default rate. The present CPF PAL-internet system enables employers to submit their monthly CPF contribution details to the Board via the Internet 24 hours a day, seven days a week. All employers need to do is to just register with the Board and have a GIRO bank account. I would like to ask the Board what is the employers' response rate so far to the e-submission system and what more can be done to get more employers on board, particularly the small and medium enterprises who generally employ less than 100 workers. I hope the Ministry would consider more measures to provide greater support and incentives to these smaller employers. I understand that by April next year, all employers with more than 100 employees have to go for the e-submission system. However, I would like to urge that more time should be given to the small businesses to make adjustments. In the interim, I hope the CPF Board could also consider providing the e-submission service at the head office and the branches for employers with less than 100 employees, so that the small businesses, particularly those who have difficulties and find it too costly to set up a system, will still be able to learn how to use the system, and eventually use e-submission, instead of the traditional way of submitting CPF contributions.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.25 pm. Sitting accordingly suspended at 3.02 pm until 3.25 pm. Sitting resumed at 3.25 pm

Debate resumed.

Mr Speaker, Sir, thank you for allowing me to speak on this CPF (Amendment) Bill. I rise to express my concern on the unfair penalty that will be imposed on the HDB flat buyers when the sellers default on payment of the charge due to the CPF Board after the amendment comes into place. Specifically, I refer to the changes to the Act, which empower the Board to sell the flat and recover its dues. Let me illustrate my point with an example. Suppose a Mr Ong has decided to buy a HDB flat from a Mr Tan. They agree on a price and Mr Ong duly paid up the amount to Mr Tan either by cash, his CPF or a loan. Thereafter, one would expect that Mr Ong would be able to move into his dream flat with peace of mind. However, after the amendment comes into force, things might not be so straightforward anymore for Mr Ong. Should Mr Tan decide to pocket the money and he does not repay the charge due to the CPF Board, Mr Ong would be in deep trouble. Why? Because with the amended legislation, the Board would come after Mr Ong for the flat, never mind that Mr Ong is not the person who defaults the payment. After 60 days on expiry of the due date of the payment to CPF Board, the Board would put up a notice of sale to declare its intention to sell the flat. Another 90 days have lapsed and if Mr Tan still does not pay up, the Board would go ahead and sell the flat and recover whatever charges due to CPF Board. As a result, Mr Ong, the buyer, who has paid for the flat would lose his flat while Mr Tan, the culprit, would get away. An analogy is like when you are going to a shop to buy a packet of rice, but because the shopowner did not pay up the supplier, the supplier comes after you to take away your packet of rice to recover the debt which is owed by the shop. This is very unfair to the buyers, Mr Speaker, Sir. I wonder if the Ministry, as the Chinese saying goes, has become "hei bai bu fen" ( ), which means unable to differentiate the white from the black. Or if the Ministry simply takes the easy way out, yes, the Board can just take the flat back, sell it, recover the charges due to itself and leave the buyers to sort out the mess with the sellers. Mr Speaker, Sir, there is another Chinese saying, "yuan you tou, zhai you zhu" ( ), which literally means there is a culprit to every wrongdoing and there is a debtor to every debt. It means that we must go after the real culprit responsible for any wrongdoing and we must not "yuan wang hao ren" ( ), that is, we must not wrong the innocent people. Therefore, Mr Speaker, Sir, while I support the other amendments in the Bill, I would like to urge the Ministry to rethink this particular amendment. Instead of empowering the Board to sell the HDB flat involved, I would like to suggest that the CPF Board be empowered to impose a severe penalty on the members who default on the charges due to the Board. For example, defaulters, like Mr Tan in my illustration, could be fined a hefty sum several times the amount due and, in some instances, be imprisoned. I certainly hope that the Ministry would not reply by saying that those buyers affected could take action against their lawyers for negligence or take out a civil suit against the sellers. Is that not a very convoluted way of solving a simple problem? In the first place, it is already wrong to ask them to assume the responsibilities of the seller's wrongdoing. Now, you want to impose further burden on these innocent victims who, after losing their flats, have to incur extra legal expenses and time, not to mention the mental anguish they have to go through. Since we know that this amendment is unfair and unjust, I feel that we should take the corrective action now. Mr Speaker, Sir, our law is to protect the law-abiding citizens and to hold wrongdoers responsible for their misdeeds. This particular provision has contradicted that spirit. Therefore, I strongly urge that this part of the amendment be reviewed and changed. The CPF Board must take action against the culprits and not take the easy option of penalising the innocent victims while leaving them in the lurch.

Mr Speaker, Sir, I thank Mr Yeo and Dr Ong for their comments. Let me reply specifically to some of their points. Mr Yeo Guat Kwang has advised the public at large to exercise prudence in making housing plans. And we reiterate this call for home buyers to acquire homes within their financial means. He asked what CPF Board and Government can do to educate Singaporeans to better plan their finances, including consumption and investment in housing. I would like to remind the House and the public that this is exactly what the imposition of the valuation limit, in terms of CPF withdrawal limit, seeks to do. It will start at 150% and slowly move over the next five years to 120%. Similarly, the cash payments will increase from 0% to 10%. Mr Yeo also talked about the CPF default rate and e-submissions, in particular, he mentioned that it was 0.6% in April-June up to 0.8% in January-March. Mr Speaker, Sir, I think these are quite highly commendable figures. We have less than 1% of employers defaulting. Statistically, it is not different. There is a quirk that in the month of February, there seems to be a slight blip, perhaps related to the Chinese New Year season. But, yes, we will do our utmost to reduce the default rate further. Our CPF Board does contact employers fairly quick after they have gone beyond a two-week limit. He also asked about small and medium enterprises and how we can help them to enable them to submit CPF submissions electronically. Yes, the Ministry will roll out the plan. Currently, about less than 10% do so. We will extend the same programmes that we do for large employers to smaller employers, including subsidising some of their transmission fees electronically. We will also create additional e-channels for e-submissions which include the use of major kiosk service providers. The AXS employer returns, for example, currently utilises 150 kiosks for goods island wide. They can also have access to sites in CDCs and CCCs as well as, he mentioned, GIRO. And, yes, there are plans to also start e-lobbies, or e-terminals within the lobbies at CPF branches. We will roll out special training plans for these small employers, including using the Government IT Literacy Programme to co-fund part of the enabling process. Let me now touch on the point brought up by Dr Ong where he mentioned that this amendment is unfair against the seller. I would like to remind him that this provision already exists for private properties. It is no different from that of private properties. The only difference is that now we create an automatic charge. So the solution really is that you still need to enable the CPF Board to acquire the properties with the power of sale. Because in certain acts of collusion between buyer and seller, you need the Act. The solution to prevent the CPF Board exercising the power of sale is to ensure that there is due diligence. We will make arrangements, in the event that HDB is the intermediary and where HDB is appointed as a solicitor for either buyer or seller of the flat to ensure that the CPF funds have been returned. In addition, banks and lawyers will be informed of the CPF charge and the power of sale that comes with it so that they will do their diligence. They will conduct search at the CPF Board and the existence of the CPF charge on the HDB flat. It will be in the interest of the banks to ensure that the CPF charge is this charge from the sale of the flat so that there is no encumbrance on the flat. The buyer's lawyer should ensure that the title to the flat is passed to their client free from prior encumbrance and the seller's lawyer should also ensure that their client returns the CPF as otherwise the sale could be jeopardised, should CPF invoke its power of sale. In the unlikely event that the above mechanisms fail and the CPF monies secured by the CPF charge are not paid, the CPF Board will still seek the assistance of HDB, the mortgagees and the parties' lawyers to recover the CPF monies from the sellers. With due diligence from all parties involved, this power will rarely be invoked and, indeed, only as a last resort, such as instances when there is evidence of collusion between the buyers or sellers, will CPF Board proceed to sell the flat to recover the seller's CPF money that is secured by the charge.

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 Ng Eng Hen]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Resolved, That the proceedings on the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Mah Bow Tan].

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In July this year, Government announced that the bank origination of HDB market rate loans would be implemented from 1st January next year, 2003. One of the objectives of this Bill is to facilitate the implementation of bank origination. The Bill also seeks to fine-tune the Act to facilitate HDB's implementation of its upgrading programmes. Sir, before I explain the proposed amendments in greater detail, allow me to first reiterate the rationale for bank origination of market rate loans. Bank Origination of HDB Market Rate Loans HDB Concessionary and Market Rate Loans HDB provides mortgage loans at a concessionary interest rate to help eligible Singaporeans buy HDB flats. These subsidised flats are granted to first-time subsidised flat buyers as well as second-time buyers who are upgrading from smaller flats. HDB currently also provides loans at market rates. Such market rate loans are for HDB buyers who have either previously consumed HDB housing loan subsidies, or who do not qualify for HDB subsidies in the first place. There are five categories of such buyers: Singapore Permanent Residents; private property owners; high income households, ie, those which earn $8,000 or more a month; those who have already enjoyed two concessionary loans; and, finally, those who have enjoyed one concessionary loan for the purchase of a subsidised flat and are buying a similar-sized flat, or a smaller flat. Bank Origination from 1st January 2003 As Members are aware, my Ministry is reviewing the functions of HDB to see in what way HDB can better fulfill its core responsibility, which is to provide good quality and affordable public housing. A guiding principle of the review is that HDB should, as far as possible, let the private sector take over those functions which extend beyond this core responsibility. One such activity is the provision of market rate loans. As these loans are not subsidised and are pegged to commercial rates, there is no reason for HDB to continue to provide them. Our financial institutions have the resources and are well positioned to provide competitive mortgage financing for the purchase of public housing. Hence, the Government decided that HDB will no longer provide market rate loans with effect from 1st January 2003. Flat buyers who are not eligible for HDB's concessionary rate loans can take market rate loans from the many banks which are licensed to offer housing loans. Existing HDB market rate mortgagors can transfer their remaining mortgages to the banks if they so wish. Some Members have previously expressed concern that the provision of market rate loans by banks, instead of HDB, is in effect a withdrawal by Government of its social safety net. They see HDB as generally being more sympathetic towards flat owners in arrears, and will not repossess flats as a last resort. On the other hand, they perceive banks as being less forbearing, as they are profit-driven. Let me reiterate that there is no change in the Government's commitment to the provision of basic housing in the form of subsidised HDB flats. We are not touching our basic housing safety net. Our housing subsidies have enabled the vast majority of Singaporeans to own their own homes. Concessionary loans are a key instrument to promote home ownership. Hence, the Government will continue to provide HDB loans at concessionary rates to eligible buyers. We will continue to maintain our home ownership policy by providing subsidised loans for subsidised flats so that eligible Singaporeans can continue to afford good quality public housing. However, with bank origination of market rate loans, the Government is indeed pulling back the safety net at the fringes. But this will only apply to those who do not need extra help in the first place. They are either the financially better off, or those who already own a HDB flat. Flexibility with responsibility While flat-buyers will enjoy greater flexibility by obtaining loans from banks, this greater flexibility also comes with greater responsibility. Those who take loans from banks should exercise financial prudence, do financial planning, and buy a flat within their means. They must go into the purchases with their eyes wide open, and expect to be subject to the mortgage financing rules and foreclosure practices of the banks. In tandem with the move to bank origination and greater responsibility, I had, in July this year, signalled my Ministry's intention to treat certain HDB flats bought with bank loans more like private properties. I informed this House that MND was actively studying whether and how the restrictions on resale and rental of HDB flats can be relaxed. This is also in line with the recommendations of various Economic Review Committee sub-committees, such as the CPF Working Group and the Sub-Committee on Entrepreneurship, that the Government explore various ways to help homeowners monetise their housing assets and thus free up capital in the economy. I am pleased to announce the results of our review. Current policy HDB flats are restricted by a minimum occupation period (MOP), which is the minimum period that a lessee needs to own a flat before he can sell it. The MOP is currently five years for a flat bought at subsidised prices, ie, either directly from HDB or a flat from the resale market but bought with a CPF Housing Grant, and it is 21/2 years for a non-subsidised flat bought from the resale market without any CPF Housing Grant. Subletting of the whole flat is also currently disallowed, except in special circumstances. For example, the lessee may be overseas, or he may be elderly and, subject to various criteria, he can sublet his whole flat for income generation. These restrictions reinforce the principle of long-term owner occupation for subsidised public housing. They help to justify the subsidies enjoyed by HDB flat lessees and are fundamental features distinguishing HDB flats from private property. Policy refinements The Government has considered the proposals from the ERC carefully. It has decided that, together with the move to bank origination in January 2003, HDB will relax the current restrictions on MOP and subletting for resale flats that are bought without the CPF Housing Grant and which are financed by bank loans.

From 1st January 2003, HDB lessees who buy resale flats without any CPF Housing Grant and with bank loans will only need to occupy their flats for one year, instead of the current 21/2 years, before they can sell it in the open market. Existing resale flats bought without any CPF Housing Grant will also qualify if the lessee re-finances his outstanding HDB market rate loan with banks or fully redeems his HDB market rate loan. The reduction in MOP will also apply to existing resale flats that are bought without CPF Housing Grant and without any loan from HDB. Subletting rules for these categories of flat buyers will also be relaxed. HDB will allow them to sublet their entire flat if they have occupied them for 10 years or more. With these changes, HDB resale flats bought without any CPF Housing Grant and without any loan from HDB will be treated more like private properties. Subletting guidelines to prevent disamenities Sir, let me stress that the Government is not abandoning the principle of long-term owner occupation, or the social objectives of public housing. That is why we have not completely relaxed the MOP and subletting rules. To preserve the good environment of our housing estate and to minimise nuisances that may arise from subletting, the HDB will apply certain guidelines and conditions on subletting that are already in place. Lessees are still expected to comply with the covenants in the lease and will be held responsible for infringements committed by their sub-tenants. The HDB will also work closely with the grassroots organisations and the residents to ensure that subletting does not become detrimental to the living environment of the HDB blocks. The HDB will be releasing more details soon on the relaxation of the MOP and subletting rules. Amendments to the Act Sir, let me now turn to the specific amendments to the Housing and Development Act - what they are and why they are being amended. Amendments related to bank origination Bank loans for the purchase of HDB flats are secured on the value of the flats. Hence the bank has to be able to foreclose the loan, recover vacant possession of a HDB flat and conduct a mortgagee sale, should the flat owner default in his mortgage payments. Clause 6 of the Bill will allow this, by enabling the bank to attach the flat when it is exercising its power of sale under the terms of the mortgage charge. The bank, in place of HDB as mortgagee, will have first charge on the market rate loan should there be a foreclosure of the mortgage. The Government recognises that bank origination is a significant move for HDB flat buyers. We are therefore keeping certain safeguards in place. The current protection clause in the Housing and Development Act against third-party creditors will not be changed. Flat lessees and their families, including those who take their mortgage loans from banks, will not lose their flats as a result of claims by third parties, in the event that they become bankrupt. Clause 6 of the Bill also allows CPF Board to, as a last resort, exercise its power of sale to recover CPF monies used in the purchase of the flat when solicitors acting for the various parties fail to ensure proper refund of CPF monies when the flat is sold. This will help to safeguard the return of CPF savings to the CPF member's account for his retirement use. Currently, HDB's consent is required before a mortgage by a bank can be made on a HDB flat. To facilitate the process of obtaining HDB's consent and to set out the terms and conditions for granting such consent, clause 9 of the Bill enables HDB to make rules for the creation of mortgage on HDB flats. Upgrading works in HDB precincts Let me now touch on the subject of upgrading works in HDB precincts. There is no change to our policies, but the amendments will ease the implementation of the upgrading programmes. Sir, the Lift Upgrading Programme (LUP) that was introduced last year can be implemented as part of the Main Upgrading Programme (MUP). New lifts and lift shafts will be added, where it is technically feasible and cost-effective to do so, to give residents barrier-free access when their blocks are identified for the MUP. A 75% `yes' vote from the residents is required before MUP or LUP can proceed. Clause 11 of the Bill will make it clear that, although residents vote for both the MUP and the LUP at the same time, the LUP will only proceed, if both the MUP and LUP polls are successful. The other amendments related to upgrading works will provide a clearer definition of the various terms used. For example, lift upgrading is today defined under the category of `special upgrading works' in the Housing and Development Act. Clause 10 will provide HDB with greater flexibility should we decide to expand the present scope of special upgrading works to other types of HDB properties. Clause 14 will give HDB the power of entry, including forcible entry, into HDB flats to carry out upgrading works within a flat or building that has successfully voted for upgrading. Such powers will, of course, be used very sparingly if at all. Administrative measures The Bill will also introduce some administrative changes to improve the enforcement of public housing regulations and policies. Firstly, clause 2 of the Bill provides for the appropriate authority to approve the purchase, sale, lease and exchange of lands based on the land values. This is because the Government Instruction Manuals already provide for different approving authorities based on the value of the lands. Secondly, clause 3 makes it clear that the rules on renovation of HDB flats apply to both the flat owners and the renovation contractor. Thirdly, clause 4 of the Bill disallows HDB from delegating the power to make subsidiary legislation to any person. It also disallows HDB to delegate the power to delegate to another party. Fourthly, clause 5 of the Bill spells out that all flat lessees, regardless of when they bought their flats from HDB, must seek HDB's prior consent before they are allowed to use their flats as a Technopreneur Home Office or for other commercial purposes. Finally, clause 15 of the Bill increases the maximum penalty for refusing to give information or giving false information to HDB to a $2,000 fine or a 3-month imprisonment term or both. This is to enable HDB to effectively enforce against illegal parking along HDB service roads. Similar penalties are imposed under the Parking Places Act and the Urban Redevelopment Authority Act. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, I rise in support of the Bill. With the introduction of market pricing for HDB flats, it is only fair that HDB should reduce its restrictions on flat owners who do not enjoy much housing subsidy. The Bill will provide more flexibility for flat owners who are presently required to pay HDB market rates for mortgage loan to obtain loan from banks instead. This move will benefit those who are able to secure attractive mortgage loans due to their financial credentials. But it may pose problems to those who are in financial hardship. These include Singaporeans who are bankrupt or face financial hardship due to the loss of their sole breadwinners or prolonged unemployment during recessions. Over the last 10 years, many HDB flat owners have upgraded to bigger flats. Many dual income families had applied for larger flats and obtained subsidised housing loans from HDB. As a result of the recent financial crisis, some are presently facing difficulty paying their mortgages. The proposed Bill will have negative impact on two groups of Singaporeans. Those who wish to downgrade to a smaller flat due to various reasons, such as financial hardship or retirement, or those who wish to move laterally to another flat of the same size due to reasons such as opting to stay near their family members. I wish to urge the Minister to consider providing HDB loan to these two groups of Singaporeans, in particular, those facing financial hardships. With the lifting of rental restrictions, the supply of rental flats will increase, thus providing more options and cheaper accommodation for people seeking rental flats. But, to avoid any inconvenience to HDB residents, HDB should apply a cap on the number of persons living in various sizes of rental flats. This is to avoid HDB flats being rented out as workers' dormitory for foreign workers, thus affecting the residents. In addition, we should also consider removing the two-and-a-half-year occupation period for flat owners taking a private bank loan. This will further increase the supply of rental flats, thus providing more options for rental. Sir, the change in policy to allow private bank loans for certain households of HDB flats may cause confusion if the terms and conditions are not clearly disseminated to the public. Many existing HDB flat owners who may fall into this category may not be aware of the financial implications of taking up a bank loan which has first charge on their flats. While we encourage financial prudence and self-management, many HDB flat owners may not understand the financial risks involved in taking up a bank loan. These include fluctuating interest rates, penalties for late payment, termination or early payment of entire loans, aggressive debt recovery procedures and charges, higher legal fees, and many other miscellaneous bank charges. Sir, to protect the interest of HDB flat owners, HDB must launch a campaign to educate the public on the financial implications of bank loans, and provide financial counselling to potential HDB flat owners using bank loans. This will help Singaporeans to make better-informed decisions when purchasing HDB flats. Sir, I wish to seek clarifications on certain technical points in the Bill. Clause 2 of the Bill amends section 24(2) of the Housing and Development Board Act by deleting the word "Minister" and substituting it with the words "prescribed approving authority". Section 24 provides the power for HDB to purchase, sell and lease or exchange land. The amendment removes the need to seek the Minister's approval when selling, surrendering, leasing or exchanging land. What is the rationale of removing this authority from the Minister or delegating this authority? The selling, surrendering, leasing or exchange of land has drastic impact on land use and the real estate market. The supply of land has always been a concern for both the Government and the private sector in Singapore. It is only prudent that such authority be given to the Minister instead of delegating it to a prescribed approving authority. I do not understand why the Board must seek the approval of the Minister when purchasing or leasing any land but do not need the Minister's approval when it sells, surrenders, leases or exchanges land. Sir, clause 11 of the Bill amends section 65C of the Housing and Development Board Act with regard to special upgrading works. I hope the Minister can clarify what is classified as special upgrading works and under what circumstances must flat owners vote for such works. To date, only the provision of lifts at every landing is defined as special upgrading work, which requires voting and payment by residents. Interim upgrading works are usually 100% funded by the Government and residents need not pay at all. If the scope of special upgrading works is not clearly defined, many items of works in the interim upgrading package may be included as special upgrading works, thus requiring payment by residents. This will pose undue financial burden on residents, especially those in 3- and 4-room flats. Sir, I support the amendment in clause 5 to allow restricted use of HDB flats for commercial use. This will facilitate the Technopreneur Home Office scheme. To further encourage entrepreneurship, I would urge the Minister to expand the home office scheme for micro businesses, such as small agency or consultancy firms. This will provide more opportunities for business start-ups which will eventually contribute to our economy. Sir, I support the Bill.

Mr Speaker, Sir, I rise to support the Housing and Development (Amendment) Bill and the various measures proposed by the Minister, particularly the schemes to help home-owners to monetise their housing assets and free up capital in the economy. Sir, I would like to raise the following points so as to moderate the impact on house-owners who are facing financial hardships because of the current difficult business and economic conditions. Sir, house-owners who have enjoyed one concessionary loan with a subsidised flat and are downgrading or moving laterally will now be required to take market loans. Could the Minister reconsider this especially for those households facing financial hardships? Like many others, I am concerned that they would find difficulties to secure a bank loan. Sir, the proposal to allow house-owners who have bought "non-subsidised" flats without any subsidy as well as existing lessees of such "non-subsidised" flats to have the flexibility to sublet their whole flat is welcomed. Sir, I would like, however, to ask the Minister to allow house-owners of subsidised flats, especially those who have fully redeemed their HDB loans, to have a similar flexibility. Some may face financial hardship, especially those who are retrenched and cannot find employment. They are not able to sell their flats and downgrade in these difficult times. We should allow them this flexibility to monetise their housing assets. Others may not want to sell their flats for sentimental or other reasons. They want to move to smaller flats within their current means or stay with their children who can take care of them. I hope the Minister would consider such cases having due regard to their hardships which they may face in these difficult times. Sir, on this note, I support the Bill.

Mr Speaker, Sir, we all know that HDB is one of the key household words in Singapore. There would not be the scale of home-ownership as we now know and have here without the concept and philosophy behind the setting up of HDB. It is an achievement which Singaporeans are all proud of. Successful as we are economically, the value of home-ownership, as a base for instilling a sense of belonging and as stakeholders in the newly emerging nation like our Singapore is priceless. One of the reasons why HDB has been able to deliver on that score is that it understood the need for the Board to remain relevant, nimble and flexible in fulfilling its role. HDB knows goalposts related to housing keep changing as Singapore and Singaporeans move up the ladder of economic and social well-being. For, after all, housing in Singapore is more than just a question of brick and mortar. It is indeed a socio-political phenomenon. It is about living and, more importantly, living under one multi-cultural roof. Judging from the number of amendments made by HDB since its inception, we are reassured that HDB wants to remain relevant, nimble and helpful. Whether for the better administration of the Act or to allow the Minister to make rules with respect to the terms and conditions of a sale, lease, mortgage or disposal of an HDB flat, or to allow an approved mortgage or statutory charge or to enable a poll to be conducted for lift upgrading and other special upgrading works, as the purpose behind this amendment Bill, to me, they all point to the intention of the HDB wanting to be helpful, and I support that. I agree that upgrading has been and is generally on the radar screen for sometime now. Similarly, matters pertaining to leases, mortgages and the role of local banks are also very much in focus now. While I have no specific comments to make on those proposed amendments, except to call for a faster rate of lift upgrading, allow me, Mr Speaker, Sir, to urge the HDB to also look at the problem of those who want to downgrade. I realise that the HDB has been very understanding in facing the problems of those who need help in terms of rescheduling mortgages or in settlement of other financial dues. The recent economic downturn and its subsequent retrenchments and rising unemployment have made many, especially in the lower income brackets, to realistically review their aspirations and dreams about the level and quality of home-ownership. Many cases I met at the MPS, something I suspect must be true at other MPSs too, are seriously facing this problem of not being able to meet their obligations and do see downgrading as a way out. For those who had the hopes of making a profit from selling their flats have had to think again. Many, I suspect, are caught in this trap. They want to downgrade but there are not many three-room flats available as the HDB has stopped building new ones. Neither could they sell their present four or five-room flats without making a loss. Moreover, they would also need to put up cash upfront for their new purchases, something they would be hard put at. I do not know how serious this problem is but I fear it might be faced by many Singaporeans. Could the HDB, Sir, study this problem and see how best it could help the many home-owners who would like to or need to downgrade, but not capable of doing so either because of policy considerations or the market supply and demand situation? Could the HDB also review its existing policies that might make it difficult for those needing to do so? This should also be part of the HDB's endeavours to remain nimble and flexible in helping those in need. Sir, I support the Bill.

Mr Speaker, Sir, I rise to appeal to the Ministry of National Development, in view of the amendment Bill, to consider, in this time of slow economic recovery, when many Singaporeans are still facing difficulties in finding employment and many families are stretching on their savings, allowing for a second concessionary rate HDB loan for families who move laterally and downgrade their flats to a smaller flat due to forced circumstances, such as retrenchments, business failures, critical illnesses, death of breadwinners, divorce separations, imprisonment and family support. If these affected families are not able to enjoy this second concessionary loan rate from HDB, they will forever be in the financial web and stuck in this difficult financial position even if they downgrade. In general, these people downgrade to lessen their financial difficulty. As stated earlier by Mr Mah Bow Tan on bank origination of HDB bank rate loans in Parliament on 23rd July, concessionary loans are a key instrument to promote home-ownership. In such dire circumstances, if these families are not able to get the concessionary rate loans, they would even lose their ability to own a flat. Since we cannot tell banks not to foreclose for hardship cases, we should encourage these families to take responsibility and be more dependent on themselves. We should applaud their decisive choice. This is in line with Government's encouragement of prudence and responsibility in housing purchase. Secondly, most of the people in this group may be from the lower income. This would also cause another major problem as they may not qualify for the banks' strict income criteria assessment. So if they do not qualify, where can they turn to? Mr Speaker, Sir, I would like to appeal to the Ministry to evaluate these special cases individually. The HDB would be able to set relevant criteria for the evaluation of the eligibility for this concessionary rate loan to ensure that when these families move laterally or downgrade, they are truly in financial difficulties and, in these circumstances, truly eligible for the subsidised loan. One possibility to prevent abuse of the flexibility of consideration by HDB for this second concessionary loan is to cap the quantum for the second concessionary loan, possibly in relation to the previous outstanding loan amount of the previous flat. This action will definitely encourage the fundamental objective of responsible and prudent home-ownership amongst Singaporeans. The second area of concern is that although the proposed amendments will enhance the home-ownership scheme to remain relevant and injecting greater flexibility into the public housing market, I would suggest that MND and HDB do consider certain guidelines to preserve the residential nature of the housing estates, especially so in a high density and close proximity of a block of flats. We should not turn the residential blocks into hostels, especially for foreign workers and foreign students. MND and HDB must retain the final authority to cancel or reject subletting permission, especially so when nuisance and complaints are being made from neighbours. 4.15 pm

(In Mandarin): Mr Speaker, Sir, at present, about 86% of Singaporeans live in HDB flats. Among them, 96% have purchased their flats from HDB. Apparently, the Government's home ownership scheme has been well supported and is very successful. I think Singapore is the only country in the world where the housing needs of as much as 86% of the people are satisfied by public housing, with almost every family owning its own flat. This is a win-win situation for both the Government and the people. However, as in any other schemes, any changes to the housing scheme or any amendment to the law would, directly or indirectly, affect some of the people. On this amendment Bill, I would like to raise three points. First, on the change in granting of concessionary loan. Under the current rules, every qualified buyer is entitled to a concessionary loan offered by the HDB. However, under the amended rule, when an existing owner of a HDB flat wants to downgrade, eg, from a 5-room or 4-room flat to a 3-room flat, or from a 4-room flat to another 4-room flat, he will not be entitled to this concessionary loan. Of course, if they have the means, there is no problem. But for those who are facing financial difficulties, particularly in the past few years because of the economic recession, many people are retrenched or unemployed, and are unable to find jobs for a long period of time, they will have problem servicing their loan, and may have to resort to downgrading in order to make ends meet. Under the new rule, they will not be able to enjoy this concessionary loan from the HDB. I think this is something that we should carefully reconsider. Residents who have to downgrade from a bigger flat to a smaller flat owing to financial hardship will face double trouble if they are deprived of the entitlement to a concessionary loan rate. Another group that warrants special consideration is the senior citizens. In their younger days, they could have purchased a big flat so that they could live with their children and grandchildren. Now that the children have grown up, bought their own flats, and set up their own families, the old folks may find the flat too big for just the old couple who are left alone, all by themselves. They do not need to stay in such a big flat, and the logical thing is to downgrade to a smaller flat. But now, they are not entitled to the concessionary loan. In the circumstances, can we not review the applications on a case-by-case basis? If they were in financial difficulties, particularly those who were retrenched, or maybe those who were adjudicated bankrupt or had some special financial difficulties, can we not consider their cases on a case-by-case basis? As for the senior citizens, do we have enough studio apartments for the elderly? I think this is one area where the HDB needs to look into. Secondly, minimum occupancy period of resale flats. Under the present rules, you have to stay in the flat for more than 21/2 years before you can put it up for resale in the open market. With the present amendment, this minimum occupancy period is shortened to one year. The point is, since they have bought the flat from the open market with no subsidy from the Government, why should there be such a restriction? Can we not fully liberalise this rule and do away with this restriction, so that when they apply to the bank for a loan, they will be in a better position to bargain for better terms? Thirdly, subletting of flats. Those who bought the resale flats from the open market are allowed to sublet the flat after staying there for a certain period of time. I would like to ask the Minister how many units would qualify for this scheme under the present arrangement. Of course, the permission for subletting is a good policy. It will provide the prospective tenants with cheaper rental flats and, at the same time, allow the owners to earn some extra income. However, if there were too many of these units available for subletting, it would give rise to some problems. Just now, the Minister mentioned that such subletting would be subjected to strict rules. We would like to know whether there would be enough provisions in the rules to restrict the owners from subletting to an excessive number of foreign workers to the annoyance of their neighbours, or people who use the flats for illegal activities. This is something which we have to be very careful about. Each and every application for subletting should be carefully scrutinised before it is approved. Sir, I support the Bill.

Sir, thank you for allowing me to join in this debate. Several of my hon. colleagues of the House have spoken at length on the Bill. Let me add my support of the Bill for giving the HDB the flexibility to allow a wider use of HDB flats. This is timely as the nation emphasises the importance of creativity and innovativeness, the promotion of entrepreneurship and the encouragement of starting of new business. But in allowing the wider use of HDB flats beyond residential purposes, let us be mindful of the needs of neighbours and other residents. The Bill - ultimately, the Act - provides for the termination of the lease for non-authorised use. But what about lessees who use the flats for the intended purposes but are indifferent to the needs of residents and neighbours? Their activities may cause annoyance. But instead of doing something to reduce the annoyance, they hide behind the authority granted to them to use the flats. I hope that in granting them the right to the flat, the lessees are also made to undertake the responsibility not to disturb the neighbours. If they unreasonably choose to ignore the problems they cause to the neighbours and neighbourhood, the Board must have the right to withdraw the privileges granted to them. On that note, Sir, I support the Bill.

Sir, I rise to oppose the amendment. This amendment requires HDB flat buyers, who have used up their subsidised loan quota or who are not qualified for subsidies, to take market rate mortgage loan from banks rather than the HDB. Clause 6 of the Bill provides for banks to grant mortgage, and they would be able to take HDB flats from registered lessees and sell them to pay outstanding loans. The implication of this amendment is that HDB flats can now be seized and sold by bank mortgagees for default of mortgage loans. Although the reason for this change, as explained, is that lending money to flat buyers at market rate is not HDB's core business, my question is whether this entire move of making flat owners take loans from the banks is politically motivated. We all know how devastating it can be to evict families from the only roof they have over their heads. HDB, being a statutory board, is identified as a wing of the Government. If it has to evict families who have not kept up with their payments, it will show how uncaring and uncompassionate the Government is. In this current economic climate and uncertainty in the future employment market, we can expect that there will be retrenchments, unemployment and decreased business opportunities. More families will be unable to keep up with their loan payments. By shifting lending from the HDB to the banks, the banks will be the ones doing the eviction. In this way, the Government will not be seen as the bad guy, when, in reality, the Government is distancing itself from Singaporeans who are facing tougher times ahead. This, in Mandarin, is called chea tau sha len. Sir, I also wish to seek clarification on clause 2 of the Bill. Instead of the Minister, a "prescribed approving authority" will decide whether HDB land will be sold, exchanged, surrendered or leased. The Explanatory Statement says that the approving authority will be prescribed in the Rules. I wonder who is this powerful authority going to be; will it be more than one authority; and what is the reason for the change.

Sir, I would like to thank various Members for speaking in support of the Bill, and I will respond to Mr Low Thia Khiang later. First of all, Dr Teo Ho Pin has asked whether we can help those who either downgrade or move laterally and who are in financial difficulties because he believes that in this current situation, they may find it more difficult to get a bank loan instead of a loan from HDB. Several other Members have also spoken along the same lines - Mr Othman Haron Eusofe, Mdm Cynthia Phua, Mr Zainul Abidin and also Mr Ang Mong Seng. Let me, first of all, explain - I think it was Mr Ang Mong Seng who said that this is a new policy - that this is not a new policy. This is an existing policy, and what this amendment Bill seeks to do is to require such lessees, instead of getting a market rate loan from HDB, to now get it from the bank. This is just for clarification. But back to the reason why we have not allowed these people who want to either downgrade or to move laterally from taking a concessionary loan and instead to take a market rate loan. First of all, let me, as I said in my Second Reading speech, repeat once again that the Government is committed to ensuring that public housing in Singapore remains affordable to its citizens. As the public housing authority, HDB's role is to ensure that all Singaporeans will be able to afford at least the first HDB flat. This is the reason why HDB sells new flats at subsidised prices and also with subsidised loans at concessionary interest rates, and HDB will continue to do so. If they do not wish to buy a subsidised new flat, they can also buy a resale flat and we give them a CPF housing grant. For the first loan, HDB will provide a subsidised interest rate for first-timers. In addition to that, to encourage social mobility, to encourage people to move up, to allow those who have outgrown their flats - they may have bought a 3-room flat many years ago; their families have grown up; they want to have more rooms for their children - or they just simply want to have a bigger flat, HDB provides a second concessionary loan to those who have already bought their first subsidised flat. So, from the perspective of the need for housing, the need to have a roof over their heads, there is really no strong reason for an HDB flat owner to move laterally; in other words, move from one flat to another flat of the same size, or for him to downgrade. And those who decide to do so should consider carefully when they do so. They should act prudently and they should decide whether they have sufficient funds. Indeed they would have sufficient funds in most cases arising from the sale of the existing flat. Invariably, most of them who sell their first flat, which is a subsidised flat, would be able to enjoy quite a significant capital gain. They can then use this capital gain to finance the purchase of the second flat, which is either of the same size or smaller. But having said all these, we do know that there are people who downgrade because of financial difficulties, and these are the cases which, I think, Members in this House come across during their meet-the-people sessions. These are the cases which Members who have spoken just now are referring to - people who have difficulties in servicing their mortgage either because of retrenchment, prolonged illness, demise of their main breadwinner, and so on and so forth. Therefore, because of this, they have no choice but to downgrade. So we recognise that there are such cases which downgrade due to financial difficulties and I would like to assure Members of the House that HDB will consider such cases sympathetically as and when they come to the attention of the HDB. Dr Teo also mentioned the cases of those who either move laterally or downgrade in order to stay near their parents. I believe he asked whether such cases can also be allowed to enjoy the second concessionary loan. Let me inform him that there are actually quite a few schemes in place to encourage people to move nearer to their families. There are higher CPF housing grants for resale flats, for those who wish to move nearer to their families. There is a married children priority scheme for purchase of new flats in the mature estates. And all these schemes have been fairly successful. The number of families living nearby or in the same estate has actually gone up. So, I do not think there is any special need for another scheme to promote family living. But, nevertheless, we will keep in mind his suggestion for another day. Dr Teo also proposed some restrictions on rental flats. If somebody wishes to sublet his flat, he is concerned that, without any restriction, this may be abused. It can either be let to foreign workers or to those who are not so socially responsible and so on. I believe several other Members have also made the same point. Let me assure them that this is a concern of the HDB and, in fact, this is the reason why even today, HDB allows subletting of the whole flat under special circumstances. There is already in place a set of guidelines to govern such subletting. In other words, you cannot just freely sublet to any Tom, Dick or Harry. You have to abide by such guidelines and these guidelines and conditions for subletting will also be applied when we relax the subletting of HDB flats. In the first place, they will have to seek prior approval from HDB before they sublet. Lessees will be held responsible for any infringement that their sub-tenants commit. And if there are such infringements, then, obviously, the HDB will be able to take action. HDB, for this particular purpose, will also conduct half-yearly flat inspections for approved subletting cases. This is to make sure that the situation that Dr Teo talked about does not actually arise in our HDB estates, where you have got 20 foreign workers living in one HDB flat, and so on. So there will be guidelines. There will be regular inspections to make sure that infringements do not take place. As a final safeguard, what HDB will do is to have regular dialogues with the grassroots leaders, advisers and Members of Parliament to get feedback to see whether the scheme is working well, to see whether there are indeed disruptions to the social environment, disamenities, people who are anti-social, and so on and so forth. But I do not think we should jump to conclusion that people who sublet HDB flats will automatically be anti-social. That is probably not being fair to those who may wish to sublet the flats. Let me just say that the subletting will actually allow quite a large number of people who may not want to buy HDB flats - the young couples, people who are in financial difficulties, who may not wish to commit - to also sublet such flats. So, I do not think we should straightaway jump to conclusion that it is only foreign workers who are subletting the flats. Dr Teo also commented on the possibility of lessees not understanding clearly the financial implications of banks taking the first charge, if they refinance the loans. I think this is a legitimate concern. But, having said that, I think we should also advise those who wish to refinance their existing loans with banks, all those who are going to go to the banks for a loan in the first place, to be aware and careful, to be financially prudent, and to do their sums before they jump in. Indeed, I dare say that the banks themselves, before they lend, would also have to do their homework, do due diligence work, and make sure that the people that they are lending to are creditworthy. On both counts, both parties, the lender as well as the borrower, will have to do their homework. And, I believe, this is currently being done when you go to a bank to borrow for purchase of a private property. They are not just going to lend it to you without asking any questions. Similarly, I expect that the banks will exercise similar prudence, credit assessments and judgement when they lend to HDB flat owners. HDB flat owners will also have to do their sums. So I would be loath to get HDB to do the financial counselling. It is not HDB's job to do financial counselling for those who are going to the banks. If HDB were to do so, one could argue why are we having bank origination in the first place. Because the whole idea of bank origination is for HDB not to be in the business of providing market rate loans. It is not their job. There are three minor points that Dr Teo raised. One is on clause 2 of the Bill - I think this is also what Mr Low Thia Khiang asked - why is it that we are changing the Act. Mr Low detects some monkey business somewhere, and this is the reason why he raised it. But I would like to disabuse him. There is no conspiracy here. It is quite a simple matter. What happened is that the Government Instruction Manual has changed whereby there are new authority limits. In the revised Government Instruction Manual, land sales below $10 million will no longer need ministerial approval. It goes to a Tenders Board. So the approving authority, in this case, for land sales below $10 million will be the Tenders Board. This Tenders Board will comprise the senior officials in the Ministry of Finance and the relevant Ministries, whichever Ministry is responsible for that sale. Land sales above $10 million will now go to a Ministerial Committee, and this Ministerial Committee will consist of Ministers from the Finance Ministry, the National Development Ministry and the relevant Ministry where that sale is taking place. So, basically, this is an administrative change in the Act which recognises the changes in the Government Instruction Manual. Clause 11 - what is "Special Upgrading Works"? This is what Dr Teo asked. Special upgrading works currently refer to the Lift Upgrading Programme. This is what we have at the moment. When we carry out the Lift Upgrading Programme, we do so under the Housing and Development Act. We carry out a poll for Lift Upgrading Programme under the Housing and Development Act, and we call this Special Upgrading Works. But, in future, we may expand the scope of Special Upgrading Works to include things like, for example, a pneumatic refuse collection system, if we do decide to implement that. There have been trials going on. If we wanted to do that, we could include that for the upgrading precinct but classify it as Special Upgrading Works. I just use this as an example. I am not suggesting that we are going to do this. But if we do decide to, we will obviously have to have further discussion on this. The last point that Dr Teo mentioned was on the Technopreneur Home Office Scheme. He asked whether we can expand this to other small businesses. Let me just say that at the moment, we are already allowing some businesses to be conducted within the HDB flat, businesses which do not pose any nuisance. Examples that come to mind include giving tuition, people who work from home, people who do small scale work, say, sewing, tailoring, that kind of business. But we are actually looking at broadening the scope of this to see whether we can, in support of the drive to encourage entrepreneurship, allow some other businesses to be allowed in HDB flats, provided that they do not create nuisance to their neighbours and they do not create disamenities in the general surroundings. But this is under discussion with the various relevant Ministries. So far, we have not come to any conclusion yet. But, yes, such discussions are ongoing. I believe I have answered Dr Teo's points. Mr Othman Haron Eusofe touched on two points. One was on financial hardship which, I believe, I have answered. He also asked about subletting, extending to those who are in subsidised flats. The general principle really is, in this particular case, that for those who are not getting any subsidy from the Government, whether in the price of the flats or in the loan, we are prepared to extend this concession to them. However, in the case of subsidised flats, I think there is a huge subsidy element involved. At this point in time, I do not think we should be extending such a concession to them. Encik Zainul talked about helping the downgraders. I think I have also addressed that point. Mdm Cynthia Phua talked about second concession loan for downgraders. I have also addressed that. She also asked about preserving the residential nature of housing estates. I believe I have also addressed that point. Mr Ang Mong Seng asked why not just lift the MOP (minimum occupation period) completely. Why reduce it from two-and-a-half years to one year? The reason is very simple. The MOP for HDB flats is to ensure that public housing is meant for owner-occupation. It is not for speculation. It is not for investment. So the owner-occupation principle is very important. When you buy a HDB flat, you must live in it. It is not for buying and then renting out. That is the reason why we want to keep a MOP but we wanted to reduce it in order to create greater flexibility. When we relax the rules, when I said we want to treat HDB flats like private properties, I did not mean totally, completely like private properties. There is still a certain principle involved in public housing and that principle is owner occupation, which we would like to preserve. Secondly, we also want to keep the MOP of one year because, although it is a short period, it helps us to signal that HDB flats are not bought for speculation or for investment. And when the property market turns up, when trading of HDB flats comes back again, which was quite prevalent at one stage, we want to make sure that the minimum occupation period is in place to prevent such speculation. Mr Ang Mong Seng asked how many units are allowed to be sublet and will it disrupt the rental market. I think that is the thrust of his question. Based on HDB's statistics, for those who are either totally non-subsidised or those who can actually re-finance, there is something like 15,000 HDB flats which are eligible for subletting with the 10-year rule. Having said that, I think not all of them will be subletting their flats straightaway. In the first place, they would have to find another place to live. And, secondly, I do not think that HDB lessees would just want to sublet their flats without careful consideration. So although the maximum number is 15,000, I dare say that the final number that will actually be released out into the rental market will be far less than that. So I do not see that there will be a major impact on the rental market. Finally, I would like to respond to Mr Low Thia Khiang. His point is that this whole move is politically motivated that, as a result of this, Government will now wash its hands off market rate loans, so that we do not have to evict tenants who foreclose. Let me inform Mr Low that the number of evictions from HDB flats of tenants who do not pay up their loans, or who default on their loans, is extremely small. So that has never been the motivation for this move. It is not as if there are many HDB tenants who are defaulting on their loans and HDB is now deciding to throw this problem on to the banks. That has never been the intention, I assure Members of this House. HDB's role is to make sure that there is sufficient housing for our people. It is affordable, good quality housing and we want our people to stay in the flats. What is the motivation then, if it is not political? It is very simple. We are in the process of reviewing the role of HDB. We know what HDB should do. We want HDB to concentrate on public housing. We want HDB to concentrate on building good public housing. We want HDB to concentrate on managing, on making sure that towns are properly built, and so on. HDB is not a bank. It is not a financial institution. There are many financial institutions, over 100 at the last count, who are better placed to provide market rate loans. These are market rate loans. These are not concessionary rate loans. So for market rate loans which are provided at market rates, let us leave it to the banks. HDB should concentrate on doing what it does best - building good quality, affordable public housing. That is the motivation for this move. It has got nothing to do with what Mr Low mentioned just now. On clause 2, I think I have already explained to him what the changes are about. Mr Speaker, Sir, I believe I have answered all the questions.

Mr Speaker, Sir, may I seek clarification from the Minister? Sir, I understand that, currently, if the lessee of a HDB flat is evicted by HDB due to financial difficulty, that is, unable to pay the loan, normally on compassionate ground, HDB will offer such a lessee a rental flat. I would like to ask the Minister, with the change, when the bank evicts the lessee of a HDB flat, will HDB come in and help? Otherwise, where are they going to live?

Sir, in the first place, when somebody buys a property to live in - and I am talking again, and I remind the House, that this is not the first basic flat, we are talking about the second or even the third flat - when he decides to purchase that second, third, or whatever flat, he has to do so with his eyes wide open, knowing exactly what he is doing, whether he can afford the purchase price, whether he can afford the downpayment, whether he can afford the repayment, the instalment payment, and so on. So I do not expect the Government to stand guarantor to every person who buys a flat using bank loans and say that if you default, if you cannot afford to pay your instalments, do not worry, we will give you a rental flat. There is no blanket guarantee. Of course, as in all cases which come to HDB, when MPs put up appeals on behalf of their constituents, when there is a genuine case of hardship, if the family has really fallen on hard times, and we look at it, we find that there is a case for special consideration, we will provide special consideration. And that is the rule of thumb. But to expect HDB to have a blanket ruling and say, "Don't worry, we are going to provide you with a rental flat if you default on your loan", I do not think that is a wise thing to do. And it creates a moral hazard. That is not something that we would like to see. What we want to do is to explain to our people, when you make a commitment like this for public housing, or for private housing, when you go to a bank for a loan, please make sure you know what you are doing and do your sums.

Sir, the Minister says the number of eviction of lessees due to default of payments is very small. Can he please tell us how many of such evictions were there in 2001 and up to the 10th month of this year?

Sir, I do not have the exact numbers with me. But I can recall that there were less than 10.

Clarification, Sir. I understand one of the reasons why there was not much of default is because there were some Government schemes in place, like deferred loan, etc. Will the Minister expect, in the event of an economic downturn like this, the banks would, like the Government, provide such services to help people who are unable to service their loans to tide over the period? And what would the Government advise the banks?

Sir, as I said in my Second Reading speech, when somebody goes to the bank for a loan, he would have to abide by the bank's rules of foreclosure, he would have to abide by the bank's rules on credit assessment. So, the short answer to him is that all borrowers would have to abide by the rules that are laid down by the lender. And it is no different for HDB's case, it is no different for the bank's case. In the case of HDB, when they come to HDB to borrow, HDB has to do a credit assessment. If they do not comply with those conditions, and they default on their loans, HDB can evict. But, as Mr Low rightly pointed out, HDB is more forbearing, more forgiving. HDB has various schemes in place to help borrowers, such as stretching of repayments, and so on. We do not expect the banks to do so. Neither should we. When they go to the bank for a loan, they have got to do their sums. And when they go to the banks currently, they may find that the banks may actually be more flexible than HDB. They may find that the banks may offer them a lower interest rate than HDB. They may find that the banks are willing to give them a longer period of loan. I understand that some banks will allow 30 years or more. HDB has a maximum, which is less than that. All this will have to be factored by the borrower. Do you want to go to the bank to borrow or not? Do you want to buy that flat in the first place or not? These are decisions which individuals would have to make. We are not talking about facilitating the purchase of the first flat. This is what I explained right from the outset. The first timers who want to purchase their first flat go to HDB, and it will provide them the subsidised loan, provide them with a subsidised flat and they will have their first flat. But, now, they are looking for the second, or third flat, or they are PRs, private property owners, or high income earners. These are the people who need to get a market rate loan. These are the ones who have to go to the bank. Is Mr Low saying that these people would also need to have a guarantee that the Government will help them if they default on their bank loans? Surely not. So we are really talking about those people who do not need a concessionary loan, who already are required to get a market rate loan from HDB. These are the ones who will have to go to the bank to get a loan. And these are the people who should be in a good position to judge whether they would like to get a loan at that price or not. In other words, you have to make your decision based on your own situation. You have to do your sums before you get the loan. We are not talking about those who are buying HDB flats for the first time. For those people, nothing has changed.

I just want to make a clarification. In fact, I am asking for consideration to be given to people who have bought subsidised flats to rent out the whole flat, and I am really referring to the hardship cases. They have bought the subsidised flats and they have stayed there for many years. Sometimes, they want to sell it, but the market conditions do not allow them to sell. So why do you not consider allowing them to monetise the flat by renting it out for a while and get an income? In the meantime, they can stay with their children, or downgrade and rent a smaller flat. So I am just asking that the Minister consider the appeals on a case-by-case basis.

Mr Speaker, Sir, there are already certain schemes in place for the cases that Mr Othman mentioned earlier. In other words, if you are staying in a subsidised flat and you have financial difficulties, we already have various schemes in place, ranging from deferment of your instalment payments, reduced repayment schemes, and so on and so forth. Quite a few of those who are in financial difficulties and come to HDB for financial assistance have been put on these schemes. So far, I believe these have been well received. So, I do not think there is a need for us to expand this scheme for subletting.

Mr Speaker, Sir, can the Minister clarify and explain how the individual third-time flat buyer can factor in factors like economic recession, retrenchments and sudden job loss in the planning process? In his negotiations to buy a property and take a loan from the bank, he cannot factor in all these factors of retrenchments and job loss.

Mr Speaker, Sir, I thought this is what happens all the time. This is what we all do. We make our decisions based on what we believe is the right thing to do. Surely, the hon. Member does not expect the Government to tell him what he should do, whether he should buy a flat or not, what is going to happen to the economy. All of us have to make up our own minds. This is what responsibility is all about, surely.

Sir, I wish to clarify. I am talking about people who need to downgrade because of financial problems, not talking about people with private properties. The other question is: is the Minister advising Singaporeans that they should not buy more than one flat, because they would have to take a bank loan, they may be in trouble? Is that what he is talking about?

I do not think I said anything of that sort. Basically, what I am saying is that if you buy your second or third HDB flat, and you cannot get a market rate loan from HDB, you go to the bank. And when you go to the bank, the bank will ask you questions, you will have to answer those questions. Then you have to decide whether you should proceed or not. Can you afford it or not? And if the answer is yes, you can afford it, go ahead. If the answer is no, you do not think you can afford it, you are worried about the future, you are worried about your job, you are not sure, just keep in view. It is a bit strange, because here we are talking in this House, and Members have said so, that we should give Singaporeans more responsibility, we should not be a nanny state, we should allow them to make up their own minds. A simple thing like this where you have to decide whether you should buy a flat and how much you should pay, these are things which every responsible person should be able to decide and make up his mind for himself. Do you expect the Government to decide for them?

Clarification, Sir. Does the Minister agree that, in fact, by imposing a different risk between HDB and bank loans at market rates, when going to the bank, the person is likely to lose the whole flat as well, that there is a risk factor? The Government is actually helping Singaporeans to decide that they better not buy a second or a third flat by taking a loan from the bank.

The hon. Member talks about risks. I thought we were saying that we should let people take some risks. Allow them to take some risks but give them the responsibility. However, at the same time, give them some more flexibility, some more freedom. This is exactly what we are doing. Of course, there is risk. In every decision, there is a risk involved. In this particular case, there is a risk too. But if you do not want to take the risk, then what happens? Ms Braema Mathiaparanam (Nominated Member) rose.

Do you have a different line of questioning?

No, it is clarification.

Yes.

Sir, for a third-time applicant, in terms of joint applications where couples are concerned - a different type of risk - the marriage goes bust, will there be any kind of consideration here, please?

I did not realise that marriage is a risk! But I am not an expert on that, so I better keep quiet. What was your question?

When a marriage dissolves and, instead of a joint application, they now become two single applicants, and they could have upgraded, so it becomes a third-time application, but it is a single parent. Could there be any concessions, please, or does it go back to the same premise of the bank loan?

Generally, as a rule, the answer is that they would be considered as third-timers. But, the HDB has so many rules and regulations, you always tend to have somebody who runs afoul of those rules in some way or other. We always consider all cases very carefully. And if there is a good case made out, then special consideration can be given, but not as a general rule.

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 Mah Bow Tan]. Bill considered in Committee.

Clauses 1 to 12 inclusive ordered to stand part of the Bill. Clause 13 -

The hon. Member for Ang Mo Kio GRC has given notice of an amendment to this clause. The notice of amendment has been circulated to hon. Members. As inadequate notice has been given of this amendment, it is subject to the consent of the Chair and the general assent of Members present. I give my consent. Is it the pleasure of hon. Members that the amendment be moved? Hon. Members indicated assent.

Sir, I beg to move, On page 5, line 29, to delete the word "change" and insert "charge". The words which were originally proposed to be added, "change or other encumbrance", follow immediately the term "subsisting mortgage". When all three terms are taken together, "subsisting mortgage", "change or other encumbrance", the word "change" seems to be out of character from the other two terms which are legal in nature. I think there is a typographical error, in that instead of the word "change", it should be "charge". All three terms share a common legal character. I believe that this is the intent of the Bill.

Sir, I thank the hon. Member for his amendment. He has got very sharp eyes. It is correct. It is a typographical error and the word should be "charge" instead of "change". Clause 13, as amended, ordered to stand part of the Bill. Clauses 14 and 15 ordered to stand part of the Bill. Bill reported with an amendment; read a Third time and passed.

Order for Second Reading read.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." This Bill seeks to make amendments to the Smoking (Control of Advertisements and Sale of Tobacco) Act (Chapter 309 of the 1994 Revised Edition). Background Sir, the fact that smoking is addictive and that it causes lung cancer, heart disease and other fatal diseases in smokers is not disputed, not even by the cigarette manufacturers. It is estimated that 50% of long-term smokers will die prematurely in their middle age without reaching the life expectancy of 76 years, a loss of about 22 years of life. Yet, new smokers, especially the youth, are attracted to the habit and become addicted. The World Health Organisation (WHO) estimates that about half of those who experiment with smoking during their adolescence, will become regular smokers.

5.10 pm The Singapore Youth Tobacco Survey in 2000 showed that in Singapore, 11% of the respondents aged 13-17 had smoked on at least one day in the preceding month, while 4% of these youths smoked at least 20 days in the preceding month. Smoking rates in Singapore had dropped to a low of 14% in 2001, from 18% in 1992, putting Singapore among the countries with the lowest smoking rates in the world. Nonetheless, the National Smoking Control Programme continues to actively work towards a smoke-free lifestyle among all Singaporeans. The basic tenet of the National Smoking Control Programme is a multi-pronged approach to control smoking. This includes public education, community involvement, legislation, enforcement, fiscal measures, and the provision of smoking cessation services. In order to support this approach, the legislation on smoking is reviewed and updated regularly so as to keep up with changes in social trends as well as to adopt the best practices from other countries. The Smoking (Control of Advertisements and Sale of Tobacco) (Amendment) Bill therefore comprises a total of seven amendments to the Act. Mr Speaker, Sir, let me now highlight the major new provisions that are being introduced in this Bill. The first change is to prohibit the sale of cigarette packs containing fewer than 20 sticks of cigarettes. The rationale for prohibiting the sale of cigarette packs containing fewer than 20 sticks of cigarettes is to discourage the youths from starting to smoke. Studies have shown that most smokers start smoking during adolescence. Many start by experimenting with one or a few sticks of cigarettes before they start smoking regularly. Cigarette packs containing less than 20 cigarettes are more affordable to the young smokers as they cost less. For instance, the average cost of a pack of 10 cigarettes is $3.50, about half the price of a pack of 20 cigarettes, which costs about $6.

50. The smaller packs can also be concealed more easily from teachers and parents. According to a WHO publication, cigarette packs containing less than 20 sticks are, in fact, a marketing strategy by the tobacco industry to specifically target young smokers, who are experimenting with cigarettes and have less purchasing power. Australia, Canada, certain states in the United States of America and Thailand have also banned the sale of small packs with fewer than 20 cigarettes to discourage experimentation by young people. The second change is to increase the fine quantum of underaged smoking offences from $50 and $100 for the first and subsequent offences, to a flat $300 ceiling. In spite of the ongoing national smoking control efforts, the trend of smoking among youths aged 18 years and below, is still a cause for concern. From a legislative perspective, the current system of penalties for underaged smokers does not pose a sufficient deterrent effect and is also administratively cumbersome. Under section 11(1) of the Act, an underaged youth caught smoking, chewing, buying or possessing any tobacco product is liable on conviction to a fine not exceeding $50, and in the case of a second or subsequent conviction, to a fine not exceeding $100. The existing amount of fines is not sufficient to deter the majority of youth offenders who can generally afford the amounts imposed. The revision of the current penalty towards a flat $300 quantum would thus have a sufficient deterrent effect on the underaged youth. The third change is to include an enabling clause to provide for the imposition of conditions when compounding offences. Currently, underaged youths caught smoking are not required to fulfill any conditions other than to face a fine of $50 or $100 upon conviction. This enabling clause will allow conditions to be imposed when compounding offences under the Act. For example, underaged smoking offenders and their parents or guardians could be conditionally required to attend smoking cessation counselling in order to have their offences compounded. Recognising that peer pressure is the main reason why many youths pick up smoking, this measure provides an excellent opportunity to communicate to both the youths and their parents not only the dangers of smoking, but also equip the youths with life skills to enable them to quit and stay smoke-free. Our survey shows that almost half of our young smokers have either one or both parents who smoke. The compulsory participation of parents in the counselling process will also enable the counsellors to motivate these parents to quit smoking and serve as positive role models for their children. This example illustrates how the enabling clause allows both enforcement and education to work hand in hand towards combating smoking among the young. The fourth change is to include the listing of other constituents in addition to tar and nicotine, in cigarettes imported or sold in Singapore. The current Act prescribes the maximum allowable limits for tar and nicotine contained in the emissions of cigarettes imported and sold in Singapore. However, in addition to tar and nicotine, cigarettes contain many other harmful and cancer-causing constituents. One such example is carbon monoxide, normally found in car exhaust fumes. Currently, Canada's legislation requires cigarette packs to list the amount of tar, nicotine, carbon monoxide, benzene, hydrogen cyanide and formaldehyde found in cigarette emissions. The Act will be amended to require the listing and its allowable limits of constituents other than tar and nicotine. This measure serves to inform consumers about the poisonous and toxic substances that are found in tobacco products and serves as a deterrent to some people to smoke. The fifth change is to extend the current licensing of tobacco retailers to include importers and distributors of tobacco products. At present, the licensing of tobacco retailers provides a system of monitoring and regulation of the sales of tobacco products at the retail end. However, there remain certain aspects of product compliance that may not be within the direct influence of the retailer. Examples of such product compliance include the tar and nicotine limits of cigarettes and mandatory health warning labelling requirements of tobacco products. Instead, greater accountability for ensuring such compliance with the licensing authority's requirements should be placed on the industry source rather than the small retail shops. This would ensure, for example, that the Health Warning Labelling regulations are properly implemented at the distribution stage before the products are supplied to retailers. In addition, this will also help to tighten the distribution of tobacco products to only licensed retailers. In order to be consistent with the approach that regulation of tobacco should begin at the source of the tobacco supply chain, the current licensing of tobacco retailers will be extended to include importers and distributors of tobacco products. In this manner, the source of the tobacco trade can be better monitored and regulated. The sixth change is to allow the serving of notice to attend Court, to be done by other means. The current Act does not have specific provisions on the serving of summonses and notices. In the absence of such provisions, the Health Sciences Authority has to rely on Chapter V of the Criminal Procedure Code on the serving of such notices. This provision requires that such notices be delivered in person by an authorised officer, a time consuming and resource intensive method. In comparison, the Housing and Development Board has the option to issue notices via registered post, as provided for in the Housing and Development Act. A similar provision will be incorporated into the Act in order to allow the serving of notices to be made by other more efficient means such as the method of registered post. The final change is to refine the powers of investigation for authorised officers under the Act. In the course of investigating offences under the Act, the investigating officer authorised by the Health Sciences Authority may be required to obtain statements from persons involved in the investigation. Similar to the option available to the National Environment Agency, such powers of investigation are provided for in the Environmental Public Health Act. A similar provision will be made in the Act to facilitate the investigations of offences under the Act by the Health Sciences Authority. Mdm Deputy Speaker, the Ministry of Health believes that a multi-pronged approach is needed to encourage non-smokers to stay smoke-free and smokers to give up the smoking habit. The amendments to the Act will complement the existing strategies, to ensure that the legislative measures remain relevant to the social climate and on par with the best practices from other countries. Madam, I beg to move. Question proposed.

Mdm Deputy Speaker, I speak in support of the Smoking (Control of Advertisements and Sale of Tobacco) (Amendment) Bill. According to the World Health Organisation, smoking kills three and a half million people worldwide every year and this works out to be about 10,000 deaths each day. Smoking can cause cancer, heart disease and stroke. Seven Singaporeans die every day from smoking-related diseases and about 15% of the population still smoke daily. Cigarette smoking has been identified as the single most avoidable cause of death. It is common knowledge that smoking kills, but yet, the size of the hole it burns in the pockets of smokers and non-smokers alike remains huge. In 1999, $871 million went up in smoke with 3.23 billion cigarettes consumed. A smoker with a daily habit of 20 sticks will end up paying $68,000 over 30 years, and this is not considering the potential medical costs needed for smoking-induced related diseases. In light of this, measures to further reduce the smoking habit are therefore most timely and welcome. Non-smokers, children in particular, also suffer the ill effects from cigarette smoke. Therefore, smoking in public areas that affects non-smokers should be further expanded to protect the non-smokers. Madam, I would like to support the call to ban smoking at bus-stops, as commuters have no choice but to wait around for their buses to arrive. There are many Western countries with Anti-smoking Activists Groups; the one in America is especially active in their fight of tobacco use especially amongst their youth and in lobbying tobacco companies to support community and sports programmes for their youth. There is no such Anti-smoking Activists Group now in Singapore and the initiation of such a group should be encouraged by the Ministry of Health. It is likely that larger business corporations, especially the tobacco companies, do not contribute as much to our community and sports programmes because we do not have such an Anti-smoking Activists Group. Madam, I believe that these companies should be the biggest donors to sports promotion programmes in aid of our youth and anti-cancer movements. This is especially so when the young people are their biggest and growing customer base and when cancer is the leading cause of death and the third leading cause of hospitalisation in Singapore. An Anti-smoking Activists Group can champion this and ameliorate the rising incidence of cancers - lung cancer especially. Amendment to clause 11 of this Bill aims to ban the sale of smaller packs containing fewer than 20 sticks of cigarettes to make the habit more expensive to pick up or sustain. This is targetting especially the young people who presumably have less money to spend. If they see people around them smoking and if cigarettes are cheap and readily available to them, the tendency to smoke would be higher. A recent study in the British Medical Journal found that even one puff for those aged 12 to 13 could turn them into addicts because their brains are still at the developmental stage and the younger they start, the more likely the habits are going to stay with them. However, the argument against bigger-pack cigarettes is that the young smokers may encourage and persuade others to share and split the cost, thereby expanding the number of smokers. Bigger packs also do not help those who are trying to quit or to reduce smoking in terms of cost and in terms of temptation with a pack of 20 compared to a pack of 10. Legislation must result in the desired outcomes and getting the public better informed on regulations and stricter enforcement of the rules would be necessary here. Shopkeepers selling individual cigarettes claiming ignorance and selling cigarettes to those below 18 must be firmly penalised. I would like to support the call for new measures to scare young smokers off the habit with gory pictures. Section 16 of the present Smoking (Control of Advertisements and Sale of Tobacco) Act provides for the implementation of labelling. Will the Ministry of Health draw up an amendment to the Labelling Regulation to impose requirement on the printing of gory pictures portraying health hazard? Gory pictures may work at first but it is likely, Madam, that people become immune to the same pictures after sometime. Hence, to be more effective, these gory pictures should be changed regularly. It will be good if the pictures depict the different diseases caused by smoking: consider, for example, pictures of blackened lungs, cancerous lung growths, bloodied brains, brain tumours, fat-choked arteries, dead heart muscles, rotting teeth and mouth diseases. This way, not only do we get the scaring effect, we also create more public awareness on the side effects of smoking. About 11% of teenagers from Secondary 1 through to Secondary 4 light up at least once a month, according to a survey done a couple of years ago. It seems that peer pressure is an important influencing factor. The Ministry of Health, in partnership with the schools, should take increased measures to address this. The anti-smoking message should be innovative and interesting lest the students take them for granted. The Health Promotion Board can step up efforts to empower our young people with life skills to make sensible health and lifestyle choices. Madam, many people do not fathom the dangers of smoking and, therefore, there should be more public education on the various diseases caused by smoking. Some schools, supported by the Health Promotion Board, have started anti-smoking clinics. I would like to see all secondary schools having such clinics where students train to spread the smoke-free message through a special peer-leader training programme, to take lead in the school's anti-smoking efforts and to offer peer counselling. On the fact that female smokers have increased two percentage points to eight percent, the recent report by Canadian scientists that women who start smoking when they are teenagers are 70% more likely to develop breast cancer than non-smokers should be publicised. The prevalence and increasing incidence of smoking in teenagers is most disturbing. Mdm Deputy Speaker, we must do more to help this group. Many people smoke because their environment influences them. They are much more likely to smoke if there are smokers surrounding them, or if their favourite film stars smoke. Most teen smokers think smoking makes them look cool. Therefore, steps must be taken to project a "smoke-free" lifestyle as cool and socially desirable. Teenage idols and celebrities should be roped in more to promote this message. Madam, may I ask the Ministry of Health to consider subsidising nicotine-free pills like the new drug called Zyban, nicotine patches and a variety of other devices that help smokers quit the smoking habit? Such products should be given free to school children to help them quit smoking. Britain and some European countries supplied the new drug, Zyban, since the year 2000 and their Departments of Health said that the money was well-spent because the drug was particularly effective. May I urge the Ministry of Health to study their experience promptly in order to do likewise in Singapore. 5.30 pm

Mdm Deputy Speaker, I rise to speak both as a Member of Parliament and a concerned mother of young children in view of the troubling statistics among the youths on smoking. While it is commendable that Singapore has one of the lowest smoking rates in the world, with the national smoking rate dropping from 15% in 1998 to 14% in 2001, smoking among the young between the age groups of 18 and 24 years has held steady at 16% between 1998 and 2001, despite an aggressive campaign against smoking. This is in contrast to the declines in rates for those aged between 25 and 44 years (from 15% to 14%) and those aged between 45 and 64 years (from 15% to 12%). The results of a school-based youth tobacco survey carried out in 2000 are even more disturbing. The survey found that one in four students had tried smoking before, and one in 10 had smoked at least one day in the past month, even though they are prohibited by law from buying as well as smoking cigarettes as they are under 18 years old. Although many of the 26% respondents who had tried smoking may have done so out of curiosity, seasoned anti-smoking campaigners will confirm that, in many instances, this is how the habit is initiated. In 1993, the then Minister for Health, Mr Yeo Cheow Tong, had noted that about half of the smokers had taken up the habit before the age of 18 years old. In fact, a grassroots volunteer of my constituency, who is a smoker, told me that most of his smoking friends had picked up the habit when they were young. He himself had picked up the habit when he was still in school. He further noted that he had observed an increase in the number of young smokers and he himself was worried for his two young sons. It is worthwhile to note that even he, who is a smoker, is now worried for his young sons whom he fears will take up the habit. In July 2002, in response to a question posed by my fellow Parliamentarian, Mdm Halimah Yacob, the Minister of State for Health, Dr Balaji Sadasivan, had reported that a total of 131 retailers had been caught selling or providing tobacco products to those aged 18 years or under since 1993. This works out to an average of some 14-15 cases per year over a nine-year period, which, as Mdm Halimah had noted, and I concur, is very small. In this regard, I would like to ask the Minister how many youths aged below 18 years have been caught for smoking, buying and/or possessing cigarettes since the Smoking (Control of Advertisements and Sale of Tobacco) Act came into force in 1993. If the numbers have been increasing over the years, what punishments were meted out to the offenders? Additionally, what proportion of these offenders are repeat offenders? Madam, I would further like to ask the Minister what mechanisms have been put in place to allow for effective enforcement of the law to prevent the sale of cigarettes to those aged below 18 years as well as the purchase, possession and/or use of cigarettes by this group. I would like to urge for greater vigilance in the enforcement of the law, as this would surely serve as one of the more effective deterrents to our young against lighting up. The neighbourhood police could work with the RCs and the schools in order to be more effective in locating retailers who contravene the Act as well as in flushing out underaged smokers. In some of my block visits, residents have informed me that they have seen students in school uniform smoking at staircases and common corridors on the top floors of HDB blocks where there is very little pedestrian traffic. We have, of course, fed this back to the police and the schools concerned. Regular policing of such areas as well as stalls that may be selling cigarettes to underaged smokers would help alleviate the problem. Madam, I note that the Bill seeks to further hinder the young from smoking by banning the sale of cigarette packs with less than 20 cigarettes, as well as by increasing the fine payable by those aged below 18 years who are caught buying, possessing and/or smoking cigarettes to $300 for any offence, up from $50 to a maximum of $100 in the existing Act. Feedback from some members of the public regarding the sale of larger packs to make smoking more expensive to pick up and sustain, particularly amongst the young, is that this may not be effective, as the young could simply share it with their friends or be enticed to smoke even more, whilst others may simply be indifferent to the higher price of a larger pack. Nonetheless, the Health Promotion Board had noted that New Zealand had experienced some success in deterring young smokers when it adopted a similar measure. It is further noted that according to a World Health Organisation study on smoking behaviour, first-time buyers usually try smaller packs initially. Although the effectiveness of this measure to thwart the young from smoking may be minimal, I would still support this move. This is because any measure that can further discourage the young from lighting up is clearly worth a try and would add weight to the host of measures that have been instituted, including an aggressive anti-smoking education campaign. I am also pleased to note that clause 8 of the Bill provides that underaged offenders as well as their parents or guardians can be asked to attend counselling sessions. I feel that this, in combination with a higher fine which is now proposed, is more meaningful than just a fine. This is because, since most youths are not in the labour force, the fines would either be picked up by their parents or they may be indifferent if they come from wealthy families and have been given generous allowance. However, I would like to ask the Minister what format such counselling sessions would take and for how long the sessions would be, as one would suspect that a one-off counselling session of a few hours may not be effective for reformative purposes. Additionally, I would like to suggest that some form of community order be instituted. The young offender could be required to attend a number of sessions after school, say, on a Saturday, where he could be counselled and taught the hazards of smoking, constructive use of leisure time, health alternatives to de-stress and so on. Such sessions could help to reform the offenders and, at the same time, act as a deterrent, since it would deprive them of some of their leisure time outside of school. Madam, it has been reported that the strategy for increasing tobacco taxes has failed for the first time this year, as a turf war between tobacco companies had brought prices down. As affordability is reported to be a major deterrent to smoking, I would like to propose that tobacco taxes be further raised, so as to negate the impact of any price cuts by tobacco companies. Any additional revenue generated from a further increase in tobacco tax could be channelled to cancer research or any other programme related to the fight against smoking. This would then clearly dispel any notion that the Government is increasing taxes on tobacco for revenue. In fact, I would like to mention that my grassroots volunteer who is a smoker said that having higher taxes and hitting him harder in the pocket could spur him to try harder to stop smoking. Madam, whilst the national smoking rate has declined since the Act was implemented in 1993, smoking amongst the young remains a major concern. Hence, we must not spare any effort in the fight to deter the young from taking up this habit - from making it less affordable and less convenient to smoke, to persistent education and vigilant enforcement. Madam, with this, I support the Bill.

Madam, like others in this House, I am concerned that the percentage of smokers aged between 18 and 24 has remained unchanged since 1998. It now stands at 16% of the age group and, more disturbingly, the female smokers among them has increased 2 percentage points to 8%. It is critical to discourage the youngsters from smoking. And, as the Minister noted, studies have shown that someone who starts smoking earlier and younger finds it harder to quit later. It also increases their risk of getting diseases like lung cancer earlier. And for the women smokers, it would also affect the health of their babies as well. The Government hopes to discourage smoking among the young by removing the smaller packets of cigarettes from the market. Only 20-stick packs or larger will be available and these are more expensive. I would like to raise two points. First, many young Singaporeans now get generous pocket money from parents. A few extra dollars will not make much of a difference, unlike those in other countries where a study cited shows that it worked in New Zealand. An average pack of 20 sticks now sells for $6.

50. This is akin to a cup of Starbucks coffee and a slice of cake. It is easily affordable to most yuppy kids in Singapore. I suggest that if the Government is serious about discouraging them to smoke by using this method, it should raise the price of cigarettes even more. It can do this by increasing the cigarette excise duties and increasing the number of smoking cessation programmes at the same time. Second, it is widely recognised that peer pressure is one reason why youngsters smoke. In my view, much has to do also with where they tend to hang out with their peers these days, to look cool and to look fashionable. If you walk into some of our pubs and clubs, chances are that they are smoke-filled and through the haze, you would see young women dangling cigarettes in their hands. Studies in other countries have shown that girls apparently smoke in order to attract men, while boys smoke to appear mature. The club scene in Singapore, I am told, is quite colourful and exciting. And many clubs and pubs are trying to reel in the young girls with Ladies' Nights, and by having a lower age entry requirement for women than for men. The strategy is that if you get in the young girls, the men will follow. But these are environments which make smoking appear fashionable and cool. Clubs have a peer pressure effect on impressionable girls to smoke in order to belong to the in-crowd and to appear more attractive. A random survey of adult pubs and clubs in Singapore shows that many allow women as young as 18-20 in, but often impose a higher age requirement for men, usually above 23. For instance, at Madam Wong's, you need to be only 20 if you are a woman to get into the club, but you have to be 23 if you are a man. At Club Eden, the entry age requirement for women is 21; for men, it is 24. At Double O, the entry age requirement for women is 22; for men, it is 25. I am concerned about this because these 20 to 21-year-old women are more impressionable, more susceptible to peer pressure and are less mature than the older men in these clubs. Indeed, I hear that it is not uncommon to see older men lighting up the cigarettes of young girls in some clubs. So I do not think bigger packs of cigarettes will work. As I see it, we can either bar these girls from environments which encourage smoking, such as these pubs or clubs, or clean up these environments that presently promote the image that it is cool to smoke. I will not go so far as to call for a ban on smoking in bars, pubs and discos, at least not for now. But I would call for a higher age entry requirement for the women, to be at least on par with the present requirement for the men. However, this is left pretty much to the discretion of the clubs and pubs right now. Can the Government do something about this? The Government should also, at the same time, rope in the pubs and clubs in its No Smoking Campaign. Finally, I understand that the Government is taking a multi-pronged approach to discourage youngsters from smoking - from legislation to public education and applying peer pressure to emphasising that staying smoke-free is cool, using stars as models. While I support this, I would like to caution against a heavy-handed approach, as it would probably backfire. Many youngsters smoke because of peer group pressure or to cock a snook at authority. They are biologically programmed to take risk. The more the Government tells them not to smoke or that they would die earlier if they do and die from horrible diseases, the more they find it exciting to smoke. The danger with a heavy-handed approach is that smoking will become a symbol of youthful rebellion. Hence, I would argue that if it is an uphill task getting the message across to the young, then let us put more focus about tackling the environments which influence them to smoke. Madam, I support the Bill.

Madam, thank you for allowing me to join in the debate. I rise to support this Bill. Smoking is an expensive and harmful habit. Like the rest of the speakers, I am particularly perturbed to see young people taking on this habit. So I think it is a good idea to sell cigarettes in packets of 20, instead of the present small packets of 10 cigarettes. I now realise that you can buy drinks in Starbucks with a piece of cake for that amount. So, it is not too difficult, but if by this move we make it more difficult for even some of our young to smoke, then it would have served its purpose. I am also glad to see that the Bill has closed the loopholes of retailers breaking up packets and selling cigarettes in sticks. The stiff penalties legislated make it not worthwhile for retailers to do so, and I support the stiff penalties proposed. I have a friend who was a heavy smoker. When he was asked if he knew that he was putting his life at risk, the reply was that, statistically, his life would be shortened by just a few minutes, and what was that compared to a lifespan of over, as the Minister said, 76 years. If a person can will the last few minutes to the very end of his life, then there is no problem. To cut the story short, he contracted cancer in his early 40s and had one of his lungs removed. He is now a wiser man and has stopped smoking. But at what a price! And even at that, he is one of the luckier ones. Madam, I strongly support the Bill.

Mdm Deputy Speaker, first, I would like to thank all four MPs who rose to speak in support of the Bill. This is a rare occasion for me where I am told I am not going far enough, and I need to be pushed forward. As I said in my Second Reading speech, the anti-smoking programme is a multi-faceted programme. We must pursue different strategies and from different angles. What we are discussing today is really the legislative changes to make it possible for us to keep the smoking rates in Singapore under control. For the items specifically under discussion today, the issue about smaller packs, I accept the different views. Whether it is effective or not, I think it is worth trying. And I thank those who support it on that basis too. Dr Lily Neo suggested setting up an anti-smoking activist group. I think that is an excellent suggestion. We will pass it on to HPB and to the Committee overseeing this and see how they can prompt or encourage such a group to be set up. We also need more enforcement, a point made by all three speakers. We need greater vigilance, enforcement of the rules, particularly against retailers who sell to underaged smokers, and also on the offenders themselves. While in the Bill we have asked for increase in fines and also introduce counselling, the changes will not be effective if these are not enforced. So I assure the House that with these additional powers and the existing powers, we are taking and intending to take stronger enforcement of these rules. On the suggestion of labelling, whether to provide more graphic or pictorial warnings, this is under consideration. It is proven to be quite effective in other countries. We intend to also review this and introduce this in Singapore. Dr Lily Neo also suggested that we subsidise nicotine-free pills in our Smoking Cessation Clinics. This is something that I will refer to the Committee to look at. Dr Amy Khor and Ms Irene Ng both advocated very strongly that the tobacco tax be further increased. Let me assure the House that it is the Government's policy to continuously increase the tobacco tax to keep up at least with the purchasing power of Singaporeans. But, as Dr Amy Khor has observed, this year, while we raise the tobacco tax by 20%, the cigarette manufacturers lowered the cigarette prices, thereby negating the impact of the tobacco tax. But this is a war that we will continue to fight. It is not fought over one year. Ms Irene Ng raised several suggestions on how to influence the environment that youths patronise, to discourage them from smoking. I was particularly intrigued by her comment that young girls smoke to attract man, and boys smoke to look mature. I remember, some years ago, watching an advertisement which shows a lady smoking and the caption saying: "Do you want to kiss an ashtray?" So, I am not sure whether a lady smoking really attracts man. Anyway, I think we agree with all the speakers that we have a big battle ahead. It may be cynical, but the cigarette manufacturers are really targeting at the young. They know that smoking is addictive and they know that the strategy is to get people hooked onto cigarettes. I think this is a very cynical strategy but, unfortunately, it is the truth, and we have to combat it at every level. As you can see from the amendments that we put into the Bill, our effort is really strongly targeted at the young people to try and persuade them not to get started on the first puff. I thank Members for their support and their many suggestions. We will take these up with the Committee looking into this. And I can assure you that these suggestions will be followed up.

Mdm Deputy Speaker, could the Minister also address my question on the ban of smoking at bus-stops? Could he also enlighten us on the anti-smoking efforts in schools, whether more can be done, and what else can be done?

As part of our strategy, we have taken anti-smoking in schools quite seriously. We have conducted talks. We have brought role models, people in the media, people in the entertainment industry, who have agreed to help us in this campaign. So they go to the schools and they serve as role models, and they try to persuade young Singaporeans not to smoke. So that is part of the strategy. We try to strike a sensible balance, as Ms Irene Ng mentioned, when dealing with the young. I think you have seen our reply in one of the newspapers. Dealing with the young, we do not really want to put them off. So you have got to strike this balance. I believe the Committee looking into this has attempted to do so. On the various suggestions about banning additional places, this is something that we work closely with the Ministry of the Environment, whether it is banning of smoking in pubs or in other places, bus stops and other areas. This is something that we continuously take up with the Ministry of the Environment.

Mdm Deputy Speaker, I would like to follow up on the query on the counselling sessions mentioned in clause 8. Could the Minister kindly elaborate on what would be involved in that process?

I am afraid I do not have the details. It is also something that Dr Amy Khor raised. This is something that the HPB and the various committees will do on their own.

Just a quick follow-up. Is it possible that in the suggestions on counselling, in order for it not to be counter-productive, due consideration is taken into getting the underlying causes for teenagers to be easily influenced by peers and to have some form of self-discipline that there would be self-awareness, sensitivity training provided for them to understand how to be assertive, how to resist peer temptation and also the kind of inner self-discipline? Because it appears that parents will also be involved. Similarly on the problems with drug abuse, if we do not tackle those underlying causes, then some of these measures could be just symptomatic treatment and not really that effective and, in fact, become counter-productive.

I thank the Member for his advice. We will definitely have properly trained counsellors to do this, and I am sure they will do the right thing.

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 Hng Kiang]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Order for Second Reading read. 5.57 pm

Mdm Deputy Speaker, I beg to move, "That the Bill be now read a Second time." Introduction During the debate on my Ministry's budget in May this year, I announced that MITA would establish the Media Development Authority of Singapore or MDA to give focus to the development of the media industry. The MDA will be formed by merging the Singapore Broadcasting Authority (SBA), the Films and Publications Department (FPD) and the Singapore Film Commission (SFC) into a single statutory body. The MDA Bill provides the legislative framework for the establishment of this new statutory board. Before I go into the Bill proper, let me first elaborate on the rationale for forming the MDA. Need to Form the MDA The need to form the MDA is driven largely by the convergence of different media, and the emergence of a cluster of high potential growth and high value-added activities in the media industries. Today, technology has blurred the lines between different types of media. Movies, for example, can be watched at cinemas, on television, and over the Internet. We get our news from the newspapers, radio and television, and also over SMS, MMS and the Internet. More changes are coming. Wireless broadband technologies, for example, promise to bring about greater convenience, more powerful communications capabilities and wider reach. The emergence of new media channels has also spurred the development of new content. Contents are now created with not just one channel in mind, but with the intent of being used and shared across many different channels. Likewise, industry support capabilities, like production houses, are structured to support multiple forms of media. And new content development capabilities, like the use of animation and films, are also being established. In its report, the Economic Review Committee (ERC) Sub-Committee on Service Industries projected that the creative cluster, of which media is a significant part, could contribute 6% to Singapore's GDP in 10 years, up from between 2.8% and 3.2% in 2000. Specifically, the media industry is targeted to double from 1.6% of GDP to 3.5% over the same period. It is therefore an important industry for Singapore, and one that has the potential to create many good jobs. These developments have two main implications. Firstly, a single authority is needed to respond to the needs of the cluster of media industries. A single authority would be able to develop strategies and devise schemes to facilitate the development of new innovative contents across all media, and to respond quickly to the rapidly changing technology and business environment. Secondly, a single authority will be in a better position to develop and administer a practical and appropriate censorship regime that takes into account the different nature, impact and viewership of different media. It would be able to regulate media companies with more flexibility, greater consistency and operational effectiveness. Roles of the MDA The MDA will therefore have two primary functions - as a content regulator, and to develop the industry. On content regulation, MITA's view is that media continues to play an important and significant role in nation building. One of the MDA's key objectives will therefore be to protect Singapore's core values and safeguard the interest of consumers. To do this, it will take over the licensing and regulatory functions of SBA and FPD, and administer the relevant Acts. On industry development, the MDA will play a number of roles. Firstly, the MDA will promote the growth of the media industry, working closely with the Economic Development Board (EDB) and other agencies to attract investments to Singapore. It would use its domain knowledge to work with the industry and other Government agencies to build up the creative and technical capabilities we need. It will drive the Media 21 vision, which aims to develop Singapore into a vibrant global media city, specialising in the creation, development, distribution and trading of media content and copyrights. Secondly, the MDA will play an important role in maintaining fair and efficient market conduct and effective competition in the media industries. Media competition was introduced in June 2000 to give viewers and readers more media choices and higher quality content. This has resulted in innovative offerings from the media companies. However, given the relatively small size of the Singapore market, competition is likely to be limited to just a few players. Competition today is between two leading media companies, each dominant in one area of traditional media - television or newspapers. There is therefore a need to ensure that the competition between these players is not dysfunctional, and that public interests and social goals are not compromised. The MDA will therefore be empowered to implement a competition code for the media industry. Such a code would lay out the ground rules for fair market conduct within the sector, provide a more transparent competition framework, and prevent the abuse of market powers by dominant media companies, to ensure that quality is maintained. Competition codes are already in place in countries, such as Britain and Australia, to ensure healthy competition. SBA circulated a draft media competition code to the industry in April this year. The comments and feedback from the industry are currently being reviewed, and the code will be released by the first half of next year, after the MDA is formed. Now, let me move on to the MDA Bill. The MDA Bill The MDA Bill provides for the establishment and constitution of the new statutory board and outlines its main functions, duties and powers. I would like to highlight some of the key aspects of this Bill. Clauses 11 and 12 of Part III set out the functions, duties and powers of the Authority. The primary function of the MDA is to exercise licensing and regulatory functions in respect of media services in Singapore, including the establishment of guidelines and standards for media content, and any equipment or facility used to provide these services. In addition, the MDA will encourage, promote and facilitate the development of the media industries in Singapore. As part of its functions, the MDA will also administer the following media-related legislation: a) The Newspaper and Printing Presses Act; b) The Undesirable Publications Act; c) The Films Act; d) The Broadcasting Act, which is the renamed Singapore Broadcasting Authority Act; and e) The arts entertainment licensing aspect of the Public Entertainments and Meetings Act. The legislative approach taken is to not make any substantive changes to these Acts that MDA will administer. This is because the various Acts have served our national objectives well. The focus of this Bill, therefore, is the merger of the various units to form the MDA. After the MDA is formed, MITA will review these Acts, and propose further amendments as necessary to deal with convergence and other issues that may arise. However, Part IV of the MDA Bill addresses an immediate issue that needs to be dealt with, which is the competition framework for the media industry. Clauses 16 to 27 are provisions to allow the MDA to maintain fair and efficient market conduct and effective competition in the media industry, and also to prevent the misuse of monopoly or market power. These provisions in the MDA Bill are essential to provide legislative powers for the statutory board to intervene in competition-related matters, and are necessary to safeguard against the potential abuse of market powers by dominant media companies. The MDA will be empowered to intervene in competition-related matters that have an impact on the industry, including mergers and consolidations that involve media companies, agreements that could unreasonably restrict competition and restrictions on access to essential resources. The provisions also include a maximum financial penalty of $1 million to deter anti-competitive behaviour, which is consistent with that prescribed in the Telecommunications Act. The Bill also includes provisions relating to staff, financial matters, and transfer of assets, liabilities and employees, which are similar to the Acts of other statutory boards. Conclusion In conclusion, Mdm Deputy Speaker, the formation of the MDA will benefit the industry and the public. The MDA will provide a focus for the development of our media industry. As a single authority, it will enhance the efficiency and effectiveness of our regulatory regimes. The formation of the MDA is timely, as it would be well positioned to respond to the recommendations of the Economic Review Committee as well as the Censorship Review Committee on matters pertaining to the media industry. MITA is confident that the MDA, with its focus on the media industry, will be instrumental in developing Singapore into a vibrant global media city and contribute to the development of a creative economy. Mdm Deputy Speaker, I beg to move. Question proposed.

Mdm Deputy Speaker, I rise in support of the Bill. First, let me declare my interest. I am the Vice-Chairman of the NTUC Media Cooperative and Board Member of the Infocomm Development Authority. And as a result of my 21 years as a journalist, I have many media friends. Madam, I have deep admiration for them who must meet deadlines every day and, following the liberalisation of the media since June 2000, every minute is deadline for many of them. The Media Development Authority of Singapore Bill sets out the functions and powers of MDA. While MITA foresees that the formation of the MDA will contribute positively to Singapore's media sector and benefit the public, I wish to highlight three concerns of its impact on the media scene. Madam, the first concern is on the standards of performance mentioned in clause 17 of the Bill. My questions are: who sets the standards? At which level? Are they the standards set by the media industry? Are they the standards set by MITA in the interest of the readers and viewers? Will there be different kinds of standards for different media? And how widely has it been consulted? Madam, I ask this question because I have observed our media scene and understand the aspiration and frustration, the satisfaction and disappointment of the journalists, readers, listeners and viewers in the past decades. In the 70s and 80s, we were discussing and debating what kind of media model was more suitable for Singapore. We talked about the American style of journalism, the UK model and the Japanese model. In the end, we developed our own brand of journalism, the Singapore Model. In short, the media is part of the virtuous cycle of good government and good society. That is the role PM Goh advocated at the Straits Times' 150th Anniversary, five years ago. Yes, Straits Times is now 157 years old and Lianhe Zaobao will be celebrating its 80th Anniversary next year. The media is part of the virtuous cycle. They have their long histories, performance standards, values and cultures. Thus, the kind of standards mentioned in the Bill must bear in mind the unwritten standards set in these media organisations which are already scrutinised by the readers and viewers every day, every hour. Madam, my second concern is the code of practice mentioned in the same clause. The MDA Bill provides for the Authority to issue a Competition Code to regulate competition so that competition continues to stay relevant and constructive. I understand that MDA's objective is to maintain fair and effective competition, as mentioned by the Acting Minister just now, and provide for safeguards against dominant media companies abusing their market powers. In my view, our principal interest is to ensure that competition does not lead to a decline in quality or depth. With competition, there must continue to be public service and a value system that serves the national interest and community. Thus, I would urge the Minister to introduce a code that regulates with a light touch rather than enforce close policing in such a way as to end up stifling competition, creativity and innovation. After all, the media here does not resort to sensationalism, or untruths, just to generate circulation. Madam, my third concern is the power of MDA. It is so powerful that it seems that it is more of a regulator rather than a champion and promoter of the industry, as the word "development" in its name may imply. MDA will oversee the licensing and content management of broadcasts, films, publications and arts entertainment. MDA will also be tasked to administer the Broadcasting Act, the Newspaper and Printing Presses Act, the Undesirable Publications Act, the Films Act, and the Public Entertainments and Meetings Act. It is so powerful that it is tantamount to be a mini-MITA. I can foresee that the Chairman and board members will have an extremely challenging role in shaping the development of the media scene in Singapore, especially in the age of new economy and the convergence of media. Finally, as Prime Minister Goh said at the Straits Times' 150th Anniversary Celebrations: "You can be proud because you have reported without being corrupt, adversarial or sycophantic."

I hope this remains the spirit of our media industry with the birth of the MDA. I support the Bill.

Mdm Deputy Speaker, many people in the arts circle and the media industry hope that the Government would not maintain the very strict stance on censorship and hope that the Government would lean more towards a less strict regulatory model in relation to the media and the arts. But it would appear from this Bill that it is not going to be so. Typical of the authoritarian and paternalistic style of the PAP, it wants to continue with a strict censorship regime. In these modern times, with the proliferation of the computer and fast widespread communication with the Internet, I do not think that strict censorship can be effective. In fact, it is holding Singapore society back. Singapore wants to be a modern, urban society. The Government wants to make it a Renaissance City. The Government wants the city to be dynamic, vibrant and creative. But while promoting these enlightened aims, the Government still wants to maintain the nanny-state status of Singapore. How can the arts and the media progress, grow and compete with those of other countries, if the Government continues to treat its citizens like children? It is true that while we all agree that pornography, unhealthy and destructive pronouncements in politics touching on issues of race, language or religion have to be curbed, and we also believe that our children have to be protected from harmful smut and pornography, this does not mean that there should be a blanket strict censorship. It is time the Government started to review its policy of strict censorship. The Government should consider, in the alternative, a model of regulatory devices, noting the conservative sensitive nature of certain groups of our population. For an enlightened regulatory model to be accepted by the majority of the people, it is best that the Government should not take into its own hands the duty of drawing up the regulations but, rather, get all sections and representatives of various interest groups to draw up the regulations. In this way, once the regulations are made and enforced, it cannot be said that they were the sole work of the Government, but rather they are made by the general consensus of the people and shall be more acceptable by the public. Whatever it is, I would like to urge the Government to stop treating Singapore as a nanny state, but to open up the society and give Singaporeans a chance to mature. I should now like to comment on some of the provisions of the Bill. I note that the enforcement of the Public Entertainments and Meetings Act (PEMA), after the MDA Bill is passed, shall no longer be under the purview of the Ministry of Home Affairs. I hope that MITA shall be more flexible than the MHA in interpreting the provisions of the Public Entertainments and Meetings Act, and allow me, as an Opposition MP, to make speeches at my Party dinners held in my own constituency. Can the Minister in charge of PEMA give me an assurance that, as an Opposition MP, I shall not be gagged in future but shall be allowed to make speeches at functions organised by my Party in my constituency? I wish to refer to clause 5 concerning the membership of the Authority. Clause 5 cites that the Authority shall comprise "a Chairman and not less than five but not more than 16 other members, all of whom shall be appointed by the Minister". In other words, the Minister is given a completely free hand to choose whoever he wants to be in the Authority. I would imagine that it would be more rational if the Bill specifically states that the Minister must choose members of the Authority from certain professions or occupations. That would make the Authority more representative and more balanced. I think the Minister should include in the membership of the Authority representatives from the local arts circles, the universities, parents' associations and the different groups. As regards the functions and duties of the Authority mentioned in clause 11 of the Bill, I would urge the Government to use a light hand rather than a heavy hand. The Government should have, as its aim, to eventually do away with censorship and make Singapore a truly Renaissance City, when Singapore shall bloom as a city renowned for its art and culture.

Mdm Deputy Speaker, thank you for allowing me to speak on the MDA Bill. Madam, I can fully appreciate the rationale of the Media Development Authority of Singapore Bill, and believe that it is timely. In this era of mergers and acquisitions, the formation of MDA as a single authority to coordinate the regulation and development of the media industry across the different media platforms, such as printing media, cyberspace and the airwaves, is sensible and logical. I believe that the aim is to streamline the roles of the different agencies and to give more flexibility and greater consistency to the Authority. As explained by the Minister, the MDA will also be taking over the roles of such organisations as the Films and Publications Department, the Singapore Broadcasting Authority and the Singapore Film Commission. All of these will come under the purview of MDA. As an integrated statutory board, it will oversee the licensing and content management of broadcast, films, publications and arts entertainment. Be that as it may, Madam, it is noted that the Bill has not attempted to make any substantive changes to the relevant Acts which MDA is tasked to administer. I am questioning the wisdom of this move. The past 10 years have seen the world changed drastically, due to the rapid scientific and technological advancement in communications and the media industry. Internet technology, handphones, PDAs and other mobile solutions are just some of the things that are now part and parcel of our lives. Moving forward, we will see more developments and breakthroughs in the communications field and, as we speak, Madam, more people, even those from the Third World countries, are starting to use or are considering the usage of satellite communications and satellite television. A few months ago, I had the opportunity to be part of the team to welcome some parliamentarians from Iran. In our discussions with them, they also highlighted the challenges that they are facing to balance their efforts to embrace new technologies like the Internet and satellite communications for all its benefits against the risks of exposure to undesirable contents that they want to protect their people from. They had wanted to hear from us and hoped to learn from our experiences. I thought it was quite flattering that they even considered us as a country to learn from. The point that I am highlighting is that even a country like Iran, which has a reputation, rightly or wrongly, as being conservative, is also toying with the idea of satellite communications and satellite television. I am wondering, Madam, what is our present status now. Have we made any progress in this area? Are we preparing ourselves for these changes? Is the new Authority, MDA, equipped and ready to come out with new initiatives and strategies? I personally was pleasantly surprised when Prime Minister Goh, in his National Day Rally speech, mentioned about bar-top dancing. I am happy not because of the bar-top dancing but by the fact that the Prime Minister is aware of the situation on the ground - the diverse views, the different lifestyles, requests and demands of Singaporeans. Mdm Deputy Speaker, I believe we have arrived at the juncture of our country's development and growth where we are expected to deliver something different. Do things differently and do not always stick to the old formula that has served us well. Let us strive to make our people more resilient and strong. I believe that we cannot afford to continuously shield and protect them from undesirable contents. Should we not start to let them learn to fend for themselves and learn to develop life skills and personal responsibilities towards their families and themselves? Similarly, we should continue to emphasise on the education and soft aspects of our development that will make our society and country even stronger in the face of more daunting challenges far more difficult than the undesirable contents that we are shielding them from. To top it all, it is becoming more difficult and almost impossible to effectively perform this protector role, due to rapid technological advancements as well as the fact that Singaporeans travel extensively. Madam, I am glad that MITA sees the formation of MDA as a body that will contribute positively to the local media industry. The area that I hope that would be given some attention and assistance would be the film industry. Back in the 1950s and 1960s, the local film and movie industry was thriving, and we produced many classic movies and we were considered as one of the main sources of quality productions. But, now, gone are the glory days of Jalan Ampas, Cathay Film Production and Shaw Film Production. But the recent development of the local film industry with the emergence of talented Singaporeans, such as Jack Neo, Eric Khoo and the likes, are making waves with their films like "Money No Enough", "I Not Stupid", "12 Storeys", and "Mee Pok Man". And it is very encouraging. It is my hope, Madam, that MDA will take a more active role to promote this industry. We can see that we do have talents in our midst. Furthermore, Singapore and the region are not short of resources to come up with respectable quality products and maybe, one day, we will see a Singaporean winner at the Cannes Film Festival and even at other competitions. In this respect, I believe that the new Authority and its relevant agencies must begin to take inputs from the industry players as their experience in the industry is worth more than any advice from academic experts. Similarly, MDA should not be seen as always giving bureaucratic directions but, rather, it must be a partner of the stakeholders - the industry players, artistes, actors, directors and many more. Madam, we have made lots of progress and strides to promote the local media, entertainment and the arts scene. I have to commend MITA in their efforts. Looking forward, it may be worthwhile for MITA to continuously review and upgrade its policies and programmes to remain relevant. I have to admit that it is not an easy task. But it will certainly make the overall effort more meaningful and it will help strengthen the local film industry in particular and the entertainment industry in general. Mdm Deputy Speaker, I support the Bill.

Madam, this Bill marks a significant change for the media industry. The Bill will create a super multimedia regulator authorised to, among other things, develop codes of practice relating to content or technical standards for media services, or relating to standards of fair market conduct in any media industry, and also to monitor compliance with such codes. More significantly, the Bill also provides for the Authority to issue a Competition Code to regulate competition. Madam, I want to point out that this Bill comes about two years after limited competition was introduced in the media sector. Since then, the two media giants in Singapore - Singapore Press Holdings (SPH) and MediaCorp - have forayed into each other's turf. In the earlier phase, the media industry saw a flurry of rapid changes. MediaCorp started publishing a daily newspaper called Today in June 2000, while MediaWorks, SPH's new broadcast arm, was licensed to run two free-to-air TV channels - Channel I and Channel U. SPH also started publishing the tabloids Streats and Project Eyeball, the first integrated print and cyberspace news publication in Singapore. In the beginning, executives of Today at MediaCorp, its major owner, have painted a painful start for Today over distribution and other matters that were once monopolised by SPH, while the executives at SPH MediaWorks also reported obstacles in a field once dominated by MediaCorp. The competition situation has now more or less stabilised. Since the economic downturn however, there have been even more changes in terms of consolidation. Consolidation has been a key feature of the media landscape. For example, SPH has suspended Project Eyeball and MediaCorp has shut down its City TV and consolidated its sports and Chinese programmes with some of its other TV channels. The media landscape is a challenging one right now for the media players. Against this backdrop, I would like to highlight two concerns. First, it is not clear if the MDA's role is to promote a level playing field for competition or to manage the competition in such a way as to make sure that MediaCorp and SPH do not knock each other out. It is quite different. Reading the comments of Singapore leaders in the past, it would seem to be the latter. For instance, DPM Lee Hsien Loong has once said that the Government wanted to promote constructive competition and it would be a managed process so that one does not knock out the other. But does it mean that to be fair, you have to be unfair? In the sense that, does it mean that if Today proves to be so successful, the Government has to step in to make sure that it does not become the dominant print media? Does it mean that if SPH becomes so successful with its two TV channels, that there will be some constraints to make sure that it will not take over and become the dominant broadcasting media? The Government has also expressed another concern that with competition, the media may go for scandals and sensations, instead of serious news and compete on the way down, which is happening in many other countries. I would like to ask the Minister: will managing the competition also mean controlling the kind of news that the media can report? And, if so, how will this be decided, given that the MDA has made clear that one of its roles is to issue a Competition Code to regulate competition? Will there be a transparent public interest test? Madam, if the code is to manage the competition, as I suspect it is, it is important that the media industry be consulted widely in drawing up the code and that there will be transparency in both how it is drawn up as well as how it will be enforced. Second, I want to ask the Minister how this Competition Code sits with the coming generic Competition Act which is said to be ready in 2-3 years' time which, incidentally, strikes me as being rather slow. One would have thought that it would be the other way round, to introduce an over-arching framework, an omnibus Competition Act, which will underpin competition in all industries and enable more focused and detailed industry-specific measures. I believe that this is the approach that Australia is taking. It also has a super media regulator responsible for the converging media and telecoms market, but it does not have a separate set of media competition rules. Australia has a generic competition law enforced by the Australian Competition and Consumer Commission, which applies to all industries. In the United Kingdom, they are also moving towards a single regulator of converging multi-media industries, the Office of Communications. It will have strong anti-competitive powers as in the Competition law that they have. In the United Kingdom, they already have an omnibus Competition law to provide an over-arching framework. In Singapore, the Government seems to be favouring a sectoral-based competition code and has come up much faster with this than with the bigger Competition Act which we are all waiting for. For instance, the IDA has already come up with the Competition Code for the telecoms and this has been effective since 2000. This poses the question of whether we have a coherent framework. Should a media company, for instance, file a complaint to the MDA or should it file with the Competition Commission, once it is formed, to enforce the Competition Act? Who is to decide whether a dispute is more appropriately tackled under the Competition Act, which is coming, or under the MDA's Competition Code? I am not arguing that we do not need sectoral regulation now. At this stage in our development, we are working to achieve a transition from a monopoly situation to a competitive marketplace. This and the particular features of the media and the telecoms are what distinguish sectoral regulators from the Competition Commission. In the absence of a Competition Act, there is a need for a competition code for specific industries such as the media. Sectoral rules provide a quick, effective way of solving disputes and to promote competition and to protect consumers. However, as competition develops and regulatory intervention fades into the background, we should do away with the Code to allow greater use of the Competition Act. It is important that we operate both the sectoral Competition Codes, the competition code for the media and the coming generic and omnibus Competition Act within a coherent framework. The MDA's aim should be to be able to lighten sectoral regulation as competition increases, thus increasingly rely more and more on the coming generic competition law. I propose that the Competition Code should include provisions for regular reviews as well as prohibition on using sectoral powers if there is already effective competition. The Government should allow regulation of the media to move towards self-regulation. To conclude, there is a need for sectoral regulation but my hope is that the more successful we are in using it, the more competition will grow and so the less need to rely on it. The challenge for the MDA is to develop an overall approach and a coherent framework in enabling greater competition in a rapidly changing environment while preserving social and cultural benefits associated with the existing policies. Madam, I support the Bill.

Mdm Deputy Speaker, thank you very much for allowing me to speak on this Bill. Mr Chiam here is a very good friend of mine. But I am amazed actually at the way he describes our media. I know we are all getting on in age, Mr Chiam included. Maybe we will soon be like grandfathers. But I cannot understand how he describes our media or Government's handling of the media is like a "nanny". Having been with the media business for more than 20 years as the editor of the Straits Times Group, I find that, in fact, the media has been maturing, and maturing very well indeed. I remember the early days when I was editor, I did feel that the media here was rather parochial and sensational and I did not want to have any part of it earlier on. But after having spent sometime, 3-5 years, I then realise how important the role of the media was and felt that in fact, it was important that we could be part of that development of the media. If you look at the media today, you will find that they are undergoing a maturing process, with the kind of different opinions and debates that are going on. I think it is helping us to move towards a maturing Singapore society. I see this move, Mdm Deputy Speaker, as an effort on the part of the Government to allow an authority and at arms-length to do the kind of work which the Ministry of Information, Communications and the Arts has been doing. To me, that is progress. When Mr Chiam and Mr Seng Han Thong talked about a "light touch", I wonder what do they mean by "light touch" as against a "heavy touch", I suppose. But I think here, perhaps what is needed is a judicious touch because "light touch" can also be too light and then we can also create problems for ourselves. But neither do I call for a "heavy touch" like in the early years. Nevertheless, like my friend, Mr Seng Han Thong, we all realise how difficult is the job done by the media people, day in day out, chasing deadlines and having to make decisions every moment of the day of their working day. Our hearts are with them and we hope they will continue to do the good work. The final point I would like to make, Mdm Deputy Speaker, is the test of this Bill or the Media Development Authority on the question of the choice of members which the Government or MITA will appoint to this Authority. I think the whole credibility of this Media Development Authority will depend on the kind of people that we elect to the Authority. I would like to ask the Minister to elaborate on what is the criterion for the selection of members of this Authority. I do hope that the Minister or the relevant authorities that will appoint the members will choose people who are critical-minded, open-minded Singaporeans, that will allow Singapore to move further ahead towards a mature media and a mature society. I support the Bill.

Mdm Deputy Speaker, first of all, may I thank all the speakers who have spoken, especially those who have spoken in support of the Bill. Let me, first of all, reiterate what I said in my speech, that is, the main function of this Bill is to bring together different agencies and Government bodies that currently administer different parts of the media industry into one statutory body. The purpose of doing this is really to give focus to the media industry. Nothing else has really changed. I think to look ahead and perhaps to speculate that this means that it is a tightening of censorship, for example, is just pure speculation. Indeed, on this issue of censorship and control, this is an issue that cannot be avoided. No country is devoid of controls or censorship rules over their media. If you take a country, perhaps a country as liberal as the United States, you will find that they too have controls over the media. No foreign entity can buy more than 20% of a broadcast company in the United States. And in the United Kingdom, where the regime is more liberal, even the transfer of ownership in the large newspaper companies will require the approval of the Minister. Every country will have to approach this in its own way, sensitive to its own context and to address its own concerns. Mdm Deputy Speaker, indeed when my staff attended a conference recently in Europe which had to do with one aspect of the media, ie, about film classification, they came back and told me that the Europeans were not able to agree on a single film classification standard for Europe. That is because each country had its own concerns about what was important, in terms of classification, standards and cultural norms that were appropriate for that particular country. So censorship is an issue that all countries have got to grapple with. And for Singapore, we have got to find our own standards. I appreciate Mr Zainul Abidin's intervention on this point that Mr Chiam raised that we should not keep saying that this is a "nanny" state and the Government tells the media what to do. Mdm Deputy Speaker, I did not ask Mr Chiam what he was going to say this afternoon when he indicated he wanted to speak on the Bill. Neither do I want to know. I was quite happy for him to raise whatever points he would raise. Likewise, I do not ask the editors of our newspapers on what they are going to write in the headlines tomorrow. Neither do they ask my permission. Neither do I want them to do so. I really do not follow why we continue to prosecute such an image of Singapore. Mdm Deputy Speaker, if I may address, in turn, the different concerns that have been raised by different speakers. Mr Seng Han Thong raised a number of issues about the standards of performance and asked what this meant. He referred to clause 17 on codes of practice. This is a clause under the competition section of the Bill. It deals with standards of performance with regard to competition. For example, if this was a broadcast company, you would expect that you need to have some standards of performance. You might need to regulate, for example, air time, the number of broadcast hours. You might need to ensure that there is no interference of signals between one broadcaster and another broadcaster. There are certain technical standards that need to be achieved. You need to ensure that service is provided and the system does not break down every other day. So there are these technical standards. As I said, there are also other social standards. But as Mr Seng has pointed out, our approach to the different media has been different in the past and will continue to be so as we move forward. For the print media, for example, I think our editors have done a very good job. They have managed to build up the reputation of our newspapers. They are seen to be credible. They are seen to be serious. They are seen to be a voice that deserves to be heard. And I think they understand their role in nation building and have taken this role seriously. I think that is a relationship that has worked well. In the broadcast area, we have programming codes, and that, again, is because we have some peculiarities in broadcast, eg, dialect policy. From time to time, a broadcaster may break that rule and needs to be reminded about that particular policy, and that policy reflects the nature of our society and our other policies - our language policies. To address Mr Seng's concern, let me say that these standards of performance are, firstly, technical. And, secondly, the other standards that may need to be introduced, I would leave it to the MDA to consider what other standards they need to introduce in order to ensure that competition is on an even playing field. Mr Seng made the point that the Bill seems to suggest that the MDA will become more of a regulator than a developer. Just because there are more clauses to deal with competition does not mean that the Board likewise will be so. I do not think we should judge a book by its cover. There are many clauses here to deal with competition. Because, as I said, this is an immediate need, and this is not something that is covered in the other Acts that the MDA will also administer. I can assure Mr Seng and the other Members who have spoken that the MDA indeed is formed to focus on the development of the media industry, and they are working very hard now to draw up plans on how to do this. One of the issues raised by Mr Zainudin, for example, was the film sector of the media industry, and I thank him for his support for the film sector. This is indeed an area that we would like to see develop. As the Prime Minister said in his National Day Rally - I think he meant it for Jack Neo - "Two No Enough", and he encouraged Jack to produce more movies that we can all enjoy and that can travel. And, indeed, Jack Neo's last hit "I Not Stupid" has done very well, not just in Singapore but it has also travelled, to some extent, in the region, and I think that augurs well. In fact, I received an e-mail recently of a Singapore club in the US which is gathering all the Singapore students and anybody else who is interested to watch "I Not Stupid". So, that is yet another way that it serves the function to hold together Singaporeans who are spread far and wide, away from Singapore. Yes, we will do what we can to develop the film industry. But we have got to recognise that it is not an easy industry to develop. We are a small marketplace and films that have local cache that can resonate with Singaporeans easily may not travel very far. So, the challenge for directors and movie makers is really to find a formula that will appeal both to Singaporeans but will also travel beyond Singapore. Because whether you show the film to 3 million people, 30 million people or 300 million people, it is still the same set of costs of making the film. If I can address some of the specific issues that Mr Chiam raised on the Public Entertainments and Meetings Act (PEMA), I should just let Mr Chiam know that the Act will not be administered in toto by MITA. MITA will only administer the art entertainment aspects of PEMA. So, if Mr Chiam decides to sing and dance, we can consider giving him a licence. But if he is going to make a speech, he will still need to go back to the Minister in charge. On clause 5, Mr Chiam made a reference to the members of the Board and suggested certain criteria for picking these members of the Board, as did Mr Zainul Abidin. I would take their suggestions into consideration. Certainly, we want to pick people who are able to contribute towards the goals of the MDA and, certainly, their suggestions that they should be people who are critical, who are open minded, who can understand and see the vision of making Singapore into a vibrant global city for media and for the arts these are certainly the kinds of criteria we would apply and we want to try to get a broadbase of people, so that we will get different ideas to drive the Board forward. I think I have addressed Mr Chiam's suggestion that we should do away entirely with censorship. I do not think it is practical and I do not think you can point to any country in the world that has succeeded in doing so. Mr Zainudin also touched on the matter of satellite communications, and suggested that even Iran was considering doing this. I think there is a big difference between Iran and Singapore, and that difference is size. Satellite technology is something that is important and useful to large countries, because it means that you do not have to really lay a lot of cables. Laying cables in large countries is probably not cost effective. For Singapore, we have cabled up the whole country and, for all practical purposes, every residence in Singapore is able to receive cable signals. So, there is really not the same reason for us to use this technology. Ms Irene Ng asked a rather philosophical question - the difference between promoting and managing competition. I think if you created a specific scenario whether we would hold back a company if it was too successful, if Today became the dominant newspaper company, would we be concerned? If MediaWorks became the dominant broadcasting company, would we be concerned? The answer is no. I think we leave the industry to compete. What we want to be sure of is really that the incumbent operator does not put impediments unfairly in the way of a competitor trying to get into the marketplace and trying to compete, and that is what the competition code is for. Ms Ng also talked about the omnibus Competition Act that is being considered and why we have chosen to do sectoral competition codes at this point in time. I think the answer is that we cannot wait, once we have introduced competition into the media industry. Although over the last two years the more aggressive competitive behaviour has quietened down a little bit, I still receive complaints every now and then by one party against another party on anti-competitive behaviour. Really, the only way to deal with this properly and effectively is to have a competition code and that is why we are introducing one now. As to whether it will be consistent with the omnibus Act in future, certainly we will have to make it compatible, and it will be reviewed at the appropriate time. Mdm Deputy Speaker, I think I have addressed the issues that have been raised by Members. Again, in conclusion, let me thank them for their support. Let me say that the purpose of bringing these different agencies together is to create focus in the media industry. We see this as a potential area of growth as we move forward. The media, together with applied arts like design, is an important industry, not just in itself but because of its spillover effects to the rest of the economy. I think one of the key elements of our economic strategy to move forward is really to tap into the creative and innovative capability of our people and of our resources here in Singapore, and the Media Development Authority is tasked to do that.

Mdm, I would like to get clarification on the functions and duties of the proposed MDA. I can well understand that it is taking a balance between development and regulations. It is true, and I agree with Ms Irene Ng, that it is creating a super statutory regulator. But I do not think the concerns that we have about censorship are as ominous as some Members have put it. Because I am on one of the appeals committee of MITA and I can safely say that we hardly have any appeals. This is an indication that we have not put too heavy a touch on censorship that the organisations would like to come forward and make appeals for us to consider. I may be wrong here but something seems to be missing amongst the functions and duties, ie, as a very important regulator or developmental organisation on knowledge, what kind of functions would MDA see for itself to actively promote Singapore's ability to be discerning about what we see, hear and read, so as to minimise the need for so-called heavy types of censorship here. I would like to implore MDA, even though it is ---

Dr Ngiam, can you just round up your clarification?

I am coming to my question now. Would MDA see for itself that it also has a responsibility to make Singaporeans safe for ideas, ie, you give them informed choices, rather than make ideas safe for Singaporeans, ie, through the censorship route?

Dr Ngiam raises a very fundamental question about the development of our society. I think he wants a society to be more reflective, to be more mature, to be thinking, to understand that there are trade-offs whatever the issue is. He has developed these perspectives because he sits on some of our boards, and he is put in a position where he has to decide very difficult issues. On the one hand, somebody might come and say, "Why don't you allow this movie to be screened, because as mature adults, surely we can make up our own minds about the contents of this movie?" On the other hand, we have others coming to the appeals board saying, "No, you should not allow this to be screened. It lowers our moral character. This will do great damage to our society." And so, indeed, Singaporeans will have to be more discerning. But I think this is beyond the ability of one agency or one authority to do. I think this is a task for all of us in this House, in all Ministries, in the way we debate, in the way we discuss, in the way we formulate policies, to be more reflective, to consider the pros and cons and to come to our own conclusions. Earlier this afternoon, Members heard suggestions about the Government making decisions on behalf of citizens. Well, we want to try and shift some of these decision-making risks that citizens have got to consider and to evaluate and to come to a conclusion for themselves. This is the process. It is not something that will happen overnight but, certainly, we can all do our part.

Madam, I applaud what the Minister said earlier about not inhibiting the censorship but making it a little bit more transparent. As part of that process, while you bring in the right people to form this body, may I also suggest that sometimes that kind of overriding principles must come down to the officers on the ground, including MITA officers as well as editors of papers, etc. Because, sometimes the OB markers are not very clear and everyone tends to over-read the Government. Perhaps this can be taken into consideration.

Mdm Deputy Speaker, again, my answer is very similar to what I gave to Dr Ngiam. We are conducting a censorship review. This is not germane really to the Bill that is before the House, but if I may just briefly address that. We decided that we will go ahead with this Censorship Review Committee, and I think I want to give them time to consider inputs from the public. We have received many useful suggestions. Arts groups have put together their thoughts and written them down. They have put serious proposals to the Committee. The Committee will consider all of these. We are moving forward in this area. But, as I have said in this House before, it is not whether we are going to become more liberal or more strict. I think the issue really is whether we can keep pace with developments. We cannot choose the world we live in. And if we want to grow and to progress, we have got to be connected to the rest of the world. But that also does not mean we have got to be like everybody else. No two countries are alike. No two societies are alike. Therefore, we should find our own formula. We should have our own voice. We should have our own distinctive identity. And we should not be too eager to copy the standards that other people have set for themselves, because no society is free of the consequences of these choices. Whatever choices we make, there will be positive outcomes and there will be problems that we will have to manage. So, it is a process and, I think, on censorship, let us wait to see what the Review Committee has to say.

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 David T. E. Lim]. Bill considered in Committee; reported without amendment; read a Third time and passed.

Resolved, "That Parliament do now adjourn to Monday, 25th November 2002." - [Mr Mah Bow Tan]. Adjourned accordingly at Six minutes past Seven o'clock pm to Monday, 25th November 2002.

asked the Minister for Manpower if he could give an update on the number of Singaporeans who remain jobless and whether he expects the situation to improve by early next year.

An estimated 84,300 residents (comprising Singaporeans and Singapore Permanent Residents) were unemployed in September 2002. (This figure is seasonally adjusted). Although the labour market had shown signs of recovery, job creation is still not sufficient to absorb this year's new entrants to the labour market. Consequently, the seasonally adjusted overall unemployment rate rose to a 15-year high of 4.8% in September 2002 from 4.1% in June and 4.5% in March this year. Among the resident labour force, the unemployment rate was 4.9% in September 2002. Unemployment is expected to remain high until the end of this year. It is expected to be between 5.0% and 5.5%. If economic recovery is sustained, then unemployment would fall in 2003. But it is too soon to predict next year's unemployment rate. Recent developments in the external environment would affect Singapore's economic recovery and employment growth. Nevertheless, there are still job vacancies. I would therefore urge unemployed Singaporeans to have a positive attitude, to be flexible and more willing to take up these jobs. It will not be easy to change, or to go into new areas, but those who keep on trying, will eventually succeed.

asked the Minister for Health, since the introduction from 1st1/2November 2001 of the one-year hospitalisation fee assistance scheme as part of the second off-Budget package to help lower income and retrenched Singaporeans (a) how many retrenched workers and their families have benefited from the scheme so far; (b) how much has it cost the Government; and (c) in view of the continued economic downturn, does his Ministry plan to extend the scheme.

There are two types of rebates that the Government has been giving to Singaporeans under the Hospitalisation Fee Assistance Scheme (HFAS) since 1st November 2001. First, Singaporeans who are class B2/C inpatients or subsidised day surgery patients in the public sector hospitals and institutions would automatically receive a 10% fee rebate on their hospitalisation bills. Second, retrenched Singaporeans and their non-working spouse and dependent children would be eligible for an additional 40% fee assistance. Thus, together with the 10% rebate, families of retrenched Singaporeans would effectively receive a 50% reduction in their hospital bills. For the past 11 months since the implementation of the HFAS (from 1st November 2001 to 30th September 2002), some 265,712 Singaporean families have benefited from the scheme. Of these, 139 were retrenched Singaporeans and their families who received a 50% reduction in their hospital bills. Altogether, the Government has paid out close to $20 million worth of rebates to Singaporeans and their families to help defray their medical expenses. Of this, $142,000 was given to retrenched Singaporeans and their families. The bulk of the rebates ($19.8 million) was given to Singaporeans who used the heavily subsidised class B2/C inpatient services or who underwent subsidised day surgery. The HFAS was introduced for 1 year under the Government's 2nd off-budget measures to help Singaporeans tide through the economic downturn. The HFAS will terminate on 31st October 2002 as planned. Singaporeans who face financial difficulties in paying their medical bills, including those who are retrenched, will continue to receive funding assistance from Medifund. They can ask to see the Medical Social Workers who will assist them accordingly. No Singaporean would be denied essential medical care because of their inability to pay.

asked the Minister for Home Affairs, following the recent tragic Bali bomb blast, (a) what security measures have been taken and what advisory has been or will be given to individuals, businesses and private security agencies to prevent attacks of similar nature from occurring in Singapore; and (b) given that many Singaporeans are making holiday plans, what advisory will be issued for those travelling overseas.

asked the Minister for Home Affairs (a) what lessons can Singapore draw from the recent terrorists' bombing in Bali with regard to alerting Singaporeans' receptiveness to information on terrorists' activities; and (b) what more can the Government do to ensure that Singaporeans shall at all times be prepared for any eventuality and not presume that all is well because the Government is taking care of everything.

asked the Minister for Home Affairs what travel directives and additional security measures are being introduced to protect our installations, assets and people working overseas, especially those on the Indonesian islands of Batam and Bintan.

Since September 11 last year, we have already taken various security measures to deal with the threat of terrorism facing Singapore. These security measures are still sufficiently robust. As I have previously informed this House, Police, and in some instances SAF and Gurkha officers, are deployed at key establishments such as Changi Airport, Tuas and Woodlands Checkpoints, certain Government buildings as well as our oil and water installations. Regular patrols are conducted and physical measures such as CCTVs and security lightings have been put in place to improve security. The Home Team and Mindef have conducted numerous joint exercises and analysed various scenarios to ensure that our contingency response capabilities and resources are ready to deal with any situation. Security measures at our borders have also been intensified to prevent entry of undesirable persons. Stringent immigration and security checks are carried out at all sea, air and land checkpoints. Police have recently deployed Explosive Detection Dogs (EDD) at the various checkpoints to aid in the detection of explosives. Role of the community Since the Bali incident, Police have enhanced their presence and increased their patrols to commercial and entertainment establishments. However, the police cannot be at every street corner. The community must also play its part by being vigilant and be on the lookout for suspicious events and characters. In fact, the critical information that gave ISD the lead in the investigation and eventual arrests of the Jemaah Islamiyah network in Singapore came from a member of the public. While there are no known imminent threats posed by the Jemaah Islamiyah, the general threat of terrorism has not abated. However, we should not allow this to affect our lives. We should not sink into despondency, nor panic and cower in fear. We must not allow ourselves to be intimidated by terrorism. We should respond to these threats in a calm and rational manner. We should maintain normalcy and go about our business as usual; just be more vigilant and alert. What we do not want is for people to play pranks by making false calls and hoaxes to divert the attention and waste the precious resources of the security agencies. We will deal firmly with such pranksters. Roles of businesses and private security agencies Following the Bali bomb blast, Police, together with ISD had again briefed the business community and the private security industry on the necessary security measures to adopt. We have also taken steps to raise the professionalism and competencies of the security guard industry. These include the revision of the basic training requirements for licensed security guards. We want to ensure that security guards are not only knowledgeable in security processes, but that they are also able to perform their assigned duties competently. All security guards will be trained to handle bomb threats, deal with suspicious-looking objects and persons, and respond to shootings and other emergencies. Advisory for overseas travel There were concerns about whether advisories will be issued to Singaporeans traveling overseas, security measures for business assets and Singaporeans working overseas. MFA will not be issuing a travel advisory at this stage. However, given the current circumstances, we would urge anyone who needs to travel in the region to keep themselves updated on developments in the region and to register with the nearest Singapore Embassy there. Singaporeans can also call the Ministry of Foreign Affairs Consular hotline (65 - 332 0000) for emergency consular assistance if required. Our overseas missions and other Government agencies have also taken appropriate measures to enhance the security of their premises, residences, staff and their families. Our overseas missions are in constant contact with our citizens working, studying or living in the host countries through students bodies, Singapore clubs, warden system and other channels to provide any consular assistance if required. Singapore companies in Batam and Bintan, especially those in the Batamindo Industrial Park and the Bintan Industrial Estate, have been briefed on the situation and the various security measures introduced by the industrial park operators. Many of our Singapore-based companies are found in these two industrial parks. For those outside the park, plans are underway to brief them as well. There are also arrangements in place to assist the companies and our citizens who are working there during emergency.

asked the Prime Minister whether any assistance was offered, eg, medical aid, refrigeration facilities or airlifts, to the people in Indonesia during the recent Bali disaster and, if no such gestures were made, what were the reasons.

Sir, the Singapore Government did offer assistance to the Indonesian Government following the tragic events in Bali. Our Ambassador in Jakarta did approach both the Indonesian Co-ordinating Minister for Social Welfare Yusuf Kalla and Foreign Minister Hassan Wirajuda to make these offers. The Indonesian leaders expressed appreciation for our offer but replied that the situation was under control. Let me add that, working closely with our Embassy in Jakarta, the Singapore Association in Indonesia (SAI) and the Singapore Women's Group (SWG) raised Rp 163 million (S$32,000) at its annual Charity Ball for the hospitals in Bali that have worked tirelessly on the ground to treat the victims. The guest at the ball was Her Excellency Ibu Herawati, wife of Foreign Minister Hassan Wirajuda, and she helped raise a significant portion of the proceeds for the Bali victims by her own impromptu song performance. Furthermore, Singaporeans spontaneously found ways to extend help to those in need. Gleneagles Hospital sent a five-member medical team to Bali to offer medical assistance and supplies. The team treated 30 Indonesian patients, including 20 burn victims, during their stay in Bali. This team was replaced by a six-member medical relief team from Singapore Red Cross. Other Singaporeans also chipped in to raise funds. As you would have read in the Straits Times, a Bali-based Singaporean couple Shaharin Abas Koh and Joyce Tan collected over S$3,000 for the Bali victims by sending out e-mail messages and SMS messages to friends and relatives. The efforts of these Singaporeans were recognised last week by the Jakarta Post, an Indonesian newspaper. In an editorial on 23rd October 2002 entitled "Thank You", the paper extended, and I quote, "deepest gratitude for what Singaporeans have done for Indonesians, on a voluntary basis". As this latest tragedy in Bali - for the victims of all nationalities - has shown, it is not always the Government that has to initiate voluntary aid missions abroad. Singaporeans will spontaneously give generously of their time, expertise and money when there are others in need. Their voluntary efforts have helped to further strengthen the good people-to-people ties between the two countries.

asked the Minister for Health if his Ministry will accept the private hospitals' offer to treat subsidised C class and B2 class patients.

The Ministry of Health acts as the purchaser of medical services for lower and middle income Singaporeans. Public sector hospitals and institutions are set up to provide good and affordable basic healthcare to them. The Ministry has put in place various safeguards to ensure that Singaporeans continue to enjoy good healthcare and to moderate cost increase. Amongst these are: a) Setting up two healthcare clusters as not-for-profit entities and imposing revenue caps on them. Each cluster has a tertiary hospital, regional general hospitals and polyclinics to ensure integrated and seamless care for patients at the lowest cost setting appropriate to needs; b) Specifying the number of Class B2+, Class B2 and C beds to be provided by our public hospitals to ensure that the needs of lower and middle income Singaporeans are met; c) Setting clinical and service standards to ensure quality in the medical services delivered; and d) Coordinating the introduction of high-cost and high-technology medicine and equipment to avoid wasteful duplication and manage increases in healthcare cost. All these safeguards are to make sure that our public sector hospitals and national centres keep cost down. Today, subsidised patients choose the public hospital and ward class they want to be treated in, and the appropriate Government subsidy is given based on the choice of ward class. The Ministry will not be able to extend this arrangement for private sector hospitals. There is no mechanism to determine who is eligible for treatment at private hospitals, and we would end up subsidising those who can and should pay for their own healthcare expenses. There is also no compelling reason for the Ministry to run a dual system where we now select subsidised patients for certain treatments in private hospitals, as suggested by the Parkway group. The public hospitals are providing acceptable standard of care to subsidised patients. The Ministry has allowed subsidised patients to be treated by private sector general practitioners and dentists under the Primary Care Partnership Scheme, but those eligible have to undergo a means test. The Ministry would be happy to contract the service from the private sector if it can offer lower costs at the same or better service quality with the proper framework in place. We are putting in place such a framework for the step-down care sector, with means testing, accredited private sector facilities, properly audited norm costs, revenue caps, and so on. If the private sector is keen to help keep healthcare costs down, they are welcome to provide step-down services within this framework for a start.

asked the Minister for Law why does Singapore Land Authority need to appoint other Government agencies, such as Urban Redevelopment Authority, Housing and Development Board and Land Transport Authority, to sell state land when it is capable of undertaking such a sale itself.

Although SLA was formed as a statutory board in June 2001, we have decided to continue with the prevailing practice of appointing other agencies to sell State land. There are good reasons for this practice. For example, URA which has expertise in urban redevelopment has been appointed to sell land linked to planning and redevelopment objectives since the 1960s. Similarly, since 1989, HDB has been appointed the agent to sell land within public housing estates. STB has been our agent for tourism-related projects since 1988. As this practice has worked well for many years, we do not intend to discontinue it. Nonetheless, as with all Government policies, we will review it and, where necessary, make changes and improvements. For example, LTA was appointed recently for a site integrated with transport infrastructure and SLA has also been appointed as land sales agent for another site.

asked the Deputy Prime Minister and Minister for Finance whether his Ministry will review the Civil Service Medisave-cum-Subsidised Outpatient Scheme for dependants of female civil servants to ensure equal treatment with their male counterparts.

The Civil Service reviews its medical benefits regularly. Under the Medisave-cum-Subsidised Outpatient (MSO) Scheme, introduced in 1994, we have aligned the treatment in medical benefits between male and female officers. They receive the same additional 1% monthly contribution to their Medisave account which they can use for other family members, including dependants. The only slight difference is in outpatient benefits. Women officers are not eligible to claim outpatient subsidy for their husbands or dependent children. However, this difference was effectively removed in 2001 when the Government decided to transfer any unused balance in the annual cap of $350 to the officer's Medisave account at the end of each year. The officer can then use this amount in Medisave according to Medisave guidelines. The basic philosophy of the civil service is that its medical benefit schemes should reflect the values and practices of our Asian society, where typically the husband is responsible for taking care of the family. We should be careful to avoid inadvertently sending a signal that husbands no longer have this responsibility, by changing long-established practices before the social reality has adjusted. However, as I mentioned at the last Committee of Supply, this is not set in concrete, and the civil service will continue to review the MSO scheme periodically as our society evolves.

asked the Minister for Manpower in view of Singapore's ratification of the International Labour Organisation Convention 100 on Equal Pay for Equal Work, whether the Singapore Civil Service is in compliance with this convention.

Singapore ratified ILO Convention 100 in June this year. This Convention seeks to promote and ensure the application of the principle of equal remuneration for men and women for work of equal value. Wages in Singapore are based on meritocracy and determined by market forces of demand and supply. In the case of the Civil Service, the principle of equal pay has been adopted since 1962. Male and female officers of the same rank are placed on the same salary scale. We are in compliance with the convention. Nevertheless, the public sector is aware of the difference in medical benefits for male and female officers engaged prior to 1994. For this group of civil servants, medical benefits were extended only to the dependants of male officers, but not to the dependants of female officers. This policy was formulated on the principle that in an Asian society like Singapore, it is the husband's responsibility to look after the family's need. However, if a female employee becomes the breadwinner, as in a widow or divorcee, her dependants would be eligible for medical benefits. In 1994, serving civil servants were given the option of accepting the subsidised outpatient cum Medisave Scheme whereby male or female civil servants received the same outpatient subsidy and additional 1% Medisave contribution. The latter could be used by both male and female officers to meet the hospitalisation expenses of their dependants. Since then all civil servants were recruited on similar terms. Officers on the older medical benefits schemes can opt over to the MSO scheme at any time. The Civil Service will periodically review its medical benefits scheme. Having ratified Convention 100, my Ministry will take steps to implement the necessary measures to comply with the requirements of this convention. The Ministry will, in consultation with the National Trades Union Congress, Singapore Business Federation and the Singapore National Employers' Federation, initiate the adoption of a Tripartite Resolution to re-affirm the commitment of the 3 social partners to promote and observe the principle of equal remuneration. This will pave the way for this principle to be incorporated in the collective agreements signed between employers and unions.

asked the Minister for Trade and Industry what is his Ministry's response to the observation of the Economic Review Committee's sub-committee on manufacturing that electricity in Singapore has become too expensive.

We need to frame this issue correctly. First, electricity price in Singapore is unlikely to be cheaper in absolute terms than in the neighbouring countries because of certain structural characteristics that are unique to a city state like ours. It is no different as to why property prices here are more expensive than in Kuala Lumpur, Bangkok and Jakarta. Second, the issue then is whether within these structural constraints, electricity prices are as competitive as they could be. What are the structural factors? Our electricity price comprises two components. One is the cost of generating electricity, and the other is the cost of the infrastructure to deliver the electricity. Our generation cost is high because we depend on oil and gas for our energy source, unlike many other countries which have recourse to cheaper electricity such as hydro-electricity. Both oil and gas are expensive. Our infrastructure cost is also high. Because of our small size, we bury our entire electricity network so that land can be freed up for other use. Depending on the voltage level, buried transmission cables cost three to 25 times more than overhead cables. To ensure reliability, back-up capacity has to be installed since faults take longer to locate and fix with buried cables. This makes a buried system much more expensive than comparable overhead systems used in most other countries and cities. This cost translates into higher grid charges. These then are the constraints. What are we doing within these constraints to ensure competitive electricity prices? On the matter of grid charges, EMA is reviewing the current grid charging framework to find ways to benchmark our grid charges to those imposed in comparable countries and cities. We have also started to further liberalise our electricity market to make it more competitive. This will help put downward pressure on prices. Competition will force market players to be more cost conscious and squeeze out inefficiencies. It will also encourage players to seek new and cheaper technology to gain market share. With the pending liberalisation, we have seen the entry of seven new licensees in electricity retailing and three new generation licensees. We can see the impact of competition on electricity prices from the first phase of retail contestability. About 220 customers, comprising the large industrial companies are already contestable. They can buy electricity from these retailers. About 179 (or 80%) have switched to buying electricity from these retailers. Of those who have switched, about 86% were able to negotiate lower prices for their electricity. Retail contestability in the electricity market will be gradually opened to other consumers. 5,000 consumers will become contestable three months after the new market starts. Another 5,000 will become contestable 6 months thereafter. This will open about 70-75% of total demand to retail competition. The EMA is currently studying extending retail contestability to domestic consumers starting end 2003. Competition has also driven the existing generation companies to seek better efficiencies to gain competitive edge over their rivals. Some had replaced their oil fired plants with gas fired plants. Such plants enjoy better efficiencies and therefore lower costs. This has enabled the Energy Market Authority to lower the price cap on 1st January 2002, which resulted in a 6% reduction in the average electricity price. In short, Singapore's electricity costs are not low. Many factors resulting in this are beyond our control. However we can expect competition to drive the industry to achieve better efficiencies which will ultimately benefit consumers. The challenge for us is to continue to provide consumers with good quality and reliable electricity supply, and the higher costs this necessarily entails; while keeping electricity prices affordable and competitive. In this regard, we appreciate the suggestions of the ERC sub-committee on manufacturing and my Ministry is carefully studying them to see what more can be done. This is so as we are in full agreement with the sub-committee that keeping electricity prices competitive is an important element for the industry to prosper and thrive.

asked the Minister for Trade and Industry, at this time of economic difficulties, whether he will advise Power Supply Ltd and the Public Utilities Board not to cut electricity and water supplies to consumers who are in arrears of utility bills but to give them more time to pay up.

The concern raised by the Member for Potong Pasir is shared by all of us in this House. My Ministry has been in discussion with Power Supply. Power Supply deals with customers in arrears by giving them what is effectively an extension of time to pay rather than pre-emptorily cutting off their utility supplies. It issues reminders and also visits these households to work out the best way to resolve the outstanding bills. If a consumer informs Power Supply that he has difficulty paying his bills, Power Supply will advise him to make alternative payment arrangements, usually in the form of instalments. For such consumers, they must pay off at least their current bill. The backpayments may be repaid via an instalment plan. This arrangement helps control the size of the arrears from spiralling out of control. Currently, about 73,000 households are paying their arrears in instalments. As a commercial company, Power Supply should recover arrears from its defaulting customers. However, they are aware that they should do this in a sensitive way especially from households who have genuine difficulties. For these households, if the need arises, Power Supply will refer them to the Community Development Councils to access the Government's financial assistance schemes. The CDCs administer a Rent and Utilities Assistance Scheme (RUAS) that offers assistance to households in HDB rental flats who are in need and have difficulties paying their rent and maintenance charges. They also administer an Interim (Short-term) Financial Assistance Scheme (IFAS) to help families in 2 to 4-room HDB flats with temporary grants to meet their subsistence needs, including maintenance charges. In the first half of this year, a total of about $340,000 has been disbursed to more than 600 applicants of the RUAS scheme. In addition, the Government has also extended the Utilities Save scheme for another year, as part of the 2nd off-budget measures to help households to offset their utility bills through a monthly grant for 10 months. The scheme started in July this year, and will last till April 2003. For households that are facing financial difficulties, they should contact Power Supply to work out a viable repayment plan, so that their bills do not get out of control. For genuine hardship cases, there are Government financial assistance schemes in place to tide families over temporary difficulties. However, households must also do their part to cut consumption and to lighten their own bills. Power Supply's statistics show that about 92% of households with accounts in arrears have electricity and water consumption bills that exceeded the national average for their housing types. Such households will find their bills more manageable if they reduce usage. As part of its education efforts, Power Supply advises these households how to better conserve their electricity and water usage. Disconnection of utilities supply is a last resort action taken by Power Supply. This can be avoided if households contact Power Supply and jointly work out a viable repayment arrangement.

asked the Minister for Education whether the proposed changes to the junior college system can be implemented before 2006.

I (Minister for Education) will be moving a motion to debate the White Paper on the Report of the Junior College/Upper Secondary Education Review in Parliament in November 2002. I will be happy to respond to Mr Chia's question during the Parliamentary debate on the White Paper where the full context of the review can be better appreciated. I hope that Mr Chia will not mind waiting till then.

asked the Prime Minister whether the Government will consider using electronic voting at the next election of the President.

In April last year, this House passed legislation to provide for the implementation of electronic voting in Singapore for both the presidential and parliamentary elections. The Elections Department then proceeded to develop an electronic voting system. Members will recall seeing a demonstration of the prototype last year. However, the electronic voting system could not be completed in time for the General Elections held in November 2001. Given the pace of rapid technology changes, Elections Department is currently looking into developing another electronic voting system. If the system can be completed and certified for use in time, it will be implemented for voters in two SMCs at the next Presidential Election which is due to be held between 1st June and 31st August 2005.

asked the Minister for the Environment (a) if he will provide an update on the proposed pilot Eco-Recycling Park in Tuas; and (b) whether his Ministry plans for more schemes and programmes to encourage recycling companies to set up their facilities and invest in advanced technology and capital equipment there.

Output of solid waste has increased in tandem with economic and population growth in the last three decades. Today, about 7,700 tonnes of waste are disposed of at our incineration plants and Semakau landfill daily. This represents a six-fold increase compared to 30 years ago. This trend is not sustainable. We need to minimise waste and recycle more. Last year, our recycling rate was 44%. We aim to increase it to 60% by 2012. To achieve this target, one key initiative is the setting up of the Eco-Recycling Park in Tuas through the joint effort of ENV, NEA, EDB and JTC. Besides helping to increase recycling in Singapore, the growth of the recycling industry can also serve the growing markets in Singapore as well as in the region. The Park seeks to attract high-value added activities, and transform the image of the recycling industry into one that deploys advanced technology and provides a more conducive working environment. We adopt a cluster approach in the development of the Park so that companies can enjoy greater synergies and operational efficiency. JTC offers them a 30-year lease at reasonable rental. ENV encourages them to make use of the "Innovation for Environmental Sustainability" (IES) Fund and try out new approaches in environmental management. They can also take advantage of various incentive schemes managed by EDB, IE Singapore and SPRING Singapore. The Park was launched in March 2002 and has received encouraging response. By the end of this year, companies operating in the Park will be able to offer facilities for the recovery of recyclables from industrial, commercial and domestic sectors, including paper, glass, plastic, wood and metal. The remaining non-recyclable materials are then disposed of at Tuas Incineration Plant located in the Park. We are in the early stage of developing the Park. There is still a long way to go. NEA, JTC and EDB are currently promoting several companies to set up facilities to recycle plastic, glass, cardboard, food waste, waste cooking oil and so on, in the Park. Guided by the Singapore Green Plan 2012, the development of the Eco-Recycling Park will not only help enhance our environmental sustainability, but also transform the waste recycling industry in Singapore into a regional leader.

asked the Minister for Home Affairs (a) how many reported cases of missing children were filed in the years 2001 and 2002; (b) what is the average age group of these missing children; and (c) what is the success rate in the police investigation.

Between 1st January 2001 and 13th October 2002, 1,341 persons aged 16 and below were reported missing. Of these, 1327 or 98.9% were found. Most of these missing persons (81.3%) were aged between 13 and 16 years. Police is still investigating the remaining 14 cases.

asked the Minister for Manpower (a) what was the Government levy for foreign domestic workers at the time of its introduction and how has it increased over the years to its present rate; and (b) what was the number of foreign domestic workers at the time of introduction of the levy and what were the numbers since then, specifically in the years before and after each change in the levy.

The foreign domestic worker (FDW) levy was first introduced in April 1982. At that time, the levy was set at 30% of the worker's monthly wages, in line with the levy rates for other sectors*. To moderate FDW demand, the FDW levy rate has been adjusted upwards over the years to the present $345 per month. The changes in FDW levy rates from 1982 to 1999 are given in Annex I below. Owing to the uncertain economic climate, a moratorium was placed on increases to the levy rate in January 1999. There were around 14,000 FDWs when the FDW levy was first introduced in 1982. Since then, the number of FDWs has grown steadily to more than 140,000 today, which is ten times the figure in 1982. * The monthly levy rates for these sectors then were set at 30% of the worker's monthly wages or $150, whichever is greater. Annex 1 FOREIGN DOMESTIC WORKER LEVIES Effective Date Foreign Domestic Worker Levy ($/month) 1 Apr 82 30% of monthly wages 1 Nov 84 $120 1 Jan 89 $160 1 Jul 89 $200 1 Feb 90 $230 1 Aug 90 $250 1 Apr 92 $300 1 Apr 95 $330 1 Apr 98 $345 1 Jan 99 $345 (moratorium imposed )

asked the Minister for National Development how many market produce and cooked food stalls respectively have been vacant at the Block 11 Hougang Avenue 3 food centre as at 1st October 2002 and whether the Housing and Development Board has plans to tender out those stalls.

As at 1st October 2002, there are 42 vacant market produce stalls and five cooked food stalls at Block 11 Hougang Avenue 7 Market/Hawker Centre. The vacant stalls in this market/hawker centre are reserved for allocation on a temporary basis to stallholders who are affected by closure of their markets/hawker centres under the Hawker Centres Upgrading Programme (HUP). This will facilitate the smooth implementation of the HUP and help the affected stallholders find alternative vacant stalls to continue their business during the HUP. Hence, HDB has no plans to tender the vacant stalls in the market/hawker centre for rental.

asked the Minister for Transport (a) why is the Bukit Panjang Light Rail Transit constantly breaking down despite repeated assurances from the Ministry that service standards are up; and (b) what kind of safety measures are in place for such a driverless transport system, when train wheels can become dislodged in the operation process.

The Bukit Panjang LRT system has had many teething problems in its initial years. But in recent months, it has largely stabilised. Until the recent breakdown, it has performed to the high service standard of 99.7% that we demand. (Meeting this standard means a maximum service disruption of less than four minutes over a 20-hour daily operation.) The average service availability from June to September was 99.74%. This compares well with other similar systems in the world. The recent breakdown occurred on 21st October at around 6.40 am, when one guide wheel was dislodged, causing a power trip. (A guide wheel helps to steer the vehicle towards the desired direction, unlike a normal wheel which helps to propel the vehicle forward.) The spindle that held the guide wheel grated against the rail and damaged 900 metres of it. SLRT had to replace the damaged sections. The repair was time-consuming due to the extent of the damage. Each connection had to be dismantled and re-installed carefully. Extensive checks and trial runs had to be conducted to ascertain the safety of the entire LRT system before commencing service. Partial service resumed on 24th October at 6.30 pm and full service resumed on 26th October at 12 noon. The incident caused a lot of inconvenience to commuters but it did not pose any safety implication for them. In any case, having a driver on board would not have prevented the occurrence of the incident. (BP LRT is not an unmanned system, just that technology has allowed it to be controlled remotely by the crew in the Operations Control Centre. The crew constantly monitors the system and carries out swift recovery actions when faults are detected.) The Land Transport Authority has directed SMRT, the parent company of the SLRT, to investigate the incident. One of its terms of reference is to look into measures to prevent similar incidents from re-occurring. The investigation team is expected to complete its investigation within four weeks.

asked the Minister for Transport (a) if his Ministry has thought of using other more convenient fare systems when replacing the single-trip Mass Rapid Transit fare card with the standard fare card where a deposit is required and refunded at the end of each trip, which has highly inconvenienced commuters; and (b) what happens to the deposits that remain unclaimed after a while.

There are two main types of transit fare cards: magnetic cards and ez-link contactless smartcards. LTA has opted for the ez-link system as contactless smartcards, unlike the existing magnetic cards, have the capacity to accommodate the fare information of an expanding Rapid Transit System. Hence, they can allow commuters to continue enjoying through-ticketing for a seamless journey even as they transfer from line to line. North-East Line and all future lines will operate solely on the ez-link system. They will not be able to accept magnetic cards, hence the need to replace magnetic cards, including the single-trip magnetic fare cards. The latter will be replaced by the new Standard Tickets (STs) that ride on the ez-link system. Currently, 7% or about 75,000 train passengers use single-trip magnetic cards. While it is technically feasible to retain a separate ticketing system for such single-trip use, it means a higher cost of operation, which will have to be borne by the rest of the commuters. This does not seem fair.

A contactless smartcard is more expensive to produce but it can be re-used. The new Standard Ticket costs about $5 to make. To encourage commuters to return them for re-use, a $1 refundable deposit is imposed on each card. While this has imposed some inconvenience, it is not that cumbersome once commuters become familiar with the refund procedure. In any case, our advice is for commuters to use the stored-value ez-link cards instead of the single-trip Standard Tickets. They can then enjoy lower fares and transfer rebates, and avoid the need to reclaim the deposit. Nevertheless, we have also asked the operators to consider allowing the Standard Tickets to be used for multiple trips on the rapid transit system (RTS) so as to reduce the inconvenience to the small group of commuters who want to continue using the Standard Tickets. As for each ST card that is not returned, SMRT loses about $4. The deposits which are not claimed will help to cover these losses. Table 1 - Priority of claim