Hansard, 2003-11-11

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: Name From (2003) To (2003) Mr Davinder Singh 11 Nov 11 Nov Mr K Shanmugam 11 Nov 14 Nov Mr Lee Kuan Yew 11 Nov 11 Nov Mr Tan Soo Khoon 12 Nov 15 Nov 22 Nov 25 Nov Mr Loh Meng See 13 Nov 21 Nov Dr Wang Kai Yuen 13 Nov 16 Nov Dr Ong Seh Hong 03 Dec 08 Dec RAdm Teo Chee Hean 05 Dec 12 Dec

ABDULLAH TARMUGI Speaker Parliament of Singapore

[Mr Speaker in the Chair]

1. Dr Chong Weng Chiew asked the Minister for Community Development and Sports (a) how many of the Family Service Centres (FSC) which provide

counselling services for crisis management operate beyond office hours; and (b) whether his Ministry will consider rendering FSC more resources to increase the number that can operate beyond office hours, on weekends and public holidays in order to better assist the distressed with urgent counselling needs.

): Mr Speaker, Sir, casework and counselling is a core programme of all Family Service Centres (FSCs). All 36 FSCs are open during normal office hours with some extending their operational hours in the evenings to meet the needs of their clients. Where necessary, FSCs will also respond to the cases known to them for crisis management beyond office hours.

Currently, 23 or two-thirds of all FSCs are already providing services beyond office hours. After office hours, families or individuals that need urgent intervention during a crisis can seek assistance from other existing resources within the community. These include 24-hour Helplines such as the Samaritans of Singapore (SOS), as well as crisis shelters. Where relevant, for example, in cases of family violence or child abuse, the public can also call the Neighbourhood Police Centres. FSCs currently work closely with these agencies to follow up on such cases, where necessary.

I am pleased to inform the Member that my Ministry is currently conducting a comprehensive review of FSCs. In this review, we will rationalise and better integrate the role of FSCs and other social service providers to meet the needs of the community. This will include resources required for FSCs to better meet the needs of individuals and families.

): I would like to ask the Minister

whether there is any consideration in the review to have all FSCs offer services after office hours, especially with regard to counselling services.

Sir, at the moment, we do not see the need for all FSCs to operate beyond office hours. We have, as mentioned in my reply, 23 out of 36 FSCs operating beyond office hours and some of them do it on their own because they see the need to cater for clients who may need services in the night. We will ask our FSCs to put up information on the notice board to allow residents who need to get some help after the FSCs have closed for the day to turn to other appropriate agencies. At the moment, I cannot say confidently that all FSCs do have this information up on their notice board. We will ask all the FSCs to put up all the relevant information so that in case of an emergency, a family that turns up at a FSC which is closed, they can turn to other sources which are available within the community.

): Could I ask the Minister regarding the national hotline number 1800? Can that be operated on 24 hours with reference to FSCs locally?

Sir, at the moment, you can call the helpline anytime but there will not be a person after office hours. You can leave a message and someone will call you back. Whether or not we can extend it beyond the normal office hours, we will have to look at that in terms of its viability.

): Sir, in view of the new social assistance schemes that are in place or will be in place like HOPE, WAP, etc, FSCs probably would be asked to shoulder more of the cases referred from CDCs and meet-the people sessions and other sources. The question of resources

is therefore pertinent. What new measures and provisions will be available for them?

Sir, with respect to these new programmes, the resources are now given to the CDCs because the CDCs are managing the programme. But as I have mentioned in my reply, we are reviewing the role of the FSCs and we will study the resources that they may need to carry out these additional responsibilities.

Sir, I have two supplementary questions. The first question is currently, all the FSCs have the same funding, regardless of whether or not they provide counselling or crisis management services beyond office hours. So is there a necessity to review this funding mechansim?

The second question is this. I am glad that the Minister mentioned that about two-thirds of the FSCs operate after office hours. But from what I know, a resident who is not being serviced by one FSC and he goes to another FSC for service, especially in the case of a crisis management, he is expected to pay a fee, and the fee can be as high as $70 per session. Is there a need to change this practice?

Sir, all FSCs are given a budget based upon what is the projected workload that they would have to handle every year. We are reviewing the entire role of FSCs, with a view to strengthening some of the resources that may be needed. But the principle of whether we want to mandate all FSCs to open up beyond office hours is something that we have to consider very, very carefully. At the end of the day, we have to see whether or not there is a real need for all FSCs. At the moment, as I have mentioned, 23 FSCs are already open beyond office hours primarily because they want to service some of

their clients whom they are familiar with, who are working and they come back in the evening. Therefore, they need to meet counsellors beyond office hours.

Sir, at the moment, MCDS does not feel that there is a need for us to extend the operating hours of all FSCs beyond office hours. But whether we will increase the funding or not in response to what Prof. Ngiam has asked earlier, because of the additional work, we will study their needs carefully.

On the second question, all FSCs impose a charge for counselling. It ranges from being free up to about $50 or so. If a particular constituent is referred to or goes to another FSC outside his boundary, he will also be charged. The charge has nothing to do with the fact that he is outside that boundary because all FSCs impose a small fee. But, Sir, any client who comes to the FSC and who cannot pay will not be turned away. That is the fundamental principle. If the hon. Member knows of any specific case that warrants my attention, I would be most happy to look into it.

2. Dr Amy Khor Lean Suan asked the Acting Minister for Education (a) what are the criteria for Normal (Technical) students to be transferred to the Normal (Academic) stream and the levels at which such transfers can take place; (b) whether these criteria will be reviewed to allow more opportunities for Normal (Technical) students who have the inclination and aptitude to switch streams; and (c) what is the percentage and number of Normal (Technical) students who are transferred to the Normal (Academic) stream per year over the past five years.

Mr Speaker, Sir, students from the Normal (Technical) course may be transferred to the Normal (Academic) course if they display the interest and aptitude for academic courses. Students need to attain an average score of 70% or higher for all subjects in the Normal (Technical) course to be eligible for the transfer. Most transfers take place at the end of Secondary 1 so that the students would have adequate time to adjust to an academic course and prepare for the 'N' Level examinations at Secondary 4.

In addition, Secondary 4 Normal (Technical) students may be promoted to the Secondary 5 Normal course if they obtain grade 1 in English and Mathematics as well as grade 3 or better in one other subject at the 'N' Level examinations at the end of Secondary 4.

In the last five years, an average of 350 Normal (Technical) students, or about 4.9% of each Secondary 1 Normal (Technical) cohort, were transferred to the Normal (Academic) stream each year.

Dr Amy Khor has asked if these criteria will be reviewed to allow more opportunities for Normal (Technical) students, who have the inclination and aptitude, to switch streams. The criteria for transfer seek to ensure that only academically-inclined students, who can benefit from an academic course, will qualify. We should not equate success for Normal (Technical) students with transferring to an academic stream. Progress up the path of technical education is an achievement no less valid than moving up the academic pathway. We will continue to encourage and help Normal (Technical) students, whose needs and abilities are best catered to by a technically-oriented education, to progress as far as possible in their studies, to post-secondary education in ITE and beyond.

MOE is conducting a review on the Normal (Technical) curriculum, its delivery and its assessment system. The review will consider how we can better gear the Normal (Technical) programme for our technically-oriented students.

To introduce greater flexibility within the Normal (Technical) course, we will also allow Normal (Technical) students with relatively strong abilities in certain subjects to proceed faster in those areas. They will be able to offer 1-2 Normal (Academic) subjects in areas in which they have particularly strong strengths. This flexibility allows us to better cater to some of our students' diverse abilities. We are already doing the same for Normal (Academic) students who have, from this year, been allowed to do two 'O' level subjects at Secondary 4.

Firstly, could the Minister comment on the performance of the Normal (Technical) students who get transferred to the Normal (Academic) stream?

Secondly, I would like to ask the Minister if he could confirm that it would be difficult, if not, impossible to get transferred from the Normal (Technical) to Normal (Academic) at the Secondary 2 level even if at Secondary 2 level, the student actually complies with the 70% pass mark for all subjects.

On the first question, because we allow Normal (Technical) students to be transferred to a Normal (Academic) stream only when it is clear that they have the academic aptitude and interest for an academic course, the students who have been transferred have been able to do reasonably well in the Normal (Academic) course. I do not have the exact data with me but they have in general not failed.

On the second question, there are a few students who are transferred at Secondary 2. The numbers are small and that is not surprising because most students in fact show aptitude by the end of Secondary 1. In fact, in primary school, at the end of Primary 5, those students who are capable of coping with the EM2 course, are already transferred at that point. On an exceptional basis, some students are transferred in Secondary 2. The teachers and the schools have to be convinced that the students are able to cope with an academic course. But, like I have said, it is not surprising that the numbers are small.

3. Ms Braema Mathiaparanam asked the Acting Minister for Education (a) how many students applied for free textbooks for this school year (2003); (b) how many were successful in their applications; (c) what are the criteria used to process such applications; and (d) whether the Ministry will look into why it is necessary for the content of primary school textbooks and workbooks to be changed each year and split into two sections, making it difficult for children to share their books across the years.

Mr Speaker, Sir, under the Ministry of Education Financial Assistance Scheme (MOE FAS), needy students can apply for waiver of school fees and part of the miscellaneous fees, as well as free textbooks if they are in primary or secondary schools. For junior college students, recipients of the MOE Financial Assistance Scheme receive a bursary of $500 which they can use to buy textbooks and other necessities. As at October 2003, there were 10,729 students receiving assistance under the MOE Financial Assistance Scheme. We do not track the number of applications received.

The income criteria for the MOE Financial Assistance Scheme are pegged to that for the MCDS' Public Assistance scheme. They were last revised in January 2003. Under the existing criteria, a citizen student would be eligible for the MOE Financial Assistance Scheme if the family's gross monthly income does not exceed $900 for families with one or two children, and $1,050 for families with three or more children.

Ms Braema Mathi asked why it is necessary for the content of primary school textbooks and workbooks to be changed each year. This is not the case. New or revised instructional materials are introduced together with revisions to our syllabuses which take place every six years. These revisions are to ensure that what is taught to our students is forward looking and remains relevant to our needs.

May I ask the Minister that it is great that the content remains more or less stable for six years. Is there any guidance that the Ministry can give the publishers such that the textbooks do not get printed with new inclusions that children cannot share textbooks across years?

As long as the syllabus remains unchanged, it is not of material significance whether one publisher comes out with a new textbook to improve on what another publisher has produced. If the syllabus is unchanged and these are textbooks which are used by our schools, they are all equally good. But the Ministry is not responsible for deciding on whether improvements or enhancements are to be made by individual publishers.

Does the Ministry issue any guidelines then, please?

We certainly do not require publishers to keep updating their textbooks every year.

4. Mdm Ho Geok Choo asked the Deputy Prime Minister and Minister for Finance (a) what steps are being taken to review the organisational structures of the various Ministries and Statutory Boards with a view to having a flatter structure and lesser layers, in line with the mission of the Cut Waste Panel; and (b) what will be the estimated number of positions in the whole Government machinery that could be collapsed, re-combined or re-designed for greater efficiency.

It is not practical for the Ministry of Finance to approach the Cut Waste Exercise on the basis of studying every organisation to see how it could or should be restructured. This will require armies of consultants. Ministries and statutory boards would be very defensive of what they do and the external auditors will have a hard time figuring out what to cut, and where.

Restructuring efforts yield worthwhile results only when the organisations themselves see the need to change and want to economise and cut waste so as to release their resources to improve or offer services of higher priority. My Ministry has, therefore, sought to force ministries to reassess their priorities and seek economies through two actions. First, by setting a clear upper bound on their budgets, and second, by making clear the requirement for best sourcing.

Expenditure budgets must adjust with revenues. When GDP and revenues go down, the Government is prepared to have budget deficits to help businesses and Singaporeans cope. However, we cannot have deficits year after year as a

standing practice. It will undermine fiscal discipline and Singapore's financial standing. This is why ministries' budgets are kept and pegged to Singapore's GDP. Once the budgets are set, ministries are left to decide how best to operate within their own budgets.

When budgets are tight, ministries need to make trade-offs on where to spend the money. Some ministries would decide on a head-count freeze. Others may decide to cut expenditure on areas like infrastructure and hardware. A freeze on teacher recruitment, for example, is not a good idea for the Ministry of Education, whereas slowing down their school upgrading programme is probably more viable. The Ministry of Finance and the Ministry of Trade and Industry, on the other hand, have implemented head-count freezes. The Ministries of Health and Home Affairs cannot have head-count freezes because of the challenges created by SARS and the terrorism threat. They have to find other ways to cut costs. We have, therefore, left it to each ministry to decide where best to spend their resources to achieve the best outcomes. But everyone knows that, as a rule, their budgets will go up and down with the GDP. Nevertheless, when new expenditure is necessary, as in the setting of the Workforce Development Authority, we must be prepared to spend. So it is not possible for the Ministry of Finance to pre-determine or to estimate the number of positions in the whole Government machinery that could be saved through greater efficiency, restructuring and cutting down of waste.

What we do know is that results of international surveys have shown that the Singapore Civil Service is consistently ranked among the lowest in terms of relative head-count and expenditure as compared to countries such as Australia, Japan, Finland, Canada, the US and UK. Notwithstanding this, the Government is aware of the need to be lean and prudent

in expenditure. But it will not be wise to simply set a target upfront of the number of positions or officers which has to be reduced. For example, defence, education and health, together account for more than half of all Government spending. We can cut the spending in these areas, and reduce the number of people employed in these sectors. But this would definitely mean that we will weaken the SAF, reduce the teacher-student ratio in schools and reduce the standard of subsidised healthcare in our hospitals. I am sure this is not the outcome that we want. So we have to approach restructuring and cutting waste in a pragmatic way.

In a typical structure in a ministry, is it right to say that we normally have a divisional director, a deputy director, a senior manager, followed by a manager and assistant manager? Can the Minister enlighten what would be the distinction between the areas of responsibilities and the scope of authority of these various positions in the hierarchy?

Members should not get the impression that just because we have a director, deputy director, assistant director, managers, that workflow goes up in a very hierarchical manner. In fact, most of the ministry headquarters are structured as teams looking after different areas. These designations are just to reflect the seniority of the people. You will find that many directors do a lot of leg-work. They write their own papers, they do their own secretarial support and they do the whole range of policy research, formulation and development. So please do not be mistaken that just because we have different designations, which should really reflect the grade and experience of the officers, that submissions go layer by layer. That is not the case.

5. Mr Steve Chia Kiah Hong asked the Deputy Prime Minister and Minister for Finance (a) what is the number of foreign chief executive officers employed by Government-linked companies and the Temasek group in the last six years; and (b) of the number employed, how many are still in Singapore and serving with these companies.

Mr Speaker, Sir, the Government does not keep track of CEOs of Government-linked companies. The respective Boards of Directors are responsible for the selection and replacement of their CEOs.

Mr Speaker, Sir, we have been seeing a lot of resignations from CEOs and those employed by the GLCs. After getting their good deal as foreign talents, we see many of them quitting within a few years of getting their huge compensation and sign-on bonuses. Some of them are allowed to keep the stock options for many years to come, like the SGX's former CEO. Are we becoming money-foolish in our search for foreign talents? Are we spending too much for them and giving them a good deal at the expense of our GLCs?

Mr Speaker, Sir, as I have said just now, the appointment, the terms of remuneration, etc, of CEOs are left to the respective Boards of Directors. It is not the intention of the Government to keep track of these conditions. The second point is SGX is not a Government-linked company.

6. Mr Charles Chong asked the Minister for Home Affairs what is (a) the number of agency security guards who have been certified under the National Skill Recognition Scheme (NSRS) and the estimated number yet to complete training and certification; and (b) the pass rate of those taking the test for NSRS certification and the reasons for the low pass rate.

7. Mr Charles Chong asked the Minister for Home Affairs what security screening and training requirements need to be fulfilled by private and agency security personnel before they are permitted to be deployed as security guards.

Mr Speaker, Sir, I would like to declare my interest as the Patron of the Securities Association of Singapore.

Mr Speaker, Sir, could I have your permission to take both Questions together as they are related?

Yes.

Sir, currently, a security agency must submit to Police the personal particulars of any person whom they wish to deploy as a security guard. Police will then screen the person for his conviction records and assess his suitability to be a security guard.

Since November last year, Police has adopted the National Skills Recognition System or NSRS framework to help raise the level of training in the security guard industry. NSRS is the national framework

for establishing work performance standards, identifying job competencies and certifying skills acquisition. There are currently nine NSRS skills standards developed for the security guard industry. Police has adopted two of these for licensing purposes, namely, guarding and patrolling, and incident management. Under Police's licensing requirements, every security guard is required to attend a 5-day course at any of the 17 NSRS approved training centres, where they will receive training on skills such as how to perform access control and patrols, manage bomb threat incidents, preserve crime scenes, provide first aid and use a fire extinguisher. These are basic skills that every security guard should have. At the end of the course, they will be tested by an independent assessor appointed by the Workforce Development Agency (WDA).

Currently, there are 10,000 security guards employed by private security agencies. As at end October this year, 3,400 security guards have been assessed on the two skills standards that I mentioned earlier. 2,150 or 63% passed. The other 1,250 failed in either one or both of the skills standards.

Of the remaining 6,600 security guards who have not been assessed under the NSRS, 4,400 have been exempted as their previous training and experience were assessed by Police to be adequate for their job. Hence, only 2,200 security guards have yet to complete the NSRS training and obtain the certification. Police have given them up till March 2005 to obtain their certification.

Compared to the average pass rate of 89% across all industries implementing NSRS, the pass rate of 63% for the security guard industry would appear low. The WDA, which administers the NSRS, has assessed that this is partly due to the inadequate training provided by security agencies to their security guards.

Many security guards who attended the NSRS did not demonstrate sufficient understanding and practical knowledge of the work procedures involved. Some even indicated that they did not know what to expect of these assessments and were thus not prepared for them. The current security climate makes it all the more pressing for the industry to level up its standards.

Sir, the NSRS framework was only introduced for the security industry a year ago. It will take time for the industry to adapt to a rigorous competency-based assessment framework. Police and MOM will continue to work with the security industry to improve the quality of their services.

Sir, is the Minister satisfied with the standard of training for security guards? Is it sufficient to meet the requirements of our security situation at present? Recently, there were reports saying that some security guards had difficulty identifying hand-grenades and potential time-bombs.

Sir, certainly in terms of the framework that has been put in place, it is a working model. But, like I have said, we have only worked it for a year and there is room for improvement. Both the Police and WDA know this and, in fact, have been conducting dialogue sessions with the training agencies as to how to improve the training and assessment packages. But ultimately the guards themselves, when they perform their duties they must not let up their guard. That is important. So, training is one thing, but the mindset, whilst you are on duty, is another. So really we should prevent human lapses.

But, on our part, putting together this training framework, that is already a big step. Mr Charles Chong must be aware

that up to 4-5 years ago, there were no requirements for training. Even before September 11, MHA and Police, seeing that there was a need to strengthen the regime, already started introducing some requirements and also encouraged the Association to carry out training with private training agencies. But post-September 11, we have sped up the process, and now with this NSRS framework introduced a year ago, I am optimistic that, working together, we can strengthen the security industry, so that it can play its rightful place in the scheme of things, particularly against security threats.

Mr Speaker, Sir, could the Minister clarify that the requirements and training needs which he mentioned are applicable to all security guards and not only to agency security guards?

Sir, there is a distinction made between guards that are under the employment of security agencies, whom we call "the security agency guards", and guards who are employed in-house. Under the Private Investigation and Security Agencies Act, as the name implies, the Act covers only the guards who are employed by security agencies and not in-house guards. There is a basis for this distinction. Security agencies are out there in the market as a core business of providing security services. So there is some holding out on their part as to the competency and standing of the guards. Also the employers that engage them will expect that sort of training.

In terms of their reach on the ground, because security agency guards can be deployed all over Singapore, there is a need to ensure that the guards are properly trained. Whereas for inhouse guards, the position we take is that, as an employer, you have a choice, whether you

want to employ your inhouse guards, that is, employ staff to be inhouse guards or go into the market place and engage agency guards who have been trained. If you employ staff to be your inhouse guards, then your approach should be that, as a prudent employer, you take all the necessary steps to ensure that the person is the right person for the job and is trained adequately for the job.

The in-house guard can be sent for training, but there is no requirement under the NSRS.

Mr Speaker, Sir, the Senior Minister of State has mentioned that there are 10,000 agency guards, but I was told that there are 20,000 inhouse guards. He also said that there is no requirement for screening or training for the inhouse guards. Is the Senior Minister of State aware that some of these inhouse guards perform the same duties as the agency guards, like guarding condominiums and other security sensitive installations? Would his Ministry consider imposing the same screening and training conditions for both inhouse guards as well as agency guards if they perform duties which are of security sensitive nature?

Sir, I have already mentioned the basis for the distinction. Ultimately, it is a matter of choice. Any property owner will have a choice whether to go into the market and engage guards from an agency or to engage his own staff to be his guard. If he engages his own staff to be his guard, the onus is on him to ensure that his guard is of good character and also to provide training for the guard.

The following Question stood in the name of Mr Chiam See Tong -

8. To ask the Minister for Home Affairs whether he will consider putting in more supervision at the Woodlands checkpoint to ease the jam and crowding of Singaporeans returning to Singapore by bus, especially during the weekends.

Question No. 8, Sir.

Sir, our checkpoints safeguard our safety and security. Since September 2001, security checks at all our checkpoints have been stepped up to prevent the entry of undesirable persons, weapons and explosives.

While these checks have initially caused some congestion at our checkpoints, the situation has gradually improved, as we adjusted and fine-tuned the system. Travellers are cleared as quickly as possible. However, it is inevitable that there may still be some inconvenience during peak hours when the traffic builds up. The resulting inconvenience is a small price to pay to ensure Singapore's security.

The clearance time is not lengthened because of lack of supervision. It is the result of the sheer number of travellers.

Let me assure Mr Chiam that ICA closely monitors traffic conditions at the checkpoints. During periods when traffic is particularly heavy, ICA opens up more clearance counters. All available manpower is deployed to clear the congestion. For example, if there is a build up of bus passengers, more officers will be deployed to the bus arrival hall to clear the passengers. In addition, ICA has staggered the shifts of its officers to better accommodate the traffic patterns. ICA can also call upon off-duty officers to return to help during times when there is an unexpectedly heavy volume of travellers. To further speed up baggage

screening, ICA has just installed an additional x-ray machine at the bus arrival hall.

Travellers can play their part by adjusting their travel plans to avoid peak periods where possible. Travellers can call the traffic information hotlines or listen in to TrafficWatch on the radio to find out the latest traffic conditions at the Woodlands and Tuas Checkpoints.

9. Ms Braema Mathiaparanam asked the Minister for Community Development and Sports (a) what is the ratio of teachers to pupils in pre-school education classes; (b) how many children received financial assistance in 2003; (c) how many children dropped out of pre-school classes in 2003; and (d) what are the support programmes in pre-school classes to help children acquire the minimum literacy and numeracy skills necessary for Primary 1.

Mr Speaker, Sir, pre-school children may attend child care centres licensed by MCDS or kindergarten programmes registered with MOE. The ratio of teachers to children in child care centres would depend on the age-group of the children. This ranges from having one teacher caring for five children for those below 18 months, and one teacher caring for a maximum of 25 children for those above four years of age.

For kindergartens registered with MOE, the recommended teacher-pupil ratios are one teacher to 20 K1 children and one teacher to 25 K2 children.

The Government recognises the importance of pre-school programmes in preparing children for primary school and that lower income families need additional financial assistance so that their children can benefit from such programmes.

Children from needy families are eligible for subsidies through the Centre-Based Financial Assistance Scheme for Child Care (CFAC). This scheme enables young children from low-income families to benefit from quality developmental programmes at child care centres. It provides a subsidy on top of the existing Government Childcare Subsidy for Working Mothers. Under the CFAC, there is also a one-off assistance of up to $1,000 for low-income families to meet the upfront costs of placing their children in a child care programme. As of 30th September 2003, there were about 2,200 children assisted under the CFAC.

For those who prefer to send their children to kindergartens, the Government has also recently introduced the Kindergarten Financial Assistance Scheme (KiFAS) to help low-income families pay for the cost of kindergarten education. The subsidies are targeted at children who are attending kindergartens that have upgraded their programmes to qualify for the Ministry of Education's recurrent grant. KiFAS aims to assist low-income parents offset any fee increases which may arise when better-quality kindergarten programmes are implemented. Application for the 2004 kindergarten intake has commenced in October 2003 and about 3,500 applications have been received so far.

The Member also asked about the number of children who dropped out of pre-school in 2003. Children leave their pre-school centres for various reasons. A child who leaves one centre may subsequently be enrolled in another pre-school centre. Both MOE and MCDS do not have data on children who "drop out" of pre-school as requested by the Member. However, for child care centres, centre supervisors will refer cases of children who may have to leave child care due to financial reasons to the CDCs for financial support so that they can remain

in child care or be referred to Family Service Centres for other social services.

Sir, the Minister for Education will address part (d) of the Member's question on support programmes in pre-schools to help children acquire the minimum literacy and numeracy skills necessary for Primary 1.

Sir, does the Minister think that it is time to have a national registry of children who are eligible for pre-school to track them? Because, now with compulsory education, it becomes more important that our pre-school children get their minimum numeracy and literacy skills. That is one question.

Another question is that I was disturbed by some recent news story as well as what I understand from social workers that in a classroom with a ratio of 1:25, there have been instances where childcare teachers have wrung their hands and asked the parents to take the child out. How can we prevent such things from happening? Is it perhaps timely to review this ratio?

Sir, it is not compulsory for every child to attend pre-school classes. Therefore, there is no need for us to have a national registry. But I agree with the Member that we should encourage parents to send their children to childcare centres or kindergarten programmes. In fact, the take-up rate is quite high. For all the childcare centres over the last four years, the enrolment rate had been up to about 75%. So, there is already an understanding by parents that childcare centres and kindergarten programmes are necessary for the child's development. On that accord, I do not think it is necessary for us to have a national registry.

On the same point, self-help groups are also encouraging low-income families with young children to enrol their children in childcare centres and kindergartens where there are assistance programmes for them in terms of offsetting the fee requirement for these families.

As regards the difficulty of some childcare teachers to deal with difficult children, I do not know of any specific cases. But if the Member knows of specific cases, I will be most happy to investigate.

As for the ratio, we have looked at this very carefully, and these are based on some studies that have been done. It is left to the childcare centre to work with the specified ratio. As I have mentioned in my reply, it is a maximum of 1 teacher to 25 children. There are some childcare centres which cater to 25, some even less. I agree with the Member that we should find the best way possible to integrate every child into the childcare centre. We have done so, especially with disabled children. This year we announced that some childcare centres are taking in kids who are disabled. Beyond that, I think the childcare centres will have to find their own way to deal with some of the difficult children. But if there are specific cases that the Member would like to raise with me, I will be most happy to look into them.

Sir, I would like to ask the Minister whether he can consider additional financial assistance for children who are slightly handicapped and also have learning difficulty, especially those who are mildly dyslexic and autistic children.

Sir, I do not have the exact figures now, but earlier this year we have extended some of the schemes to children with mild difficulties in learning. But I will be most

happy to supply the information to the Member.

10. Ms Braema Mathiaparanam asked the Acting Minister for Education (a) what are the minimum literacy and numeracy skills needed for a child to be successfully enrolled into Primary 1; (b) what programmes are there to prepare the child, who has fallen short of these standards, for Primary 1; and (c) what is the rationale for such minimum requirements in Primary 1.

Mr Speaker, Sir, Ms Braema Mathi's question is on what the minimum literacy and numeracy skills are for a child to be successfully enrolled in Primary 1 (P1) and what are the support programmes at the pre-school to help children acquire these skills. MOE's approach to pre-school education is to encourage pre-school operators to prepare children for learning rather than for the primary school curriculum specifically. This means arousing children's curiosity about the world around them, teaching them social skills such as learning to work and play with others, and the ability to express their thoughts and ideas. To nurture children's motivation and interest in learning, we encourage a holistic approach during the pre-school years, aimed at developing children in all domains: the emotional, physical, moral, social and cognitive. There is thus no need for support programmes at the kindergarten level aimed at preparing children for the Primary 1 curriculum.

Pupils do not have to meet any academic prerequisites in order to be enrolled in Primary 1. Neither do the Primary 1 English Language and Mathematics syllabuses assume that pupils have any prior literacy or numeracy skills. However, the reality is that pupils

do enter Primary 1 with different levels of readiness and skills in literacy and numeracy.

Schools therefore tailor their instruction appropriately to meet the needs of their pupils, taking into consideration the experience that they bring with them. There will be some pupils who will need more support initially compared to their peers at the entry point in Primary 1. To enable teachers to support such learners more effectively, a set of Primary 1 supplementary materials for Mathematics and English Language has been developed by MOE and distributed to schools. These materials guide teachers in conducting small group teaching to help pupils understand Mathematical concepts, and acquire the basic skills in reading and writing so that they can keep pace with the class. Further, we have in place, as Members know, the Learning Support Programme, an early intervention programme in all primary schools, that provides additional support in language and literacy to pupils at Primary 1 and Primary 2.

Sir, could the Minister please clarify on why some kids, as reported in the newspapers, have been asked to take a year off to increase their competency in literacy and numeracy skills before being enrolled in Primary 1? What is the Ministry's mandate where principals are concerned in taking in children who perhaps cannot read or write at all?

Sir, I am not aware of students being asked to take a year off. We have a number of students who are particularly weak in numeracy and literacy skills when they enter Primary 1 and they are placed in the Learning Support Programme. I have visited many of these classes and observed for myself the level of competency of the students, and some of them, because they may have either missed pre-school education or attended

irregularly, are rather weak. But through the Learning Support Programme, we are able to bring them up to a level where they are able to, by and large, participate and benefit from the Primary 1 and Primary 2 classes after a few terms.

The following Question stood in the name of Mr Chiam See Tong -

11. To ask the Minister for National Development whether the upgrading work at Sennett Estate, as promised by the Prime Minister, has commenced and, if not, when will the work commence.

Question No. 11, Sir.

Mr Speaker, Sir, since the announcement of the Estate Upgrading Programme at Sennett Estate in January 2003, a Working Committee comprising the CCC Advisor, and volunteers from the grassroots organisations, has been formed to gather feedback from the residents on the desired upgrading items. The Working Committee will next be working with the residents, relevant public agencies (ie, LTA, PUB, URA, NParks and SLA), the implementing agent and consultants on the detailed planning and design.

It usually takes about 12 to 18 months to do the planning and design, after which work can begin.

.

12. Mr Steve Chia Kiah Hong asked the Acting Minister for Education if he will give the rationale for allowing school

students to carry mobile phones for use in schools.

Mr Speaker, Sir, the Ministry does not prohibit the use of mobile phones in school premises. Schools decide on this for themselves. Those schools which allow for mobile phones set their own rules regarding its use, for instance, to ensure that classes are not disrupted.

Where schools allow students to bring mobile phones to school, they are encouraged to use them in a responsible manner and observe proper etiquette when doing so.

Sir, recent news reports revealed that at least 15 mobile phones were reported lost or stolen daily. By allowing students to carry mobile phones in school, are we not adding to the number of handphone thefts and robberies happening amongst school students?

That is a curious argument. The same can be made about watches or many other items of personal belonging. We do not intend to take a draconian approach to solving these problems by preventing students from wearing watches or wearing clothes to schools.

Sir, does the Minister know that many school students are also very obsessed with the latest handphone models and constantly bug their parents to buy them these expensive latest new MMS models with cameras and whatever? It may not be much for a rich family to buy, but for children from lower-income families, going to school without a mobile phone is actually like being considered an outcast among their peer group, not accepted into the group, and not being kept in the loop of what is happening because they do not

receive messages from their friends through the mobile phone.

I am wondering whether the Ministry will look into subsidising the students for carrying handphones, by allowing for more students to carry handphones.

That will, of course, add to the number of thefts of mobile phones, by Mr Chia's argument, which is not something we desire. His observation on students being obsessed with latest brands, like others in society, is a useful one. It is basically a social phenomenon. It makes for a good talk during CME lessons in schools, but it is not something which can be eliminated. This is in the nature of a society which has social aspirations. It sometimes takes the form of relatively petty things. These are things that are useful to talk to students about, but they are not really policy issues.

Sir, this idea of allowing a certain article to be brought into school is one thing, but allowing its use is another. And I think this question is about students who are allowed to carry mobile phones and they use them in school. This is where it can affect discipline in the school. I remember that MOE was very clear that we want to have a level playing field for kids coming from rich backgrounds as well as from poorer backgrounds. Anything that will accentuate the differences and lead to an inferior complex should be discouraged. So, has there been any attempt in schools to ensure that as far as possible we do not have that differential? Wearing school uniforms is one way in which you make sure everybody comes equal, and you do not come in with the latest branded clothes and things like that. I think it also applies to school shoes. You cannot come in with Nike shoes or things like that.

Prof. Ngiam, no Nike shoes or other things, let us stick to mobile phones.

Just an example where MOE is conscientious. So, in this regard on the use of mobile phones, is there the same consideration?

I would rather leave this matter to schools. Some schools, in fact, do prohibit mobile phones; most schools do not. Those that do not, in fact, have guidelines on how students should use it. These are matters which schools really have to decide for themselves. As a philosophical matter, I do not think we should take the approach of standardising everything, whether it is shoes, bags or the things they hang on to their bags. It is really something that you cannot prevent altogether. But it is important for students to be educated on how to use a mobile phone without disrupting the school or educational activities. Certainly, because a mobile phone is not being used in education, no child is disadvantaged for not having one.

Mr Speaker, Sir, why can the MOE not issue standardised guidelines for all principals and all schools to follow, instead of having the individual principals in individual schools to decide whether to allow or not to allow? It should have a standardised policy where education is concerned.

If this was a matter of some gravity, for instance, if the instrument or technology in question is used to inflict pain on others or used for criminal purposes, we might take a serious view of the matter. But, in this instance, it is really something like many other issues that a school is really responsible for. The principal is responsible for dictating rules and guidelines for a whole host of things. It is

really not for the Ministry to get into these matters.

Mr Steve Chia, I suggest you get on to your next question.

13. Mr Steve Chia Kiah Hong asked the Minister for Defence (a) if there is a 'white horse' classification for national servicemen in the Singapore Armed Forces and, if so, (b) who qualifies to be classified as a 'white horse' and what privileges are accorded to them.

Sir, National Service (NS) is the foundation of our nation's defence. The success of our national service hinges on two key factors - universality and equity. All male Singaporeans, regardless of socio-economic background or status, are required to fulfil their NS duty. We have applied these principles consistently and unequivocally. All national servicemen are treated equally and are deployed in vocations and units based on SAF operational requirements, their medical classification and their academic and military performance. No national serviceman has been accorded special privileges.

Prior to year 2000, the term 'white horse' was used to identify sons of influential persons to ensure that such enlistees were not given preferential treatment, and that medical classification and vocational assignment are scrupulously fair.

Over the years, the public has widely accepted that the NS assignment system is fair and that there is no preferential treatment to anyone. As such, since year 2000, the SAF does not have a "white horse" classification for national servicemen.

Resumption of Debate on Question (10th November, 2003), "That the Bill be now read a Second time.". - [Minister of State, Ministry of Trade and Industry].

Question again proposed.

2.25 pm

(In Mandarin): Mr Speaker, Sir, I support the Bill. Once it comes into force, the Consumer Protection (Fair Trading) Bill will effectively help to protect the interests of Singaporeans and tourists when they consume, make purchases and obtain services in Singapore, thereby enhancing our reputation as a shoppers' paradise.

This Bill has also clearly defined "unfair practices" and has listed out 20 specific unfair practices so that the victimised consumers can use as a basis to take legal action against the unscrupulous merchants. When you make a claim at the Small Claims Tribunal, you need only to pay just about $10. It is convenient. It saves time and money, and you do not have to go through a complicated legal process.

I have two issues to raise with the Minister of State:

First, the Small Claims Tribunal is operated mainly in English. For those ordinary citizens who do not speak English, they feel that they are being shut out. Therefore, can I suggest that separate service counters manned by officers who speak Malay, Tamil and Chinese be set up to serve these non-English speaking people.

Secondly, under this Bill, unfair trade practice is not a criminal offence. So if the merchants do not comply with the order of the Small Claims Tribunal and

refuse to compensate the consumers, keep on delaying payment or even close down their business, these claimants would have a big headache. They will have to apply for a writ of seizure and sale. If the other party has absconded or has deliberately closed down its business, the claimants will have to go through more legal proceedings to enforce the court order. Otherwise, they will just have to resign to fate and give up their claims. These unscrupulous merchants will just run away scot-free.

I think putting the onus on the consumers to seek compensation is not fair. We should take some legal sanctions against these unscrupulous merchants. For example, if they refuse to pay the compensation, the officer-in-charge, the shareholders or the directors should be charged in court and fined, and the court should have the right to increase the compensation to the victims. Only then would it be fair to the victims and it would also have a deterrent effect on the unscrupulous merchants.

I am also very disappointed and puzzled as to why this Bill does not cover the insurance, financial and banking industries. As we know, almost every single Singaporean, even a little boy, would have some dealings with the bank. As we know, many parents nowadays would open bank accounts for their children. Besides, many Singaporeans are taking up various types of insurance coverage. There is no way the ordinary folks can take on these banks and insurance companies who are financial giants. As such, these ordinary citizens need the Government to protect their interests and to help them, so that they would not be bullied by these big banks and insurance companies. Recently, a very big insurance company refused to fulfil its commitment under some of the insurance policies. I think this is a good example.

Apart from that, there is strong competition among the banks. Apart from receiving deposits, they are promoting all sorts of financial products. When they are marketing these products, they use all sorts of unfair means which we read frequently in the newspapers or heard from our friends, residents and even our family members. In fact, I have a personal experience.

Recently, I went to a bank to change my ATM card. When I was waiting to be served, I noticed that the counter staff were persistently promoting some of their products to the customers. I heard one of them telling an elderly lady, "Auntie, you put your money in a savings account, the interest is very low. Why don't you put in this particular account where you can earn much more interest?" In fact, this particular account is not a savings or fixed deposit account but an investment product, like a unit trust fund. It may not be suitable for everyone. Moreover, in the course of his sales talk, the counter staff kept emphasising the returns and did not take the trouble to understand the needs of his customer, nor explain the possible risks of such investment. For an elderly person of 60 or 70 years old, why does he need to buy a long-term investment product? And should he be buying a unit trust? He does not even know what a unit trust is! In this process, the counter staff did not tell his customers that they could also lose money from this investment, and the various fees and charges were not explained to them.

If we go by the definition under this Bill, such a sales tactic should be classified as an unfair practice, because it is in violation of clause 4(a) of this Bill, that is, failing to explain certain items to the consumers, or misleading them, and under clause 4(c)(i), that is, failing to protect the interest of the consumers. It also violates clause 4(c)(ii) as the unique features and nature of this transaction are not explained.

Apart from them, the banks are in the habit of using the small print to conceal some very important and disadvantageous terms to the consumers. This is exactly what is described in Unfair Practice No. 20 in the Second Schedule.

When it was eventually my turn to be served, instead of proceeding to change my ATM card which was the purpose of the visit, he zeroed in on my bank account and said, "Uncle, your money in the savings account is earning very low interest. Why don't you buy this other product? It will give you more interest." I smilingly declined his offer.

But, today, if you ask me again, I would say, "I hope the Government would amend this Bill to cover banking, finance and insurance industries as well."

Sir, it is the duty of advertisers to tempt buyers, and it is the duty of buyers to resist them; or at least to carefully evaluate them.

Consumers are not stupid. But they are often either too busy, illiterate or not in the best position, when confronted with a hard driving and smooth talking salesman. And all too often, consumers are either taken for a ride or could have made better decisions with regard to their purchases.

Recently, a grassroots leader, who is a polytechnic diploma holder, came to see me about a contract he entered into with a door-to-door salesman for a purchase of a vacuum cleaner. This was no ordinary vacuum cleaner, but one which cost $3,000 to purchase. Now, why would anyone want to buy a $3,000 vacuum cleaner? Obviously, my grassroots leader was sufficiently tempted to want to consider it, subject, as he told the salesman, to getting his queen's, that is, his wife's, consent. Mind you, he was

retrenched and was not drawing an income at that time. The salesman said it was okay and arranged for him to take the vacuum cleaner and to sign some papers which, as it turned out, was the sales agreement. There was no effort on the part of the salesman to either explain the terms of the agreement or allow the buyer to study the terms of the agreement. All my grassroots leader was told was to just sign the agreement and leave the rest to him. As it turned out, his wife thought that the purchase was a stupid one and went totally ballistic on finding out about the vacuum cleaner. Ah, but my friend said not to worry. The contract was subject to her consent. However, he was wrong. The contract that he signed was a firm commitment to buy and there was nothing that said he could renege from it if his wife had objected. Obviously, there was a misrepresentation by the salesman and the contract, which the grassroots leader signed, had put him in a weaker position in the eyes of the law as, indeed, my friend was in that position when he subsequently caved in to the seller's legal demand. I need not have to tell you what happened between he and his wife.

Sir, in a market driven economy, we celebrate the diversity of choices that the consumer is given. Yet, at the same time, the playing field is never even for the consumer. Often, it is the one with the financial resources who has the upper hand. Supposing a German car company buys a business-class ticket for a motoring journalist, wines and dines him for a week in Stuttgart. Do you think that bad car review is in the making?

Sir, I support the Bill whose function is to allow consumers to take action against retailers who are engaged in unfair practices. It has been a long time in coming, in making illegal, practices which we know to be totally reprehensible; such as bait and switch tactics, bogus last-day and closing down sales, and making

advertisements look like editorials. For once, it is now possible for the consumer either on his own or through an independent body seek redress in court against unfair practices.

While I welcome the introduction of such legislation, Sir, I do not think that the objects of the Act has gone far enough to try to redress the imbalance that exists between the consumer and the retailer. There are two reasons for this. Let me explain. First, the current Bill gives the consumer redress largely through the courts. It presupposes that the consumer will always have the wherewithal to mount or initiate litigation against the erring retailer. Such an approach has its limitation. Litigation is often seen as time-consuming and an expensive way to deal with a problem. Additionally, we do not know if the prospect of being sued by the consumer would have a sobering effect on the retailer to behave. The truth of the matter is that, in the majority of the cases, consumers who have been misled or unfairly treated, would just blame it on their misfortune to have encountered such an unethical retailer. The pots and pans seller who cons the housewife, my mother included, into buying such wares on wild promises of its quality is unlikely to be brought to task before a judge in court. It is just not in our Asian culture for an aggrieved party to seek redress in court. The approach in the West may be different, but it is just not the culture here.

Sir, I am disappointed to learn that the Government has decided not to criminalise any aspect of unfair trade practices. A crime and punishment approach to complement civil remedy may be better suited in the circumstance. The point about criminalising an action is not about making it more onerous for the retailer to operate, but to serve, as my colleague has said earlier, as a deterrent against reprehensible conduct. The description of

specific unfair practices in the Schedule makes one wonder whether there is any difference between cheating and unfair practices. Yet, on the one hand, cheating is a Penal Code offence, the punishment of which is a jail term. On the other hand, the remedy for unfair practices, as is the basis of the proposed Bill, is injunctive relief, restitution and damages. Unfortunately, unfair practices in law is not cheating as such and, yet, it is no less morally reprehensible. Sir, let me repeat. The prospect of going to jail will have a greater effect on the behaviour of the retailer than the prospect of being sued for damages.

Our policy towards protecting members of the public is full of inconsistencies. On the one hand, under the Securities and Futures Act, a person cannot offer securities to members of the public without an accompanying prospectus that gives full and accurate information about the issuer. Any fradulent or negligent misrepresentation by those involved will result in prosecution by the authority and the punishment, besides civil remedies, can include jail terms. On the other hand, we allow people to sell foreign real estate, even time-share rights, using hard pressure techniques and often on the basis of misleading representations, almost with impunity. And people have lost huge sums of money that way. Just look at the recent newspaper reports about people who have been misled about time-share contracts. In both cases, whether it is share investments, or purchases in time-share rights, people are put at risk of losing vast sums of money. Yet, with one particular type of investment, there is an overwhelming overload of protective legislation, and in the other case, the investor or the buyer is left very much on his own. Why the inconsistency?

Seen from this perspective, the present Bill does seem very much like that

of a toothless tiger. I need say no more than to lament that even the right of the consumer to take action against an unethical time-share seller in the Small Claims Tribunal, a supposedly easier forum to prosecute a claim, is not given to him in the Bill. Although the right to terminate a time-share contract may be given by a Minister pursuant to the provisions of the Act, has the Government considered whether or not there are other remedies that the aggrieved party may want to pursue arising from the time-share contract? And I say that it is a toothless tiger even for the Government because of the rather unusual requirement for a specified body to consult a panel before taking any action against the errant retailer. Since when has the Government got to consult anyone before taking action in the public interest? I would therefore urge the Minister that, if the Government is serious in its intent to protect the consumer, then more can and should be done specifically by way of criminalising the more serious aspects of unfair trading practices.

Sir, my second comment on the present Bill relates more broadly to the question of redressing the imbalance of information between the retailer and the consumer. At the marketplace, money is often made on the basis of imperfect information flows. Thus, an ignorant consumer is often an easier target for salesman to close a deal than one who is well knowledgeable about the product that he is looking for.

It is therefore arguable that the best protection for the consumer is often not the law which helps him post facto, but information which helps the consumer decide what to buy, where to buy and when to buy. Consumers will also want to know which shops to avoid, which operators to choose and how much to pay. Such information, if made freely

available, will minimise the risk of being taken for a ride. The point is that if I bought a handphone, the last thing on my mind is to want to take the vendor to court because it keeps breaking down. What I want help on would be information that will help me decide and a forum that will allow me to provide feedback to help other consumers make the right choice.

Unfortunately, in Singapore, the culture and the climate of consumer education is rather lacking. I applaud the effort of CASE in seeking to advance the cause of consumers in Singapore through battles with the retailers on specific issues. However, I also recognise that, as an organisation that depends on members' subscription to fund its activities, its ability to do more for consumers by way of its public education programme is rather limited. Such programmes, to achieve any real effort, can be expensive to undertake and would often continue to remain on the wish list of CASE unless Government is prepared to substantially support it through adequate subvention on its part. For instance, in the United Kingdom, there is a consumer magazine called "Which", a trusted publication of the consumer watchdog body there. It is a magazine that has earned the trust of readers as it independently reports on the quality of goods and services provided. Independent tests and surveys are objectively conducted and the results are often published in the magazine for the benefit of its readers. It is, I believe, a magazine that retailers respect and perhaps fear because of the potential damage that an adverse report may do to their sales. A magazine such as "Which" is therefore a blessing to consumers as it gives them the ability to make the right choice. However, publishing such magazines can be expensive and would require Government funding and support. Typically, advertising revenue for such magazines is never an option if integrity and independence are to be preserved. We would love to have a magazine like

this in Singapore. However, would the Government be prepared to support its publication, and not only the publication, but also to provide it with funds to collaborate with SPRING to carry out independent tests on consumer products and services?

Sir, if the Government is determined about wanting to strengthen the consumers' position in Singapore, then it could truly do much more than what it is doing at the moment. I am just somewhat pessimistic that unless we step up our efforts in consumer education to create a greater transparency in the marketplace, not even the present Consumer Protection (Fair Trading) Bill will be sufficient to truly protect consumers from unscrupulous retailers.

Subject to the above comments, I support the Bill.

Mr Speaker, Sir, I stand to support the Consumer Protection (Fair Trading) Bill.

Responsible retailers who believe in the principles of fair trading should support the Bill. The umbrella body representing these retailers should also participate jointly with the Consumers Association of Singapore to encourage fair trading both for the retailers and consumers. Retailers should be encouraged, in particular, to accept a goods-returnable policy, of course, with sufficient safeguards for the retail operations.

However, the specific unfair practices in the Second Schedule is a long list. It should also allow the retailers sufficient time to work out the operation details with the suppliers to safeguard their interest as well as to support the Bill. Recalcitrant offenders should be brought to book and publicly chastised. The recent media publicity on STB's

action against some shops was commendable. MediaCorp Radio should also be commended for running the consumer watch programme. We should encourage more umbrella bodies to constantly continue to make the public aware of such recalcitrant cases.

I share with Mr Sin Boon Ann's concern on time-share contracts. I would like to request that this Consumer Protection (Fair Trading) Bill also protects the consumer's interest in proprietary clubs and time-sharing facilities and resorts, to review the form of corporation, to hold the investment of its members or, if deemed as a consumer product, the ownership of the product held in trust for the members, the adequacy of the disclosure of information to members as regards the management of the investment or products, and allow the members a general meeting to question the proper management of the club,

hence the protection of one's own investment. Lastly, to allow the members or consumers to minimise their loss with the ability to sell or transfer their investment or product at a reasonable transfer fee.

To use the Small Claims Tribunal for these cases, MTI may have to work with the Ministry of Law on their set up and the ability to cope with the cases. I understand that recently the Subordinate Courts have put a limit to the number of cases each Town Council could submit for their arrears in service and conservancy charges.

There should also be continuing public education programmes subsequent to the passing of the Bill. We hope the Government agency and CASE could work closely with the grassroots agency to inform the public of their rights under the new amendments, explain the avenues open to them to seek redress for unfair trade practices, make them aware what they need as evidence so that they do not

unwittingly throw away important documents, and tell them how to avoid high-pressure sales tactics.

The acid test for the public before they make any commitment is to ask: "Is this deal too good to be true and what is the catch?" Then, make the decision and do not regret.

Mr Speaker, Sir, I am very pleased that this particular Bill has generated such interest among Members. I think it bodes well for the Bill, as a key thrust of the Bill is to raise awareness of the issues involved in consumer protection. I have listened very carefully to all the suggestions. In particular, I would like to thank Members for the support that they have given to the Bill.

But let me just put things in perspective to begin with. What is the underlying philosophy when we drafted this Bill? Basically two.

One is that the principle of caveat emptor remains. That is the operating paradigm. What does it mean when we say "buyers beware"? It means that, as a society, we believe that the individual should take responsibility for his or her own action when he or she enters into a transaction.

Two, we must all be aware that it is not just one interest here, but two interests to balance off. On the one hand, yes, we would like to give adequate protection for the small consumer not to be taken advantage of and enter into an unfair transaction. On the other hand, it is businesses and traders. There should be business certainty and not undue costs in complying with this proposed Act. So, let us bear that in mind, because this

informs the Act and the drafting of the Act.

Members have raised various issues. I will take them in a cluster, because quite a number of hon. Members have spoken.

Mr Leong Horn Kee yesterday asked: what is new about this Bill? Where is the bite? As some other Members have said, this is actually quite a significant milestone in consumer protection. What it does is to provide a right of action to the individual consumer to seek redress when it comes to unfair practices. Secondly, it allows consumers to cancel certain contracts within a cancellation period. In particular, we have specified direct sales and time share. It also creates a specified body, ie, CASE and the Singapore Tourism Board (STB), in the first instance, in which they can enter into a voluntary compliance agreement (VCA) to ensure that the recalcitrant and errant trader not continue with the unfair practice. Also, it allows an injunction to be applied for by the specified body to the courts to prevent that particular practice.

Several Members have spoken on the desirability of having a Fair Trade Office (FTO). Whether we have a Fair Trade Office or not really depends on the nature of the Act. Dr Teo Ho Pin is not here today, but he put it quite graphically when he asked: "What is the point of having traffic rules when you do not have traffic police?" But the context here is quite different. Like Mr Sin Boon Ann correctly pointed out, the Bill does not create any criminal provisions. There is no penal provision here in the Bill. So, the context is quite different. What we have done here - and as Mr Yeo Guat Kwang said in his speech - is really to enable the consumer to seek civil redress, if there has been an unfair practice. Criminal offences are already in the books for the more serious offences, such as cheating, touting, false labelling. So, the Bill is really quite similar to the other consumer

protection legislations that we have in Singapore today such as the Misrepresentation Act, Unfair Contract Terms Act, Hire Purchase Act. In none of these consumer protection Acts have we created a body to police these Acts. And the fact that there has been no agency created for these has not affected the effectiveness of the Act. The intent and purpose of the Act have been fulfilled.

Mr Leong Horn Kee asked whether the reason why we do not have the FTO is because the Ministry is concerned about the costs involved. The principal reason is that we were concerned in creating another regulatory agency which might add another layer of bureaucracy to businesses. As I said, there are two interests here in which we have to balance off. MTI, together with CASE and various bodies, did a detailed study on this. If we look at jurisdictions which have such a body, it has a tendency to grow a bureaucracy of its own, spewing forth more and more administrative directives. If Members have the time and would like to look at some jurisdictions, you will find that the amount of directives that you have to comply with for consumer protection is voluminous.

So, we were mindful of that. That was the reason, trying to minimise undue compliance costs on businesses while at the same time protecting the small consumer. What all Members must be clear here is that the laws we have reflect the sort of society we want. How we effect the laws reflects the sort of society we want. I have sat here on many occasions, and I have heard Members stand up and say, that really the sort of society they want is one that moves from a nanny-state to an enabling state, and I fully agree. And this Bill is a step in that direction. It provides the individual consumer with the right to take action rather than to rely on the state to take action on his behalf.

As Mr Yeo Guat Kwang said yesterday, and he put it well, if we take this approach, it is much more robust and sustainable, and I am quoting him here.

Next, there was a cluster of questions on what is the role of CASE and specified bodies. To begin with, CASE. CASE is not the de facto Fair Trading Office. Under the Act, its role is quite narrow and focused. Two things. It is a specified body; this means that it can enter, as I said, into a voluntary compliance agreement. Two, it can apply for an injunction. Why have we done this? Why have we designated CASE and STB to be specified bodies? If we sit back and look at it, under the Bill, the individual who has suffered an unfair practice has a right to take action. But, beyond that, it is not in his interest. He has to be quite a rare individual to go to court, suffer the legal cost to get an injunction to provide and to protect the wider public interest. And that is the background to why we have designated CASE and STB as specified bodies, because they will then be able to act for the wider public interest, ie, there is a public good element involved here in both the VCA and injunction.

There was a suggestion as to why we did not make CASE the body to adjudicate on small claims which are less than $5,000. The problem here is, if you have read the papers you will know, when there were suggestions that CASE might be a specified body, there were howls of protests that CASE would be biased. It is consumer-centric, so it would be biased, and the retailers would therefore be at their mercy. So, to make CASE in effect the prosecutor and judge in its own cause would not be sensible. Far better to let it go to the courts or Small Claims Tribunal.

Should we give immunity to CASE in its role as a specified body? We looked into that. The decision that affects the trader is made not by CASE but by the Injunction Proposals Review Panel. And

that is why the Panel has been given immunity and not CASE.

What about the $20,000 cap? I think it is important to go into the intention of the Bill. The Bill is to protect small consumers. In our deliberations, in the joint task force, the conclusion was that, generally, if it is a higher value item, then the consumer should be in a position to pursue this on his own because he has greater resources and expertise. More importantly, is that by putting it as $20,000 for the value of the claim, it covers most of the complaints that CASE has been handling.

Let me give Members some statistics. In 2001, 99% of disputed claims dealt with by CASE were equal or below $9,000. For 2000, 99% of disputed claims were equal or below $12,000. For 1999, 99% of disputed claims were below $7,000. Hence, a cap of $20,000 in the value of the claim covers almost all the complaints that CASE has been receiving.

The next series of questions is on why is it that the Small

Claims Tribunal does not have jurisdication over time share, hire purchase and rentals. Mdm Halimah Yacob yesterday brought up the point that, this being the case, if someone were to purchase furniture, it might not be covered. He cannot go to the Small Claims Tribunal to have the matter resolved. In fact, most furniture purchases would actually be covered under the Small Claims Tribunal because these are not hire purchases. They do not come under the Hire Purchase Act. Typically, it is really a credit sales transaction. They are making monthly instalments and the retailer is just extending credit to them. So it is actually captured by the Small Claims Tribunal. The issue here is really less to do with the Bill than the jurisdiction of the Small Claims Tribunal, and this is what we will monitor and see how it develops and, if necessary, make the adjustments in consultation and discussion with the relevant bodies.

Mr Leong Horn Kee asked whether competitors would abuse the Act by filing complaints to a specified body and be a nuisance to a competitor.

Firstly, if it is just a trader to a trader, it is not covered by the Bill. It has to involve a consumer transaction. So, if it is a business transaction, it is not covered.

Secondly, there is a screen. CASE and STB act as a screen so that the trader, in his position as a consumer, if it is a dual-purpose good, ie, he has business purposes and consumer purposes - and that is captured under the Bill - they still have to go through a screen, and that is why we have a specified body. So, CASE or STB will do their due diligence. Even after that is done, there is a further screen, which is the Injunction Proposals Review Panel. So, there are certain safeguards to ensure there is no abuse.

Mdm Halimah Yacob and Mr Yeo Guat Kwang asked whether by having the specified body, have we not made the process too cumbersome, that it will take too long to get an injunction. The issue here is that we needed to balance between giving traders the assurance that there will be no element of bias in the application of the injunction against that of timeliness. We have to balance the two. If Members have read the papers, when the idea was first floated, retailers were concerned. They were concerned that, again, because CASE is consumer-centric, they are not being protected, hence, the Panel as an independent and objective check. But the Panel will be mindful that the time element is important, to ensure that the injunction

process works to safeguard the public interest.

Dr Teo Ho Pin brought up the point about the voluntary compliance agreement. He asked whether it is effective if someone enters into it and then ignores it. The VCA was meant to be a non-litigious option so that it is less costly for all parties involved. If it is breached, a specified body like CASE can sue to recover its costs as a civil debt. And if the consumer's claims are included in the VCA, then that consumer can sue for his loss as a civil debt. There is no need then to prove unfair practice once it is captured in the VCA. Further, a specified body, if there is a violation of the VCA, can go ahead and apply for a court injunction, if it is endorsed by the Panel. And if there is a breach of the injunction, this could lead to a custodial sentence or fine, or both.

Several Members have spoken in this House about the 3-day cooling-off period. The first principle is that we would really like to preserve the sanctity of contracts. And what happens with this 3-day cooling-off period is that it is a signficant departure from the sanctity of contracts. Mr Ong Kian Min is not here today, but yesterday he made a good point. He said that there is only a fine line between an unfair bargain and a bad bargain. It is only a fine line. So, we have to be careful here. This is a significant departure because, within those three days, you can cancel it without any proof of duress. The issue here is really that of high-pressure sales. With high-pressure sales,

for example, if you are forced to buy a vacuum cleaner, which you do not want, you have three days away from the pressure to review your decision whether or not you should go ahead with it, ie, three days away from duress and pressure. It is not to give you time to look at the goods that you have contracted, which may be exactly as the person has described. So the vacuum

cleaner that he has sold to you, with all the attributes, are exactly there. It is not for you to receive the vacuum cleaner and then say, "Well, I do not want the vacuum cleaner."

In the United States, they have a three-day cooling period. So it is a cooling off period, not a see-and-then decide period, not quite the same. In any case, the three-day period only kicks in when the trader informs the consumer that he has a three-day cancellation period to decide whether or not he wants to go ahead with the transaction. If he fails to do so, it starts at the time when he tells the consumer.

Mr Yeo Guat Kwang and several MPs have asked whether the limitation period could be longer than a year. We looked into this. If you look at the Small Claims Tribunal (SCT), they have a one-year limitation period and, at the same time, they encourage mediation. The point which Mr Yeo made is that by the time we go through mediation and get to the SCT, the one-year limitation period would have expired. But the experience of the SCT has not been the case. Many cases go through the SCT and are resolved, even though they encourage mediation. Mediation is fast. We have checked with the Singapore Mediation Centre. Their statistics show that 93% of cases were settled within a day and the limitation period starts when the consumer reasonably discovers the unfair practices, not necessarily the date of purchase. On balance, we have gone for a one-year limitation period to create greater certainty, mediate as many cases as possible, and if that fails, settled them in the Small Claims Tribunal.

Mr Ong Kian Min, Mr Chay Wai Chuen and Mr Yeo talked about the exclusion of some of the professional services, such as financial services, from the Bill. Mr Ong Kian Min made a point, which I agree, that professional bodies regulate their members with high standards and if they

were to breach their standards, disciplinary action would be taken against them. But this is in no way inconsistent with the Bill. What the Bill does is to complement what the professional bodies are doing by giving the consumer the right to civil redress.

Dr Ong Seh Hong brought up the point on financial services. We have studied this carefully and worked with the Monetary Authority of Singapore on this. The position here is that there are certain Acts that have just been introduced, like the Securities and Futures Act and the Financial Advisers Act. The financial institutions are just making their adjustments now to these Acts. So, a new regulatory framework has been put in place. MAS felt that we should give them some time to settle down before we review it. So the answer is not that it would not be included, but it would be subject to review in two years' time to see whether or not to include it. The points that he has made are valid.

Several MPs have also spoken on the need for education. We fully agree with this. It is important at the end of the day to educate people so that they do not have to rely on civil action to resolve their problems. So we should have consumer education and business education on this Bill. We will work very closely with CASE and other bodies or business associations in this particular matter.

Finally, Mr Speaker, I would like to assure Members that we do not regard this as a once-off exercise. As several Members have said yesterday and today, this is the starting point. We want to kick-start it, we want to get it moving and we have taken an evolving approach on consumer protection. For us, it is a continuous learning exercise. As some of you know, MTI, at the beginning, had reservations on this Bill but by working closely with CASE and other associations,

we have a better understanding of it. So it is a continuous learning process for us. We will monitor developments and make whatever adjustments that are necessary as things develop.

Sir, I am just puzzled by the Minister of State's explanation of the need to balance between the needs of the traders and consumers. In this regard, he said that whether or not an injunctive relief is to be given depends on the panel beforehand. But surely whether or not there is unfair trade practice is a question of fact to be decided by law. Would it not be a proper forum for the judge, rather than for a separate panel, to decide, because if you have broken the law, you have broken the law. Why is it for the panel then to determine whether or not it is in the interest of the parties concerned to determine the question of law? Should it not be the judge?

The panel does not decide on the merits of the case. It is a preliminary assessment whether or not they would endorse the application for an injunction. As I have said, this is to assure retailers that the cases that go up to the court have sufficient merit. It is a preliminary assessment. The actual merits of the case, as Mr Sin has correctly pointed out, is by the court. He is quite right.

Could the Minister therefore clarify what exactly are the parameters or considerations that go into, in deciding whether or not a matter would be brought before a judge in court?

If you look at the Bill, we have empowered the panel, taking into consideration all it thinks is necessary in making the decision whether or not they will allow the matter to proceed to court. So they have the power to do that.

The question should be whether or not there is sufficient

evidence of unfair practice on the part of the retailer to warrant the matter to be heard by the judge, and for the judge to decide whether or not an injunctive relief should be issued.

As I have said, it is a preliminary assessment. They have to weigh it and say yes, there is sufficient evidence, in order to proceed. But the actual merits of the case would have to be decided by the court.

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 Raymond Lim Siang Keat].

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."

Imperative for the Bill

The Regulation of Imports and Exports Act (RIEA) requires all traders to apply for a permit to bring goods in and out of Singapore. The objective is to ensure that only legitimate trade passes through our port. The Act has stood us in good stead. Today, Singapore is renowned as a safe and efficient international trading hub.

In recent years, we have strengthened economic links with major trading partners

through the establishment of a network of free trade agreements (FTAs). These FTAs contain significant tariff concessions for goods that originate from Singapore.

In the absence of an FTA, our trading partner would apply the same tariff to goods coming from all over the world. In ordinary circumstances, they would therefore not be concerned about where the goods were manufactured. With FTAs, and the preferential tariffs that are granted, there is a legitimate concern that non-qualifying goods may enter via the FTA provisions.

The Bill before the House today seeks to address this issue. It marks a positive effort by Singapore to cooperate with our FTA partners to prevent origin circumvention activities that undermine our trade agreements. The Bill establishes the necessary legal and enforcement means to ensure that preferential tariff concessions will be limited strictly to Singapore goods. This will encourage our major trading partners to extend maximal concessions during future FTA negotiations and reviews of existing agreements.

Key features of the Bill

Mr Speaker, Sir, let me now turn to the key features of the Bill.

This Bill creates one new provision relating to the sharing of information, two new substantive offences, and three improvements intended to streamline the administration of the RIEA.

Let us first look at the new substantive offences. The first offence is found in clause 2, which permits the Minister to prohibit the export of certain goods, unless they meet certain conditions meant to ensure compliance with preferential tariff arrangements between Singapore and its FTA partners.

These conditions will be specified in the regulations under the RIEA. Currently applicable to textiles and garments (the only scheduled goods for export under the RIEA), the conditions are aimed at ensuring the proper registration and documentation of these exports.

The second new offence is found in clause 4 of the Bill. This clause, which adds a new section 28A to the RIEA, criminalises wrongful change of origin labels on all products traded through Singapore. When goods are transhipped through Singapore, they are repackaged at our warehouses. Errant traders could seize the opportunity to manipulate the goods' origin through false claims or labelling, with the aim of gaining preferential tariff treatment for entry into certain markets.

The penalties for falsifying product information are commensurate with the other offences in the RIEA. For first offenders, this entails a maximum $100,000 fine or three times the value of the goods, or/and two years' jail. Subsequent offenders could suffer a maximum $200,000 fine or four times the value of the goods, or/and three years' jail.

Let us now turn to the new provision on information sharing. Clause 5 of the Bill creates a new regime for the sharing of information, pursuant to a prescribed Agreement. These provisions enhance the enforcement of claims to preferential tariffs under our FTAs. The sharing of the information is not unqualified: the Director-General of Customs must be satisfied that the three conditions specified in clause 5 are met prior to the release of information.

Finally, the Bill contains three administrative improvements to the RIEA. The first requires the provision of a security deposit to secure compliance

with the RIEA or its regulation. The second allows appeals to the Minister in respect of any matter relating to the RIEA or its regulation. The third is a consequential amendment relating to powers to investigate offences under the new section 28A.

Mr Speaker, Sir, the proposed amendments preserve the fundamental principles inherent in the design of the original RIEA. First, information sharing is subject to safeguards. We have specified three conditions for disclosure to filter out frivolous requests. In particular, we have included the confidentiality clause to safeguard the integrity of the information. The information exchange must also relate strictly to enforcement and investigative needs in all instances. Under no circumstances, should proprietory information on businesses be leaked to competitors.

Second, the proposed amendments do not impede legitimate trade. There will be no fishing expeditions to enforce the law. Singapore Customs would only act when credible information has been assembled against the suspected errant traders. Checks would not be arbitrary nor burdensome. Compliance for traders and businesses would, therefore, not be onerous.

Third, these amendments would benefit the business community. At the broad level, the new penalties for incorrect trade description (clause 4) and enhanced cooperation with foreign customs authorities information sharing (clause 5) will engender confidence in existing and potential FTA partners. At the industry-level (clause 2) which enhances the regulation of textile exports, makes it possible for this sector to enjoy the benefits of liberalisation by a major trading partner.

Under the US-Singapore Free Trade Agreement, the US was prepared to offer

substantial tariff concessions to our textile industry, provided that we could ensure that these privileges would not be abused by non-Parties to the Agreement. The textile concessions are not insignificant given the political sensitivity of that sector within the US, especially in the southern states. Indeed, the estimated tariff savings to the local textile industry will amount to more than $130 million every year. Beyond the immediate benefits to the industry, there is potential for job creation as the industry expands.

Mr Speaker, Sir, this Bill is, therefore, in Singapore's long term economic interests and a necessary corollary of our FTA trade strategy. It safeguards our position as a major international trading hub and enhances our reputation as a responsible FTA partner. By generating greater confidence in our trade enforcement regime, we can look forward to negotiating more liberal FTAs with our major trading partners.

At this point, I would like to highlight that the domestic industries also have an important role in ensuring that the FTAs we negotiate are meaningful to our traders and businessmen. I would like to take this opportunity to commend the local textile industry for actively participating in consultations on the US-Singapore FTA. Their views were invaluable to our negotiating team who reflected them in the overall negotiated textile package. The industry has, therefore, expressed understanding with the enhancement of the RIEA, which they see as integral to the extension of exclusive trading privileges to Singapore businesses.

Our FTAs are instrumental in removing trade barriers, increasing foreign investments and creating more and better jobs for Singaporeans. Mr Speaker, Sir, the enhancement of the RIEA will help make these benefits a reality.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, the new US-Singapore Free Trade Agreement and other FTAs will generate substantial benefits for Singapore traders and manufacturers. Therefore, I would like to express my support for this amendment Bill as this Bill is essentially to amend the Regulation of Imports and Exports Act (RIEA) so as to enable Singapore to implement our bilateral free trade agreements.

The Bill will enable the Government to collect trade information for sharing with our FTA partners for the purpose of compliance with the terms under such FTAs. However, in setting down the regulations for the submission of trade information by the traders, I would like to voice some concerns.

One concern is the possible high compliance costs. The second concern is the confidentiality of sensitive company information, which the Minister had touched on in his speech. I hope that the information required to be collected and submitted to the Singapore authorities would not be too onerous and voluminous. This will add to the cost for the traders. I understand that the regulation empowers the relevant authorities to have access to computers and other storage devices of the traders to enforce compliance. The question is how can the trader be assured that when he releases his computers and files to be inspected, other sensitive information of the company stored in his computers or files would not be accessed without proper authorisation of the inspection officers.

Secondly, the information to be submitted is generally confidential company business data. Therefore, I would like to know how the authorities

could ensure that such information is not used to the detrimental effect of the Singapore traders by third parties or companies in third countries, such as our FTA partners. Who will have access to this trade sensitive information? Are the data submitted in aggregate form to the FTA partner, or are separate details of individual companies being made available to our FTA partners? What is done to protect and ensure the confidentiality of this information?

Mr Speaker, Sir, I understand that the Bill also provides for the traders a recourse for appeal against decisions in respect of customs matters. The appeal would be against, for example, the determination of eligibility for FTA preferential treatment or against certain trade procedural requirements. I would like to know whether the process of appeal is simple, fast and efficient. Often, when a trader makes a selling price offer for his products to a buyer in a foreign country, he would base it on whether he gets preferential tariff treatment. Therefore, he needs to know quickly whether he can enjoy preferential treatment so as not to miss out on a potential transaction. Moreover, he would have incurred or committed to incur substantial costs when he has to ship certain goods to buyers in the FTA partner countries. These goods could be in the process of being shipped or would have landed in the partner country's docks. The holding and handling costs being incurred could be quite high. If there is any delay in the determination of his appeal to the Minister, he may incur higher costs, and to a businessman, time is money. So I would like to seek the Minister's assurance that his Ministry would set up a process for application, as well as appeal, that is fast and efficient, that cuts through the red tape and bureaucracy.

Sir, I support the Bill.

Mr Speaker, Sir, I would like to thank Mr Leong Horn Kee for his support of the Bill and some of the issues he has raised. Let me address the concerns that he has raised.

First, the information we collect from the traders will neither be onerous nor voluminous. He has our assurance. It comprises standard production and shipping documents generated in the course of conducting business. This includes documents like cost statements, commercial invoices and bills of lading relating to the goods in question. All traders are not expected to provide anything more than what they had been providing.

Inspection of traders' computers and other apparatus would be carried out only when investigating a specific suspected offence. If the inspection officer chances upon any other sensitive company information stored in the computer, he is bound by the same Act not to communicate or disclose to any other person the contents of such sensitive company information.

Second, every care would be taken to ensure that the information we share with prescribed FTA partners to detect abuses of trading privileges will not be used for any other purposes. The rationale for information sharing is to assure our FTA partners that only Singapore-origin exports will enjoy the negotiated tariff benefits. Singapore Customs will share information with its counterparts only when our FTA partners can clearly show that they have cause to suspect that the abuse of trading privileges has occurred. In other words, we will not entertain fishing expeditions when no adequate cause can be shown for the request for information. Moreover, the information given would be specific to the case being

investigated. If there is a breach of confidentiality by the FTA partner, we are entitled to take the matter through dispute settlement procedures to seek redress.

Third, the procedure for appeals to the Minister will be kept as simple as possible. Anyone can write to the Minister, giving the circumstances and full facts of the case for the Minister's consideration. MTI, I would like to assure Mr Leong, will ensure that the appeal process will be simple, fast and efficient, as he puts it.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Raymond Lim Siang Keat].

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

Order for Second Reading read.

3.27 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The main purpose of this Bill is to update the Urban Redevelopment Authority's function in the Act to reflect its role as the national land use planning authority and as land sales agent for the State and other Statutory Boards for purposes of national development. This updating of URA's function is to formally recognise URA's contribution in these two key areas of national development. Sir,

let me explain the background of URA's role in undertaking these functions.

The present URA was formed in September 1989 with the enactment of the current Urban Redevelopment Authority Act, which effected the merger of the old Urban Redevelopment Authority with the former Planning Department and the former Research and Statistical Unit of the Ministry of National Development. As a result of this merger, URA took over from the old Planning Department the overall task of control and management of land planning and development control as well as advising the Government on these matters. These planning functions were not explicitly included in the URA Act at that time. Today, it is well-established that URA is the statutory authority charged with the responsibility of land planning and development control. As such, it is timely to recognise this key responsibility as part of URA's functions.

The amendments provide that the URA shall (a) undertake land planning and manage and control the development of land in Singapore; and (b) inform and advise the Government on matters related to land planning and the development of land in Singapore. In addition, the Bill updates URA's role as a land sales agent for the State and other Statutory Boards.

URA has since the middle of 1980s been one of the main agents that sells state land on behalf of the Government for the purpose of development under the Government land sales programme. This function has enabled URA to better realise the land use planning objectives of sites slated for development. The development of Marina Centre as a major business, hotel and convention area,

the development of Tanjong Rhu for quality private housing and the revitalisation of the conservation districts and the China Square area are all examples of successful implementation of land use planning

objectives through URA's land sales activities.

Apart from the Government land sale programme, URA has, on occasions, sold land for development on behalf of other statutory boards or Government departments. The amendment recognises URA's function in selling land as agent for the State and other statutory authority for purposes of development.

Sir, I shall now move on to the other amendments in the Bill.

Clause 2 of the Bill raises the maximum number of URA's Board members (excluding the Chairman) from 8 to 12. This will allow more URA Board members with different expertise and qualifications to be appointed to help URA to address the needs and concerns of the various sectors of the economy and of the public.

Clause 4 of the Bill seeks to remove the constraint of the Trustees Act on URA's investment powers. Today, URA may invest its funds in securities in which trust funds may, under the Trustees Act, be invested. The amendment will allow URA, with the Minister's approval, to invest its funds in such manner as it thinks fit and to manage or hedge against financial risks involved in such investments. The removal of the constraint will enable URA to adopt more optimal risk-return investment portfolios.

Finally, clause 5 introduces the power to compound offences under the URA Act and its regulations. This is to give URA the discretion to compound offences under the URA Act where it is not sufficiently serious to warrant prosecution. The power to compound offences shall only be exercisable in relation to offences which are prescribed by URA, with Minister's approval, as a compoundable offence.

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 Mah Bow Tan].

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

Order for Second Reading read.

3.35 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The current Planning Act came into effect on 1st April 1998. This Bill is to introduce some amendments to the existing Act to enable a more equitable sharing of any value enhancement arising from the alteration of the Master Plan for sites in the future. The amendments will also strengthen the legal framework to facilitate development control and to make the current process more pro-business. I shall now explain the rationale for the main changes.

Revised definition for Development Baseline

One of the main changes to the Planning Act is the redefinition of the development baseline to make it more relevant to today's context.

The Development Baseline refers to the base value above which Development Charge is payable. The Development Charge (or DC) is a tax levied when the value of land, resulting from the State

authorising a development proposal on it, exceeds the base value of the land. The current Development Charge rate is 50% of this land enhancement value.

Under the current Planning Act, the base value of a piece of land, ie, the Development Baseline, is determined by comparing the values of the following three items:

the 1958 Master Plan baseline;

the 1980 Master Plan baseline; or

the approved development baseline.

The highest of the three values derived will be the Development Baseline.

The Master Plan 58 and Master Plan 80 baselines have been included in the baseline definition due to historical reasons. The proposed amendment in clause 12 is to delete the first two items in the definition, ie, the 1958 and the 1980 Master Plans.

With this amendment, the Development Baseline is the value of the approved development for the site for which Development Charge was paid, exempted, or not required to be paid. Any enhancement in value arising from redevelopment would be that above this base, and not that above a historically prescribed base that has no direct link with the actual development history of the site.

Better reflect the intentions of the DC System

The revised Development Baseline will better reflect the intentions of the Development Charge as a tax on land value enhancement.

Sir, as this is a rather technical matter, please allow me to clarify the issue by referring Members to the handout* on the

*Cols. 3553-8

Planning (Amendment) Bill which has been distributed. If Members look at Figure 1(a), today, the baseline for a site would be the highest of the three values, either MP 58 or MP 80 or the approved development value. In Figure 1(a), the highest value would be in column 1, the MP 58 or 80 baseline. When the site is redeveloped up to the use and intensity allowed under the prevailing Master Plan (known as the Development Ceiling), the value enhancement will be that between the MP 58 or MP 80 baseline and the Development Ceiling. A Development Charge will be payable for this enhancement.

With the removal of the MP 58 and MP 80 values from the definition of baseline, the Development Baseline becomes the approved use for the site, ie, column 2 of Figure 1(a). If the land is developed up to the prevailing Master Plan, the enhancement of land value will be measured from this revised baseline in column 2, instead of the higher Development Baseline in column 1.

A second situation is illustrated in Figure 1(b). Here, the MP 58 and MP 80 values of a site, as shown in column 1, exceed not only the value of the approved development in column 2, but also exceed the value of the development potential allowed by the prevailing Master Plan in column 3. In this case, the prevailing Master Plan will be the Master Plan 2003, which will be enacted by the end of this year. With the removal of the MP 58 and MP 80 baselines, the value of the approved development will become the baseline instead, ie, column 2 of Figure 1(b).

Achieve a fairer and more effective Development Charge tax system

Let me now explain the purpose of the proposed amendment. In Figure 1(b), where sites have very high MP 58 or MP 80 baseline that exceed the value of the

development potential under the MP 2003, no Development Charge is payable if they undergo redevelopment, because the MP 58 or MP 80 baseline exceeds the Development Ceiling. In other words, the benefits of the value enhancement arising from the redevelopment cannot be shared between the land-owner and the State.

Furthermore, if the Government upgrades the development potential for these sites in future, the enhanced land value will not be subject to Development Charge as long as the MP 58 or MP 80 baseline is higher than the new Development Ceiling. [See column 4 of Figure 1(b)]. Development Charge is payable only for the portion of the new Development Ceiling which exceeds the MP 58 or MP 80 baseline. [See column 4 of Figure 1(b)].

Sir, with the proposed amendment, a Development Charge has to be paid once the value of the "approved development" is exceeded. This allows for a more equitable sharing of the enhancement in value arising from an upgrading of the Development Ceiling in future Master Plan Reviews. It results in a fairer and more effective tax system for the redevelopment of sites.

Simplify Development Baseline and make it more transparent

The change would also simplify and standardise the process of establishing the Development Baseline and improve transparency of the system, as the outdated MP 58 and MP 80 are not easily understood and often require interpretation by URA planners.

Advance notice period and auto lock-in of historical baseline

Sir, the deletion of references to MP 58 and MP 80 from the definition of

Development Baseline, though a necessary and desirable move, will affect those landowners who have sites with MP 58 and MP 80 baselines that are higher than their approved Development Baseline. These landowners would be subject to a higher Development Charge upon rezoning or redevelopment of their sites.

To mitigate the impact on these landowners, and to give ample time for landowners to adjust to the revised baseline definition, my Ministry intends to effect the revised baseline definition only in 4 years' time, ie, on 1st January 2008. During this period, landowners who intend to redevelop their lands can submit development proposals and they can still make use of their historical baselines up to the MP 03 intensity for the purpose of computing Development Charge.

For landowners who have no intention or are unable to redevelop their lands within this advance notice period, my Ministry will take a further step to safeguard and lock-in the historical baseline in MP 58 and MP 80 that is applicable to their site under the current legal provisions. This is capped at the maximum use and intensity allowed under MP 03 if the MP 58 or MP 80 baseline value is higher than the MP 03. In other words, the URA will preserve the value of historical baseline up to the development potential of the Master Plan 2003. Landowners will thus not be worse off than they are presently. The historical value locked-in will continue to be applicable after 1st January 2008. Any development proposal on these lands after 1st January 2008 will be exempted from Development Charge payment up to the difference between the locked-in value and the new Development Baseline, if the locked-in value is higher.

Once again, because the matter is complicated, let me refer Members to the handout. If Members look at Figure 2(a),

before the revision, the MP 58 or MP 80 baseline is the Development Baseline, as I explained earlier, because it

is the higher value of all the three, higher than the approved development. However, it is below the MP 2003 value, and therefore Development Charge (DC) is payable. After the revision, Figure 2(b), the Development Baseline is now the value of the approved development (column 1 figure). Strictly speaking, DC payable would now be higher. However, URA will preserve the baseline up to the value of the MP 58 or MP 80 baseline. Value enhancement above the approved development up to the MP 58 or MP 80 value will be exempted from Development Charge. If you look at column 2 of Figure 2(b), that portion of it from the new Development Baseline to the original MP 58 or MP 80 baseline will be exempted from DC. Development Charge is payable only when the locked-in MP 58 or MP 80 value is exceeded. With the lock-in, there will essentially be no change in the DC payable before and after the revision.

In the same way, sites where the MP 58 or MP 80 baseline is higher than the MP 2003 value will also not be affected if they redevelop their site up to the MP 2003 value. Please refer again to the handout, and this time to Figure 3. Before the revision, Figure 3(a), no DC is payable when the site redevelops up to the value allowed under MP 2003. Why? Because the MP 58 or MP 80 baseline is higher than the MP 2003 value. With the revision, Figure 3(b), the value of the approved development becomes the Development Baseline. Enhancement in value above the approved development up to the MP 2003 will now be liable to Development Charge. However, URA will preserve the value of the historical baseline up to the development potential of the MP 2003. This is shown in column 2 of Figure 3(b). Owners of these sites will not need to pay DC for developments up to the value of the MP 2003. This is no different from the position before the

baseline revision, where DC is also not payable.

However, the revision will allow enhancement gains to be shared in future when the Development Ceiling is raised beyond the MP 2003 value. This is shown clearly in the third column of Figure 3(b) where we show a new Development Ceiling beyond the current Development Ceiling and the DC is payable on the difference. When the Development Ceiling is raised in future Master Plan Reviews, redevelopment can take place beyond the MP 2003. The enhancement in value beyond the MP 2003 will be liable to Development Charge. What this means is that it will bring these sites in line with other sites after 2008. Development Charge will now be payable for all sites which have their Development Ceiling raised beyond the MP 2003 value. URA will release more details on how the historical baseline will be safeguarded at a later stage.

With the deferred implementation and safeguarding of historical value up to the allowable uses under the prevailing Master Plan, the impact of the redefinition of baseline will be minimal. However, it will allow a more equitable sharing of the value enhancement for redevelopment and Master Plan alteration in future Master Plan Reviews. After 2008, the Development Charge system will be fairer and more effective.

Temporary Permission

Sir, let me move on to explain the changes to be made to facilitate the grant of temporary planning permission.

Under the Planning Act, the Competent Authority is required to act in conformity with the Master Plan. When a proposal conforms to the Master Plan, permanent permission is usually granted. However, when a proposed use does not conform to the Master Plan, but can be

supported on planning grounds, the Competent Authority may approve the use for a limited period on temporary permission. Some examples of non-conforming use on temporary permissions could be the conversion of the upper storey of a shophouse to office use or the conversion of a residential house to a childcare centre.

The power to grant temporary permissions for non-conforming uses is not explicitly provided for under the present Act. Clause 6 in the current amendment will enable the Competent Authority to grant temporary permissions not exceeding 10 years for non-conforming uses.

The next amendment is the introduction of the temporary development levy.

Temporary Development Levy

Currently, the Competent Authority collects full Development Charge upon grant of a permanent permission for conforming uses when there are enhancements in land value. URA has received feedback that the Development Charge, if it is a significant amount, could pose a major hurdle to entrepreneurs who want to try out new business ideas. To reduce the entry barrier for businesses, clause 15 introduces a Temporary Development Levy scheme to tie the amount of levy to the period of the temporary permission. This will allow new business start-ups to choose either to apply for a permanent permission (in which case they would have to pay full Development Charge), or to apply for a temporary permission not exceeding a period of 10 years with payment of a levy. The levy will be based on the period of use according to a prescribed table, but it will be lower than the full Development Charge they would otherwise have had to pay if permanent permission had been issued.

The Temporary Development Levy will apply for temporary permissions for both conforming and non-conforming uses, as long as there are enhancements in value. This system will benefit applicants for conforming uses who wish to try out their development ideas before applying for permanent permission. However, I must point out that it will be a new levy for those who are on temporary permissions for non-conforming uses. Today, the Competent Authority allows such non-conforming uses on a temporary basis without any levy. However, since the operators and owners benefit from the higher value use from Government's approval, it is reasonable that part of the value enhancement is taxed through the levy and then redirected back for public use. However, we will only impose the Temporary Development Levy for non-conforming uses from 1st January 2008 when the revised Development Baseline definition, which I elaborated earlier, comes into effect. This will provide sufficient notice to operators and owners.

Sir, I shall now move on to the determination of Development Baseline for hotels that were approved under the Hotel Concession Policy.

Sites with approval granted under the hotel concession policy

Between 18th April 1968 and 31st December 1969, a hotel concession policy was in effect. Under this policy, special concessions were given to developers to encourage hotel developments. Development Charge, which was otherwise payable for the hotel development, was not levied. A total of 25 hotels were approved under this policy and enjoyed Development Charge concessions. Examples of such hotels include Shangri-La Hotel, Hilton Singapore, Orchard Parade Hotel.

There could be the mistaken impression by hotel owners that the concession floor area will continue to form part of their Development Baseline upon redevelopment to non-hotel use. This was not the intent of the hotel concession policy. As the Development Charge was not levied on hotel developments during that period, the Development Charge concession should cease to apply once the hotels redevelop to other development types.

The proposed amendment will make this clear. Provision is now made in clause 11 to make it explicit that the floor area of the hotels approved between 18th April 1968 and 31st December 1969 under the hotel concession policy will be disregarded for the purpose of Development Baseline if the hotel use ceases, or if there is redevelopment to other non-hotel use.

Sir, I shall now go through the amendments relating to the responsibilities of Qualified Persons in making development applications.

Making Qualified Persons responsible for declarations

Currently, the URA administratively requires Qualified Persons (QPs) to submit and certify planning information in a development application, which a lay person would not have the technical competence to handle. The Competent Authority would also check the proposal plans to ensure that the planning requirements are complied with. In a move towards greater self-regulation within the industry, and to accord industry professionals a greater role in the development process, the Competent Authority intends to place greater reliance on the QP's declaration of compliance with development control guidelines and/or any proposed deviations from these guidelines in their development applications. This will have the added

advantage of speeding up the approval process.

Clause 7 inserts a new section 14A to provide that the Competent Authority may grant written permission on the basis of a certification or declaration by a QP if it is required to be submitted together with an application.

However, in order that development control is not compromised, there would be a need to put in place a robust control mechanism to discourage errant QPs from making false declarations. Therefore, it is necessary to strengthen the current legal framework to make QPs more responsible for their declarations. Clause 17 amends section 61 to empower the Minister to make rules to:

Prescribe the submission requirements for various applications and the type of applications that require QP's declaration, and

State the duties, responsibilities and liabilities of a QP in relation to making a declaration.

For proposals affecting conserved buildings, the controls are on architectural details. QPs are to ensure that these controls continue to be complied with during construction stage. Clause 8 provides that the QPs would now be required to declare that the building plans that were submitted to the Building and Construction Authority are in accordance with conservation plans approved by the Competent Authority.

Finally, Sir, there are three other changes that I would like to quickly explain.

Remission of Development Charge

Currently, the Planning Act only has provisions to grant exemptions from payment of DC and to refund DC. There is no provision to allow partial reduction of the amount of DC payable, even in

situations where it is reasonable for the Government to do so. Provision is now made in clause 13 to allow the Minister the flexibility to consider such requests in future and to remit the DC payable where it is just and equitable to do so.

Authorisation of subdivision

Currently, owners of certain multi-unit developments such as commercial, non-landed residential and flatted factory/warehouse buildings are required to apply for strata subdivision approval if they want to sell or grant leases for more than a specified number of years.

There has been feedback from the Economic Review Committee's Land Working Group to grant greater flexibility to enable longer leases of multi-unit developments. The Government

has responded to this call by extending the maximum duration of lease from 14 to 21 years, beyond which strata subdivision permission is required.

In the current amendment, the Government has gone one step further to make it easier for owners to obtain approval for strata subdivision. Clause 9 amends section 21 of the Planning Act to enable the Minister to authorise, by notification in the Gazette, the subdivision of land and buildings. With this amendment, strata subdivision for certain types of developments approved for multi-units can be authorised. These building owners will no longer need to apply for strata subdivision approval by the Competent Authority, and therefore help them save time and cost.

Making it explicit that the use and operation of certain developments

as 2 or more separate entities would require planning permission

Finally, it will be made clear in clause 3 that for hotel, boarding house, service

apartments, workers dormitory, student hostel and place of worship developments, having more than one operator would constitute a material change of use and thus require planning permission.

The requirement for planning permission gives the Competent Authority a chance to evaluate and decide on any proposal to have multiple operators in such developments based on planning and other considerations. This is to ensure that amenity issues, such as spillover effects of business rivalry or deterioration of common areas, can be addressed.

Sir, in summary, the amendments will simplify and strengthen the legal framework to facilitate planning and streamline the development application approval process, making it more pro-business and in line with present needs.

Sir, I beg to move.

Question proposed.

Mr Speaker, Sir, I rise in support of the Bill.

The Bill will provide more flexibility and allow more opportunities for alternative use of land in Singapore. In today's fast changing business environment, we need to inject more adaptability capabilities in our land use planning system so that we can better respond to changing business needs.

The Master Plan provides comprehensive land use planning of our limited land resource. But it has certain rigidities, which sometimes do not facilitate change of land use to meet business demands or changing market conditions. It also increases business costs drastically when permission to change of use is approved.

Clause 6 of the Bill provides that the Minister can grant temporary permission to a particular application or a class of application non-conforming to the Master Plan for up to 10 years. This provision will facilitate the setting up of businesses or business expansion for firms. This flexibility will also hopefully add more vibrancy to our living and working environment.

But it is not clear in the Bill that what are the likely changes of use which the Minister would approve. As the change of use of any land parcel or building has an impact on the property value and business activities of the surrounding area, I hope the Minister can provide more details on the types of change of use that are likely to be granted approval.

I also wish to ask the Minister whether there are measures in place to make sure that fair practices are adopted to protect the interests of other existing users surrounding the designated change of use land parcel or building. In a competitive business environment, like Singapore, the planning authorities must ensure that there is fair competition among businesses when allocating land use. The granting of temporary permission may encourage unfair competition, thus affecting businesses.

As the time-based enhancement levy for temporary permission is lower, it may impose unfair competition to existing businesses, which have paid full Development Charge for permanent permission. While it is important that we keep our business cost competitive, we should also be mindful not to cause any closure of businesses due to the approval of such temporary permission.

Sir, I would like to suggest that the Minister should only approve temporary

permission for developments, which will complement their surrounding developments. The land use mix in any area is a key attribute to the success of the development in that area. The temporary permission should also increase activities in the area, thus bringing more benefits to its building owners and users.

Clause 3 of the Bill amends section 3 of the Planning Act and makes it explicit that leasing out of certain developments to two or more operators will require planning permission. Sir, I am concerned with this amendment as it affects the viability of this group of "one single entity" developments, such as hotel, service apartment, workers' dormitory, boarding house, student hostel and place of worship. Very often, these developments have various ancillary facilities, such as kiosks, clinics, retail shops and laundry, to provide convenience to its users.

With the amendment, there is now a requirement for planning permission for every single operator of these ancillary facilities. The need for planning permission will increase business costs and slow down the process to commence business. It will also provide hindrance to the subletting of these developments, and thus affecting the range of services provided. The new requirement may also cause inconvenience to the users of these developments. I wish to seek clarifications from the Minister to explain the rationale for amending section 3. I would like to suggest that certain capping or quota system, such as 20% of built up area, could be allocated to these developments instead to allow them to provide for such facilities. May I ask the Minister how many existing developments are affected by this amendment and what are the costs involved in obtaining such planning approvals?

I support the Bill.

Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 4.30 pm.

Sitting accordingly suspended

at 4.08 pm until 4.30 pm.

Sitting resumed at 4.30 pm

Debate resumed.

Mr Speaker, Sir, as highlighted by the Minister, the two key changes effected by the Bill are a change in the basis of calculating the Development Baseline, which determines the amount of levy the Government charges a landowner for any approved change of use, re-zoning or enhancement of plot ratio, and the introduction of a Temporary Development Levy. I would like to comment on each of these main changes in turn.

As explained by the Minister, before the amendment, a landowner who wishes to develop his land can, under the Act, use the highest of the three methods prescribed in the Act to compute the Development Baseline. A higher Development Baseline means a lower Development Charge or no Development Charge, if the baseline is higher than the ceiling. These are as illustrated in Figures 1(a) and (b) of the handouts given by the Minister.

Again, as noted by the Minister, two of these existing methods for calculating the baseline take reference from the 1958 and 1980 Master Plans. For some sites, due to various historical reasons, the 1958 Master Plan and the 1980 Master Plan may prescribe higher plot ratios and more valuable land use and density parameters than later Master Plans. This means that some landowners pay little or

no Development Charge to develop his land, while other owners of neighbouring land with less generous provisions in the 1958 or 1980 Master Plan may pay more for the same or similar development rights granted by the URA.

From the Minister's speech, I am given to understand that one of the rationale for the first change is to correct such an anomaly, as the one that I have just described. As the Minister clearly highlighted in his speech, after the amendment, if the Government upgrades the development potential of these sites in the future over and above what is currently allowable in the 2003 Master Plan, the enhanced land value will be subject to Development Charge. Whereas if the Act remains status quo, then no Development Charge will be payable for the future enhanced land value, as long as this is below what is allowable under the 1958 Master Plan.

On the surface, this sounds very reasonable and equitable. Indeed, from a socio-economic perspective, since it is the State that has created value through its action of zoning, re-zoning or enhancement of land use intensity, it is perfectly legitimate to require landowners who so benefit from such positive externalities to give back a portion of the realisable gains to the State by way of the Development Charge. So, the State should have the prerogative to change the rules of the game and shift the basis of the Development Baseline calculation from time to time where circumstances so dictate.

One wonders how many plots of land in Singapore would fall under this category to warrant such an amendment to the Act. I would like to ask the Minister whether, before deciding to amend the Act, the URA has undertaken a study to determine how many plots of land in Singapore would fall under this "anomaly" category and what percentage

is this of all privately-held land in Singapore.

Whatever the case, landowners of affected sites will most surely feel aggrieved by this change even if the higher plot ratio and/or use accorded in the historical 1958 or 1980 Master Plan is not realisable under current planning parameters. Even if they have not suffered a direct loss but merely a reduction in potential gains, in effect, this change can be construed as a form of "value" destruction directed at a group of unfortunate land owners in which the Government planners have stapled higher value planning provisions on their land at one time, but have since reversed this. And, from their perspective, this has happened through no fault of theirs.

Sir, I think the outcome resulting from the changes made to the Act is rather odd, given that the Government has been preaching the virtues of value creation as part of our overall economic strategy. The analogy is compulsory land acquisition which does not offer any choice to the affected landowners. The State gazettes land to be acquired for some public purpose and dictates compensation which, for all practical purposes, is statutorily pegged at historical values, although ex-gratia payments are often made for some deserving cases to make up the compensation to full current market value.

The change in the baseline definition is a case of someone being theoretically made worse off without anyone being made better before the change. This is because the transitionary provisions of a historical lock-in baseline essentially means that the baseline for all other cases would remain the same, except for the "anomaly" cases. There is a potential lowering of overall private gains, although some of these will flow back to the State.

Sir, the present system of determining the Development Baseline is well understood and accepted by the industry. Why does the Government want to deny the original "gains" accruing to these landowners, even if these may be unrealisable under current planning parameters?

As the Government is now preaching enterprise and flexibility, and with foreseeable future increases in population, the higher plot ratio or use accorded in the 1958 or 1980 Master Plan which may be unrealisable now, may well be appropriate in the future when the plot ratio may be increased or the use of the land enhanced in view of changed circumstances. This is already clearly shown in Figure 3 of the handouts provided by the Minister.

The transitionary provisions allowed until 31st December 2007 will not address the sense of injustice felt by such affected landowners since they will only be allowed to preserve the baseline for their properties in the Historical Lock-in Register to be set up by the authority, up to what is currently allowable in the prevailing Master Plan, and not the highest allowed in the 1958 or 1980 Master Plan.

They would have to pay Development Charge, if in future the URA were to increase the plot ratio and/or use in the Master Plan over and above what is currently permissible in the prevailing Master Plan, and they wish then to redevelop their land to the stipulated intensity. Under the current rules, they would not have to pay Development Charge or pay a much lower Development Charge.

As regards the proposed Historical Baseline Register, which I understand the authority would set up during the 4-year transitionary period, it is presumed that

the URA will publish the baseline applicable to every development site in Singapore. While this can be construed as a good idea to provide more transparency and reduce confusion as regards the applicable Development Baseline, especially during the transitionary period, I hope that the cost of developing this Register, which is initiated solely on the part of the authority, would not be unfairly passed on to users in the form of higher search fees or development application fees.

Again, Sir, one wonders about the amount of manpower that would have to be put in to determine the Development Baseline of every plot of land in Singapore, if this task were to be carried out. Also, landowners should be allowed to check and challenge the Development Baseline published in the Register within a stipulated timeframe since the authority cannot be assumed to be infallible.

The second major change in the Bill is the introduction of the Temporary Development Levy intended to lower costs for entrepreneurs seeking to use land on a temporary basis for a period not exceeding 10 years. The motivation for this change came from the ERC Land Working Group which examined ways to lower the cost barriers for doing businesses, thus encouraging entrepreneurship. I think this is clearly a positive step and I commend the authority for being proactive and pro-enterprise in accepting and implementing this ERC recommendation.

Businesses, such as those setting up kiosks at places like Orchard Road, would benefit from this scheme, as the building owners now only need to pay Development Charge for the duration of the intended use and not based on the property's freehold value.

However, as a member of the Land Working Group, I feel that the ERC's recommendation on this matter is a pay-as-you-go arrangement, which is far more flexible than what the amendment Bill envisages. Thus, I fear that while the intention of the temporary levy is laudable, the change does not go far enough. For instance, why only 10 years as a maximum length of time for the temporary permission? To cater to a potentially large pool of businesses, perhaps a longer fixed period should be prescribed, or more generous extensions be allowed. After all, the landowner is not getting a free lunch here. His Temporary Development Levy is pegged to the length of the term. Moreover, he bears the risks of future increases in Development Charge rates. Furthermore, I understand that the temporary levy is not applicable for new erections of buildings. Again, I think this could unnecessarily restrict the type of businesses that can benefit from this scheme. There could be businesses which require custom-built premises and yet such premises may suffer from functional and economic obsolescence very quickly even if the building is physically sound.

I would like to urge the Minister to consider widening the scope under which temporary levy is applicable to make this initiative truly helpful to aspiring entrepreneurs.

With these comments, Sir, I support the Bill.

Mr Speaker, Sir, I thank the two Members who have spoken. Both Dr Teo and Dr Amy Khor have supported the changes in the Bill, but they have asked relevant questions and I would like to take this opportunity to address them.

First of all, Dr Teo asked what are the likely changes when we talk about giving

temporary approval. I have mentioned some examples in my speech. For example, when we allow the living quarters above a shophouse to be used for office space and it is zoned residential, we allow it to be used for office space because there is deemed to be little or no disamenity to the surroundings. Another example I cited was childcare centres in residential estates. I could give a few other obvious ones, such as car-polishing stations in car parks. Members will notice that there are many car parks which have been designated for car-polishing stations. Again, that is a conversion from a car park use to a commercial use. There is also quite a lot of requests for eating houses in areas which are normally zoned residential. A good example is Jalan Merah Saga in the Holland Village area.

So, these are some of the temporary permissions that are granted. They do not conform with the Master Plan as it is currently gazetted, but URA planners look at the applications and, if the applications do not create much disamenity, permission would be granted and they are called non-conforming uses, for which this Temporary Development Levy would have to be paid.

However, let me say that it does not follow that all such temporary permissions will attract this levy. The levy would only be paid in cases where there is an enhancement in land value. So, a comparison would have to be made, the application would have to be assessed: is there an enhancement in land value as a result of this change? If there is, there will be a Temporary Development Levy paid. If not, then it would continue to be given this temporary permission free of charge. Combing through some of the current examples, if we took this system and applied it to them, the indication is that very few of the temporary permissions granted would attract such a

levy. So, in terms of impact on businesses, I think the impact would be minimal. However, it is something that is fair, equitable and needs to be done, because there is an enhancement in land value. There is no reason why a temporary permission granted should not attract a levy when there is an enhancement in land value, whereas a permanent permission granted attracts such a levy. So, it is really addressing an anomaly.

Dr Teo also asked how do we protect the interests of other users. This again is a valid question, because every time URA planners or the Competent Authority allows a change of use, there is inevitably the question raised: what is the impact of this change of use on the surrounding areas? So, planners always need to look at amenity issues, whether such a change of use would create disamenities to the surrounding areas. Again, I cite the example I quoted earlier on childcare centres. Childcare centres which are sited in residential areas are given very close scrutiny. Why? Because, at first glance, you think that they would create traffic and noise problems and so on. Yet, at the same time,

we know that there is such a demand for childcare centres in residential areas. We have to balance this need for operators to satisfy this demand and yet, at the same time, make sure that when they do so, they do not create excessive noise and traffic problems to the surroundings and their neighbours. This is a fine balance and each case is assessed on its own merits. But the reason why they are granted temporary permission is precisely that if they do, in the course of their operation, create such problems, the Competent Authority can withdraw that permission. When Dr Teo asked how do we protect the interests of other residents around the area, this is one way. The very fact that we grant it on a temporary basis, and not a permanent basis, is one way to make sure that the operator keeps to his

promise to make sure that the nuisance is minimised.

Dr Teo also asked why is it that we are requiring in this Bill to have two or more operators come to URA for planning permission. Why not just allow them to continue? The answer lies in the original planning permission. The original planning permission for such developments usually takes into account a single operator, whether it is a boarding house, a hotel, a childcare centre, whatever. All the planning considerations are based on such a single operator. When you have more than one operator, inevitably, problems do arise. The situation on the ground has shown that, for example, if you have multiple operators in a building operating boarding houses, you have lots of problems - business rivalry, touting and deterioration of the common corridors, etc. Our experience has been that multiple operators, operating in a single environment, do create problems, and that is the reason why we are requiring in this amendment in clause 3 to make sure that whenever there is more than one operator, it immediately constitutes a material change of use. And as a material change of use, they have to go back for temporary planning permission, in order for the planners to look at the issue, consider the potential problems and then decide whether or not they want to approve. That is the reason why this particular amendment in the clause has been enacted. I hope I have answered Dr Teo's questions.

I turn now to Dr Amy Khor's questions. I think she has raised some very fundamental questions pertaining to the Development Baseline. She asked, first of all, why are we doing this. How many sites are there that have this anomaly, and is it worth our while to comb through all the sites in order to just correct a very small anomaly. I go back

to the very principle of the Development Charge. The Development Charge is really a tax. It is levied where the value of land is enhanced as a result of some actions of the State, whether this is in the building up of infrastructure that would allow land to be used more intensively, or whether this is some change in planning parameters, or some change of policy regarding land use. All these are actions of the State which have created value in the land. The principle is, as first mooted when Development Charge was implemented in 1964, that where there are enhancements in land value, the State should share with the landowner in that enhancement. That is the first principle.

In this particular case, we have situations where pieces of land with high baselines, historically derived in 1958 and 1980, would actually result in no sharing of enhancement between the State and the landowner, if such lands were to be redeveloped in future whenever the Master Plan allows. Where such an anomaly exists, we should correct it. It does not matter whether there are many pieces of land or not. The point is that this is an anomaly that has to be corrected because, if it is not corrected, we are not able to apply this principle. Having said that, of course, I can inform the Member that there are quite a few of these sites in the central area. URA has combed through the various sites and they have estimated that there are over 1,000 such sites, mainly in the central area, where there are such high baselines and which, if this Act is not amended, would result in the State not having the ability to share in any enhancement in land values in the future. So that is the reason behind this change. It is not an administrative issue. It is not an issue where we are doing this just because we happen to go through and we see this anomaly and, therefore, we want to change it. I think there is a fundamental principle involved.

The other major point that she raised is whether, in this particular amendment, we are actually destroying value. Is it akin to, say, compulsory acquisition of land, where we are actually taking land and compensating based on a certain formula in the Act? Are we destroying value in this? Let me say that when we talk about destroying value, the Member is assuming that the high baselines in the 1958 and 1980 Master Plans are actually legal entitlements to the value of the land. In other words, you were given a high baseline, you are entitled to this value for eternity. The answer is no. It is not a legal entitlement. What is it? It is an expectation that you can develop these lands up to that particular value subject to what is stipulated in the current Master Plan. So even if the Master Plan 1958 or 1980 stipulates a very high baseline exceeding the current Master Plan - in this case, we are talking about Master Plan 2003 - it does not follow that that high baseline is what they are legally entitled to. They can only develop up to Master Plan 2003. This is the main point that I would like to make. Historical baselines are not legal entitlements to land value. They are expectations of enhancements of development potential in the future. They are actually parameters in the Development Charge tax formula. We can change this parameter from time to time. I do not agree that there is a destruction in the value of the land in this particular case. As I have said, the proposal is to refine the tax formula to make it more in line with the principle of collecting Development Charge as and when lands are redeveloped and value is enhanced.

Why are we doing this? We are doing this simply because when value is enhanced as a result of State actions, particularly through the building of infrastructure, it is only fair that some of the benefits accruing from this enhancement in land value be channelled back to the State for public infrastructure

works, for building of roads, building of MRTs, sewer lines, etc. The proposed revision in the baseline merely re-establishes this principle of sharing of enhancement gains for those sites which may have fallen through the system. Let me say once again that I do not agree with the Member when she said that this particular change is destroying land values.

She has also asked whether the baseline register will actually add cost to landowners. Let me assure her that we will be very mindful of the cost associated with creating this register. I have, in fact, made this point to the officers that we will find an administratively simple way to implement this particular amendment so that costs are kept to a minimum. Definitely the impact of this change, at least in terms of maintaining the register, will not be felt by the landowners.

On Temporary Development Levy, the issue is whether we have gone far enough or whether we should actually apply that to permanent structures, new erections or whether we should apply that to structures on a longer term basis. As the name suggests, the Temporary Development Levy is really meant for temporary permission for temporary structures. One can argue that something that has been erected for 10 years cannot be construed to be temporary but, nevertheless, the sense is that 10 years is a reasonably long time to allow a business to recover its costs and yet, at the same time, the Government allows the State to bring down the barrier to entry. If we are talking about a structure which is, say, 20 years, for longer term use, perhaps we could look at some other mechanisms to also allow for the cost of doing business to be brought down. I think the sentiment behind the Member's question is a sound one.

What I am saying is that perhaps this is not the right mechanism for us to do so. What we can do is to look at, say, shorter term leases. By shorter term

leases you automatically attract a lower Development Charge, albeit not a directly pro-rated Development Charge, but it is a lower development. So, perhaps we can look at that.

5.00 pm

Twenty years, again as I said, may not be a very short time. It may well be that the structure that is erected for 20 years cannot be considered a temporary structure, and for that reason it does not fall under the ambit of this Bill. But I take her point that we should continue to look at how we can refine this system even further. And, if there is a market demand to apply this temporary levy scheme to other development types, we can look at it and we will review the policy as we go along. But, bear in mind that the purpose of this change is really to help businesses start their operations without too much upfront costs in order to lower barriers to entry. If we can do that, then it has served its purpose.

I believe I have answered all the questions, Mr Deputy Speaker, Sir.

First, I would like to thank the Minister for his comprehensive reply. On a point of clarification as regards the legal entitlement, my point is that, from the landowner's perspective, based on the current legislation, he would be entitled, if in future there is an increase in plot ratio. So it is from the landowner's perspective.

The second point relates to Temporary Development Levy. My understanding would be it is temporary as the Development Charge payable is for a temporary period of time. It is not necessarily related to the length of the

structure. So the idea would be that you may have a privately-held freehold land, but you want a temporary use, so short leases may not be applicable. But I appreciate the Minister's point that we could use some other mechanism.

Yes, it is true that a landowner with a very high baseline would think that with this change his value has been destroyed. But, that is "if", and the operative word is "if" the Master Plan is changed, such that he is able to develop beyond what his high baseline entitles him to. So, the question is that if there is no approval given for him to change his use beyond that particular baseline that he enjoys, he actually does not enjoy any enhancements at all. So really, as I explained earlier, it is a reasonable expectation perhaps, but it is certainly not an entitlement.

On the second point, I would repeat my assurance that we will continue to look at how we can refine the Temporary Development Levy scheme to make sure that we continue to make it business-friendly.

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

Order for Second Reading read.

Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Income Tax (Amendment) Bill 2003 has two components. First, it provides for the income tax changes announced in this year's Budget Statement by the Deputy Prime Minister and Minister for Finance. The second component also includes other amendments to the Income Tax Act arising from our regular review to improve our income tax system.

The Income Tax (Amendment) Bill was released for public consultation in June this year. This was the first time such a public consultation has been conducted. The draft Bill was revised to incorporate suggestions from businesses and the public. Let me now highlight six key policy changes which were announced in the 2003 Budget Statement.

Exemption of foreign source income

First, exemption of foreign source income. To improve our tax competitiveness, all foreign source dividends, branch profits and service income remitted into Singapore from 1st June 2003 onwards are exempted from income tax. This tax exemption is available to any resident taxpayer, whether an individual or a company, so long as the Comptroller of Income Tax assesses that the taxpayer would be better off coming under the exemption scheme than continuing under the existing tax credit system. To prevent abuse, the exemption would only apply if the foreign income is received from jurisdictions with headline tax rates of at least 15% and would normally be subject to income tax in the foreign jurisdiction. Clauses 3(e) and (f) amend the Act to provide for this exemption.

Exemption of domestic interest income

The second change is the exemption of domestic interest income. To attract foreign funds and retain domestic funds in Singapore, interest income derived by

individual on or after 1st January 2003 from deposits in standard savings, current and fixed deposit accounts, in excess of $100,000, with any approved bank or licensed finance company in Singapore, will be exempt from tax. From Year of Assessment 2006 the exemption would be extended to the full amount of these deposit accounts held by individuals. Clauses 3(d) and (l) amend the Act to provide for these changes.

Portable medical benefits

The third major change is the portable medical benefits. Portable medical benefits would provide our workers with medical benefits coverage, not only when they are in employment, but also when they are in-between jobs. To encourage workers and employers to adopt the new portable medical benefits scheme, or the new transferable medical insurance scheme, the additional amount of tax exempt Medisave contributions that employers can make per year would be raised from $720 to $1,500 per employee with effect from 1st January 2003. From 1st April 2004, employers who implement either of the two new schemes will also enjoy tax deduction for medical expenses up to a limit of 2% of the payroll. Other employers would qualify for deductions of up to 1% of total payroll. Clauses 2 and 10 amend the Act to provide for these tax changes.

Tax exemption of foreign trusts

The fourth change is a tax exemption of foreign trusts. The development of world class trustee services in Singapore is important to our growth as a wealth management centre. To boost the development of trust administration and custodian services, the current income tax exemption granted to foreign trust administered by approved trustee companies will be extended to foreign trust administered by any trustee company in Singapore. This will take

effect from Year of Assessment 2004. Clause 7 amends the Act to provide for this change.

Enhancement of global trading programme

The fifth change is the enhancement of the global trading programme. International trading companies in Singapore have helped build our global reach over the years. To further promote Singapore as an international trading centre, the global trading programme was enhanced with effect from Budget Day on 28th February 2003. Approved global trading companies may now qualify for concessionary tax rate of 5% on qualifying income instead of 10%, depending on their contribution to the Singapore economy. Clause 40 amends the Act to provide for this change.

Intellectual property promotion

The sixth change is intellectual property promotion. With the focus of new services like healthcare, education and creative industries, that involve high-value added and knowledge-based activities, it is critical to continue to build up talents in R&D and in the creative fields. Tax deductions would be granted for patenting costs incurred on or after 1st June 2003. Clause 17 amends the Act to provide for this change. Automatic writing-down allowance over a 5-year period will also be granted for capital expenditure incurred on intellectual property rights such as patents, copyrights and trademarks acquired on or after 1st November 2003. Clause 23 amends the Act to provide for this change.

Other changes

Mr Deputy Speaker, Sir, the other tax policy changes announced in the 2003 Budget Statement are also covered

by changes in the Income Tax Act. I would not subject Members to a repeat broadcast of the 2003 Budget Statement. If there are any other specific policy changes which Members are interested in discussing, I would be more than happy to oblige.

Let me now focus on the tax policy changes which require amendments to the Income Tax Act, but were not covered in the 2003 Budget Statement. Our regular review on the relevance of our existing tax incentive schemes has brought out changes or refinements that should be made to these schemes. I will now highlight four major changes.

Umbrella financial sector initiative

To streamline and simplify the host of financial sector incentives, clause 41 amends the Act to provide for the merger of seven existing incentives into an umbrella financial sector incentive scheme (FSI). This scheme would provide a 5% concessionary tax rate for high-growth and high-value added activities and a 10% concessionary tax rate for other qualifying financial activities. This scheme will come into effect on 1st January 2004.

Changes to incentives that promote the debt market

The tax incentive for qualifying debt securities will be extended to 31st December 2008 to further promote the growth of the debt market. In addition, the tax exemption for income derived from trading in Singapore Government securities will be extended another five years to 27th February 2008. Both the approved bond intermediary scheme and this incentive to provide a concessionary tax rate for income derived from trading in debt securities will also be subsumed under the financial sector incentive (FSI), which I described earlier, with effect from 1st January 2004. Clauses 3(a), (g), (h), (i) and (j) and clauses 34, 39 and 44(c)

amend the Act to provide for these changes.

Removal of activities that qualify for industrial building allowance

Industrial building allowance is currently granted for buildings or structures used for qualifying activities. As activities relating to plantation, mining and pig farming are no longer carried out in our urban environment, these activities would be removed from the list of qualifying activities. Clauses 11, 19(b), 21 and 22 amend the Act to provide for these changes.

Removal of tax deductions for expenditure on energy conservation

Tax deductions for expenditure incurred in upgrading air-conditioned commercial buildings was introduced in 1982 to encourage energy conservation. As all buildings constructed since 1st January 1982 have complied with the overall thermal transfer value requirements, the tax deduction scheme is no longer relevant. Clause 13 amends the Act to provide for this removal.

Let me now briefly outline key legislative changes related to improving our tax administration.

Changes in withholding tax administration

Currently, when local taxpayers make payments to non-residents, local taxpayers must notify and pay the amount withheld to the Comptroller of Income Tax within 10 days - the so-called "10-day rule" - from the date the local taxpayer becomes liable to pay to the non-resident. With effect from 1st April 2003, taxpayers are required to notify and pay the tax withheld to the Comptroller by the 15th of the month following the date the amount becomes liable to be paid to the non-resident. This change will help reduce the compliance burden on local taxpayers that have to withhold tax.

Clauses 35, 44(a) and 45 amend the Act to provide for this change.

Heavier penalties for serious fraudulent tax offences

The current penalty provisions for tax offences under section 96 of the Income Tax Act are similar, regardless of the severity of tax offences committed. To deter serious tax fraud, such as preparation or maintenance of false books of accounts or other records, heavier penalties would be imposed on these more serious tax offences. A new penalty provision (section 96A) is enacted to cater for serious tax fraud. Clauses 47 and 48 amend the Act to provide for this change.

Formalising the Central Fund Scheme

Most Institutions of Public Character (IPCs) are administered through a Central Fund according to the primary area of activity of the IPC. To instill greater accountability and transparency among IPCs, clause 50 amends the Act to formalise the Central Fund Scheme, thereby legally requiring IPCs to comply with minimum operating requirements imposed directly or through the Central Fund, in accordance with the Income Tax Act.

Set-off rules for allowances

The existing practice is to set off capital allowances and industrial building allowances within each source of income first, before setting off excess industrial building allowances and capital allowances against other sources of income. Clauses 25, 26 and 29 amend the relevant provisions of the Income Tax Act to make clear the above set-off rules.

Change in basis of computing the 80% Rule

Currently, a charity has to spend at least 80% of their annual receipts on

charitable work in Singapore before it is granted exemption from income tax. This 80% rule is imposed to encourage charitable organisations to spend most of their income on charitable causes, and discourage them from accumulating large surpluses.

When a charity receives a donation in kind, other than donation of securities, the value of the donation in kind is included in the computation of the 80% spending rule at the time of donation. With effect from 1st April 2003, only the net proceeds from the disposal of these donations in kind will be included in the computation of the 80% spending rule at the time of disposal. Clause 9 amends the Act to provide for this change.

Valuation of units in listed unit trusts donated to approved Institutions of a Public Character (IPCs)

Clauses 30(g), (k) and (l) amend the Act to clarify that the value of listed unit trusts donated to approved IPCs shall be the price of such units in the open market at the last transaction of such units, as at the date of the donation.

Finally, Mr Deputy Speaker, other tax policy changes that have been incorporated in this Bill include:

Clarification on the treatment of further tax deductions under the group relief scheme (clauses 12, 14 and 15(b));

Introduction of the requirement to apportion donations among income subject to tax at different tax rates (clauses 30(a), (b) and (j));

Changes in conditions to claim of industrial building allowance (clauses 19(a) and 20);

Introduction of tax exemption for Bareboat Charter-In ships (clause 4(b));

Removal of tax treatment that deems certain dividends as interest (clauses 4(a), 5, 6, 8 and 15(b));

Removal of Approved Credit Rating Agency Incentive (clause 38);

Amendments consequential to the implementation of one-tier corporate tax system (clauses 42 and 43);

Withdrawal of Hotel Refurbishment Scheme (clause 15(a)); and

Withdrawal of Double Child Relief (clause 51).

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.

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.

5.21 pm

Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill will amend the Development Fund Act and Financial Procedure Act to allow for:

Voted equity to be appropriated from the Development Fund (DF);

Transfer of budgets to follow transfer of functions;

Interest from certain public deposits to be accounted with the deposit and not transferred to the Consolidated Fund; and

Expenses on Investment to be converted to statutory expenditure from FY 2004.

Let me now explain the main amendments in the Bill.

Voted equity to be appropriated from the Development Fund

At present, the Minister for Finance cannot inject capital into a statutory corporation from the Development Fund. Such investments could either be funded from the Consolidated Fund or the Development Investment Fund.

However, the scope of the Development Investment Fund is limited to projects that can generate returns. For projects that are highly subsidised, the only current alternative would be to use the Consolidated Fund. But this would be highly distortive as the funding ends up reflected as 'operating' expenditure. It would therefore be appropriate to change the legislation to allow for such capital injections to be appropriated from the Development Fund.

Clauses 2 and 3(b) of the Bill will allow the Development Fund to be used to provide capital contribution for investment by way of capital injection in any statutory corporation.

Transfer of budgets to follow transfer of functions

Currently, when a function and the staff performing it is transferred from one Ministry to another during the financial year, additional budget would have to be provided to the receiving Ministry while the budget for the transferred function is retained with the original Ministry, because the law does not allow the transfer of the funds between Heads of Expenditure. This results in a budget that is distortive and misleading.

Clause 3(c) will allow the full transfer of funds between Heads of Expenditure when, and only when, there is a transfer of functions between those Heads.

Retention of interest from deposits

At present, section 7(4) of the Financial Procedure Act requires interest on all types of deposits placed by the public with the Government to be credited to the Consolidated Revenue Account. On an annual basis, these interest payments have then to be voted separately by Parliament to the Ministry to return to the depositors. This creates unnecessary work flow due to the round-tripping of funds. The interest is due to the depositors, and at no point is it Government revenue.

A self-financing mechanism, such that the administration of returning the principal and interest to the public would reside within the Ministry that imposed the deposit, will therefore address the issue. Administration of the deposits

could then be managed individually and the interest credited directly to these accounts. Clauses 3(a) and (d) will enable the implementation of this mechanism.

Expenses on investment to be converted to Statutory Expenditure

The Constitution and Financial Regulations require the Government's accounts to be prepared on a gross basis. As such, the investment income and Expenses on Investment (EOI) from the Government's reserves managed by GIC are reported separately in the Government's books. A separate budget needs to be provided for expenses and this estimate presented to Parliament at the beginning of the fiscal year. While the general principle that all revenue should go to the Consolidated Fund and all expenditures should be specifically voted remains conceptually sound, it is distortionary in the case of EOI because income and expenditure occur at the same time and are co-dependent: the expenses are integral to the trades. The current arrangement also distorts returns by overstating revenue through accounting for gross proceeds rather than net proceeds. In the private sector, fund managers offset the EOI from investment income and only net proceeds from investment are taken into the books.

Even in Government, there are precedents to such a treatment. Expenditure incurred on investment activities involving the Government Securities Fund, for example, is not separately voted but charged against the fund directly as the Government Securities Act allows for direct deduction of such expenses from the Fund.

Clause 3(a) will enable EOI to be charged directly to the Consolidated Fund.

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 Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The amendments to the CPF Act in this Bill will require members who meet the CPF Minimum Sum to top up their Medisave Minimum Sum balances before withdrawing their CPF. This change was announced by the Prime Minister in August this year. The Bill also seeks to facilitate the implementation of Portable Medical Benefits Scheme and to give effect to other changes to better serve CPF members.

Topping up of the Medisave Minimum Sum

Sir, the Medisave Minimum Sum (MMS) is to ensure that CPF members have enough money set aside to meet healthcare expenses in their older years. This MMS amount is currently set at $25,000. However, we have not required CPF members to top it up to that prescribed amount before withdrawal of their CPF monies at age 55. This is so even if that member has balances above the CPF Minimum Sum in his Ordinary and Special Accounts which he can withdraw at age 55.

From 1st January 2004, we will require CPF members who meet the CPF Minimum Sum to top-up their Medisave Minimum Sum to the required amount. The required amount is set at $2,500 from 1st January 2004 and then increased further by $2,500 (in today's dollars) per year to reach $25,000 (in today's dollars) in 2013.

Clause 5 of the Bill amends section 15(6) to require members to set aside or top up in the Medisave Account

a sum of up to $2,500 or such other amount as the Minister may specify, at the time when they make CPF withdrawals from 1st January 2004. This includes first withdrawals by CPF members at or after age 55 and all subsequent withdrawals.

Sir, let me now focus on the other amendments introduced by this Bill.

Additional Medisave contributions above the voluntary contribution limit

On 1st October this year, my Ministry announced details of the Portable Medical Benefits Scheme (PMBS).

Under this Scheme, an employer may make additional contributions, in lieu of the existing inpatient benefits, to an employee's Medisave Account for him to buy medical insurance to cover his inpatient needs. However, section 13B of the CPF Act limits CPF contributions made by a Singapore citizen or permanent resident, including voluntary contributions paid by his employer, to the mandatory contribution amount, or $28,800 in any year, whichever is the higher. This is to prevent excessive CPF contributions for the purpose of avoiding tax.

To facilitate the implementation of the Portable Medical Benefits Scheme, clause 4 amends section 13B(3) to exclude any additional Medisave contribution made by an employer to an employee from the